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Appeal court supports Lacrosse damages decision

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The Victorian Court of Appeal has largely upheld a landmark decision on the payment of damages by consultants after the cladding-fuelled fire at Melbourne’s Lacrosse building.

The initial Victorian Civil and Administrative Tribunal decision ordered builder LU Simon to pay more than $5.7 million in damages to apartment owners, but with the liability passed down and divided between the consultants on the project.

Building surveyors Gardner Group were allocated 33%, architects Elenberg Fraser 25% and fire safety engineers Thomas Nicolas 39%, prompting an appeal application from the three firms.

“None of the proposed grounds of appeal argued by Thomas Nicolas or Elenberg Fraser have any real prospect of success. Their applications for leave to appeal must, accordingly, be refused,” Justices David Beach, Robert Osborn and Kathryn Stynes said in a decision on Friday.

The court came to similar conclusions for Gardner Group but granted leave to appeal on one of its grounds.

Weir Legal and Consulting MD Bronwyn Weir says if that ground for appeal is successful, the end result might be a change in the percentages apportioned between the consultants.

The cladding issue has triggered professional indemnity exclusions, withdrawal of cover and soaring premiums for specialists in the building sector, including fire safety engineers, architects and building surveyors.

Wotton + Kearney, which acted for the owners corporation and lot owners, says fires caused by the highly combustible aluminium composite panels (ACP) cladding have captured attention worldwide.

“This appeal upholds the first decision in Australia dealing with the allocation of responsibility to the builder, and thereafter to building consultants, engaged to construct a domestic high-rise building with combustible ACP cladding,” the firm says.

“The appeal decision has major implications for insurers of construction professional indemnity, as well as for the construction industry more broadly.”

The fire was ignited by a cigarette butt left in a plastic container on the balcony by a person staying in the apartment. He was apportioned 3% of the damages responsibility, but no order was enforced against him in the initial decision.

The Court of Appeal decision is available here.