Civil and Administrative Tribunal New South Wales Medium Neutral Citation: CN1 Pty Limited v NSW Self Insurance Corporation [2024] NSWCATCD 38 Hearing dates: 7 August 2023 Date of orders: 19 March 2024 Decision date: 19 March 2024 Jurisdiction: Consumer and Commercial Division Before: S A McDonald, Senior Member Decision: (1) By consent, the name of the respondent be amended from 'Insurance & Care NSW' to 'NSW Self Insurance Corporation'; (2) The Applicant is not a developer for the purposes of s.3A of the Home Building Act 1989 (NSW); (3) The Applicant is entitled to an indemnity from the Respondent in respect of its claim dated 2 August 2022 in the sum of $340,000.00 (or in such sum as the parties may agree, or the Tribunal may determine) pursuant to a contract of insurance bearing Policy No. HBCF20070405; and (4) The matter be listed for directions for the quantum of the Applicant's claim to be prepared for hearing and determined (if not agreed). Catchwords: Home Building – meaning of developer – breach of statutory warranties – s. 3A of the Home Building Act 1989 (NSW) – meaning of residential development. Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Home Building Act 1989 (NSW) Cases Cited: Hawli v NSW Self Insurance Corporation [2017] NSWCATCD 38 Dieter v NSW Self Insurance Corporation [2022] NSWCATAP 52 The Owners – Strata Plan No. 79707 v Trilogy Capital Services Pty Limited [2014] NSWCATCD 205 The Owners – Strata Plan no. 79707 v Trilogy Capital Services Pty Limited [2015] NSWCATAP 171 Ace Woollahra Pty Ltd v. The Owners – Strata plan No. 61424 [2010] NSWCA 101 Trek Consulting Services Pty Ltd v Campbelltown City Council [2004] NSWLEC 627 R v Khazaal (2012) HCA 26 Category: Principal judgment Parties: CN1 Pty Limited ACN 164 313 062, Applicant NSW Self Insurance Corporation, Respondent Representation: Mr T Smartt of counsel instructed by Centurion Lawyers for the Applicant Mr S Ahmed of counsel instructed by Gillis Delaney Lawyers for the Respondent File Number(s): 2023/00407952, formerly HB 23/09406 Publication restriction: Unreserved REASONS FOR DECISION Introduction 1. On 24 February 2023, CN1 Pty Limited (Applicant) lodged a home building application (Application) against Insurance & Care NSW (now properly identified as NSW Self Insurance Corporation – see paragraph 9 below) (Respondent) in which the Applicant claimed an amount of $340,000 from Insurance & Care NSW by way of indemnity pursuant to a contract of insurance no. HBCF20070405 (Policy) issued by the Respondent. 2. The Applicant's claim was made on 2 August 2022 in respect of defective and incomplete home building work pertaining to residential building works performed by Willoughby Homes Pty Limited at 19A and 19B Welford Circuit in North Kellyville, NSW 2155 (Lot 544). 3. On 31 October 2022 Gallagher Bassett Services Pty Limited (Gallagher Bassett) as agent for the Respondent, advised the Applicant's indemnity under the Policy was declined because: 1. first, the Applicant was a "developer" within the meaning of s. 3A of the Home Building Act 1989 (NSW) (HBA), and 2. secondly and as a result, the Applicant's entitlement to indemnity was excluded by reason of clause 3.4A of the Policy. 1. On 10 November 2022, the Applicant's solicitors wrote to Gallagher Bassett seeking a review of this decision. 2. On 1 December 2022, Gallagher Bassett wrote to the Applicant's solicitors confirming that the decision had been reviewed by Gallagher Bassett's Internal Dispute Resolution Committee which determined to maintain the decision. 3. On 9 December 2022, the Applicant's solicitors sent an email to Gallagher Bassett disputing the review of the decision and requesting a further review. 4. On 13 June 2023, iCare wrote to the Applicant's solicitors to confirm that the decision had been further reviewed by the HBCF Claims Committee and that the decision was maintained (HBCF Decision). 5. This home building application filed in the Tribunal is therefore an appeal against the HBCF decision. 6. At the request of the Respondent and with the consent of both parties, the Tribunal amends the name of the Respondent identified in the application from 'Insurance & Care NSW' to 'NSW Self Insurance Corporation'. For the avoidance of doubt, all references to the Respondent in these reasons for decision or in the orders made refer to the NSW Self Insurance Corporation. Jurisdiction 1. Pursuant to s. 48K(1) of the HBA, the Tribunal has jurisdiction to hear and determine any 'building claim' (as defined) in which the amount claimed does not exceed $500,000.00. 2. Pursuant to s. 48A(1) of the HBA, 'building claim' means a claim for: (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services but does not include a claim that the regulations declare not to be a building claim. 1. Pursuant to s. 48A(2) of the HBA, and without limiting the definition of "building claim", a building claim includes the following: (a) an appeal against a decision of an insurer under a building cover contract required to be entered into under this Act, (b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C. 1. Regulation 49 of the Home Building Regulation 2014 (NSW) states that an appeal against a decision of an insurer that is a building claim under Part 3A of the HBA or a claim under the Consumer Claims Act 1998 must be made not later than 45 days after written notice of the decision is given to the beneficiary. 2. The Tribunal therefore has jurisdiction to hear this home building application because first, the amount claimed by the Applicant in the Home Building Application is $340,000.00, and secondly, the Respondent lodged this home Building Application in the Tribunal on 24 February 2023 and within 45 days after written notice of the decision was given to the beneficiary (which expired on 27 February 2023). 3. There appeared to be no dispute between the parties at the hearing that the Applicant's appeal against the HBCF Decision by way of a home building application in the Tribunal was by way of a re-hearing of the Applicant's claim, insofar as it relates to the HBCF Decision to decline indemnity to the Applicant. 4. In Hawli v NSW Self Insurance Corporation [2017] NSWCATCD 38 at [56], the Tribunal said: "The Tribunal determines the appeal on the basis of a re-hearing of the insurance claim". 1. In other words, the Tribunal's jurisdiction is with respect to an appeal, and not a review, of the HBCF Decision and is therefore to be conducted as a re‑hearing of the Applicant's claim insofar as it relates to the HBCF Decision to decline indemnity. 2. There was also discussion at the hearing as to whether the Tribunal's decision was an interim or final decision of the Tribunal. In this context, there appeared to be two possible outcomes: 1. If the Tribunal finds that the HBCF Decision was correct, then the Application must be dismissed. The Respondent supports this outcome. 2. If the Applicant succeeds in this home building application to overturn the HBCF Decision, then it should be remitted to the home building list in the Tribunal for further hearing and directions to determine the quantum of the Applicant's claim for indemnity under the Policy, as this issue has not yet been determined and the parties have not completed their quantum evidence for this to occur. 1. The Respondent in its written submissions at paragraph 24 submitted that the Tribunal has power pursuant to s.48O(1)(c)(ii) of the HBA to order the Respondent to indemnify the Applicant under the Policy with the amount of such indemnity either to be agreed between the parties or, if not agreed, to be determined by the Tribunal pursuant to a fresh home building application. 2. It is unclear (and was not discussed during the hearing) as to why a fresh home building application was required and why an assessment of quantum could not be undertaken in the existing application when remitted for directions to the Tribunal's home building list. But the Tribunal is not required to determine this as part of the hearing of the current miscellaneous matters application and will leave that for the parties to agree or determine, if necessary, in due course. Legislation 1. Section 3A of the HBA states: "APPLICATION OF PROVISIONS TO DEVELOPERS (1) For the purposes of this Act, an individual, a partnership or a corporation on whose behalf residential building work is done in the circumstances set out in subsection (2) is a developer in relation to that residential building work. (1A) Residential building work done on land in the circumstances set out in subsection (2) is, for the purpose of determining who is a developer in relation to the work, deemed to have been done on behalf of the owner of the land (in addition to any person on whose behalf the work was actually done). (2) The circumstances are: (a) the residential building work is done in connection with an existing or proposed dwelling in a building or residential development where 4 or more of the existing or proposed dwellings are or will be owned by the individual, partnership, or corporation, or (b) the residential building work is done in connection with an existing or proposed retirement village or accommodation specially designed for the disabled where all of the residential units are or will be owned by the individual, partnership or corporation. (3) A company that owns a building under a company title scheme is not a developer for the purposes of this Act." Evidence 1. The Applicant relied upon an affidavit of Maroun Antoine Draybi, solicitor, sworn 21 April 2023. There was an exhibit "MD-1" to the affidavit of approximately 177 pages exhibiting relevant emails, insurance policies, building contracts, tender documents, plans, and correspondence in respect of the insurance claim. 2. The Respondent relied upon an affidavit of Darren William King, solicitor, affirmed 4 August 2023. Exhibited to the affidavit were two large exhibits "DWK‑1" and "DWK-2". DWK-1 included development applications while DWK‑2 included company searches, land title searches, building contracts, and other public record documents. 3. Both affidavits were sworn by solicitors of the firms representing the two parties. There was no cross examination and the contents of the documents exhibited were generally agreed. Where the parties diverge was in respect of the legal inferences or submissions available from those documents. Facts 1. There is no dispute that on or about 29 July 2022 Willoughby Homes Pty Limited ACN 056 751 592 (Builder) had administrators appointed namely Deloitte Financial Advisory Pty Limited at Parramatta. At that time, the administrators reported that Willoughby Homes had not been trading for some time and may have been insolvent since April 2021. 2. There was debt of $5.7 million owing by the Builder and a Deed of Company Arrangement was offered to creditors recommending payment of between 1.7 cents and 5.7 cents in the dollar. This was scheduled for vote at a second meeting of creditors on 5 September 2022. 3. Willoughby Homes held builder's licence 204985C prior to its failure. The HBCF Claim Form submitted by the Applicant suggested a contract price for Lot 544 of $515,742.25, of which $167,616.22 had been paid to the Builder prior to 29 July 2022. 4. The building contract for Lot 544 between the Applicant and the Builder was dated 17 February 2021 for a contract price of $515,742.25 incl. GST and was signed by David Kavanagh on behalf of the Applicant (A19‑60). Although the build was almost complete at Lot 544 when the Builder failed, a significant amount of defective or incomplete home building work was discovered after it went into administration. 5. The Builder was also party to a building contract dated 17 February 2021 with the Applicant as owner for a contract price of $465,002.25 incl. GST in respect of a nearby property at 41 Cocoparra Circuit, Kellyville NSW 2155 (R19-60). Bot building contract provided for dual occupancy construction namely a two-storey house plus a studio/granny flat. 6. The preliminary tender by the Builder for Lot 544 dated 17 October 2019 stated the client as First State Pty Limited, addressed to David Kavanagh (A61‑76). A number of variation summaries of the Builder dated 23 July 2020, 3 November 2020 and 8 October 2020 were all addressed to the Applicant and signed by David Kavanagh (A77‑82). 7. The Icare HBCF Policy No. HBCF 20070405 dated 23/12/2020 for Lot 544 is at A103 (for 19A) and at A104 (for 19B) 8. The Applicant submitted its insurance claim for defective to Icare in respect of Lot 544 in early August 2022 (A138-142). 9. By letter dated 16 August 2022 from I to the Applicant (A155-159), Icare stated: "We note that the residential building work (including that at 1 Expedition Street and 41 Cocoparra Circuit, North Kellyville NSW 2155) was to construct 4 dwellings for you. This may mean that you are a developer within the meaning of the Home Building Act 1989, as well as within the meaning of the policy. The attached policy wording states that the cover is not provided to a developer. We refer you to Section 3 (Loss and damage for which the policy provides no cover) of the policy wording, which states, in part: '3.4 The policy does not cover a claim by any person who is, in relation to the work: (a) a developer;' This may mean that we are unable to accept your claims, as you may be a developer. At this stage, however, we have not made a decision on the issue and are still considering whether the developer provisions apply to you. Once we determine this, we will write to you again with the decision either way." 1. By letter dated 31 October 2022 from Icare to the Applicant (A160-163), Icare confirmed the contents of its letter dated 16 August 2022 to the effect that the Applicant was a developer and that icare would be unable to accept the claim. 2. By email dated 1 November 2022 (A164) the Applicant responded to this determination in the following terms: "Why would CN1 be considered a developer when they don't satisfy the definition. Building 2 houses each containing studios on separate blocks does not seem to fit the definition under the Act. Please explain how they fall into the definition below noting these are separate blocks and could not be considered being located in the same residential development. They also may never get separately titled. … The definition (of s. 3A of the HBA) clearly contemplates a situation where 1 policy is written for a Residential Development in which the developer owns 4 or more of the properties within this development. For example 12 townhouses being constructed under the one DA and CC approval where 4 of them being retained by the developer. This is not the case in our situation. We have 2 separate blocks of land that are not connected. They have separate DA and CC approval and separately HOW insurance policies. They also now have separate ownership. Surely this definition is not being interpreted by the insurer to mean Residential Development applies to sites with separate DA, CC and HOW policies. If that is the intent then the wording doesn't say that and it easily could." 1. By letter dated 10 November 2022 (A165-169), the Applicant's lawyers Centurion Lawyers wrote to Gallagher Bassett in the following terms: "6. The Owner completely rejects that it is a developer within the meaning of the HBA. The Builder was contracted, in two separate contracts, to construct two separate buildings, on separate and non‑adjoining lots of land, each building containing two dwellings. 7. On 4 November 2022, in a discussion with Mr John McLean, Mr McLean confirmed that the assertion that 4 dwellings were constructed by the Builder arises from: (a) 2 dwellings being constructed by the Builder under a contract dated 17 February 2021 between the Builder and the Owner in relation to the land 19 Welford Circuit, North Kellyville NSW 2155 (contained in folio identifier 544/1204342) (Welford) (Welford Contract); and (b) 2 dwellings being constructed by the Builder under a contract dated 17 February 2021 between the Builder and the Owner in relation to the land 41 Cocoparra Circuit, North Kellyville NSW 2155 (contained in folio identifier 547/1204342) (Cocoparra) and (Cocoparra Contract). 8. Mr McLean confirmed that the reference to '4 dwellings' in your decision is the combination of each of the 2 proposed dwellings at Welford and Cocoparra. 9. As seen in figure 1 above, Welford and Cocoparra are separate lots, and they do not adjoin. 10. The Welford Contract and the Cocoparra Contract were also separately entered into, and contain different approval plans approved by Council. Welford's development application reference is 619/2020/HA and Cocoparra's development application reference is 612/2020/HA they are not part of the same development. 11. The: (a) Welford Contract is covered under HBCF policy HBCF20070405, with two certificates being issued for 19A and 19B Welford; and (b) Cocoparra Contract is covered under HBCF policy HBCF20070388, with two certificates being issues for 41 and 41A Cocoparra." 1. Further down, and in respect of residential developments, the letter dated 10 November 2022 from Centurion Lawyers states (A167-168): "14. Section 3A requires that the proposed dwelling(s) must be in a building or residential development. 15. As there are two buildings (each on a separate lot of land), each containing two proposed dwellings, 4 dwellings cannot be in the same building. 16. This means that your position must be that there are 4 dwellings in a residential development. 17. The Owner submits that the 4 dwellings are not part of, or in, the same residential development. 18. The phrase 'residential development' only appears in s. 3A of the HBA and is not a defined term. It must be taken as its plain meaning. 19. If the 4 dwellings were part of the same residential development, then that development would have a single development application. They do not, and that is because Welford and Cocoparra are separate residential developments. 20. If they were part of the same residential development, then there would only be one construction contract to construct them. That is not the case, and there are two construction contracts, because they are separate developments." 1. The letter dated 1 December 2022 from Gallagher Bassett to Centurion Lawyers in response (A170-172) confirmed that the Internal Disputes Resolution (IDR) Committee of HBCF had completed its review of the matter and confirmed that the outcome was that the IDR Committee maintained the claims decision issued on 31 October 2022. 2. Relevantly it said: "The IDR Committee notes that the words 'residential development' are not defined within the Act, and agrees that those words must have their ordinary meaning. In your correspondence, you state that the project must be considered as separate residential developments, because two written contracts were executed, two development applications were submitted to the local government authority and that the buildings are not identical. The IDR Committee notes that whilst your client and the builder executed two written contracts, both written contracts were executed at or around the same time on 17 February 2021, both provide for the same building period and provide the same conditions. Further, the two development applications were both lodged with the local government authority at or around the same time on 6 November 2019, and both are described as for 'Two Storey Dwelling, Studio, Retaining Walls and Strata Subdivision'. The IDR Committee considers that the existence of multiple documents does not evidence separate agreements between your client and the builder. More importantly, there are no provisions within the Act that requires the work to be done under one agreement. The number of written contracts executed is irrelevant to determining what residential building work is, or determining that your client is 'on whose behalf' the work is done. Residential development containing 4 dwellings can be configured as four detached houses, two attached dual‑occupancies, amongst other options. The IDR Committee considers that any dissimilarity between any of the dwellings is not relevant to defining residential development." 1. An email from the Applicant's solicitors, Centurion Law, to HBCF Complaints dated 9 December 2022 (A173-176) contested the decision of the Gallagher Bassett dated 1 December 2022, including pointing out some inaccuracies in their letter in the following terms: 1. Heavy reliance is placed on the similar dates and times that works were carried out, however, no weight has been placed on the fact that there are two residential developments carried out on two different lots of land, separated by an entire lot and (by a) building that is not owned by the Insured. The subject lots that you consider a residential development are neither adjoining nor connected, and it is difficult to see how that could be considered as a single residential development. 2. The contracts do not provide for the same conditions. One contract price is higher than the other. They are both for the construction of different buildings, each with their own set of plans. One contract provides for a guarantee to be signed, whilst the other is not. The special conditions are not identical. Whilst the building periods are the same, that does not necessarily mean that the buildings would have been completed at the same time. Each contract provides for different works to be carried out, such that the building period under one contract might be extended for reasons that the other building's period cannot. Even though some of elements of the contracts are identical, it would be fallacious to rely upon such a point to reach a conclusion that they are in the same development. They are clearly not. 3. You have accepted that there are two development application, but have concluded that because they were lodged at the same time with the same description, that they must be the same residential development. That is, again, a fallacious conclusion. If they were the same residential development application, then the Insured would have been required to lodge only one development application. The fact that two development applications were required means that the Insured was not undertaking a single residential development. 1. The email from the Applicant's solicitors, Centurion Law, to HBCF Complaints dated 9 December 2022 concluded in paragraph 4 stating that 'there are two separate and distinct residential developments occurring, such that there is not one single residential development containing 4 dwellings'. 2. A letter dated 13 January 2023 from icare HBCF to Centurion Lawyers advised the Applicant that a meeting of the HBCF Claims Committee was held on 12 January 2023 to review the decision by Gallagher Bassett dated 31 October 2022 and that that review concluded that the Applicant was considered a developer under the HBA and that, as such, clause 3.4 of the Policy applied. No detailed reasons or grounds was provided in that letter by icare HBCF. 3. While the hearing of the application today in the Tribunal is a re‑hearing by way of appeal, the Tribunal nevertheless considers it useful to outline above the decision and correspondence of the parties to date which highlight the issues. 4. Relevantly, a party is entitled to introduce new evidence in such a re-hearing. Directions made by the Tribunal on 24 March 2023 provided for the Applicant to file and serve its evidence and documents by 21 April 2023 (which it apparently did), and for the Respondent to do likewise by 19 May 2023. The Tribunal notes that the affidavit relied upon by the Respondent was affirmed on Friday 4 August 2023, the date of the Respondent's written submissions and the business day prior to the hearing in the Tribunal on Monday 7 August 2023. Respondent's Submissions 1. On the day of the hearing the Respondent's counsel handed up approximately 20 pages of written submissions which were of great assistance to the Tribunal. As well as summarising the background of this application, the submissions stated the outcome the Respondent sought, the basis upon which the Respondent put its case and the reasons why the application should be dismissed with costs. 2. Without and in any way wishing to diminish the comprehensiveness of the Respondent's submissions, they may usefully be summarised by the Tribunal in the following manner: 1. Whether the Applicant is a developer for the purposes of s.3A of the HBA is the crux of this dispute and the Tribunal should adopt a 'purposive' approach to that analysis and seek to address the mischief that the HBA seeks to prevent. 2. Section 3A(1A) was introduced by the Home Building Amendment Act 2011 No. 52 (NSW) which commenced on 25 October 2011. The amending Act was introduced to address the decision of the Court of Appeal in Ace Woollahra Pty Ltd v The Owner – Strata Plan No. 61424 [2010] NSWCA 101 in which the Court of Appeal had taken a narrow view of the HBA's definition of 'developer' in its decision and found that in order for work to be done on behalf of the developer, the developer must have been in contract with the builder. This decision overlooked joint venture arrangements where one organisation or person owns the land and the other enters into the building contract. 3. 'Developer' is not defined in the HBA. Schedule 1 of the HBA, which contains its definitions, simply refers back to s.3A when defining the meaning of 'developer'. Section 3A(1A) sets out that the section itself is for 'the purpose of determining who is the developer in relation to the work'. 4. Section 3A(2) of the HBA sets out the circumstances for the purposes of determining who is a developer. It states that those circumstances are when 'the residential building work is done in connection with an existing or proposed dwelling in a building or residential development where four or more of the existing or proposed dwellings are or will be owned by the individual, partnership or corporation …'. 5. The Note to s.3A(1A) of the HBA is not to be excluded from the HBA and can be used in the interpretation process. 6. The Note confirms that s.3A(1A) of the HBA adds to the class of persons who are 'developers' meaning that in any one instance there may be a number of developers all of whom provide statutory warranties and must respond to them. The Respondent quoted the text "Building Disputes & the Home Building Act (2012)" by Philip Bambagiotti at p.38 in support of this proposition. 7. The Applicant was the registered owner of Lot 544 in DP1204342 which comprised two dwellings (2 storey house and studio). According to public records the Respondent put into evidence, Lot 544 of DP1204342 was created as part of a subdivision of Lots 512, 513, 514, 517, 518, 519, 523, 524, 525 and 526 of DP1201133 which created Lots 531, 532, 533, 534, 535, 536, 537, 538, 539, 540, 541, 542, 543, 544, 545, 546 and 547 of DP1204342. The Applicant at all relevant times was the registered owner of seven of these lots in DP1204342 being Lots 536, 537, 543, 544, 545, 546 and 547. In respect of at least Lot 547, the Applicant entered into a building contract with the Builder with a construction of two dwellings at 41 and 41A Cocoparra Circuit in North Kellyville which together with the two dwellings on Lot 544 satisfies the 4 dwellings referred to in the HBA. 8. In any event, the residential development properly considered of 37 lots of which the Applicant owns seven of them. 9. Lot 544 is one lot of a much larger residential development comprising 37 lots, occupying over 25,000 m2 of land, the development of which is undertaken by numerous companies being the Applicant, Kavshan Pty Ltd, Zoshan Pty Ltd, DK01 Pty Ltd and Davshan Pty Ltd which all have some association with David Kavanagh. Applicant's submissions 1. The Applicant stayed close to the submissions and issues outlined in the email of Centurion Law dated 9 December 2022 with the following additions: 1. If the Respondent says the Applicant is excluded from making claims under the Home Building Policy the onus of proof is on the Respondent to prove that the Applicant falls within the exclusion as a developer of clause 3.4(a) of the Policy. 2. Clause 3.4(a) of the Policy is prefaced by the words "the Policy does not cover a claim by any person who is, in relation to the work, a developer". The words "in relation to the work" limit the exclusion. 1. Pursuant to s 3A(2) of the HBA, the residential building work must be done 'in connection with an existing or proposed dwelling in a building or residential development'. The Applicant submits the work undertaken on the two properties, Lots 544 and 547 are not part of a single residential development. 2. The Applicant repeated the submissions in the email of Centurion Law dated 9 December 2022 but highlighted the differences in the two building contracts for Lot 544 (Welford) and Lot 547 (Cocoparra) in a document handed up to the Tribunal on the day and marked MFI'2'. 3. In respect of the building contract for Lot 544, 19A and 19B Welford Circuit: 1. The contract price was $515,742.25 on a deposit of $51,574.23; 2. There was no mention of who will pay for the construction certificate; 3. There was no guarantor; 4. There were exclusions for owner supplied items; 5. The description of work was as per the plan; 6. There was a variation to upgrade external colour packages; 7. The variation includes supply and install of gas points; 8. The plans were different. 1. In respect of the building contract for Lot 547 for 41A and 41B Cocoparra Circuit: 1. The contract price was for $465,002.25 on a deposit of $46,500.23; 2. The construction certificate was to be paid by the builder; 3. Mr David Kavanagh was the guarantor; 4. There were no exclusions; 5. The description of the work was a custom 2 storey, dual occupancy dwelling; 6. There were no variations to upgrade external colour packages; 7. Variations do not include supply and installation of gas points; 8. The plans were different. Consideration 1. The issue for determination by the Tribunal appears to be not only what constitutes a "developer" for the purposes of s.3A of the HBA but also the meaning of the words "residential development" where they occur in s. 3A(2)(a) of the HBA. 2. In Ace Woollahra Pty Ltd v The Owners – Strata Plan 61424 [2010] NSWCA 101, the issue was whether an owners corporation (OC) in a strata development of 38 strata titled, aged person units was entitled to the benefit of statutory warranties under s.18D of the HBA. The party who contracted with the builder to build the common property was also a party to a joint venture agreement with the previous registered proprietor of the site and for the development of the site as an aged care facility. Because there was no contract between the party that owned the land and the builder, successors in title such as the OC could not pursue damages for breaches of statutory warranty. 3. The factual circumstances of that case are said to have resulted in amendments to the HBA by the Home Building Amendment Act 2001 No. 52 (NSW), but those circumstances appear not to mirror the present case: 1. Which is not in respect of a strata scheme; 2. Where the owner and Builder contracted directly; and 3. Where there were no joint venture agreements with previous owners. 1. The Tribunal has some concerns with the breadth and scope of the Respondent's submissions which it will address. 2. First, the Respondent in its submission that the Applicant is a 'developer' appears to go beyond the narrow parameters of the circumstances defined in s.3A(2) of the HBA which states that 'the residential building work is done in connection with an existing or proposed dwelling in a building or residential development where four or more of the existing or proposed dwellings are or will be owned by the … corporation'. 3. Of the few decided cases on this point, most relate to the four or more dwellings being contained within a single strata scheme development or implicitly in respect of a single parcel of land. 4. In Dieter v. NSW Self Insurance Corporation [2022] NSWCATAP 52 at [7], the development involved the existing commercial premises on the ground floor of the property and the construction of four residential apartments on the first floor of the property. It did not involve separate allotments of land across a residential subdivision of land. 5. In The Owners – Strata Plan No. 79707 v. Trilogy Capital Services Pty Ltd [2014] NSWCATCD 205 at [4], the proceedings related to 'a block of land and … development consent to build a mixed commercial/residential building.' The respondent was a 25% owner of the land as tenants in common upon which the development occurred. Ultimately there were two strata plans registered (one commercial which was owned by the Respondent and one residential) as well as a stratum subdivision, and both the builder and the owner of the residential strata scheme went into liquidation. 6. At first instance the Tribunal held that the respondent was not a developer pursuant to s.3A(2) of the HBA because although it owned 25% of the land upon which four dwellings or more were built, that ownership passed on registration of the strata plan at which moment the OC became the successor in title. 7. In the Appeal Panel's consideration of The Owners – Strata Plan No. 79707 the Trilogy Services Pty Ltd [2015] NSWCATAP 171 on appeal, the consideration of whether the Respondent is a developer was relatively straightforward – see [22]-[26] of the decision. The finding at first instance was not disturbed. 8. In these cases, the 'residential development' for the purposes of s.3A(2) of the HBA is a single property or parcel of land which is being developed or transformed into a strata plan. Such a strata development has a single development application, a single building contract for the common property and a single building contract between the developer and the builder. 9. While there is also no definition of 'residential development' in the HBA, the term is frequently used in the Land and Environment Court of NSW (LEC). The LEC includes the following words on its website under the heading "Residential Development': "A person may wish to construct a detached single dwelling or dual occupancy (including subdividing the two dwellings), or to alter or add to such a dwelling or dual occupancy." 1. While the LEC website acknowledges that these types of residential development are not the only types of residential development (for instance, they exclude any mention of strata or stratum developments), there is an inference that they are the predominant types of residential development with which local councils must deal. 2. In Trek Consulting Services Pty Ltd v Campbelltown City Council [2004] NSWLEC 627 at [1], a local council had to adjudicate on a single development application 'to demolish the existing houses and construct a residential development at lot 1 DP910270, and lots 8,9 and 10 DP 911247 known as 145 Dumaresq and 186-190 Lindesay Street, Campbelltown'. At [5] the judgment continued 'the area is a mix of residential development including single storey detached houses, town houses and residential flat buildings'. 3. The use of 'residential development' in this manner is consistent with where a single property, single development application or single development is considered by a local council. 4. In its submissions, the Respondent has gone beyond such a definition of residential development to include in its definition the suburban subdivision of approximately 25,000 m2 of land in North Kellyville into approximately 40 building lots. 5. This analysis is supported by LRS searches and ASIC current and historical company searches illustrating links between the owners, the original subdividers of the land and the connections between the residential development of Lot 544 and Lot 547 (and other lots). It has asserted a 'joint venture' between the Applicant and a number of other companies of which either David Kavanagh, Shannon Kavanagh or Lorraine Young are officeholders to support its conclusion. 6. There are no joint venture agreements between these parties that have been put in evidence by the Respondent. 7. There are no reported cases in the Respondent's submissions or that the Tribunal has been able to locate where the expression 'residential development' has been accepted as referring to more than a single property or parcel of land, a single development application or a single development consent. This is consistent with the Applicant's submissions 8. In its submissions, the Respondent appears to consider the term 'residential subdivision' as interchangeable with 'residential development' for the purposes of s.3A(2) of the HBA. The Tribunal rejects that submission. 9. Secondly, the Respondent submits that following amendments made by the Amending Act to the HBA in 2011 following the Ace decision, the Note to s.3A(1A) of the HBA suggests that there may be a developer other than the owner, for instance a person on whose behalf the work is actually done under a joint venture agreement with the owner. 10. The Respondent adopted the Note in its submissions to conclude that there may a number of developers notwithstanding that no joint venture agreements have been produced in this process to suggest that other developers may exist, and the identity of such additional developers was not identified by the Respondent. 11. Thirdly, in respect of the 37 (or 17) lots referred to in the Respondent's submissions, a number of broad submissions are made but there is no evidence before the Tribunal addressing the following matters which appear to separate their residential developments: 1. The building contracts that those lots may, or may not, have been subject to; 2. Who the builder was in each instance; 3. With whom the building contract was entered into as owner; 4. Whether the builder was in any case "Willoughby Homes Pty Ltd" the builder that went into liquidation resulting in the current circumstances of this case in respect of Lot 544; and 5. Notwithstanding the submission of paragraph 88 of the Respondent's submissions: 1. whether insurance policies have been entered into in respect of the home building work for those lots, 2. the parties to those policies, 3. whether buildings have been built or completed or not, 4. the limit of indemnity of those insurance policies, and therefore 5. whether a claim for $340,000.00 (or some other sum) will ever be made against the insurer in respect of those lots. 1. Fourthly, the Tribunal rejects the submission made by the Respondent in respect of the use of the words 'in connection with' when interpreting s 3A(2) of the HBA. The Respondent submits that applying the High Court in R v Khazaal (2012) HCA 26, French CJ said at [31] that the words 'may refer to a relationship between two subjects which may be the same or different and may encompass activities, events, persons or things'. They also may be designed to 'cover a variety of subjects and a variety of relationships between those subjects'. 2. In that case, the High Court had to consider whether the accused (Mr Khazaal) 'did make a document connected with assistance in a terrorist act knowing of that connection' (emphasis added). The use of those words in that context differ from the use of the phrase in the HBA. And there is no justification given for the Respondent's submission in paragraph 43 that these words operate sufficiently broadly to mean different companies, different directors or different parcels of land even if they are not adjoining - as all these things are 'in connection with a residential development'. The Tribunal rejects that submission. 3. The Tribunal finds that the word 'in connection with a residential development' should be suitably limited and restrained. In this instance, the Applicant's claim has been made in respect of 19 Welford Circuit and it was rejected as a result of the apparent residential development at 41 Cocoparra Circuit of which it was considered part. 4. The Tribunal finds that on the simple and everyday meaning of the words involved, each of dual occupancy dwellings at 19 Welford Circuit and 41 Cocoparra Circuit are separate instances of residential development because: 1. They had separate development applications; 2. They had separate building contracts; 3. They relate to separate parcels of land; 4. The building contracts have significant and material differences as outlined in paragraphs 50-51 above; 5. Separate contracts of insurance were taken out with HBCF in respect of each of the two residential developments. 1. For the above reasons, the Tribunal finds that the Applicant is not a developer for the purposes of s.3A of the HBA, and that the Applicant is entitled to an indemnity from the Respondent in respect of its claim dated 2 August 2022 in the sum of $340,000.00 (or in such sum as the parties may agree, or the Tribunal may determine) pursuant to a contact of insurance bearing Policy No. HBCF20070405. 2. The matter will be listed for directions accordingly so that the issues (if any) surrounding the quantum of the Applicant's claim under the policy may be the subject of expert evidence and prepared for hearing in the usual manner. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 December 2024