The owners of apartments at Melbourne's Lacrosse tower in Docklands have won more than $5.7 million in damages in a lawsuit launched after a fire fuelled by flammable cladding caused significant damage to the building in November 2014.

Key points: The builder has been found liable for $5.7 million in damages over the fire

The builder has been found liable for $5.7 million in damages over the fire But contractors have been ordered to reimburse the builder 97 per cent of costs

But contractors have been ordered to reimburse the builder 97 per cent of costs The cost of replacing non-compliant cladding is still being negotiated

The fire, which was sparked by a late-night cigarette left to burn in a plastic food container, raced up aluminium composite cladding on the building's exterior, but none of the approximately 400 people evacuated from the complex were hurt.

A review by the Metropolitan Fire Brigade (MFB) found the building's cladding was not compliant with combustibility requirements, and the Buildings Appeal Board ordered the cladding be removed from Lacrosse in January 2017.

It was the first major building fire in Melbourne caused by combustible cladding, which is now a serious and widespread problem.

Earlier this year, flammable cladding helped fire spread over several storeys of the Neo200 apartment complex on Spencer Street, renewing concern over the use of combustible materials as cladding on high-rise buildings.

Sorry, this video has expired A separate cladding fire spread up the Neo200 apartment tower on February 4

The Lacrosse blaze caused millions of dollars of damage to the 21-storey building, prompting apartment owners to launch legal action against the builder, LU Simon, in a bid to recoup more than $12 million in damages.

That claim for damages covered the cost for owners of replacing non-compliant cladding, damaged property, additional insurance premiums and "anticipated future losses".

In a decision handed down in the Victorian Civil and Administrative Tribunal (VCAT) by Judge Ted Woodward on Thursday, LU Simon was ordered to pay more than $5.7 million to apartment owners.

However, most of that money would be paid to LU Simon by the architect, fire engineer and building surveyor who worked on the project, after Judge Woodward found they had breached contractual obligations.

Design 'defects' contributed to damage

In his ruling, Judge Woodward found the architects Elenberg Fraser had failed to remedy "defects in its design", specifically designs which allowed the "extensive use" of aluminium composite panels (ACPs) on the east and west facades of the building.

"That caused the design to be non-compliant with the [Building Code of Australia] and not fit for purpose," he said in his 227-page ruling which laid out how costs should be paid.

He also found the building surveyor, Gardner Group, breached its agreement with LU Simon by failing to exercise due care when it issued a building permit in 2011 for those architect plans.

Thirdly, he found the fire engineer, trading as Thomas Nicolas, failed to recognise and warn the builder that the ACPs proposed for use on the building did not comply with the building code.

The cladding used on the outside of the building, known as Alucobest, was found to have been highly flammable and did not comply with Australian building standards.

As a result, he ordered that the three parties pay LU Simon a combined total of 97 per cent of the damages owed to apartment owners.

Gardner Group was ordered to pay 33 per cent, Elenberg Fraser 25 per cent and Thomas Nicolas 39 per cent.

Smoker who sparked blaze escapes costs

The remaining 3 per cent of costs were attributed to Jean-Francois Gubitta, who was on a working holiday in Melbourne from France, and whose abandoned cigarette sparked the blaze.

But Judge Woodward found Mr Gubitta's responsibility for the loss and damage was "minimal" and made no order directly affecting Mr Gubitta.

Instead, LU Simon was ordered to pay that share of the costs itself.

Some of the $12.7 million sought by apartment owners is yet to be resolved.

Judge Woodward said the calculated compliance cost of nearly $6 million sought by the owners seemed reasonable, but he made no order on the sum while the parties continued to negotiate the matter.

The ruling may be closely followed by apartment owners across Melbourne considering who will foot the bill to replace non-compliant flammable cladding on their buildings.

However, Judge Woodward stressed that his ruling should not be taken as setting any particular precedent for bodies corporate more generally.

"These reasons should not be read as commentary generally on the safety or otherwise of ACPs and their uses," he said.

"Many of my findings have been informed by the particular contracts between the parties in this case and by events occurring in the course of the Lacrosse project that may or may not be duplicated in other building projects."