The fallout from official findings on the cause of last year's Lacrosse apartment fire in Melbourne's Docklands precinct have left the strata industry in a panic.

The strata industry may soon find itself compelled to make exorbitant outlays for the replacement of sub-par cladding installed on apartment exteriors, in the wake of a fire disaster that was expedited by the use of non-compliant materials.

Melbourne’s Metropolitan Fire Brigade (MFB) released a report last week concluding that combustible cladding materials were behind the spread of last year’s apartment fire in the city’s Dockland’s precinct.

An unextinguished cigarette left on an apartment balcony was found by the MFB to be the initial cause of the blaze, igniting flammable materials that had been stored on the balcony.

The building’s external wall cladding subsequently caught fire, causing a blaze to spread vertically from the sixth floor to the topmost 21st floor.

Testing conducted by the CSIRO in mid-April on behalf of MFB found that the Alucobest cladding material installed by building company LU Simon failed to comply with high-rise combustibility requirements.

The Victorian Building Authority has launched an investigation into construction company LU Simon as well the building surveyor, and plans to investigate the usage of non-compliant cladding in other locations within the state.

The scandal also threatens soon embroil Pan Urban, one of the main players behind the apartment complex, with reports that Morry Schwartz’s property development vehicle faces potential litigation over the installation of the flammable cladding.

The potential fallout of legal action in relation to the Lacrosse apartment fire has left the strata industry in a panic, due the heavy costs that could be incurred by the replacement of external cladding materials, or even industry-widespread litigation.

Strata Community in Australia – the country’s peak body for the strata management industry, has pointed out that tens of thousands of lots around the country could be affected by the threat of legal action over flammable cladding, with owners potentially incurring “exorbitant” costs in relation to replacement work.

Law firm Slater & Gordon is mulling the launch of a class action on behalf of the owners of units in the apartment complex, with Ben Hardwick, national practice group leader of commercial and project litigation, pointing to the possibility of litigation throughout Australia should the use of illegal building materials be as widespread as feared.

Members of industry report that the use of combustible non-compliant cladding – in particular cheaper products with plastic cores – is rife within apartment construction throughout Australia due to cheaper cost. The installation of sub-par cladding manufactured in China is believed to be especially common within the Melbourne and Sydney building sectors.

SCA has advised body corporates and owners to conduct prompt inspections of building exteriors to determine whether or not their cladding leaves them vulnerable to legal action.