Thanks to an order from Associate Justice Macready of the NSW Supreme Court, Hemmes' company, Hemmes Hermitage, will now be able to convert a $1.6 million performance bond it holds with the building firm's insurance company, QBE, to pay for the defects.

Hemmes told the court there were 1324 general defects and 197 water leaks. Under the original contract, Hemmes had an unconditional performance bond that could be converted to cash if any defects needed to be fixed.

Hemmes and the building firm have been arguing for more than a year in relation to delays and defects during and after construction. Last May, the building firm successfully pursued Hemmes Hermitage for $4.6 million of unpaid bills.

Hemmes brought a counter-claim, valued at about $11 million, alleging defects and delays at the George Street complex.

Associate Justice Macready said: ''It must be observed that, from a practical point of view, the use of defects liability provisions in contracts is usually to provide an additional period of further protection in case defects emerge after the building has been completed and occupied. Experience suggests that this is a wise provision.''

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The Mallesons team was led by construction partner Julie Wright and solicitor Sarah Hoffman.