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Lacrosse tower cladding fire – Consultants burnt and builder walks (nearly…)

Owners Corporation No.1 of PS613436T, Owners Corporation No. 2 of PS613436T, Owners Corporation No. 4 PS613436T & Ors v LU Simon Builders P/L, Stasi Galanaos, Gardner Group & Ors [2019] VCAT

After a six-week hearing ending in October 2018, his Honour Judge Woodward, Vice President of the Victorian Civil and Administrative Tribunal, last week handed down his decision regarding the liability of various parties for their involvement in the fire at Melbourne’s Lacrosse tower, which had heralded the start of the ‘combustible cladding crisis’ across the Victorian building industry and led to multiple enquiries involving the Victorian Building Authority, Local Councils and State Government, as well as a great deal of uncertainty within the general insurance and construction communities.

The decision itself confirmed the position that the implied warranties specified by the Domestic Building Contracts Act 1995 (Vic) (DBCA) in relation to suitability of materials, fitness for purpose and compliance with the law involve no requirement for the exercise of reasonable care on the part of the builder and as such are not apportionable under s24AH of the Wrongs Act 1958 (Vic) (Wrongs Act).

The builder LU Simon was found to have breached those warranties, which had been implied into its Design and Construct Contract (the D&C Contract) and therefore primarily liable to the 211 applicants comprising the Owners in the proceeding. However, it was also specifically found that the builder had not failed to exercise reasonable care in the construction of the Lacrosse tower by installing combustible aluminium composite panels with a core containing polyethelene (the ACP cladding).

His Honour then went on to find that:

(a) each of the fire engineer, building surveyor and architect (whose consultant agreements had each been novated by the original developer to LU Simon) had breached their consultant agreements by failing to exercise due care and skill; 
(b) the failure to exercise reasonable care by each of the fire engineer, building surveyor and architect was a cause of the harm to LU Simon resulting in its breach of the D&C Contract; and
(c) each was a concurrent wrongdoer within the meaning of s24H of the Wrongs Act, and that, on this basis, 97% of the damages payable by LU Simon to the Owners were apportioned as between the consultants in the following proportions:

1. Building surveyor (33%)
2. Architect (25%)
3. Fire engineer (39%)

The occupant whose cigarette had started the fire was found to be a concurrent wrongdoer and 3% liable for the damages. However, as no party had sought judgment against him, there was no order against him, leaving LU Simon to pick up the shortfall. 

No adverse finding was made against the tenant of the apartment involved in the fire as there was no evidence to support a finding that storage of items on the balcony had contributed to the ignition of the ACP cladding.


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