On the early morning of 25 November 2014, a sole unextinguished cigarette on a balcony started a fire that consumed the side of the LaCrosse Apartments, caused an evacuation of some 500 people, and led to a claim for $24 million in damages. In the first decision regarding the fire, the builder avoided liability. Instead, the building surveyor, architect and fire engineer were each held liable, to varying degrees.
12 March 2019
The Victorian Civil and Administrative Tribunal handed down the first decision on the highly publicised LaCrosse Apartments fire, finding Gardner Group Pty Ltd (the Building Surveyor), Elenberg Fraser Pty Ltd (the Architect) and Thomas Nicolas (the Fire Engineer) all proportionately liable for the damage caused by the fire.
In coming to this conclusion, Judge Ted Woodward found that the aluminium composite panels (ACPs), which were used as part of the external walls of the LaCrosse Apartments, were combustible within the meaning of the National Construction Code (NCC) and fell short of the NCC performance requirements.
Despite finding that the use of the ACPs meant that LU Simon Builders Pty Ltd (the Builder) had “breached the warranties of suitability of materials…implied into its Design and Construct Contract”, Judge Woodward held that the Builder did not fail to exercise reasonable care when installing the non-compliant ACPs and was therefore not liable for the damage caused by the fire, as:
- the development was a “large and complex project”; and
- the Builder “sought to cover acknowledged shortcomings in its own expertise by engaging highly skilled professionals” (being the Building Surveyor, the Architect and the Fire Engineer – who all approved the use of the ACPs).
It was ordered that the $5.75m in damages payable by the Builder to the owners was to be apportioned in the following proportions:
- 33% to the Building Surveyor;
- 25% to the Architects; and
- 39% to the Fire Engineer.
The remaining 3% was apportioned to the resident whose cigarette butt started the fire, however as no judgment was sought against the resident, no orders were made against the resident.
Importantly, the $5.75m in damages related only to the costs of reinstating the building to its pre-fire state and additional insurance premiums. Additional claims totalling approximately $6.8m (mostly for the replacement costs for the non-conforming building products) are still yet to be resolved.
Whilst the Builder effectively escaped liability in this case, the outcome may have been different if the building had been constructed in a different jurisdiction. For example, in Queensland, the Queensland Building and Construction Commission Act 1991 (Qld) was specifically amended in 2017 to place additional duties on each person in the chain of responsibility (including the person who installs the product) to ensure that, so far as reasonably practicable, a building product is not a non-conforming building product.
Regardless of the jurisdiction, this decision serves as a stark reminder for all industry participants of the potential consequences for failing to exercise reasonable care when ensuring that all aspects of a project satisfy the relevant NCC requirements.
We recommend that all participants in the building and construction industry remain mindful of their obligations under the NCC in order to avoid the risk of being held liable for any non-compliant works.
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