Strata Plan 92450 v JKN Para 1 Pty Ltd & Anor

Case Study

Overview – NSW Supreme Court Hearing and Appeal

‘The Rise’ residential apartment building was owned and developed by JKN Para 1 until July 2016 when it was then taken over by the Owners Corporation. Built between 2014-2016 by Toplace Pty Ltd, the building sits at a height of 93m in Paramatta, New South Wales.

In 2022, the Owners Corporation launched a claim against JKN Para 1 and Toplace in response to the City of Parramatta Council raising fire safety concerns in relation to the cladding and requested the Owners to take immediate action. The Plaintiffs alleged that the Defendants had breached the statutory warranties under the Home Building Act 1989 (NSW) and sought costs exceeding $5 million for the removal and replacement of aluminium composite panels (ACPs) cladding on the building.

The Court held that the Plaintiffs did not establish that the cladding was composed of material that was not ‘good and suitable for its purpose’ under the Home Building Act nor did they establish that the cladding resulted in a dwelling that was not reasonably fit for occupation. Justice Black found no breach of the statutory warranties, ruling in favour of the Defendants and ordering the Plaintiffs to pay the cost of and incidental to the determination of the separate questions and the hearing.

In 2023, the Plaintiffs appealed the case to the New South Wales Court of Appeal, claiming that the Primary Judge erred in in finding that there was no statutory breach under section 18(1)(c) of the Home Building Act 1989 (NSW) due to the installation of the cladding and that the Plaintiff had not established that an Alternative Solution could have been performed in relation to the ACPs installed to the building.

It was held that the Defendants had in fact breached the statutory warranties set out by the Home Building Act. The decision was reversed and the Defendants were ordered to pay the Plaintiffs’ cost of the appeal and the cost of having the cladding removed and replaced.

Problems

The Plaintiff’s Expert Witness based their conclusions on the combustibility of the cladding on a CSIRO test report for the wrong cladding product. Although similar products, litigation compliant reports require conclusions to be robust and upheld by supporting documents.

During the building process, Fire & Rescue NSW (FRNSW) provided a Fire Safety report to the certifiers which identified concerns that the cladding was not adequately fire resistant and recommended that the cladding be rectified and the façade be certified compliant. Neither of these recommendations were implemented by the Defendants during the design or build stage.

The Plaintiffs relied on a brochure published by the cladding manufacturer years after the building construction. The Court found that the brochure could be interpreted in contrast to the Plaintiffs’ arguments. They further argued that the cladding had a core which consisted of 35-40% polyethylene. This argument was not supported by any evidence.

Solutions

This case reinforces the need for special experts to ensure that their assumptions and conclusions are robust and supported by the correct underlying documents. When writing litigation compliant reports, it is ever so important to ensure that any conclusions, assumptions or statements made are supported by evidence.

Had the Certifier, Builder or Developer taken more notice of the fire authority at the time of construction, the cladding may have been changed and the Owners would not dealing with this lengthy and costly issue years later. For developers, it is important to note that if fire safety reports are requested and the relevant fire authorities identify safety concerns, they are legitimate and recommended for the sake of safety. When constructing buildings, fire safety should always be a top priority.

Without being able to prove the cladding was combustible, the Plaintiffs could barely uphold the argument that the cladding being installed breached the relevant statutory warranties. This highlights the importance of having a strong legal case when launching civil litigation suits.

Conclusion

The resulting decision of the case and its appeal, helps to clarify what evidence is needed for an ACP cladding litigation case for parties and their legal representatives. Parties seeking to bring a claim must examine whether they have sufficient evidence as to whether ACPs meet the Deemed-To-Satisfy Provisions or Performance Based Solutions under the Building Code of Australia whilst Expert Witness’ must ensure that their conclusions are thoroughly researched and corroborated in order to uphold their integrity.

The case also highlights the importance of involving Fire Brigades in the developmental stages to assess fire safety aspects of building developments, to further avoid being held up in lengthy litigations and more importantly, the safety of residents.

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