Lawyers have weighed in on likely insurance impacts from the outcome of The Star casino’s cladding lawsuit against builder, Buildcorp Group.

The Star Entertainment Sydney Properties had launched proceedings to recover $4 million in damages from the builder in relation to refurbishment works at the complex in Pyrmont that involved installation of aluminium composite panels between 2014 and 2016. 

Buildcorp Group, trading as Buildcorp Interiors, in turn sought damages from the casino’s architect and Ausrise Aluminium, the subcontractor that installed the panels. Ausrise was in liquidation and its insurer, Lloyd’s Syndicate 1206, was joined to the lawsuit. 

NSW Supreme Court judge Kelly Rees handed down her decision in February, ruling against the casino group in two of three projects undertaken as part of the refurbishment works. 

She determined the casino group had no grounds to claim for damages in the first project as the terms gave the builder no design responsibility and in the second, installation of the ACPs complied with the building code at the time. 

In the third project the builder was found liable and entitled to be indemnified by Ausrise. Judge Rees determined using non-compliant ACPs caused “property damage” within the meaning of the policy.  

Law firm Gilchrist Connell says the court’s decision is of “significance for construction, design and insurance professionals … particularly as to the operation of misleading conduct provisions in the Australian Consumer Law”. 

On the court’s decision in the third project, the law firm said “having found that the cladding installer was liable to the builder by reason of an indemnity in its contract, the court turned to assessment of whether the insurers of the cladding installer would be liable under the cladding installer’s policy of insurance. 

“The key issue for determination being whether the installation and/or removal of non-compliant cladding is sufficient to constitute ‘property damage’ within the meaning of the policy. Her Honour ultimately determined that there had been property damage both by affixing and removing the cladding.”

Clyde & Co partner Matthew Smith says the case reinforces the validity of traditional policy exclusions relating to defective workmanship. It supports the position that insurance is intended to cover fortuitous events, not predictable business risks such as poor construction. 

As a result, insurers are likely to continue drafting policies with clear exclusions and may become even more precise in defining what constitutes “damage”, he says. 

“Overall, the decision reinforces a clear boundary: insurance covers damage caused by defects, but not the defects themselves. This distinction has practical implications for both industries, shaping how risks are priced, managed, and allocated across construction projects.”