Opal Towers court update

Opal Tower builder Icon has court win against insurers over damage bill

The builder of the cracked Opal Tower in Sydney’s west has had a court win against two insurers who had refused to help cover a multi-million dollar bill to fix the damage.

About 300 residents were evacuated from the 36-storey apartment block at Sydney Olympic Park in Homebush after a crack developed in a load-bearing concrete panel on Christmas Eve two years ago.

Icon launched action in the Federal Court against insurers Liberty Mutual and QBE, both of which had denied they had to provide coverage in relation to legal claims against the company related to the building’s defects.

“On the night before Christmas in 2018, things were stirring: major cracks were observed at the Opal Tower across three floors in certain wall panels, floor slabs and hobs,” Federal Court Justice Michael Lee wrote in a decision this week.

Residents evacuated from the building gradually returned to their apartments during 2019, after Icon carried out a series of building rectification works.

The cracking to the newly-completed Opal Tower was among the first incidents to trigger concerns about the quality of new apartment blocks across Sydney and the incident unleashed a wave of litigation in NSW courts.

The Federal Court decision said that, since February 28, Icon had paid out in excess of $31 million as a result of the cracking damage, including $17 million in property rectification costs, $8.5 million in alternative accommodation costs for residents and $530,000 in legal fees defending a class action launched last year.

Court documents said Icon entered into a $155 million contract to build the tower and had separate policies in place with both insurers that covered construction and the period after the tower was completed in August.

One of the issues at the centre of the dispute was whether Icon’s insurance policy with Liberty Mutual had expired at the time the damage occurred in December, less than five months after construction was completed.

“The essence of Icon’s argument … [is that] commercially sensible parties in the position of Icon and Liberty would have expected that the Liberty policy covered Icon during the defects liability period.”

“The reason why Liberty may properly refuse to pay the purported claim is because Icon seeks indemnity in respect of alleged property damage that did not occur within the period of insurance under the relevant policy,” court documents said.

Written by Megan Gorrey – 20/10/2020

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Justice Lee found Icon only partly succeeded in its claim against Liberty, however, he said the parties’ common intention was for the policy to also cover the building after construction.

Another question was whether the built structure of the Opal Tower was considered a “product” under the terms of Icon’s policy with QBE, which covered the period when the cracks occurred.

Justice Lee found that it was and that Icon succeeded in its claim against QBE.

The decision smooths the path for Icon to progress its claims for compensation from the insurers.

The parties are required to provide a further response to the court’s decision within a week.

Owners last year launched a class action against the state-owned Sydney Olympic Park Authority – which owns the land where the tower was constructed – seeking millions of dollars in compensation.

The authority subsequently dragged Icon and developer Ecove into the legal dispute.