Construction and Infrastructure case note: Court of Appeal finds in favour of landmark 2019 Lacrosse building decision

Apr 27, 2021

In late March 2021, judges Beach, Osborn JJA and Stynes AJA of the Supreme Court of Victoria Court of Appeal (Court of Appeal) handed down their decision in respect of the Lacrosse apartment tower fire in the case of Tanah Merah Vic Pty Ltd & Ors v Owners Corporation No 1 of PS613436T and Ors [2021] VSCA 72 (Lacrosse Appeal).

This decision followed the earlier landmark decision in February 2019 of the Victorian Civil and Administrative Tribunal (VCAT) in Owners Corporation No 1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286 (Primary Case).

Background

In November 2014, a fire broke out on the balcony of an apartment in the Lacrosse apartment tower building in Latrobe Street, Docklands.

The ignition source of the fire was an incompletely extinguished cigarette butt left in a plastic container by a person staying in the apartment, Jean-François Gubitta. The damage caused to the building and internal property damage was extensive and exceeded $12 million.

In February 2019, VCAT delivered its reasons for judgement in relation to the damage caused by the fire, determining that the builder, LU Simon Pty Ltd (LU Simon), had breached warranties concerning the suitability of materials, compliance with the law and fitness for purpose which was implied into the relevant construction contract and for this reason, the builder was primarily liable to pay damages to the owners

VCAT also determined that the relevant consultants and the Mr Gubitta were concurrent wrongdoers within the meaning of the Wrongs Act 1958.

VCAT then determined that the damages payable to the owners by LU Simon at first instance were to be apportioned between the consultants and Mr Gubitta as follows:

  • the building surveyor, Gardner Group: 33%
  • the architect, Elenberg Fraser: 25%
  • the fire engineer, Thomas Nicolas: 39%
  • Mr Gubitta: 3%.

In the Lacrosse Appeal, the relevant consultants sought leave to appeal the decision in the Primary Case.

Court of Appeal decision

In the Lacrosse Appeal, the relevant consultants submitted to the Court of Appeal, amongst other things, that VCAT had erred in concluding that the owners’ claims against LU Simon were not apportionable.

The proportionate liability regime is contained in Part IVAA of the Wrongs Act 1958 and section 24AF(1)(a) of the Wrongs Act 1958 relevantly provides that Part IVAA applies to a claim for economic loss or damage to property in an action for damages (whether in tort, contract, under statute or otherwise) arising from a failure to take reasonable care.

Following VCAT’s decision, the Court of Appeal agreed that the owners at trial of the Primary Case made no claim against LU Simon for failing to take reasonable care.

Having found in favour of the only claims made by the owners against LU Simon (which did not include a claim that LU Simon failed to take reasonable care), VCAT concluded (and the Court of Appeal agreed) that these claims were not apportionable within the meaning of Part IVAA.

In arriving at this decision, the Court of Appeal found that the terms in which a claim is framed is the starting point for deciding whether the claim is of the kind referred to in section 24AF(1)(a) of the Wrongs Act 1958.

Potential for further appeal

Notably, there were 11 grounds of appeal and all but one ground, which was raised by Gardner Group, were unsuccessful in the Lacrosse Appeal.

It is possible that the Court of Appeal’s decision will not see the end of this matter. Only time will tell whether the relevant consultants will apply to the High Court of Australia to seek leave to appeal.

Take home message

This decision highlights how parties may exclude the proportionate liability regime through carefully prepared claims and demonstrates how critical it is for those considering initiating legal proceedings to obtain legal advice from experienced lawyers, such as KCL Law.

More information

To learn more about the decision, or for advice, please contact Darren Cain, Principal Lawyer and Head of Construction and Infrastructure, on (03) 8600 8835 or dcain@kcllaw.com.au, or Dominic Brown, Associate, on (03) 8600 8851 or djbrown@kcllaw.com.au.

Author

This Construction and Infrastructure case note was authored by Dominic Brown, Associate.

Note: This update is a guide only and is not intended to constitute legal advice.

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