Owners Corporation update: Victorian Government announces financial assistance and new agency, Cladding Safety Victoria, to assist cladding crisis

Jul 25, 2019

Last week, the Victorian Government announced it would contribute $600 million towards high-risk cladding found on privately owned homes across the State, in a bid to alleviate the financial pressure faced by hundreds of buildings.

The Government’s move to provide the financial assistance is in response to:

  • the recommendations made in the Victorian Cladding Taskforce’s final report, released on 16 July 2019; and
  • the failure of the initial plan to allow apartment owners pay for the works through their council rates.

The Government will directly fund the first $300 million and introduce changes to the building permit levy to raise $300 million over the course of the next five (5) years.

The Government also announced the establishment of Cladding Safety Victoria — a newly created agency to work with owners and owners corporations to help them rectify non-compliant cladding. Cladding Safety Victoria will oversee the project, manage funding and work with the affected lot owners, including the respective owners corporations, throughout the process.

Currently, the Victorian Building Authority (VBA) has identified 15 buildings as high-risk. These buildings will be addressed first and works will commence in the coming weeks.

How will you know if your building is eligible for assistance?

The VBA will be conducting an audit to assess which buildings are eligible for assistance.

Once a building has been assessed as being eligible, the VBA will:

  • notify the lot owners and respective owners corporation that an inspection will be conducted; and
  • communicate the results of the inspection accordingly.

What should owners corporations do next?

On receiving notification of a building’s eligibility, we recommend owners corporations to contact us so that we can assist and advise in relation to:

  • next steps where the building is deemed eligible; or
  • appealing the decision where the building is deemed ineligible.

What if an owners corporation has already been issued with a Show Cause Notice?

For buildings that have already been issued with a Show Cause Notice, a follow-up audit will be conducted to assess if those buildings meet the eligibility criteria. At this stage, the timing for such a follow-up audit is unknown. 

What if an owners corporation has cladding but has not been issued with a Show Cause Notice?

For buildings with cladding that have not yet been issued with a Show Cause Notice, the process remains unchanged.

As part of the on-going audit process by the VBA, each building:

  • Undergoes an on-site inspection to determine whether combustible cladding is present.
  • Is assessed by an expert panel to review risks based on the inspection findings.
  • Will have recommendations made to the local council's Municipal Building Surveyor (MBS) about any required action.
  • May be required to undertake emergency works to reduce the immediate risk.

If a building is found to be in a higher-risk category, it will be referred to Cladding Safety Victoria. If the building is not considered to be in a high-risk category, the owners will be required to address the cladding issues themselves. Typically, this will require the obtaining of advice from a fire engineer, negotiating with the relevant Council or VBA as to the required works and seeking approval from the Building Appeals Board.

There may also be an opportunity to recover the costs for these works from the builder, the building surveyor or other parties.

It is important to note, that such claims can only be brought within 10 years from the date of issue of the occupancy permit. Therefore, if the 10 year date is looming and you suspect or know that cladding is present on your building, waiting for the VBA and/or Cladding Safety Victoria to undertake their audit and review, may prejudice your ability to bring a claim.

In order to protect the interests of the owners corporation, we recommend you contact us to assist you.

In conclusion

While the Victorian Government and Cladding Safety Victoria has provided much information, including building eligibility, the process for fixing high-risk buildings and the timeline for rectification works, it is apparent there are many questions still to be answered and it will be some time before the cladding crisis is resolved.

For further details on Cladding Safety Victoria, please visit: www.vic.gov.au/cladding-safety.

More information

For more information, please contact Anton Block, Principal Lawyer and Head of Owners Corporation, on (03) 8600 8833 or ablock@kcllaw.com.au, or Deborah Andronaco, Associate, on (03) 8600 8848 or dandronaco@kcllaw.com.au.

Authors

This Owners Corporation update was co-authored by Deborah Andronaco, Associate, and Anton Block, Principal Lawyer.

Note: This update is a guide only and is not intended to constitute legal advice.

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