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In a decision handed down in the VCAT by Judge Woodward on 28 February 2019, LU Simon was ordered to pay more than $5.7 million effectively to apartment owners. However, Gardner Group, Elenberg Fraser and Thomas Nicolas were ordered to reimburse LU Simon in respect of that payment in proportions of 33%, 25% and 39% respectively, leaving 3% to be borne by LU Simon, for the following reasons:-

(1)  The relevant building surveyor, Mr. Galanos, and his employer Gardner Group was found to have breached its Consultant Agreement with the developer (later novated to LU Simon) by failing to exercise due care and skill in issuing the building permit and approving the cladding, which did not comply with the building code of Australia (“BCA”); and failing to notice and query the incomplete description of the cladding systems in the fifth iteration of the Fire Engineering Report prepared by Thomas Nicolas bearing the date November 2010 but finalised on about 9 December 2011 (“Fifth FER”).

(2)  The architects, Elenberg Fraser, were found to have breached its Consultant Agreement with the developer (later novated to LU Simon) by failing to remedy defects in its design, which saw non-compliant cladding used; and failing as head design consultant to ensure that the sample of the aluminium composite panels (“the ACP”) provided by LU Simon was compliant with Elenberg Fraser’s design intent articulated by the specifications and the BCA;

(3)  The fire engineer, Thomas Nicolas, was found to have breached its Consultant Agreement with the developer (later novated to LU Simon) by failing to conduct a full engineering assessment of the Lacrosse Tower in accordance with the requisite assessment level and failing to include the results of that assessment in the Fifth FER; and failing to recognise that the ACP proposed for use in the Lacrosse Tower did not comply with the BCA and failing to warn at least LU Simon of that fact.

(4)  The Builder, LU Simon, was found to have “breached the warranties of suitability of materials, compliance with the law and fitness for purpose” implied in its contract with the owners and was therefore primarily liable to pay damages to the owners. However LU Simon did not fail to exercise reasonable care in the construction of the Lacrosse Tower.

(5)  Mr. Gubitta, who disposed of his smouldering cigarette which was not fully extinguished before leaving it in a plastic container, was held to be 3% liable for the damages payable by LU Simon to the owners. However no party sought judgment against him. Therefore, LU Simon was not reimbursed for 3% of the damages it was liable to pay to the owners.

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