The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd trading as “Buildcorp Interiors”

Medium Neutral Citation: The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd trading as “Buildcorp Interiors” [2026] NSWSC 27

Hearing dates: 13 – 24 October 2025, last submissions 12 December 2025

Date of orders: 6 February 2026

Decision date: 06 February 2026

Jurisdiction: Equity - Technology and Construction List

Before: Rees J

Decision: Damages awarded.

Catchwords: BUILDING AND CONSTRUCTION – casino refurbishment – architect specifies “non-combustible” cladding for external façade – procurement concerns – builder and façade installer suggest aluminium composite panels (ACPs) instead – ACPs are “combustible” – casino and architect approve product substitution – construction drawings not updated – certifier unaware of ACPs – government requires ACPs to be replaced – casino sues builder for $4M remediation costs – builder sues architect, façade installer and its insurers – partial damages awarded.
BUILDING CODE OF AUSTRALIA – 2014 and 2015 editions – fire-resisting construction – cl 2.4 – attachments – cl 3.1 – whether “combustible” materials can be attached to a Type A building – consideration at [48]-[62].
CONTRACT – façade installer gave warranty that works would be fit for purpose – whether installation of non-compliant ACPs on building breached warranty – principles at [386]-[387] – not fit for purpose.
AUSTRALIAN CONSUMER LAW – whether “supply” by architect to builder absent contract between them – s 4(1) – principles at [251]-[256] – no “supply” – whether casino a “consumer” – s 3(10) – presumption that a consumer “unless the contrary is established” – whether architect represented to builder that ACPs were suitable to install on external walls by approving sample and shop drawings – whether statement of fact or opinion – whether representation as to a future matter.
CONTRACT – Construct Only contract excluded “Design Responsibility” – warranty that works would comply with BCA – proper construction – multiple documents in same transaction – presumption against surplusage – commerciality – principles at [207]-[216] – warranty did not extend to non-compliance with BCA referable to tasks within “Design Responsibility”.
NEGLIGENCE – economic loss – whether architect owed duty to builder – principles at [235]-[239] – builder lacked “vulnerability” – builder protected itself by excluding Design Responsibility in contract with principal.
INSURANCE – “property damage” – whether attaching non-compliant ACPs to casino was “property damage” – principles at [398]-[405] – removing non-compliant ACPs left holes, gaps and damaged adjacent building elements – exclusions – principles at [414]-[416] - whether insured’s agreement with builder to exclude operation of Civil Liability Act was an assumption of liability regardless of fault – not so – whether insurers entitled to nonetheless rely on apportionable claims – not so – s 4, Civil Liability (Third Party Claims Against Insurers) Act 2017.
DAMAGES – whether casino entitled to estimated or actual cost of remediation – actual cost less given remediation works undertaken together with other works – principles at [435]-[437] –actual costs is a more accurate award of damages and does justice between the parties.

Legislation Cited: Australian Consumer Law
Building Code of Australia
Civil Liability Act 2002 (NSW)
Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW)
Environmental Planning and Assessment Act 1979 (NSW)
Environmental Planning and Assessment Regulation 2000 (NSW)
Home Building Act 1989 (NSW)
Interpretation Act 1987 (NSW)
Limitation Act 1969 (NSW)
Trade Practices Act 1974 (Cth)

Cases Cited: AAI Ltd v The Owners – Strata Plan No 91086 [2025] FCAFC 6
Absolute Tiling Solutions Pty Ltd v Certain Underwriters at Lloyds [2024] NSWSC 364
AFC Holdings Pty Ltd v Shiprock Holdings Pty Ltd [2010] NSWSC 985
Anchorage Capital Master Offshore Ltd v Sparkes (2023) 111 NSWLR 304; [2023] NSWCA 88
Aquagenics Pty Ltd v Break O’Dea Council (2010) 20 Tas R 239
Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority [2006] VSC 117
Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6
Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2023] FCAFC 45
Australian Competition and Consumer Commission v Telstra Corporation Ltd [2007] FCA 1904; (2007) 244 ALR 470
Austral Plywoods Pty Ltd v FAI General Insurance Company Ltd [1992] QCA 4
Barton v Stiff [2006] VSC 307
Bellgrove v Eldridge (1954) 90 CLR 613; [1954] HCA 36
Brighton Automotive Holdings Pty Ltd v Honda Australia Pty Ltd (No 2) [2024] VSC 262
Brookfield Multiplex Ltd v The Owners - Strata Plan No 61288 (2014) 254 CLR 185; [2014] HCA 36
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60
Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653; [1986] HCA 81
Capral Ltd v Insurance Australia Ltd (t/as CGU Insurance) v Capral Ltd [2024] FCA 775
Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295
Cirrus Real Time Processing Systems Pty Ltd v Jet Aviation Australia Pty Ltd (2023) 113 NSWLR 80; [2023] NSWCA 280
Clark v Macourt (2013) 253 CLR 1; [2013] HCA 56
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54
Cook v Pasminco Ltd (2000) 99 FCR 548; [2000] FCA 677
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500; [1986] HCA 82
Ecosse Property Holdings Pty Ltd v Gee Dee
Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12
Fink v Fink (1946) 74 CLR 127; [1946] HCA 54
Golden Strait Corp v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353; [2007] UKHL 12
HDI Global Specialty SE v Wonkana No 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296
Hill v Van Erp (1997) 188 CLR 159; [1997] HCA 9
Impact Funding Solutions Ltd v AIG Europe Insurance Ltd [2017] AC 73; [2016] UKSC 57
Insurance Australia Ltd (t/as CGU Insurance) v Capral Ltd (2025) 309 FCR 385; [2025] FCAFC 46
Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307
John Shaw v Richard Jeffrey (1860) 15 ER 162
Johnson v Agnew [1979] 1 All ER 883
Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64
Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350
Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 276 CLR 500; [2023] HCA 6 Madden v Seafolly Pty Ltd [2014] FCAFC 30; (2014) 313 ALR 1 Liberty Mutual Insurance Company Australian Branch (t/as Liberty Specialty Markets) v Icon Co (NSW) Pty Ltd [2021] FCAFC 126; (2021) 154 ACSR 126 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 Makawe Pty Ltd v Randwick City Council [2009] NSWCA 412; (2009) 171 LGERA 165 Mallonland Pty Ltd v Advanta Seeds Pty Ltd [2024] HCA 25; (2024) 418 ALR 639 Margaronis Navigation Agency Ltd v Henry W Peabody & Co of London Ltd [1965] 1 QB 300 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 McCrohon v Harith [2010] NSWCA 67 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79 Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants (Aust) [2001] FCA 1056 Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110; [2002] FCAFC 197 Norton Property Group Pty Ltd v Ozzy States Pty Ltd (in liq) [2020] NSWCA 23 Owners Corporation No.1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286 Ranicar v Frigmobile Pty Ltd; Ranicar v Royal Insurance Pty Ltd [1983] Tas R 113 Rockment Pty Ltd (t/as Vanilla Lounge) v AAI Ltd (t/as Vero Insurance) (2020) 282 FCR 561; [2020] FCAFC 228 Ross v The Queen (1979) 141 CLR 432; [1979] HCA 29 Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186; [2023] HCA 8 Smith New Court Securities Ltd v Citibank NA [1997] AC 254 Smith v The Queen (1994) 181 CLR 388; [1994] HCA 60 Star Entertainment Group Limited v Chubb Insurance Australia Ltd [2022] FCAFC 16; (2022) 400 ALR 25 Tanah Merah Vic Pty Ltd v Owners Corporation No 1 of PS 613436T (2021) 75 VR 1; [2021] VSCA 72 Taylor Construction Group Pty Ltd v Strata Plan 92888 (t/as Owners Strata Plan 92888) [2021] NSWSC 1315 The Owners – Strata Plan No 66375 v King [2018] NSWCA 170 The Owners – Strata Plan No 69312 v Rockdale City Council [2012] NSWSC 1244; (2012) 191 LGERA 160 The Owners – Strata Plan No 91086 v Fairview Architectural Pty Ltd (No 3) [2023] FCA 814 The Owners – Strata Plan No 92450 v JKN Para 1 Pty Ltd [2022] NSWSC 958 The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd [2023] NSWSC 241 Walton Construction Pty Ltd v Illawarra Hotel Company Pty Ltd [2011] NSWSC 534 Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2018] NSWCA 100; (2018) 359 ALR 314 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16 Voli v Inglewood Shire Council (1963) 110 CLR 74; [1963] HCA 15 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; [1992] HCA 55 Wenham v Ella (1972) 127 CLR 454; [1972] HCA 43 Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd (No 6) [2020] WASC 302 Xu v Lindsay Bennelong Developments Pty Ltd [2020] NSWSC 1692

Texts Cited: AS 1530.1 – Methods for fire tests on building materials, components and structures – combustibility test for materials
CSIRO, Fire Performance and Test Methods for ACP External Wall Cladding, Melbourne (2020)
DC Pearce and RS Geddes, Statutory Interpretation in Australia, (8th ed, 2014, LexisNexis Butterworths)
Macquarie Dictionary, 3rd ed (2001)
NSW Government, Product remediate: cladding replacement pattern book (2nd ed, 5 May 2023)
NSW Planning & Environment, Building Regulation Advisory Note BS 15-001, External walls and cladding (3 August 2015)
Oxford English Dictionary, 10th ed (2002)
P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters)
Victorian Building Authority, Fact Sheet, “Non-Deemed-to-Satisfy External Wall Cladding Systems” (April 2015)

Category: Principal judgment

Parties: The Star Entertainment Sydney Properties Pty Ltd (1st Plaintiff)
The Star Pty Ltd (2nd Plaintiff)
Buildcorp Group Pty Ltd trading as Buildcorp Interiors (Defendant/Cross-Claimant)
Malone Buchan Laird & Bawden Pty Ltd trading as The Buchan Group (1st Cross-Defendant)
Ausrise Aluminium Pty Ltd (in liquidation) (5th Cross-Defendant)
The Underwriting Members of Lloyd’s Syndicate 1206 subscribing to the 2013 underwriting year of account (6th Cross-Defendant)
The Underwriting Members of Lloyd’s Syndicate 1206 subscribing to the 2014 underwriting year of account (7th Cross-Defendant)
The Underwriting Members of Lloyd’s Syndicate 1206 subscribing to the 2015 underwriting year of account (8th Cross-Defendant)

Representation: Counsel:
L Shipway / S Kanagaratnam (Plaintiffs)
B Le Plastrier / L Muir (Defendant/Cross-Claimant)
S Docker SC / A Gandar (1st Cross-Defendant)
IGB Roberts SC / J Wright (6th-8th Cross-Defendants)
Solicitors:
Holding Redlich (Plaintiffs)
Colin Biggers & Paisley (Defendant/Cross-Claimant)
Lander & Rogers (1st Cross-Defendant)
DWF (Australia) (6th-8th Cross-Defendants)

File Number(s): 2020/112369

TABLE OF CONTENTS

JUDGMENT

Star Casino: a consumer?

Aluminium composite panels (ACPs)

Backpans

BCA requirements

“Non-combustible”?

Attachments?

Alternative Solution

First project

Development Application drawings

For Tender drawings

The builder

Ausrise

ECI Contract

Product substitution

Construction certificate

Construction

BCA compliance

First project claims and cross-claims

Claim against the builder

Cross-claim against the architect in tort

Cross-claim against the architect under Australian Consumer Law

Cross-claim against Ausrise

Second project

BCA compliance

Second project claims and cross-claims

Claim against the builder

Cross-claim against the architect

Cross-claim against Ausrise

Third project

BCA compliance

Third project claims and cross-claims

Claim against the builder

Subcontract with Ausrise

A duty of care?

Time-bar?

Entitlement to indemnity?

Policy coverage

Replacing the cladding

Damages

Methodology

Quantum

Concurrent wrongdoers

Orders

JUDGMENT

1. HER HONOUR: From 2014 to 2016, the plaintiffs (Star Casino) undertook three projects to refurbish parts of their casino complex in Pyrmont. In the course of these works, aluminium composite panels (ACPs) were installed on the external façade of two buildings. The works spanned a period when the risks involved in so using ACPs were becoming known in Australia, including after a fire at the Lacrosse building in the Docklands, Melbourne in November 2014. Warnings by building regulators gradually followed.

2. In 2017, after the catastrophic fire at the Grenfell Tower in London, the NSW Government required Star Casino to remove the ACPs, and it did. Star Casino now seeks some $4 million in damages from Buildcorp Group Pty Ltd trading as “Buildcorp Interiors” (the builder). In turn, the builder seeks damages from:

(a) Star Casino’s architect, Malone Buchan Laird & Bawden Pty Ltd trading as “The Buchan Group” (the architect), and (b) the builder’s subcontractor who installed the ACP, Ausrise Aluminium Pty Ltd (in liquidation). Given the company’s insolvency, its insurers have been joined under the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the insurers).

3. Also in turn, the builder, the architect and the insurers sought to reduce any liability they may have in light of the responsibility of others, including the following third parties:

(a) for the first project, the certifier 007 401 649 Pty Ltd (in liq) (formerly Philip Chun & Associates Pty Ltd) ATF Philip Chun & Associates NSW Unit Trust (Philip Chun) and fire engineer AECOM Australia Pty Ltd; (b) for the second project, certifier McKenzie Group Consulting (NSW) Pty Ltd and fire engineers AECOM and WSP Buildings Pty Ltd; and (c) for the third project, certifier McKenzie Group and structural engineer Taylor Thomson Whitting (NSW) Pty Ltd (TTW).

4. In short, all parties involved in each project were contractually obliged to ensure that the building work complied with the Building Code of Australia (BCA). The BCA required the casino complex to be of Type A construction, being the most fire-resistant type. Specifically, the external walls of the buildings must be “non-combustible”. But all ACPs are “combustible” within the meaning of the BCA.

5. As originally designed by the architect, the product specified for the external cladding was “non-combustible”, but that particular product had been withdrawn from the Australian market. The architect found a former employee of the manufacturer, who assured the architect that the product could be supplied from South East Asia if an order was placed in a timely manner. But the builder was nervous.

6. The builder had been initially engaged to provide “Pre-Construction Services”, including reviewing the architect’s design, advising on “buildability” and running a value engineering process in order to lead the consultants, including the architect, to finalise a design for approval by Star Casino. To that end, the builder enlisted Ausrise to prepare shop drawings for prefabricated façade panels. Those shop drawings included ACPs. With the assistance of Ausrise, the builder suggested the use of an ACP made by Mitsubishi Plastics Inc called Alpolic®/fr (Alpolic FR), as it was the closest “match” to the existing façade and able to be procured within the necessary timeframe. Star Casino approved the product substitution. This was subject to the design intent remaining as detailed by the architect, who was to approve samples. The architect attended to both tasks. The same product was then used on the second and third projects.

7. Star Casino had a contract with each of the builder, the architect, the certifiers and engineers, but sued the builder alone. While the builder had a subcontract with Ausrise, it sued the architect in tort and under the Australian Consumer Law. All parties made alternate claims against each other on the same bases for each project. Where the quantum in issue is some $4 million, being a relatively modest claim in the Technology and Construction List, I have, by and large, resolved the dispositive claims but not each of the multitudinous claims in the alternative.

8. In the result, Star Casino failed in its claim against the builder in respect of the first project – which accounted for some $3.4 million of the damages sought – as the terms of the Construct Only contract for that project provided that the builder had no “Design Responsibility”. Star Casino failed in its claim against the builder in respect of the second project – which accounted for some $285,000 of the damages sought – as, on the evidence, the installation of ACPs on the external façade complied with the BCA as it then stood, given the ‘attachment exception’ in Clause 2.4 of Specification C1.1. As Star Casino failed in its claim against the builder, it was unnecessary to resolve the builder’s cross-claims against the architect, who was only engaged on those projects.

Star Casino: a consumer?

10. Star Casino built and operates a casino complex which includes a casino, shops, function centre and three residential (hotel) towers. The first question is whether Star Casino is a “consumer” under s 3(1) of the Australian Consumer Law, given its alternative claim for damages for breach of a guarantee as to acceptable quality: s 54, Australian Consumer Law.

11. Star Casino accepted that ACPs are not “goods … of a kind ordinarily acquired for personal, domestic or household use or consumption”: s 3(1)(b), Australian Consumer Law. The issue is whether the amount paid for the goods did not exceed $40,000: s 3(1)(a), Australian Consumer Law. Star Casino relied on s 3(10) of the Australian Consumer Law, which provides, “If it is alleged in any proceeding … that a person was a consumer in relation to particular goods or services, it is presumed, unless the contrary is established, that the person was a consumer in relation to those goods or services.”

12. Star Casino’s architect on the first and second projects, Alan Polden, said the cladding component of the works would likely approach millions of dollars in costs. Expert architect Grant Roberts agreed that the cladding was “always an expensive part of the contract”, the cost of which would probably have been in the millions.

13. While Star Casino sues the builder in respect of the three projects, the projects were undertaken sequentially (with some overlap) and used the same product, which was chosen during the first project. On one view of it, there was one representation which carried across all three projects and the cost of ACPs can be tallied across all three projects. In that event, the $40,000 threshold is easily exceeded having regard to the evidence of the architects. But Star Casino has pleaded a separate cause of action in respect of each project. I will, thus, approach the matter conservatively.

14. The evidence does not reveal precisely the amount paid for the ACPs on each project. The cost of the ACPs formed an indeterminate part of the contract price paid by the builder to Ausrise, and then passed on by the builder to Star Casino.

15. Specifically, the amount which the builder agreed to pay to Ausrise in respect of the first project was $2.025 million, of which $1.61 million was referable to “Unitised façade panels … - Procurement, supply and installation”. These panels included ACPs. The builder’s lump sum submission to Star Casino in respect of the first project included $2,007,327 for “façade / cladding / windows / glazed doors as full Modular Unit”.

16. The amount payable by the builder to Ausrise for the second project was $437,000, of which $55,000 was referable to “ACM Cladding to external wall”.

17. The contract between Star Casino and the builder for the third project included a contract sum breakdown, which noted that the cost of replacing the “existing composite façade panels to façade in front of lifts inclusive of all penetrated panels from structural supports and steel bridge steel sections” was $103,000. A variation was allowed for additional façade panelling of $7,200, noting that an initial allowance had been made of $31,200. To this was added 7% for builder’s overheads and profit. On my calculations, the amount “paid” for the ACP on the third project was $41,088. (If my calculation is incorrect, then it does not matter as Star Casino succeeded against the builder in its contract claim on the third project and did not need to rely on its alternative claim under s 54 of the Australian Consumer Law.)

Aluminium composite panels (ACP**s)

19. It may assist to understand the nature of an ACP and the regulatory requirements which governed the use of this product at the time. ACPs are sandwich-type panels comprising two aluminium faces and a core material, typically being polyethylene, mineral-based material or a combination of both: NSW Planning & Environment, Building Regulation Advisory Note BS 15-001, External walls and cladding (3 August 2015). According to this note, the thickness of the panels is typically between 3mm and 5mm. It is the core material which affects the fire performance of the panel. Minerals with a higher proportion of mineral core are generally considered to have better fire performance than those with a polyethylene core or a low proportion of mineral core.

20. The ACP chosen for these projects was Alpolic FR. According to the technical manual published by Mitsubishi Plastics, “fr” referred to the fact that the product was “fire rated … and meets the fire-safety requirements for external claddings in most countries.” The product was described by the manufacturer as composed of a “non-combustible” mineral core with a small amount of low-density polyethylene sandwiched between two skins of 0.5 mm thick aluminium. Whether or not the mineral core was “non-combustible” in isolation, adding polyethylene meant that the resulting ACP was not: see [45].

21. Mitsubishi Plastics’ technical manual described the advantages of Alpolic FR as including that it was “fire safe”, as to which the manual elaborated:

“ALPOLIC/fr is a fire-safe material which passes mandatory requirements for exterior and interior in most countries. Though the core material does contain a small amount of combustible polyethylene, the main ingredient of the non-combustible mineral does not permit the proliferation of flame and restricts the development of smoke detrimental to evacuation activities.

“… Extensive fire tests have been performed on … ALPOLIC/fr in accordance with requirements in various countries.”

22. SGI Architectural Pty Ltd distributed Alpolic FR in Australia. At the time of these events, SGI Architectural described Alpolic FR on its website as “fire retardant panels”. Further, “By meeting fire codes worldwide, obtaining Codemark certification … ALPOLIC®/fr sets the standard for fire safety”. I will return to the details of the CodeMark Certificate of Conformity at [65].

23. Expert façade engineers Gareth Winstanley and Colin Lim both thought that the manufacturers and distributors of ACPs provided misleading information about their products back in 2014. With the benefit of hindsight, the suggestion that the products had a “non-combustible mineral filled core” was incorrect because none of these products complied with AS 1530.1 – Methods for fire tests on building materials, components and structures – combustibility test for materials. Mr Winstanley said that the data sheets were misleading and had a lot of mistakes “and still do today actually”. He said that SGI Architectural “didn’t always interpret the data that’s coming from the supplier correctly on the data sheet.”

24. But the manufacturer’s claim that the product had fire-safety features was not entirely without foundation. According to expert fire engineer, Dr Tony Enright, Alpolic FR had a fire-retardant filler of aluminium hydroxide. The percentage of fire-retardant filler was approximately 70% by mass, with the remaining 30% of the core being a polymer binder, polyethylene. Aluminium hydroxide is an endothermic fire retardant, which absorbs heat in the process of decomposing into aluminium oxide and water vapour. Decomposition occurs at a temperature lower than that required to combust the polyethylene binder. Dr Enright explained that the endothermic effect of one gram of aluminium hydroxide will absorb almost twice the amount of energy needed to raise one gram of polyethylene from an ambient temperature of 20ºC to its ignition temperature. In addition, Alpolic FR has 2.3 grams of filler for every gram of polyethylene, so that the endothermic effect is magnified. Further, the aluminium oxide forms a protective coating on the fuel surface, which insulates it from radiant heat, while the water vapour has a dilution effect on the fire.

25. Dr Enright also said, “I just would like to address that image that we all have in our mind of the Grenfell fire and reiterate we are talking about a very different product here with very limited fire spread, particularly lateral fire spread.” Dr Enright was not aware of any credible reports of a significant fire involving Alpolic FR, either in Australia or internationally. Dr Enright said Alpolic FR was in widespread use in Australia at the time as an external cladding product. He regarded it as not unusual that it was proposed for the projects at Star Casino.

26. The builder and architect did not profess to be particularly knowledgeable about ACPs at the time. The builder’s project manager, Jad Maroun, said he was not familiar with the Alpolic FR product and “I’m not too familiar with cladding definitions and descriptions.” The builder’s contract administrator, Nick Martin, recalled understanding that Alpolic FR meant fire retardant and “was the best available Alpolic on the market”. Mr Polden said this was the first time that he had been involved in a project where ACPs were used. He was aware of the use of Alpolic on many other commercial buildings. He understood that Alpolic FR was fire resistant and therefore “non-combustible”. (Expert architect Mark Bullen said that a reasonable architect would assume that Alpolic FR was fire-resistant and therefore ; he said these two matters were quite different and the BCA set out the requirements for each clearly enough.)

Backpans

28. In addition to the ACP that was chosen for these projects, Ausrise used another ACP called “Qbond” for backpans on the first and second project. As I understand it, curtain wall façade systems (as supplied by Ausrise for these projects) are fabricated offsite and installed as discrete modules, with the inside of each curtain wall unit generally sealed with a non-combustible galvanized steel backpan: NSW Government, P**roduct remediate: cladding replacement pattern book (2nd ed, 5 May 2023) at 68-69.

29. Ausrise’s shop drawings for the first project noted that the backpans would be made of “Zincalume”. Dr Enright said that Zincalume was “non-combustible” and comprised a steel sheet coated with an alloy of zinc, aluminium and magnesium. Two samples of the backpans in the first project were taken by Star Casino’s remediation contractor and provided to polymer scientist, Dr John Scheirs, for analysis. The samples contained 60% calcium carbonate and 40% polyethylene.

30. Ausrise’s shop drawings gave no details on the material to be used for the backpans on the second project. Samples of the backpans in the second project were also provided by the remediation contractor to Dr Scheirs, but the test results are not in evidence.

31. Dr Enright was concerned that there were limited samples of the ACP product used in the backpans, “In my experience taking one sample isn’t sufficient to determine … an ACP product on the building”. Dr Enright was also mindful of the fact that the samples were taken by contractors rather than under the supervision of Dr Scheirs, so “when it comes to weighing the credence and credibility of his expert report, I’m mindful of that fact.”

32. Whatever it was, the product used for the backpans was not Zincalume and probably not Alpolic FR either. I say this for two reasons. First, the two samples that were tested by Dr Scheirs from the first project had different proportions of mineral-based material and polyethylene, and a different type of mineral core, than Alpolic FR. Second, Mr Martin was onsite when the modular units, with their backpans, were installed on the first project. He took photographs. The backpans can be seen in the photographs, covered by protective film with branding “Qbond”. Mr Martin agreed that, typically, Zincalume did not come with a protective film. Both architect experts, Mr Bullen and Mr Roberts, agreed that the material looked like an ACP from Mr Martin’s photographs.

33. Star Casino’s solicitor, Paul Libreri, took photographs of samples of the backpans collected from the second project, which also record a panel covered with a protective film branded “Qbond”. Most likely the ACP used in the backpans was not Alpolic FR but another ACP branded “Qbond” and I so find.

BCA requirements

34. At the time (and now), it was a requirement under the Environmental Planning and Assessment Act 1979 (NSW) (EPAA) and Environmental Planning and Assessment Regulation 2000 (NSW) (EPA Regulation, since repealed) that building work be carried out in accordance with the BCA. Specifically, cl 145(1)(b) of the EPA Regulation then provided that a certifying authority must not issue a construction certificate unless the proposed building will comply with the BCA in force at the time the application for the construction certificate is made. The relevant version of the BCA was BCA (2014) for the first project and BCA (2015) for the second and third projects. There is no relevant difference between these versions.

35. The Star Casino complex forms a single building for the purposes of the BCA. Relevantly, Levels 2 and 3 of the complex comprise the casino and functions rooms and have a building classification of Class 9b. The upper levels are hotel and have a building classification of Class 3. The type of construction required by the BCA for the building is Type A construction. Volume One of the BCA applies to buildings of Type A construction.

36. The BCA is a performance-based document, which means that there is more than one pathway to compliance. Section A contains general provisions and definitions. Words with special meanings are printed in italics and defined in A1.1. Clause A0.4 provides that a Building Solution will comply with the BCA if it satisfies the Performance Requirements. Clause A0.5 provides that compliance with the Performance Requirements can be achieved by complying with the Deemed-to-Satisfy Provisions, formulating an Alternative Solution, or a combination of both. (An Alternative Solution is now called a Performance Solution.)

37. Section C of the BCA concerns “Fire Resistance”. Performance Requirements are set out, being CP1 to CP9. Part C1 of Section C, entitled “Fire Resistance and Stability", sets out Deemed–to–Satisfy Provisions which apply to particular types of buildings and materials. Clause C1.1(b) notes that Type A construction is the most fire-resistant and Type C is the least fire-resistant of the Types of construction. Part C2, Part C3 and a series of specifications then follow, setting out further Deemed-to-Satisfy Provisions.

38. Specification C1.1, “Fire–resisting construction" contains Deemed–to–Satisfy Provisions for the fire–resisting construction of building elements: cl 1. Fire–resisting construction means one of the Types of construction referred to in Part C1: Clause A1.1. As mentioned, Part C1 referred to Type A, Type B and Type C construction.

39. Clause 2 of Specification C1.1 contains General Requirements which, presumably, apply to all types of construction, followed by Clauses 3, 4 and 5, which address Type A, Type B and Type C fire-resisting construction respectively. Relevantly, Clause 2.4 provides:

2.4 Attachments not to impair fire-resistance

(a) A combustible material may be used as a finish or lining to a wall or roof, or in a sign, sunscreen or blind, awning, or other attachment to a building element which has the required FRL [fire-resistance level] if –

(i) the material is exempted under C1.10 or complies with the fire hazard properties prescribed in Specification C1.10; and

(ii) it is not located near or directly above a required exit so as to make the exit unusable in a fire; and

(iii) it does not otherwise constitute an undue risk of fire spread via the façade of the building.

(b) The attachment of a facing or finish, or the installation of ducting or any other service, to a part of a building required to have an FRL must not impair the required FRL of that part.

40. As to Clause 2(a)(i), Clause 4(c) of Specification C1.10, entitled “Fire Hazard Properties”, required that “material used as a finish, surface, lining or attachment to a wall or ceiling must be a Group 1, Group 2 or Group 3 material” in, relevantly, a sprinkler-protected Class 9b building.

41. Clause 2.4 gained prominence, as Dr Enright was of the view that this ‘attachment exception’ could apply, depending on how the ACPs were used in each project, and did apply to the second project. Star Casino’s building surveyor and fire safety engineer expert, Allan Harriman, disagreed both as to whether the ‘attachment exception’ applied to the second project or at all. In forming this view, Mr Harriman relied on Clause 3 of Specification C1.1, which sets out Deemed-to-Satisfy Provisions for Type A fire-resisting construction. Clause 3.1(b) provides:

3.1 Fire-resistance of building elements

In a building required to be of Type A construction –

…

(b) external walls … must be non-combustible;

42. Clause A1.1 contains the following definitions:

Required means required to satisfy a Performance Requirement or a Deemed-to-Satisfy Provision of the BCA as appropriate.

External wall means an outer wall of a building which is not a common wall.

Common wall means a wall that is common to adjoining buildings.

Non-combustible means –

(a) Applied to a material – not deemed combustible as determined by AS 1530.1 – Combustibility Tests for Materials.

(b) Applied to construction or part of a building – constructed wholly of materials that are not deemed combustible.

Combustible means –

(a) Applied to a material – combustible as determined by AS 1530.1.

(b) Applied to construction or part of a building – constructed wholly or in part of combustible materials.

43. Before resolving the controversy between the experts on the proper construction of Clause 2.4 of the BCA, it is necessary to determine whether Alpolic FR was non-combustible.

“Non-combustible”?

44. The combustibility test required in AS 1530.1 involves placing a sample in a furnace at 750ºC. A product is deemed combustible if the mean temperature rises by more than 50ºC, or if there is sustained flaming of the sample.

45. Mr Harriman and Dr Enright agreed that Alpolic FR would likely have failed this test. Dr Enright considered that this is an expected result where polyethylene has an ignition temperature of 377ºC, the furnace temperature is 750ºC and the test duration is usually 30 minutes. Dr Enright added that the CSIRO concluded that all ACPs are deemed combustible: CSIRO, Fire Performance and Test Methods for ACP External Wall Cladding, Melbourne (2020).

46. I think it is safe to assume that the “QBond” ACP used on the backpans would have failed the combustibility test too, particularly where the two samples tested by Dr Scheirs indicate that the product contained less mineral core and more polyethylene than Alpolic FR. Query whether the backpans were part of the external walls or internal.

47. As such, the experts agreed that the use of Alpolic FR as part of an external wall did not comply with the Deemed-to-Satisfy provisions of the BCA. This brings us to the ‘attachment exception’ in Clause 2.4 of Specification C1.1.

Attachments?

48. The disagreement between Dr Enright and Mr Harriman – at a level of principle – was whether an ACP applied to the external façade of a building could be an ‘attachment’ within the meaning of Clause 2.4 or whether Clause 3.1(b) effectively ‘over-rode’ the attachment exception in respect of Type A construction. Mr Harriman considered that the non-combustible test in the Clause 3.1(b) was a higher test than the requirement in Clause 2.4 that an attachment not constitute an undue risk of fire spread. He considered that anything attached to an external wall must be non-combustible in order for the external wall as a whole to comply with Clause 3.1(b).

49. I note that Mr Harriman expressed the same view in The Owners - Strata Plan No 92450 v JKN Para 1 Pty Ltd [2022] NSWSC 958 (overturned on appeal on other issues), of which Black J noted at [18]:

… As Mr Harriman fairly recognised … nothing turns on that proposition where, to the extent that the ACP cladding here constitutes part of a wall, then it is subject to the requirement under Specification C1.1 cl 3.1 that relate to external walls; and the other parts of the cladding, which the experts agree are Attachments, would not be subject to that clause in any event.

50. As to the proper construction of the BCA, the applicable principles were considered in Tanah Merah Vic Pty Ltd v Owners Corporation No 1 of PS 613436T (2021) 75 VR 1; [2021] VSCA 72, which concerned the Lacrosse building in Melbourne. The Court of Appeal accepted the approach to construction was as stated by the learned authors DC Pearce and RS Geddes, Statutory Interpretation in Australia, (8th ed, 2014, LexisNexis Butterworths), 167–8 [at 208]:

The text, context and purpose of the provision to be interpreted ought to be taken into account in the ordinary [way], whilst recognising that what is to be interpreted is a technical document not drafted in the same way as acts of Parliament and is to be applied by those in the construction industry on a daily basis, and not ordinarily by lawyers.

51. The Court of Appeal followed The Owners - Strata Plan No 69312 v Rockdale City Council [2012] NSWSC 1244; (2012) 191 LGERA 160, where Lindsay J noted that the BCA was a publication of the Australian Building Codes Board rather than a form of subordinate legislation in its own right: at [30]. The BCA was, however, recognised by the EPAA and EPA Regulation. While his Honour considered that the BCA was something of a hybrid between a legislative “instrument” or “statutory rule”, at [61]:

Whatever side of the line it might be thought to fall on for the purposes of the definitions of “instrument” and “statutory rule” in the Interpretation Act, the task for the court in these proceedings is to construe it as a formal document designed to define standards, for the promotion of public safety, in the construction of buildings. …

52. With this in mind, I note that the goal of the BCA is to enable the achievement of nationally consistent, minimum necessary standards of relevant safety, including safety from fire: Introduction, BCA. The Objectives and Functional Statements are to be used as an aid to the interpretation of the BCA.

53. The Objective of Section C, “Fire Resistance”, is to safeguard people from illness or injury due to a fire in a building, to safeguard occupants while evacuating a building during a fire, to facilitate the activities of emergency services personnel, to avoid the spread of fire between buildings, and to protect other property from physical damage caused by structural failure of a building as a result of fire. The Functional Statements note that a building is to be constructed to maintain structural stability during fire and to be provided with safeguards to prevent fire spread.

54. Star Casino submitted that the text and context of cl 2.4(a) indicated that an “attachment” was limited to building elements that were similar to “a sign, sunscreen or blind [or] awning.” I disagree.

55. Whilst the BCA is replete with defined terms, “attachment” is undefined. It should, therefore, be given its natural and ordinary meaning in the context in which it appears. Accepting that a court is not bound by dictionary meanings, and dictionaries are no substitute for interpretation, they may be a useful starting point where the purpose of a dictionary is to state the ordinary meanings of words with precision: P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters) at [2.130]-[2.140], and the authorities there cited. The Concise Oxford English Dictionary, 10th ed (2002) at 85 defines “attachment” as “an extra part or extension attached to perform a function”. The Macquarie Dictionary*,* 3rd ed (2001) at 112 defines the verb “attach” as “to fasten; affix, join, connect” and defines the noun “attachment” as “an adjunct or supplementary device”.

56. Four principles of statutory construction also assist. First, the heading to Clause 2.4 is not to be taken as part of the instrument but may be used in the interpretation of the clause: cl 35(2) and (5), Interpretation Act 1987 (NSW). Second, an instrument should be construed so that it is consistent with the language and purpose of all of the provisions of the instrument and given a construction that will render those provisions harmonious: Ross v The Queen (1979) 141 CLR 432 at 440 (Gibbs J with whom Gleeson CJ, Stephen, Mason and Aickin JJ agreed). Third and relatedly, the presumption against surplusage indicates that the instrument should be construed to avoid one provision as having virtually no practical effect: Interpretation at [5.170]. Finally, where there is a conflict between general and specific provisions, the specific provisions prevail: (1994) 181 CLR 388 at 348 (Mason CJ, Dawson, Gaudron and McHugh JJ); [1994] HCA 60.

(a) as a finish or lining to a wall or roof, or (b) in a sign, sunscreen or blind, awning, or (c) other attachment to a building element which has the required FRL.

58. That is, “other attachment” is not in the same group as “a sign, sunscreen or blind, awning”. This suggests that “other attachment” need not be similar to these objects. The fact that an “attachment” is not limited to building elements similar to “a sign, sunscreen or blind [or] awning” is confirmed by Clause 2.4(b), which refers to “The attachment of a facing or finish …”.

59. The heading to Clause 2.4 further confirms this, gathering all of the groupings that I have earlier separated beneath the title “Attachments not to impair fire-resistance”. This suggests that all building elements referred to in the chapeau to Clause 2.4(a) are “Attachments” and not just building elements that are similar to “a sign, sunscreen or blinds [or] awning”.

60. Can Clause 2.4 operate harmoniously with Clause 3.1? Clause 3.1 requires the external walls in a building required to be of Type A construction to be non-combustible, that is, constructed wholly of materials that are not deemed combustible as determined by AS 1530.1. But the very concept of an attachment is that it is attached to something else, and in this case, to an external wall. It is not part of the wall. If it was part of the wall, then it would not be an attachment. The clauses operate together.

61. If the external wall is constructed wholly of non-combustible material, and there is an attachment which meets the criteria in Clause 2.4, then the Objective**s of Section C are not thereby undermined. Proceeding otherwise would make Clause 2.4 superfluous in respect to buildings required to be of Type A construction. The presumption against surplusage tells against such a construction. Nor is it necessary to give the more specific requirements of Clause 3 primacy over the more generally applicable Clause 2.4, where the clauses are not inconsistent.

62. In short, as a matter of principle, there was nothing to prevent an ACP being attached to an external wall of a building required to be of Type A construction so long as it satisfied the criteria in Clause 2.4. Whether that was so will depend upon the particular features of each project, to which I will return in due course. I also note that the ‘attachment exception’ was removed in BCA (2016).

Alternative Solution

63. Turning to whether compliance with the Performance Requirements could be achieved by formulating an Alternative Solution, Clause A0.8 provided that an Alternative Solution must be assessed in accordance with one or more of the Assessment Methods. Clause A0.9(a) provides that Assessment Methods include evidence to support that the use of a material, form of construction or design meets a Performance Requirement or a Deemed-to-Satisfy Provision as described in cl A2.2. Clause A2.2 (Evidence of Suitability) provided:

(a) Subject to A2.3 [Fire-resistance of building elements] and A2.4 [Fire hazard properties], evidence to support that the use of a material, form of construction or design meets a Performance Requirement or a Deemed-to-Satisfy Provision may be in the form of one or a combination of the following:

…

(ii) A current Certificate of Conformity or a current Certificate of Accreditation. …

64. Certificate of Conformity was defined as a certificate issued under the ABCB scheme for products and systems certification stating that the properties and performance of a building material or method of construction of design fulfills specific requirements of the BCA: Clause A1.1. Dr Enright said that was the CodeMark scheme.

65. When Alpolic FR came to be considered for use on the first project in August 2014, a CodeMark Certificate of Conformity was on issue by CertMark International Pty Ltd trading as CertMark Australia, certifying that Alpolic FR:

Complies with the Building Code of Australia

…

2. BCA Volume One 2014: CP2 and CP4 “Fire Resistance” for wall and ceiling cladding (see conditions b, c and d)

…

5. BCA Volume One 2014: Specification C1.1 Fire-Resisting Construction, 2 4 Attachments not to impair fire-resistance (a) (see condition g).

…

Subject to the following conditions and limitations

…

c) Material group number 1 as per BCA Volume One 2014: Specification C1.10 "Fire hazard properties” Section 4 (a) i.

d) This product may be used in conjunction with either Type A, B or C Constructions.

e) Compliance or otherwise with the BCA Volume One 2014: Specification C1.1 Fire-Resisting Construction, 2 4 Attachments not to impair fire-resistance (a) ii and iii, are to be determined by the regulatory authority (building certifier or building surveyor).

…

g) For further information about specific installation details contact the certificate holder.

66. There was some debate between Dr Enright and Mr Harriman as to whether the CodeMark Certificate of Conformity could have been relied on at the time in support of an Alternative Solution, either alone or in combination with other evidence. But no Alternative Solution was, in fact, in place for the use of ACPs on any of the three projects. On the face of it, where Alpolic FR was not non-combustible, the use of ACPs on the three projects did not comply with the BCA subject, perhaps, to the ‘attachment exception’. I will return to whether each project complied with the BCA at [186], [319] and [348].

First project

67. The first project was variously referred to as Sovereign Lakes Expansion or “Project Titan”. It involved the expansion of “Sovereign Lakes", being Level 17 of the Astral Hotel, to maximise VIP private gaming rooms.

68. The evidence in respect of the first project involved a microscopic focus on each party’s involvement in the suggestion or subsequent approval of Alpolic FR. In part, this was because the bulk of the damages was referable to the first project. Also in part, having chosen Alpolic FR for that project, Mr Martin said that the cladding, for the second and third projects was always going to be Alpolic FR. Indeed, this topic remained relevant until the insurer’s final arguments that their obligation to indemnify Ausrise should be reduced by reason of the suggested minimal role of their insured.

69. Star Casino engaged a project manager, John Chalmers. Star Casino engaged the architect, who began work in January 2014. Star Casino later entered into a Professional Services Agreement with the architect: see [227]-[231]. The architect’s Key Personnel was Mr Polden. He was an experienced, senior architect, who had been involved in various projects at Star Casino since 2008.

70. Next, Star Casino engaged AECOM to provide fire safety engineering services. In March 2014, AECOM began work on an Alternative Solution, given the omission of sprinklers in the floor void. AECOM also provided electrical, mechanical and acoustic engineering services. As such, when information or documents were provided to AECOM during the course of this project, it was not necessarily for AECOM’s input on fire engineering. Otherwise, it is sufficient to note that, over the course of the first project, AECOM issued a series of fire engineering reports. None of these reports touched on the use of ACPs on the external façade.

Development Application drawings

71. The Design Brief for the first project explained that, from the planning advice received, it was expected that the external façade treatment would need to blend with the existing structure. And that was clearly a strong focus for the architect. Mr Polden said the general premise of the design was to make the new top level of the Astral Hotel appear as though it had always been there, rather than an extension which had been added on years after the original hotel was built in the late 1990s.

72. In May 2014, the architect prepared drawings for a development application. Mr Polden nominated the use of aluminium flat sheet cladding for the external façade, to match the existing construction of the Astral Hotel building. Specifically, the material selected for the façade was “PVF2 PAINTED ALUMINIUM FLAT SHEET WALL AND FASCIA CLADDING WITH EXPRESSED JOINTS”, to be used in locations on the drawings marked with ‘AL-51’.

73. Star Casino appointed a private certifier, Philip Chun. Robert Marinelli was responsible for the certification. Mr Marinelli understood that the specified cladding was “aluminium flat panel”, which was a cladding panel consisting of solid aluminium. Such cladding contained nothing but aluminium, would be non-combustible and would satisfy the Deemed-to-Satisfy requirements of the BCA.

74. On 23 May 2014, Philip Chun completed a “Building Code of Australia 2014 Capability Report for DA Submission”. Mr Marinelli said that this report was prepared to assess, at a very high level, the ability of the architectural design, at that point in time, to meet the general requirements of the BCA for the purpose of obtaining development approval. (The architect relied on part of the report which addressed “Wall, Floor, Ceilings Linings – Fire Hazard Properties”, although as I read it (and as Mr Marinelli confirmed), this concerned internal linings.) The report concluded:

“We have assessed the architectural building design to date and have reviewed the revised scheme with respect to the Building Code of Australia. The design is at a point where the inherent BCA philosophies have been checked and development consent can be sought. The finer details with respect to BCA 2014 compliance can be finalised prior to the issue of a Construction Certificate."

75. And that does appear to have been the case when the report was issued. On 30 May 2014, a development application was lodged.

For Tender drawings

76. To achieve the design intent, Mr Polden wanted to use the same materials as had been used on the existing building. To that end, after the development application documentation was issued, Mr Polden and senior draftsperson, Maria Ison, searched the original architectural drawings for the Astral Hotel to identify the products which had been used on the external façade. Those drawings had been prepared by Cox Richardson in the 1990s. The cladding product was ‘QuadroClad’, which was a honeycomb core painted panel manufactured by Hunter Douglas.

77. The architect made enquiries of Hunter Douglas, but learned that the product had been withdrawn from the Australian market. However, a former Hunter Douglas employee had secured the distribution rights in Australia. The architect contacted the former employee, who assured the architect that he could guarantee supply of the product – which would be coming from South East Asia – if the order was placed in a timely manner. The former employee also told the architect that he was unable to use the ‘QuadroClad’ name due to trademark restrictions, and that the product was now referred to as ‘QC StarFlexClad’.

78. Mr Polden and Ms Ison discovered that a second Hunter Douglas product, known as ‘Luxalon MultiPanel’, had also been used. This product was a flat sheet single skin aluminium panel, and had been used to clad the plant room in the centre core on Level 17. There is no evidence of any enquiries made by the architect of the availability of this product.

79. Mr Polden decided that the QuadroClad / QC StarFlexClad product was best suited for the walls of the gaming suites surrounding the windows and that the Luxalon MultiPanel product (which was cheaper) was suitable for the vertical cladding to the roof fascia overhangs and soffits, as well as the ‘pop-up’ roof areas above the ceiling level. On 17 June 2014, the architect issued “For Tender” drawings. The legend included the following finishes:

“2. PVF2 PAINTED ALUMINIUM PROFILED SHEET WALL AND FASCIA CLADDING WITH EXPRESSED JOINTS (AL-51) COLOUR: ‘RAL 9006’ TO MATCH EXISTING

2B PVF2 PAINTED ALUMINIUM HONEYCOMB CORE FLAT SHEET WALL CLADDING WITH SILICONE FILLED EXPRESSED JOINTS (AL-55) COLOUR: ‘RAL 9006’ TO MATCH EXISTING”

80. That is, areas on the plans which were marked “AL-51” were to be finished with a product described in No 2. Areas on the plans marked “AL-55” were to be finished with the product described in No 2B. The “2B” finish accounted for some 80% of the external walls to the additions and alterations to Level 17 of the Astral Tower. Mr Harriman noted that this aluminium honeycomb core flat sheet product was non-combustible and thus compliant with the Deemed-to-Satisfy provisions of the BCA.

81. Accompanying the For Tender drawings was the architect’s “Shell & Core Works Package”. This was an architectural trade specification prepared for the builder, setting out the materials that the architect had specified for use on the project. In respect of cladding, the specification included the following products:

2.4 ALUMINIUM SOLID CORE COMPOSITE PANELS

Panels

Material: A composite consisting of two pre-finished aluminium cover sheets over a plastic core.

Thickness: 4mm

Finish: Selected colours and textures as referred to in the finishes schedule.

2.5 ALUMINIUM HONEYCOMB CORE COMPOSITE PANELS

Panels

Cladding System: Starlife Sun Control & Facade Solutions ‘QC StarFlexClad’ (previously Hunter Douglas ‘Quadroclad’)

Material: A pre-treated aluminium honeycomb within pre-coated and roll-formed aluminium skins in variable lengths and widths as detailed on the architectural drawings. The exterior panel face shall be coil coated, interior panel face shall be polyester coated.

Thickness: 25mm

Finish: Colour RAL9006 to match existing panels.

2.6 ALUMINIUM SINGLE SKIN PROFILED PANELS

Panels

Cladding System: Luxalon MPF ‘Multipanel Facade’.

Material: A pre-coated variable profile 300mm wide aluminium panel in variable lengths as detailed on the architectural drawings.

Thickness: 1.2mm BMT with 31mm depth profile.

Finish: Colour RAL9006 to match existing panels.

82. Mr Polden explained that the inclusion of ACPs in the specifications came from the architect’s pro-forma or generic specification. But that type of cladding was not actually referred to on the plans. The drawings only referred to the QuadroClad and MultiPanel products. Mr Roberts said the fact that the architect’s specifications included reference to a product which was not actually used in its drawings was not unusual. A specification may refer to products and materials in widespread use in the building industry, as a design contingency.

83. Mr Bullen disagreed and said that such a practice would only confuse. An architect should only specify products that they have investigated to satisfy themselves that the products are suitable for the proposed use and comply with the BCA. Mr Bullen considered that, by including ACP in its specifications, the architect confirmed that the material was suitable for use as cladding on the external walls of the project, even though the product was not referred to in the architect’s initial drawings. Further, the architect failed to state in the specifications that the ACP must be non-combustible.

84. Expert façade engineer Mr Lim was also of the view that the architect’s specification allowed the use of ACPs on the first project. Mr Lim said, “The minute you state that, you are actually saying you are allowed to use combustible cladding because as far as I know there’s no aluminium solid core composite panel which would actually comply with the [Deemed-to-Satisfy] requirements of the Building Code of Australia so it … actually has been specified. … Alpolic FR is just a proprietary name. It is … generically … an aluminium solid core composite panel which has been specified in the specifications”.

85. The architect’s specifications also permitted product substitution, noting “Identification of a proprietary item does not necessarily imply exclusive preference for the item so identified, but indicates the necessary properties of the item”. If alternatives were proposed, then the builder was to submit sufficient information to permit evaluation of the proposed alternative including:

- Evidence of conformity to a cited standard.

- Samples.

- Essential technical information, in English.

86. As I read it, while the For Tender drawings specified QuadroClad and MultiPanel products for cladding, the architect’s specifications were open to the use of ACPs for cladding, by following the product substitution process.

87. Finally, the architect’s specifications also addressed the submission of ‘shop’ drawings, which would be stamped by the architect when satisfactory. The specifications stated:

Acceptance of shop drawings are to imply only that the contractor’s interpretations of the relevant requirements of the contract are generally correct, but are to in no way relieve the contractor of his obligations under the contract to construct and complete the works correctly and accurately. …

88. To the extent that the builder provided design, the architect’s specifications required that the builder use only appropriate qualified persons and “comply with all statutory requirements” and the design intent of the contract documents for materials. There was a general requirement that the builder comply throughout with the BCA.

The builder

89. In June 2014, the builder began to provide “Pre-Construction Services”, otherwise known as early contractor involvement phase works (ECI). A contract in respect of these services was executed two months later (the ECI Contract): see [114]. The builder later noted on its website that it was engaged as the ECI builder for 16 weeks upfront “to help drive the design and provide buildability advice to the design team.”

90. Mr Maroun said “buildability” advice meant reviewing the design intent (the way it appears) and trying to decide on the best manner of installing the design and how to deliver the project. This included reviewing the architect’s design. Mr Martin said the purpose of the ECI phase was to de-risk the construction phase of a project as much as possible before the design phase has ended. During an ECI phase, the builder will look at the proposed design and liaise with the principal’s consultants and specialised contractors about possible changes that could help deliver the project quicker or more cost effectively.

91. On 18 June 2014, the builder's bid and design manager emailed the architect's For Tender drawings to Ausrise, advising:

We want to panelise and prefab as much of the façade and cladding as possible.

Please review … We will be onsite in Aug/sept so need to get moving.

92. Mr Maroun said the architect’s original design was agnostic as to whether it could be a modular prefabricated design or a conventional stick construction. Mr Maroun said panellising and prefabrication was the chosen method due to considerations such as time. In addition, the façade was being installed “in a live environment”: there was a pool and “We were building … on the roof edge so it made sense for it to be … panelised as much as possible.” Mr Martin said pre-fabrication of a façade system may eliminate the time and cost of installing a full height multi-storey scaffold, which was expensive and time consuming.

93. On 24 June 2014, the builder attended its first design workshop meeting. The first minutes record:

Buildcorp to provide a sketch of an alternative façade construction, allowing for prefabrication for [the architect] and TTW [structural engineer] review.

94. Mr Maroun chaired the next design workshop on 1 July 2014. The minutes record that Mr Maroun was to issue the sketch to the architect and structural engineer “for review and approval and design coordination” by 2 July 2014. Further:

Buildcorp noted [For Construction] documentation should be revised to include revised sections to ensure details are coordinated. Leo [Tsui, acoustic engineer, AECOM] requested section workshop drawings to be issued to AECOM for assessment.

95. Mr Maroun said the minutes indicate “this was still very early in the design development phase”, where the builder was providing a sketch.

Ausrise

96. According to its website at the time, Ausrise had been installing commercial aluminium and glass façades for many years. On 1 July 2014, Ausrise prepared shop drawings. The drawings noted a “4mm “COMPOSITE PANEL” and “ZINCALUME BACKPAN”. On 3 July 2014, the builder’s project engineer, Albert Wong, sent the shop drawings to the architect and TTW, copied to Mr Chalmers. To the architect, Mr Wong advised:

Further to external façade meeting last week, please find attached draft workshop drawings showing our propose[d] alternative for your review.

Please advise if this will meet [the architect’s] design intent.

97. On 5 July 2014, the builder provided Star Casino with a “Programme Adequacy Report”. (The Pre-Construction Services provided by the builder under the ECI Contract – yet to be signed – included reporting on the adequacy of the indicative program prepared by the Consultants: para (h), Schedule 2). The builder concluded that the tender program was inadequate. To address this, the builder made various suggestions, including “Redesign external façade system from conventional stick construction to panelised façade system”. The builder further advised that the critical path of the programme was currently through the procurement of the structural steel and façade. The programme would be halted until these items arrived on site.

98. On 8 July 2014, the architect reviewed Ausrise’s shop drawings and emailed the plans to Mr Wong and TTW, copied to Mr Chalmers. Mr Polden made extensive handwritten notes on the shop drawings. Where the shop drawings referred to “4mm COMPOSITE PANEL”, Mr Polden noted “This is 25mm honeycomb core panel to match existing”. Elsewhere, “4mm COMPOSITE PANELLING” was crossed out and “25mm honeycomb core alum” was written instead. On one plan, it was crossed out and replaced with “13mm profiled luxalon multi-panel to match existing”. On three plans, “4mm COMPOSITE PANELLING” was unaltered, whether intentionally or by oversight. Elsewhere on one drawing which called for “composite capping”, the architect noted “A 4mm composite panel would be acceptable as it would be more suitable to withstand rope forces from abseiling window cleaners.”

99. Mr Roberts considered that the architect’s review of the shop drawings affirmed the architect’s design intent to maintain the cladding products that it had specified. Mr Bullen also observed that, when the architect made the note – “A 4mm composite panel would be acceptable as it would be more suitable to withstand rope forces from abseiling window cleaners” – this indicated that the architect considered the use of ACP cladding suitable for use on the external walls. I agree with the observations made by both Mr Roberts and Mr Bullen. The architect pressed for the QuadroClad and MultiPanel products to be used as initially specified but was open to the use of ACPs in particular locations as well.

100. On 9 July 2014, Mr Maroun chaired the next design workshop. The minutes record that an alternative design had been submitted to the architect and TTW for review. The builder had received the architect’s comments; the structural engineer’s comments were awaited. After the meeting, Mr Wong also emailed the shop drawings to acoustic engineer, Mr Tsui, at AECOM, “Please find attached the alternative external façade system for your review.” The attached drawings did not include the architect’s handwritten notes.

101. On 18 July 2014, Mr Wong emailed Ausrise, “Any chance we can get a physical sample for … Alpolic-M7796 Silver White Metallic [and] Interpon – Ultra Ultriva Olde Pewter Matt YY223A. These seems like the closest match so far.” This was the first mention of Alpolic.

… Buildcorp advised the details of the external façade system shall be confirmed and detailed within the subcontractor’s [workshop drawings].

104. The builder called for tenders to supply façade aluminium and glazing. (Under the ECI Contract – still yet to be signed – Star Casino could direct the builder during the Pre-Construction Services stage to tender for subcontracts for any part of the Project Works: cl 22.1(a)). The scope of works in the tender called for drafting shop drawings (drafting of façade system and engineering, 3D modelling and design coordination with other subcontractors and consultants) together with procurement, fabrication and installation.

105. On 24 July 2014, Ausrise submitted a quotation for “façade drafting / design” as follows:

“We hereby submit our quotation for the façade system design and procurement of workshop drawings …

Scope of works:

1. Initial design meetings between Ausrise and Buildcorp to discuss design intention

2. Taking original concept design drawings and develop new system using unitized façade panelling, submission to Buildcorp and subsequent correspondence in dealing with client / architect’s comments

3. Provide new concept drawings to Buildcorp which have subsequently been used for inclusion in Buildcorp tender package

4. Revisions, updates and submission of full set of workshop drawings to architect and client’s approval”

106. The total quotation for “drafting and design” was $41,000. Mr Maroun said of Ausrise, “they definitely did design.”

107. On 29 July 2014, Mr Maroun chaired the next design workshop. The minutes record that AECOM had provided specifications for acoustic walls to the fish tank room, which may explain why AECOM’s acoustic engineer had been involved at that stage. After the meeting, Mr Wong emailed Mr Polden regarding a colour sample:

“Spoken to the contractor for the aluminium cladding …

We can only select from the Alpolic colour chart.

We will need to reselect again, if you are not happy with the sample colour today.

Please advise.”

108. Mr Wong’s email indicates that the restriction on selecting aluminium cladding from the Alpolic range came from the contractor, being Ausrise. On 30 July 2014, Mr Polden replied, copied to Mr Chalmers:

“The council has been advised that we are matching the existing materials and colours ie the Luxalon ‘Quadroclad’ and whilst I expect the actual product can be substituted, the detailing eg corners, junctions, joints etc needs to be the same. If there is a colour variation, we think it can be easily justified but our understanding is that Council would prefer something darker rather than lighter than what’s there and we agree with that.

We will have to revisit the colour chart as the samples reviewed yesterday were most definitely lighter than the existing. Once a suitable colour has been chosen, the client will have to approve both the colour and the material substitution.

Back to SGI!!!!”

109. Presumably, the reference to “SGI” was to SGI Architectural, being the distributor of Alpolic FR. There are no contemporaneous emails with SGI. I take Mr Polden’s reference as alluding to what colours of the Alpolic product were then available. Mr Polden’s email also indicates that he had no particular objection to the use of Alpolic, so long as the colour was suitable and the detailing of the material was the same as existing. On 31 July 2014, Mr Wong emailed Ausrise, requesting larger sample pieces for four Alpolic colours by 5 August 2014.

110. On 6 August 2014, Mr Maroun provided Mr Chalmers with a “Cost Plan Validation”. (This was part of the Pre-Construction Services to be provided by the builder under the ECI Contract: para (g), Schedule 2). The builder provided its cost estimate for the project, highlighting the main elements which were over budget and the reasons why. This included the façade, for which the following reasons were provided:

● Façade cost now includes the following:

○ Full eave and parapet section including cladding;

○ Glazing;

○ Partition section underneath window;

○ Capping over existing hob back to modular panel;

○ Insulation;

○ Steel supports to steel line …

111. On 7 August 2014, Mr Chalmers sought further information, copied to a quantity surveyor. Mr Maroun replied that the façade cost now included costs as a full curtain wall / modular system and not a conventional façade system. As such, the costs of the external façade section now included other elements which had been separately costed elsewhere.

112. Separately, the builder received another tender to supply façade aluminium and glazing. On 8 August 2014, the builder asked the tenderer to “Allow for ACM 4mm cladding NOT 25mm hone[y]comb” and to “Allow for the composite cladding to the upper fascia”. On 21 August 2014, Ausrise submitted a tender “for the supply, installation & glazing of curtain walling … in accordance with the architectural drawing & specification supplied.” The tender included “workshop drawings & engineering”. Not included was “Honeycomb cladding (4mm ACM in lieu of)”.

113. While the builder was moving away from the use of honeycomb cladding to ACP, the architect was not. On 15 August 2014, the architect produced For Construction drawings. The drawings continued to depict the use of QuadroClad and MultiPanel in the same locations as the For Tender drawings.

ECI Contract

114. On 22 August 2014, Star Casino executed the ECI Contract. The builder agreed to work with Star Casino and its consultants in performing Pre-Construction Services “to finalise the design, staging, program and cost plan parameters for the Project and to prepare Lump Sum Submissions”: cl 8.3(a). Schedule 2 described Pre-Construction Services, including:

(b) Perform a managing contractor’s peer review of current design documentation … and notify the Principal of any non-compliance it identifies with the requirements of the design briefs including the performance requirements;

(c) In the event that a non-compliance is identified during the peer review referred to in (b), provide a report to the Principal which sets out the reasons for non-compliance, any options available to correct the non-compliance including cost estimates and the Contractor’s recommendation as to which option to adopt;

(d) Make recommendations on and assist the Principal to undertake peer reviews of design work;

(e) Work with the Principal, the Project Manager and the Consultants by providing advice on buildability and running a value engineering process in order to lead the Consultants to finalise the Project Developed Design for the Principal’s approval; …

115. Clause 8.3(d) added that, in providing these services:

“… the Contractor must comply with, and (subject to clause 25) ensure that the documents referred to in Schedule 4 comply with:

(1) All Legislative Requirements, Standards and requirements of all Authorities … including all planning and building regulations;

…

(3) Any relevant Standards; and

(4) Any other standards specified in this Contract.”

116. Clause 25 provided:

25 Responsibility for design

The parties acknowledge that:

(a) the Contractor will perform Design Management for the duration of its appointment in respect of the Pre-Construction Services, the Project Works and (if required to by the Principal) in respect of relevant New Works Packages;

(b) as part of the Pre-Construction Services, the Contractor will notify the Principal of any gaps or deficiencies it identifies in connection with the Consultant Contracts, including any gaps or deficiencies concerning:

(1) the scope of the services to be performed by the Consultants; and

(2) the extent of the risk and any other Design Responsibility which the Consultants are obliged to assume,

pursuant to the Consultant Contracts; and

(c) the Contractor will not have any Design Responsibility in connect with the Pre-Construction Services or the Project Works or any New Works Package, except for the Design Responsibility assumed by the Contractor pursuant to the General Conditions of Contract if the Principal accepts a Lump Sum Submission based on the General Conditions of Contract.

117. Legislative Requirements was not defined. Standards included the BCA: cl 1.1. Schedule 4 called for the completion of a Project Developed Design, being design documentation for the Project Works developed in accordance with the requirements set out in the schedule: cl 1.1; Sch 4. Schedule 4 required “construction quality drawings and specifications outlining the extent of Project Works”: para (a), Part 1 of Schedule 4.

118. The builder also agreed to submit a Lump Sum Submission to the Principal for the Project Works: cl 21.1(a). Lump Sum Submission was a written submission identifying a lump sum Contract Sum for which the builder was willing to complete some or all of the Project Works, either under the General Conditions of Contract or the Construct Only Conditions of Contract: cl 1.1. In the event that the Lump Sum Submission was acceptable, then Star Casino could accept the submission on the basis of General Conditions of Contract (in Schedule 5), not accept the submission and direct the builder to perform the Project Works on an Actual Cost basis, or accept the submission on the basis of the Construct Only Conditions of Contract (in Schedule 6): cl 21.1(b); cl 23, cl 23A.

119. Schedule 5 to the ECI Contract comprised General Conditions of Contract for Design and Construct. The builder did not submit a Lump Sum Submission using this form of contract, but the differences between these terms and the form of contract that was used are relied on by the builder in its submissions on the proper construction of the building contract.

120. Under both forms of contract, the builder was obliged to execute and complete the work under the Contract in accordance with the requirements of the Contract: cl 3.1. The definition of “work under the Contract” differed in that it included “the Contractor’s Design Obligations” for the General Conditions of Contract for Design and Construct. “Contractor’s Design Obligations” meant all tasks necessary to design and specify the Works required by the Contract, including preparation of the Design Documents”. “Design Documents” meant the drawings, specifications and other information, samples, models, patterns and the like required by the Contract and created … for the construction of the Works: cl 2.1.

121. Clause 4 concerned warranties given by the builder. In the General Conditions of Contract for Design and Construct, cl 4.1 provided: (emphasis added)

4.1 Contractor’s Warranties

Without limiting the generality of Clause 3.1, the Contractor warrants to the Principal that the Contractor-

…

(b) subject to Clause 9, shall engage and retain the Consultants and subcontractors who are suitably qualified and experienced and shall coordinate the activities of the Consultants and subcontractors so that the Works are designed and executed in a proper and workmanlike manner;

…

(d) shall execute and complete the Contractor’s Design Obligations and produce the Design Documents to accord with the Principal’s Project Requirements and, if Clause 10 applies, accept the novation and retain the Consultants for any work the subject of a prior contract with the Principal;

(e) shall execute and complete the work under the Contract in accordance with the Design Documents so that the Works, when completed, shall

(i) be fit for their stated purpose; and

(ii) comply with all the requirements of the Contract (including the Principal’s Project Requirements) and all Legislative Requirements; and

…

122. Legislative Requirements included approvals and the BCA: cl 2.1. Clause 4.2 of the General Conditions of Contract for Design and Construct provided:

4.2 Warranties Unaffected

The Contractor acknowledges that the warranties in Clause 4.1 and the Contractor’s Design Obligations shall remain unaffected notwithstanding any one or more of the following-

(a) that design work … has been carried out by or on behalf of the Principal and included in the Principal’s Project Requirements;

(b) that the Contractor has entered into a novation of any prior contract between the Principal and a consultant of the Principal under Clause 10 and thereafter has retained that consultant in connection with the work under the Contract;

(c) any receipt or review of, or comment or direction on, the Design Documents by the Principal or the Project Manager;

…

(e) any receipt, review, comment, rejection or expression of satisfaction or dissatisfaction by or on behalf of the Principal or the Project Manager whether under the Contract or otherwise with:

(i) any of the Contractor’s selection of subcontractors;

(ii) any of the Contractor's materials, plant or equipment selections used in the Works; or

(iii) the execution of any work under the Contract.

123. Clause 8 of the Design and Construct contract contained extensive obligations in respect of design. Clause 8.3(a)(i) provided that the builder must “produce and develop the Design Documents so that they comply with and satisfy the Principal’s Project Requirements and the Preliminary Design and all relevant Legislative Requirements”. The clause continued to outline the builder’s obligations in respect of design and presentations, a design working group, a design acceptance group and review of design documents by the Principal. The builder was not relieved from its obligations in respect of producing and developing Design Documents that complied with Legislation Requirements by reason of the Principal’s review or comments, nor those of the Principal’s consultants or project manager: cl 8.11.

124. Clause 10 envisaged the novation of contracts between the Principal and its Consultants. The Contractor was then responsible for those Consultants and enforcing the Consultant’s Contracts: cl 10.2 – 10.4. The builder was also obliged to ensure that every consultant had professional indemnity insurance: cl 21.

125. Schedule 6 of the ECI Contract contained General Conditions of Contract for Construct Only. This form of contract ultimately became the contract between Star Casino and the builder in respect of the first project. The terms of this contract were quite different. I will return to the details at [189].

126. Also on 22 August 2014, Star Casino directed the builder to commence works on an Actual Cost basis, on the basis of the Managing Contractor General Conditions of Contract (being Schedule 7 to the ECI Contract), while the builder finalised a lump sum submission. The parties referred to this as the “Letter Agreement”.

127. On 25 August 2014, the builder submitted a “Lump Sum Construct Only” offer for review and approval. On 26 August 2014, the builder issued a progress claim to Star Casino for Pre-Construction Services. In respect of the builder's peer review of current design documentation, the claim noted that this task had been completed through the ECI phase and included:

“— Redesign external façade system from conventional stick construction to panelised façade system”

128. In sum, the builder, with Ausrise’s assistance and the architect’s input, had substantially redesigned the external façade in the course of performing its obligations under the ECI Contract. The next step was to gain Star Casino’s approval of the Project Developed Design.

Product substitution

129. As mentioned, the Principal could direct the builder during the Pre-Construction Services stage to tender for subcontracts for any part of the Project Works: cl 22.1(a), ECI Contract. (That appears to be what the builder had been doing in respect of the supply of façade aluminium and glazing). In that event, the builder would conduct a tender process, following which the Principal could direct the builder to contract with a tenderer and commence that part of the Project Works on an Actual Cost basis: cl 22.1(b).

130. On 22 August 2014, the builder provided Mr Chalmers with the façade aluminium and glazing trade recommendation for review and approval. Mr Maroun said that, by the trade package recommendation, the builder sought approval from the client, following which there would be approvals of physical samples as the design progressed. Accompanying the builder’s trade recommendation was a Tender Comparison Sheet, which noted:

4mm ACM Composite Cladding … in lieu of the specified Hone[y]comb Cladding**.** D****esign intent to remain as detailed by the architect, samples to be provided for approval.

131. On 28 August 2014, Mr Chalmers approved the trade recommendation in respect of façade aluminium and glazing, “Please take this email as direction to proceed with the … recommended subcontractor”, being Ausrise. Mr Maroun said that, by approval of the trade recommendation, the honeycomb cladding was changed to an ACP, subject to a sample approval process.

132. Mr Polden said he received a call from Mr Maroun to tell him that a decision had been made by the builder and Mr Chalmers, without the architect’s involvement, to use Alpolic cladding in lieu of the QuadroClad product that was in his design. Mr Maroun told Mr Polden that they had decided to do this because they were nervous about the reliability of supply of QuadroClad, given that the product was manufactured in and supplied from South East Asia.

133. Mr Maroun did not recall the conversation described by Mr Polden, but said it could have happened. But I think that Mr Polden’s recollection that the architect was not involved is not entirely accurate, as he had received an email from Mr Wong on 29 July 2014 that the cladding would be selected from the Alpolic colour chart, reviewed samples and advised Mr Wong, copied to Mr Chalmers, of his thoughts on the subject: see [107]-[108]. That said, Mr Polden considered a product to be replaced when the project manager approved it, and he understood from the telephone conversation that Mr Chalmers had approved the change. That does appear to have been the case.

134. At about this time, Mr Martin began work for the builder. Mr Martin recalled, “when I commenced on the project the discussions around the cladding type was … one was unavailable and one was discontinued.” On 1 September 2014, the builder met with Ausrise. Mr Martin requested a cladding sample. The “cladding swatch” was provided in an envelope. Mr Martin photographed the sample and the envelope. He emailed Mr Polden:

“I’m the new Contract Administrator on the Star project and will be looking after the samples for the project from this point forwards.

I have attached the sample sign off documents to be discussed in tomorrow’s design meeting for you to review beforehand.”

135. Attached to the email were two Buildcorp forms entitled “Prototype / Sample Sign Off”. Mr Martin had prepared these forms. One concerned Alpolic FR. The item was described as “Alpolic/fr Composite Cladding Sample No. M9170-G30, being the colour “Silver Metallic”. The form included a photograph of the sample and its packaging. Some of the text on the packaging can be read in the photograph, as follows:

“Alpolic/fr

The rigid and bendable composite material with non-combustible mineral filled core”.

136. Less readable was the smaller print on the packaging. Not readable was the text on the packaging in respect of fire resistance. This was because the sample had been placed in front of that portion of the packaging when the photograph was taken. Presumably, the packaging was placed behind the sample to make plain that the sample was, indeed, Alpolic FR.

137. Mr Polden agreed that he would have read the email of 1 September 2014 and its attachment in accordance with his usual practice. But Mr Polden needed a magnifying glass to read the text on the packaging when asked about it in the witness box. Mr Polden did not say that he scrutinised the text on the packaging at the time. Where Mr Polden professed that he understood that he was only approving the colour of the sample, there would have been no particular reason for him to have endeavoured to try to read the text on the photographed packaging. Indeed, Mr Polden complained that the builder did not provide any information in relation to the properties of Alpolic FR.

138. The builder forwarded Mr Martin’s email of 1 September 2014 to Mr Chalmers for information. The builder also emailed Ausrise, providing the latest For Construction drawings and advising that a meeting was being arranged with the architect and structural consultants. Ausrise was asked to attend. A later email from Mr Polden notes that he met with Mr Wong on site to choose a sample in relation to the “Luxalon cladding products”.

139. Meanwhile, work had begun on an application for a construction certificate. On 2 September 2014, Philip Chun provided Mr Chalmers with an updated construction certificate list of requirements. The accompanying form anticipated that a set of detailed plans and specifications would accompany the application for a construction certificate, together with the details of Alternative Solutions to comply with the BCA (if applicable). Mr Chalmers forwarded this to the architect, the interior architect, AECOM, TTW and the builder for action.

140. Mr Polden agreed that, by Mr Chalmers’ email, the architect was asked to issue up-to-date For Construction drawings to the certifier. He understood that this was a standing request up until the date that the construction certificate was issued. But, perhaps inconsistently, Mr Polden did not agree that he was also required to provide any updated drawings if anything changed.

141. The architect submitted that, notwithstanding Mr Polden’s admission, any 'standing instruction' from Philip Chun was in respect of interior plans and the instruction was issued to the interior architect, Laurence Lee Associates. I disagree. The certifier emailed Mr Chalmers, who forwarded the email to both Mr Polden and Mr Lee. The documents sought by the certifier did not obviously relate to the interior architect only. The certifier’s cover letter advised that BCA comments would be provided “upon receipt of one full PDF set of architectural and service drawings. .” I agree that the mark-up was of the interior architect’s plans. But the certifier asked for a complete set, which must have included Mr Polden’s drawings too.

“NOTE 1

FASCIA PANEL IN ALPOLIC IS CONTRARY TO THE DESIGN DRAWINGS AND APPROVED D.A. FASCIA PANEL SHOULD BE ‘MULTIPANEL’ (MULTIPANEL FAÇADE SYSTEM – 300MM WIDE VERTICAL FINE LINE CLOSED JOINT WITH EXPRESSED VERTICAL FINE LINE CLOSED JOINT WITH EXPRESSED VERTICAL JOINT EVERY THIRD PANEL OR 900MM TO MATCH EXISTING)

TO PROCEED WITH THE SUBSTITUTION OF THE ‘MULTIPANEL’ WITH ALPOLIC, AN INSTRUCTION IS REQUIRED FROM THE PROJECT MANAGER.”

154. That is, Ms Ison raised an issue with the substitution of Alpolic FR for MultiPanel. In addition, Ms Ison added “Note 6” where Alpolic FR panels were fixed where the QuadroClad-like product was in Mr Polden design drawings. Ausrise’s drawings depicted what appeared to be adhesive fixings and Ms Ison prepared a note relating the architect’s preferred mechanical fixing, that is, with a screw after the panel was folded. Ms Ison provided further notes on the façade cladding joints:

“NOTE 6.

[THE ARCHITECT] PREFERS THE TRADITIONAL/USUAL ‘TRAY TYPE’ WITH ROUT AND RETURN TO ALL ALPOLIC PANELS. CURRENT DETAIL LOOKS INSUFFICIENT IN TERMS OF STABILITY. [THE ARCHITECT] PREFERS PANELS TO BE MECHANICALLY FIXED IN LIEU OF ADHESIVES.”

155. That is, Ms Ison did not have a problem with the substitution of Alpolic FR for QuadroClad but how it was affixed. Ms Ison emailed the review of the shop drawings to the builder, copied to Mr Chalmers, on 23 September 2014. The builder forwarded these to Ausrise, noting:

“In relation to the note on the “MultiPanel” my understanding was that we are proceeding with the Alpolic in lieu of this however the installation was to match the architect’s design intent of 300mm wide vertical joints for the fascia…?”

156. Separately, Mr Maroun emailed Mr Chalmers, copied to Mr Polden:

“Please note that I believe we have already been provided with approval to utilize the alpolic in lieu of multi-panel by [your firm] which we have proceeded with.

… Can you please confirm your direction …”

157. Mr Polden replied, copied to Mr Chalmers and TTW:

“Our understanding of the Alpolic substitution is that it only related to the Quadroclad on the external walls at window level, not the Multipanel on the soffit lining and the fascias at roof level. The Multipanel was selected for specific reasons eg to match the existing and create a seamless joint between existing and new and to overcome the variable spacing of the wall joints and the inevitable misalignment of joints where the two planes come together. It is also what has been approved by Council.

Perhaps the Alpolic is more suitable than the Multipanel for the prefabricated panelised construction system and, if so, particular attention must be given to the jointing alignment at the wall/soffit/fascia transition so that it retains an orderly configuration. Also, if Alpolic is to be used for the fascia which separates the two roof levels, the existing Multipanel fascias over Pit 80 and the existing northern [private gaming rooms] should also be replaced to match.

Lastly, Council should also be consulted and the reasons for the substitution fully explained to ensure there are no potential issues with the existing Consent.”

158. Mr Polden said he was concerned that an alternative façade construction with Alpolic FR instead of MultiPanel may not comply with development approval and he wanted Mr Chalmers and Mr Maroun to know this before Mr Chalmers decided whether to replace the MultiPanel product with Alpolic FR. He was concerned that the substituted product may not match the existing building in colour or form and would not allow for a seamless transition from the façade of the existing building to the façade of the new construction. He understood this to be important for compliance with the council’s development approval as well as his design intent.

159. The builder quickly responded to clarify the extent to which Alpolic FR would be used and to ensure that the detailing of that product was such as to meet the architect’s design intent. The builder forwarded Mr Polden’s email to Ausrise, noting “we need to resolve this ASAP”. Mr Martin forwarded the builder’s Sample Register to Mr Maroun. Mr Maroun then emailed Mr Polden and Mr Chalmers, copying Ms Ison and TTW: (emphasis added)

“Apologies Alan,

Correct, the alpolic is being substituted to match the existing multi panel layout. We also note that it is the only product that currently meets the program constraints required to procure/fabricate/deliver the façade on time.

We understand that the alpolic needs to match the existing layout, which the current contractor is site measuring to ensure we match existing accurately. This will be reflected in the revised shop drawings.

…

John,

Please note that we have ordered material based on signed off samples attached, therefore if there is going to be a discussion with council it needs to happen urgently. Please note that the sample that has been signed off was put against the existing and was determined to match noting the only difference was that it looked ‘newer’.”

160. Mr Maroun then emailed Ausrise:

As discussed, please note the following diagrams showing the multi clad detail which is IMPORTANT. It is imperative that we match existing and we connect into the existing façade seamlessly. DA conditions specifically call for the design to match existing which is why the drawings show the multi clad detail as they do. We have always stressed the importance of this cladding detail to match existing. Please ensure the shop drawings are revised to match this detail please. As we have agreed please attend site to measure the existing profiles and ensure we shop draw to match.”

161. Mr Chalmers asked whether they had “a photo of the Alpolic up against the existing … Multipanel …?”. Further, Mr Chalmers enquired whether they could “still achieve a seamless joint between existing and new with the Alpolic? As well as overcome the variable spacing of the wall joints and the inevitable misalignment of joints where the two planes come together?” Mr Chalmers asked Mr Polden, “Excuse my ignorance with the different specific finishes; but is the Alpolic that different to the Multipanel and can it be picked?” Mr Maroun also clarified a detail with Mr Polden, “I now understand that you were saying that we would only have to replace those areas if we left the detail as per the current shop drawings. We will match existing multi-clad layout as [the architect] ha[s] documented so no issues at all.”

162. On 24 September 2014, the builder met with the architect and Ausrise. Following the meeting, the builder confirmed:

● in general Ausrise to revise shop drawing according to:

○ agreed details with architect in today’s meeting otherwise as noted by the architect within the latest shop drawing review.

…

○ revised detail of the composite cladding as agreed with architect (Ribs to the boxed fascia are to be between 275-325 mm wide). …

163. As a result of these final communications, Star Casino and the architect approved the use of Alpolic FR in place of the QuadroClad and MultiPanel products.

Construction certificate

164. On 25 September 2014, the certifier issued a construction certificate. In doing so, Mr Marinelli explained that he approved the For Construction drawings for use in the project, including the aluminium cladding specified in those drawings. It was to be aluminium with no combustible elements as it was solid aluminium or honeycomb aluminium construction. That cladding contained no polyethylene core. Mr Marinelli was not aware that Alpolic cladding had been approved for use in the project.

165. Mr Harriman noted that, if Alpolic FR was to be used, then a modified construction certificate was required. Given that Alpolic FR did not meet the Deemed-to-Satisfy provisions, an Alternative Solution would have had to be prepared. No application was made to modify the construction certificate to account for this amendment to the cladding.

166. Mr Polden did not agree that, when a certifier considers BCA compliance, the certifier is considering the specific product, “Possibly not.” Further:

“At the time, I didn’t consider that a change from one non-combustible cladding to a different manufacturer’s … non‑combustible cladding constituted a significant change. Because to the naked eye, they both look the same from a distance and they would both perform the same.”

167. Mr Polden also maintained that the plans in the certifier’s possession “did reflect our cladding choice” in that the architect approved the colour. Further, “It was my opinion at the time that the change to the ALPOLIC from the QuadroClad was not a significant enough change that it would’ve changed the performance of the facade. That’s all I can say.”

168. By contrast, Mr Bullen said an architect would be “expected to act”, where a reasonably competent architect would be watchful of the approval process and make sure that the construction certificate was valid for the work to be done. Where the architect is the lead consultant, it needs to keep its documents up to date so that everybody on the project is properly informed. A change in cladding was a material change in the building. It was necessary to update the drawings as it had an impact on the construction certificate and in order to inform the team.

169. Mr Roberts was of the opinion that a reasonably competent architect would not have prepared updated For Construction drawings, either as at 16 September 2014 or as at 25 September 2014, without seeking a direction from the project manager.

170. Against this, Mr Bullen said a responsible architect would have sought such instructions if they could not be assumed. But nor did Mr Bullen consider that a direction was necessary where the architect was the lead consultant in charge of co-ordinating all other consultants; “it has its own work to do and its own obligations to fulfill and it doesn’t need directions from anyone for some of that.” Mr Bullen further said, “The architect is the lead designer. It’s in control of its own documents. It doesn’t need an instruction. I mean, if we had to have an instruction every time we changed something you’d never get anything done.” I preferred Mr Bullen’s views: see [268].

171. On 29 September 2014, Ausrise issued revised shop drawings. The drawings continued to refer to “4mm composite panel” and “composite cladding”. The architect accepted that this was understood as a reference to Alpolic FR. On 7 October 2014, the builder emailed these drawings to the architect, copied to Mr Chalmers, for review and approval. On 9 October 2014, Ms Ison approved the shop drawings. (The architect is said to have made a further misrepresentation in so doing.)

Construction

172. From 13 October 2014, the builder continued site establishment and commenced demolition for Level 17 and two hotel rooms. On 22 October 2014, Star Casino accepted the builder’s final lump sum submission on the basis of the Construct Only Conditions of Contract: cl 21.1(b)(4). I will return to the details of the contract at [189].

173. Based on the builder’s project reports, façade cladding and backpans began to be installed on 18 November 2014. Mr Martin said the façade cladding was installed as a pre-fabricated curtain wall with a ‘tongue and groove’ joint. On 21 November 2014, Mr Maroun emailed Ausrise, asking them to revise their packing methods as façade panels were arriving on-site damaged, “Other than that the panels look great and are of high quality. Very impressed. Just need to move quicker!!!”.

174. As earlier mentioned, Ausrise’s shop drawings, as reviewed by the architect, noted that the backpans would be made of Zincalume. Mr Martin said that the backpans were installed during the pre-fabrication process. Mr Martin was onsite when the modular units, with their backpans, were installed. He took photographs. As earlier mentioned, the backpans can be seen in the photographs, covered by protective film with branding “Qbond”.

175. Mr Martin said he did not realise there was an issue with the backpans at the time. If he had realised that the wrong material was being installed “it would have been stopped straightaway” as there was “zero advantage” to the builder in having a product used which deviated from the signed-off drawings. But Mr Martin was looking at the backpans as the modular units were installed. I consider that Mr Martin’s evidence as to what he would have done is affected by hindsight and I do not accept it.

176. On 25 November 2014, during the period when the façade system was being installed at the Astral Hotel, a fire started on a balcony of an apartment in the Lacrosse building in Docklands, Melbourne. According to the CSIRO’s report, the balconies were clad with “Alucobest” PE ACP. Fire spread rapidly via the ACPs from level 8 upwards to the top of the building on Level 21. Fire also spread downwards to level 6 by falling burning debris, starting a secondary fire on that level. This appears to be the first large fire in Australia involving ACPs.

177. According to a building regulation advisory note later circulated by NSW Planning & Environment in August 2015, the Lacrosse fire highlighted issues with the use of ACPs as part of an external wall system or an attachment to an external wall. In multi-storey buildings, the use of this building material had the potential for rapid vertical fire spread via the façade if inappropriate products were used. This had the potential to affect the safety of occupants, the public and firefighting personnel.

178. Returning to the first project, installation of the façade was completed on 20 December 2014. On the builder’s website at the time, it described a unique feature of the project as the curved building, “which presented a unique challenge for set-out of prefabricated structural steel and façade units which were in production well before construction commenced.” The builder described unique milestones delivered by the project team as including “The redesign of the conventional façade system originally detailed to a custom unitised double glazed façade system that significantly reduced the construction program that has now been implemented, exceeding client’s expectations.”

BCA compliance

186. As earlier noted, expert fire engineers Dr Enright and Mr Harriman agreed that the use of Alpolic FR as part of an external wall did not comply with the Deemed-to-Satisfy provisions of the BCA as the product was not non-combustible subject to the ‘attachment exception’. Based on the construction drawings, Dr Enright considered that the ACPs were not an attachment in the first project, so the ’attachment exception’ did not apply.

187. Dr Enright considered that the CodeMark Certificate of Conformity applicable during the first project was evidence of suitability at the time that Alpolic FR could be used as an external cladding, as it complied with Performance Requirements CP2 and CP4. Mr Harriman disagreed, being of the view that the CodeMark certificate only applied if Alpolic FR was used as an attachment. It is not necessary to resolve this controversy as no Alternative Solution was in place when application was made for a construction certificate for the project. As such, the works did not comply with the BCA.

First project claims and cross-claims

188. This brings us to whether Star Casino’s costs of remediation are recoverable from the builder, and by the builder from others, in respect of the first project. As Star Casino is not a ‘consumer’, it is only necessary to consider its claim for breach of contract.

Claim against the builder

189. The contract between Star Casino and the builder in respect of the first project comprised three documents: a letter dated 22 October 2014, Construct Only General Conditions of Contract (being Schedule 6 of the ECI Contract) and a Preliminaries and Supervision Fee breakdown. The letter stated that terms defined in the ECI Contract which were not otherwise defined in the letter had the meanings given in the ECI Contract.

190. The letter also noted that, notwithstanding the Letter Agreement of 22 August 2014, and consistent with cl 22.3(b) of the ECI Contract:

“from the date of execution of this letter the attached Construct Only General Conditions of Contract will apply to all of the Project Works, including those that were executed during the Managing Contractor Stage in accordance with the Letter Agreement and the Early Works”.

191. The Managing Contractor Stage was the period from when Star Casino first directed the builder to commence performance on the Project Works on an Actual Cost Basis until Star Casino accepted the Lump Sum Submission: cl 1.1, ECI Contract. That is, the parties agreed to apply the terms of the Construct Only contract retrospectively from 22 August 2014.

192. Clause 3 of the building contract provided:

3. NATURE OF CONTRACT

3.1 Performance and Payment

The Contractor shall execute and complete the work under the Contract in accordance with the requirements of the Contract. …

…

3.4 Responsibility for Design

Notwithstanding any other provision of this Contract, the parties acknowledge that:

(a) the Contractor will perform Design Management for the duration of its appointment in respect of the Works; and

(b) the Contractor will not have any Design Responsibility in connection with the Works.

193. I note that there was no cl 3.4 in the alternative Design and Construct contract: Schedule 5, ECI Contract. Design Management and Design Responsibility were as defined in the ECI Contract (cl 1.1) as follows:

| Design Management | coordinating and managing the Consultants, including the collection of certificates and other documents which the Consultants are required to provide pursuant to Consultant Contracts. Design Management does not include the assumption of any Design Responsibility. | | Design Responsibility | 1 all tasks necessary to design and specify the Project Works …; and 2 ensuring the design of the Project Works … is fit for its intended purpose, complies with all applicable Legislative Requirements and Standards, and otherwise satisfies the Principal’s requirements, including those set out in the Contract. |

194. I note that para 2 of the definition of Design Responsibility corresponds with the portions of the Contractor’s warranties in cl 4.1 in the Design and Construct contract which are excluded in the Construct Only version: “ensuring the design of the Project Works … is fit for its intended purpose, complies with all applicable Legislative Requirements and Standards, and otherwise satisfies the Principal’s requirements”.

195. Clause 2.1 included the following additional definitions:

‘work under the Contract’ means the work which the Contractor is or may be required to execute under the Contract …

‘Works’ means the whole of the work to be executed in accordance with the Contract … which by the Contract is to be handed over to the Principal.

196. Further, ‘Legislative Requirements’ included “Approvals” and the BCA: cl 2.1.

197. In cl 4.1, the builder gave a more limited warranty to Star Casino than in the alternative Design and Construct contract:

4.1 Contractor’s Warranties

Without limiting the generality of Clause 3.1, the Contractor warrants to the Principal that the Contractor:

(a) is and at all times shall be suitably qualified and experienced, and shall perform the work under the Contract with a degree of professional skill, care and diligence expected of a contractor that is an expert in carrying out work of a nature similar to the work under the Contract. The Contractor acknowledges that the Principal has entered into the Contract in reliance upon the Contractor’s representation that it has the skill, experience and ability to provide the work under the Contract in accordance with this Clause 4.1(a);

(b) subject to Clause 9, shall engage and retain subcontractors who are suitably qualified and experienced and shall coordinate the activities of the subcontractors so that the Works are executed in a proper and workmanlike manner;

(c) shall execute and complete the work under the Contract so that the Works, when completed, shall comply with all the requirements of the Contract and all Legislative Requirements; and

(d) is responsible for, and has allowed for the time and cost consequences of, all the Contractor’s Risks in respect of the work under the Contract.

198. Clause 4.1(a) is the same in both the Construct Only and Design and Construct contracts. Clause 4.1(b) differs. In the Design and Construct contract, the builder was obliged to engage and retain “the Consultants and subcontractors” and to coordinate their activities “so that the Works are designed and executed in a proper and workmanlike manner”. Consultant meant any person engaged by the builder and included any consultant of the Principal whose prior contract was novated under cl 10: cl 2.1. In the Construct Only contract, the warranty was limited to subcontractors only and the reference to design was omitted.

199. There is no equivalent to the warranty in cl 4.1(d) of the Design and Construct contract: see [121]. The warranty given in cl 4.1(c) of the Construct Only contract is a sub-set of the warranty in para 4.1(e) of the Design and Construct contract. No longer is the builder obliged to ensure that the work under the Contract is completed “in accordance with the Design Documents so that the Works, when completed, shall be fit for their stated purpose”. Nor that the Works will comply with the Principal’s Project Requirements.

200. Finally, the warranty in the last sub-clause in both contracts is roughly equivalent, save that the definition of Contractor’s Risks differs. In both contracts, ‘Contractor’s Risks’ means all risks for which the Contractor is responsible under the terms of the Contract including: Legislative Requirements except as provided for in the Contract; the procurement of materials and equipment; and the buildability of the Works. In the Design and Construct contract, the term includes “the Contractor’s Design Obligations included design development under clause 8” and responsibility for Consultants. In the Construct Only contract, the risk is limited to that involving subcontractors.

201. Clause 4.2 in the Construct Only contract provided:

4.2 Warranties Unaffected

The Contractor acknowledges that the warranties in Clause 4.1 shall remain unaffected notwithstanding any one or more of the following-

…

(b) any receipt, review, comment, rejection or expression of satisfaction or dissatisfaction by or on behalf of the Principal or the Project Manager whether under the Contract or otherwise with:

(i) any of the Contractor’s selection of subcontractors;

(ii) any of the Contractor’s materials, plant or equipment selections used in the Works; or

(iii) the execution of any work under the Contract.

202. Unlike the Design and Construct contract, the acknowledgement does not include reference to “the Contractor’s Design Obligations”, nor include sub-cl a), (b) or (c): see [122]. Clause 10.1, concerning novation, was not used. Nor were the provisions for dealing with consultants or enforcing consultants’ contracts.

203. As ultimately put, Star Casino relied only on the builder’s warranty that the Works would comply with the BCA: cl 4.1(c). Where the works were non-compliant with the BCA, Star Casino was said to be entitled to damages for breach of contract. The warranty was said to be unaffected by the fact that non-compliance was caused by defective design or that the contract was “Construct Only”: The Owners – Strata Plan No 66375 v King [2018] NSWCA 170 at [408] (White JA, with whom Ward JA relevantly agreed). To proceed otherwise would be to treat cl 3.4 as an exclusion clause. It was said that the contra proferentem rule should apply.

204. The builder submitted that construction of the warranties in this manner would, in practical effect, import Design Responsibility and be inconsistent with cl 3.4. There was no textual support for this, where cl 3.4 began, “Notwithstanding any other provision of this Contract …**”. The Owners – Strata Plan No 66375 v King was distinguishable, where the result was dictated by statutory construction of the Home Building Act 1989 (NSW), as opposed to the proper construction of a contract: at [403] (White JA, with whom Ward JA relevantly agreed). The construction proffered by Star Casino had been rejected in Walton Construction Pty Ltd v Illawarra Hotel Company Pty Ltd [2011] NSWSC 534 at [187]-[190] (Einstein J). There was no need to apply the contra proferentum rule where cl 3.4 was unambiguous.

205. The builder further submitted that Star Casino’s construction was uncommercial and unrealistic. It would not be rational to construe the contract in the manner contended for by Star Casino. That would mean that a sophisticated commercial operator, which had not priced its Lump Sum Submission on the basis of the Design and Construct contract, warranted that the works, when complete, would be BCA compliant. Star Casino rejoined that the builder’s proffered construction was unworkable.

206. I was not greatly assisted by Owners – Strata Plan No 66375 v King or Walton Construction Pty Ltd v Illawarra Hotel Co. The parties’ submissions on the contra proferentem rule can be put to one side, where the contracting parties agreed that “no provision of the Contract may be construed adversely to a party solely on the basis that the party was responsible for the preparation of the Contract or that provision”: cl 2.2(j).

It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.

208. If, after considering the contract as a whole and the surrounding circumstances, the Court concludes that the language of a contract is unambiguous, then the Court must give effect to that language unless to do so would give the contract an absurd operation: Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [73]-[75] (per Leeming JA, Gleeson and White JJA agreeing).

209. In addition, multiple documents executed by the same parties to effect a transaction should be read together harmoniously: John Shaw v Richard Jeffrey (1860) 15 ER 162 at 171 (Bruce LJ). Regard may be had to the ECI Contract and its attached alternate contracts, both as an earlier document executed by the same parties to effect the transaction and as commercial context for the final building contract. The building contract requires the parties to return the ECI Contract for terms not defined in the building contract.

210. The commercial context in this case is that Star Casino had engaged the builder to provide Pre-Construction Services, including under the ECI Contract, for some months before the building contract was executed. The builder began to provide these services at a time when the architect had already prepared a design. The builder critically examined the architect’s design: Schedule 2, cl 25(b), ECI Contract. The builder provided “advice on buildability” and “value engineering”: Schedule 2, ECI Contract. The product of this process was to arrive at a Project Developed Design for approval by Star Casino: Schedule 4, ECI Contract.

211. Notwithstanding the builder’s engagement with the design “to lead the Consultants to finalise the Project Develop Design for the Principal’s approval”, cl 25 of the ECI Contract made plain the builder “will not have any Design Responsibility” except for the Design Responsibility assumed by the builder if Star Casino accepted the Lump Sum Submission based on the Design and Construct contract: para (e), Schedule 2; cl 25(c); cl 1.1 (definition of General Conditions of Contract), ECI Contract. Star Casino did not accept the Lump Sum Submission based on the Design and Construct contract.

212. The exclusion of Design Responsibility under the ECI Contract continued under the building contract, not only by reason of cl 3.4 but by the retrospective application of that clause to 22 August 2014. The ‘carve out’ of any Design Responsibility on the builder was utterly consistent. When regard is also had to the substantial differences between the alternate Design and Construct contract and the Construct Only contract, then it is apparent that cl 3.4 is both explicable and important to the contracting parties.

213. The primacy of cl 3.4 is underlined by the opening words, “Notwithstanding any other provision of this Contract …”. The warranty in cl 4.1(c) must be read subject to the overriding acknowledgement by the parties in cl 3.4. Were it otherwise, cl 3.4 would be redundant. The presumption against surplusage was explained by Ball J (as his Honour then was) in [2010] NSWSC 985 at [13]: (citations omitted)

The general principle is that the words of a contract should be interpreted in a way which gives them an effect rather than a way in which makes them redundant. That principle does not operate as an invariable rule. In some cases, it may be appropriate to interpret words in a way that makes them redundant. That may be appropriate where the alternative construction of the words is inconsistent with other provisions of the contract or where the alternative construction is inconsistent with the commercial purpose of the contract or where it appears that the words have been included out of abundant caution.

214. Star Casino’s proffered construction of the warranty in cl 4.1(c) does give rise to surplusage in respect of what is obviously a key clause in the contract. The same does not operate in reverse. The builder continues to give the warranty in cl 4.1(c) in respect of “the work under the Contract”, being “the work which the Contractor is … required to execute under the Contract”. As a Construct Only contract, the work which the builder was required to execute was, in short, construction. It was not a Design and Construct contract. The warranty did not extend to non-compliance with the BCA which was referable to tasks falling within “Design Responsibility”; that responsibility remained elsewhere.

215. As to the suggestion by both parties that the other party’s construction was uncommercial, “reasoning by reference to commerciality has its limits”: Star Entertainment Group Limited v Chubb Insurance Australia Ltd [2022] FCAFC 16; (2022) 400 ALR 25 at [11] (Moshinsky, Derrington and Colvin JJ). This is because what is "business commonsense" is itself a topic on which minds may differ and in respect of which an imputed consensus is impossible: Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 at [43] (Gleeson CJ, Gummow and Hayne JJ).

216. Nor are judges best placed to assess the commerciality or otherwise of a particular construction: Cirrus Real Time Processing Systems Pty L**td v Jet Aviation Australia Pty L**td (2023) 113 NSWLR 80; [2023] NSWCA 280 at [87]-[88] (Leeming JA, who also noted that the High Court was divided as to whether a construction accorded with commercial commonsense in Ecosse). As the Full Court cautioned in Rockment Pty Ltd (t/as Vanilla Lounge*)* v AAI L**td (t/as Vero Insurance*)* (2020) 282 FCR 561; [2020] FCAFC 228 at [56] (Besanko, Derrington and Colvin JJ):

… references to a commercial result are not intended to invite a consideration of the actual financial consequences for each of the parties of a particular construction in the events which have occurred by the time that a dispute arises. Such inquiries would quickly descend into an assessment with hindsight as to what a fair and reasonable contract might provide given the circumstances that have unfolded. It would be contrary to the very certainties that the law of contract seeks to provide as to the allocation of risks, rights and obligations, if the meaning of agreements were to be adjudicated by reference to such an imprecise foundation. …

217. Here, the commercial purpose of cl 3.4 is tolerably clear. It was envisaged under the ECI Contract that the builder would engage with the design and provide input, including to enhance “buildability” and achieve “value engineering”. The builder’s potential exposure to liability for the resulting Project Developed Design is obvious. A particular feature of that design may be said to be, or in fact be, a consequence of the builder prevailing upon the architect to make changes to the design. The contracting parties may be taken to have understood that, put bluntly, the builder was not qualified to design, but to build. Absent protection from this exposure, the builder would be most reluctant to critically examine the design during the ECI phase, including making suggestions or pushing for change, which is presumably what Star Casino wanted the builder to do.

218. If the builder was ultimately engaged under the Design and Construct contract, then this envisaged novation of the contract between Star Casino and the architect. This would enable the builder to give directions to the architect and have the benefit of any warranties given by the architect to its principal. Absent this, the builder’s engagement with the design under the ECI Contract would not make the builder responsible for that design: cl 25, ECI Contract. This protection continued in cl 3.4 of the Construct Only contract.

219. Star Casino submitted that it was the builder who decided to use Alpolic FR as external cladding. As such, the Court would not construe cls 3.4 and 4.1 so as to excuse the builder from liability for a breach of the BCA that arose from a “design” decision that the builder in fact made. I think that is precisely what cl 3.4 does, and what it was intended to do. By engaging with the design and making recommendations on how it should be changed to enhance “buildability” or “value engineering”, the builder may stray into the architect’s area of responsibility. Clause 3.4 ensures that the builder’s exposure to liability for its actions in this blurred area were clear. In the result, I have construed the contract in the manner suggested by the builder.

220. The next question is whether the builder breached its warranty, as construed. Star Casino submitted that, as a matter of fact, the decision to use Alpolic FR, or some other combustible ACP, as the external cladding on Level 17 of the Astral Tower appears to have come from the builder and was certainly not initiated by the architect or Star Casino. The builder submitted that Alpolic FR was compliant with the BCA for the reasons given by Dr Enright, including by reference to his concerns about the reliability of the samples taken by the remediation contractor. (I did not understand Dr Enright to regard the use of Alpolic FR on the first project as compliant with the BCA.)

221. Whether a party’s performance fulfils its obligations is a mixed question of fact and law: Margaronis Navigation Agency Ltd v Henry W Peabody & Co of London Ltd [1965] 1 QB 300 at 318 (Roskill J). As to the question of law, the builder has warranted that the Works, when completed, will comply with the BCA save that “the Contractor will not have any Design Responsibility in connection with the Works”. Design Responsibility means “all tasks necessary to design and specify the Project Works … and ensuring the design is fit for its intended purpose, complies with all applicable Legislative Requirements [including the BCA] … and otherwise satisfies the Principal’s requirements”.

Cross-claim against the architect in tort

225. If I am wrong about this then, in the event that Star Casino established its contentions against the builder, the builder sought to recover the loss and damage which it thereby suffered as damages from the architect in negligence. The issues were:

(a) did the architect owe a duty of care to the builder; and (b) did the architect breach that duty by failing to ensure that the shop drawings and For Construction drawings accurately recorded the use of Alpolic FR as external cladding?

226. As to the existence of a duty of care, both parties placed some reliance on the architect’s contractual obligations to Star Casino. The terms of the contract are “not an irrelevant circumstance” in considering what duty the architect owed others; there would be “evident difficulty” in holding that the architect owed the builder a duty of care to avoid an economic loss if performance of that duty would have required the architect to do more or different work than the contract required or permitted: Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16 at [28] (Gleeson CJ, Gummow, Hayne and Heydon JJ), citing Voli v Inglewood Shire Council (1963) 110 CLR 74 at 85 (Windeyer J with whom Dixon CJ and Owen J agreed); [1963] HCA 15.

227. Under its contract with Star Casino, the architect was required to perform its services with the degree of professional skill, care and diligence expected of a competent professional consultant experienced in carrying out such services: cl 4.1(a)(2). In addition, the architect was obliged to perform its services in compliance with Legislative Requirements and Standards: cl 4.1(a)(4); 4.2(a) and (b). Legislative Requirements included approvals, determinations and certificates. Standards included the BCA.

228. Schedule 1 detailed the architect’s services for the first project. The architect would assume the role of lead architect and “shall lead the design, planning and approval and construction documentation for the Project, both architectural and interiors”. Specifically, the architect’s services included (cl 2, Schedule 1, “General - Architectural services and interiors”):

(g) Act as lead consultant of the Other Consultants engaged by the Principal in relation to the Project and manage and coordinate the design.

…

(i) Design the Project so that it complies with the Design Brief (as amended from time to time) and the Building Code of Australia.

(j) Liaise with the Other Consultants as necessary to coordinate the design.

…

(p) Perform the Services so that the Services complies with all relevant Authority Requirements including requirements of:

● The Building Code of Australia

…

(q) Provide all drawings and information required by the Other Consultants to assist in their preparation of design and documentation in respect of the Project.

229. Amongst its tasks, the architect was to prepare the development application, For Tender and For Construction documents. Further, the architect was to “coordinate the design of the works including requirements for all building services, structure, façade and other architectural elements”. The architect’s task during construction included (cl 2, Schedule 1, “Stage 4 – Services during construction”):

(g) Review shop drawings and relevant details prepared by subcontractors, and promptly provide comments to the Principal and the Project Manager to procure the orderly progression of procurement, supply, fabrication and installation.

230. Clause 2.5(a) provided that the Project Manager (Mr Chalmers) “may give instructions to the [architect] in connection with the Services and [the architect] shall comply with those instructions.” Similarly, when the architect required a decision, direction or instruction from Star Casino, the architect was obliged to give Star Casino and the Project Manager notice of what was needed, together with all information necessary to enable that decision, direction or instruction to be given: cl 5.2(d).

231. The architect was obliged to comply with Star Casino’s instructions unless the architect advised in writing that he objected to an instruction, in which case, the parties were obliged to discuss the objection and Star Casino would give a further instruction to the architect: cl 5.1. The architect was also obliged to keep itself fully informed of all matters concerning the project so far as its services were concerned, and to promptly notify Star Casino and the Project Manager of matters which were material to Star Casino’s interests: cl 8.1.

232. The builder submitted that the architect owed it a duty of care having regard to the factors outlined in Anchorage Capital Master Offshore Ltd v Sparkes (2023) 111 NSWLR 304; [2023] NSWCA 88 at [266] (Ward P, Brereton JA and Griffiths AJA) and Makawe Pty Ltd v Randwick City Council [2009] NSWCA 412; (2009) 171 LGERA 165 at [63] (Campbell JA). The builder was said to be vulnerable to harm from the architect’s conduct and could not protect itself from the consequences of the architect’s want of reasonable care. The builder had no Design Responsibility. The architect did. The builder relied on the architect in respect of BCA compliance, including in respect of the use of Alpolic FR. In the contractual matrix, the architect assumed responsibility for the risk that, if it did not exercise reasonable care in the performance of its services and the builder built in accordance with those designs, then the builder would suffer loss.

233. The architect submitted that, to establish a duty, the builder must establish that it was vulnerable to the particular type of economic loss that eventuated: Mallonland Pty Ltd v Advanta Seeds Pty Ltd [2024] HCA 25; (2024) 418 ALR 639 at [39] (Gageler CJ, Gordon, Steward, Gleeson, Jagot and Beech-Jones JJ). The architect submitted that the builder could have negotiated contractual protections or taken practical steps such as investigating the facts for itself: Mallonland at [39]; Anchorage Capital Master Offshore Ltd v Sparkes (2023) 111 NSWLR 304; [2023] NSWCA 88 at [270]-[272] (Ward P, Brereton JA and Griffiths AJA); Brookfield Multiplex Ltd v The Owners - Strata Plan No 61288 (2014) 254 CLR 185; [2014] HCA 36. The builder was able to protect itself under its own contract with Star Casino (which anticipated novation of the architect’s contract) and under its subcontract with Ausrise (which contained indemnities). The builder rejoined that it was Star Casino’s decision as to whether to novate the architect’s contract.

… vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. “Vulnerability”, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, “vulnerability” is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. …

237. In Woolcock Street Investments v CDG, McHugh J elaborated, “In this context, vulnerability to risk means not that the plaintiff was exposed to risk but that by reason of ignorance or social, political or economic constraints, the plaintiff was not able to protect him or herself from the risk of injury”: at [80]. Further, the capacity of a person to protect themselves from damage by means of contractual obligation is often a decisive reason for rejecting the existence of a duty of care in tort in cases of pure economic loss: at [94].

238. These principles were applied in *Aquatec-*Maxcon Pty Ltd v Barwon Region Water Authority [2006] VSC 117, which concerned a more complicated contractual matrix for a building project than in this case. A public authority constructed two sewerage treatment plants. The builder signed a design and construct contract, sub-contracted the work to an engineering construction contractor, who entered into a sub-contract with a civil design engineer, Montgomery Watson. That firm entered into sub-contracts with a design engineer and a firm of architects. The design engineer entered into a sub-contract with a geotechnical engineer. Due to a design error by Montgomery Watson, cracks appeared in the sewerage tanks. As a consequence, each of the contracting parties was in breach of their design obligations owed under their contract with the next party up the contractual chain. Montgomery Watson sought to pass responsibility on to its subcontractors, who sought to do the same to their subcontractor. In addition to contractual claims, all parties made claims in negligence.

239. In dealing with the tort claims, Byrne J noted, “It cannot be over-emphasised that this is a major commercial project undertaken by a public authority supported by a firm of consulting engineers”: at [268]. Further, the contractual arrangements were of a very formal kind with specifications, a tender process and extensive discussions and negotiations between the public authority and builder. Further, “the parties in question are all professionals in varying aspects of the building industry who have come together to produce a complex and substantial engineering plant. They have found themselves in a particular contractual hierarchy … by formal and sophisticated contracts … entered into at arm’s length after negotiation”: at [273]. His Honour noted that “the parties providing the services … assumed the risk of liability in the event of deficiency in those services and this was doubtless reflected in the price agreed to be paid for them”: at [274]. In the result, his Honour found a want of vulnerability between the parties in the contractual hierarchy.

240. In this case, I consider that the builder lacked the necessary “vulnerability” such that no duty of care was owed by the architect. Not only was the builder able to protect itself from the consequences of any want of reasonable care on the part of the architect, but the builder protect itself by including cl 3.4 in the Construct Only contract. The builder thereby expressly sought to excise any responsibility to Star Casino which was referable to the architect’s design, or any failures in the architect’s work.

Cross-claim against the architect under Australian Consumer Law

242. If I am wrong about this then the builder contended that, by the architect’s approval of the Alpolic FR sample on 16 September 2014 or its approval of Ausrise’s shop drawings on 9 October 2014, the architect represented that:

(a) Alpolic FR was suitable to install on the external walls; (b) Alpolic FR was of a standard, quality, grade, composition, style or model that was compliant with the BCA; and (c) the architect’s services with respect to the design for the first project were of a standard, quality, value or grade that meant the design was compliant with the BCA.

243. These representations were said to be misleading and deceptive in contravention of s 18 of the Australian Consumer Law or false and misleading in contravention of s 29 in connection with the supply of goods or services. This was said to be because Alpolic FR did not comply with the Deemed-to-Satisfy provisions of the BCA. No Alternative Solution had been formulated for its use on the external walls. Further, the proposed installation of Alpolic FR on the external walls was inconsistent with the For Construction drawing submitted for the construction certificate. The result was that Alpolic FR was not compliant with the BCA. Alpolic FR was unsuitable for installation on the external walls.

244. The builder contended that it relied on these representations and used Alpolic FR on the external walls. It would not have otherwise done so but would have obtained an alternate product that did comply with the BCA, was fit for purpose and suitable for installation. The builder would have sought the architect and the Project Manager’s approval to use the alternative product. The builder would not have commenced installing cladding panels to the external façade until a construction certificate certifying the use of such panels had been issued by Philip Chun.

245. The architect denied each aspect of this claim save that it was accepted that any representations were made in trade or commerce. The architect admitted that it approved the colour of the sample of Alpolic FR on 16 September 2014, to be substituted for the “QuadroClad” only. The architect also approved the shop drawings for compliance with the design intent, but the limit of that review was made clear by the architect’s stamp placed on each drawing.

246. Section 18(1) of the Australian Consumer Law provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

247. Section 29(1) provides:

False or misleading representations about goods or services

(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

(a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or

(b) make a false or misleading representation that services are of a particular standard, quality, value or grade; …

248. Section 4(1) defines “supply” as follows:

"supply", when used as a verb, includes:

(a) in relation to goods--supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and

(b) in relation to services--provide, grant or confer;

249. The first issue is whether s 29 has any application, where the architect contended that any “supply” by the architect was to Star Casino and not to the builder.

250. The builder submitted that this was an unduly restrictive construction of s 29. Both parties were providing services in a common endeavour to Star Casino, to effect a project in accordance with their respective contractual obligations to the principal. The builder and architect worked closely together. The architect was effectively providing services to the builder by consent.

251. In Cook v Pasminco Ltd (2000) 99 FCR 548; [2000] FCA 677, Lindgren J noted that the definition of “supply” was inclusive, with “an essential element of supply that it is a bilateral and consensual process…”: at [24]. Further, “a supply of goods must occur as part of a bilateral “transaction” or “dealing” under which the other party acquires them…”: at [26]. I take the reference to a bilateral process to generally refer to supplier and consumer or seller and purchaser.

252. How “supply” is deployed in s 29 is also significant. The prohibition in s 29 is on making false or misleading representations “in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services”. The expression “in connection with”, while potentially broad, bears a meaning dictated by legislative context, purpose or object: Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants (Aust) [2001] FCA 1056 at [252] (Lindgren J). In that case, his Honour considered its meaning when used in a similarly worded earlier provision, s 51AC of the Trade Practices Act 1974 (Cth), which then provided:

51AC - unconscionable conduct in business transactions

(1) A corporation must not, in trade or commerce, in connection with:

(a) the supply or possible supply of... services to a person ...

engage in conduct that is, in all the circumstances, unconscionable.”

253. After considering the legislative purpose of the section – which was to deal with general disparity between buyers and sellers – Lindgren J concluded at [260]:

Both the context internal to s51AC and the legislative history to which I have referred, teach that the expression "in connection with" in s51AC requires that the conduct impugned "accompany", "go with" or "be involved in" the supply of the goods or services, and that it is not sufficient that … such a supply be the occasion of unconscionable conduct of the supplier directed to an unrelated third party with which the supplier has no dealings at all.

254. His Honour was upheld on appeal in Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110; [2002] FCAFC 197, where Heerey J (with whom Black CJ and Tamberlin J agreed) confirmed that, as a matter of language, s 51AC(1) was not directed to conduct in trade or commerce generally but to conduct in trade or commerce in connection with a particular kind of transaction, being the supply or acquisition of goods or services as between stipulated categories of person; the section was “not concerned with the impact of conduct on third parties”: at [114]-[116].

255. The legislative precursor to s 29 was applied in Madden v Seafolly Pty Ltd [2014] FCAFC 30; (2014) 313 ALR 1, where Ms Madden made statements on her personal Facebook page and the Facebook page of her business “White Sands” and in emails to various media outlets that Seafolly had copied her swimwear designs. Ms Madden’s statements were held to be in connection with the supply of goods or services within the meaning of the provision. Rares and Robertson JJ held that it did “because Ms Madden was stating to those to whom she was communicating that they should purchase her swimwear as the original, rather than Seafolly’s alleged copies. This was, in our opinion, a sufficiently close connexion with the supply or possible supply of goods or services and with the promotion by any means of the supply of goods within the meaning of [the section]”: at [100]. Marshall J agreed that the statements were made in connection with the supply by Ms Madden of her swimwear, “The representations were made in the context of Ms Madden’s business as a competitor to Seafolly”: at [10].

256. Having regard to how the legislation has been interpreted and applied, I consider that s 29 has no application to representations said to have been made by the architect to the builder. In no scenario could the builder be considered to be a consumer, or potential consumer, of any goods or services being provided or promoted by the architect. It is true that both the architect and the builder were working together to provide goods or services to their mutual principal, but I do not consider that their relationship had the attributes of buyer and seller, or supplier and consumer. Section 29 is directed to a different mischief. This has the consequence that the alleged representations set out at [226](b) and (c) need not be considered further.

257. Turning then to the builder’s claim under s 18 of the Australian Consumer Law, the remaining alleged representation is that Alpolic FR was suitable to install on the external walls. As the High Court recently summarised the tasks in analysing such a claim in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186; [2023] HCA 8 at [80] (the Court), the first step is to identify with precision the “conduct” said to contravene s 18. The next step is to consider what meaning that conduct conveyed. The final step is to consider whether that conduct in light of that meaning was “misleading or deceptive or … likely to mislead or deceive”. Each step involves “quintessential question[s] of fact”: citing [2007] FCA 1904; (2007) 244 ALR 470 at [14]-[15] (Gordon J). Further, in at [82] (the Court):

The[se] steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference to its context, on the state of mind of the relevant person or class of persons. That context includes the immediate context – relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation – and the broader context of the relevant surrounding facts and circumstances. …

258. Where the representation is made to one person, rather than a class of consumers, it is necessary to consider the character of the conduct of the particular person making the representation in relation to the particular representee, “bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known”: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [37] (Gleeson CJ, Hayne and Heydon JJ).

259. As to relevant attributes of the particular persons involved in this alleged representation, the builder submitted that it had a design co-ordination role, while the architect was responsible for design. The builder understood (correctly) that the architect was obliged to produce a BCA compliant design that included BCA compliant material. The builder did not have expertise in compliance with the BCA. The builder and architect always knew and expected that the architect would consider whether Alpolic FR was compliant with the BCA. Nothing had been said or done by Star Casino or the builder to attenuate the architect’s obligations in this regard. Any representations in relation to the suitability of Alpolic FR extended to its compliance with the BCA. Mr Polden understood that the preparation of a design that was consistent with the BCA also required the selection of compliant material; he understood that the architect was obligated to produce such a design. It was in this context that the representations were made.

260. Accepting that Ms Ison’s approval of the Alpolic FR sample on 16 September 2014 approved the colour and finish of the product, the builder submitted that there was also a representation that Alpolic FR was BCA compliant and suitable, including on the basis that it was consistent with the For Construction architect’s drawings. The architect’s approval of Alpolic FR for use in its design carried with it a representation that the architect had carried out its BCA compliance assessment role.

261. As to the architect’s review of the shop drawings on 9 October 2014, the builder submitted that by then the architect had approved the sample of Alpolic FR. The architect’s stamp made no difference to the result in these circumstances. Further, the architect did not require the shop drawings to be re-submitted for review or make any notations on it to the effect it had made previously. The architect’s review of the shop drawings repeated the representation previously made when the architect approved the Alpolic FR cladding sample in September 2014.

262. The architect submitted that both were experienced operators who could be expected to have a working knowledge of the BCA: Butcher at [42]-[43]. There is no evidence that the builder had seen the architect’s contract with Star Casino and was thus aware of the architect's obligations in respect of BCA compliance. The architect was not known to have BCA compliance expertise. The builder likely did not look to the architect for advice on this subject, either via the Sample Sign-Off form or absent a specific request for such advice.

“This drawing has been reviewed for compliance with the design intent of the architectural documents and in our professional opinion as architects:

• The drawing substantially meets design intent Yes / No

• The drawing requires attention to matters noted on the drawing Yes / No

• The drawing requires attention to matters noted in our memo dated _______

• The drawing is to be resubmitted for further review Yes / No

This review is not an architect's instruction and the builder remains responsible for:

• Compliance with statutory authorities codes and requirements

• Coordination with other trades

• Site measurements of dimensions and levels

• Dimensions, quantities, calculations or methods of manufacture

• Compliance with manufacturer's current published recommendations”

278. The stamp was completed in handwriting: the architect circled the appropriate alternative and then signed and dated the stamp. Accepting that architects do not ‘approve’ shop drawings but review them for design intent, the builder can take from the fact that the architect has no further comments or does not require the shop drawings to be revised and re-submitted that the architect has no objection from their perspective to the building element being constructed in accordance with those drawings.

279. The builder was presumably aware, from the architect’s specifications, of the significance of the architect’s approval of ‘shop drawings’. That is, the architect’s approval implied only “that the contractor’s interpretations of the relevant requirements of the contract are generally correct” but did not relieve the builder of its own obligations: see [82]. That said, Mr Martin did not regard the architect’s stamp does not detract from the architect’s obligations in respect of design responsibility and BCA compliance.

280. In addition to the architect’s usual stamp, the architect added a further note to each plan on 9 October 2014:

“Note:

The façade is to be certified and warranted by the façade contractor and their certified designer’s in accordance with the relevant codes and standards”

281. Of the “Note”, Mr Martin understood that it referred to the internal makings of a façade system, as the structural framework may involve a proprietary product and involve other disciplines like waterproofing and “an architect would never warrant a product that would be provided by the subcontract.”

282. As I read it, the additional stamp emphasises that the architect’s performance of its role does not absolve others from performing their roles. The Note would not have been understood by the reader as a unilateral curtailment by the architect of its own obligations.

283. Mr Bullen said the architect’s review of shop drawings included BCA compliance, particularly where the architect had not previously investigated whether the product to be used was BCA compliant. The architect should have marked-up the shop drawings to note that any cladding used on the external walls must be non-combustible and require that the shop drawings be revised and submitted for further review. The architect should also have requested that the subcontractor confirm that the ACP intended for use was non-combustible and BCA compliant.

284. The ultimate question is what meaning was conveyed by the architect’s approval of the Alpolic FR sample on 16 September 2014 and its approval of Ausrise’s shop drawings on 9 October 2014. Specifically, did the architect thereby represent that Alpolic FR was suitable to install on the external walls?

285. As Mr Bullen opined, the architect failed to signal any disagreement or issue any disapproval for the use of Alpolic FR cladding on the external walls. Further, “To remain silent while disagreeing with the selection of Alpolic was to provide tacit approval”.

286. In the circumstances which unfolded, I consider that a reasonable person in the position of the builder would have understood that the architect was not only approving the particular colour of Alpolic FR but representing that the product was suitable to install on the external walls. This was implicit from the architect’s role and responsibilities, approval of the substituted product and approval of its inclusion in construction. In the result, I would have found that the alleged representation was made.

287. The architect accepted that, if made, the representation was misleading and deceptive if it was a statement of fact. But the representation, if made, was said to be as to a future matter or a statement of belief or opinion. Where the BCA applies to the performance of buildings when constructed, any representations about compliance with the BCA, or the suitability of Alpolic FR for use on the external façade, were not of existing fact but representations as to future matters. Such representations will only be misleading or deceptive if there were no reasonable grounds to make the representation: s 4(1), Australian Consumer Law; Xu v Lindsay Bennelong Developments Pty Ltd [2020] NSWSC 1692 at [404] (Ward CJ in Eq). The architect was said to have had reasonable grounds, given the information from the manufacturer which appeared on the photograph in the earlier 1 September 2014 Sample Sign-Off form. The packaging stated that Alpolic FR was non-combustible.

Cross-claim against Ausrise

291. In the event that Star Casino established its contentions against the builder, then the builder sought to enforce an indemnity given by Ausrise under the subcontract, as well as damages in negligence and under the Australian Consumer Law. The builder sought damages against the insurers under s 4(1) of the Civil Liability (Third Party Claims Against Insurers) Act.

292. It is not necessary to consider these claims given that the builder has suffered no loss vis a vis Star Casino. The same issues arise in respect of the later projects. Nor is it necessary to consider the insurers’ contentions in respect of contributory negligence, concurrent wrongdoers, policy coverage or time bars in respect of the first project.

Second project

293. The second project was referred to variously as Darling VIP Gaming or “Project Sovereign Rivers”, being the refurbishment of the Darling VIP Gaming rooms in The Darling Hotel. On 12 February 2015, the architect issued drawings for a development application in respect of the second project. This involved alterations and additions to the first floor outdoor gaming area including five new internal private gaming rooms, two outdoor balconies and associated mechanical ventilation and services. The last page of the architect’s drawings included samples of materials to be used for external finishes but did not include a sample of Alpolic FR, nor refer to that product. The architect later signed a Professional Services Agreement with Star Casino.

294. The certifier for the second project was McKenzie Group. On 16 February 2015, McKenzie Group wrote to Mr Chalmers, confirming that they were satisfied that the proposed new works were capable of complying with the BCA. On 27 February 2015, McKenzie Group produced a Building Code of Australia Report in respect of the second project, not dissimilar to that issued by Philip Chun in respect of the first project.

295. The fire engineer for the second project was initially AECOM and, later, WSP Buildings Pty Ltd. It is sufficient to note that, over the course of the second project, AECOM and WSP issued a series of fire engineer reports, none of which referred to the use of ACPs on the external façade.

296. On 31 March 2015, the architect issued a Shell & Core Works + Interior Fitout package for the second project. Mr Polden said, in the interests of time, the specification was based on that used for the first project, including specifying the same cladding products, including QuadroClad and MultiPanel. On 2 April 2015, the architect produced For Tender drawings for the second project. Alpolic FR was not referred to on the plans.

297. In April 2015, the CodeMark Certificate of Conformity for Alpolic FR was re-issued but remained relevantly the same. Alpolic FR was still said to comply with BCA 2014 Volume One: CP2 and CP4 “Fire Resistance” for wall and ceiling cladding subject to the following condition:

g. Compliance or otherwise with the BCA Volume One 2014: Specification C1.1 Fire-Resisting Construction, 2.4 Attachments not to impair fire-resistance (a) ii and iii, are to be determined by the regulatory authority (building certifier or building surveyor).

298. In April 2015, the Victorian Building Authority issued a Fact Sheet, “Non-Deemed-to-Satisfy External Wall Cladding Systems”. The Fact Sheet warned that “practitioners should note that a CodeMark certificate applying to a product only (ie. not a building system) is not in itself evidence of compliance with the Performance Requirements of the BCA. Care is needed when reviewing the scope of the certificate.”

299. The Victorian Building Authority elaborated that ACPs were not dealt with in the BCA as a Deemed-to-Satisfy building solution. When these cladding systems were included in a design, they needed to be presented to the certifier as an Alternative Solution, with sufficient information and evidence to allow the certifier to determine that the material, form of construction and design met the Performance Requirements of the BCA. Further, “Architects and building designers should take care when specifying non-[Deemed-to-Satisfy] cladding systems … to ensure their application contains sufficient evidence / information to show that the building work will comply with the [BCA]. … relevant certificates, reports and forms should be submitted at the design stage, including all details of the Alternative Solution of concern.” Whether the Fact Sheet was circulated in New South Wales is not known.

300. On 6 May 2015, Ausrise submitted a tender to the builder, “for the supply, installation & glazing of windows, features & aluminium louvres generally in accordance with the specification and architectural drawings. In May 2015, Ausrise produced shop drawings for the second project. As for the first project, the drawings simply referred to “Composite Panel”.

301. On 1 June 2015, Star Casino executed a contract with the builder for the second project. Unlike the first project, this contract was for “Design and Construct”. On 4 June 2015, the development application was approved. On 11 June 2015, the builder entered into a Major Works Subcontract Agreement with Ausrise in respect of the second project.

302. On 15 June 2015, the architect certified to McKenzie Group that the design of the Darling VIP salon’s fit-out was in accordance with normal architectural practice and met the relevant requirements of the BCA and relevant Australian standards. In particular, the design was certified as being in accordance with BCA Clause 1.10 Fire Hazard Properties. Mr Polden explained that this certification related to the internal fit-out; Clause C1.10 Fire Hazard Properties related to the combustibility of interior linings, being floors, walls and ceilings. I accept this.

303. On 17 June 2015, the builder provided Mr Polden with drawings for the façade windows for review and approval, copied to Star Casino. On 18 June 2015, Mr Polden provided the builder with reviewed façade shop drawings. Mr Polden included comments on how to treat the composite cladding joints. Mr Polden offered to discuss this the next morning on site with Ausrise.

Use as an external wall (composite wall design)

CP2, Clause C1.1 Fire-Resisting Construction, Specification C1.1 Fire-Resisting Construction

● Exova Warrington test report 241610 test prototype incorporated a non combustible wall substrate that was fixed to the steel restraint frame, the Alpolic cladded panel system was side clamped and mechanically fixed to the substrate at the edges and intermediate locations. The Alpolic cladded panel system maintained its integrity without spread of fire or failure for at least 121 minutes.

316. On 3 August 2015, NSW Planning & Environment issued a planning circular in respect of external walls and cladding, to raise awareness and provide advice to councils, certifiers, builders, architects and building designers about matters that needed to be considered when assessing the suitability of ACPs for external walls. The requirements of the BCA were laid out. Practitioners were advised that they needed to be satisfied that suitable evidence was provided to demonstrate that the products proposed for use in the construction of external walls complied with the BCA. Documentation should include adequate specification of materials and products to be used in the construction of external walls and facades, with clear identification of the materials and products, clear details on how those materials and products were to be installed and clear identification of where walls were required to be non-combustible or achieve an FRL.

317. Practitioners were also advised to be aware of any limitations or specific requirement specified on product documentation regarding use or installation. Builders and installers were advised to take care to ensure that materials or products being installed were the same as those specified in the approved building documentation. At the completion of work, certifiers should confirm the materials and products installed were the same as specified in the approval documentation and that the materials and products had been installed in the approved manner. Before relying on a CodeMark Certificate of Conformity, practitioners were advised to be mindful of the information on the certificate, including the provisions of the BCA against which the product or system had been assessed, the approved application of the product or system, any conditions or limitations of the certificate and its currency.

318. Based on the builder’s project reports, the installation of cladding on the second project began on 5 August 2015 and was completed by 11 August 2015. On 12 October 2015, WSP issued a fire engineering report in respect of the second project. On 14 and 15 October 2015, the architect issued Final Construction drawings. On 16 October 2015, McKenzie Group issued a final inspection report and, on 20 October 2015, a final occupation certificate.

BCA compliance

319. Based on Ausrise’s workshop drawings for the second project, Dr Enright considered that the Alpolic FR appeared to be an attachment. Insulation was not installed beneath the ACP external cladding. A lining, and in some cases a concrete structure, was detailed beneath the ACP. The ACP was not fulfilling a characteristic function but, in his view, was an attachment. However, the attachments exception did not apply to the use of ACP for the backpans or inner layer.

320. Dr Enright noted that an attachment must meet all criteria set out in Clause 2.4 of Specification C1.1 of the BCA to qualify for this exception: see [47]. As to the first criteria – “the material is exempted under C1.10 or complies with the fire hazard properties prescribed in Specification C1.10” – Clause 4 of the Specification C1.10, “Fire Hazard Properties”, provided “material used as a finish, surface, lining or attachment to a wall or ceiling must be a Group 1, Group 2 or Group 3 material” in a sprinkler-protected Class 9b building. Alpolic FR was a Group 1 material, according to the CodeMark Certificate of Conformity.

321. As to the second criteria – “it is not located near or directly above a required exit so as to make the exit unusable in a fire” – the Alpolic FR cladding surrounded seven windows on Level 1 and flanked a louvre on Level 2 above one window. The window surrounds occurred along the Union Street elevation. There were two exits from the ground floor to Union Street. One exit was below a window on Level 1 with an AFP cladding surround, but the exit was protected by a canopy. The other exit was not below the cladding. Dr Enright was of the view that this criterion was satisfied.

322. As to the third criteria – “it does not otherwise constitute an undue risk of fire spread via the façade of the building” – Dr Enright said that Alpolic FR was combustible but so is gypsum plasterboard, this being a product with which firewalls are made. In terms of fire performance, it was a matter of degree and detailing. The ability for the fire spread to occur at a particular project was highly relevant. Fire spread from ACPs was predominantly vertical, due to the buoyant nature of a fire plume. Testing had shown that fire does not spread laterally more than a metre for this product. The area underneath a fire may have some disruption to fire service operations, but this would be limited as the standard operating procedure for any fire brigade is not to be below the seat of the fire.

323. For the second project, Dr Enright said the window surrounds were at a single level on Level 2. The only instance where there was vertical continuity in the second project was at the plant room surrounds, and that room was not normally occupied. Alpolic FR did not self-sustain fire spread if not proximate to an external fire source. He considered that it did not present an undue risk of fire spread via the façade and the third criterion was satisfied.

… In my view, the determination as to whether the risk is undue … involves an evaluative task that requires consideration of the circumstances and context in which the … combustible cladding is used as an attachment to the external walls of the Buildings. That includes consideration of the objective of Section C of the BCA of ensuring the safety of people from fire, the BCA requirement that external walls in Type A buildings are to be constructed using non-combustible material, the possibility of fire spread eventuating, and the gravity of the risk from such use. Factors such as the ignitability of the combustible material and the likely rate of fire spread, the location of the material, and relevant safety features of the Buildings would also be germane to consider.

330. As mentioned, Mr Harriman volunteered that he had not actually assessed the undue risk of fire spread given his views on the inapplicability of Clause 2.4 for a building of Type A construction. In these circumstances, I prefer the opinion of Dr Enright, who specifically considered the third criteria and was an obviously knowledgeable and impressive witness. I conclude that the use of Alpolic FR on the external façade in the second project did comply with the BCA. Again, Dr Enright did not suggest that the ‘attachment exception’ applied to the backpans.

Second project claims and cross-claims

331. I have concluded that the installation of Alpolic FR on the external façade for the second project did comply with the BCA, having regard to the competing views of Dr Enright and Mr Harriman. This is effectively dispositive of the claims and cross-claims in respect of the second project.

Claim against the builder

332. Under the “Design and Construct” contract for the second project, the builder was to “execute and complete the work under the Contract in accordance with the requirements of the Contract”: cl 3.1(a). There was no equivalent to cl 3.4 in the previous Construct Only contract. In this contract, cl 3.4 described a Design Partnership between the builder, Star Casino and its consultants. The builder gave wider warranties in cl 4, including in cl 4.1(e): (emphasis added)

Without limiting the generality of Clause 3.1, the Managing Contractor warrants to the Principal that the Managing Contractor:

…

(e) shall execute and complete the work under the Contract so that the Works (including, without limitation, any Design Documents), when completed, shall comply with all the requirements of the Contract and all Legislative Requirements.

333. Design Documents meant the designs, drawings, specifications and other information, samples, models, patterns and the like required by the Contract to the extent created (or amended) by the builder for the construction of the Works: cl 2.1. Again, Works meant “the whole of the work to be executed in accordance with the Contract … which by the Contract is to be handed over to the Principal”, while Legislative Requirements included “Approvals” and the BCA: cl 2.1. The builder was obliged to supply everything necessary for the proper performance of its obligations under the contract: cl 29.1. On practical completion, the contractor was to give possession of the site “and the Works to the Principal”: cl 35.2.

334. Star Casino submitted that the external cladding did not comply with the 2014 BCA when the Works were handed over, with the consequence that the builder breached its warranty. Star Casino did not suggest that the presence of ACPs in the backpans was also a breach of the builder’s warranty. Rather, the installation of non-compliant ACP as the external cladding led to the Fire Order, which required the removal and replacement of the external cladding. That process led to the discovery of the use of ACP for the backpans and the requirement to remove the backpans as well, except where an Alternative Solution was able to be negotiated. The requirement to identify and replace the backpans led to loss and damage that flowed naturally from builder’s breach of warranty and was so included in the estimated loss claimed for the breach.

335. As I have concluded that the external cladding did comply with the BCA when the Works were handed over, there was no breach of warranty by the builder. The same cannot be said for the use of ACPs in the backpans. But Star Casino did not rely on this as a breach of the builder’s warranty but part of its recoverable loss. In these circumstances, where there was no breach of warranty, Star Casino’s claim against the builder in respect of the second project fails.

Cross-claim against the architect

336. It follows that it is not necessary to consider the cross-claim against the architect. For the tort claim, the issues were the same as the first project: did the architect owe a duty of care to the builder; was that duty breached by the architect’s failure to ensure that the shop drawings and For Construction drawings accurately recorded the use of Alpolic FR as the external cladding?

337. If I am wrong about Star Casino’s claim in contract against the builder, then I would have concluded that there was no duty of care in this claim for pure economic loss as the builder lacked the necessary “vulnerability” such that no duty was owed for, essentially, the same reasons as in respect of the first project.

338. For the Australian Consumer Law claim, the architect was said to have made similar misrepresentations as during the first project when issuing For Tender architectural drawings in June 2015, which referred to Alpolic cladding. The architect then approved a sample of Alpolic ACP on 30 June 2015, approved shop drawings depicting the use of combustible ACPs and, later, For Construction drawings. I would have concluded that these representations were made under s 18 of the Australian Consumer Law for essentially the same reasons as for the first project.

Cross-claim against Ausrise

339. In the event that Star Casino established its contentions against the builder, then the builder sought to enforce an indemnity given by Ausrise in the subcontract, as well as damages in negligence and under the Australian Consumer Law. Again, it is not necessary to consider these claims given that the builder has suffered no loss vis a vis Star Casino. The same issues arise in respect of the third project, and I have considered these issues there. Nor is it necessary to consider the insurers’ contentions.

Third project

340. The third project was referred to as Observation Lift. It involved removal of the existing Astral Towers observation lifts from level 1 to Level 17 and works to seal the openings. The architectural drawings were prepared by another firm.

341. On 3 September 2015, TTW issued a Façade Performance Brief for tender in respect of the third project. In respect of cladding, the brief specified:

Where proposed, aluminium cladding is to be minimum 3mm sheet or proprietary 4mm aluminium composite panel. Aluminium composite panel shall have a fire resistant core ….

342. On 11 September 2015, development approval was given. McKenzie Group were appointed as the certifier for the third project. On 30 November 2015, McKenzie Group issued a construction certificate, attaching TTW’s Façade Performance Brief. Dr Enright considered that Alpolic FR fell within the description in TTW’s Façade Performance Brief.

343. Mr Harriman considered that the specification in TTW’s Façade Performance Brief did indicate a compliance pathway with the Deemed-to-Satisfy provisions of BCA (2015). Both a product with a honeycomb core or solid aluminium sheeting would be non-combustible. Where no Alternative Solution was approved in respect of the application, the construction certificate was approved to the Deemed-to-Satisfy provisions of the BCA only.

344. Nor could the CodeMark Certificate of Conformity have been relied upon at the time in support of an Alternative Solution. Dr Enright said that the applicable CodeMark Certificate of Conformity limited the use of Alpolic FR to use as an external wall attachment, and internal lining or an external wall (composite wall). The latter application involved Alpolic FR being fixed to a non-combustible substrate, which in turn was fixed to a steel frame. Effectively, the Alpolic FR became an attachment. The Façade Performance Brief did not describe an external wall (composite wall) arrangement. Dr Enright assumed that the ACPs were not installed in that manner. As such, the CodeMark Certificate of Conformity did not apply.

345. On 3 December 2015, the builder entered into a Major Works Subcontract Agreement with Ausrise, the terms of which followed the earlier subcontracts. The subcontract sum was $103,000. On 10 December 2015, Star Casino entered into a Minor Works Contract with the builder.

346. In December 2015, during the third project, the CodeMark Certificate of Conformity was revised again. The certificate now stated that the Alpolic Cladding System did not provide full fire resistance for the building and these requirements would need to be addressed by other products. The Alpolic FR panel satisfied the required group number, spread of flame and smoke development index in accordance with the BCA, and therefore was not required to be a non-combustible attachment. The Alpolic Cladding System was not required to have a non-combustible layer between it and the primary building element. The Alpolic FR cladding system was permitted to be used on buildings of Type A construction provided that the primary building element and / or its fire protective attachments satisfied the required FRL. The certificate retained the Schedule of Product Compliance, which was now considerably longer.

347. Based on the builder’s project reports, cladding installation began on 26 January 2016. On 2 March 2016, McKenzie Group issued a final occupation certificate in respect of the third project. A certificate of practical completion was issued on 3 March 2016.

BCA compliance

348. There was no Alternative Solution in place when the third project was undertaken. Dr Enright was not able to form a view as to whether the ‘attachment exception’ applied, as there was insufficient detail to determine whether the cladding was an attachment or not. It follows that the use of Alpolic FR on the third project did not comply with the BCA.

Third project claims and cross-claims

349. As to the claims and cross-claims made in respect of the third project: Star Casino sued the builder for breach of contractual warranty; the builder sought to enforce an indemnity given by Ausrise in the subcontract; and, the insurers sought to limit any liability to indemnify Ausrise by reason of the Limitation Act 1969 (NSW), the policy wording and the proportionate liability of the builder, TTW and McKenzie Group.

Claim against the builder

350. In the Minor Works Contract between Star Casino and the builder, the project was described as including the demolition of the existing lifts “and design and construction of new steel columns, glazing panels, roof protection and associated façade make good works”. The builder was required to “execute and complete the work under the Contract in accordance with the requirements of the Contract”: Clause 3.1. Further, the builder was obliged to comply with BCA requirements: cl 14.1(e).

351. The builder gave a warranty in cl 4.1 as follows:

Without limiting the generality of clause 3.1, the Contractor warrants to the Principal that:

(a) the Works (including, without limitation, any Design Documents) will satisfy the requirements of the Contract;

(b) the Works (including, without limitation, any Design Documents) will be fit for their stated purpose;

352. The Works when completed did not comply with the BCA, given the installation of ACPs on the external walls in breach of the non-combustible requirement and absent an Alternative Solution. The builder thereby breached its warranty under the contract. It follows that Star Casino is entitled to damages. The builder did not suggest otherwise.

Subcontract with Ausrise

353. In the subcontract between the builder and Ausrise, the subcontractor agreed to complete the Subcontract Works in accordance with the Subcontract Documents: Recital A, Formal Instrument of Agreement; Schedule 21. Subcontract Works meant all the works and services to be executed by the Subcontractor under the Subcontract: Clause 1.1.48, Subcontract Terms. Subcontract Documents meant the documents, drawings and specifications listed or referred to in or attached to the Subcontract including the Schedules and documents referred to or listed therein: clause 1.1.45, Subcontract Terms.

354. The Subcontract Works were largely described in a scope of works annexed to the subcontract. The Trade Specific Scope of Works included removing the existing lift doors and composite façade panels which had been penetrated by steel or fixed through in relation to the existing lift structure. Ausrise was to replace like for like to match the existing façade as closely as possible: para 2.2 and 2.5, Annexure A, “Scope of Works for Façade for Works”.

355. The scope of works included labour, material and supplies “and the undertaking of all work in strict accordance with specification, schedules, drawings, … Building Code of Australia …”: para 4.1, General items, “Scope of Works for Façade Works”. Further, para 4.2 of the scope of works provided:

4.2 The subcontractor is to inform Buildcorp in writing prior to commencing manufacture and/or installation of any item where they believe the design of this item does not comply with the Building Code of Australia. Failure to inform Buildcorp of the aforementioned will render the subcontractor liable for all rectification/remedial works carried out that do not comply to the BCA.

356. The subcontractor acknowledged that detailed design resolution was a necessary aspect of the Subcontract: para 4.24, General items, “Scope of Works for Façade Works”. The General Inclusion List included all labour, materials and equipment necessary for the complete design, supply and delivery of the works: item 2.25, Annexure B.

357. To the extent that Ausrise was required to design any part of the Subcontract Works, the subcontractor was obliged to complete the design without any Defect so that the design complied with the BCA and was suitable for its intended purpose: cl 2.4.1 and Schedule 15, Subcontract Terms. Para 3 of Schedule 15 provided:

3. Professional Services

3.1 The Subcontractor has represented that it has the necessary skill, experience and ability to perform the Design Obligations and to co-ordinate and complete the Subcontract Works. …

3.2 The Subcontractor must carry out the Design Obligations with the degree of professional skill, care and diligence expected of a specialised consultant experienced in providing services equal or similar to those required to properly perform the Design Obligations.

358. Design Obligations were defined as the subcontractor’s obligation to “design those parts and components of the Subcontract Works which the Subcontract Documents (including any scope of works) state are to be designed by the Subcontractor”: para 1.1, Schedule 15. This obligation included “the development, correction and finalisation of any preliminary design included in or attached to the Subcontract and the undertaking of all tasks necessary to design, document, develop, correct, specify and finalise all designs for those parts and components of Subcontract Works which the Subcontract Documents state are to be designed by the Subcontractor”: para 1.2, Schedule 15.

359. It is not entirely clear the extent to which Ausrise in fact engaged in design work on the third project. The Subcontractor tender review sheet completed by the builder included item 65, “Does this subcontract involve a design component?”. The builder’s employee noted “N/A”. By contrast, the employee also noted that the subcontractor had nominated two weeks for “Design & Drawings”.

360. Consistently with this, Mr Martin was not aware of any ‘as built’ or shop drawings for this project. He said the builder’s scope of works was limited to replacing panels where the previous lift structure connected to the building, which did not require the builder to consider the designs. Where the subcontract sum was $103,000, the third project appears to have been a small job. Presumably for these reasons, and unlike the first and second projects, the builder did not suggest in its pleading that Ausrise undertook Design Obligations on the third project.

361. The builder further contended that there was an implied term by law that the subcontractor had a duty to exercise due care and skill in performing its work. This was denied. Where a contract is for the provision of professional services, an implied term of reasonable care arises by operation of law: Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 at [47] (Gleeson CJ, McHugh, Gummow and Hayne JJ). I agree that the subcontract contained such an implied term. In respect of Design Obligations, the subcontract imposed a more onerous duty to exercise the degree of professional skill, care and diligence expected of a specialised consultant experienced in providing such services. But the builder did not suggest that the subcontractor undertook Design Obligations on the third project.

362. When complete, the Subcontract Works were required to be fit for their intended purpose and to comply with all Laws (which included the BCA): cl 2.1.1; 1.1.18(b) (definition of “Law”), Subcontract Terms. Ausrise warranted that the Subcontract Works would be fit for purpose and the completed works would comply with all Laws (which included the BCA): cl 5.1.1(g) and (m); cl 8.1.1(a) and (d).

363. Ausrise also gave two indemnities to the builder. Clause 13.3.4 of the subcontract provided:

The Subcontractor indemnifies the Contractor from and against all Claims, costs, losses, penalties, expenses and other liabilities suffered or incurred by the Contractor (on an indemnity basis) arising from or in connection with any claim made under or pursuant to the Building Legislation, to the extent that such Claim, cost, loss, penalty, expense or liability arises from or in connection with the act, default or omission of the Subcontractor. …

364. Claim included any demand, entitlement, remedy, suit, injury, damages, loss, Cost, liability, action, proceeding, or right of action: cl 1 .1 .5. Building Legislation meant any law regulating or otherwise relating to the Works “including without limitation” the Home Building Act 1989 (NSW): cl 1.1.2; Schedule 20.

365. Further, cl 14.2.1 provided:

The Subcontractor shall be solely liable for, and indemnifies the Contractor … for, any losses, expenses, liabilities, costs, Claims and actions of whatsoever kind in connection with or arising out of in the course of the performance of the Subcontract, irrespective of when and how such losses, expenses, liabilities, costs, Claims and actions arise or whose fault or negligence (if any) gave rise to same, in respect of:

(a) any loss of or damage to property;

…

(c) financial loss consequent upon paragraph (a) … above.

366. Finally, cl 24.10.1 of the subcontract provided:

The parties agree that to the extent permitted by law, the operation of the Civil Liability Act is excluded in relation to all and any rights, obligations and liabilities under this Subcontract whether such rights, obligations or liabilities are sought to be enforced as a breach of contract or a claim in tort or otherwise at law or in equity.

A duty of care?

367. The builder further contended that Ausrise owed a duty of care. Ausrise was said to be a “specialist design and construct façade subcontractor”. Ausrise knew, or ought to have known, that if it performed the works under the subcontract inadequately or without due skill, care and diligence, this was likely to cause loss or damage to the builder. The subcontractor knew, or ought to have known, that the builder relied on it to perform the works with due skill, care and diligence. The builder was vulnerable to suffering economic loss, including liability to Star Casino, if Ausrise did not so perform the works. In these circumstances, Ausrise was said to owe a duty to exercise reasonable care in performing the works and to warn the builder of matters that may cause loss or damage to the builder.

368. The insurers denied the existence of a duty of care. Further, an ordinary and competent supply and installation subcontractor in Ausrise’s position was said to be entitled to rely on the CodeMark Certificate of Conformity in respect of Alpolic FR. This contention was not referred to in the insurers’ written submissions in relation to the third project, presumably given Dr Enright’s opinion in respect of the revised CodeMark Certificate of Conformity as at December 2015: see [348]. I take this argument to be not pressed.

369. The insurers submitted that the builder lacked the necessary vulnerability as it had the means to protect itself from the relevant risk of harm through contractual arrangements with Star Casino. The builder could conduct investigations itself or cause the fire safety engineers engaged on the project to consider how the ACPs could be used. As the builder was responsible for the overall management of the project, it was well placed to collate the relevant information, materials and documents to enable this to be done.

370. As pleaded, the duty of care was to perform the works such that the builder did not suffer financial loss or damage, including by incurring a liability to Star Casino. I repeat the principles set out at [235]-[239]. For essentially the same reasons as given in respect of the builder’s assertion of a duty of care owed by the architect, I consider that no duty of care to avoid economic loss arose here. The builder lacked the necessary “vulnerability”. Not only was the builder able to protect itself from the consequences of any want of reasonable care on the part of Ausrise, but the builder did protect itself by detailed contractual obligations including warranties and expansive indemnities. Nor can it be said that, “by reason of ignorance or social, political or economic constraints”, the builder was not able to protect itself from the risk of injury: Woolcock at [80]. The builder was an experienced commercial operator who had worked with Ausrise before.

Time-bar?

371. The insurers contended that the claim against Ausrise was statute barred by operation of section 14 of the Limitation Act. Any cause of action was said to have accrued no later than the issue of the certificate of practical completion on 3 March 2016. This was more than six years before the cause of action was added by amendment on 3 October 2023.

372. The insurers would have a good point if Ausrise was sued for breach of contract. But it is not. As the builder’s pleading makes plain, the builder contends that Ausrise is liable under its indemnities. A necessary ingredient in the indemnity in cl 13.3.4 is that the Claim made on the builder, for which indemnity is sought, “arises from or in connection with the act, default or omission” of Ausrise. Similarly, the indemnity in cl 14.2.1 requires that the builder’s liability to Star Casino is “in connection with or arising out of the course of the performance of the subcontract”. It is for this reason that the builder has pleaded the subcontractor’s contractual and tortious obligations, and the breach of those obligations, in order to prove that the elements of the contractual indemnities have been satisfied.

373. Time runs from the date on which a cause of action first accrues: s 14(1), Limitation Act. Where a cause of action is to enforce an indemnity, time does not begin to run until the contingency which activates the indemnity is fulfilled: Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 533 (Mason CJ, Dawson, Gaudron and McHugh JJ); [1992] HCA 55. Here, the contingency nominated by cls 13.3.4 and 14.2.1 is the existence of inter alia a Claim against the builder or a liability incurred by the builder.

374. Star Casino commenced proceedings against the builder on 15 April 2020, but only in respect of the first and second projects. In August 2021, PCB provided a further cladding assessment report, advising that further areas of ACP had been identified during the course of cladding replacement works. On 17 March 2023, Star Casino amended their pleading to add a claim in respect of the third project. The builder amended its claim against Ausrise six months later to add the third project, on 11 September 2023. It is not known precisely when Star Casino first made a Claim against the builder in respect of the third project. Presumably, it was sometime between August 2021 and March 2023. A Claim having been made, the builder made a claim on the indemnity in a timely manner. The builder’s cross-claim against Ausrise is not time-barred.

Entitlement to indemnity?

375. The builder submitted that the fact that Alpolic FR was combustible meant that the installation of this product had the consequence that the Subcontract Works were not fit for purpose: Barton v Stiff [2006] VSC 307 at [33]-[39] (Hargrave J); Owners Corporation No.1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286 at [287]-[290] (Judge Woodward). Relying on the expert evidence of Mr Winstanley, the builder also submitted that the duty to exercise reasonable care and skill was breached. Accordingly, the builder submitted that the indemnities applied.

376. The insurers submitted that Ausrise was merely a supply and install-only subcontractor. There was no issue with the quality of Ausrise’s workmanship but simply the selection of the cladding product. Ausrise simply installed the ACPs requested, specified and approved by others. Discussions about using Alpolic FR on the first project were said to be between Star Casino, the builder and the architect but not Ausrise. As Alpolic FR had already been used on the first project, Mr Martin agreed that the same product was always going to be used on the second and third projects. Further, Alpolic FR could have been used if an Alternative Solution had been prepared. The builder’s reliance on LU Simon Builders was said to be misplaced as the contract in that case was a design and construct contract, unlike Ausrise’s more limited role.

377. The insurers submitted that Ausrise did not breach any implied duty of care as it only did what it was told to do: to supply and install specified ACPs which had been approved by others. Mr Winstanley’s views to the contrary should not be accepted, where he was not a façade contractor and incorrectly assumed that Ausrise was engaged to design and construct the façade. Further, the expert incorrectly attributed to Ausrise the same responsibilities as TTW, a façade engineer which specified materials. Mr Lim’s views should be preferred.

378. The views of the expert façade engineers differed because, in large part, they proceeded on the basis of different assumptions. Mr Winstanley was asked to make an assumption that Ausrise recommended the particular ACP. He proceeded on the basis that Ausrise issued the Alpolic FR sample for approval but no other products. Mr Lim was instructed that Ausrise had no design role but was retained only to supply and install cladding panels in accordance with the instructions and subsequent approvals received from other consultants on the design team. On this basis, he disagreed with Mr Winstanley.

379. Both experts’ opinions were based on their views on Ausrise’s involvement in the first project, which were then ‘rolled over’ into the second and the third projects. Mr Winstanley considered that, if Ausrise was asked to design an alternate façade design on the first project, then it was taking on a design role. He said that Ausrise was involved in the ECI stage, the purpose of which was to work out a cheaper façade, one that was easier to install or panelise. The design that Ausrise presented used their extrusions that they owned in their fabrication facility in Thailand. To produce the shop drawings, Ausrise had to undertake design. It was not possible to produce the drawing without undertaking design. Mr Lim responded that the shop drawings were a system which had to be approved by the consultants. Whilst it was a commercial decision to provide the composite panels and use that system, it was a decision that would ultimately have to be approved by the consultants.

[287] Consistently with the discussion in Barton v Stiff, the starting point in the analysis in respect of … the warranty of fitness for purpose, is to determine the purpose for which the building (and thus the relevant materials) was required. The purpose of Lacrosse tower was as a multi-storey residential apartment building. What this means for the selection and fitness of materials might be said to be a matter of common sense, but it is convenient to draw on the provisions of the BCA.

[288] As the objective in clause CO1 of the BCA indicates, fire has the potential to result in injury to people, physical damage to property and structural failure of a building. For this reason, the BCA requires, by clause CP2(a), that a building have elements which will avoid the spread of fire to the degree necessary to achieve the objective. The BCA places particular emphasis upon the suitability of materials used in high-rise residential buildings. It requires that such buildings be of “Type A construction”, being the most fire-resistant type of construction, and specifically provides that their external walls must be non-combustible.

387. His Honour concluded that the ACPs used on the Lacrosse building were combustible within the meaning of the BCA and obviously not fit for purpose on the external walls of a high-rise residential building: at [289]-[290]. The approach of Judge Woodward was not challenged on appeal in Tanah Merah Vic Pty Ltd v Owners Corporation No 1 of PS613436 [2021] VSCA 72.

388. The same approach can be applied here. Star Casino is a building used by the public for entertainment and accommodation. It is required to be of Type A construction – being the most fire-resistant type of construction – and to have non-combustible external walls. The fact that combustible ACPs were affixed to the external façade of the building, contrary to BCA requirements, had the consequence that the building was not fit for purpose: LU Simon Builders at [287]-[288] (Judge Woodward). It follows that Ausrise was in breach of its warranty that the Subcontract Works would be so fit. Again, the warranty is agnostic as to who suggested that Alpolic FR be used – whether Ausrise, the builder or TTW.

389. Turning to the indemnities, cl 13.3.4 applies. Ausrise agreed to indemnify the builder “from and against all Claims … arising from or in connection with any claim made under or pursuant to the Building Legislation, to the extent that such Claim … arises from or in connection with the act, default or omission of the Subcontractor.” Star Casino’s claim against the builder in respect of the third project arises from or in connection with Ausrise’s act, default or omission.

390. Clause 14.2.1 also applies, where Ausrise agreed to indemnity the builder for any Claims “in connection with or arising out of in the course of the performance of the Subcontract, irrespective of when and how such … Claims arise or whose fault or negligence (if any) gave rise to same”.

391. But Ausrise is in liquidation and the real question is the extent to which the insurers are obliged to indemnity their insured in respect of its liability to the builder.

Policy coverage

392. The builder contended that Ausrise had an "insured liability" to the builder within the meaning of s 3 of the Civil Liability (Third Party Claims Against Insurers) Act and the builder was entitled to recover that amount from the insurers. There were two issues. First, has the builder established that there was “Property Damage” within the meaning of the policy? Second, are the insurers entitled to reduce the amount payable to the builder by reference to the concurrent wrongdoing of others?

393. As to the first issue, the insuring clause provided:

2.1 What We Cover

We agree … to pay to You or on Your behalf all amounts which You shall become legally liable to pay as Compensation in respect of:

…

2.1.2 Property Damage …

394. Property Damage was defined as “physical loss, destruction of or damage to tangible property”: cl 1.22. Compensation meant monies paid or agreed to be paid by judgment, award or settlement in respect of inter alia Property Damage: cl 1.5.

395. The builder submitted that Ausrise’s policy responded as the installation of the Alpolic FR caused Property Damage, specifically, damage to Star Casino as a consequence of affixing defective material: Insurance Australia Lt**d (t/as CGU Insurance) v Capral Ltd (2025) 309 FCR 385; [2025] FCAFC 46 at [32] (Thawley J with whom Downes and Shariff JJ relevantly agreed), adopting Jackman J’s analysis at first instance in Capral Ltd v Insurance Australia L**td (t/as CGU Insurance) [2024] FCA 775 at [135]-[137]; Austral Plywoods Pty Ltd v FAI General Insurance Company Ltd [1992] QCA 4; AAI Ltd v The Owners – S**trata P**lan No 91086 [2025] FCAFC 6; Ranicar v Frigmobile Pty Ltd; Ranicar v Royal Insurance Pty Ltd [1983] Tas R 113 at 116 (Green CJ).

396. The builder submitted that there was a physical alteration of the tangible property, namely Star Casino, when the Alpolic FR was installed, as installation involved the insertion of nails and screws into the walls of the building. The same could be said when Alpolic FR was removed, as this process damaged elements of the building, requiring restoration. The facts were said to be indistinguishable from AAI, as described by Wigney J at first instance in The Owners – S**trata P**lan No 91086 v Fairview Architectural Pty Ltd (No 3) [2023] FCA 814 at [115]-[118], [152]-[158]. The alteration caused an impairment in the usefulness or value of the building as Star Casino was “essentially unsafe because there is a risk that if there is a building fire, the fire will spread more rapidly and be more severe than would otherwise be the case”: The Owners – S**trata P**lan No 91086 v Fairview Architectural at [152].

397. The insurers submitted that Capral was distinguishable on the facts. There was no alternation of the physical state of the Star Casino by the installation of ACPs. There is no evidence of any “damage” caused by their removal, which was carried out by Star Casino’s remediation contractor. Mr Martin’s evidence was said to be speculative. was an interlocutory decision, where the relevant question was required only to be arguable: at [178]. If there was property damage, then this was limited to the damage to the Star Casino caused by the affixation of the ACPs: at [150], at [62], at [68]-[70].

In one sense any affixation of plywood to a hull by means of screws and glue causes physical injury to the hull. It causes holes to be drilled in the hull for the screws and the glue may also damage the surface of the hull. In order to restore the hull to its original condition, the plywood would have to be removed, the glue chiselled or scraped off and the screw holes filled. …

Upon the permanent affixation of the defective plywood to the hull, the hull was not only physically injured by the screw holes and glue but was rendered unsuitable, or less suitable, for the purpose for which it was constructed. …

To remedy that injury the plywood had to be removed and the hull restored to a state in which new plywood could be affixed.

400. Austral Plywoods was followed in The Owners – S**trata P**lan No 91086 v Fairview Architectural, which concerned the installation of combustible ACPs to a residential building. On the basis of apparently detailed and competing expert evidence, Wigney J found that the removal of ACPs would inevitably cause some damage to the building, in particular, as the top hat subframe would have to be removed as well. It would then be necessary to remediate parts of the building before any new subframe or replacement panels were fixed to the building, including filling holes and repairing or replacing existing sarking: at [116]-[118].

401. The insurer there invited Wigney J to determine, on a final basis, that this did not amount to “property damage” within the meaning of the policy. Wigney J declined to do so on an application for leave to join and proceed against the insurer. His Honour did, however, consider on an interlocutory basis that there was “property damage”, where affixing combustible ACPs to a residential building made the building less suitable for the purpose for which the building was intended, and the means by which the panels were affixed to the building caused physical damage to the building too: at [152]-[155].

402. His Honour rejected the insurer’s argument that any damage to the building was trivial or superficial, “The insertion of nails and screws into the concrete and steel walls of the building could fairly be said to have changed or altered the physical state of the building in a harmful or deleterious way”: at [156]. Removal of the ACPs would require restoration of the damage caused by the affixation and removal of the existing top hats and panels: at [158]. The Full Court refused an application for leave to appeal, where his Honour’s decision was not attended by sufficient doubt to warrant a grant of leave: AAI Ltd v SP 91086 [2025] FCAFC 6 at [62].

403. More recently, Austral Plywoods was followed in Capral v Insurance Australia, where the insured had supplied defective aluminium plate for use in the construction of marine vessels. The aluminium plate did not meet the standards for corrosion resistance and had to be cut out of the vessels and replaced. The definition of Property Damage was relevantly the same. Jackman J extensively reviewed the authorities in this area and concluded that “physical injury to tangible property” required a physical alteration of tangible property that impaired its usefulness or value; this involved comparing the state of the tangible property immediately before the alleged incident of damage with its state immediately thereafter: at [132].

404. Further, Jackman J considered that, where a defective product has been incorporated into larger tangible property, it is a question of fact as to whether there was a physical alteration of tangible property: at [135]. If a physical alteration is identified, then it will depend upon the particular circumstances as to whether that alteration caused an impairment in the usefulness or value of the tangible property: at [136]. At [137]:

… a claim will be “for Property Damage” in a case like Austral Plywoods, where:

(1) the incorporation of a defective product into larger tangible property physically alters that property;

(2) the nature of the defect is such that the incorporated product must be removed from the property;

(3) the nature of the physical alteration is that removing the product will come at a substantial cost;

(4) as a result, the usefulness or value of the property immediately after the incorporation of the defective product is less than its value immediately beforehand; and

(5) the customer claims for that difference in usefulness or value.

405. His Honour’s reasoning was upheld on appeal. The Full Court observed in Insurance Australia v Capral, “The real point is that the alteration in property must involve some negative consequence to the property sufficient for the consequence to be properly regarded as “damage””: at [68]. Whether there was damage is a question of fact and degree: at [68]. Whether changes in physical characteristics of property affect usefulness or value is relevant to determining whether there has been property damage: at [69].

406. As for lay evidence in this case, Mr Martin said that he was heavily involved in this project; he inspected the works to certify practical completion. Mr Martin said that the cladding was installed to the Austral Hotel on the third project by fixing it to the framing / top hats using screws and caulking / mastic seal.

407. Mr Martin prepared a scope of works for the rectification of damage caused by the affixation and subsequent removal of the ACP cladding. He said the mastic / caulking would need to be cut out for the cladding to be removed. This was because the mastic / caulking was an architectural feature and also played a weatherproofing and wind resistant role. Screw holes left by the cladding would need to be infilled. The framing / top hats and edge trims would be damaged when the cladding was levered off existing framing and would require replacement. The edge trim on top would need to be replaced due to bending when levering off panels. Sarking would be ripped during cladding removal and would require replacement as it plays a weatherproofing role.

408. As for expert evidence, three quantity surveyors have examined the remediation works that were undertaken on third project. None were of the view that the remediation work was unnecessary. Their varying estimates of the costs of removing non-compliant cladding and repairing the building before affixing new cladding were each over $200,000. This is double what Ausrise was paid under the subcontract to install the ACPs in the first place.

409. The evidence in respect of property damage in relation to the third project is less extensive evidence than what was before Wigney J in The Owners – Strata Plan No 91086 v Fairview Architectural. Perhaps this was because the problems were not discovered until some five years later. I am nonetheless satisfied, having regard to the lay and expert evidence, that affixing non-compliant ACPs to Star Casino during the third project gave rise to “Property Damage” within the meaning of the policy. Affixing non-compliant ACPs caused “damage to” the building in the relevant sense as there was a physical alteration to the building which impaired its value or usefulness in two ways. First, a significant public building now had a combustible external façade. This created a liability for those responsible for ensuring that the building complied with the law. And like any building defect, it meant that anyone interested in acquiring an interest in the building would factor in the cost of fixing it. The affixation of non-compliant ACPs to the external cladding also changed the usefulness of the building, as it reduced its fire-resistance.

We do not cover any liability:

…

3.6 Contractual Liability

which has been assumed by You under any contract or agreement that requires You to:

…

3.6.2 assume liability for … Property Damage regardless of fault …

412. The insurers relied on exclusion 3.6. The insurers submitted that, by agreeing to cl 24.10.1 of the subcontract, Ausrise excluded the benefit to it of the proportionate liability regime in Pt 4 of the Civil Liability Act 2002 (NSW), which would have permitted it to defend the claims by the builder on the basis that other parties caused or contributed to the loss and thereby assumed a liability for property damage regardless of fault. The insurers’ liability was said to be limited to the liability that Ausrise would have had absent Clause 24.10.1, which was said to be nil given its minimal role.

413. The builder submitted that Clause 24.10 did not fall foul of the exclusion. For the proportionate liability scheme to be enlivened, there must have been a failure to take reasonable care: s 34(1)(a), Civil Liability Act. To construe the clause otherwise would inappropriately circumscribe the indemnity provided by the insurance: Absolute Tiling Solutions Pty Ltd v Certain Underwriters at Lloyds [2024] NSWSC 364 at [246]-[253] (Nixon J).

414. A policy of insurance is a commercial contract and should be given a businesslike interpretation, paying attention to the language used by the parties, the commercial circumstances that the document addresses and the objects which it was intended to secure: McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22] (Gleeson CJ); Liberty Mutual Insurance Company Australian Branch (t/as Liberty Specialty Markets) v Icon Co (NSW) Pty Ltd [2021] FCAFC 126; (2021) 154 ACSR 126 at [151]-[152] (Allsop CJ, Besanko and Middleton JJ).

415. Exclusion clauses are to be construed in the same way and, where appropriate, construing the clause contra proferentem in the case of ambiguity: Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510 (Mason, Wilson, Brennan, Deane and Dawson JJ); [1986] HCA 82. In HDI Global Specialty SE v Wonkana No 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296, Meagher JA and Ball J followed (at [29]), the observations of Lord Hodge in Impact Funding Solutions Ltd v AIG Europe Insurance Ltd [2017] AC 73; [2016] UKSC 57 at [7]:

An exclusion clause must be read in the context of the contract of insurance as a whole. It must be construed in a manner which is consistent with and not repugnant to the purpose of the insurance contract. There may be circumstances in which in order to achieve that end, the court may construe the exclusions in an insurance contract narrowly.

416. As Barrett JA put it in W**eir S**ervices Australia Pty Ltd v AXA C**orporate Solutions A**ssurance [2018] NSWCA 100; (2018) 359 ALR 314, “The insuring clause and any exclusion clause must be read together in an harmonious way so that due effect is given to both and the right conferred by the former is not negated or rendered nugatory by the construction adopted in relation to the latter”: at [54]. Put another way, the exclusion must be “construed in a way that does not negate … the indemnity provided by the insurance”: at [125].

417. As between the builder and Ausrise, the parties could contract-out of the Civil Liability Act, s 3A(2); Aquagenics Pty Ltd v Break O’Dea Council (2010) 20 Tas R 239 at [20]-[22] (Evans J, Wood J agreeing). As such, by reason of cl 24.10.1 of the subcontract, Ausrise could not limit its liability in respect of a claim made by the builder by reference to the role played by other concurrent wrongdoers. If Ausrise had been solvent, then the company would have been obliged to indemnify the builder in full, without deduction to reflect the extent to which McKenzie Group or TTW may have contributed to the Works falling short of the requirements of the subcontract.

418. By cl 24.10.1 of the subcontract, did Ausrise assume liability for Property Damage regardless of fault? No. As the builder submitted, Pt 4 of the Civil Liability Act applies to “apportionable claims” being, relevantly, “a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care”: Civil Liability Act*,* s 34(1)(a). Clause 24.10.1 only operates when Ausrise is at fault, in particular, by reason of a failure to take reasonable care. If that condition is satisfied, then the contractual parties have agreed that Ausrise’s liability to the builder cannot be reduced by reason of the failure of others to take reasonable care as well. The exclusion in cl 3.6.2 of the policy does not apply to cl 24.10.1 of the subcontract.

Replacing the cladding

419. More than a year after these projects were completed, in June 2017, the Grenfell Tower in London was destroyed by fire. More than 70 people died, another 70 people were injured and 223 people escaped. According to the CSIRO’s report, the fire started on the fourth floor from an electrical fault. The fire spread to cladding via a window jam and rapidly spread up the east face of the building, then spread around the crown of the building and down the sides. The flame fronts converged and enveloped the entire building in under three hours. The main cause of the rapid external fire spread was combustible cladding and insulation. This led to a review of building regulations and fire safety in the UK and significant changes in regulation relating to combustible cladding.

420. In December 2017, NSW Department of Planning & Environment issued a notice to Star Casino, imposing a condition under s 122C of the EPAA, specifically, requiring Star Casino to audit whether there was a fire safety risk posed by external wall cladding and, if so, provide recommendations and an action plan to implement those recommendations.

421. In January 2018, TTW provided a Combustible Cladding Assessment to Star Casino. TTW identified that various cladding was not BCA compliant. In June 2018, the department required Star Casino to engage a fire engineer to provide a detailed action plan for rectification and mitigation measures. In October 2018, Star Casino engaged Performance Base Consulting Pty Ltd (PBC).

422. On 1 February 2019, PBC provided a Cladding Assessment, which was provided to the department and NSW Fire & Rescue. On 12 February 2019, the CodeMark Certificate of Conformity for Alpolic FR was withdrawn.

423. In May 2019, Star Casino retained WSP to undertake a peer review of the PBC report. WSP generally agreed with the proposed remediation measure to replace the ACPs at the majority of locations. But the suggestion to retain or remove ACPs partially in some locations was not thought to be adequately justified, as no risk assessment had been provided; further clarification was needed. In July 2019, PBC provided a further cladding assessment report, including an updated risk assessment methodology and additional confirmation samples.

424. On 15 April 2020, Star Casino commenced these proceedings against the builder. In September 2020, the department issued a fire safety order, requiring Star Casino to remove all existing combustible ACPs, together with any combustible insulation and sarking associated with the ACPs. Star Casino was to install non-combustible replacement material, as defined by the BCA, or to otherwise demonstrate that the replacement material was compliant with the BCA.

425. In August 2021, PCB provided a further cladding assessment report, advising that further areas of ACP had been identified during the course of cladding replacement works. Coutts Cost Consulting Pty Ltd provided an estimate for the cost of replacing the cladding on Level 17 of the Astral Hotel. In February 2022, Star Casino entered into a contract with Shape Australia Pty Ltd to undertake remediation work (together with other works). Work began.

Damages

428. There were two issues in respect of damages. First, should damages be assessed on the basis of what it would have cost Star Casino to rectify the defective building work as a ‘stand alone’ project, or as a portion of the rectification works that were actually undertaken but in combination with other works? Second, what portion of the rectification cost is attributable to the third project?

429. Three expert quantity surveyors gave evidence: Michael Gilligan for Star Casino, David Madden for the builder and Adrian Jamieson for the insurers. The focus of Mr Gilligan and Mr Madden’s work was the appropriate method of apportionment for the costs incurred by Star Casino, where some of the non-compliant ACPs that were removed had not been installed by the builder and where the replacement of non-compliant ACPs formed part of a larger refurbishment. The focus of Mr Jamieson and Mr Madden’s work was the portion of the remediation costs which were attributable to removing ACP cladding and repairing and reinstating the building but excluding the cost of installing replacement panels (this being a limit under the policy wording).

Methodology

430. The first issue is which method should be adopted for calculating damages to be awarded to Star Casino in respect of the third project.

431. Mr Gilligan considered the rectification costs on a ‘stand alone’ basis, that is, as if Star Casino had replaced the non-compliant ACPs as a single project rather than work undertaken by the contractor in the course of another refurbishment contract. Mr Gilligan said he did this so that his method was “not contaminated by any other works that are not Buildcorp’s or not ACP works.” But he accepted that Star Casino did not pay for the works as if they were carried out as a ‘stand alone’ basis. Nor did his calculations take account of efficiencies to be achieved in undertaking the work as part of other works.

432. Mr Madden approached the task by calculating the portion of the remediation costs actually incurred by Star Casino, which were attributable to removing and replacing ACP that had been installed by the builder. Mr Madden was of the view that Mr Gilligan’s approach of calculating the reasonable cost of reinstatement, rather than basing his calculations on costs that had already been incurred, artificially inflated Star Casino’s claim for damages.

433. Star Casino submitted that the “standalone” methodology adopted by Mr Gilligan was closest to ascertaining the amount required to rectify the defects complained of, because it does not look to what Star Casino did as part of a broader and concurrent project. Mr Gilligan’s methodology focused squarely on ascertaining the amount that would have been required to rectify the defects caused by the builder and give Star Casino the building that it had contracted for, consistent with the principles in Bellgrove v Eldridge (1954) 90 CLR 613 at 617 (Dixon CJ, Webb and Taylor JJ); [1954] HCA 36. There was said to be no reason in principle or logic to reduce the damages awarded to account for the coincidence that other defect-rectification work was going on at the same time. Such a reduction would fly in the face of the principle that damages are assessed at the date of breach.

434. The builder submitted that Mr Gilligan’s methodology was not appropriate as it overcompensated Star Casino. An injured plaintiff was not entitled to be placed in a superior position to that which he or she would have been in had the contract been performed: Johnson v Perez (1988) 166 CLR 351 at 356 (Mason CJ); [1988] HCA 64; McCrohon v Harith [2010] NSWCA 67 at [53] (McColl JA, Campbell JA and Handley AJA agreeing). Although damages were generally assessed as at the date of the breach, this was not always the case: McCrohon v Harith at [54]-[56].

435. The general measure of damages is the amount, so far as money can provide, necessary to put the plaintiff in the position they would have been if the contract had been performed: [1969] 1 AC 350; (1972) 127 CLR 454 at 460 (Barwick CJ); [1972] HCA 43; (1986) 161 CLR 653; [1986] HCA 81. This requires the Court to compare the actual position of the party who sustains a loss by reason of the breach to what that party’s position would have likely been in a counterfactual scenario in which the contract was performed: [2024] VSC 262 at [74] (Matthews J).

Quantum

440. Star Casino and the builder ultimately agreed that the damages calculated using Mr Madden’s pro rata method – for all three projects – was $3,995,275.50. Mr Madden and Mr Gilligan also agreed that 7.15% of the total cost attributable to the builder was in respect of the third project. As such, Star Casino’s damages vis a vis the builder are $285,662.

441. As between the builder and Ausrise / the insurers, the parties agreed that, given the policy wording, the insurers were only obliged to pay the costs of removing the non-compliant ACPs and repairing the building to a state in which replacement panels could be affixed. This did not extend to the cost of replacing the non-compliant ACPs. Mr Jamieson and Mr Madden agreed that 75% of replacement works concerned the removal of non-compliant ACPs and repairing the building ready to receive new panels, whilst the remaining 25% was the cost of installing replacement panels.

442. But, while Star City and the builder ultimately agreed on the cost of rectification, Mr Jamieson disagreed with Mr Madden on various cost items. Further, Mr Jamieson did not apportion the reasonable cost calculated between the three projects. Mr Jamieson initially considered that the reasonable cost of removing ACP cladding and repairing and reinstating the building to a state in which replacement panels could be affixed was $2,632,106. Mr Jamieson also reached a lower figure for access and craneage. While Mr Madden used a proportion of costs from the contractor’s refurbishment contract, Mr Jamieson used published rates apportioned for the relevant cost applicable to the works on which he was focussed.

443. Mr Jamieson arrived at lower trade costs where he and Mr Madden disagreed on the quantity of ACPs and Mr Madden included two variations to the contractor’s refurbishment contract which Mr Jamieson regarded as outside the scope of the work on which he was focussed. The experts used different percentages for preliminaries and margin: Mr Jamieson thought a reasonable percentage was 20% whilst Mr Madden used 25%. The experts used different percentages for design and consultants’ costs: Mr Jamieson used 3% while Mr Madden used 4%. In respect of project management office costs, Mr Madden used the costs entered in Star Casino’s costs system whilst Mr Jamieson considered this to be overstated as it included costs from outside the period in which the works on which he was focussed were carried out. Mr Jamieson applied a percentage to the cost of the works.

444. As between Mr Madden and Mr Jamieson, Mr Madden settled on $3,048,564 while Mr Jamieson reached a figure of $2,750,861. In a second joint report, Mr Gilligan narrowed his disagreements with Mr Madden, accepting his method for apportioning consultant, investigation costs and development costs but maintaining his position in respect of long service leave.

445. Mr Madden, when calculating the revised costs for the purpose of Ausrise’s insurers, assumed that all window frames would have to be replaced while Mr Jamieson assumed that 20% of the window frames could be reused. Mr Madden said this was based on his experience that frames were generally fully replaced by remediation contractors, who had to warrant the works. In addition, the existing frames were often not set out correctly in the spacings or were damaged in initial construction or removal.

Concurrent wrongdoers

451. The insurers contended that their liability to indemnify Ausrise and, thus, the builder for its claim against the insured was limited to an amount reflecting the proportion of damage that the court considered just having regard to the extent of the insured's responsibility for the damage or loss, having regard to the responsibility of the builder, TTW and McKenzie Group. The insurers submitted that the builder was intricately involved in the decision to substitute Alpolic FR on the first project, which decision carried through to the third project. The builder was best placed to consider whether the product was suitable to for use, by gathering together all relevant information for consideration by a fire safety engineer for the purposes of preparing an Alternative Solution.

452. As for TTW, the insurers relied on the expert opinions of both Mr Winstanley and Mr Lim, who agreed that the conduct of TTW fell below the standard of a reasonable façade engineer. A reasonable façade engineer in the position of TTW, when specifying materials to be installed to the external façade of the Star Casino on the third project, would have known that ACPs were combustible for the purposes of AS 1530.1. Further, a reasonable façade engineer would have known that compliance with the BCA could only be achieved through the ‘attachment exception’ or an Alternative Solution. Either would require the approval of a fire engineer. In these circumstances, TTW should only have proposed the use of ACPs on the condition that a fire engineer had approved its use.

453. As such, the experts agreed that TTW’s conduct fell below the standard of care of a reasonable façade engineer when preparing the Façade Performance Brief, in particular, by failing to identify that the combustibility of the ACPs was a fire safety issue, failing to advise the builder that the ACPs were non-compliant and that fire engineering advice was needed to confirm whether the ACPs were compliant or whether an Alternative Solution was required.

454. As for McKenzie Group, the insurers relied on the expert opinion of Mr Lim, who noted that the certifier did not raise any concerns or potential non-compliance with the proposed panels specified by TTW for the external façade. Where Ausrise did not have any design role in determining the fire compliance of the BCA, compliance remained the responsibility of the consultants engaged on the project. A reasonable façade subcontractor in the position of Ausrise would have relied on the advice and approval of the consultants when procuring and installing the ACPs.

455. The builder submitted that Ausrise did not play a minimal role. Ausrise was bound to supply ACP in a manner that ensured the works met the warranties in the subcontract. It failed to exercise reasonable care in doing so. Ausrise was not absolved from liability merely because there were others who may also have prevented the installation of Alpolic FR.

Claimant may recover from insurer in certain circumstances

(1) If an insured person has an insured liability to a person (the claimant), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court.

(2) The amount of the insured liability is the amount of indemnity (if any) payable pursuant to the terms of the contract of insurance in respect of the insured person's liability to the claimant.

(3) In proceedings brought by a claimant against an insurer under this section, the insurer stands in the place of the insured person as if the proceedings were proceedings to recover damages, compensation or costs from the insured person. Accordingly (but subject to this Act), the parties have the same rights and liabilities, and the court has the same powers, as if the proceedings were proceedings brought against the insured person.

457. Section 3(1) relevantly provides:

insured liability means a liability in respect of which an insured person is entitled to be indemnified by the insurer.

458. There are two bases on which the insurers can reduce their liability: first, by reference to the “insured liability”, that is, what the insurers were obliged to pay to their insured given the terms of the policy; and, second, by relying on a defence or right on which the insured would have been entitled to rely in defending the proceedings. In respect of the second matter, the insurers effectively stand in the shoes of Ausrise.

459. As such, the insurers are only entitled to reduce their liability to the builder by reason of the responsibilities of concurrent wrongdoers if Ausrise was entitled to do so. Ausrise was not entitled to reduce its liability to the builder by reason of the concurrent wrongdoing of others: cl 24.10.1 of the subcontract. I have concluded that the insurers are not entitled to rely on the exclusion in cl 3.6 of the policy to avoid the operation of cl 24.10.1. It follows that the insurers are not entitled to reduce their liability by reason of the actions of TTW or McKenzie Group.

460. If I am wrong about this, then I do not accept that Ausrise’s role in what occurred was de minimis: see [382]. None of the builder, the subcontractor or the consultants engaged on the third project appear to have turned their mind to the suitability of using Alpolic FR on the third project, notwithstanding revisions to the CodeMark Certificate of Conformity following the Lacrosse fire in Melbourne and emerging regulatory concerns. The façade engineer, TTW, was probably best placed to do so, followed by the certifier, McKenzie Group. But Ausrise was not without knowledge or skill in the field, having regard to the views of Mr Winstanley. I would have reduced Ausrise’s proportionate liability to 40%.

Orders

461. For these reasons, I make the following orders:

462. Judgment in favour of the plaintiffs in the amount of $285,662.

463. Judgment against the sixth, seventh and eighth cross-defendants in the sum of $214,247.

464. Otherwise dismiss the Summons and Further Amended Cross-Summons.

465. Direct the parties to notify any errors or omissions within seven days.

466. In the event that costs orders are not agreed by the parties within 14 days, direct the parties:

(a) within 14 days to provide submissions (limited to three pages) and affidavits in respect of the costs orders sought; (b) within 28 days to provide submissions (limited to three pages) and affidavits in reply;

with any contested costs orders to be decided on the papers.

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Amendments

16 February 2026

[8]: amended to "Construct Only contract" [150]: amended to "For Construction drawings" [156]: amended to "Mr Maroun emailed Mr Chalmers, copied to Mr Polden" [335]: full stop amended to comma after "warranty"