Tanah Merah Vic Pty Ltd v Owners Corporation No 1 of PS613436T [2021] VSCA 72
Refusing leave to appeal from VCAT on the apportionment grounds, the Victorian Court of Appeal held that owners' claims against the builder of the Lacrosse tower for breach of the warranties implied by the Domestic Building Contracts Act 1995 (Vic) were not apportionable claims under the Wrongs Act 1958 (Vic), because they did not arise from a failure to take reasonable care.
What the court decided
In November 2014 a cigarette started a fire on an apartment balcony in the Lacrosse tower [1]. The fire spread up cladding made of aluminium composite panels with a polyethylene core [2], [3]. In the owners' proceeding, VCAT held the builder, LU Simon, liable to the owners for breaching statutory warranties under the Domestic Building Contracts Act 1995 (Vic), namely those in section 8(b), (c) and (f) [42]. The Tribunal found that LU Simon had not failed to exercise reasonable care, so the claims against it were not apportionable and it was liable for the whole loss [43]. On LU Simon's own claims, the Tribunal apportioned the damages LU Simon had to pay the owners among the building surveyor's firm (Gardner Group), the architect (Elenberg Fraser), the fire engineer (Tanah Merah, trading as Thomas Nicolas) and the person who left the cigarette [1], [5], [11], [94].
The three consultants sought leave to appeal, raising issues that included whether the owners' claims were apportionable under the Wrongs Act 1958 (Vic) [13]. The Court (Beach and Osborn JJA and Stynes AJA, in joint reasons) refused leave to Elenberg Fraser and Thomas Nicolas, finding no real prospect of success in any of their grounds [272]. Gardner Group was granted leave on one causation ground and its appeal was allowed on that ground alone, with consequential orders and costs to be heard later [259], [273], [274]. The Court found that the Tribunal's causal reasoning on that ground did not fit the Tribunal's own findings about what the fire engineer already knew and assumed [253], [255], [256], [258].
On apportionment, the proportionate liability provisions in Part IVAA of the Wrongs Act apply relevantly to a claim for economic loss or property damage in an action for damages, in contract or otherwise, arising from a failure to take reasonable care [101]. At trial the owners pursued only the warranty claims against LU Simon and did not allege any want of care on its part [93]. The Court held that the terms in which a claim is framed are "an essential determinant" of whether it arises from a failure to take reasonable care [120]. The definition does not reach a claim "involving circumstances arising out of a failure to take reasonable care" [113]. The Tribunal therefore made no error in holding the warranty claims not apportionable, although they involved circumstances arising out of the consultants' failures of care [128]. The Court also held that whether a claim is apportionable must be decided before asking who the concurrent wrongdoers are [134].
The cladding question was whether the panels proposed for use in June 2011 met the requirements of the Building Code of Australia [207]. Under clause C1.12(f), bonded laminated materials could be used where a non-combustible material was required [220]. Among other conditions, each laminate had to be non-combustible [220]. The panels installed on the tower were combustible [216]. Gardner Group argued that "laminate" excluded the polyethylene core [221]. The Court agreed with the Tribunal that the core is one of the laminates, save that it treated the clause's references to an adhesive layer as distinct from the laminates [223], [224]. Leave to appeal on the cladding ground was therefore refused [233].
Leave was refused on all other grounds, including a new argument that the builder owed a non-delegable statutory duty [89], [272], [273].
Why it matters
The decision indicates that, in Victoria, where owners sue a builder only for breach of the warranties implied by the Domestic Building Contracts Act 1995 (Vic) and the builder is not found to have failed to exercise reasonable care, the builder may be liable for the whole loss without apportionment, even if consultants' failures of care contributed to it. On the Court's reasoning, how the claim is framed is an essential determinant, and a defendant cannot make such a claim apportionable merely by showing that the circumstances involved others' failures of care.
On the construction of clause C1.12(f) of the Building Code of Australia that the Court shared with the Tribunal, the polyethylene core of a bonded aluminium composite panel is a laminate that must be non-combustible, so panels of the Lacrosse type proposed in June 2011 could not rely on the clause.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.