Insights

The clock keeps ticking for cladding claims

Insurance Law & Litigation
Round black analogue clock symbolising time passing.

On 14 September 2021, the Victorian Government introduced into the Legislative Assembly a further cladding reform giving building owners even more time to take legal action for cladding-related claims.

If the Building Amendment (Registration and Other Matters) Bill 2021 passes, building owners whose cladding claims would be time barred between 16 July 2019 and 1 December 2023 will have 15 years to pursue legal action against builders, building professionals or others to recover the cost of removing and replacing combustible cladding.

This change follows the recent passing of the Cladding Safety Victoria Bill 2020 which introduced a suite of cladding-related reforms, including giving building owners an extra two years to pursue legal action.

This new bill is a disturbing development for builders, consultants and their professional indemnity insurers who are concerned about the prospect of cladding claims as:

  • the proposed changes are retrospective (and many professionals have, quite reasonably, arranged their affairs on the basis of the existing state of the law, namely the 10-year "long stop" applying)
  • many professionals and others formulated bulk notifications prior to the introduction of cladding exclusions on their professional indemnity policies, based on the 10-year long stop being in place. Accordingly, older projects may not have been notified, and with cladding exclusions rife within the industry, this could result in uninsured exposures.

We will be following the progress of the bill closely and provide a further update if it passes.

The full text of the bill and the explanatory memorandum can be accessed here.

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

Key
Contacts

Simone  Karmis

Simone Karmis

Lawyer