4. Insolvency of responsible practitioners may limit recovery. The construction industry is a volatile market – particularly in light of recent developments in cladding-related insurance. CSV may face difficulties recovering from responsible parties if those parties have since become insolvent or wound up. 5. Limitation periods. A number of affected buildings will likely have either reached the statutory limitation period, or be approaching it. CSV will need to commence any recovery proceedings quickly in order to ensure it is not time-barred. 6. Documentary issues. If CSV takes over the legal rights of owners’ corporations to seek recovery against responsible parties, it may face practical difficulties obtaining the necessary documents to establish the claims, as standards of document retention may differ widely between owners’ corporations. 7. Limited experts to support recovery claims. Given the current climate in the construction industry, there is a widespread experience of experts (such as fire engineering experts) being unavailable to give evidence in support of claims by owners against other building professionals. This might cause delays or create other hurdles to CSV commencing proceedings to recover rectification costs. 8. Time and cost for recovery. Proceedings in VCAT and the Supreme Court can take years from start to finish. This could result in the State Government using up the rectification fund without any prospect of recovering those costs in the short term (unless early negotiated outcomes can be reached). Further, the costs of investigating, commencing and running multiple recovery proceedings are likely to be significant. 9. Impact on the market. Victoria’s infrastructure boom has resulted in capacity shortages for existing projects. A large-scale rectification program for hundreds of buildings will place further strain on the market’s capacity. If planned carefully and executed effectively, the establishment of CSV could be a game-changer in the world of cladding.
1 Victorian Cladding Taskforce Report from the Co-Chairs dated July 2019, available here: https://www.planning.vic.gov.au/__data/assets/pdf_file/0019/426034/DELWP0124_Victorian_ Cladding_Taskforce_Final_Report_July_2019_v9 .pdf about the author jane hider partner emily steiner senior associate samuel woff senior associate corrs chambers westgarth lawyers