The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd [2026] NSWSC 27

Andrew Hales  |  Luke Sundercombe  |  Ersen Ahmet

Key takeouts

The Supreme Court of NSW has found in a matter where the builder was engaged on a ‘construct only’ basis that the builder’s contract which excluded ‘design responsibility’ limited the operation of Building Code of Australia (BCA) compliance warranties in the contract, even where the builder was in fact significantly involved in the selection of defective ACP cladding products.

The matter also analysed the application of the BCA concerning the use of combustible ACP cladding to the façade of the building, including the then-existing distinction between the compliance of ACL cladding products as ‘attachments’ to, as opposed to being ‘part’ of, the ‘external wall’.

The Court further found that the installation (and subsequent removal) of non-compliant cladding can constitute ‘property damage’ for the purpose of insurance policies.

The Court was also prepared to accept that approval of the ACP cladding products by an architect responsible for approving products for use on the building was sufficient to constitute a misleading representation for the purposes of the Australian Consumer Law.

Facts

The Plaintiff, The Star Entertainment Sydney Properties Pty Ltd (Star) embarked on 3 refurbishment projects at its Casino Complex in Sydney. The project involved the installation of aluminium composite panels (ACP) to the external façade of 2 buildings, at a time where the combustibility risks associated with ACPs were becoming known in the industry.

Having removed the ACPs following intervention by the NSW Government, Star sought $4 million in damages from the builder, Buildcorp Group Pty Ltd (builder). The builder, in turn, sought damages from the project architect, The Buchan Group (architect), and the insurers of the façade subcontractor.

The architect had acted as the lead consultant for the projects, and was responsible for the architectural design and coordination, including specifying façade materials, reviewing shop drawings for design intent, and ensuring the design was compliant with the BCA. The contracts between Star and the builder differed in respect of each project, although each contract contained a warranty that any works would comply with the BCA:

• Project 1 – construct-only contract that expressly provided that the builder ‘will not have any Design Responsibility‘;
• Project 2 – design and construct contract; and
• Project 3 – minor works (design and construct) contract, which included a warranty that the works were fit for purpose.

The same combustible ACP cladding product was used in all 3 projects.

Issues

• Did installation of ACPs across the 3 projects give rise to breaches of contractual warranties, specifically compliance with the BCA;
• Were the ACPs properly characterised as external walls or ‘attachments’ for BCA compliance purposes;
• Did consultants or subcontractors owe the builder duties of care in negligence, having regard to the concept of vulnerability in claims for pure economic loss;
• Could the installation and removal of ACPs constitute ‘property damage’ for the purposes of liability insurance; and
• Did representations made during the projects engage the prohibitions against misleading or deceptive conduct contrary to the Australian Consumer Law (ACL).

Decision

Overview

In relation to each project, the Court found:

• Project 1 – the ACP cladding product installed on the external façade was not compliant with the BCA, but the builder was not liable because responsibility for the non‑compliant design lay outside its contractual scope.
• Project 2 – the ACP cladding product was compliant with the BCA, as it qualified as a permissible ‘attachment’ and did not pose an undue risk of fire spread.
• Project 3 – the ACP cladding product was not compliant with the BCA, and the builder was contractually liable for the resulting non‑compliant works.

Project 1

Breach of contractual warranties

Notwithstanding the contract excluded ‘design responsibilities’ from the scope of the builder’s obligations under the contract, Star sought to rely on the builder’s warranties, which required the works to comply with the BCA, to say that the builder was responsible for the defective cladding.  

The Court found that achieving BCA compliance fell within the definition of ‘design responsibility’ in the contract, and was therefore outside the builder’s contractual responsibility. The Court found that the builder’s warranties relating to BCA compliance did not extend in scope to design related non-compliance. This was not affected by the builder having been involved in the selection of the defective ACP cladding product. 

Architect’s liability in tort?

Despite finding that the builder did not have liability to Star, the Court considered whether the architect would be responsible to the builder in negligence.  The builder contended that the architect owed it a duty of care in negligence for pure economic loss arising from the non‑compliant use of ACP cladding.

The Court confirmed that ‘vulnerability‘ is central to any assessment of whether the architect owed the builder a duty of care. The builder submitted that in not having design responsibility, it was vulnerable to the architect’s decisions, including as to the approval of the ACP cladding product.  The Court found that the builder lacked the necessary vulnerability such that the architect did not owe a duty of care. Both parties were experienced, commercial entities entering into sophisticated contracts at arm’s length. In particular, the Court considered that not only was the builder able to protect itself contractually, but it in fact did by excluding its responsibility for design errors.

Clarification and application of the ACL

Although finding it unnecessary to determine, the Court also considered the builder’s cross-claim against the architect in relation to alleged breaches of sections 18 and 29 of the ACL concerning Project 1.

Section 18 of the ACL states that, in trade or commerce, a party must not engage in conduct that is misleading or deceptive. Section 29 of the ACL provides that a party must not, in trade or commerce, make false or misleading representations about matters such as the characteristics, approval, or suitability of services, where those representations may induce the counterparty to contract.

The builder contended that the architect breached sections 18 and 29 by making misleading representations, including through certification and assurances as to compliance and suitability, upon which the builder relied in carrying out and pricing the works.

The builder had claimed that by approving the ACP samples, the architect had represented that the ACP product was suitable for installation and compliant with the BCA, statements which the builder claimed were misleading and deceptive.

The Court rejected the applicability of section 29, finding that section 29 does not create a general prohibition, but that the phrase ‘in connection with the supply of goods or services’ in section 29 requires a direct supplier–consumer relationship, which the builder did not have with the architect.

As to section 18, the Court was prepared to accept that by the architect’s approval of the ACP sample and shop drawings, the architect conveyed the misleading impression that the ACPs were compliant with the BCA, despite not being expressly stated. Ultimately, the Court did not determine the builder’s cross-claim under section 18 given the Court had found the builder was not liable to Star in relation to Project 1.

Project 2

Star’s claim against the builder also failed in respect of Project 2, although for different reasons.

The Court found that the combustible ACP panels were compliant with the BCA at the time of construction, in that the Court accepted their use as ‘attachments‘ to an external façade where the external wall itself was non-combustible. In coming to this view, the Court preferred the Builder’s evidence that the indicia in the BCA were met, having regard to: compliance with fire hazard properties whether the ACL panels impaired the required fire resistance level, the location of the panels relative to required exits, and whether the panels posed an undue risk of fire spread via the façade of the building.

Star had contended that the ACP panels formed part of the external wall and were subject to a more restrictive requirement in the BCA prohibiting use of combustible elements.

Ultimately, the Court accepted on the evidence that the ACPs were ‘attachments’, and subject to the less onerous test in the BCA, concluding that the cladding was compliant with the BCA.

Project 3

Differing from Projects 1 and 2, the Star had engaged the builder under a design and construct minor works contract which included a clause that any works would be compliant with the BCA and fit for purpose. The builder conceded that the works did not comply with the BCA. The Court found the builder to have breached its warranty, entitling Star to damages in the amount of $285,662.

Insurance – ‘property damage’ definition issue

The builder sought to pass through its liability to the insurers of the cladding installer (which was in liquidation) by establishing that the installation and subsequent removal of the ACP constituted ‘property damage’ within the meaning of the insurer’s policy wording.

The Court ultimately concluded both the installation and the removal of the ACP constituted property damage. In doing so, the Court relied on the finding in Ranicar v Frigmobile [1983] TAS R 113 that damage to property occurs where there ‘is a physical alteration or change, not necessarily permanent or irreparable, which impairs the value or usefulness of the thing said to have been damaged‘.

The Court accepted that attaching the non‑compliant ACP cladding to the building physically altered the building because the panels were fixed using screws, framing and sealants, each of which would cause damage. This would be exacerbated by the removal of the ACP, causing further damage. Beyond this, the Court found that affixing of the panels had caused property damage by impairing the value and usefulness of the building, which now had a combustible external façade reducing its fire resistance.