Insulation Companies Start Class Action Against Government For Pink Batt Losses

Thursday 26 May 2016 @ 12.38 p.m. | Corporate & Regulatory | Trade & Commerce

Home insulation installers and manufacturers are being asked to join a $100 million class action against the Commonwealth Government, claiming the failed management of the “pink batts” scheme caused them massive financial losses and damage to their businesses.

The class action is being run by ACA Lawyers and McLaughlin & Riordan, who have obtained litigation funding from Harbour Litigation Funding on the proviso that a sufficient number of businesses join the action. Home insulation companies established before 3 February 2009, when the program started , and manufacturers, installers and distributers established after that date are all eligible to participate in the action.

In a media release announcing the action, Mark Farrell, partner at McLaughlin & Riordan said:

“These were honest, successful and well established businesses that were operating well before the Rudd Government started the HIP [the “Home Insulation Program”] in 2009. But just on a year later, when the program was suddenly closed, many were forced into bankruptcy… This was not because of their mismanagement but because the Commonwealth Government failed to deliver on its commitments.”

The lead claimant in the case, Matthew Hannam, who runs an insulation manufacturing business in Queensland told ABC News that his business was “mostly idle” and that the program “took a business that was basically operating since 1978, turned it upside down and destroyed it”. He said:

“The government had literally hijacked our entire industry and started involving itself in areas that in had no understanding, no expertise, and that was only ever going to end in disaster … They reassured us, they promised us and then they pulled out the rug from underneath us right at the height of the program.”

Compensation Scheme

A government compensation scheme, which commenced on 1 July 2015, is operational, but the ACA Lawyers website states “[t]o date, offers under the Home Insulation Program Industry Payment Scheme are significantly undervaluing the losses suffered at law.”

A spokesman for Industry minister Christopher Pyne told ABC News the scheme had paid out nearly $13 million to 92 businesses, and was operating in line with the Royal Commission’s recommendations.

Claim Summary

On their website, ACA Lawyers sum up the case as follows:

It is alleged that the Commonwealth breached its duty of care by negligently designing and/or administering the HIP and failing to properly identify and manage inherent risks by:

failing to institute an administrative procedure by which the Commonwealth monitored the workplace safety of the installers, and ensured that the installers worked under safe systems of work;
failing to ensure that installers were trained;
failing to ensure that supervisors were supervising the installation of insulation by untrained and inexperienced installers;
failing to ensure that installers were informed of the dangers of installing roll-out foil as insulation;
failing to ensure that pre-installation hazard and risk assessments were formulated and conducted prior to installation work being undertaken in ceiling spaces;
failing to ensure that the States and Territories enforced installer compliance with OH&S requirements;
failing to have any proper regard to the risks of working in ceiling spaces and the risks of installing insulation in ceiling spaces.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.