Combustible cladding legal proceedings and recovery costs for building professionals

Architects, Engineers, Building Surveyors, Roofers, Project Managers and other consultants or contractors who undertook design or carried out building work on residential strata are exposed to future proceedings to recover costs of combustible cladding removal.

Legal Update: State recovery rights confirmed

Chances are that many parties will be part of a long list or Respondents at the Victorian Civil and Administrative Tribunal or Defendants at the County Court of Victoria as the recovery efforts get underway to recover substantial costs that have been incurred to remove combustible cladding on Melbourne buildings.

As background, the recent case of State of Victoria v L.U. Simon Builders Pty Ltd [2025] VSCA 52 provided an important clarification on the State’s rights to recover those costs from the builder.

The Court’s decision is in support of the State’s right to recover under section 137F of the Building Act 1993 (Vic) after making payments to the OC both for itself and on behalf of individual lot owners. This entitles the State to be subrogated to the rights of both the OC and the individual lot owners.

What this means for the industry

This is significant news for builders, professional indemnity insurers, government lawyers in addition to owners corporations because future proceedings can now likely be expected and pursued and preparations may now be made to deal with same.

Given the substantial delays at the tribunal and the prospect of proceedings to be filed at the County Court where a commonwealth legal issue arises, I would not be surprised to see a surge in residential strata building disputes.

Higher stakes in strata disputes

The unique issue with domestic building works in residential strata as opposed to single dwellings is that the loss claimed can be far higher and into the many millions. There can be extreme lists of multi-party defendants and respondents given the works conducted are akin to commercial buildings and therefore the legal strategies differ.

If you are seeking advice on the unique issues arising under defects related to strata reach out to our office. Our team continues to scale and have capacity in this specialist area.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• building law
• insurance law
• litigation
• professional liability
• property disputes
• regulatory compliance