UPDATE: BGC says it will “vigorously defend” any lawsuits launched by a homeowner’s group that secured funding to pursue a potential class action against the builder over chronic construction delays.
Homeowners who experienced major construction delays when building with BGC have secured funding to pursue a proposed class action lawsuit led by Morgan Alteruthemeyer Legal Group.
The Fremantle-based law firm announced it had secured litigation funding from ASX-listed Omni Bridgeway for the legal action which could represent up to 5,000 homeowners.
The class action would be seeking compensation from BGC Housing Group for alleged losses suffered from unauthorised delays on home constructions, according to the legal group.
Affected homeowners Jess Spithoven, Tanya Princi and Domenica Vecchio founded the Proposed Class Action Group on Facebook and led a campaign to initiate the legal action.
The class action would focus on alleged issues with building contacts, namely building delays, extension of time notices, and price increase variations, according to the Facebook group.
Ms Spithoven told this masthead more than 800 homeowners had expressed their interest in joining the proposed class action, with the website set to launch at noon on Thursday.
Founders of the Proposed Class Action Group Tanya Princi, Jess Spithoven and Domenica Vecchio. Photo: Supplied
The proposed class action covers homeowners who entered into building contracts with BGC between July 2019 and June 2022, and will need a certain number of participants to proceed.
In April, BGC announced it was closing its books for the foreseeable future to concentrate on completing its existing builds under construction.
A BGC Housing Group spokesperson said the group took the potential class action seriously and that it would vigorously defend any action.
“As a result of a severe lack of labour and materials in the building industry – something beyond the control of BGC Housing Group – we have taken the unprecedented step of ceasing new home sales until the backlog is cleared,” BGC said.
“We are acutely aware of the impact of delays on homeowners, and we remain focused on finishing all homes we currently have under construction.
“There is no easy solution to resolving the labour and materials shortages and constraints, that we see across Western Australia, in all industries and sectors.
“However, BGC Housing Group has been diligently seeking to build as quickly as possible, while maintaining quality and safety.”
Class action funder Omni Bridgeway describes itself as a “global leader in dispute finance, financing disputes from inception through trial, appeal, enforcement and recovery,” according to its website.
“The securing of funding with Omni Bridgeway was a significant step forward for BGC homeowners who have suffered financially from the delays in building their homes,” Morgan Alteruthemeyer Legal Group building and construction partner Spencer Lieberfreund said.
“A class action against BGC offers individuals a way of seeking financial compensation without being exposed personally to legal costs.
“We encourage impacted homeowners to join the class action”.
The proposed class action also encompasses BGC brands HomeStart, Smart Homes for Living, Aussie Living Homes, Terrace Homes, Now Lining and Ventura South West among others.
The Proposed Class Action Group on Facebook, which is made up of 2,200 members, was launched in October by the three founders who signed with BGC between 2020 and 2021.
The group engaged Morgan Alteruthemeyer Legal Group in November and in the following month the law firm had commenced discussions with potential litigation funders.
Ms Spithoven implored affected BGC homeowners to register to join the class action.
She said they expected about 5,000 homeowners had been impacted by chronic construction delays.
“We'd like to see a big sign up, a big registration, and if we can get that then we can start proceeding straightaway and we would like to start strong,” Ms Spithoven told Business News.
“If we can demonstrate that a lot of us are impacted, which we know that we are, then we hope that will give BGC some thoughts on coming to the table to negotiate.”
Ms Spithoven signed with BGC in March 2021 and said she was lucky to be in her home now.
She said other homeowners had signed around a similar time and were still not in their homes, leading to stress and even hospitalisations over the drawn-out process.
It comes as homebuilders face increased pressure from cost blowouts incurred from fixed price contracts, coupled with strong demand from government stimulus.
A BGC spokesperson defended its sale of homes during the state government’s stimulus period.
“The number of sales BGC Housing Group took on through the building stimulus period were well below previous sales in recent strong markets such as 2015/2016 and our market share of home sales remained at historic average levels," they said.
“A key driver of extra pressure into the housing construction industry in Western Australia has been the total take-up of stimulus grants.
“Like all builders, BGC Housing Group was unaware of the total take-up (as later revealed by the government) was in the order of 25,000 homes in a market completing 11,000 homes in the prior twelve months to June 2020.
“There simply is not enough capacity in the market. Western Australia has about 22,000 homes currently under construction while build completions across the state remain at about 12,000 per annum.
“This issue will continue until chronic labour shortages are addressed.”
