District Court New South Wales Medium Neutral Citation: Wesfarmers General Insurance Limited t/as Lumley Insurance v Nestel [2011] NSWDC 224 Hearing dates: 14 & 15 December 2011 Decision date: 16 December 2011 Before: Neilson DCJ Decision: 1) Appeal dismissed 2) I order the Plaintiff pay the Defendant's costs 3) I remit the matter back to the Consumer, Trader and Tenancy Tribunal Catchwords: CTTT APPEAL - STATUTORY INTERPRETATION - proper construction of clause 52(3) of Home Building Regulation 2004 - question of whether person has "disappeared" if they have left territorial jurisdiction of NSW Legislation Cited: Home Building Regulation 2004, cl 2(3), 52(3), 56 Home Building Act 1989, s 18B, 42A, 90, 95, 99, 101 Interpretation Act 1987, s 5(2), 12(1), 17 Home Building Amendment (Insurance) Act 2002 Foreign Judgments Regulations 1992 Foreign Judgments Act 1991 Farm Produce Agents Act 1926 s 23(1) Home Building Amendment Act 2008 Cases Cited: Grannall v C. Geo Kellaway and Sons Proprietary Limited (1955) 93 CLR 36 Texts Cited: Pearce and Geddes, Statutory Interpretation in Australia, 7th edition (2011), [6.38] Category: Principal judgment Parties: Wesfarmers General Insurance Limited trading as Lumley Insurance (Plaintiff) John Nestel (Defendant) Representation: Mr L. Dawson (Plaintiff) Mr R. Alkadamani (Defendant) Vardanega Roberts (Plaintiff) In person (Defendant) File Number(s): 2011/317556 Headnote Property constructed by owner-builders and insured pursuant to section 95 of Home Building Act 1989 - purchasers commenced proceedings in CTTT for breaches of statutory warranties in s 18B of Home Building Act and received damages and costs - purchasers claimed on insurance policy and provided evidence that owner-builders could not be found - insurer declined claim by asserting they had found the owner builders in Vanuatu - purchasers appealed against insurer's decision to CTTT - question of whether person has "disappeared" if they have left the territorial jurisdiction of NSW heard at a preliminary hearing - CTTT upheld purchaser's claim that owner builders had "disappeared" for purposes of Home Building Regulation 52(3) - insurer appealed to District Court - question of law considered. Held : Section 12(1)(b) of the Interpretation Act 1987 ought be imported into section 90(2) of the Home Building Act 1999 and into clause 52(3) of the Home Building Regulation 2004 so that the defendant is only required to prove that the owner-builder cannot be found in New South Wales after due search and enquiry Judgment 1HIS HONOUR: This is an appeal from an interim decision of the Consumer Trader and Tenancy Tribunal (CTTT) made by Senior Member J Smith on 15 September 2011. The appeal raises a question of law: the proper construction of clause 52(3) of the Home Building Regulation 2004, made pursuant to the Home Building Act 1989. Implicit in the proper construction of clause 52(3) is the proper construction of certain parts of the Act from which the clause is derived, in particular sections 90(2) and 101 and other parts of the Regulation, in particular, clause 56. 2The background to this appeal has been summarised by Mr Alkadamani, who appeared for the defendant, in his written submissions and was adopted by Mr Feller SC, who, with Mr Dawson, appeared for the plaintiff. I shall quote that background (any matter inserted in square brackets has been inserted by me): "1.2 The appeal comes before the District Court after a tortuous history of litigation relating to extensive building defects in Mr Nestel's family home at 11a Linkmead Avenue, Clontarf (the Property). 1.3 Mr Nestel exchanged contracts of purchase of the Property with Darryl and Linda Millar (the Owner-Builders) on 2 August 2006 (the Contract for Sale). The Contract for Sale was completed on 13 September 2006. 1.4. The Property had been constructed by the Owner-Builders. Consequently, in accordance with the requirements of section 95 of the Home Building Act , the Owner-Builders had taken out insurance cover so as to indemnify the purchasers, inter alia, in the event of defects in the construction of the Property. 1.5. In 2007 substantial water penetration issues became evident. 1.6. On 8 February 2008 Mr Nestel commenced proceedings in the CTTT for breaches of the statutory warranties contained in the section 18B of the Home Building Act (CTTT proceedings HB 08/07730). 1.7. After numerous interlocutory contests the CTTT heard the case against the Owner-Builders on 17 May 2010. As a consequence of that hearing the CTTT (Senior Member, Durie) ordered the Owner-Builders to pay Nestel damages of $403,092.00 and costs as agreed or assessed, such costs to be on an indemnity basis after 31 October 2008. [The orders were made on 17 May 2010 and the hearing had proceeded ex parte]. 1.8. On about 23 June 2010 Mr Nestel made a claim on the insurance policy and provided evidence that the Owner-Builders could not be found. 1.9. By letter dated 23 September 2010 Wesfarmers General Insurance Limited t/as Lumley Insurance ("Lumley") declined the claim. Lumley asserted that it had found the Owner-Builders in Vanuatu ["after intensive investigations"]. 1.10. On 3 November [2010], Mr Nestel filed an application with the CTTT appealing Lumley's decision to decline the claim (CTTT proceedings HB10/51236). The grounds of the appeal were as follows: i. The insurer had not located the owner builders Darryl Christopher Millar and Linda Maree Millar (Ground1); ii. further, and alternatively, on a true construction of the relevant legislation, a relevant person has disappeared if they [sic] have left the territorial jurisdiction of the Parliament of New South Wales (Ground 2); iii. further, and alternatively, on a true construction of the relevant legislation, and/or the policy of insurance, a relevant person has disappeared if, after due search and inquiry the person cannot be found (Ground 3). 1.11. In April 2011 the CTTT set down for hearing Mr Nestel's appeal against the decision of Lumley to decline the claim for 19 May 2011. 1.12. Lumley was late in filing its materials for the hearing of 19 May 2011 with the consequence that the hearing was adjourned. In addition, an order was made, by consent, that the issues in ground 2 be determined by way of preliminary hearing. It was envisaged that determination of ground 2 against the insurer would save the parties the considerable expense of private investigators in Vanuatu compiling affidavits and then being cross-examined as to whether the Owner-Builders had in fact been found. 1.13. The parties consequently agreed, for the following for the purposes of the preliminary hearing, as follows: "For the purposes of the preliminary hearing only the CTTT assumes that the Owner Builders Darryl and Linda Millar have been identified and found to be residing in the Republic of Vanuatu. The Applicant agrees to this for the purposes of the preliminary hearing only and on the basis that, in the event the preliminary hearing is not resolved in the Applicants' favour, he may adduce evidence or otherwise contest whether Owner Builders Darryl and Linda Millar have been identified and found." Lumley's submissions in this appeal assert that the Owner Builders have been found. This issue has not in fact been determined by the CTTT and it is not conceded. 1.14. On 18 August 2011 the Preliminary Hearing was conducted before Senior Member Smith. 1.15. On 15 September 2011 the CTTT delivered judgment on the issue identified for [the] Preliminary Hearing. The CTTT upheld Mr Nestel's claim that the Owner-Builders have disappeared for the purposes of the Home Building Regulation 52(3). 1.16. On 5 October 2011 Lumley commenced this appeal in respect of the judgment of Senior Member Smith." 3In exhibit A (an affidavit of Mr BM Silva, a solicitor) is an investigators report, the substance of which is this: "The bottom line is that the subjects Mr & Mrs Millar now reside at Vanuatu. They arrived in Vanuatu on 7 th October, 2009 with their 8 year old Dalmatian dog. Their mobile phone numbers are ... The dog is now deceased. They have set up in the real estate business in Vanuatu and are listed on the internet. There is a photo of Linda on the internet. I have attended at the Vanuatu Embassy, I have spoken to William Lontwan, the Consul and other staff. I was informed for new residents wanting to settle in Vanuatu, they have to take at least $100,000.00 per person into the country. I have not been able to establish just how much money they had taken to Vanuatu, but I do know that they purchased the double addressed property, at 1 Bremer Lane/1 Balone Avenue, Sinnamon Park [Queensland] for $785,000.00 on 14/7/07 and sold it for $949300.00 on 6.9.2009, one month before they went to Vanuatu. They also purchased 150 Tinarra Crescent, Kenmore Hills [Queensland] on 8.3.2007 for $415,000.00 and sold it on 22.6.09 for $410000.00. I do not know if they had mortgages on the properties, but the gross sum is $1,350300.00 which they might have been able to take with them to Vanuatu. When I was at the Vanuatu embassy, I was told that intending people wanting to be permanent residents in Vanuatu, not being nationals of that country [,] had to deposit at least $100000.00 per person to gain that status. So they have at least $200000.00 in the bank in that country." An uncharitable person or a cynic might draw the conclusion that Mr and Mrs Millar have "done a runner". 4After stating the background of the litigation in the CTTT, the Senior Member summarised the submissions on behalf of the applicant (the present defendant) and on behalf of the respondent (the current plaintiff). In essence the Senior Member adopted the submissions on behalf of the defendant. He applied to the construction of clause 52(3) to section 12(1)(b) of the Interpretation Act so that you read it as follows: "A reference in this Part to the disappearance of a contractor, supplier or owner builder includes a reference to the fact that, after due search and inquiry, the contractor, supplier or owner-builder cannot be found in New South Wales." 5Section 5(2) of the Interpretation Act 1987 provides: "This Act applies to an Act or instrument except in so far as the contrary intention appears in this Act or in the Act or instrument concerned." 6On that issue the Senior Member said this: "33. Does any "contrary intention" appear from the regulation that would preclude the application of the Interpretation Act , s 12 to reg 52(3)? 34. The respondent's submission was that if the legislature had intended to insert the words "in New South Wales", it would have done so. 35. However, I do not take that to be something that demonstrates a "contrary intention" in reg 52(3). The very purpose of s 12 is so that the words do not need to be written into in every provision of every Act passed by the New South Wales Parliament, but can be assumed to be there. 36. The respondent further argues that the outcome of applying those words as submitted by the applicant is observed in that a builder who moves interstate has then "disappeared". 37. I do not accept that to be an absurd outcome at all. The fact that a builder or owner-builder may move interstate does no more than trigger the right to make an insurance claim. The issue of whether or not the home-owner can enforce judgment against the builder/owner-builder in another state (or country for that matter) is immaterial to that question. 38. Where an owner is able to enforce judgment against a builder who is no longer within the physical boundaries of New South Wales, it may be in his interests to do so. For example, as in this case the original judgment for the applicant was in the order of $400,000.00 whilst the maximum recoverable under the insurance policy is $200,000.00. However, I do not accept that the homeowner must attempt enforcement against the builder outside of New South Wales as a prerequisite to making an insurance claim. 39. For these reasons I am satisfied that there is no "contrary intention" that prevents the application of s 12 to reg 52(3)." 7The relevant provisions of the Home Building Act 1989 are these. Section 90 provides definitions for Part 6 of the Act, which deals with home warranty insurance. Section 90(1) defines "home warranty insurance" to mean "insurance under a contract of insurance required to be entered into by or under this Part". Section 90(2) is in the following terms: "A reference in this Part to the disappearance of a contractor, supplier or owner-builder includes a reference to the fact that, after due search and inquiry, the contractor, supplier or owner-builder cannot be found." 8Section 95 provides that an owner-builder must not enter into a contract for the sale of land on which the owner-builder work is to be done by on behalf of the owner-builder unless a contract of insurance complying with the Act is in force in relation to the work or the proposed work. An owner-builder is required to annex to the contract for the sale of land on which such work is to be done or has been done, a copy of the certificate of such insurance. Section 101 provides: "(1) A contract of insurance in relation to owner-builder work or residential building work required by section 95 or 96 must insure a purchaser of the land on which the work is done and the purchaser's successors in title against the risk of being unable, because of the insolvency, death or disappearance of the owner-builder or contractor concerned: (a) to recover compensation from the owner-builder or contractor or a breach of a statutory warranty in respect of the work, or (b) to have the owner-builder or contractor rectify any such breach. (2) In this section: contractor means a person doing residential building work otherwise than under a contract to whom section 96 applies." 9Mr Alkadamani also referred me to sections 42A(2) and section 99(3). Section 42A was inserted by, and section 99 was amended by, Act no. 93 of 2008 which commenced on 1 April 2009. These provisions do not apply to owner-builders but they may assist in the task of statutory construction. These provisions apply to contractors. Section 42A(2) is this: "If the holder of a licence fails to comply with an order of a court or the Tribunal to pay an amount of money in respect of a building claim by the due date, the licence is, subject to this section, suspended until such time as the Director-General is satisfied that the order has been complied with." 10Section 99(3) is this: "A contract of insurance in relation to residential building work required by section 92 must include provision that deems the suspension of a contractor's licence under section 42A to constitute the insolvency of the contractor for the purposes of the application of the policy to any loss that is the subject of a building claim order made against the contractor that remains unsatisfied." 11The relevant parts of the Home Building Regulation 2004 are these. Clause 52(3) is in the following terms: "A reference in this Part to the disappearance of a contractor or owner-builder includes a reference to the fact that, after due search and inquiry, the contractor or owner-builder cannot be found." 12I interpolate that the words of this subclause echo the terms of section 90(2) of the Act, with the deletion of the reference to a supplier of a kit home. Clause 56 is headed "Losses indemnified". It is in the following terms: "(1) An insurance contract must indemnify beneficiaries under the insurance contract for the following losses or damage in respect of residential building work covered by the insurance contract: (a) loss or damage resulting from the non-completion of the work because of the insolvency, death or disappearance of the contractor, (b) loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or owner-builder or have the contractor or owner-builder rectify because of the insolvency, death or disappearance of the contractor or owner-builder. (2) (Repealed) (3) Without limiting subclause (1) or (2), an insurance contract (other than insurance contract in relation to owner-builder work) must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor: (a) loss or damage resulting from faulty design, where the design was provided by the contractor, or (b) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor's wrongful failure or refusal to complete the work, or (c) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of an event referred to in subclause (1) or (2), or (d) loss of deposit or progress payment due to an event referred to in subclause (1) or (2), or (e) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage. (4) Without limiting subclause (1) or (2), an insurance contract in relation to owner-builder work must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the owner-builder concerned, or have the owner-builder rectify, because of the insolvency, death or disappearance of the owner-builder: (a) loss or damage resulting from faulty design, where the design was provided by the owner-builder, or (b) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of an event referred to in subclause (1) or (2), or (c) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the owner-builder for the loss or damage or in taking action to rectify the loss or damage. (5) the insurance contract must state that the risk indemnify include the acts and omissions of all persons contracted by the contractor, owner-builder or other person to perform the work resulting in loss or damage of a kind referred to in this clause." 13It is to be noted that the policy of insurance issued by the plaintiff for the benefit of the defendant complies with the statutory scheme for owner-builder home warranty insurance. The scheme of the Act is clearly to provide some consumer protection to the owners and purchasers of residential properties, albeit the extent of the protection may be limited. It is correct to classify the Act as "beneficial legislation" but it does not necessarily follow that all provisions of the Act are to be construed beneficially let alone beneficently. The current legislative scheme was introduced by the Home Building Amendment (Insurance) Act 2002, no.17. That Act received the Royal Assent on 16 May 2002 and commenced on 1 July 2002. In moving that the bill which became this Act be read in the Legislative Assembly on 7 May 2002, the Minister, Mr Aquilina, said: "The home warranty insurance scheme was established under the Home Building Act and commenced in May 1997. The scheme, along with licensing, compliance and education, is a key component of the consumer protection regime for the home building industry. Cover is provided by the private insurance sector. In recent times a number of significant events, such as the collapse of HIH Insurance and September 11, have dramatically changed the insurance landscape. These events have impacted on a wide range of businesses, community groups and occupations. The difficulties created by these changes in the insurance market have been well publicised. Home warranty insurance has not been immune from these developments, with major insurers indicating their belief that the current scheme is not viable. To insure there is viable consumer protection for home owners, the New South Wales and Victorian Governments negotiated in tandem with the majority players in the home warranty insurance industry. The outcome is a sustainable home warranty insurance scheme provided through private insurers. On 13 March this year the New South Wales and Victorian Governments announced uniform changes to their home warranty schemes. The bill provides for a number of these reforms, which I will outline shortly. In addition to announcing these structural changes to their schemes the New South Wales and Victorian governments have taken action to overcome a situation created by the withdrawal of reinsurance support for sectors of the market. The New South Wales and Victorian governments have put in place arrangements to provide the necessary reinsurance in these areas. This has ensured that the three home warranty insurers - Dexta, Royal and Sun Alliance and Reward - can continue to offer insurance to builders, including cover for high-rise projects. These arrangements will operate in the short term. The Government is continuing to work towards a longer-term solution. The bill provides for amendments to both the Home Building Act and the regulation. Cover under the scheme will be provided on a last resort basis. Loss resulting from non-completion of work because of the insolvency, death or disappearance of the contractor will be covered. A home owner will also be able to lodge a claim where he or she is able to recover compensation from the contractor or take action to have the contractor rectify the problem because of the insolvency, death or disappearance of the contractor. Similar provisions will apply to claims in relation to owner-builder work and the supply of a kit home. The period of cover under the scheme for structural defects is to be six years after completion of the work or the end of the contract, whichever is later. For other defects, cover of two years will apply. Insurance covering building work or the supply of a kit home by a licensed contractor will still have to be taken out prior to the commencement of the work or the supply of the kit. However, in line with the new period of cover under the scheme, owner-builders will have to take out insurance only if they sell their home within six years of completion of the work. The amount of cover for defective work will remain at $200,000. This will include cover for such reasonable legal and other costs as may be incurred by the claimant in seeking to recover compensation under the contract. In the case of a claim for non-completion of work the insurance contract may limit liability to an amount that is 20 per cent of the contract price of the job. Because of the difficulties that the home warranty market has experienced, a number of industry bodies have been examining the feasibility of setting up alternative indemnity schemes to cover work. Provided such schemes deliver equal or better cover to the home warranty insurance scheme, they have the potential to benefit both industry and consumers. The problems relating to reinsurance to which I referred earlier also make it important for the Government to be able to act quickly to put in place arrangements to avoid dislocation to the building industry. The bill therefore provides that the Minister may approve alternative home building indemnity schemes or similar arrangements. The reforms contained in the bill will enable builders to continue building while ensuring continuing viable consumer protection for home owners. Faced with global issues confronting the insurance industry, the Government has acted to maintain support for consumers and builders while providing a viable market for insurers. The bill provides for enabling provisions under which, if appropriate, the Building Insurers' Guarantee Fund may be used as a vehicle to administer arrangements such as the reinsurance amendments which the Government has recently put in place. The Guarantee Corporation currently handles claims under the Government's HIH rescue scheme. I commend the bill to the House." 14It is immediately apparent from this speech and the amendments made that the current scheme is less than beneficial the earlier scheme which, as I understand it, allowed the beneficiary of a policy of insurance to make a claim directly on the insurer. In these circumstances extreme care must be exercised in statutory construction. More is required than asserting that the legislation is beneficial and therefore ought be interpreted for the benefit of those it seeks to protect. 15The plaintiff before me laid stress upon the statement made by the Minister that the cover under the statutory scheme is "on a last resort basis". The essence of the plaintiff's argument is summed up in par 18 of the plaintiff's written submissions: "The Tribunal erred in two significant ways. First, it construed the term "disappearance" solely by reference to whether the requirement in regulation 52(3) that "after due search and enquiry, the contractor, supplier or owner-builder cannot be found" had been satisfied. Secondly, it construed that requirement by adding to it the words of limitation "in New South Wales". In doing so, the tribunal failed to address the primary issue as to the meaning of the word "disappearance" in regulation 56(4)." 16There is really no dispute about what the term "disappearance" means. Paragraphs 21 and 22 of the plaintiff's written submissions are these: "21. The word "disappear" is clear and unambiguous in its meaning and does not permit of any strained or extended construction. The Oxford English Dictionary defines the verb 'disappear' to mean: "To cease to appear or be visible; to vanish from sight". It is the reverse of the verb "appear". The noun "disappearance" is defined to mean: "The action of disappearing; passing away from sight or observation; vanishing." 22. The fact of "disappearance" is apt to describe a state of affairs which define a person's known whereabouts. A person either appears and is therefore apparent or disappears and is therefore not apparent. It is not dissimilar to words which describe a person's status as "married", "undischarged bankrupt", "creditor". In all cases the words describe a person's state, condition or status. More relevantly, regulation 56(4) refers to three conditions, namely, "insolvency", "death" or "disappearance". Each of these are absolute terms that are not qualified by and do not draw any content or meaning from physical location." I have no hesitation in adopting the interpretation argued by the plaintiff in par 21 of those submissions. However, I cannot accede to the submission that "disappearance" is equivalent to a status, such as being married or being an undischarged bankrupt or being a creditor. 17A person might "disappear" to certain classes of persons in our community. A suspected criminal might "disappear" to police and other law enforcement authorities but his or her actual whereabouts might be known to the criminal's intimates, who do not wish to divulge it to the police or other law enforcement authorities. In other words a person can disappear to some and not to others. For example, at the current time there is a suspected murderer being pursued by the police. For approximately the last seven years his whereabouts have been unknown but his whereabouts have now been detected in a geographical area west of Kempsey and east of Tamworth and in which geographical area the police are now searching for him. He may have "disappeared" over the last seven years but his whereabouts are now confined to a known area. At the present time he could not be described as having "disappeared" even though his exact whereabouts is currently not presently known. 18Par 23 of the plaintiff's submissions is: "There is no sense in which the terms "death" or "insolvency" can be related to location within the meaning of regulation 56(4). It is absurd to speak of someone being dead or insolvent in NSW. Equally, there is no sense in which it can be said that disappearance has any relevant relationship to location, such that the term "disappearance" can be construed as meaning "disappearance in NSW". Once a person has disappeared his or her whereabouts are necessarily unknown irrespective of where that person may be. Indeed a person whose death is unknown has relevantly "disappeared", wherever that death may have taken place. After seven years, that person may also be presumed dead. Disappearance, like death or insolvency describes a condition or status that is not capable of being defined by location. All three terms must be read [eiusdem] generis." I have replaced with "eiusdem" that which Mr Feller SC typed as 'sui' because to me the import of the submission was to the effect that the three terms should be construed in the same fashion. However, it may well be the case that each term must be interpreted in its own fashion, that is sui generis. 19Whether a person is dead or not is an absolute fact. Whether a person is insolvent or not is a fact which is legally determinable and once determined legally is an absolute fact. However, a "disappearance" is not an absolute fact. A person might disappear to his creditors, to his bankers, to law enforcement and other authorities, to the Department of Immigration, but he might not have disappeared to his intimates, to his family and friends. A person may have disappeared to the people of Australia but may not have disappeared to the people of another place to which he has taken himself. A person could disappear from Australia but take himself to the Amazonian jungle and be known to the local inhabitants of that jungle. Disappearance is not an absolute condition. 20The gravamen, as I appreciate it, of the plaintiff's arguments is contained in paragraph 24 of the plaintiff's submissions: "It would be a contradiction in terms to say that a person, whose whereabouts outside of NSW are known, has nonetheless disappeared because he or she is no longer in NSW. To hold otherwise, would mean that the terms "disappearance" has been used in regulation 56(4) to mean "departure from NSW". However, if the Legislature intended the test to be whether the builder had departed from the jurisdiction, it could clearly have provided for such a requirement by using words such as "departure from NSW". The fact that it did not is a clear indication that it intended to set a higher bar. Further, if that were the intended test, how would it accommodate the situation where the absence from NSW is only temporary? Would it mean that a contractor who has left NSW for the duration of a project he or she has undertaken in Canberra has relevantly disappeared? What if the project was located in Vanuatu? What if the contractor has left on an extended vacation of an undefined duration? Is the Court required to undertake an inquiry as to the intention of the contractor or owner-builder or as to the probability of his or her return to NSW? If the Legislature intended permanent departure from NSW to be the relevant criteria [sic], surely it would have said so in clear language." Of course the short repost to the latter part of that submission is the same repost made by the Senior Member that section 12(1)(b) of the Interpretation Act makes it unnecessary for the legislature to specify the matter "in New South Wales". However, the argument as expanded has certain very attractive features to it. 21In oral argument a number of situations were canvassed. For example, a resident of Albury might engage a builder from Wodonga whose residence is in Wodonga and whose normal place of business is in Wodonga, but the building work which the Albury resident requests is home building work in the city of Albury itself. If the interpretation adopted by the CTTT be correct, it would lead to the absurd proposition that merely the intervention of the River Murray between the builder and the home owner would enable the home owner to have direct access to the insurer. The same argument can be postulated for a builder whose normal place of residence is Red Hill in the Australian Capital Territory, whose normal place of business is in Fyshwick in the Australian Capital Territory, but agreed to perform building work for a home owner in Queanbeyan. Likewise a home owner in Tweed Heads might engage a builder whose place of residence and normal place of business is in Coolangatta or Kirra Beach or Tugun and, in such circumstances, the resident of Queanbeyan and the resident of Tweed Heads would have direct access to the insurer because the relevant builder had "disappeared" from NSW. 22The argument is even more stark if the builder is not a natural person but a company. A company's registered office might be in the ACT or Victoria or Queensland or some other jurisdiction within the Commonwealth of Australia but the builder might agree to carry out work in New South Wales and not have a registered office in New South Wales and therefore not be present in New South Wales and be seen not to be able to be found in New South Wales after due search and inquiry. These are very valid points. 23However, the defendant has made equally valid points. The defendant has pointed out that a builder, being a natural person, could leave Australia and take up residence in a foreign country where there might be no laws relating to insolvency, where there may be no mechanism for registering a New South Wales judgment as a judgment of a local court that might be enforced or where it might be necessary to re-establish liability already established by the defendant in the CTTT, or go to a place where it is necessary to re-establish liability and where the proper law of the contract, clearly the law of New South Wales, would not be applied but the local court would apply the lex fori. 24In the current case, for example, under the Foreign Judgments Regulations 1992 passed pursuant to the Foreign Judgments Act 1991 (Commonwealth) none of the courts of Vanuatu is a specified superior court or specified inferior court. There is no evidence before me to establish what the law of Vanuatu is. Whether the law of Vanuatu would permit the registration of a New South Wales judgment as a registration of its local courts I do not know. Whether it would be necessary to establish liability in Vanuatu de novo I do not know, nor do I know whether Vanuatu would apply the proper law of the contract or the lex fori. 25A relevant starting point is the terms of section 12(1) (e) of the Interpretation Act 1987. Section 12 bears a heading, "References to New South Wales to be implied". Subsection (1) is in the following terms: "In any Act or instrument: (a) a reference to an officer, office or statutory body is a reference to such an officer, office or statutory body in and for New South Wales, and (b) a reference to a locality, jurisdiction or other matter or thing is a reference to such a locality, jurisdiction or other matter or thing in and of New South Wales." 26The first thing to note about the provision is that it is mandatory, subject, of course, to section 5(2) of the same Act, which I have already quoted. Of course, in, for example, section 90(2) of the Home Building Act and in clause 52(3) of the Home Building Regulation there is no particular reference to any locality or jurisdiction or thing but there is reference to some matter. The concatenation of words "a locality, jurisdiction or other matter or thing" is in my view apt to describe any relevant circumstance. 27The plaintiff submitted that section 12(1)(b) could have no application to, for example, clause 52(3) because it would be a nonsense to speak of a disappearance "in and of New South Wales" or a builder being unable to be found "in and of New South Wales". The submission largely depends on the choice of an appropriate preposition. However, that submission cannot survive the interpretation adopted by the High Court of Australia in Grannall v C. Geo Kellaway and Sons Proprietary Limited (1955) 93 CLR 36. Section 23(1) of the Farm Produce Agents Act 1926 (NSW) provided that no produce agent shall charge for, sue for or recover any commission or other remuneration for or in respect of the sale or disposal of farm produce except commission not exceeding the prescribed commission. 28Commencing on 2 January 1953, a regulation made under the Act prescribed a commission of 7.5% of the price realised where the farm produce was fruit as distinguished from vegetables and the like. The same regulation prescribed what services were to be included in respect of these charges, commissions, rewards and fees. The defendant company carried on business in Sydney as a farm produce agent. It was charged upon an information with having on 4 August 1953 contravened section 23 of the Act and the appropriate regulation in that it charged commission for 144 cases of apples consigned by a farmer, Direen, a grower in Tasmania in excess of the prescribed commission, being 10%. 29The information made its way to the High Court of Australia under an argument that the New South Wales regulation infringed the freedom of interstate trade prescribed by the Constitution. The case failed on that ground but during argument a fresh ground of appeal was raised by Mr Justice Kitto. That led to the dismissal of the information. In the joint judgment of Dickson CJ, Webb, Fullagar, Kitto and Taylor JJ the following appears at 52: "It is whether the evidence shows that the offence of charging more than seven and one-half percent commission was committed by the defendant within New South Wales. The question depends on the meaning of the word "charge" in s 23(1)(a) and upon the application to that meaning of the rule that all offences are local and territorial. That rule is reinforced by s 17 of the Interpretation Act 1897 of New South Wales, which provides that all references to localities, jurisdictions and other matters and things shall, unless a contrary intention appears, be taken to relate to such localities, jurisdictions or other matters and things in and of New South Wales. It is not a question of the jurisdiction of the forum. Nor is it altogether a question of the territorial power of the legislature. For doubtless the acts or conduct of the defendant company in the present case include elements sufficiently connected with New South Wales to enable the legislature of that State to deal with them. But, just as the words in s 23(1)(a) "sue for" and "recover" must be understood as "sued for or recover in New South Wales" so must the word "charge" be interpreted as "charged within New South Wales". It appears from the facts already stated that an account sales was made out in New South Wales showing as a deduction the amount of the commission calculated at ten per cent. It is to be inferred that a charge for the net amount was drawn and that this was directed to Direen at his address in Tasmania and was posted. The question is in effect whether the defendant company had committed the offence of charging Direen more than seven and one-half percent before the communication reached its destination in Tasmania. If in the circumstances of this case the commission had not been "charged" until the charge was communicated to Direen, the offence was not committed in New South Wales. The word "charge" is no doubt a wide one capable of flexible application. But it does seem in the context to convey the idea of a claim or demand or an effective imposition of a pecuniary burden, effective if not de jure at least de facto. Here if, for example, the cheque had been lost in the post Direen would not have been paid the net amount; there would have been no demand or claim, no imposition effective de facto. It may be true that to impose the burden of the amount upon Direen no further overt acts of the defendant company remained. But the post was the chosen means of communication and if communication was necessary to complete the "charging", the communication was not made when the letter was posted; delivery of the letter was needed to complete it." 30The High Court there had no hesitation in replacing the prepositions "in and of" with the preposition "within". The clear import is that the words of the Interpretation Act must be applied no matter what the appropriate preposition might be. I hasten to add that section 17 of the Interpretation Act 1897 is the equivalent of section 12 (1)(b) and section 5(2) of the Interpretation Act 1987. The words of section 17 of the 1897 Act are these: "Wherever in an Act any officer or office is referred to, the same shall be taken to refer to the officer or office of the description designated in and for New South Wales, and all references to localities, jurisdictions and other matters and things shall, unless the contrary intention appears, be taken to relate to such localities, jurisdictions, and other matters and things in and of New South Wales." 31There, of course, remains the "contradiction in terms" argued by the plaintiff when one says that a person whose whereabouts outside of New South Wales are known has nonetheless disappeared because he or she is no longer in New South Wales. That apparent contradiction in terms or absurdity would not arise if, for example, one read clause 52(3) of the Home Building Regulation 2004 and relevantly other parts of the Act and Regulation in this fashion: "A reference in this Part to the disappearance from New South Wales of a contractor or owner-builder includes a reference to the fact that, after due search and inquiry, the contractor or owner-builder cannot be found in New South Wales". 32In fact the latter rendering of "in New South Wales" would be unnecessary because all the due search and enquiry would need to prove is that the owner builder has disappeared from New South Wales. The plaintiff argued that if one adopted such an interpretation a person might not have disappeared from New South Wales; he may still be in New South Wales but have been merely hiding in some deep canyon in the Blue Mountains or in a State Forest west of Kempsey and east of Tamworth. In those circumstances one can see the force of the argument that both the word "disappearance" should be construed as "disappearance from New South Wales" and that the last clause of the sub-clause should be read as that the "owner-builder cannot be found in New South Wales". 33The relevant section of Pearce and Geddes, Statutory Interpretation in Australia , 7th edition (2011), [6.38], is this: "It is common to find a provision in Interpretation Acts that declares that references to localities, jurisdictions and other matters and things are to be read as localities, etc, in and of the place where the Interpretation Act has been passed. Evatt J and McTiernan J relied on this provision to hold that the Interest Reduction Act 1931 (NSW) did not apply to loans raised in New South Wales by a New Zealand local authority: Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581 at 607 and 612-13. McTiernan J said that the phrase 'in and of' New South Wales 'imports both situation and a close identification of the matter or thing with New South Wales. The phrase is a composite one and perhaps should not be divided.' However, the operation of the section may be displaced by a contrary intention. In Birmingham University v FCT (1938) 60 CLR 572 the fact that extra-territorial income was subject to taxation was held to rebut an argument that the Interpretation Act provision limited a provision exempting the income of certain bodies from taxation to bodies within Australia. See also Jackson v FCT (1920) 27 CLR 503. The general subject matter of the legislation may also indicate that the Interpretation Act provision is not to be applied. An example of such a case is provided by the New South Wales Court of Appeal in O'Connor v Healey (1961) 69 SR (NSW) 111. O, an employee of H, was killed in New South Wales while journeying from his place of work in New South Wales to his home in Victoria. It was argued that the effect of the provision in the New South Wales Interpretation Act meant that all matters in the case had to be related to New South Wales. Accordingly, both ends of the journey had to be in New South Wales. This argument was rejected by the court. Jacobs JA (with whom the other judges agreed) said (at 114): It seems to me that the intention of [the Interpretation Act provision] is to provide the natural limit of a legislation, so that it applies in its subject matter to those situations which have a nexus with New South Wales. However, it is not every aspect of every sentence or clause of legislation which can be given the local New South Wales connotation. This decision was followed in Tan v Vocational Registration Appeal Committee (1996) 71 FCR 45; 41 ALD 506 to hold that a reference to a medical practitioner's training was not limited to his training in Australia. In Morgan v Goodall [1984] 1 NSWLR 108 a reference to the needs of the 'neighbourhood' in the licensing legislation was held to justify the taking into account of the facilities and population of a town immediately across the border. These decisions reflect a sensible approach to the application of the Interpretation Act . The provision is intended to make it unnecessary to identify places, jurisdictions and so on each time that they are mentioned, but it should not be used by a person to limit the scope of an Act. Nonetheless, the prima facie rule will be that references are to places within the jurisdiction and it will be necessary to demonstrate why this is not the case: Tobacco Leaf Marketing Board v Corte [1983] 3 NSWLR 10. The relationship between the Interpretation Act provision and the presumption that legislation is not to have extraterritorial operation ... is not entirely clear. Williams J in Vicars v Commissioner of Stamp Duties (NSW) (1945) 71 CLR 309 at 345 expressed the view that the section only gave statutory effect to the common law rule of construction. The Full High Court in Grannall v Geo Kellaway & Sons Pty Limited [1955] ALR 213 at 220 said that the section 'reinforced' the rule that all offences are local and territorial. On the other hand, Dixon J in the Wanganui case (1934) 50 CLR 581 at 600 seemed to think that the Interpretation Act section was narrower in effect than the presumption. With respect to this view, there would seem to be no good reason to read the Interpretation Act section narrowly. As both it and the presumption can be excluded by a contrary intention, it probably matters little which is applied. What is significant is that the legislature has chosen to endorse the notion that references in legislation are prima facie not to be given an extraterritorial effect. The courts should be aware of this indication of intent and not be overly ready to conclude that matters referred to include matters outside the jurisdiction." 34I hasten to add that much force was given by the defendant to the decision of Hunt J in Tobacco Leaf Marketing Board v Corte , which was cited in the extract from Pearce and Geddes and I have carefully considered it. However I incline to the view and I accept that prima facie the Interpretation Act provision must be read into the Home Building Act and the Regulation where appropriate. 35There is force in the argument submitted by the defendant that the interpretation which the defendant submits should be adopted, that adopted in the Tribunal that the due search and enquiry must be within New South Wales. That same argument is that the interpretation submitted by the plaintiff would require due search and enquiry throughout the world. 36Unfortunately this is a question of statutory construction and not a question of legislation. The defendant filed a notice of contention which, if acceded to, would require me to legislate. The first two grounds in the notice of contention are these: "In the alternative to the Applicant's primary submission, where an owner builder has departed Australia then that fact is within the definition of "disappearance" in regulation 52(3). In the alternative, if the owner builder departs to a county with which Australia does not have any treaty that gives recognition to an Australian judgment then the owner builder has relevantly disappeared." If I adopted such arguments I would in fact be replacing the legislature. The mischief identified on each side in the current case could easily be rectified if Parliament qualified section 90(2) and clause 2(3) of the Regulation with the words "in Australia" after the words "cannot be found". However, the only course open to this Court and the only course open to the CTTT was either to import the words "in New South Wales" or not to import those words. The real question is, does a contrary intention appear? 37In that regard there is force in the submissions made by the defendant that when one considers section 42A(2) and section 99(3) that a failure to pay a money order made by the CTTT or to pay a judgment debt recorded by this Court or the Supreme Court suspends a contractor's licence to do further work and is deemed to be in insolvency, such that the person who obtained the money order or the judgment creditor can seek satisfaction of the debt from the insurer in question whether the contractor be insolvent or not. This is hardly a "last resort" remedy. 38Counsel referred me to the second reading speech for the Home Building Amendment Act 2008 number 93, to which I have already referred. The speech has significance because it does tend to show the significance of the beneficial effect argued by the defendant. The speech was given by the Honourable Penny Sharp on 29 October 2008. The speech commences thus: "I am pleased to introduce the Home Building Amendment Bill 2008, which includes a number of important enhancements to the Home Warranty Insurance Scheme under the Home Building Act 1989. As members know, residential building is one of the most expensive purchases consumers undertake. The Home Building Act requires that insurers contracting residential building work worth more than $12,500 must take out home warranty insurance. Home Warranty insurance indemnifies a homeowner against loss and damage arising from insolvency, disappearance or death of a contractor. Insurance cover is provided for non-completion of work and for breach of statutory warranty. This form of insurance often is referred to as last-resort cover and acts as a safety net in the event of the most dire of circumstances where there is no longer a contractor in place to build, complete or repair the contracted work. A homeowner who has a problem with their [sic] home can currently access a comprehensive dispute resolution process involving inspections and mediation by Fair Trading or, if mediation fails, they can lodge a claim with the [CTTT]. Claims can also be lodged direction with a court. The tribunal can order the contractor to undertake work or pay compensation, which is known as a money order. If the contractor fails to comply with a money order the homeowner must take legal action to enforce the order or have the contractor made insolvent. Fair Trading's research has indicated that a significant number of consumers who have [had] orders made in their favour are not having them enforced. In the five years to 2007 there were 564 money orders issued by the tribunal that were complied with by the required date. Some 160 of those orders related to contracts with 132 contractors and were of sufficient value that a home warranty insurance contract was required. Thus they are not able to receive the relief that has been provided by the tribunal or launch a home warranty insurance claim. An insurance claim cannot be paid until the contractor is declared insolvent or extensive inquiries show the contractor has disappeared or has died. The proposal will provide consumers with the remedies to which they are entitled." 39I interpolate at this time that I have grave difficulty in understanding the facts that are being referred to by the Member of Parliament speaking on behalf of the Minister in question. However, it is clear that what the member is referring to is the inability of the persons obtaining money orders from the CTTT to enforce the order that has been made where there has been no access to relevant insurance. I also add that, clearly, if the scheme were a true "last-resort" scheme, that this procedure is inconsistent with it. The Member of Parliament continued thus: "Currently a licence cannot be issued or renewed if the applicant has not satisfied any order of the [CTTT] within the period specified by the tribunal. However, licences under the Home Building Act can be issued for up to a period of three years. The taking of disciplinary action could be a lengthy process and covers only non-compliance with a tribunal's order. Non-compliance with a court order is not grounds for disciplinary action. There needs to be a faster process to provide consumers with the remedies to which they are entitled. The proposed legislation, under proposed s 42A, will suspend a home building licence 28 days after the date on which the amount of money was due to be paid under the tribunal's order. I note that while tribunal orders tend to include a time frame for performance, court orders for money generally become payable once they are made. Regarding orders to so things, the District Court does not generally have the power to make such orders; but when the Supreme Court makes orders there is no general practice as to whether time limits are imposed. Accordingly, it is proposed that the director general will determine a reasonable period for payment in published guidelines if no period is specified in the order. This is necessary to make the principle applying to tribunal orders equally applicable to court orders. If an order is obtained staying the operation of the decision pending an appeal against the decision the suspension would take effect when the decision of the court or the tribunal is confirmed on appeal, and the contractor will not be able to continue in business until they comply with the order. ... The legislation will also reduce the time involved in determining a home warranty insurance claim. The legislation will provide consumers with the ability to make a home warranty insurance claim as soon as a contractor has their home building licence suspended for non-compliance with a money order. On suspension of a licence for non-compliance with an order, insurers will be required to provide an insurance contract that allows a claim to be made by a person on whose behalf the work is being done and that person's successors in title as though the contractor has died, disappeared or become insolvent. However, the insurer is not able to pay the amount that is the subject of the order of the tribunal or a court. I should point out that the risk of being insured does not change from the current situation. In other words, it is the risk of loss from non-completion of the work and from not being able to recover compensation for breach of statutory warranty or not being able to have the breaches rectified. The suspension of the licence of a builder for failure to comply with an order gives relief to the claimant only and not every other client of the builder. Under the proposed s 99(4) the insurer is required to accept liability for the claim only where the tribunal or a court has ordered the contractor to pay the beneficiary an amount of money, and the contractor has failed to comply with the order. Should the builder have other work in progress, those consumers would have to have a money order made in their favour by either a tribunal or a court, and the builder would have to fail to comply with that order before the insurer is required to accept liability for a claim. ... Taken as a whole, the proposed provisions will facilitate more timely access to home warranty insurance and will create an incentive for builder contractors to act appropriately when ordered to pay compensation to home owners. I note that the Government's bill is consistent with recommendation 18 of the inquiry into the operation of the Home Building Service, which was conducted by the Legislative Council's General Purpose Standing Committee No. 2 in 2007. The recommendation was as follows: 'That the New South Wales Government adopt the recommendation of the Home Warranty Insurance Scheme Board to introduce an additional trigger to enable consumers to access insurance without having to pursue a builder's bankruptcy or insolvency.'" I omit quoting the three final paragraphs of that speech. 40The speech of course is important for three reasons. Firstly, it shows that the "last-resort" principle is not being adhered to by Parliament itself. Secondly, it makes the point that "residential building is one of the most expensive purchases consumers undertake". Where, as here, there is a purchaser from an owner-builder, one might think that that is for most residents of New South Wales the most expensive that they undertake in their life. A similar submission was made on behalf of the defendant by Mr Alkadamani. In his submissions this was stated: "5.3 The subject matter of the legislation deals with residential premises. For most people in New South Wales, this will be their family home. The family home is usually the single most expensive and important asset in a family. 5.4 Substantial building defects in a family home would place great pressure on families. A family that had recently purchased their single most important asset would ordinarily find the discovery of substantial building defects a cause of great stress. 5.5 In addition to issues of inconvenience, possible dangers from sub-standard building work and emotional stress, building defects are also capable of requiring great expense to rectify. The legislature was concerned to protect consumers in such an important transaction." The third important matter to be derived from this speech is the fact that there have been continuing problems with home warranty insurance and with beneficiaries of policies being unable to enforce money orders and judgment debts. 41As I have sought to indicate, the arguments of each party before me have merit. However at the end of the day, I believe I must import the provisions of section 12(1)(b) of the Interpretation Act into both section 90(2) and clause 52(3). That is the prima facie position. The question essentially is, where must the beneficiary of the policy establish that the owner-builder cannot be found? Therefore, from where the owner-builder has disappeared? Not to import that provision would in my view throw an unnecessary and extremely big burden on the consumer, the beneficiary of the policy. The beneficiary of the policy would be forced to make due search enquiry not only in New South Wales but also in Australia and indeed such enquiries overseas as may be necessary depending upon the results of the due search enquiry locally, meaning within New South Wales and Australia. 42Is a contrary intention to be gleaned from either the Home Building Act 1989 or the Home Building Regulation 2004? I am unable in the circumstances that I mentioned to find such a contrary intention. The absurdity argued by the plaintiff is no less "absurd" than the decisions that when in the Evidence Act 1898 a witness need not be called who was "beyond the seas", "beyond the seas" meant only outside New South Wales and the person might be in Queensland, South Australia or Victoria but was for the purpose of the evidence legislation then in force "beyond the seas" because the English courts had determined that "beyond the seas" meant outside of the realm. 43I am aware of cases which I will not mention where the Court of Appeal, for example, have mentioned that arguments are finely balanced but in the end they prefer one interpretation to another. Sometimes policy arguments are advanced, usually they are not. I am bold enough to state a policy argument. Here the legislation is for the benefit of consumers and in particular in the present case the purchaser of a property, which was the subject of work done by an owner-builder. The owners of residential properties are not, as a general proposition, millionaires, although some are. Many home owners do not have deep pockets. Even carrying out due search enquiry in New South Wales and in Australia can be onerous. To require a homeowner to make due search and enquiry throughout the world, as may be argued depending on what evidence is available, could be extremely onerous. Pursuing Mr and Mrs Millar in Vanuatu may be extremely difficult and costly. The policy argument of course is that pursuing somebody who has left New South Wales would best be done by someone with deep pockets such as an insurer. Equally, the cover provided by home warranty insurance ought not be defeated because the insurer, who has long pockets, can ascertain where the contractor or owner-builder in default has gone although the beneficiary of the policy might not be able to do so. Here it is clear that the insurer ascertained the whereabouts of Mr and Mrs Millar when the defendant could not and now uses its information to deny the defendant access to the policy upon which the defendant seeks to rely. 44Of course that is only an instance of the policy which assists me in reaching the interpretation which I have, that section 12(1)(b) of the Interpretation Act ought be imported into section 90(2) of the Home Building Act 1999 and into clause 52(3) of the Home Building Regulation 2004 and to hold that the defendant is only required to prove that the owner-builder has disappeared either from New South Wales or even might have disappeared within New South Wales and that due search and enquiry need only establish that he cannot be found in New South Wales. 45This is the last day of term. I have given an ex-tempore judgment because I am fully committed for the first six months of next term and will not be sitting in the civil list in the first six months of next term other than in the Special Statutory Compensation List over which I generally preside. Therefore I have no opportunity to give judgment next term and I prefer to deal with this matter after hearing very careful and learned argument over the last two days. I commend both Mr Feller and his junior Mr Dawson and Mr Alkadamani for the carefully crafted written submissions and the carefully and well articulated oral arguments and I regret that I may have not have done justice to those arguments in my ruling but those arguments will be available in the transcript and in the written submissions which have marked for identification and will be left with the papers. 46For those reasons the appeal is dismissed, I order the plaintiff to pay the defendant's costs. ********** Amendments 21 November 2012 - Amended title - abbreviation of "trading as" and surname of defendant only 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: 21 November 2012