Amendment of the Building Amendment Act

The Building Amendment Act 2021 extends the statute of limitations for cladding building actions from 12 to 15 years, impacting construction professionals and insurers.

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The Building Amendment Act 2021 (the Act) came into force last year October. Its main purpose is to amend the Building Act 1993 in order to facilitate a new registration and licensing scheme for tradespeople and to clarify who must pay maintenance costs for critical safety measures in certain retail premises, and to improve the quality of building work done in Victoria.

Nevertheless, there is also a change to the statute of limitations for actions related to cladding building actions in the Act (Section 134). The limitation period for cladding building actions has been extended from 12 to 15 years. A ‘cladding building action’ as defined in the Building Act is a claim “in connection with, or otherwise related to, a product or material that is, or could be, a non-compliant or non-conforming external wall cladding product”. This definition is not restricted to claims concerning combustible cladding and is presumably applicable to claims concerning all non-conforming external wall cladding. Thanks to this limitation period being extended, property owners in Victoria who had cladding claims set to be extinguished between 16 July 2019 and 1 December 2023 now have more time to take action against builders and other building professionals. Furthermore, this amendment also benefits the Victorian government as it has been granted more time to bring recovery claims where it has paid for cladding rectification as part of the Cladding Safety Victoria program.

Impact on construction professionals and insurers

This amendment may be worrying for some, as there is now a three-year extension of time for building owners and the State Government (where it is completing rectification works) to bring claims against building professionals. Most notably, certain claims that had previously been out of time have now been revived because of these legislative changes. As a result, most construction professional indemnity policies now exclude combustible cladding claims. There is a possibility that claims which are now covered by the extended limitation period may not be covered if building professionals only notified projects that were completed within the previous 10-year limitation period.

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