Key Takeaways

On 1 February 2021, the new ministerial guidelines published by the Minister of Planning on 13 January 2021 came into force in Victoria, banning the use of combustible external cladding such as that responsible for the fires at Melbourne’s Lacrosse Tower and London’s Grenfell Tower and also extending existing limitation periods to 12 years for ‘cladding building actions’.

While this prohibition is not retroactive, the further measures extending limitation dates for cladding building actions will apply to already completed buildings with combustible external cladding and further expose to new litigation, the builders and related contractors involved in the construction.

New Legislation

In the years following the devastating fires at London’s Grenfell Tower in 2017 and at Melbourne’s Lacrosse Tower in 2014, the Victorian Government has sought to introduce policies to address the grave risks of combustible cladding.

These new policy measures included the creation of Cladding Safety Victoria, the creation of a Cladding task force to perform an audit of existing buildings for the purpose of establishing which buildings contained ‘flammable external cladding’ and the creation of a $600 million fund to fund cladding removal in certain circumstances.

The Victorian Government’s law reform plans came to fruition with the granting of royal assent to the Cladding Safety Victoria Act 2020 (Vic) (Cladding Safety Act) on 4 November 2020 and with the publishing of the world first declaration prohibiting the use of combustible cladding on 13 January 2021.

The Changes

Banning of External Combustible Cladding

Section 192B of the Building Act, which was inserted by the Cladding Safety Act, allows the Minister to ban the use of external wall cladding they believe, will likely cause a risk of death, serious injury or severe property damage. The declaration made by the Minister as it stands prohibits the use of the following external cladding products:

• aluminium composite panels (ACPs) with a core of less than 93 per cent inert mineral filler (inert content) by mass in external cladding as part of a wall system; and
• expanded polystyrene (EPS) products used in an external insulation and finish (rendered) wall system.

The declaration will affect any person carrying out building works on buildings of Type A or Type B construction, which includes residential and public buildings two or more stories high, as well as commercial buildings three or more stories high.

The declaration does not apply retroactively. Nor does it apply to any external cladding products included in permit applications made to a building surveyor before 1 February 2021.

Extended limitation period of cladding building actions

The Cladding Safety Act amendments to the Building Act also extend certain limitation periods. The limitation on time to commence certain ‘cladding building actions’ is extended from 10 to 12 years (s134(2) and (3) of the Building Act).

A ‘cladding building action’ is defined by the Building Act as ‘a building action in connection with, or otherwise related to, a product or material that is, or could be, a non-compliant or non-conforming external wall cladding product.’

In respect to a building for which an occupancy permit was never issued, the extension only applies to ‘cladding building actions’ that have (or which will) run out of time between 16 July 2019 and 12 months after the commencement date of s53 of the Cladding Safety Act, which was 1 February 2021.

Implications

The declaration itself now crystallises the position of the Minister as to the use of ACP as part of external cladding. In practice, the announcement only confirms a view already accepted amongst the building industry following the outcome of the fires and the Lacrosse trial.

No prudent building surveyors or builders were approving or using ACP cladding as part of any relevant construction projects, and the related context was that professional indemnity and contract works insurers for those parties were specifically excluding ACP cladding claims from coverage.

The larger implication of the Cladding Safety Act is that it extends the already accepted long-stop limitation period of 10 years by an additional two years, which potentially exposes builders and related contractors to litigation they could otherwise have avoided. The extension of limitation periods came into effect on 1 February 2021.

The extension of the limitation period is also a boon to property owners and strata managers considering litigation, as it will provide them with additional time to bring actions which would otherwise have been barred.