The Cladding Safety Victoria Bill 2020

Since the tragic loss of life from the Grenfell Tower Fire in 2017, there has been considerable government activity to work out how dangerous combustible cladding came to be on so many multi-storey buildings, and how to prevent a Grenfell-like tragedy occurring in Australia. Victorians are fortunate that the Lacrosse tower fire in 2014 and the Neo-200 fire in 2019 did not lead to loss of life. Vertical fire spread events like these should never happen.

There have been multiple parallel inquiries at State, Federal and International level considering the worrying proliferation of combustible cladding including: the Victorian Cladding Taskforce (2017 interim report here and the 2019 final report here), the Senate Inquiry into non-conforming building products (2017 interim report on ACPs here), the Building Ministers’ Forum that commissioned the 2018 Shergold Weir report (here), and the UK Independent Review of Building Regulations and Fire Safety by Dame Judith Hackett (2018 report here). The reports all identified woeful inadequacies in the regulation of the building industry and made substantial recommendations for improvement. A Victorian State-wide cladding audit commencing in 2017 identified, as at July 2019, 1,069 of the 2,227 inspected multi-storey commercial and domestic buildings (i.e. apartments, hotels, motels, student accommodation, hospitals, schools and aged care facilities) in Victoria had combustible cladding, 72 of which were identified as ‘extreme risk’ and 409 were identified as ‘highest risk’. Shocking numbers, particularly given the number of occupants and potential vulnerabilities of those occupants.

The legislative and executive results of these inquiries include: an NCC 2016 amendment to address the use of combustible wall cladding in multi-storey buildings; Minister’s Guideline MG-14 (here), which requires permission for the use of combustible cladding on new buildings to be given by the Building Appeals Board rather than individual building surveyors; and the Building Amendment (Registration of Building Trades and Other Matters) Act 2018 (here) and the Building Amendment (Cladding Rectification) Act 2019 (here), which introduced cladding rectification agreements enabling owners to receive funding from Councils to rectify non-compliant cladding, financial assistance from the Victorian Building Authority (VBA) for cladding rectification work and a right of subrogation by the Crown where financial assistance is given, and a levy on building permits enabling funding of cladding rectification estimated to cost $600 million. The latest crucial piece of legislation is the Cladding Safety Victoria Bill 2020 (here), which has passed the second reading stage in both the lower and upper houses of the Victorian Parliament, and therefore it is expected to be made law shortly.

The Bill creates Cladding Safety Victoria (CSV) as a new independent statutory body with considerable functions and powers relating to cladding rectification. CSV was previously an arm of the VBA. The second reading speech (here) identifies that the independence of CSV from the VBA is expected to give CSV the ability to scale up its delivery of compliant buildings from 15 (in 2019-2020) to 200 per year going forward.

Parts 1 and 2 of the Bill establish CSV as an independent body to support owners and owners corporations of affected buildings to progress rectification of non-compliant or non-conforming external wall cladding products to improve safety of those buildings. This is known as a ‘cladding rectification program’. The program is funded by the building permit levies imposed by the VBA under Part 12 Division 2 of the Building Act 1993. CSV’s role in the program seems quite hands-on: its functions include prioritising buildings for financial assistance, deciding whether to grant or refuse assistance, determining the amount of assistance and making payments, monitoring rectification work, and supporting owners and owners corporations by procuring building practitioners to undertake works and engaging technical design and project management services for the works, amongst other things.

Part 3 of the Bill empowers CSV to grant financial assistance to owners or owners corporations on application, and to enter a funding agreement with the owner or owners corporations. The financial assistance process originates with a municipal building surveyor notifying CSV of a building potentially requiring cladding rectification work, CSV inviting the owner or owners corporation of the building to apply for financial assistance, and then CSV deciding whether to grant financial assistance. The ‘prescribed criteria’ for financial assistance do not appear in the Bill, so these seem to be left for the regulations.
Part 4 of the Bill relates to reporting and financial provisions of CSV, Part 5 gives broad regulation-making powers to the Governor in Council, and Part 6 includes transitional provisions for the transfer of employees, rights and liabilities from the VBA to CSV.

Part 7 of the Bill amends the Building Act 1993. Significantly, it amends the 10-year limitation period in section 134 Building Act 1993 by 2 years for a ‘cladding building action’, defined 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’. The extension is limited in duration: it applies to a building action where the limitation period expired between 16 July 2019 (being the date when the government announced the $600M fund for the cladding rectification program) and 12 months after the Bill commences. The extension appears directed to the proliferation of combustible cladding on multi-storey buildings from 2007. The Bill also ties the right of subrogation to the payment of financial assistance by CSV made pursuant to the mechanisms in the Bill.

I am hopeful the ambitions expressed in the second reading speech about the speed with which the CSV can turn around non-compliant buildings are realistic, as lives depend on it.

Andrew Downie

Liability limited by a scheme approved under professional standards legislation