Considering a Class Action Lawsuit Against a Builder or Building Group: Practical Insights

As homeowners, it’s crucial to understand legal options when facing disputes with builders. Since the formation of Vogt Legal, we have received a high and ongoing intake of clients reporting issues relating to delays by their builders in completing works by the contracted date for practical completion.

It is not uncommon for us to hear clients voice their complaints in respect of the same builders, which begs the question: should homeowners be commencing class action lawsuits against their builders?

The Proposed BGC Class Action

You may be aware of the class action lawsuit being prepared against the BGC Group which has secured litigation funding (Proposed BGC Class Action). According to the BGC Class Action website, any BGC homeowner who entered into a home building contract with a BGC home building group company between 1 July 2019 and 30 June 2022 and has suffered loss and damage as a result of delays to their home build are eligible to participate in the Proposed BGC Class Action.

Here, we delve into what we consider the complexities and challenges involved with the Proposed BGC Class Action and highlight the key takeaways which can be taken from it.

Understanding Class Actions

Before considering the Proposed BGC Class Action, it is important to first understand what a class action lawsuit entails.

Class actions are legal proceedings where a group of people with similar claims collectively sue a defendant. They can offer advantages such as pooling resources and sharing legal costs, which can be appealing when many homeowners face similar issues with a builder’s delays in completing their homes, however, they can also present risks for participants such as not satisfying the criteria to be accepted by the Court and ongoing limitation periods to bring one’s claim.

Our take on the Proposed BGC Class Action

The Proposed BGC Class Action illustrates several critical points to consider:

• Criteria for a Class Action: To proceed with a class action, specific criteria must be met, including commonality of claims and substantial legal issues shared among participants. While this seems straightforward in theory, the reality of the sheer variety of circumstances causing delay, diversity of building contracts and varying sources of loss among homeowners can present unique and sometime fatal challenges:
  • Variety of Circumstances: Each homeowner’s situation can vary significantly, impacting the cause and extent of delays. Factors such as land title delays, finance approvals, design changes, variations to building contracts and site access issues are just a few examples of how circumstances can diverge.
  • Diverse Building Contracts: Builders often use varied contracts with different provisions for handling delays, even when the builders are part of the same building groups. Variations in contracts’ conditions, including conditions for extensions of time, can complicate the collective pursuit of claims under a single class action umbrella.
  • Varying Sources of Loss: Homeowners typically suffer varying sources of loss due to delays, ranging from rental payments, water and electricity consumption charges, council rates and interest payments on loan agreements. This diversity may challenge the commonality of claims required for a successful class action.
• Settlement Considerations: If a class action settles, all participants are bound by the outcome, regardless of individual satisfaction. This can lead to compromises that may not fully address every participant’s grievances, leaving participants dissatisfied and regretful that they entered the class action process to begin with, and did not opt out in time.
• Limitation Periods: Time constraints, such as limitation periods for filing claims, continue to run during the preparation and execution of a class action. This can restrict homeowners’ ability to properly pursue individual claims if they decide to opt out of the class action later, or worse, prevent them from bringing a claim altogether.

This is especially relevant when considering the prolonged and protracted manner in which class action lawsuits are carried out, in comparison to individual claims.

• Continued Individual Legal Responsibilities: Homeowners will still need to pursue any additional claims separately, such as for defective workmanship, as such claims are not covered in the class action.

Conclusion

While class actions can appear attractive for homeowners wishing to commence claims against their builders, the practical challenges highlighted above, which we consider will be faced by the Proposed BGC Class Action, suggest otherwise.

Each homeowner’s situation is unique, and pursuing individual claims is often more effective in achieving satisfactory resolutions.

For homeowners considering legal action against their builder, we recommend seeking personalised legal advice to assess your potential action individually. This approach ensures that your specific circumstances are thoroughly evaluated, maximizing your chances of a favourable outcome.

Contact Us

At Vogt Legal, we have helped countless homeowners navigate complex legal issues related to construction and property disputes, including issues in relation to delay. Contact us today to discuss your situation and explore the best legal strategies tailored to your needs.