A recent NSW Supreme Court decision involving The Star Entertainment Sydney Properties and Buildcorp Group is quietly redefining how misleading or deceptive conduct claims under the Australian Consumer Law (ACL) are assessed in construction-related disputes.
The ruling, handed down in The Star v Buildcorp, is expected to have significant ramifications across both the construction and insurance sectors.
The dispute originated after defects were identified in construction works at The Star Casino, where Buildcorp, using a contractor, installed aluminium composite panel (ACP) cladding.
The works spanned three projects between 2014 and 2016.
The Star alleged that the cladding was combustible and non-compliant, seeking recovery for rectification costs.
Buildcorp responded by filing cross-claims against several consultants it said were responsible for the installation issues, even though those consultants were engaged directly by The Star and had no contractual relationship with Buildcorp.
A central legal question concerned the application of section 29 of the ACL, which addresses misleading or deceptive conduct in trade or commerce.
Buildcorp argued that the architect had engaged in misleading conduct under that provision.
However, the Court determined that section 29 was inapplicable in situations where parties work together to provide goods or services to a shared principal without a direct supply relationship between them.
In reaching its finding, the Court drew a clear distinction between sections 18 and 29 of the ACL.
Section 18 may apply in broader contexts where misleading conduct occurs in trade or commerce, while section 29 is limited to representations made during a supply of goods or services.
On that basis, the Court dismissed Buildcorp’s claim under section 29, concluding that no bilateral supply existed.
Furthermore, the Court found that Buildcorp was not liable for any design-related non-compliance because its construction contract specifically excluded design responsibility.
The arrangement was deemed ‘Construct only’, shielding Buildcorp from liability for defects arising from design choices or consultant approvals.
An additional issue related to whether the financial loss caused by the defective cladding amounted to ‘damage’ under The Star’s insurance policy, or whether it represented only the cost of rectifying poor workmanship.
The Court held that only damage to other property might be covered under standard policy wording, distinguishing it from the defective work itself, which generally remains excluded.
This interpretation underscores a long-standing principle that insurance is intended to protect against fortuitous events, not inherent business risks such as substandard work.
Matthew Smith, a partner at global law firm Clyde & Co, emphasises that the ruling reinforces traditional insurance exclusions concerning defective workmanship.
It also highlights the importance of precise risk allocation and contract drafting, particularly in projects where builders do not assume design responsibility.
For construction professionals, the decision serves as a reminder to clearly define design roles, approvals, and scope limitations to avoid unintended exposure.
The judgment provides a fresh lesson for litigators pursuing misleading or deceptive conduct claims under the ACL, indicating that the correct legal pathway must be chosen where parties lack a direct contractual link but contribute to the same project.
Overall, the decision draws a sharp boundary between coverage for damage caused by construction defects and the defects themselves.
The outcome is expected to influence how construction risks are priced, managed, and insured in future Australian projects.
