Drummond v Gordian Runoff Ltd - [2023] NSWSC 607

Supreme Court

New South Wales

Medium Neutral Citation: Drummond v Gordian Runoff Ltd [2023] NSWSC 607
Hearing dates: 3 April 2023
Date of orders: 9 June 2023
Decision date: 09 June 2023
Jurisdiction: Equity - Commercial List
Before: Rees J
Decision:
Summons dismissed with costs.

Catchwords:
INSURANCE — “delayed claim” under “last resort” home warranty insurance policy — s 103BB, Home Building Act 1989 (NSW) — insured risk, being builder’s insolvency, materialises three years after end of period of cover — insured does not give notice under s 103BB(3) — whether s 54 Insurance Contracts Act 1984 (Cth) applies — s 103BB directly alters parties’ rights and obligations — s 54 provides relief against “the effect of a contract of insurance” not the effect of State law
CONSTITUTIONAL LAW — inconsistency of Commonwealth and State laws — whether s 103BB, Home Building Act 1989 (NSW) inconsistent with s 54, Insurance Contracts Act 1984 (Cth) — no inconsistency — s 54, Insurance Contracts Act not engaged as the “effect” is not “the effect of a contract of insurance” but of State law.

Legislation Cited:
Home Building Act 1989 (NSW)
Home Building Amendment (Insurance) Act 2009 (NSW)
Home Building Amendment Act 2011 (NSW)
Home Building Regulation 2004
Insurance Contracts Act 1984 (Cth)
NSW Self Insurance Corporation Amendment (Home Warranty Insurance) Act 2010 (NSW)
Retail Leases Act 1994 (NSW)

Cases Cited:
Foy v Calliden Insurance Limited [2017] NSWDC 33
FAI General Insurance Co Limited v Australian Hospital Care Pty Ltd (2001) 204 CLR 641
Maxwell v Highway Hauliers Pty Ltd [2014] HCA 33; (2014) 252 CLR 590
Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252
Gosford City Council v GIO General Ltd [2003] NSWCA 34
SP 57504 v Building Insurers' Guarantee Corporation [2008] NSWSC 1022
Newcastle City Council v GIO General (1997) 191 CLR 85
East End Real Estate Pty Ltd v CE Health Casualty & General Insurance Limited (1991) 25 NSWLR 400
Antico v Heath Fielding Australia Pty Ltd (1997) 188 CLR 652
Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252; (2013) 302 ALR 732
CA & MEC McInally Nominees Pty Ltd v HTW Valuers (Brisbane) Pty Ltd Ltd [2001] QSC 388
Gosford City Council v GIO General Ltd [2002] NSWSC 511
Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2022] HCA 38; (2022) 97 ALJR 1
Byrne v Australian Airlines Limited (1995) 185 CLR 410
Victoria v The Commonwealth (1937) 58 CLR 618
Norsworthy v SGIC [1999] SASC 496
Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 244 CLR 508
Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418
Momcilovic v The Queen (2011) 245 CLR 1
NRMA Insurance Ltd v Tatt (1989) 94 FLR 339
Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1993) 32 NSWLR 735

Texts Cited:
Greg Pynt, Australian Insurance Law: A First Reference (1st ed, 2008, LexisNexis Butterworth)
Herzfield and Prince, Interpretation (2nd ed, 2020, Thomson…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NSWSC 607
Decision Date: 09 June 2023

CaseChat Overview and Summary

Drummond sought to recover costs under a "last resort" home warranty insurance policy issued by Gordian Runoff Ltd. The dispute arose after the insured's builder became insolvent, an event that triggered the insurance coverage, but only three years after the policy period had expired. Drummond did not provide notice to Gordian as required by s 103BB(3) of the Home Building Act 1989 (NSW). The central legal issues were whether s 54 of the Insurance Contracts Act 1984 (Cth) applied to relieve Drummond from the consequences of his failure to provide notice, and whether there was any inconsistency between s 103BB of the Home Building Act and s 54 of the Insurance Contracts Act.

The court examined whether s 103BB of the Home Building Act directly altered the rights and obligations of the parties, and whether s 54 of the Insurance Contracts Act provided relief from the effect of a contract of insurance. It held that s 103BB of the Home Building Act did directly alter the parties' rights and obligations by requiring notice, and that s 54 of the Insurance Contracts Act did not apply as it was concerned with the effect of a contract of insurance, not the effect of State law. The court found no inconsistency between the Commonwealth and State laws, as s 54 was not triggered by the State law requirement.

In conclusion, the court determined that Drummond was not relieved from the consequences of his failure to provide notice as required by s 103BB of the Home Building Act. The court held that the provisions of the Home Building Act prevailed over the general relief provided by the Insurance Contracts Act. Drummond's claim was dismissed.

Orders