Cladding case back to “square one”

This is a class action arising from the use of ‘Alucobond Cladding’, which is alleged to be unsafe and has since had to be replaced on several buildings because of its lack of resistance to fire.

This is a class action arising from the use of ‘Alucobond Cladding’ as a building material, which is alleged to be unsafe and not in compliance with relevant building codes, and which has since had to be replaced on several buildings, at considerable cost, because of its lack of resistance to fire. The first respondent (a German company) is the manufacturer of the cladding; the second respondent (an Australian company) is the Australian importer and distributor of the cladding.

The applicant brings various claims under the ‘acceptable quality’ and ‘merchantable quality’ provisions of the Australian Consumer Law and the Trade Practices Act 1974 (Cth) respectively.

The first respondent had contended, for some time, that the ‘common questions’ identified in the originating application were deficient and inadequate (a contention originally rejected by the applicant), and ultimately applied to strike out that part of the originating application. That application was, however, overtaken by the applicant filing a Further Amended Originating Application and a Second Further Amended Statement of Claim which, inter alia, reformulated the ‘common questions’ (and which were not opposed by the respondents). That left only the question of costs to be dealt with.

The applicant accepted that it should be ordered to pay the respondents’ costs thrown away by reason of the amendments, but opposed any order that those costs be payable forthwith.

In the result, Wigney J ordered the applicant to pay the respondents’ costs thrown away (including the costs of the first respondent’s strike out application), and that those costs be paid forthwith. His Honour’s reasons for doing so included:

  • the original statement of claim pleaded the case in “relatively short and simple terms”, which “tended to obscure some potential complexities in the pleaded case” (at [5]ff);
  • those potential complexities were also somewhat obscured by the ‘common questions’ specified in the originating application, which were in “fairly short and simple terms” (at [12]ff));
  • contrary to the applicant’s contention, the amendments made to the originating application and statement of claim were extensive (at [23]ff):

[23] It would perhaps be an understatement to say that the amendments to the statement of claim are extensive and substantial. Virtually every paragraph of the existing pleading has been the subject of some amendment. The vast majority of the amended pleading is entirely new. The original statement of claim was 19 pages in length (without annexures) and contained 25 paragraphs. The amended statement of claim is 49 pages in length (without annexures) and contains 89 paragraphs. More significantly, the new pleading contains entirely new causes of action and, while the original causes of action are retained, for the most part they are now supported by substantially new or reformulated allegations and particulars…

[25] While at an entirely superficial level it might be said that the core of [the applicant’s] case may remain the same, the suggestion that the new pleading simply provides a clearer explanation of the existing causes of action and does not introduce substantially new factual allegations is nonsense. So too is the claim that the new causes of action arise from facts already pleaded. It would be more accurate to characterise the new pleading as an almost entirely new case…

[30] The amendments to the originating application are also substantial. The common questions as originally framed in paragraph two of the application have been completely replaced by an annexure which sets out, over 11 pages, 45 detailed common questions, and a further four “questions of commonality”; being questions applicable to some, but not all, group members.

  • an order that costs be payable forthwith is appropriate where a party faces what is, in essence, a new case, and where the costs order is made at an early stage of the proceeding, meaning that the costs might not be recovered for some considerable time, both of which were applicable here (at [37]-[38]); and

the applicant’s conduct “in persisting with the existing pleading and existing common questions for almost a year [was] unreasonable in all the circumstances”, and effectively meant that the proceeding was now back at “square one” (at [43]-[44]).

Case details

The Owners – Strata Plan No 87231 v 3A Composites GmbH (No 2) [2020] FCA 333

  • Federal Court of Australia, Wigney J, 12 March 2020
  • Applicant's Solicitors: William Roberts Lawyers
  • Respondent's Solicitors: King & Wood Mallesons / Sparke Helmore Lawyers
  • Applicant's Funder: N/A

Read more about this case on Austlii: The Owners – Strata Plan No 87231 v 3A Composites GmbH (No 2) [2020] FCA 333 

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