Lacrosse Apartment Melbourne – The first Australian ACP cladding fire

CJK Fire & Safety Engineering

In this article we review the 2014 Lacrosse apartment fire – the background, case, liability and appeal.

The fire

Jean-Francois Gubitta was a French backpacker in Australia on a working holiday. He had moved into Apartment 805 of the 23 storey Lacrosse apartment tower at 673-675 La Trobe Street, Melbourne about three weeks prior to the fire and lived in this 2 bedroom apartment on level 8 with 5 other people.

On Monday 24 November 2014, Mr Gubitta returned home from work and went out onto the balcony to check if his clothes were dry and to have a smoke. He butted his cigarette out in the plastic container they used as an ashtray, on top of a timber topped outdoor table. Although he said he heard a “psh” sound because there was water, the cigarette did not go out.

A fire started from the container and spread to the table, A/C unit and a cardboard box until it finally spread to the cladding on the external façade of the building. The flame degraded the aluminium sheet and exposed the highly flammable polyethylene core. From here it quickly travelled up the vertical wall to the balconies above. Embers and fire residue also fell down onto the balcony of an apartment below.

At 2:23am, a smoke detector in the hallway outside the apartment front door activated and sent an automatic alarm to the Metropolitan Fire Brigade. It was later found that there was a single smoke detector inside the apartment but it had been covered with aluminium foil. When the first fire crew arrived on the scene at 2:29am, the fire was travelling rapidly up the cladding on the external wall and had spread onto the balcony on each level and was already at level 14.

Six minutes later, the fire had reached the roof of the tower.

The rapid fire spread compromised the Emergency Warning and Intercommunications System and fire crews had to individually alert the occupants of each apartment to ensure total evacuation. Approximately 450 to 500 people required immediate evacuation and emergency accommodation. Fortunately, there were no fatalities or serious injuries; a testament to the first responders and sprinkler system.

The fire resulted more than $12 million dollars in damages.

See the end of the article for the development timeline.

The case

Owners Corporation of PS613436T v LU Simon Builders P/L VCAT 286

The building’s Owners Corporation brought an action against the builder, LU Simon in the Victorian Civil and Administrative Tribunal. The hearing presided over His Honour Judge Woodward.

The Owner’s Corporation was made up of 211 applicants and they each argued that LU Simon had breached the warranties implied into the Design & Construct Contract by the Domestic Building Contracts Act (VIC) and that they were liable to pay damages. One of the warranties was that all materials that were to be supplied by the builder for use in the work would be good and suitable for the purpose for which were used.

They went on to say that if LU Simon was successful in shifting liability to the other parties, then those parties too would be liable to the Owners. As aforementioned, Gardner Group, Elenberg Fraser and Thomas Nicolas had all signed agreements making them liable to LU Simon.

Then began the blame game, as the surveyor, architect and fire engineer each in turn tried to shift liability back to LU Simon, relying on principles of proportionate liability. They alleged that LU Simon failed to take reasonable care in selecting and installing the Alucobest panels and that LU Simon should bear the majority share of any responsibility for damage suffered by the Owners.

The Fire Engineer

The Court found that Thomas Nicolas played the most important role in the Lacrosse project due to the fact that they were the primary consultant responsible for fire safety compliance under the Building Code of Australia. The Court said Mr Nicolas should have warned others that the ACPs proposed did not comply with the DTS provisions of the BCA.

The Judge noted that the statement in the FER regarding the deletion of sprinklers on the balconies was due to Thomas Nicolas’s lack of attention to the significance of the ACPs. Therefore, while in insolation, the statement was not a breach of the Consultant Agreement, his failure to assess and advise on the implications of the use of combustible ACP’s, was in breach of the Agreement.

The court did not accept that Thomas Nicolas had recognised the ACPs did not comply by simply making a passing reference in the FER. If they were fulfilling their contractual obligations, they would have, as a minimum, included it in the FER as a matter requiring an Alternative Solution or raised it in discussions with at least Gardner Group (or both). This meant that Gardner Group did not issue the Stage 7 Building Permit and LU Simon would not have constructed the Lacrosse tower incorporating the ACPs as specified by Elenberg Fraser.

The Building Surveyor

LU Simon’s claim against Gardner Group include issuing the Stage 7 Building Permit with the ACPs in the design, failing to identify deficiencies in the FER and failing to inspect the work during construction.

LU Simon also argued that Gardner Group was liable for not adding that the apartment balconies are not to be used for storage in the Essential Safety Measures in the occupancy permit. But it was found that there was no evidence to say that the cardboard boxes contributed to the ignition and subsequent spread of fire.

The Architect

The architect, Elenberg Fraser, tried to focus attention on LU Simon’s design responsibilities under it’s D&C contract. Elenberg Fraser initially specified the non-compliant ACPs in the T2 Specification and architectural drawings and never tried to correct this. They also failed to check whether the sample of Alucobest ACP actually complied with the BCA and was fit for purpose.

Both Elenberg Fraser and Gardner Group claim to have believed that the material was non-combustible and therefore raised no concerns.

The Liability

The Court agreed with the Owners’ submission that the Alucobest panels were obviously not ‘good or suitable’ for the purpose of being used on the external walls of a high-rise residential building.

The Judge found that although LU Simon did not fail to exercise reasonable care, they had breached the warranties implied into the D&C Contract by sections 8(b), (c) and (f) of the Domestic Building Contracts Act 1995, and so were found to be wholly responsible and liable. The Tribunal ordered LU Simon to pay a total of $5,748,233.28 to the Owners. This was to cover the reinstatement works and additional insurance premiums.

After establishing that LU Simon was liable to the owners, the Judge allowed LU Simon to pass its liability onto the consultants on account of their failure to fulfil their obligations with reasonable care. No evidence was given 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. This effectively absolved the builder of any blame by distributing the costs amongst the consultant team.

Whilst LU Simon was liable to pay damages to the owners, these damages were to be reimbursed by the other respondents. And so the three contractors were all held to have breached their consultancy agreements with the developer by failing to exercise due care and skill.

The Findings

It was found that Thomas Nicolas had breached their Consultant Agreement and did not exercise due care and skill by failing to conduct a full engineering assessment and failing to include the results of that assessment in the FER; and also failing to recognise that the ACPs did not comply with the BCA and failing to warn LU Simon and the other parties of this.

Gardner Group breached its Consultant Agreement and did not exercise due care and skill by issuing the Building Permit for Stage 7 and approving the Elenberg Fraser specification of ACPs; and failing to notice and query the incomplete cladding description given by Thomas Nicholas in the FER.

Elenberg Fraser breached its Consultant Agreement and did not exercise due care and skill by failing to remedy defects in its design that caused it to be non-compliant with the BCA and not fit for purpose; and failing to ensure the builder’s substitution of Alucobest ACP sample was complaint.

The judge distributed the damages payable as

  • Thomas Nicolas: 39%
  • Gardner Group: 33%
  • Elenberg Fraser: 25%

Mr Gubitta also owed a duty of care to the owners. However, his responsibility was confined to the balcony of apartment 805. He was allocated 3%, however no order was made against him, and LU Simon was not reimbursed for this proportion.

The Appeal

Tanah Merah Vic Pty Ltd v Owners Corporation No.1 of Ps613436t and Ors (Tanah Merah Vic Pty Ltd doing business as Thomas Nicolas)
Gardner Group Pty Ltd v Owners Corporation No.1 of Ps613436t and Ors
Elenberg Fraser Pty Ltd v Owners Corporation No.1 of Ps613436t and Ors

In July 2019 and again in July 2020, the Owners sent a Calderbank offer to each of the applicants for leave to appeal, in which they offered that each application be discontinued on the basis that each party bear its own costs. Neither were accepted.

In July 2020, LU Simon sent a letter to each of the applicants for leave to appeal, offering to pay the applicants a 10% contribution towards the damages awarded in favour of the Owners; a 10% reduction in the amount the applicants had each been ordered to pay the Owners;  and a 10% reduction in the costs they had been ordered to pay LU Simon. Elenberg Fraser and Thomas Nicolas both sought to accept the offer but Gardner Group did not.

Then on 26 March 2021, in separate applications, Thomas Nicolas, Gardner Group and Elenberg Fraser appealed the decision.

The court rejected all of the grounds of appeal by Thomas Nicolas and Elenberg Fraser, and all but one of the grounds of appeal by Gardner Group. This resulted in the damages payable by LU Simon to the Owners being redistributed as:

  • Gardner Group: 30% (a small win at 3% less than the original share)
  • Elenberg Fraser: Unchanged
  • Thomas Nicolas: 42% (which was 3% more than the original share)

This case has highlighted the importance of contracts and liability.

In Australia, there are still many buildings that were constructed with ACP cladding and so these cladding litigation cases will not be ending any time soon.


The building construction and contracts

The development timeline.

2007 The Lacrosse project commenced.

Gardner Group was engaged by the developer, Pan Urban, to provide regulatory advice and building surveying services.

The architect, Elenberg Fraser, was engaged by the developer in June.

In August, fire engineer, Thomas Nicolas, was engaged to provide fire safety engineering services.

The architect, Elenberg Fraser, proposed designs using Aluminium Composite Panels (ACPs) on the east and west façades of the tower as external cladding. ACPs consist of two thin aluminium sheets bonded together by a polyethylene core. They were originally designed for signage, they are durable, versatile, lightweight and can contribute to energy efficiency, weatherproofing and are visually appealing.

2008 In January, the fire engineer, sent out his preliminary draft fire engineering design brief, and in this document it noted that ‘External sprinkler protection to overhang and balconies etc not required’.

The brief did not take into account the east and west façades and it was claimed that they were not identified as a Deemed-To-Satisfy deviation. He argued that the brief was only based on what was included in the Gardner Group’s “Summary of Fire Engineering Issues”.

Although this brief was described as a preliminary draft, no final version was ever produced.

The Fire Engineering Report (FER) sent in March contained a Fire Suppression System table stated that – ‘Unless otherwise noted, external areas (e.g., balconies, eaves, overhangs etc.) which comprise non-combustible construction, need not be sprinklered’. The FER referred to ‘composite wall cladding – silver aluminium composite sheet’

No versions of the FER referenced ACPs and no one in the design team ever raised any questions about it.

In April, Elenberg Fraser issued the T2 Specification, which later formed part of the design for the Stage 7 Building Permit, which included ‘Composite metal panel wall and soffit cladding system indicative to Alucobond’.

2009 The project stalled due to the global financial crisis.

In August, the developer instructed Elenberg Fraser to split the project into two stages. The east tower was to be built in stage 1 and the west tower was to be constructed in stage 2.

LU Simon provided tenders for Stage 1 in September and October.

2010 In May, Property Development Solutions was formally retained to provide project management and superintendent services and LU Simon was awarded the Design and Construct Contract.

The Gardner Group’s initial fee proposal governed their project roles and responsibilities as the Building Surveyors until the Gardner Group Consultant Agreement with the Builder, LU Simon, was signed in early 2010. This meant they were contracted by LU Simon to ensure that the design and materials used in the construction of the building complied with the BCA.

Later this year, Elenberg Fraser and Thomas Nicolas each signed Consultant Agreements and Deeds of Novation that largely followed the same terms as the Gardner Group Consultant Agreement, making them liable to LU Simon.

These agreements meant that all three parties, were liable to LU Simon.

2011 In February, Thomas Nicolas contacted the Metropolitan Fire and Emergency Services Board (MFB) with architectural drawings for approval. Although the drawings refer to aluminium composite sheets, the report only said precast panel wall systems. The MFB report carries this incomplete description of the façade over. The report also required that the essential safety measures for the Lacrosse building were to include a condition that “apartment balconies are not to be used for storage”

In May, LU Simon sent Elenberg Fraser, a sample of an Alucobest ACP (not Alucobond). The project architect checked the colour of the sample, then asked LU Simon for confirmation that the ACP meets the warranty and other requirements of the specification. LU Simon contacted the manufacturer and replied that Alucobest’s warranty terms are 15 years in accordance with the specifications and Head Contract. The architect took this as meaning that Alucobest ACP met the warranty and other requirements of the T2 Specification and signed off on the sample.

In June, Gardner Group issued the Stage 7 Building Permit, signed by Mr Galanos.

2012 Through 2011 and 2012, LU Simon constructed the Lacrosse tower with the ACP panels as per the Elenberg Fraser design, as they were obliged to do so under the terms of the D&C Contract.

Mr Galanos undertook the final inspection of the building and issued the occupancy permit in June.

2014 Two years after the building completion the fire occurred on 24 November 2014.

 

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