On 31 May 2019, the Supreme Court of Victoria ruled against home insulation businesses impacted by the sudden cancellation of the Home Insulation Program in 2009. We are currently reviewing the judgment and will be exploring all options for recovering compensation for these businesses.
Shine Lawyers and McLaughlin & Riordan are conducting a class action against the Commonwealth on behalf of Roo-Roofing Pty Ltd and Matsuh Pty Ltd and eligible home insulation businesses for losses sustained as a result of the early cancellation of the Home Insulation Program (HIP class action). Shine Lawyers (as ACA Lawyers) are the solicitors on the Court record and are responsible for the legal proceedings. McLaughlin & Riordan have a long standing relationship with a large number of the group members and a historical involvement in this dispute. A summary of the claim against the Commonwealth is set out below.
- On 3 February 2009, the Commonwealth made a public announcement that, from 1 July 2009 and for a time-limited period of two and a half years, it would provide funds of $1,600 per home under the HIP to fund the installation of ceiling insulation in a minimum of 2.2 million eligible Australian homes.
- The Department of Environment, Water, Heritage and the Arts (DEWHA) was charged with designing, implementing and operating the HIP.
- The Commonwealth intended that the Home Insulation Class Action (HIP) provide economic stimulus. To this end the Commonwealth met with and advised industry representatives in manufacture, supply and installation of insulation (insulation related businesses) to encourage them to invest and expand their businesses to meet increased demand.
- The HIP was to formally commence on 1 July 2009. However from the date of the announcement on 3 February 2009 interim measures were established to allow home owners to take advantage of the rebate for installation of insulation pursuant to the HIP (phase 1).
- From inception until 30 June 2009 it was contemplated by the Commonwealth that the pre-existing installers would meet the demand to retrofit insulation to existing homes under the HIP. This was to allow the pre-existing installers to continue to operate pending the commencement of phase 2 of the HIP on 1 July 2009.
- From 1 July 2009, a register was established and was open to new installers (businesses with no previous installer experience) provided they undertook to abide by the terms of the HIP Program Guidelines (phase 2).
- A significant number of new installers entered the market after 1 July 2009 to take advantage of the HIP. It is estimated that there were 200 to 270 pre-existing installer businesses at the commencement of the HIP. During phase 2 approximately 10,500 new businesses were registered under the HIP.
- The Plaintiffs allege that the DEWHA failed to institute a robust compliance regime to ensure installers were suitably trained in installation and fully aware of the dangers associated with installing insulation in existing houses.
- The HIP was suspended on 19 February 2010, due to the likelihood of further risk of injury and fatalities if the scheme continued.
- On 22 April 2010 the Commonwealth announced that the HIP would not proceed in any rebranded form. Approximately $1 billion of the $2.45 billion allocated to the HIP had not been spent.
- The Plaintiffs allege that cancellation of the HIP proved catastrophic for the insulation related businesses who had increased capital investment to meet increased demand for retrofit installation of insulation created by the HIP.
- The Plaintiffs plead a number of causes of action against the Commonwealth. Broadly, the causes of action are as follows:
- Breach of contract. The Plaintiffs allege that the Commonwealth entered into a contract with the pre-existing and new installer businesses for the installation of ceiling insulation in eligible homes and that by reason of the Commonwealth’s repudiation of the contract on 19 February 2010, pre-existing and new installer businesses suffered loss and damage.
- Negligence. The Plaintiffs allege that the Commonwealth had a duty to take reasonable care to minimise the risk of foreseeable economic loss to both the pre-existing manufacturers and installer businesses as well as new installer businesses and that insulation related businesses suffered loss and damage as a result of the defective design, implementation and/or operation of the HIP.
- Negligent misrepresentation. The Plaintiffs allege that the Commonwealth negligently represented expressly or impliedly to the Plaintiffs and group members that the Commonwealth would not reconsider their decision to operate the HIP until the earlier of the following dates:
- 31 December 2011; or
- the funds that the Commonwealth had allocated to the HIP to fund insulation of a minimum of 2.2 million Australian homes built prior to 2003 ran out, and that as a result of acting in reliance on the Commonwealth’s negligent representations the Plaintiffs and group members suffered loss and damage.
- Misleading and deceptive conduct. The Plaintiffs allege that the Commonwealth engaged in conduct that was misleading and deceptive for the purposes of section 52 of the Trade Practices Act 1974 (Cth) by making the representations defined in paragraphs 5, 6, 8, 12 and 12A of the Further Amended Statement of Claim and that as a result of the Plaintiffs and group members reliance on the Commonwealth’s misleading and deceptive conduct the Plaintiffs and group members suffered loss and damage.
The class action was heard by the Victorian Supreme Court in March, April and May 2018