A court has ordered a Lloyd’s syndicate to pay towards the cost of replacing external wall cladding on Sydney’s The Star casino.

Aluminium composite panels (ACPs) were installed on the facade of two Star buildings between 2014 and 2016, before the fire risks of such cladding were known.

In 2017, the NSW government told Star to remove the ACPs and the casino’s owner sought to recover $4 million in damages from the builder, Buildcorp Interiors. 

The builder in turn sought damages from the casino’s architect and the subcontractor that installed the panels, Ausrise Aluminium, which was in liquidation. Given Ausrise’s insolvency, its insurer, Lloyd’s Syndicate 1206, was joined to the action. 

The building work comprised three projects. Star’s claim against Buildcorp for the first – accounting for $3.4 million of the claim – failed because the terms of the project gave the builder no design responsibility. 

NSW Supreme Court judge Kelly Rees says Star’s claim also failed on the second project – for damages of $285,662 – because installation of the ACPs complied with the building code at the time. 

Star succeeded in its claim against Buildcorp for the third project – for damages of $285,662 – and the builder was entitled to be indemnified by Ausrise. Lloyd’s Syndicate 1206 should pay the builder $214,247 under the property damage clause in its policy, the court says. 

The Lloyd’s syndicate argued Ausrise only supplied and installed the cladding, but Justice Rees refers to the “expansive terms of Ausrise’s warranties and indemnities” towards the builder.

Ausrise gave a warranty that the work would be fit for its intended purpose and comply with the building code, and this was not the case. 

The judge says using non-compliant ACPs caused “property damage” within the meaning of the policy. 

Two expert facade engineers told the court they believed both the manufacturers and distributors of the ACPs provided misleading information about their products in 2014. 

Justice Rees says that, with the benefit of hindsight, the suggestion that the ACPs had a non-combustible mineral-filled core was incorrect because none of the products complied with the Australian standard on fire testing for building materials.  

However, the ACPs did have fire-retardant features, according to another expert, who was not aware of any significant fire involving the cladding used on the Star buildings. 

Read the judgment here.