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Tricky Territory: ACT fails to act on Mr Fluffy asbestos victims

by Kim Wingerei | Apr 4, 2023 | Government, Latest Posts

It’s almost twenty years since all asbestos use was finally banned in Australia, followed by buy-back schemes and class lawsuits to compensate victims. But in Canberra, some owners of ‘Mr Fluffy’ homes are still waiting to be compensated. Kim Wingerei reports.

For 10 years from 1968, Asbestosfluf Insulations, and its successor J&H Insulation, pumped dangerous loose form amphibole asbestos filling – which later came to be known as ‘Mr Fluffy’ – into the roofs of more than 1000 houses in Canberra. They did so with the approval of the Federal Government (Commonwealth) minister in charge of the ACT. Within months, this prompted an investigation by the Commonwealth because it had been warned of the dangers of loose fill asbestos. Nothing came of it.

Prompted by growing public concern about asbestos in general, and Mr Fluffy in particular, the Commonwealth conducted an audit in 1988 and identified most of the Mr Fluffy homes in Canberra. Nothing came of it.

After the ACT became self-governing in 1989, the Territory conducted a “clean-up program” of more than 1000 Mr Fluffy homes between 1989 and 1993 and claimed it had ‘remediated’ the problem. They were also urged to disclose the presence of the harmful asbestos to all Mr Fluffy owners. This was not done.

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The loose-fill amosite asbestos used by Mr Fluffy was especially hazardous, because its lack of a bonding agent allowed it to migrate easily to hidden corners and cracks inside a residence. So over the years, this asbestos worked its way down into many other vacant spaces in the Mr Fluffy houses and asbestos was later found in some of the ‘cleaned’ houses, and others had been missed altogether.

Asbestos warnings ignored

In 2005, Katy Gallagher, then the Territory’s minister responsible for Mr Fluffy, and currently Commonwealth Minister for Finance, was warned personally about the risks of the Mr Fluffy problem. Still, nothing was done.

In 2010, an independent review recommends that the Territory strengthen warnings and provide regular information to new and existing Fluffy owners, tenants and tradespeople. The Territory ignores it. The Territory was warned again in 2013 and 2014. Still, secrecy prevailed.

Wind back to 2003, Leo and Lorraine Carvalho purchased what was to be their family and retirement home at 24 Olympus Way in Lyons. They did not know that it was the original Mr Fluffy house, once owned by Dirk Jansen, who ran Asbestosfluf Insulations. Nor did the Territory tell the Carvalhos that they were buying a Mr Fluffy home. Nor did that get a mention in their crown lease or in any of the other publicly available Territory documents.

Over the next 12 months, the Carvalhos made renovation plans and submitted their development applications (DAs) to the Territory. They were all approved, but in late 2004, a private sector building certifier told the Carvalhos they had a Mr Fluffy house. This meant that the house had to be certified as fit to live in by a qualified asbestos removalist before their second and third DAs would be approved by the Territory. So they duly got the certificate and the Territory then approved their DAs.

After having spent over $600,000 on renovations, the Carvalhos were granted their certificate of occupancy and use in 2013. They finally had the house of their dreams. Or so they thought.

Buy-back and demolition

In 2014, the Territory announced that every Mr Fluffy house was going to be demolished. The Territory imposed the “Loose-fill asbestos buyback concession scheme” in 2015, based upon what some claimed was a flawed valuation process. For the Cavalhos, it meant that the $600,000 they had spent was rendered worthless.

The Territory’s Scheme imposed a number of other requirements: if an owner sold their house on the open market, the purchaser could not live in it nor lease it and owners were given a pittance for legal services, which could not be used for advice about the legality or validity of the Scheme, but only to get help with the land transfer documents. Owners also had to waive all their rights to sue the Territory over the transaction. Under certain circumstances, the Territory might grant the owner the first right to buy back the ‘remediated’ land at an ‘agreed’ price, being the price the Territory paid the owner less $10,000. As if you can build a new house for $10,000.

Shortly afterwards, to make sure that the market for Mr Fluffy homes was completely corrupted, the Territory published the addresses of every Mr Fluffy address on the publicly available Affected Residential Premises Register.

Documents obtained by The Canberra Times show that as industrial relations minister responsible for asbestos, Katy Gallagher received numerous recommendations to deliver ‘explicit’, ‘regular’ and ‘systematic’ warnings to more than 1000 Mr Fluffy homeowners that remnant asbestos within their wall cavities posed a potential health risk.

Katy Gallagher said in 2018  that “our knowledge from May this year to today has changed exponentially to what was before us for all those years…Would I do things differently now? Yes, knowing what I’ve seen in the asbestos assessment reports, of course. But there was never any information presented to me that led to that belief that there was that level of contamination. None.” Based on Territory documents subsequently obtained, this was not true.

Today, the original Scheme has been abandoned. The Territory has continued to ramp up the pressure on owners who, as was their right under the ‘voluntary’ Scheme, chose not to opt in to the buyback Scheme. It has continually threatened to resort to ‘compulsory purchase’ of the Mr Fluffy properties, although they are now saying they will only “consider it in 2025”.

However, the Territory’s will pay claimants only what the Territory says the land is worth after the house is demolished and the land is remediated. But of course, by publishing the Register and imposing all of the onerous conditions of the Scheme on owners, including stringent and potentially costly Asbestos Management Plans, the Territory has completely corrupted the market since 2014.

In May or June of 2015, the names and addresses of all the then known 1022 ACT Mr Fluffy owners were leaked to a communications company. The Territory asked the AFP to investigate. As usual, nothing was found.

Class actions looming

Many of the Mr Fluffy house owners refused to partake of the Buyback Scheme. Even today, there are still 20 houses on the Register. Further, many of the 1040 or so owners who did the deal with the Territory have complained that they have lost hundreds of thousands of dollars. The implacable Territory with its deep pockets and carping Asbestos Task Force simply wore them down. They took the loss to make the years-long pain go away.

But here’s the rub for the Territory and the Commonwealth (as the legal owner of all land in the ACT), if they act to compulsorily acquire the remaining Mr Fluffy properties, it will likely invite a storm of litigation.

Because legislation requires that nether the Territory, nor the Commonwealth, can acquire the owners’ properties on “other than just terms”. With the exception of a few special deals done by the Territory and “genuinely unique” (to quote the language of the ACT Chief Minister) situations, virtually every one of the 1040 Mr Fluffy acquisitions have not been on “just terms”. This could end up costing a lot more than the billion dollars the Commonwealth ‘loaned’ the Territory to fund the Scheme. By its own admission, the Territory, through its improper acquisitions and on-sales, has already made a profit.

After having corrupted the market so thoroughly and imposing the completely unconscionable terms of the Scheme as the Territory did, any attempted compulsory acquisition will not only open up the possibility of a class action of the remaining 20 on the Register, but potentially open it up to all the other 1040 owners who have lost tens and hundreds of thousands of dollars. That may be why the Territory is putting any ‘consideration’ of compulsory acquisition off till 2025. Is it hoping all the remaining Mr Fluffy owners will have caved in or be dead by then?

The whole Scheme now appears more like a giant bluff by the Territory, designed to minimise cost. Until it gets sorted, the Carvalhos and many other house owners are having to wait for their just compensation.

Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.

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