The cladding was advertised as safe for use in residential, commercial and public buildings by German manufacturer 3A Composites and its Australian distributor Halifax Vogal Group (HVG), the Federal Court was told.
A class action lawyer said the components were "wholly unsuitable" for that purpose, as they contained a flammable polyethylene core which could ooze, melt and deform - accelerating the spread of fire.
Combustible cladding hit the public eye after the July 2017 fire at the 24-storey Grenfell Tower in London, where 72 people died.
The class action by building owners and lessees has culminated in a 40-day hearing, where compensation and damages have been sought.
The Federal Court is due to hold a 40-day hearing on the cladding. (James Ross/AAP PHOTOS)
On the second day of that hearing on Tuesday, barrister Stephen Free SC said the Australian Consumer Law was in place to provide protection from poor-quality goods.
The court should interpret the national law in a way that promoted its goal of consumer protection, providing the "fullest relief" possible, he told Justice Stewart Anderson.
The lawsuit focuses on two brands of 3A cladding: Alucobond PE, which is banned in Australia, and Alucobond Plus, which has been sold to architects and builders as a more fire-safe solution.
Owners corporations that are part of the case say they have been forced to undergo costly renovations to remove the banned cladding, or have been hit with skyrocketing insurance premiums as insurers became more reluctant to cover buildings fitted with Alucobond products.
The building components are not of merchantable quality and 3A and HVG made misleading representations when marketing the material to architects and builders in Australia, the class action claims.
Mr Free rejected 3A's arguments that it was not liable under Australian consumer law because it was located in Germany.
It was clear 3A was actually conducting business in Australia as it had sent the cladding to HVG and maintained control over how many of these products were sold and the phrasing used in marketing materials, he said.
"In many, many dimensions, (3A) is controlling and maximising the business use of its products within Australia for its profit," Mr Free said.
The firm's representatives also frequently visited Australia, holding educational sessions with architects and building professionals and attending trade shows, the court was told.
The class action alleges the firms gave no warnings about the fire risk of their products. (Bianca De Marchi/AAP PHOTOS)
No warnings were given about the fire dangers of the products at these meetings or in any of the promotional material, Mr Free said.
This conflicted with 3A and HVG's defence, which argued architects should have hired fire-safety engineers to check whether the way they planned to install the cladding on their buildings was safe, he said.
Dangerous goods did not become acceptable simply because there was a chance a well-informed professional might happen upon a particular project and manage the risk, Mr Free said.
Under the consumer law, goods sold prior to July 1, 2021, are required to come with an automatic consumer guarantee only if they are valued at under $40,000.
3A and HVG claim the value of the cladding should be calculated as the aggregate cost for each building, which could put the material over the $40,000 limit and outside the scope of any guarantee.
The class action says the value should be determined on a per-unit basis and each panel of cladding was priced at only a few hundred dollars.
The two firms will give their opening submissions on Wednesday.
