BGC Housing Group: Class action launched against major Aussie home builder that sold too many homes to handle during Covid

A major Australian homebuilder that left thousands of customers in financial distress for years is now facing a class action lawsuit.

BGC Housing Group is one of Western Australia’s largest builders and sold 1,000 homes in one month during Covid-19. They were then unable to complete construction within the contracted timeframe, leaving customers in financial and emotional distress.

Morgan Alteruthemeyer Legal Group this week filed a class action lawsuit against three BGC Housing Group companies in the Supreme Court of Western Australia.

The class action lawsuit was filed on behalf of thousands of people who entered into home construction contracts with BGC Housing Group companies BGC Residential, J-Corp and Ventura Homes between January 2019 and September 2022.

The charges allege the companies breached the Australian Consumer Law and their contractual obligations to thousands of homeowners in the BGC.

Spencer Lieberfreund, a construction partner at Morgan Alteruthemeyer Legal Group, said they expect between 5,000 and 7,000 BGC clients to join the class action lawsuit.

According to Mr Lieberfreund, customers were having to wait two to three years for their homes to be completed, forcing people to take on second jobs or FIFO positions to make ends meet.

“In terms of the financial stress, it’s been tremendous, unfortunately these people have suffered greatly from that,” he said.

‘If you have rent and a mortgage and you don’t expect to have both of them for that long, then your savings are gone.

‘On a financial level, we look at things like loss of rent, additional interest payments, utilities and property taxes.

‘In terms of the emotional experience, it was heartbreaking to hear the stories of families being separated because one parent had to move to another country for work.

‘There are people living in sheds and caravans. There is also someone who lives in a caravan that is three metres long and travels from one place to another to get his children to school.

“It’s really heartbreaking. It comes down to them not knowing when their homes will be ready.”

According to Mr Lieberfreund, there was a situation where the builder had sold far more houses than he could deliver and had ever sold before in previous years.

“It would just never happen,” he said.

‘In July 2020 they sold 1,000 homes, more than any other builder in Australia. That wasn’t possible, considering they only sold 2,000 homes the year before.

‘If you were to sell half of that in one month the following year, you could never finish it unless you suddenly expanded your labor force considerably.

“We really feel for the people who are affected here. They are real families and parents who have to deal with this every day. It is a very difficult situation.”

A BGC spokesperson said they were aware of a class action lawsuit filed in the Supreme Court of Western Australia against the housing associations.

“BGC will vigorously defend the class action as we believe the basis of the case has potentially far-reaching implications for all builders in the state and Australia,” the lawyers said.

‘The company will not be distracted by this from our continued focus on delivering all homes as quickly as possible, within the current constraints on the labour market.’

In April 2023, BGC stopped accepting orders for new homes and since then more than 1,800 homes have been handed over to customers.

“We are making good progress, with 90 percent of homes now out of lockdown,” the spokesperson said.

‘We currently deliver about 40-50 sets of keys per week.’

This week, the company decided to sell its cement division, which includes BGC Asphalt, BGC Cement, BGC Concrete, BGC Quarries, BGC Transport and the company’s Materials Technology Centre.

According to Daniel Cooper, CEO of BGC, the sale process is part of the divestment of the BGC Group announced in 2018.

“Our focus remains on creating safe workplaces and continuing to provide services to our customers,” he said.

‘I want to assure the customers who build with us that we are fully committed to delivering their home as quickly as possible.’

The class action lawsuit is being funded by litigation funder Omni Bridgeway.

James Buck, a representative of the plaintiff in the class action lawsuit, said he was hit hard by the delay in construction of his home.

“BGC’s behavior towards me and my family during the construction of our home has devastated us both financially and emotionally,” he said.

Facebook BGC proposed class action Group and class action member Jess Spithoven said she hoped that now that the lawsuit had started, all homeowners affected by BGC’s actions would receive their full compensation under the law.