The Cladding Issue Is Still Making Headlines

Cladding was a hot topic in 2018 with the delivery of a number of reports after the Grenfell Tower fire on the state of the local industry and its exposure to combustible cladding. Today The Australian reports that emergency services have identified up to 10,000 buildings on the Eastern seaboard that have used the non-compliant material and are now classified as priority response target given the risk of fires spreading quickly.

We have already discussed that the legal buzz around the cladding is only just beginning to gain momentum with 2019 set to see a string of cases and class-actions hitting the courts. Developers, constructors, owners, owners corporations, importers and manufacturers are all urgently reviewing their exposure and options.

On Wednesday (16/1) The AFR identified a somewhat surprising risk associated with the saga. Apparently insurers are increasingly including carve-outs relating to cladding or indeed, refusing to offer Professional Indemnity Insurance for building surveyors. The challenge and danger here is that registration as a qualified surveyor (in Victoria at least) requires “unfettered” Professional Indemnity coverage. If these surveyors are unable to secure cover (at a sustainable cost), the industry could face a potentially disastrous shortage of qualified surveyors leading to blow-outs in building and occupancy permits being issued.

What 2019 will hold will be interesting. Legal suites are a given however legislators are going to have to address some serious issues – made all the more difficult in NSW in an election year. Question 1: what to do about the buildings that already exist with the non-compliant cladding? Question 2: how to handle the potential issue with a shortage of qualified surveyors. Question 3: who pays the bill?

Watch this space…