A major Australian home builder that left thousands of customers in financial distress waiting years for their homes to be completed is now facing a class action.
BGC Housing Group is one of Western Australia‘s biggest builders and sold 1,000 homes in one month during Covid then were unable to complete the builds within contractual time frames, leaving customers in financial and emotional distress.
Morgan Alteruthemeyer Legal Group started class action proceedings against three BGC Housing Group companies in the WA Supreme Court this week.
The class action was initiated on behalf of thousands of people who entered into home building contracts with BGC Housing Group companies BGC Residential, J-Corp and Ventura Homes between January 2019 and September 2022.
The action claims the companies breached Australian Consumer Law and their contractual obligations with thousands of BGC homeowners.
Morgan Alteruthemeyer Legal Group building and construction partner Spencer Lieberfreund said they were expecting between 5,000 and 7,000 BGC customers to join the class action.
Mr Lieberfreund said customers had waited two to three years for their homes to be completed which had forced people to take second jobs or take FIFO positions just to make ends meet.
‘In terms of financial stress it has been enormous, unfortunately these people have been under a lot of financial stress,’ he said.
A major Australian home builder that left thousands of customers in financial distress waiting years for their homes to be completed is now facing a class action. Stock image
‘If you have rent and a mortgage and you did not expect to have both of them for that length of time, savings are gone.
‘Financially we are looking at things like loss in rents, extra interest payments, utility charges and land tax.
‘In terms of the emotional experience, it has been absolutely heartbreaking hearing some of the stories from families that have been split with a mum or dad having to work away.
‘We have people living in sheds, caravans, we have one person living in a nine-foot caravan going from site to site trying to get their kids into school.
‘It is really, really heartbreaking and what it comes down to is not knowing when their homes are going to be finished.’
Mr Lieberfreund said it was a situation where the builder had sold homes well in excess of what they could deliver and had ever sold in previous years.
‘It just was never going to happen,’ he said.
The action claims the companies breached Australian Consumer Law and their contractual obligations with thousands of BGC homeowners. Stock image
‘They sold 1,000 homes in July 2020, more than any other builder in Australia, so there was just no real way when they only sold about 2,000 homes in the previous year.
‘If you sold half of that in one month the following year, you were never going to complete that unless you suddenly increased your labour force significantly.
‘We really do feel for the people who have been affected here, these are real families and parents who are living this day in day out, it is a really difficult situation.’
A BGC spokesperson said they were aware of a class action filed in the WA Supreme Court against its housing group entities.
‘BGC will vigorously defend the class action, as we believe the basis of the case has potential widespread implications for all builders across the state and Australia,’ they said.
‘The company will not let this distract us from our continued focus on delivering all homes as quickly as current labour market constraints allow.’
In April 2023, BGC stopped taking orders for new homes and has since handed over more than 1,800 homes to customers.
‘We are making good progress, with 90 per cent of homes having passed the lock up stage,’ the spokesperson said.
‘Current completion rates are seeing us hand over 40-50 sets of keys per week.’
This week the company made the decision to sell its cementitious division which consists of BGC Asphalt, BGC Cement, BGC Concrete, BGC Quarries, BGC Transport and the company’s Materials Technology Centre.
BGC chief executive officer Daniel Cooper said the sale process was part of the divestment of the BGC group announced in 2018.
‘Our focus will remain on managing safe workplaces and continuing to deliver for our customers,’ he said.
‘For those customers who are building with us, I want to reassure you we remain firmly focused on completing your home as fast as possible.’
A lawyer said the financial stress on his clients ‘has been enormous’. Stock image
The Class Action is being funded by litigation funder Omni Bridgeway.
James Buck, a representative plaintiff of the class action, said he had been hit hard by the delay in his home build.
‘BGC’s conduct to me and my family while we were building our home left us devastated both financially and emotionally,’ he said.
Facebook BGC Proposed Class Action Group and class action member Jess Spithoven said now the court action had begun she hoped all those homeowners affected by BGC’s actions would receive their full compensation under the law.
