Owners of two high rise residential buildings covered in flammable cladding have won a court bid to have insurer AAI Insurance, trading as Vero Insurance, included as a party in their damages case. 

Strata Plan No 91086, the owners corporation of the properties in Warwick Farm, NSW, commenced proceedings against Fairview Architectural which manufactured and supplied the panels. The buildings at the centre of the case are 15 and 16 storeys high and contain 185 apartments. They were built between 2013 and 2015. 

They alleged that Fairview supplied panels which were not “merchantable or acceptable quality” under Australian consumer law. 

The owners wanted compensation for loss or damage arising from the supply of the Vitrabond panels, including the costs of the removal of the panels and the remediation of the buildings. 

Because Fairview was placed in voluntary administration in 2020 the owners looked to AAI, which provided liability insurance coverage for Fairview during the time the panels were affixed, to be a party to the case. 

In a Federal Court hearing last September which was the subject of a July 20 ruling by Justice Michael Higgins, the owners sought to amend the statement of claim to have AAI Insurance joined in the case as the second respondent. 

Justice Higgins ruled that “it is at the very least arguable that AAI’s policies respond to Fairview’s claim in respect of the compensation it may be found liable to pay owners arising from the affixation of defective Vitrabond panels to its buildings”. 

“On the basis of the evidence currently before the court, I am satisfied that Fairview’s claim could properly be characterised as a claim in respect of amounts which it might become liable to pay as compensation in respect of ‘property damage’ happening during the period of insurance and caused by an ‘occurrence’.” 

Fairview used two types of Vitrabond panels. PE panels include a core of approximately 100% polyethylene, a highly flammable and combustible synthetic thermoplastic polymer. Vitrabond FR panels had an advertised core of approximately 30% polyethylene, though owners allege that the actual polyethylene content could vary up to 45% to 50%.  

The Vitrabond panels were affixed to the buildings by what is known as the "flat stick" method. That involved the installation of horizontal and vertical metal strips known as "top hats" onto the building structure. The owners outlined that the removal of the cladding would result in extensive damage to the properties. 

In June 2019, the owners commenced a case against Fairview on behalf of owners or people with a leasehold interest in a building fitted with Vitrabond panels which had been supplied between June 2009 and June 2019.  

The proceedings will be listed for further case management on August 16, 2023.