Festa Holdings Pty Ltd v Adderton

Festa Holdings Pty Ltd (the purchaser) appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning a contract for the sale of residential property. The dispute arose after the purchaser sought to terminate the contract, alleging a defect in the vendor's title due to the absence of a certificate of insurance under the *Home Building Act 1989* (NSW). The vendor, Adderton, resisted the termination and sought to forfeit the deposit paid by the purchaser.

The central legal issues before the Court of Appeal were whether a certificate of insurance issued under the *Home Building Act 1989* forms part of the title to a residential property, and consequently, whether the lack of such a certificate constituted a defect in title that entitled the purchaser to terminate the contract. The court also considered whether a subsequent purchaser of residential property is obliged to procure such insurance.

The Court of Appeal affirmed the primary judge's decision, holding that a certificate of insurance under the *Home Building Act 1989* is not a document that forms part of the title to a property. The court reasoned that the Act imposes obligations on the builder or developer to obtain the insurance for the benefit of the owner, and while a failure to do so may have consequences for the builder, it does not render the title defective in a manner that would permit a purchaser to terminate a subsequent sale contract. The court found that the purchaser's obligation to procure insurance, if any, would arise under the terms of the sale contract itself, not as an inherent defect in the vendor's title.

The appeal was dismissed, and Festa Holdings Pty Ltd was ordered to pay Adderton's costs.