The Australian National University is embroiled in a bitter dispute with an insurance company over reconstruction of its Mt Stromlo Observatory, which was almost destroyed by Canberra's bushfires in January 2003.
The observatory lost five telescopes, a heritage-listed administration building, workshops and seven houses for astronomers on the site.
The observatory was insured with three companies including its primary insurer, US-based Chubb Insurance. Chubb Insurance has agreed to meet just a tenth of the estimated A$80 million (£34 million) costs for reconstruction, claiming that it was liable only for values that were registered on the policy.
ANU vice-chancellor Ian Chubb - who has no connection with the company - warned that the university would take legal action to obtain what it believed was owed.
He said the money offered by the insurance company was enough for only "half a telescope" and that the failure to pay the claim in full was paralysing the university's efforts to rebuild the observatory.
"For the past seven years, the policy with Chubb Insurance has not required a specific declared value to be provided for each asset covered. This is a policy that in 2003 covered nearly A$1.4 billion in assets," he said.
The ANU paid more than A$1 million in insurance costs last year, Professor Chubb said. The university is negotiating with the two other insurers, which covered 50 per cent of the risk.
The federal government has allocated A$7.3 million to the rebuilding project. This includes restoring the 1920s administration building, obtaining a new research-grade telescope, a digital mapper of the southern sky and an advanced instrumentation workshop to construct equipment.
Delays in the rebuilding have led two observatory staff to leave and have stalled a plan to map the southern sky. Astronomers say it will take up to three years to reconstruct the observatory.
Gerry Gilmore, deputy director of the Cambridge Institute of Astronomy, told The Australian that the disaster provided an opportunity for modernisation and "rebalancing Stromlo's activities away from historical constraints".
"This needs resources but has the potential to re-establish Stromlo, ANU astronomy and Australian optical astronomy with a strong base for the 21st century," he said.