Non-conforming products – a tragic reminder

The recent tragedy at the Grenfell Tower in London highlights the importance to contractors of the risks and dangers in utilising non-conforming products.

Grenfell Tower was a public housing building, with over 129 flats. It has been revealed in the weeks following the tragedy that zinc cladding originally proposed for the Grenfell Tower renovation was instead replaced with aluminum cladding, which saved approximately $500,000.00 in building costs.

The leader of the relevant Council has stepped down from his role, following widespread criticism of his involvement in this decision.

Across Britain, cladding is being tested on other tower blocks, and to date, over 149 buildings have failed the test.

Here in Australia, many contractors will no doubt recall the Infinity electrical cable recall and the headaches that followed.

Contractors need to ensure they remain diligent in their selection of products and materials that they use daily.

What are non-conforming products?

Non-conforming products are those which do not meet Australian regulatory standards. They are considered to be not fit-for-purpose; are not of acceptable quality; contain false or misleading claims; or are counterfeit.

Non-conforming products may not be obvious at the time of installation or construction, with the consequences possibly not being realised for some time and only after there has been a failure. This occurred in the Infinity cable example.

Key industry bodies regularly provide information on any non-conforming products identified in the Australian market.

Am I liable?

If it is found that you have used or installed non-conforming products in your building sites, you can expect to be held liable.

Whether you have recourse against someone higher up in the food chain will depend on the particular circumstances of the job and the product.

If the manufacturer of the defective product is still in business, you may be able to pursue them and they in turn may be covered by their own insurance.

However, as we saw with the Infinity cable issue, the manufacturer was in liquidation, so no recourse against the manufacturer was possible.

Any domestic work performed will be covered by the Australian Consumer Law, which requires that any goods supplied to consumers are of acceptable quality. The term “acceptable quality” includes being free from defects, something a non-conforming product would not be. Contractors can therefore be in breach of these provisions by using such products.

In addition, contracts will ordinarily contain terms that require contractors to comply with all relevant legislative requirements in completing their work. The use of non-conforming products will likely offend various legislation.

Consumers or home owners are likely to be entitled to a refund or replacement of non-conforming goods. They may also be entitled to compensation for any consequential (or flow-on) loss they may suffer as a result of the goods or services failing. Consequential loss, for example, can include damages to replace someone’s home after it burns down as a result of a fire being caused by the defective product.

For commercial work, where often the end user of the product is not regarded as a “consumer”, the obligation to use products which satisfy legislative requirements still remains.

Consumer protection laws also require a manufacturer to indemnify a supplier who incurs costs as a result of goods not meeting a statutory warranty. If goods are imported, the importer is deemed to be the manufacturer.

What is being done?

Proposed new legislation was introduced into Queensland Parliament in May in an attempt to stop the “buck passing” on non-conforming products. The legislation will introduce a chain of responsibility and will include all participants in the industry – including designers, manufacturers, importers, installers, and executive officers of any companies in the supply chain. The primary duty is that each person involved in the chain of responsibility must ensure, insofar as reasonably practicable, that a product is not a non-conforming building product.

Fines of up to $120,000.00 can be imposed in the event of any breach of the new legislation, once in effect.

This legislation has not yet commenced, and a proposed start date has not been provided.

If you would like more information on non-conforming products, please contact the team at McKays.