Star Casino rolls the dice on a $4M cladding claim and wins one out of three

date

02 March 2026

In issue

Whether combustible materials can be attached to a Type A building under the Building Code of Australia (BCA),
whether installation of non-compliant ACPs on a building breached the contract warranty that the works would comply with the BCA (warranty),
whether the plaintiff’s architect (The Buchan Group) (architect) represented to the builder that ACPs were suitable to install on external walls by approving sample and shop drawings,
whether the architect owed a duty of care to the builder,
whether attaching non-compliant ACPs to the plaintiff’s building (Star Casino) (building) was 'property damage', and
whether the agreement between the builder and the sub-contractor who installed the ACP (Ausrise Aluminium Group Pty Ltd) (installer) (subcontract), which purported to exclude the operation of the Civil Liability Act 2002 (NSW), was an assumption of liability regardless of fault.

The background

From 2014 to 2016, the plaintiff undertook three refurbishment projects (projects) to the building which involved the installation of ACPs to the building’s façade. All parties involved in each project were contractually obliged to comply with the BCA, requiring the building to be a Type A construction under the BCA. This is the most fire-resistant classification and requires the external walls to be 'non-combustible'.

In the provision of its pre-construction services, the builder subcontracted the installer to prepare shop drawings, which included ACPs. By way of product substitution from what had been included in the architect’s original design, the builder, with the assistance of the installer, suggested the use of an ACP called Alpolic FR (Alpolic) as it matched the building’s current façade and would be quicker to procure; this product substitution was approved by the plaintiff and the architect.

In 2017, the plaintiff was mandated by the NSW Government to remove the ACPs due to their flammable risks becoming known in Australia, especially after the high-profile Grenfell Tower and Lacrosse building fires.

The plaintiff removed the ACPs from the external façade, and then commenced the proceeding seeking damages totaling $4 million in remediation costs from the builder, who subsequently sued the architect, with the installer’s insurers being joined to the proceedings (given the installer’s intervening insolvency).

The decision at trial

The plaintiff’s claim against the builder failed in respect of the first and second projects but was successful in the third project. Crucially, the Court held that:

the terms of contract for the first project provided that the builder had no design responsibility and the builder was not owed a duty of care by the architect due to the lack of necessary 'vulnerability',
the builder’s installation of the ACPs in the second project had complied with the BCA at the time of their installation, and
the builder breached the warranty owed to the plaintiff in the third project owing to the non-compliance of the ACPs.

First project

In relation to the first project, the plaintiff engaged the builder to lead consultants in finalising the project design for approval. While the builder provided 'buildability' and 'value engineering' input - often blurring the lines with the architect’s role - the Court held that Clause 25 of the ECI Contract (Early Contractor Involvement Contract) expressly excluded the builder’s design responsibility. This 'carve out' remained consistent in the subsequent building contract, effectively absolving the builder of liability for the ACP design. The Court noted the parties understood the builder was contracted to build the works, not to design them.

The Court rejected the builder’s claim that the architect owed it a duty of care. Applying Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16, the Court found the builder lacked the 'vulnerability' necessary to establish such a duty. As a sophisticated commercial entity, the builder had the contractual capacity to protect itself from risk, negating any extra-contractual duty from the architect.

Second project

Regarding the second project, the Court evaluated compliance based on the BCA standards applicable between 2014 and 2016. It concluded that the ACPs qualified as 'external wall attachments' under Clause 2.4 of Specification C1.1. To meet this exception, the material had to satisfy specific criteria: falling within Group Numbers 1 to 3, maintaining appropriate proximity to exits, avoiding undue risk of fire spread across the façade, and not compromising the building’s fire-resistance level. The Court found these conditions were met at the time of installation, meaning the builder was not in breach of the warranty.

Third project

In relation to the third project, the Court found the builder liable for breaching its Minor Works Contract by failing to ensure ACP installations met BCA non-combustibility requirements. This was because between the second and third project, in April 2015, the CodeMark Certificate of Conformity for the relevant ACP being Alpolic was re-issued. From that date, the CodeMark Certificate stated, in effect, that Alpolic did not provide full fire resistance for the building and that the fire resistance requirements would need to be addressed by other means. As there was no Alternative Solution in place, the cladding installed as part of the third project was determined to be BCA non-compliant.

The Court applied the precedent in Ranicar v Frigmobile Pty Ltd; Ranicar v Royal Insurance Pty Ltd [1983] Tas R 113 to rule that installing non-compliant, less fire-resistant cladding constitutes 'property damage' because it impairs the building’s value and usefulness. Furthermore, due to a contractual waiver of proportionate liability in the subcontract, the insolvent installer's insurer could not reduce its liability based on the fault of other parties.

Implications for you

Three key takeaways for this case are:

BCA compliance for ACPs, and whether these constitute a breach of contract to the extent that the builder has warranted that all work will be BCA compliant, is to be determined by reference to the BCA provisions at the time the ACPs were specified and installed (as opposed to BCA provisions at the time of the commencement of the proceedings). Parties should maintain constant vigilance with all contemporary BCA provisions,
for a builder to show that an architect (or any other consultant) owes it a duty of care in order to establish negligence, there must be an element of 'vulnerability' in the builder when compared to the position of the architect. This will be difficult to show where both parties can be considered as sophisticated commercial parties able to protect their own interests, and
where removal or remediation of non-compliant external cladding is required, this can constitute 'property damage' at law for the purpose of interpreting liability clauses in insurance policies. All parties should continue to regularly review their insurance policies to ensure any exposure to liability is protected.

Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd t/as Buildcorp Interiors [2026] NSWSC 27

get in touch