Iplex Pipelines and the state government have agreed to provide up to $150 million as part of an industry deal to repair damaged houses but BGC Australia is not participating.
Iplex Pipelines and the state government have agreed to provide up to $150 million as part of an industry deal to repair damaged houses but BGC Australia is not participating.
The in-principle agreement includes a state government commitment to provide up to $30 million to fund repairs to houses damaged by rupturing of Iplex’s Pro-fit polybutylene pipes.
Iplex’s parent company Fletcher Building said its share of costs would be an estimated $120 million and would not be capped.
Participating builders will meet any costs beyond the Iplex and government contributions.
The pipes have been installed in about 15,000 homes in WA, with BGC responsible for about half of those.
It has already spent $18 million of its own money funding repairs.
BGC described today’s agreement as “a temporary band-aid provision and there is simply not enough funding to resolve the matter for participants”.
It has previously claimed the total repair cost could be up to $700 million.
BGC has called on Iplex’s ultimate parent, New Zealand-based Fletcher Building, to guarantee the funding rather than its Australian arm.
“BGC remains concerned that, while this issue has been live, Fletcher Building Australia has transferred assets from Australia to New Zealand over the last 18 months, and that it has failed to adequately provision for the true cost of this program,” BGC stated.
Fletcher Building said its provision for repair costs “allows for a leak rate of approximately 35 per cent which is higher than current or expected trends”.
The agreement means a product recall will not occur, removing one of the key risks facing Fletcher and Iplex.
The government acknowledged details of the agreement were yet to be finalised but asserted it would provide WA homeowners certainty that leaks with the Pro-fit polybutylene pipes will be managed and resolved at no cost to them.
Fletcher said the builders who erected “almost all of the affected homes” participated in the mediation discussions.
It added that all of those builders, other than BGC, have agreed to join the scheme.
Other builders, including plumbing contractors and owner-builders, who have installed the pipes will be able to sign up directly with Iplex once the agreement has been finalised.
The government said the option remains available for BGC to join the scheme.
However BGC said it was precluded from the scheme because it recently commenced its own litigation against Iplex.
It has argued the manufacturer supplied defective pipes and should meet the cost of repairs, whereas Iplex has countered by arguing the problem was defective installation.
Iplex is also on the receiving end of a class action, led by law firm Baker McKenzie.
The terms of the industry agreement appear to make the class action less appealing, as people who are in the class action at its conclusion will not be eligible for payments from Iplex.
However, Baker McKenzie is believed to be pressing ahead on the basis the scheme provides only a partial remedy for affected homeowners.
The class action is seeking compensation for any reduction in house values, full replacement of defective pipes for consumers who have suffered less than 3 leaks, loss or damage of possessions caused by burst or leaking pipes and loss of amenity, distress and disappointment.
Commerce Minister Sue Ellery said getting an in-principle agreement was a great outcome.
“Homeowners can be reassured that they have a way forward in getting these works done in a timely and sustainable manner,” she said.
“The Cook government has acted in customers’ best interests and will introduce legislation to protect homeowners with leaking Pro-fit Typlex 1050 pipes for 15 years.
“The legislation will ensure all eligible homeowners are given the same remedy for leaking pipes, no matter who they built with or when they built their home.
Remedial work on affected homes will be undertaken by participating builders proportionate to the number of leaks experienced, with homes that have experienced one leak being offered repairs and a ceiling re-pipe, those with two leaks offered a zone re-pipe, and those with three or more being offered the choice of a full or partial replacement of all pipes.
Funding to cover the costs of alternative accommodation or other arrangements needed where homeowners have to move out during full pipe replacement will also be offered.
The funding for participating builders to complete the necessary works will be available irrespective of when the home was completed or when the leaks occurred.
Iplex Australia, will also be offering the installation of a leak detection unit free of charge in all homes with the Typlex 1050 pipes to reduce the risk of property damage.
The in-principle agreement was the result of a mediation process led by former Supreme Court Justice John Chaney and supported by the Housing Industry Association.
