Remedying High Risk Cladding: The Australian Approach

In the post-Grenfell landscape, one of the tasks now faced by owners and leaseholders of multi-storey residential buildings is to ensure that the same (or a similar) tragedy is not repeated. There is however an obvious, yet difficult, question: how do owners and leaseholders – an often large and amorphous group – go about rectifying their own buildings to remove high-risk cladding? There are two immediate difficulties: (i) funding the necessary works; and (ii) co-ordinating what is likely be a time-consuming and logistically challenging task.

One possible solution might come from looking at what is happening in Australia, specifically the schemes adopted by the States of Victoria and New South Wales. It is a solution that is not without some traction in the UK, with the Labour Party already pushing the UK government to implement similar remedial solutions. So what do the Australian schemes involve?

The Victorian scheme (arguably the more extensive of the two) has involved a partnership between government, owners and construction professionals. Its key components are:

• A government-backed audit on all buildings, hotels, motels and student accommodation over three storeys, as well as all hospitals, care homes and schools over two storeys, with each building assigned to a category (extreme risk, high risk etc) in order to prioritise remedial works. Owners are then subject to a Building Order requiring remedial works to be undertaken.

• The establishment of a statutory body (Cladding Safety Victoria, or CSV) with about AUD$600 million in funding to operate the scheme and assess individual cases. Cases which have been identified by the audit are referred to CSV largely in order of priority.   

• CSV and the owners then enter into staged funding agreements whereby CSV grants financial assistance to the owners to pay for the remedial works including independent experts, builders and materials.

• The project is managed by a CSV-appointed project manager who assists in preparing and issuing a tender for the works, and later administers a CSV-approved design and construction contract entered into between the owners and the successful CSV-approved builder.

• The owners can pursue recovery of the remediation costs against the original designers/builders/contractors, and then repay any recovered sums to CSV.

• Alternatively, CSV can itself pursue subrogated recovery claims in the name of the owners.

In summary, the New South Wales scheme (Project Remediate) works in a similar way though has marginally less government involvement throughout the process and there is no statutory body equivalent. The State’s government is, however, the primary financer of the remediation works providing up to AUD$1 billion to accelerate the removal of high risk cladding, primarily by way of interest-free loans to owners of buildings that have been identified as “high risk” by the NSW Cladding Taskforce (who undertook a similar auditing process). The Office of the New South Wales Building Commissioner also assists owners in project managing the remedial works, appointing project managers to oversee each project who will work closely with the Commissioner’s own project assurance service.

Both schemes’ primary aim is the removal of dangerous, high-risk cladding, and avoiding further unnecessary tragedy. However, they also arguably give owners some breathing space to consider and pursue their own recovery claims in appropriate cases, whilst also fast-tracking the remedial works and thereby crystallising the owners’ losses.

Click below for further information

Authors: Elliott Cook