20 Nov Controversy: Lacrosse Dockland court findings lets the Property Developer off the hook!
Does the court really understand what a property developer is? Letting the developer off the hook in this life threatening event is not doing future apartment owners a service. Dr Drane of Expert Triage provides a background to how property developers operate and how they remain invisible.
The Lacrosse Dockland fire preceded the Grenfell fire by 3 years (see chronology gallery below) and yet it heralded all the hallmarks of the same malaise in the High Rise Multi-Apartment development sector that have since been revealed across numerous cases, some of which are tragic.
Apartment owners were apparently oblivious to the fire rampaging up the side of the building and 450 to 500 residents were effected. (See Melbourne City Councils Report on the tower fire)
The fire was evidently caused by a cigarette on a balcony, lit and flicked by a tenant which then led to the conflagration through the ACP panels which are what I term similar to a ‘petrol sandwich’.
ACP or Aluminium Composite Panel which by the way is no stranger to the construction world with the likes of Alucabond which has been used effectively across many commercial office towers over the decades. It is basically a sandwich panel with aluminium panels as the bread and polyethylene as the filling.
The court however only allocated 3% of the liability to that action and 97% to the builder LU Simon.
The court also then redistributed the liability from the builder to their key consultants : The architect (25%), the building surveyor (33%) and the fire engineer 39%. See article.
Was the builder let off the hook?
What is extraordinary is the fact that the D&C builder though predominantly liable was allowed to recoup this loss through the consultants as part of the ruling. Is this not a signal to other D&C builders that they enjoy the equivalent of an ‘underwriting’ of liability?
Of greatest significance however is the staggering lack of reference to the actual property developer and their liability. To quote lawyers Holding Redlich article dated 18 March 2019:
‘It will be interesting to see if the NSW tribunal and courts adopt a similar approach to apportionment, noting that the NSW landscape includes s.18C of the HBA by which developers owe the same statutory warranties as the builder’
Source: Australia: Residential Focus: Lacrosse tower decision, 18 March 2019 by Christine Jones and Divya Chaddha, Holding Redlich:
Letting the developer off the hook: The Property Developer and the Sacrificial Vehicle
Reading further into this case articles it is found that the property developer is ‘675 La Trobe Street Pty Ltd’ which is likely to be a ‘project specific development entity’. Such an entity is created to quarantine risk spreading to the wider property developer organization. These are in fact ‘sacrificial’ in nature and often result in what are also called ‘phoenix companies’ which ‘rise from the ashes’ of the failed development.
The court is surely aware of this situation, but to be fair it is early days in the evolution of legislation across the building landscape across the Federal system.
Dr Jonathan Drane
5 August 2021