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Victorian Appeals Court finds for builders in Lacrosse cladding case

Posted on : Monday, 29 March 2021

After a month's deliberations, Victoria's Supreme Court of Appeal has agreed with a lower court finding that builders LU Simon should not be held accountable for $12m in damages caused by combustible cladding that it installed on the Lacrosse building. 


The ruling upheld the Victorian Civil and Administrative Tribunal (VCAT) finding that the fire engineer (Thomas Nicholas), building surveyors (Gardner Group), and architect (Elenberg Fraser) were liable for the aluminium composite panels (ACP). 


In November, 2014, the panels used on the building were ignited by a cigarette on the eight-floor balcony and the resultant fire raced up to the 21st floor in just 10 minutes - it only stopped because it reached the top of the building. 


The ACP was found in a report not to prevent the spread of fire to the degree necessary, and as such were in breach of the Building Code of Australia (BCA).  The report also declared that 'simultaneous internal fire ignition events over multiple floors are simply an unacceptable fire safety solution for a residential high-rise building, or any other occupiable building for that matter.' 


The case triggered a crisis in the construction industry, significantly restricting the availability of professional indemnity insurance. 


Governments also acted to introduce policies banning ACP, leaving building residents facing considerable rectification costs for removing flammable façades - the impacts of those policies are still being felt. 


The court's ruling is not likely to ease these pressures on practitioners any time soon. 


In its earlier ruling, VCAT held that the LU Simon was not accountable because it relied upon the advice of its consultants when it installed the panels. 


While the appeals court agreed that the builder had breached the implied warranty of Victoria's Domestic Building Contract Act, and part of the Building Act, by constructing a non-BCA compliant building, it found the builder not to be negligent under the Wrongs Act


The case means that the builder is not liable for the damages bill, which was predominantly allocated by VCAT to Gardner Group (33%), Thomas Nicholas (39%), and Elenberg Fraser (25%). 


The three consultants and their insurers will now have to seek leave to appeal to the High Court, if they wish to challenge the appeals court's ruling.