Builder admits flammable cladding “widespread”

By Leith van Onselen

Over the past month, several reports have emerged about apartment owners being stung by huge costs, and being embroiled in legal battles, relating to dangerous flammable cladding that now must be removed.

Last month, The AFR reported that owners in one Pyrmont apartment complex in Inner Sydney are facing a $7 million bill to have dangerous flammable cladding replaced, with each owner facing a $10,000 levy per quarter instead of the current $3000 for at least five years.

A week ago, owners of the 328 apartments in Melbourne’s Lacrosse residential tower launched legal action against builder LU Simon to recoup an estimated $10.7 million in recladding costs, $1 million in lost rent and emergency accommodation costs and over $500,000 in insurance premium hikes.

Then over the weekend, it was reported that a major Melbourne building company facing millions of dollars in claims for flammable cladding went bust, leaving apartment owners with $3.8 million in rectification costs.

Yesterday, The Age reported that the result of the Lacrosse residential tower case could set a precedent for at least 100 other Victorian buildings where flammable cladding needs to be removed, with the builder admitting flammable cladding is widespread across Australia’s high-rise:

In Melbourne alone, the state government has issued apartment owners with about 100 orders to remove flammable cladding from building exteriors and replace it with suitable material…

Melbourne City Council’s municipal surveyor has ordered removal of the flammable cladding the [Lacrosse] tower is wrapped in to start by September 23.

The owners’ corporation at the 21-storey Lacrosse tower is suing eight parties in all, including builder LU Simon, surveyors Galanos and Gardner Group, architect Elenberg Fraser and fire engineers Thomas Nicolas.

Virtually the only party not being sued in the case is the developer, a $2 holding company registered in 2007 by Morrie Schwartz and a member of the Halim family…

The six-week tribunal case began last week, with 17 barristers and solicitors at the bar table, and at least as many lawyers for various parties looking on in the public gallery.

Evidence tendered by builder LU Simon in its defence shows just how widespread combustible aluminium cladding has become on Australian skyscrapers.

In 1998, one statement tendered by LU Simon said, around 100,000 square metres of one brand of the material was sold. Two years later sales of that brand alone had risen by 50 per cent, and by 2008 there was half a million square metres of the cladding sold…

Lawyers for the owners’ corporation predict work to replace the building’s cladding will cost $17.1 million, while $6.9 million has already been spent as a result of the 2014 fire…

Talk about market and regulatory failure of epic proportions.

No doubt the defendants will pass the blame with the apartment owners ending up being liable for the remediation works.

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Unconventional Economist
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Comments

  1. Napalm cladding. Total failure by the Building Commission. I foresaw this nearly twenty years ago when certification was privatised.

    • First thing I read in the Australian media after the initial news on Grenfell ; “nah, wouldn’t happen here, mate. We’ve got the best regulations onna planet”.

      • Regulations written by the property industry lobbyists for the profit of the property industry.

        There has been “regulatory capture” of the government by the property industry.

    • It is an excellent reason why any policy support for property investment should be directed to new construction rather than mere acquisition of existing housing.

    • Investors will be staying a long way away from new apartment builds, too hamstrung trying to refinance the IO loans and stump up the funds to pay for the cladding fix.
      Going to have an interesting side effect on established houses, but luckily with serious credit tightening in place and falling prices their ability to leverage up the wazoo is gone.Otherwise we’d see house prices take off as apartments plunge.

  2. Pyrmont is $7m over 5 years across 200 units which is $7k additional per unit per year not quarter. I learnt that in MB comments first time this was reported.

  3. and no asbestos in sight to counteract the inevitable fires

    death by mesothelioma or death by substandard fire protection ????

  4. – I fear A LOT OF builders will choose to close their companies/subsidiaries in order to avoid giant financial claims. Just simply close one company and open a new building company. Problem solved !!!!

    • Of course.

      Builds are carried out by special purpose companies (and trusts) for this very reason. It is routine.

  5. Flammable illegal warehouses too:

    West Footscray fire warehouse was not registered for chemical storage: WorkSafe

    http://www.abc.net.au/news/2018-09-07/west-footscray-factory-fire-not-registered-chemical-storage/10201234

    Just like everything else in this corruptistan.

    Metropolitan Fire Brigade (MFB) was called to a large industrial fire at a factory in West Footscray at around 5am this morning (30 August 2018).

    https://www.epa.vic.gov.au/about-us/news-centre/news-and-updates/news/2018/august/30/west-footscray-factory-fire

    12 days on and residents are still suffering migraines, stinging eyes, sore throats:

    https://www.theage.com.au/national/victoria/sore-throats-stinging-eyes-coughing-residents-feel-ill-weeks-after-west-footscray-fire-20180909-p502pi.html

    • I did plumbing and drainage on chemical storage warehouses and one of the choices of site was that there was NO storm water for the very reason of fire and the chemicals ending up in the river … bay

      • Sounds expensive to get such a purpose-built facility leased. Better just lease aome other warehouse and quietly store drums of chemicals there.

        If nobody knows, nobody can care.

        Straya

      • Yesterday we looked at the structural life of high-rise built 40 years ago
        Most at at the end of that life. What now.
        For sewers (piping) the design life is also 40 years and for sewage handling (mechanical) the life is 25 years.
        BAck of the envelope stuff shows about half of the sewage piping systems are at the end of their design life.
        So plenty of work for u guys yet,
        But who covers the cost of replacement ??

      • ErmingtonPlumbingMEMBER

        Who cares,…Ca$hink Ca$hink.

        I use my sewer camera on nearly every jetblast nowdays (good for generating diggups 😉) and often go a little ways down the boards main even though im not supposed to, thats their domain.

        These old Earthern ware house drains and Mains layed through thec50s and 60s are fu#ked, with root penetration, Fractures and shifting ground.
        95% of the time I can get them working again,…for years after initial problems show, but doing a lot of real estate work over the last decade, I have found that “investors” are the ones most insistent that I just jet the line again, every 6 months, just so as to avoid a sewer renewal (10k to 20k) before they sell and leave the problem to the next “sucker”.
        Ive seen several decisions to sell a house based on a “Rooted” sewer.
        As I tell my groaning customers,…what other product or service that gets daily use is gonna last over 50 years! once its renewed?,….that bloody 10 grand quote of mine is good value!

        Pipe re-lining works good in the right circumstances, avoiding dig ups, but its more expensive than digging up most of the time,…Sydney water is constantly re lining sewers every week.
        This involves draging a 5-10mm thick fiberglass like “Sock” through the lines and then getting these robot thingies to inject resin and smooth it off along the pipe, side branches/junctions are cut out before or after.
        Ive had chokes though that are caused by the rough cutoff edge at the customers sewer entry.
        Also with the dramatic increase in the number of properties entering the sewer it needs to be remembered this relining reduces the diameter of the sewers it used in.

        Nothing wrong with a bit of Plumbing generated GDP growth! And avoiding sewerage related diseases in the community is hood for National productivity.

      • So when u have a squizz into the boards main
        what do u see.
        Cos I figure it like this
        the branch to the main is the problem of the rooted punter, back of the envelope again
        say half the houses, say 10k for a 50yr fix, or 3 to 4 k for a jetting fix for 2 years
        now the boards main, that is the big arena
        with the mains going under roads etc a replacement is hugely expensive and the cost for that is picked up by all rate payers of that council.
        Say half the current municipal installation (major city councils) require immediate replacement.
        So where is all this money coming from.

      • boomengineeringMEMBER

        Hey Ermo, made a camera housing for a plumber many years ago before they became popular. He didn’t pick it up. You can have it for free if you want.

  6. ErmingtonPlumbingMEMBER

    “Virtually the only party not being sued in the case is the developer, a $2 holding company registered in 2007 by Morrie Schwartz and a member of the Halim family…”

    Morries Step daughter is being sued though,…quite an example of REAL “White Privilege”.

    Her involvement basiclly means no expenses will be spared to lay the responsibility and costs apon others,…probably the least economically powerfull,…the appartment owners.

    “While still a student at RMIT she (Zahava Elenberg) completed her first project for her stepfather Morry Schwartz, the $50 Million Liberty Tower apartment building[4] on the corner of Spencer and Collins Streets in Melbourne city centre, establishing her practice with Callum Fraser in 1998 at the age of 24. Other projects for Schwartz include the $180 million Docklands residential complex Watergate Place,[5] Lacrosse and A’Beckett Tower.[6] Elenberg Fraser[7] is now one Australia’s leading multi residential and commercial architecture practices. Other recent and awarded projects include Slattery Australia,[8] 50 Albert,[9] Zumbo Melbourne,[10] Shannon Bennett’s Vue de Monde,[11] Avenue,[12] and Luna.[13]

    Elenberg diversified her interests by setting up two additional businesses: Move-in,[14] a company specialising in turn-key furniture packages and FF&E for hotels, serviced apartments and investment properties; and Zacamoco, a property development business established to deliver a series of boutique Ski Resort projects in the Victorian Alpine region, including Huski Falls Creek[15] and Saint Falls.[16]

    Elenberg was photographed by renowned Melbourne photographic artist Bill Henson at the age of 12, and spoke out in support of the artistic value of his work in May 2008 when his work was seized by NSW police after a complaint by a child protection campaigner.[17][18][19]”

  7. Between the cladding bill and the loss in value, owners would probably be better off burning down the building themselves. How long before there are numerous fires due to “accidentally” dropped cigarettes or steaks being flame grilled on a BBQ on the balcony?

    • Housing valuations must be regulated and a standard system of systems methods applied more like the NRMA RACV would do for a car you were interested in buying, Gavin please comment as you are expert in car stuff.

    • How long before some terrorist or nutcase rents a dogbox on Airbnb on a hot windy Melbourne night and sets fire to the whole block?

      • How long before terrorist groups realise they can be paid by apartment owners to commit arson? Win Win.

      • You think way too small. I write fiction for a living. In my tale ten extremists in balaclavas running around the CBD all at once set fire to a few dozen buildings in 15 minutes armed with nothing more than a brulee torch.

      • blacktwin997MEMBER

        Shut up man, or they’ll be banning brulee torches within built up areas as part of a public safety initiative! THEN what will MasterChef do?

  8. Here is a Bolstrood scenario that could occur:
    The summer of will go down in history as the worst fire season in Australia’s history.
    After 21 days of 45 degree plus temperatures and very low humidity the blustery hot winds arrived in Sydney from the parched centre of the continent. No one knows how it started , but, a fire in a bush gully in the drought stricken mountains soon became a raging inferno. The fire storm raced thru the bush to the city’s edge and the ferocious winds carried it across the highways and into the suburbs.
    Homes exploded into flames and the winds swept it from house to house.
    Thousands of people fled.
    The real catastrophe occurred when the fires ignited a high rise apartment block covered in highly flammable cladding.
    It just exploded in flames, none of the occupants stood a chance .
    Worse was to come as neighboring blocks of units took fire, like a spark in a box of fireworks, one after another of these closely built towers erupted in flames.
    By nightfall a quarter of the city was in flames.

      • indeed ……… Canberra was saved by a shift in the winds, nothing else …….. at the time I was astounded to hear work colleagues talking about how they were pleased to see the smoke obscuring the sun that Saturday am as it meant their golf group could enjoy the mornings game more ……

        and everyone in Canberra who chose to look could see the fires moving ever closer for the preceding week through the mountains on the NSW border ………
        nothings changed …………. the fire load around the city is, shall we say, “concerning” ………… those who do not learn from history are bound to repeat it (I’ve got my fire plan in place) ……..

    • or …………… in inner city blocks there were large numbers of young south asian and Chinese residents. They were tired of being cooped up the high rises. The heat wave was getting to them. “Let’s cook on the balcony. The a/c can’t cope with the heat” one said to the other. “Why not?” the others replied.

      Of course these recent immigrants had no concept of Australian heat waves and the easy spread of fires. They thought that sort of thing only happened to the ignorant villagers. ………… the bbq is fired up, no-one notices the increased strength of the hot, gusting winds that whip around the closely placed high rises …………. the youngsters aren’t used to managing fire cooking, after all that was their mother’s/servants’ responsibility. The fire sparks, the kids jerk back bumping into the visitors on the balcony (which is of course way too small).

      No-one quite knows how but the bbq is upended and the coals spread across the balcony and some go up against the smart, trendy cladding. A couple of coals actually go over the edge of the balcony and land on the cladding below…..

      In the parched, intense summer heat the cladding started to smoke almost immediately. No-one noticed. The residents and friends had gone back inside to enjoy the struggling a/c. Once started the fires were fast and furious, the high rises a grotesque parody of a gum tree forest as they exploded into uncontrollable flames, whipped along by the blustery, searingly hot westerlies …………..

  9. China may have sold us dud cladding, but we sold them dud mortgages to buy the appartments they cladded.

  10. Have any MB readers ever been inside a typical migrant guestworker dwelling in Australia.

    The fire safety risks are not just the cladding & shoddy tower blocks but the massive illegal high density third world migrant occupancy & lack of fire safety controls.
    That was one of the key factors in the Greenfells fire death toll being so high.
    And it’s the same here – in the small old 2 story walkups and now in suburban housing (which is never checked).
    Hundreds of thousands of dwellings.

    We have 2.7 million migrant guestworkers.
    2.2 million Temporary Visa holders
    440,000 Tourist Visitors Working Illegally.
    65,000 Overstayers.

    Almost all are third world unskilled poor, most on a pretext visa in debt to a foreign agent procurer & here only to work & live illegally, repay loan debt, send back remittances & try to snag a PR and be an anchor for chain migration.

    They rent, well over 90% rent in ‘private shared accommodation’, code for migrant only sublet cash in hand, fake ID, paying some $140 to $220 a week for a bunk & room share, wifi, rice & gas cooker plus toilet paper deal. Go on gumtree or any of the foreign only sites advertising this.

    The dwellings the 2.7 million migrant guestworkers live are invariably old run down ‘ex Australian affordable housing’ acquired by foreign syndicate owned via an onshore proxy.
    Then rented out via a migrant friendly real estate agent in a transient migrant name or fake ID.
    To run migrant only cash in hand subletting.
    The proxy ‘manager’ pulling at minimum $1,100 a week cash from say 7 sublet migrants at $160 each, but only declaring $400 or less as ‘declared rent income’.
    It’s a $24 billion foreign criminal run industry, with less than $10 billion declared.

    The proxy often lives in one of the dwellings (often the proxy will have several properties funded by the foreign criminal syndicates & laundered money, but never on the lease as he is often getting the negative gearing and is he or a delegate is ‘the manager’ who collects the cash and pass key etc access.
    The proxy then pays back the foreign criminal syndicate on the dirty money laundered in via their name, takes a cut and also collects the negative gearing.
    Your taxes at work..

    Any problems or complaints?
    The proxy owner will deny all knowledge and blames the Real Estate agent.
    The Real Estate agent blames the transient fake ID holding the lease. ‘Don’t understand’, ‘we didn’t know’, ‘we don’t speak English’ or ‘they are just family or friend visiting’.
    This is why the rare attempted prosecutions fail.
    Then wait a while & do it all over again.

    The Fire & safety risks.
    As example a typical unit, say in the Regis Tower Block. Inside the unit are 4 or 6 bunks in the main bedroom and 4 in the other room plus several mattresses in the lounge 1 or even the laundry or on the floor inside any built in wardrobes.

    The 2 bed unit will have separated living areas, plywood partitions or sheets strung up on curtain wire.
    Each little area will have its own small portable gas camp stove & rice cooker.
    Smoke alarms are routinely disabled.
    Illegal internal partitions & room dividers.
    No building manager or fire safety inspections.
    Or else if this is eventually forced by the building manager (can take years) they will remove all the temporary fittings, move to another unit while it’s checked, then reinstall it again.

    Regis Tower 282 Units, 1,900 live there, (7 per unit average) almost all third world migrant guestworkers on pretext student, skilled, visitor, tourist visas.

    The migrant guestworker housing model however has dramatically shifted out to the suburbs in Sydney.
    (There’s your Sydney & Melbourne housing price bubble in a nutshell)

    A small old run down house in Ashfield or Burwood or Granville (anywhere along the train lines or now bus routes / the tenant base are third world poor) and it’s much more profitable.
    ➡️ Same price as a CBD unit, but no building controls, no fire or safety checks, migrant friendly councils.

    Much higher occupancy density & cash flow.
    8 to 10 migrant guestworkers is common.

    The little old ex Australian house is also seperated into little zones. No council approval or rules even.
    4 or 6 bunks in each bedroom, several in the sunroom, or hand built sleepout & also in the garage or shed. 8, 10, 12 is common.
    Gas camping stoves. Plywood & sheet dividers.
    Barred or internally locked doors as the little old house is divided up into 3 seperate migrant family zones with their own illegal cooking areas or racks bunk share for 10 or more.

    “Oh but these are just rare exceptions, most of them don’t live like that”
    Well most of them do.

    We have 2.2 million third world Temporary Residents and 440,000 Tourist Visitors Working Illegally plus 65,000 Overstayers in Australia.
    2.7 million in total.
    Occupying some 550,000 dwellings (5 per dwelling(
    86% or 2.3 million are in Sydney or Melbourne.
    Occupying some 400,000 ex Australian dwellings.
    1.3 million live in Sydney.
    Occupying some 250,000 plus dwellings.
    And with over 150,000 cars, old bombs registered under an international drivers licence, no fines or parking tickets ever collected (NSW SDRO gave up)

    1 million in Melbourne.
    Occupying some 200,000 dwellings.
    100,000 old bomb cars.
    They are third world poor in debt and live week to week in the vast migrant underground economy.
    And this is exactly how they live.
    A Fire, health, community risk.
    Creating massive transport, traffic & infrastructure congestion in all the migrant zones – now flooded with third world unskilled at 2 or 3 times the normal or planned for people, public transport & traffic density.

    How long before we have a Greenfells Tower Block tragedy ( a case study in similar migrant subletting & illegal occupancy use) or migrants trapped & killed in a gas cooker explosion ?
    Some incidents have already happened.

    We need a housing audit, including fire & safety controls.
    The fire & safety and housing authorities given powers to inspect & check all buildings suspected in breach.

    But the real answer is to remove these migrant guestworkers.
    That’s the underlying cause.
    1.6 million of these 2.7 million should never have been allowed in.
    They are here illegally or on a pretext visa and In breach.
    That’s the real fix required,