Atlen Pty Limited v Building Insurers' Guarantee Corporation & Anor [2004] NSWSC 195

New South Wales Supreme Court

CITATION : Atlen Pty Limited v Building Insurers' Guarantee Corporation & Anor [2004] NSWSC 195 revised - 26/03/2004 HEARING DATE(S) : 11/02/2004 JUDGMENT DATE : 24 March 2004 JURISDICTION: Equity JUDGMENT OF : Brownie AJ at 1 DECISION : Judgment for the defendants and order the plaintiff to pay the defendants' costs.

CATCHWORDS : Home Building Act: - A contracted with B, for B to do residential bulding work. B subcontracted that work to C. C became insolvent, and did not complete the work. B and C each obtained insurance cover under Pt 6 of the Act, but both insurers became insolvent. - Held: B was not entitled to be indemnified under C's policy, and therefore was not entitled to be indemnified by the State under P 103I of the Act. LEGISLATION CITED : Home Building Act 1989 Home Building Regulation 1989 CASES CITED : Australasian Concrete Services Pty Limited v Multiplex Pty Limited [1999] NSWSC 1140 De More Constructions Pty Ltd v Garpace Pty Ltd (2001) 53 NSWLR 132 Atlen Pty Limited - Plaintiff PARTIES : Building Insurers' Guarantee Corporation - 1st Defendant The State of New South Wales - 2nd Defendant FILE NUMBER(S) : SC 4306/2002 COUNSEL : Mr Stephen Epstein SC - Plaintiff Ms P Nash - Defendant SOLICITORS : Gadens - Plaintiff McLachlan Chilton - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BROWNIE AJ

WEDNESDAY, 24 MARCH 2004

4306/02 ATLEN PTY LIMITED v BUILDING INSURERS' GUARANTEE CORPORATION & ANOR JUDGMENT 1 HIS HONOUR: The plaintiff claims that it was entitled to be indemnified under a contract of insurance, issued by FAI General Insurance Company Limited (FAI). The plaintiff says that FAI is an insolvent insurer within the meaning of Pt 6A of the Home Building Act 1989 (the Act), and therefore that it is now entitled to be indemnified by the second defendant, the State of New South Wales: s 103I of the Act. It is not in dispute that FAI is such an insolvent insurer. The first defendant administers the position under Pt 6A, in a way that is not in dispute. It may be that the second defendant is an unnecessary party: see s 103J of the Act; but nothing turns on that. 2 Developmentlink Surry Hills Pty Limited (Developmentlink) and the plaintiff entered into a contract dated 3 February 1999, the former as "the owner" and the latter as "the builder", for the conversion of a warehouse at Surry Hills into 29 home units. This was "residential building work" within the meaning of the Act, so that Pt 6 (ss 90-103E) applied. Sections 92(1) and 99(1) and (2) were in these terms:- "92(1) A person must not do residential building work under a contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name of the person who contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract … 99(1) A contract of insurance in relation to residential building work required by section 92 must insure: (a) a person on whose behalf the work is being done against the risk of loss resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor, and