Apartment owners in Australia's first-ever combustible cladding class action say Alucobond supplier Halifax Vogel Group and manufacturer 3A Composites should replace the combustible panels on their Dolls Point building and pay compensation for costs such as higher insurance premiums.
Lead applicants in
the case, backed by litigation funder IMF Bentham and represented by William
Roberts Lawyers, argue that the polyethylene-core panels failed to meet
standards set by consumer protection laws and carried a "material
risk" of causing or spreading fire, and increasing the risks to life or
property in the event of a fire at their southern Sydney building.
The argument by
owners of the 17 apartments sidesteps debate about the panels' compliance with
the building code, a key feature of last year's
ground-breaking Lacrosse case in which apartment owners sought damages from builder LU Simon.
"What we
allege is that the product was unsafe, and not fit for purpose," said
IMF Bentham investment manager Gavin Beardsell on Monday.
"No doubt
within that the argument's about whether at the relevant time the product in
question complied with the Building Code of Australia, but that is not the
ultimate issue we have to prove."
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While consumer law
has long given individual consumers a means of redress for defective products
against manufacturers with whom they have no direct relationship, it is the
first time the law has been used to bring a claim in relation to combustible
cladding.
A judgment, or settlement
prior to judgment, could give the compensation to owners of potentially
thousands of apartments across Australia, as well as owners of commercial and
government buildings and even long-term leaseholders with the obligation to
rectify defects.
The statement of
claim filed in the Federal Court shows owners in the four-level Shore building
at 172-174 Russell Avenue argue that Alucobond PE-core cladding was "at
all material times" a good acquired for consumption under Australian
Consumer Law and was, accordingly, subject to ACL guarantee that it be of
acceptable quality.
A further argument
made by the owners of the building completed in 2012 is that the panels used on
the building were not of "merchantable quality", that is, not
fit for the purpose for which they were sold, under the Trade Practices Act.
HVG chief executive
Bruce Rayment did not respond to a request for comment on Monday.
Shores Dolls Point,
developed by a company called Prestige Apartments Australia, was completed in
2012. In December 2013, a 148-square-metre two-bedroom apartment sold for
$930,000, 15 months after it sold off-plan for $800,000, records show.
The case is still
at early stages. The applicants are still going through the processes of
serving papers on Osnabruck, Germany-based 3A Composites.
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Halifax Vogel,
represented by Quinn Emanuel Urquhart & Sullivan lawyers, was only required
to file a defence and an initial tranche of Alucobond-related marketing
materials, along with an affidavit as to what other relevant documents were
discoverable, to the Federal Court earlier this month.
Mr Beardsell said
his side was unlikely to disclose the identity of other applicants joining the
class, as owners did not generally want to make it public that their building
had combustible cladding.
"One benefit
of being in this class action is your identity is not known or disclosed
as a group member," he said.
The class isn't
only open to owners of private buildings, but to government and other public
owners. These entities have to explicitly opt in to any action, unlike private
building owners who were all accepted unless they opted out.
William Roberts
Lawyers principal Bill Petrovski said he was not at liberty to say if any
public entities had opted in to the action.
Source:https://www.afr.com/real-estate/residential/combustible-alucobond-cladding-not-safe-under-consumer-law-20190422-p51g3g
Jason Gwerder
Wednesday, 24 April 2019
