Perth home builder BGC may face class action over construction delays

Fremantle law firm Morgan Alteruthemeyer Legal Group expects up to 5,000 homeowners could be eligible to join a class action against WA's largest home builder BGC Housing Group over construction delays, after a grassroots campaign already garnered 2,200 members seeking redress for financial hardship.

The law firm has secured funding from Omni Bridgeway (ASX: OBL), a litigation financer valued at close to $600 million which has a global presence and is known for backing victims of the 2011 Queensland flood against dam operators and the state government, and shareholders who lost money in Sirtex Medical.

The funding allows Morgan Alteruthemeyer to proceed against Perth-based BGC companies on behalf of homeowners who entered into home building contracts between 1 July 2019 and 30 June 2022, and suffered losses due to alleged unauthorised delays in the construction of their homes.

"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," says Morgan Alteruthemeyer Legal Group building and construction partner, Spencer Lieberfreund.

"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 announcement has been welcomed by founders of the BGC Proposed Class Action Group, Jess Spithoven, Tanya Princi and Domenica Vecchio.

Spithoven encourages any impacted BGC homeowners to register to join the class action.

"We are pleased to learn of the litigation funding announcement regarding the class action but securing funding to commence a class action is not enough," she says.

"We need all BGC homeowners who have suffered or will suffer financially because of BGC’s delays to come forward and register to join the class action."

In a response, a spokesperson for BGC said the group would vigorously defend any action.

"BGC Housing Group is committed to its customers and we have been diligently working our way through our existing home builds.  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," the spokesperson 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."

The company highlighted a record production month in August with approximately 70 homes per week completing roof carpentry, roof cover and lock up.

"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," the spokesperson 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 ~22,000 homes currently under construction while build completions across the State remain at ~12,000 per annum. This issue will continue until chronic labour shortages are addressed."