Cladding Safety Victoria Act receives Royal Assent

The Cladding Safety Victoria Bill 2020 (Vic) (CSV Bill) introduced 3 September 2020 has now received royal assent on 4 November 2020. The Cladding Safety Victoria Act 2020 (CSV Act) will come into operation on a day yet to be proclaimed, and at the very latest 1 July 2021.

Key Features

One of the main purposes of the CSV Act is to establish a separate body corporate, Cladding Safety Victoria (CSV) to administer the cladding rectification program.

Currently, CSV is operating as a business unit of the Victorian Building Authority (VBA) since the Government announced the $600 million package to fix buildings with combustible cladding in July 2019. CSV will now become a standalone entity charged with various functions to support Victorians to rectify non-compliant or non-conforming external wall cladding products on buildings to improve the safety of those buildings.

CSV’s key functions include:

• prioritising buildings for potential financial assistance for cladding rectification work and registering owners and owners corporations of those buildings;
• determining how much financial assistance will be given for cladding rectification work and give those amounts under funding agreements;
• supporting owners and owners corporations of buildings by engaging technical design and project management services for cladding rectification work and providing other services directed by the Minister relating to cladding rectification work before and after funding agreements are entered into;
• monitoring cladding rectification work where financial assistance has been given; and
• providing guidance to owners and owners corporations and others in relation to cladding rectification work in order to mitigate risk.

Extension of limitation of actions time period for cladding building actions

The CSV Act also amends section 134 of the Building Act 1993 (Vic) (Building Act) to extend the time in which a ‘cladding building action’ can be brought up to 12 years after the date of issue of the occupancy permit in respect of the building work (rather than the usual 10 year period).

However, this extension only applies to those actions that expired on or after 16 July 2019 (the date the Victorian Government announced the cladding rectification fund) but before 12 months after section 53 of the CSV Act comes into operation.

This extension to the statutory limitation period gives the State and building owners extra time to conduct due diligence activities to identify the scope of cladding rectification work required and to commence proceedings against building practitioners in respect of non-compliant or non-conforming external wall cladding products.

However, it is important to note that the extended limitation period does not apply to any other building defects which may be identified during the course of investigation of combustible cladding.

Rights of subrogation to CSV

The CSV Act also amends section 137F of the Building Act to clarify that the Crown’s subrogation rights are triggered when financial assistance is paid by CSV to the owner of a building. After that time, CSV will be entitled to pursue any claims against building practitioners to seek to recover the cost of the relevant cladding rectification work.

How will I obtain funding under this new Act?

There are a few hurdles to owners and owners corporations obtaining financial assistance through CSV for cladding rectification work:

1. 1. A building must be ‘prioritised’ by CSV having regard to various prescribed criteria. Priority will be given to any building in respect of which a Municipal Building Surveyor has notified CSV that he or she considers requires cladding rectification work.
   2. If prioritised, the owner or owners corporation may then receive an invitation from CSV to apply for registration of ‘potential financial assistance’. At this stage financial assistance is not guaranteed, the owner is only being registered for potentially receiving funding from CSV if the application has been accepted.
   3. CSV will then decide whether to grant or refuse financial assistance. CSV may assess your building to determine the extent of cladding rectification work required to mitigate the risks associated with any non‑compliant or non-conforming external wall cladding product. This approach reflects that CSV funding may used to mitigate risks, not necessarily eliminate them.

It is currently unclear how long CSV will take to decide registration applications and granting of financial assistance, however CSV must notify the applicant of its decisions within 14 days of making that decision.

Once financial assistance has been granted, an owner will need to enter into a funding agreement with CSV. The funding agreement will be in a prescribed form with prescribed terms and conditions.

Authored by:

Daniel Middleton, Partner
Adrian Clifford, Senior Associate
Sandy Jassal, Lawyer