The Lacrosse Apartment Fire: Obtaining Justice for Dangerous Cladding

The Lacrosse Fire and its significance in Australia and the United Kingdom

On 24 November 2014, an incorrectly extinguished cigarette ignited with the timber top of a balcony of the Lacrosse residential apartment tower in Melbourne, Australia. The fire quickly spread to the nearby external aluminium composite panel (“ACP”), which contained a 100% highly combustible polyethylene core. Polyethylene has a high calorific content, fuelling a fire upon ignition.

The Lacrosse apartment fire was one of several prominent events exposing the dangers inherent in highly combustible composite cladding that foreshadowed the 2017 Grenfell Tower fire in London. The litigation that followed the Lacrosse apartment fire offers a valuable comparator to events and proceedings in the United Kingdom. This post discusses the recent Court of Appeal decision by the Supreme Court of Victoria concerning who should be held liable for defective cladding.

The First Instance Decision

Following the fire, the owners’ corporation and the owners of individual apartments (‘the Owners’) commenced proceedings in the Victorian Civil and Administrative Tribunal (“VCAT”). The Owners claimed damages in excess of $12 million against the builder, LU Simon Pty Ltd, and the design consultancy team (including the architect, the fire engineer and the superintendent under the building contract). The builder, in turn, claimed an indemnity against the design consultants.

The first instance decision, Owners Corporation No.1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property), is discussed by the current authors here. The VCAT observed that the ACP did not satisfy the relevant provisions of the Building Code of Australia (“BCA”). It followed that the builder had breached contractual warranties implied into its Design and Construct Contract by the Domestic Buildings Contracts Act 1995 (Vic.) concerning the suitability of materials, compliance with law (including the BCA) and fitness for purpose.

The VCAT also held that the building surveyors, architect, and fire engineer had breached their consultancy agreements, by failing to exercise due care and skill in the provision of their services. As a result, they were concurrent wrongdoers under the Wrongs Act 1958 (Vic.). On the other hand, the builder had not failed to take reasonable care. The practical result was that the builder was required to pay damages in full to the Owners but was, in turn, indemnified by the architect (33%), building surveyors (25%) and fire engineer (39%), leaving only a 3% liability that was attributed to the smoker’s responsibility (in respect of which the builder had not sought to recover).

The VCAT decision was significant, sending “shudders through building industry consultants and governments” and resulting in, among others, a ban on the use of ACP.

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The Appeal

The design consultants sought leave to appeal on 11 grounds to the Victorian Court of Appeal (Beach, Osborn JJA and Styne AJA). On 26 March 2021, the court handed down its much-anticipated decision in Tanah Merah Vic Pty Ltd v Owners' Corporation No 1 of PS631436T [2021] VSCA 72 (“the Lacrosse Appeal”), dismissing 10 out of the 11 grounds. Most of the grounds related specifically to the operation of the Wrongs Act (and the one successful ground was limited to a specific deficiency in the VCAT’s reasoning). The Court of Appeal did, however, make useful observations regarding the builder’s reliance on its design consultancy team as well as the application of the Bolitho test to construction professionals, which gives the court greater oversight over the standard expected of a professional even if they acted in accordance with an accepted body of professional opinion.

Reliance on design consultants

The consultants submitted that the builder had failed to take reasonable care in identifying, checking and confirming that the ACP chosen was compliant with the BCA, and the obligations by the imposed Building Act 1993 s.16 (Vic.). According to the consultants, it followed that the VCAT had erred in apportioning practically all of damages to them.

The court reiterated the VCAT’s finding that the builder’s use of ACP with a polyethylene core was in breach of the Domestic Buildings Contracts Act 1995 and the BCA. However, the court proceeded to hold that the builder had taken reasonable skill and care, as inter alia they: were unaware of the fire risks associated with ACP; had relied upon the consultants to ensure compliance with the BCA; were not responsible for the design; did not draft the specification; there was no expert evidence from any party to the effect that the builder did not act reasonably or in accordance with what would be expected of a reasonably competent builder in the circumstances of the case; and had engaged highly skilled consultants. In practical terms, the Court of Appeal affirmed that the builders were entitled to rely on its consultancy team’s (albeit wrong) advice.

Peer Professional Opinion and the Bolitho test

Within the building surveyor profession at the time of the construction of the Lacrosse building it was considered to be acceptable to use combustible ACPs on high-rise residential buildings. The appeal court had to decide if the VCAT had erred in finding this peer professional opinion was ‘unreasonable’.

The Wrongs Act 1958 (Vic.) 1959 s.59 sets out the relevant standard of care for professionals, providing that a professional is not negligent if they act “in a manner that (at the time the service was provided) was widely accepted in Australia by a significant number of respected practitioners in the field (peer professional opinion) as competent professional practice in the circumstances” (s.59(1)); however, “peer professional opinion cannot be relied on for the purposes of this section if the court determines that the opinion is unreasonable.” (s. 59(2)).

This is substantially a statutory enactment of the English House of Lords decision in Bolitho v City and Hackney Health Authority (“Bolitho”). A design consultant will typically be judged by the standards of a reasonably competent practitioner of the relevant discipline. If, therefore, an architect or other design professional acts in accordance with the practice of a responsible body of architects, they would not be liable in negligence, even if there was a body of competent professional opinion which held that he was at fault. This test was established in Bolam v Friern Hospital Management Committee (“Bolam”), and has subsequently been applied in construction professional negligence cases. In Bolitho, Lord Browne-Wilkinson qualified this test: if the court considered that there is no logical basis for the body of opinion in accordance with which the defendant acted, then the court is entitled to find that the defendant was negligent. The relevance of Bolitho to construction disputes was recognised by the English Court of Appeal in Michael Hyde & Associated Ltd v JD Williams & Co Ltd, but it is difficult to find instances in which it forms the basis of a finding of negligence by the court.

The VCAT had held that the practice of issuing permits for the use of ACP with a polyethylene core was widely accepted in Australia by a significant number of respected practitioners in the field. The VCAT then proceeded to observe that the practice was, however, unreasonable, and did not withstand logical analysis, due to the combustibility of the polyethylene core in ACP. It recorded the following at [396]:

“…the evidence internationally of fire hazards associated with ACPs was developing long before 2010. And concerns over their combustibility were being openly discussed in Australia by then, if not earlier. Even a casual enquiry of fire engineers at around this time is likely to have revealed these concerns.”

The Court of Appeal in the Lacrosse Appeal noted that:

“244 […] the question whether an opinion is unreasonable is ultimately a question of fact. It is obviously open to conclude that an opinion is unreasonable if it lacks a logical basis (in the sense of a rationally defensible basis) but the ultimate question is simply whether in all the circumstances of the case the opinion was unreasonable.”

In the Lacrosse Appeal, the Court of Appeal concluded that the VCAT was correct to hold that the acceptance of the relevant practice was unreasonable within the meaning of s.59 of the Wrongs Act 1958 (Vic.). The reasoning of both the VCAT and the Court Appeal, making direct reference to English and Australian case law, is a powerful illustration of the application of the Bolitho test in fire safety cases, and construction law more generally.

A slow process

The Lacrosse fire occurred in 2014. The first instance decision was not handed down until 2019. The first appeal was decided in 2021. There remains the possibility of an appeal to the High Court of Australia. This case serves as a stark reminder of the long and exceedingly costly process residential owners face to obtain a remedy for dangerous buildings. This is but one instance of the painful and unacceptable delays involved in obtaining justice for the victims of dangerous cladding.

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How to cite this blogpost (Harvard style): 

Sawtell, D. and Maxwell, D. (2021). The Lacrosse Apartment Fire: Obtaining Justice for Dangerous Cladding. Available at: https://www.law.ox.ac.uk/housing-after-grenfell/blog/2021/04/lacrosse-apartment-fire-obtaining-justice-dangerous-cladding (Accessed [date])