BGC Housing Group: Class action lawsuit launched against major Australian homebuilder who sold too many homes to handle during pandemic

A major Australian homebuilder that left thousands of customers in financial distress waiting for years for their homes to be completed is now facing a class action lawsuit.

BGC Housing Group is one of Western Australia’s largest developers and sold 1,000 homes in one month during Covid and then failed to complete the builds within contractual timeframes, leaving customers in financial and emotional distress.

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

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

The action alleges the companies breached Australian Consumer Law and their contractual obligations to thousands of BGC homeowners.

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

Mr Lieberfreund said clients had waited two to three years for their homes to be finished, forcing people to take on second jobs or accept FIFO (first in, first out) positions just to make ends meet.

“In terms of financial stress it’s been enormous, unfortunately these people have been under a lot of financial stress,” he said.

‘If you have rent and a mortgage and you didn’t expect to have both for so long, the savings disappear.

‘In financial terms, we are looking at things like rental losses, additional interest payments, utility charges and land taxes.

‘In terms of the emotional experience, it’s been absolutely heartbreaking to hear some of the stories of families who have been torn apart because a mother or father has had to work away.

‘We have people living in sheds, caravans, we have one person living in a nine-foot caravan going from place to place trying to get their kids to school.

“It’s really heartbreaking and what really matters is not knowing when their houses will be finished.”

Mr Lieberfreund said it was a situation where the builder had sold houses in quantities far exceeding what it could deliver and what it had sold in previous years.

“That was never going to happen,” he said.

‘They sold 1,000 homes in July 2020, more than any other builder in Australia, so there was no way they could do that when they only sold around 2,000 homes the year before.

‘If you sold half of that in one month the next year, you would never complete it unless you suddenly significantly increased your workforce.

“We really feel for the people who have been affected here. These are real families and parents who live this day in and day out. It’s a really difficult situation.”

A BGC spokesperson said they were aware of a class action lawsuit filed in the WA Supreme Court against their housing group entities.

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

“The company will not allow this to distract us from our continued focus on delivering all homes as quickly as current labor market restrictions allow.”

In April 2023, BGC stopped accepting orders for new homes and has since delivered more than 1,800 homes to customers.

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

‘Current completion rates allow us to deliver between 40 and 50 sets of keys per week.’

This week, the company made the decision to sell its cement division consisting of BGC Asphalt, BGC Cement, BGC Concrete, BGC Quarries, BGC Transport and the company’s Materials Technology Center.

BGC chief executive Daniel Cooper said the sale process was part of the BGC Group’s divestment announced in 2018.

“We will remain focused on operating safe workplaces and continuing to provide services to our customers,” he said.

‘For those customers who are building with us, I want to assure you that we remain firmly focused on completing your home as quickly as possible.’

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

James Buck, a class action plaintiff, said he had been greatly affected by the delay in construction of his home.

“BGC’s conduct toward me and my family while we were building our home left us devastated both financially and emotionally,” she said.

BGC’s proposed class action group and class member Jess Spithoven said that now that the lawsuit had begun, she expected all property owners affected by BGC’s actions to receive their full compensation under the law.