The damage to the Opal Tower unleashed a wave of litigation in NSW courts.

The damage to the Opal Tower unleashed a wave of litigation in NSW courts.Credit:Janie Barrett

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.

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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.

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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.

Construction company Icon brought legal action against two insurers who have denied they have to provide coverage.

Construction company Icon brought legal action against two insurers who have denied they have to provide coverage.Credit:Janie Barrett

"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."

Liberty argued its policy ended when construction of the Opal Tower was completed on August 10,and did not extend to a 12-month"defects liability period",during which Icon was required to remedy any building problems.

Damage from a crack in a wall inside Opal Tower at Sydney Olympic Park.

Damage from a crack in a wall inside Opal Tower at Sydney Olympic Park.

"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.

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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.

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