The builder behind the infamous Lacrosse apartment towers has largely escaped liability for the 2014 fire which raced up building because of flammable cladding.

The Supreme Court of Victoria Court of Appeal has held largely dismissed an appeal against a 2019 decision handed down in the Victorian Civil and Administrative Tribunal (VCAT) which held that it was the architect, the building surveyor and his employer and the fire engineer along with one resident rather than the builder who shared in responsibility for damages which resulted from the fire.

As a result, builder LU Simon has escaped liability for all of the damages which have been awarded bar the thee percent which have been apportioned to the resident (see below).

In its judgement, the court dismissed ten of the eleven potential grounds for appeal which were raised by the appellants, saying that only one had any realistic prospect of success and would be heard.

That final matter relates to the apportionment of liability between consultants and does not impact the builder.

“For the reasons set out below, we have concluded that none of the challenges to the Tribunal’s Reasons which are raised by these issues have any real prospect of success save for the question raised by issue 10,” the Court’s judgement read.

The case originated after extensive damage was caused to the Lacrosse building in Melbourne’s Docklands which started on the eighth floor ripped up the side of the building via the building’s cladding in the early hours of November 24.

The fire broke out on the balcony of apartment 805 after a cigarette smoked by resident Jean Franciois Gubitta was not completely extinguished and was instead left in a plastic container which was sitting on top of a table with a timber top on the balcony of the apartment.

The fire spread from the container to the table and then to the building’s nearby external cladding.Once reaching the cladding, it raced up the cladding and onto the balcony at each level – rising up thirteen storeys to the roof above the 21st floor within about twelve minutes after ignition.

The rapid spread of fire was caused by the installation of highly flammable cladding material which was constructed with an aluminium composite panel which contained a polyethylene core.

In response, 211 owners and owners corporations commenced action at VCAT against builder LU Simon and other respondents.

The owners were seeking compensation for damage caused by the fire along with the replacement cost of cladding which had not been damaged but was now recognised to constitute a significant fire hazard.

In 2019, the Tribunal upheld the owners’ claim against the builder and found that LU Simon had breached warranties concerning the suitability of materials, compliance with the law and fitness for purpose implied into its Design and Construct Contract (‘the D&C Contract’) and was therefore primarily liable to pay damages to the Owners.

However, it held that architect Elenberg Fraser, building certification company Gardner Group and fire engineer Thomas Nicolas had each breached consultancy agreements with to which they were parties with LU Simon, by failing to exercise due care and skill in the provision of their services.

The architect was held responsible for defects in its design which allowed for extensive use of the panels on the east and west facades of the building.

The building surveyor, meanwhile, had failed to exercise due care when issuing a permit for those plans whilst the fire engineer had failed to recognise and warn the builder that the ACPs which were proposed for use did not comply with the building code.

It also found that Mr Gubitta breached a duty of care he owed the Owners by failing to ensure that his cigarette was fully extinguished before leaving it in the plastic container.

Accordingly, it apportioned responsibility for the damages of 25 percent to Ellen Fraser, 33 percent to Gardner Group and 39 percent to Thomas Nicolas and ordered that each of these parties to reimburse LU Simon in respect of their share of responsibility.

Mr Gubitta was found to bear three percent of the responsibility, but the Tribunal determined that there would be no order against him as no party had sought judgement against him.

Accordingly, builder LU Simon was left to pay Mr Gubitta’s three percent share without receiving reimbursement from him.

All up, the amount of damages awarded was $5.7 million.

In separate applications, each of the three consultants sought leave to appeal.

All up, there were eleven grounds on which the application were based.

However, the Court rejected ten of the eleven grounds for appeal.

It has agreed to only one matter which relates to the apportionment of liability between consultants.

For builders, the decision is a welcome reprieve as it appears to confirm their ability to rely on advice from consultants in relation to technical matters with regard to specific products.

For consultants, however, it reinforces that there is unlikely to be any fast resolution to the crisis in professional indemnity products which has seen professional indemnity insurance premiums soar and insurers demand exclusions for cladding related matters in providing insurance.