Apartment owners have been awarded more than $5.7 million in damages following the 2014 flammable cladding-fuelled fire at Melbourne’s Lacrosse building – including $700,000 for spiralling insurance premiums.
The owners launched legal action against builder LU Simon, claiming more than $12 million to cover replacement of non-compliant cladding, damaged property and soaring insurance costs.
In the Victorian Civil and Administrative Tribunal yesterday, Judge Ted Woodward ordered LU Simon to pay $5,748,233 to the apartment owners.
But he also ruled the vast majority of that sum would be paid to LU Simon by the project’s architect, fire engineer and building surveyor, who were in breach of contractual obligations.
The owners claim non-compliant Alucobest cladding on the building “significantly increased the premiums payable under the owners corporation’s strata insurance policy”.
They say they have already paid out more than $534,000 in additional premiums and faced another $167,000 for the coming year.
“I award the owners the full amount of their claim in respect of additional insurance premiums totalling $701,270,” Judge Woodward said.
As previously reported by insuranceNEWS.com.au, thousands more buildings across Australia are believed to carry flammable aluminium composite panels (ACPs), and building ministers have agreed in principle to ban such materials in new construction projects.
However, Judge Woodward stressed his findings were based purely on the circumstances of the Lacrosse building, which has 4000 square metres of ACPs with a 100% polyethylene core on external walls and unsprinklered balconies.
He says the judgment “should not be read as a commentary generally on the safety or otherwise of ACPs and their uses”.
“There may well be particular applications (such as for signage or decorative features) where ACPs, even with a 100% polyethylene core, can be compliant, including where made subject to an appropriate performance-based solution under the [Building Code of Australia].
“ACPs with a lower polyethylene content may be suitable for more general applications. That is a matter for regulators and building engineering experts.”
However, international fire safety expert Jonathan Barnett, the MD of fire engineering firm Basic Expert, toldinsuranceNEWS.com.au the judgment is a positive outcome for owners.
“This says to builders that if you take advice from experts you may find that you are not negligent if something goes wrong,” he said.
“It gives builders a way out – they can rectify problems and recover the costs.”