18 November 2024
14 min read
#Property, Planning & Development
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A recent case in the NSW Court of Appeal has revisited the interplay between the Home Building Act and the Insurance Contracts Act.
In Drummond v Gordian Runoff Limited ACN 052 179 647 [2024] NSWCA 239, (Drummond) the Court of Appeal dismissed the owners’ appeal of an earlier decision in the Supreme Court of NSW, which had dismissed their claim that the insurer should provide cover for the loss and damage they suffered resulting from the (since liquidated) builder’s defective and incomplete work.
The owners had contracted with the builder to build their home in January 2009.
In 2017, the owner sued the builder in the NSW Civil and Administrative Tribunal for a breach of statutory warranties.
The builder went into liquidation in August 2020, 11 years after the insurance policy was first issued.
The owner notified the insurer of the loss in July 2020, and made a formal claim to the insurer in December 2020. Both dates were outside of the period of insurance.
The insurer refused the insurance claim, in accordance with section 103BB(3)(a) of the Home Building Act.
This section allowed for claims to be made outside the period of insurance if the builder had not yet gone into liquidation in certain circumstances. Notably, these delayed claims could only be made if (relevantly) the loss was properly notified to the insurer during the period of insurance.
As the time frame associated with delayed claims had not been met, the claim was refused.
In the Court below, the owners had argued, unsuccessfully, that:
See our earlier article regarding that decision.
On appeal the principal issue was whether section 54 of the Insurance Contracts Act prevented the respondent from disclaiming liability. This turned on the proper construction of each of the policy, section 103BB of the Home Building Act and section 54 of the Insurance Contracts Act, specifically:
The other issue on appeal was whether section 103BB(3) of the Home Building Act (a NSW statute) was inconsistent with, or alters, impairs or detracts from the operation of, section 54 of the Insurance Contracts Act (a Commonwealth statute) within the meaning of 109 of the Constitution.
The Court of Appeal found that there was no error from the Supreme Court in finding that the insurer had validly refused to pay the insurance claim.
Notably, the majority found that neither the Home Building Act nor the Insurance Contracts Act operated to alter the terms of the insurance contract. Particularly, the Court found that the Home Building Act regulated when a home warranty insurance policy may or may not respond, but did not directly alter the rights between the parties within the contract of insurance and therefore did not incorporate itself as a term of the policy. The insurer was entitled to refuse based on the Home Building Act in these circumstances.
Consequently, this meant that section 54 could not be engaged in these circumstances, as it did not apply to a statutory refusal, only a contractual refusal.
The owners in Drummond were left without recourse. The decision serves as a reminder to notify a loss promptly and properly, even if a trigger event has not occurred.
Given that section 103BB applies to policies of insurance under the Home Building Compensation Fund, Drummond (which relates to the former home warranty insurance scheme) remains instructive to owners
Authors: Christine Jones & Brandon Thai
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PDS Engineering Division Pty Ltd v North Sydney Council [2024] NSWLEC 17
DEVELOPMENT APPLICATION – mixed use development in MU1 and R2 zone – heritage conservation – whether conservation incentives apply.
Environmental Planning and Assessment Act 1979, ss 3.30, 4.16, 8.7, 8.15(3); Heritage Act 1977, ss 57, 59; Land and Environment Court Act 1979, s 39; Environmental Planning and Assessment (Special Infrastructure Contribution – St Leonards and Crows Nest) Determination 2020; Environmental Planning and Assessment (Special Infrastructure Contribution – St Leonards and Crows Nest) Direction 2020; Environmental Planning and Assessment Regulation 2021, ss 29, 38, 288A; North Sydney Local Environmental Plan 2013, cll 1.7, 2.3, 4.3, 4.4A, 4.6, 5.10, 6.12A, 7.6, Sch 5; Standard Instrument (Local Environmental Plans) Amendment (Land Use Zones) Order 2021; Standard Instrument (Local Environmental Plans) Order 2006; State Environmental Planning Policy (Biodiversity and Conservation) 2021, ss 6.6, 6.7; State Environmental Planning Policy (Housing) 2021, ss 144, 145, 147, 148; Ch 4; Sch 9; State Environmental Planning Policy (Infrastructure) 2007 (repealed); State Environmental Planning Policy (Resilience and Hazards) 2021, s 4.6; State Environmental Planning Policy (Sustainable Buildings) 2022; State Environmental Planning Policy (Transport and Infrastructure) 2021, ss 2.48, 2.119, 2.120, 2.121, 2.122; State Environmental Planning Policy Amendment (Land Use Zones) (No 3) 2022.
SPS Building Contractors Pty Ltd v Keith Dyer Plumbing Pty Ltd [2024] NSWSC 1426
PRACTICE AND PROCEDURE – judgments and orders – proceedings dismissed for want of due despatch – no issue of principle.
Civil Procedure Act 2005 (NSW) s 61; Home Building Act 1989 (NSW) s 18B; Uniform Civil Procedure Rules 2005 (NSW) r 12.7.
Houston v Phillips trading as Arise Building Services [2024] NSWCATAP 213
APPEAL – errors on questions of law – no evidence to support finding – wrong principle of law – failure to give reasons – denial of procedural fairness.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).
Black Label Developments Pty Ltd v McMenemy [2024] NSWDC 516
JUDGMENTS AND ORDERS – STAY – stay of enforcement of judgment under s.135 Civil Procedure Act 2005 – judgment obtained under s.26 of the Building and Construction Industry Security of Payment Act 1999 (NSW) – Owner occupier construction contract – residential building work – deed of variation of contract – owner seeks to have deed set aside on grounds of duress, undue influence, unconscionable conduct, misleading or deceptive conduct or pursuant to Contracts Review Act 1980 – stay granted on condition money paid into Court.
Building and Construction Industry Security of Payment Act 1999; Building and Construction Industry Security of Payment Amendment Regulation 2019; Building and Construction Security of Payment Amendment Act 2018; Building and Construction Security of Payment Regulation 2020; Civil Procedure Act 2005; Contracts Review Act 1980; District Court Act 1973; Home Building Act 1989.
Alta Vale Residential Pty Ltd v The Owners – Strata Plan No. 95693 [2024] NSWCATAP 212
APPEALS – interlocutory decision – leave to appeal – refusal of adjournment – leave to appeal refused.
APPEALS – point of law taken below – whether new point of law should be allowed on appeal new point of law not allowed.
BUILDING AND CONSTRUCTION – occupation certificate – whether document purporting to be an interim occupation certificate authorised use and occupation of the whole of the building – whether running of limitation period for breach of a statutory warranty under the Home Building Act contingent on such authorisation – whether occupation certificate issued in contravention of s 109H(2) of the Environmental Planning and Assessment Act 1970 (NSW) is an occupation certificate for the purposes of s 4C of the Home Building Act 1989 (NSW)
LAND LAW – Strata Titles – action begun by Chairperson acting for owners corporation without special resolution authorising proceedings – Ratification by the owners corporation – expiration of limitation period applicable to cause of action – Whether owners corporation entitled to adopt action after expiry of limitation period.
Body Corporate and Community Management Act 1997 (Qld); Civil and Administrative Tribunal Rules 2014; Environmental Planning and Assessment Act 1979 (NSW) (as in force 2015-2017)(Repealed); Home Building Act 1989 (NSW); Civil and Administrative Tribunal Act 2013 (NSW) Strata Schemes Management Act 2015 (NSW); Strata Scheme Management Act 1996 (NSW) (Repealed)
Orell v Clas Concrete & Constructions Pty Ltd [2024] NSWCATAP 220
APPEALS – appeal on question of law – scope of question of law
APPEALS – constructive failure to exercise jurisdiction by not addressing a material issue or by overlooking material evidence
APPEALS – leave to appeal – principles governing – leave to appeal granted
APPEALS – procedural fairness – failure to give reasons – adequacy of reasons
BUILDING AND CONSTRUCTION – residential building work – statutory warranties under Home Building Act 1989 (NSW) – claims by owner against builder
Civil and Administrative Tribunal Act 2013 (NSW), s 62, 80, 81, Sch 4, cl 12, Sch 6, cl 11; Civil and Administrative Tribunal Rules 2014 (NSW), r 38A; Home Building Act 1989 (NSW), ss 4, 10, 48O, 92, 94; Legal Profession Uniform Law Application Act 2014 (NSW).
Keogh v Samchris Pty Ltd [2024] NSWCATCD 32
Home building – reliance on flawed designs or specifications – clause 40 contract
Home building – s.18F defence
Home building – major defects – preferred outcome
Home building – variations paid by homeowners – Homeowners seeking refund – s.48K(3)
Home Building Act 1989 (NSW), 3B, 18B, 18E, 18F, 48A, 48K, 48MA; Civil and Administrative Tribunal Rules 2014 (NSW) 38.
Croll v Form and Colour Pty Ltd; Form and Colour Pty Ltd v Croll [2024] NSWCATCD 31
CONSUMER LAW – misleading or deceptive conduct – consumer guarantees – supply of services – guarantee as to due care and skill
CONTRACTS – termination – repudiation of contract – uncertainty – severance of void term
Australian Consumer Law; Fair Trading Act 1987 (NSW); Home Building Act 1989 (NSW).
SPS Building Contractors Pty Ltd v Keith Dyer Plumbing Pty Ltd [2024] NSWSC 1426
PRACTICE AND PROCEDURE – judgments and orders – proceedings dismissed for want of due despatch – no issue of principle.
Civil Procedure Act 2005 (NSW) s 61; Home Building Act 1989 (NSW) s 18B; Uniform Civil Procedure Rules 2005 (NSW) r 12.7.
Syed v Delcon Group Pty Ltd [2024] NSWCATCD 33
BUILDING AND CONSTRUCTION – application refused for reopening case after hearing – competing expert evidence as to quantum to rectify defective residential building work – jurisdiction under Home Building Act 1989 (NSW) – whether “major defects” – s 48MA preferred outcome – work order refused – money order made based on an assessment of the reasonable costs for rectification of defective work.
Home Building Act 1989 NSW; Civil Procedure Act 2005 NSW; Civil and Administrative Tribunal Act 2013 NSW; Civil and Administrative Tribunal Rules 2014 NSW.
Birelli Built Pty Ltd v Secretary, Department of Customer Services [2024] NSWCATOD 184
Administrative Law – home building – disciplinary action – whether company failed, without reasonable cause, to comply with a rectification order – improper conduct – applicable penalty.
Civil and Administrative Tribunal Act 2013; Administrative Decisions Review Act 1997; Home Building Act 1989; Design and Building Practitioners Act 2020.
Proclamations commencing Acts
Strata Legislation Amendment Act 2023 No 45 (2024-542) – published LW 1 November 2024
Building Services (Registration) Regulations 2011 (WA) – published 1 November 2024
Regulations and other miscellaneous instruments
Community Land Management Amendment (Pets) Regulation 2024 (2024-543) – published LW 1 November 2024
Final Determination [Biodiversity Conservation Act 2016] (2024-544) – published LW 1 November 2024
Surveillance Devices Amendment (Delegation) Regulation 2024 (2024-546) – published LW 1 November 2024
Environmental Planning Instruments
Bellingen Local Environmental Plan 2010 (Map Amendment No 3) (2024-547) – published LW 1 November 2024
Cumberland Local Environmental Plan (Housing) (Map Amendment No 1) (2024-548) – published LW 1 November 2024
Hawkesbury Local Environmental Plan 2012 (Amendment No 37) (2024-549) – published LW 1 November 2024
Inner West Local Environmental Plan 2022 (Amendment No 9) (2024-555) – published LW 1 November 2024
Port Stephens Local Environmental Plan 2013 (Map Amendment No 9) (2024-550) – published LW 1 November 2024
Shoalhaven Local Environmental Plan 2014 (Map Amendment No 13) (2024-551) – published LW 1 November 2024
State Environmental Planning Policy Amendment (Wagga Wagga) 2024 (2024-552) – published LW 1 November 2024
Sydney Local Environmental Plan 2012 (Amendment No 104) (2024-553) – published LW 1 November 2024
Wagga Wagga Local Environmental Plan 2010 (Amendment No 47) (2024-556) – published LW 1 November 2024
Wollondilly Local Environmental Plan 2011 (Map Amendment No 10) (2024-554) – published LW 1 November 2024
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
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