Atlen P/L v Building Insurers' Guarantee Corp

The appeal concerned a claim by Atlen Pty Ltd (the appellant) for indemnity from the Building Insurers' Guarantee Corporation (BIGC, the respondent) under Part 6A of the *Home Building Act 1989* (NSW). The dispute arose after a subcontractor abandoned performance of a subcontract, and the subcontractor's insurer became insolvent. The appellant sought to be indemnified by BIGC, arguing it was entitled to stand behind the insolvent subcontractor's insurer. The Supreme Court had previously dismissed the appellant's proceedings against BIGC and the State of New South Wales.

The central legal issues before the court were whether a subcontractor was required by Part 6 of the *Home Building Act 1989* to enter into a contract of insurance for the benefit of the head contractor, and consequently, whether the respondent, BIGC, was bound to provide an indemnity in relation to the insolvent subcontractor's failed insurer. The court was required to interpret the provisions of Part 6 and Part 6A of the Act, particularly concerning the scope of compulsory insurance and the conditions for indemnity from BIGC.

The court reasoned that the *Home Building Act 1989* mandated that a contract of insurance in relation to residential building work must insure the person on whose behalf the work is being done against specific risks, including non-completion due to the contractor's insolvency or death, and loss arising from a breach of statutory warranty. While the appellant had complied with its obligations under s92 by obtaining its own insurance policy, the present litigation did not involve rights under that policy. Instead, the appellant sought indemnity under Part 6A based on the subcontractor's policy. However, s103I(2)(a) of the Act explicitly states that "the builder to which the policy relates is not entitled to the indemnity," which precluded the appellant from claiming indemnity under the subcontractor's policy.

The appeal was dismissed with costs.