Background
The 2014 fire in the Lacrosse Apartments in Melbourne’s Docklands, was started by a cigarette butt being placed in a plastic container on one of the apartment’s balconies by a backpacker living in the apartment at the time. It resulted in hundreds of residents being evacuated and considerable damage to the building as the combustible cladding on the façade of the building contributed to the fire’s rapid spread.
Civil action in VCAT followed between the owners of the Lacrosse Apartments, the builder, the architect, the fire engineer and the building surveyor.
The VCAT decision was appealed and we now provide details of the Court of Appeal’s decision which was handed down recently. Details of the parties and the Court of Appeal’s decision can be found here.
Current legal position
The Court of Appeal delivered judgment in the Lacrosse matter on 26 March 2021. There was no division amongst Their Honours Justices Beach, Osborn and Stynes who delivered a unanimous decision. Both the architect and the fire engineer were unsuccessful on all appeal grounds.
The building surveyor was unsuccessful in respect of four of its five grounds. It was granted leave in respect of one ground which was the trial judge’s finding that in failing to detect an error in the Fifth Fire Engineering Report (FER), it missed an opportunity to address the ACP issue and that this was causative of some of the loss.
The Court of Appeal found that the trial Judge erred in relying on this error because even if the building surveyor drew the matter to the attention of the fire engineer it would not have resulted in any change in the design.
There is now a further question that needs to be answered being whether any adjustment should be made to the apportionment of liability between the building surveyor (33%), the architect (25%) and the fire engineer (39%).
At the Directions Hearing on 31 March 2021 all parties agreed that the question of any reapportionment arising from the Fifth FER Appeal Finding should be determined by the Court of Appeal.
The Court of Appeal were not in a position to hear submissions on re-apportionment and decided that the appropriate course was for the parties to file written submissions with a view to the matter being listed for further hearing in May 2021. A timetable has been agreed between the parties for the filing of written submissions and submissions in response.
We will report further sometime after May 2021, when the Court of Appeal has considered the question of re-apportionment.
What does this mean for Architects and the Insurance Industry?
The spotlight is now on the importance of product specification and compliance, with all consultants having a responsibility in this regard.
Claims resulting from non-compliant cladding products have dealt a devastating blow to the insurance industry and as a result, obtaining Professional Indemnity Insurance has become much more problematic and is proving quite difficult for certain professionals. In addition, most PI insurers are now routinely applying much broader exclusions to the PI Insurance policies they offer Construction Professionals, premiums are on the rise and, in some instances, we have seen PI Insurers simply refuse to offer terms to certain professionals either because of the nature of their work, their claims history or both.
Planned Cover and our Risk Managers from informed by Planned Cover will keep you updated on further developments, but in the meantime please speak to your Account Manager if you have any concerns.
