Introbuild Constructions Pty Ltd v Insurance and Care NSW

[2025] NSWSC 773

Supreme Court

New South Wales

Medium Neutral Citation:

Introbuild Constructions Pty Ltd v Insurance and Care NSW [2025] NSWSC 773

Hearing dates:

4 July 2025

Date of orders:

18 July 2025

Decision date:

18 July 2025

Jurisdiction:

Common Law

Before:

Chen J

Decision:

(1) Extend the time for the plaintiff to file the amended summons, and to commence proceedings, in this Court to 21 December 2024.

(2) Order the amended summons filed 20 December 2024 be dismissed.

(3) Order the plaintiff to pay the third defendant’s costs of and incidental to the proceedings in this Court.

(4) Order the plaintiff to pay the first and second defendants’ costs of and incidental to the proceedings in this Court up to, and inclusive of, 19 December 2024.

Catchwords:

ADMINISTRATIVE LAW – judicial review – where plaintiff has been repeatedly refused eligibility for Home Building Compensation Fund insurance – where notice of resignation of directorship was not immediately lodged by accountant – unacceptable risk scenario – where refusal of eligibility could affect the plaintiff’s “ongoing viability” – whether the reasons included an apparently baseless but material finding that the plaintiff’s director had engaged in phoenix activity – no issue about the adequacy of reasons – interaction between the eligibility manual and eligibility guidelines – use of the word “fatal” – amended summons dismissed

Legislation Cited:

Home Building Act 1989 (NSW)

Home Building Regulation 2014 (NSW)

NSW Self Insurance Corporation Act 2004 (NSW)

Supreme Court Act 1970 (NSW)

Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Attorney-General (NSW) v Quin (1990) 170 CLR 1; [1990] HCA 21

BYW22 v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FCAFC 206

Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 456

Granville Hotel Operations Pty Ltd v Independent Liquor and Gaming Authority [2023] NSWCA 248; (2023) 413 ALR 499

LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2024) 280 CLR 321; [2024] HCA 12

Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6

New South Wales Land and Housing Corporation v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

R v Australian Broadcasting Tribunal; Ex Parte Hardiman (1980) 144 CLR 13; [1980] HCA 13

Texts Cited:

Home Building Compensation (Eligibility) Insurance Guidelines – published 17 December 2021

Home Building Compensation Fund Eligibility Manual – published November 2023; version 11.2

Category:

Principal judgment

Parties:

Introbuild Constructions Pty Ltd ACN 164 013 263 (plaintiff)
Insurance and Care NSW ABN 16 759 382 489 (first defendant)
NSW Self Insurance Corporation (second defendant)
Attorney-General for NSW (third defendant)

Representation:

Counsel:
P Horobin (plaintiff)
C Tran (third defendant)

Solicitors:
Invictus Legal (plaintiff)
NSW Crown Solicitor’s Office (third defendant)

File Number(s):

2024/00367756

Publication restriction:

N/A

JUDGMENT

Introduction

1. Introbuild Constructions Pty Ltd (‘the plaintiff’) is a building company in New South Wales (‘NSW’). It requires Home Building Compensation Fund insurance (‘HBCF insurance’) to enter residential building contracts exceeding $20,000: s 92 of the Home Building Act 1989 (NSW) (‘the HBA’); reg 53 of the Home Building Regulation 2014 (NSW).

2. The plaintiff has been unable to obtain HBCF insurance since December 2023 having been deemed ‘ineligible’ for it by the delegate of the NSW Self Insurance Corporation (‘the second defendant’), Insurance and Care NSW (‘the first defendant’). The plaintiff was previously eligible. The first defendant is the only provider of HBCF insurance in NSW.

3. By amended summons dated 20 December 2024, the plaintiff seeks judicial review of the first defendant’s decision dated 2 May 2024 (‘the ineligibility decision’) to uphold an earlier ineligibility decision dated 15 April 2024 and, if successful, orders of certiorari and mandamus.

4. The plaintiff initially advanced three grounds of review, but abandoned the first of them. The remaining grounds of review may be summarised, for introductory purposes, as follows: that the ineligibility decision involved a factual finding that lacked “a proper evidentiary foundation” or was “not open on the material” (ground 2), and that the ineligibility decision involved the misconstruction or misunderstanding of the insurance eligibility guidelines (issued by the State Insurance Regulatory Authority (‘SIRA’)) under the HBA (‘the eligibility guidelines’), thereby resulting “in an improper exercise of statutory power” (ground 3).

5. The Attorney-General for NSW (‘the third defendant’) was joined to these proceedings as a contradictor, given the first and second defendant adopted the usual course of filing submitting appearances: R v Australian Broadcasting Tribunal; Ex Parte Hardiman (1980) 144 CLR 13, 35-36; [1980] HCA 13.

Leave

6. The plaintiff requires leave to bring its application given the summons (and amended summons) were filed more than three months after the date of the ineligibility decision: r 59.10(1) of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’). Notwithstanding, it argues that the Court should exercise its power to extend time (r 59.10(2) of the UCPR) given the existence of a variety of relevant factors, including that it:

1. commenced proceedings nine weeks after the relevant three-month UCPR period expiring (the implication presumably being that this is not a significant delay);

2. used some of that time to complain to and correspond with the SIRA;

3. is particularly interested (r 59.10(3)(a) of the UCPR) in challenging the decision, given ineligibility for the HBCF insurance will “negatively affect its ongoing viability”; and

4. is not aware of any prejudice caused to the defendants by the “passage of time” (r 59.10(3)(b) of the UCPR; plaintiff’s submissions at [52]).

7. I accept that a failure to obtain HBCF insurance could have significant implications for the plaintiff. There is no evidence of the defendants suffering prejudice, nor did the third defendant advance any submission opposing the grant of leave. Given these factors, I grant leave to extend time.

Background

8. James Marroun is the director of the plaintiff. He was formerly the director of another company, TLH Services Pty Ltd (‘TLH’). TLH provided labour hire services.

9. On 25 June 2020, Mr Marroun purportedly emailed his accountant, Lloyd Fadi Agha, and instructed him to remove him as the director of TLH in place of his brother-in-law, Anesty Shakir. Documentation confirming the change of directorship was not lodged by Mr Agha with the Australian Securities and Investments Commission (‘ASIC’) at this time. TLH ceased trading on 30 November 2023 and entered administration on 4 December 2023.

10. On 7 December 2023, the first defendant initiated a “special eligibility review” into the plaintiff’s eligibility for HBCF insurance.

11. On 11 December 2023, the plaintiff’s eligibility for HBCF insurance was suspended because some “unacceptable risk scenarios” contained within section 9.1 of version 11.2 of the HBCF Eligibility Manual (‘the eligibility manual’) had eventuated. The effect of this suspension was that the plaintiff could not obtain HBCF insurance certificates for any new building projects. The first defendant’s suspension report reasoned that:

“Under section 9.1 of the HBCF Eligibility Manual, the nine-month period is assessed to have started from the date a notice was lodged with ASIC confirming the director has resigned their directorship (that is, the date of lodgement and not the effective date of the notice). We understand that James Marroun advised [Mr Agha] to remove him as a director on the 25th of June 2020. Note however that this was not lodged with ASIC until 20/11/2023. This is a fatal scenario”.

12. Section 9.1 of the eligibility manual relevantly provides that:

“icare HBCF deems that some factors make a Builder ineligible for insurance (both new applications and reviews) and should have an overriding impact on any Eligibility decision. The factors below are an overriding impediment for Eligibility and typically cause us to decline Eligibility.

When these factors exist, they must be supported by objective facts that can be externally reviewed:

…

7. A business suspected of applying for Eligibility to provide funding to a business that is subject to a DOCA within the meaning of the Corporations Act or other compromise arrangement with creditors (such as on the basis of the documented terms of the proposed DOCA or other compromise arrangement).

…

11. A key manager, director or principal of the Builder being reviewed has been a director or key manager of another business within nine months of that business undergoing a Business Closure. When calculating the immediate nine months before a Business Closure:

a. Directorship: The nine-month period is assessed to have started from the date a notice was lodged with ASIC confirming the director has resigned their directorship (that is, the date of lodgement and not the ‘effective’ date of the notice)”.

13. On 20 December 2023, the plaintiff applied to the first defendant to have its HBCF insurance eligibility reinstated and included financial documents and a letter from Mr Agha in support. The first defendant declined to reinstate the plaintiff’s eligibility on 10 January 2024.

14. Between 16 January 2024 and 9 April 2024, the plaintiff made further unsuccessful reinstatement applications.

15. On 15 April 2024, the plaintiff requested that the first defendant internally review its decision of 9 April 2024. The first defendant did so, and confirmed that decision. It communicated this ineligibility decision to the plaintiff in a letter dated 2 May 2024.

The grounds of review: introduction

16. The plaintiff’s grounds of review are:

Ground 2: “The first defendant’s purported decision is affected by jurisdictional error due to critical findings that lacked a proper evidentiary foundation, or were not open on the material, such that the decision is legally unreasonable”.

Ground 3: “The first defendant’s purported decision is affected by jurisdictional error in that it misconstrued or misunderstood the purposes of [the eligibility guidelines] and in so doing has failed to take into account relevant factors which has resulted in an improper exercise of statutory power”.

17. Before addressing these grounds and the plaintiff’s arguments in support of them, the following matters separately warrant emphasis.

18. First, the plaintiff’s position was that the second defendant (or its delegate) is required to provide a statement of reasons when it makes an eligibility decision. That obligation was said to derive from cl 6.8 of the eligibility guidelines. The third defendant was prepared to accept – for the present matter only – that there was an obligation to provide reasons under that clause.

19. Secondly, consistent with the above, the parties accepted that the reasons of the first defendant were those contained in the ineligibility decision letter dated 2 May 2024.

20. Thirdly, although the third defendant accepted that there was an obligation to provide reasons, it nevertheless submitted that any reasons would be informed by cl 6.8.2 of the eligibility guidelines, which requires the eligibility decision-maker to provide “the reasons for…declining eligibility, including on re-assessment”.

21. Fourthly, it is important to note that, when exercising its supervisory jurisdiction under s 69 of the Supreme Court Act 1970 (NSW), the Court is concerned with the legality of the decision and not its merits: “[t]he merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and…for the repository alone”: Attorney-General (NSW) v Quin (1990) 170 CLR 1, 36; [1990] HCA 21.

22. Fifthly, as both grounds involve consideration of the manner in which the first defendant expressed its reasons (as contained in the ineligibility decision), regard must be had to a number of well-established principles that reinforce the need for judicial restraint. These include that the reasons of an administrative decision maker should not be reviewed “minutely and finely with an eye keenly attuned to the perception of error”: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280, 287; [1993] FCA 456 (‘Pozzolanic’); Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, 272; [1996] HCA 6; that the reasons should be read fairly, in context and, where necessary, as a whole: New South Wales Land and Housing Corporation v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231 at [77] (‘Orr’); and that there should be a “degree of tolerance for looseness in the language” of, or “unhappy phrasing” by, a decision-maker: Pozzolanic at 287; Orr at [77]. These well-settled principles emphasise the need for “principled restraint by the judicial branch in relation to the scrutiny on judicial review of an administrator’s reasons”: BYW22 v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FCAFC 206 at [6]; Orr at [76].

23. I turn now to address the plaintiff’s grounds of review.

Ground 2: the “phoenix activity” finding

The plaintiff’s submissions

24. By this ground of review, the plaintiff argues that the first defendant found that it was ineligible for HBCF insurance because the “plaintiff’s director had engaged in phoenix activity” and it was “not open to find” that he had (amended summons at [2](a) and (b); plaintiff’s submissions at [23]).

25. The plaintiff argued in furtherance of this ground that the first defendant “identified anti-phoenixing laws” as one reason for its refusal of [the plaintiff’s] application “in circumstances where there is no question that those laws had [no] application” to the plaintiff (plaintiff’s submissions at [24]). The decision was thus said to be “affected by jurisdictional error” because there was no question about the inapplicability of those anti-phoenixing laws to the plaintiff (plaintiff’s submissions at [29]).

26. The third defendant, by way of response, submitted that there was no “phoenix activity finding”, and that the references to the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth) (‘the TLA Act’) were used as a means, and only as a means, to confirm the consistency of the approach that had been taken – namely, that the resignation of a directorship was effective on the date that the resignation notification was lodged with ASIC, and not at some other time. The third defendant had a fallback submission: although it conceded that any phoenix activity finding would be erroneous, it argued that any such finding was immaterial to the ineligibility decision and would not vitiate it.

Discussion and consideration

27. As explained above, the arguments of the parties effectively left two live and narrow issues for this ground of review: first, whether a phoenix activity finding was made and, secondly, if so, whether such a finding was immaterial to the first defendant’s ineligibility decision.

28. In its written submissions, the plaintiff argued that the phoenix activity finding was made in the following parts of the reasons of the first defendant (plaintiff’s submissions at [13]; plaintiff’s emphasis):

“Per section 9.1 of the EM, a key manager, director or principal of the Builder being reviewed has been a director or key manager of another business within nine months of that business undergoing a Business Closure is a fatal scenario that has an overriding impediment for eligibility. When calculating the immediate nine months before a Business Closure for directorships, the nine-month period is assessed to have started from the date a notice was lodged with ASIC confirming the director has resigned their directorship (that is, the date of lodgment and not the ‘effective’ date of the notice). In the case of James Marroun’s directorship in TLH, the resignation lodgment was made to ASIC on 20 November 2023.

• The adverse events noted above are still within the immediate 5-year history and [are] deemed a fatal scenario.

…

Resigning or removing a company director

icare’s position remains unchanged on Mr James Marroun’s resignation lodgment and effective date with ASIC. Further we note that in February 2020, the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 was enacted to help combat illegal phoenix activity. Illegal phoenix activity involves creating a new company to continue the business of an existing company that has been deliberately liquidated to avoid paying outstanding debts, including taxes, creditors and employee entitlements”.

29. During submissions, the plaintiff also relied upon the following part of the ineligibility decision:

“icare, as the sole government insurer for the HBCF scheme, has obligations to protect homeowner’s (sic) and the community’s interests. We do not support builders who engage in phoenix corporate activity (that is, using the corporate veil to start up new operations where [a] previous homeowner, home building compensation insurer or creditors have suffered a loss through a prior associated business)”.

30. Although the plaintiff argued that the phoenix activity finding was contained in these three passages (see [28]-[29], above) of the ineligibility decision, the first of those passages (commencing “Per section 9.1 of the EM”) does not, in my view, constitute part of the substantive reasons of the first defendant for its decision. Rather, it appears to simply summarise the ineligibility decision dated 6 February 2024, which upheld an earlier ineligibility decision dated 10 January 2024. That understanding of the structure of the ineligibility decision is, I consider, particularly apparent from the location of these remarks under the sub-heading “Dispute Decision outcome for Introbuild dated 6 February 2024”.

31. The plaintiff accepted during submissions that the abovementioned interpretation of the first passage was correct, but nevertheless maintained its argument that the phoenix activity finding was made in the remaining two passages.

32. The plaintiff’s argument in substance was that, given the subject matter of these passages, it was “plain” that the first defendant found that Mr Marroun had engaged in phoenix activity, as the first defendant understood that concept. Further, although the ground of review relates to the first defendant erroneously making the phoenix activity finding and not to any suggested inadequacy in its reasons, the plaintiff argued that these passages were important because the decision would essentially be left with “no other explanation or reasoning” without them. The last submission appeared to be directed to providing practical confirmation about the existence of the phoenix activity finding and its materiality.

33. I do not accept the plaintiff’s arguments, for the following reasons.

34. First, the two remaining passages of the ineligibility decision that were argued to contain the phoenix activity finding were not, in my view, directed to nor concerned with whether Mr Marroun actually engaged in phoenix activity. No “finding” about that matter was made in either passage.

35. In relation to the second passage, the reference to the TLA Act was to confirm the consistency of the first defendant’s approach to calculating the date of the resignation of a directorship – namely, if there is no notification provided within the prescribed time, “the effective resignation date will be the lodg[e]ment date” of the resignation notice with ASIC. That date was relevant, for example, to cl 9.1(11)(a), which provides that the date of resignation by a director “is assessed to have started from the date a notice was lodged with ASIC…”. Thus, contrary to what was argued by the plaintiff, the first defendant’s reference to the TLA Act was for that purpose, and did not involve the first defendant making the alleged finding.

30. In relation to the third passage, the statement by the second defendant about its “obligations” and who they do not support does not, in my view, amount to a phoenix activity finding. The plaintiff argued that it did but did not – at least clearly – identify why. Although the relevance of this statement may be a little unclear given it adopts language from cl 12.1 of the eligibility manual, that ambiguity does not transform the passage into a finding of the kind argued by the plaintiff, as the third defendant submitted.

31. Secondly, putting aside these two passages, the ineligibility decision was not, in my view, bereft of reasons. The first defendant reasoned that it upheld the ineligibility decision because it accepted that there were present “unacceptable risk scenarios” within cl 9.1 of the eligibility manual. There was thus no basis to infer, as the plaintiff argued, that an absence of reasons in connection with cl 9.1 provided practical confirmation about the existence of the alleged phoenix activity finding.

32. I will briefly explain why this is the case but, in doing so, emphasise that the plaintiff does not challenge the ineligibility decision based on the inadequacy of the reasons.

33. The first reason for upholding the ineligibility decision was in connection with the deed of company arrangement (‘DOCA’) for TLH. The DOCA appears to have caused the first defendant to consider cl 9.1(7) of the eligibility manual:

“Deed of Company Arrangement (DOCA) for TLH

• As part of the current dispute, an updated letter from the deed administrator along with a DOCA proposal was provided. The DOCA proposal document was signed by previous director Mr. James Marroun on 14 December 2023. Per this DOCA, James Marroun was required to contribute $130,000 into a Deed Fund, which would be used to compensate the creditors of TLH.

• Per Section 9.1 of the EM, a business suspected of applying for Eligibility to provide funding to a business that is subject to a DOCA within the meaning of the Corporations Act or other compromise arrangement with creditors (such as on the basis of the documented terms of the proposed DOCA or other compromise arrangement) is an unacceptable scenario that has an overriding impediment for Eligibility. Based on the DOCA pertaining to TLH, icare holds the view Introbuild is seeking eligibility to assist the funding of the DOCA with TLH”.

40. That last finding corresponds with the language of cl 9.1(7) of the eligibility manual, which, as previously outlined at [12], above, provides:

“7. A business suspected of applying for Eligibility to provide funding to a business that is subject to a DOCA within the meaning of the Corporations Act or other compromise arrangement with creditors (such as on the basis of the documented terms of the proposed DOCA or other compromise arrangement)”.

41. The basis for that finding does not lie in any suggested phoenix activity but, rather, in the DOCA itself. I consider that this is apparent from both dot points (see [39], above), which describe the deed and its content, and confirm that the first defendant’s conclusion was “[b]ased on the DOCA”, respectively. Separately, as the third defendant submitted, there is no reference to phoenix activity in this part of the decision (albeit that it may have been relevant to this matter), thereby reinforcing the conclusion that no such finding was in fact made.

42. The second reason for upholding the decision was in connection with the “ABN Status of TLH”, which involved the first defendant considering cl 9.1(11) of the eligibility manual:

“ABN Status of TLH

• We understand that TLH is now back to registered status with ASIC. However, as per section 29 of the EM, the definition of Business Closure includes the following, “A company which was a Chapter 5 body corporate within the meaning of the Corporations Act (regardless of whether that external administration was subsequently terminated, released, discharged, or otherwise ended).” Therefore, the previous external administration status of TLH is still considered to be an unacceptable risk scenario for this eligibility application”.

43. This finding corresponds with the language of cl 9.1(11) of the eligibility manual, which, as previously outlined at [12], above, provides:

“11. A key manager, director or principal of the Builder being reviewed has been a director or key manager of another business within nine months of that business undergoing a Business Closure. When calculating the immediate nine months before a Business Closure:

a. Directorship: The nine-month period is assessed to have started from the date a notice was lodged with ASIC confirming the director has resigned their directorship (that is, the date of lodgement and not the ‘effective’ date of the notice)”.

44. The basis for this finding derives from the date that the resignation notice was lodged and an application of the eligibility manual itself, not any suggested phoenix activity finding. Consistent with this, there is no reference to any phoenix activity on the part of Mr Marroun in this part of the decision.

45. Further, the reasons of the first defendant concluded with the following:

“Regrettably, we are unable to grant eligibility for Introbuild, based on the unacceptable risk scenarios identified above. Furthermore, as these unacceptable scenarios have occurred within the last five years, the eligibility considerations per section 12.1 of the [Eligibility Manual] are not applicable to Introbuild”.

46. Notwithstanding that the conclusion reached on the “first issue” is sufficient to dispose of this ground of review, I will briefly address the “second issue” – namely, whether any suggested finding was immaterial to the first defendant’s ineligibility decision.

47. The third defendant argued that even if, contrary to its principal submission, a phoenix activity finding was made, that finding was immaterial to the first defendant’s ineligibility decision. The third defendant submitted that the actual bases for the decision were independent of any phoenix activity finding, with the consequence that there was no realistic possibility that the decision made in fact “could have been different if the error had not occurred”: LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2024) 280 CLR 321; [2024] HCA 12 at [7] (‘LPDT’; emphasis in original).

48. The plaintiff accepted that it was necessary to demonstrate the materiality of this error for relief to be granted, but submitted that the relevant threshold had been met because the first defendant’s decision “rested on that finding”, and because no other “explanation or reasoning” was given to justify the engagement of cl 9.1. It may be accepted that, if such a finding were made and the decision rested on that finding, the threshold would readily be met: the error would clearly have affected the decision. However, the plaintiff’s submissions did not extend to grappling with the analysis of the reasons substantively advanced by the third defendant (see [39]-[45], above). They instead simply denied that any reasoning relating to cl 9.1 was in fact given. This denial was presumably to support the inference that, if no other reasoning was provided, the alleged finding was both important and relied upon by the first defendant in arriving at its conclusion to decline eligibility.

49. In these circumstances, given the actual bases for the decision were independent of any (assumed) phoenix activity finding and an “explanation or reasoning” for the engagement of cl 9.1 was given, I am unpersuaded that there exists a realistic possibility that the first defendant’s decision could have been different had that (assumed) error not been made.

50. For these reasons, this ground of review should be dismissed.

Ground 3: misconstruing or misunderstanding the purposes of the eligibility guidelines

The plaintiff’s submissions

51. By this ground of review, the plaintiff argues that the first defendant committed jurisdictional error by misconstruing or misunderstanding the “purposes” of the eligibility guidelines and “in doing so has failed to take into account relevant factors which has resulted in an improper exercise of statutory power”.

52. Given the argument rests on a suggested misconstruction or misunderstanding of the purposes of the eligibility guidelines by the first defendant, it is necessary to provide a description of them.

53. The eligibility guidelines were published on 17 December 2021 and were issued under ss 103EC, 103ED and 104E of the HBA: cl 3.1 of the eligibility guidelines. They are expressed to “apply to all insurers…that are the holder of a licence...and includes [the second defendant]”: cl 4.1 of the eligibility guidelines. In exercising its functions with respect to insurance under the HBA, the second defendant is “to comply” with such eligibility guidelines: s 8A(2) of the NSW Self Insurance Corporation Act 2004 (NSW) (‘the SIC Act’).

54. The eligibility guidelines contain “[e]ligibility principles”. Licence holders’ “eligibility models must comply” with those “overarching principles”: cl 5.3 of the eligibility guidelines. As I will shortly explain, the plaintiff’s argument for this ground sought to engage two such eligibility principles.

55. The term “eligibility model” is defined in cl 2 of the eligibility guidelines as:

“The systems and practices by which a licence holder decides whether it will offer to underwrite a contractor (comprising matter[s] such as decision-making criteria, conditions, duration, reviews, suspensions, cancellations, and dispute processes)”.

56. The eligibility manual is expressed as having been issued as “part of meeting [the] eligibility model submission requirements” (cl 1 of the eligibility manual) and describes its objectives as the “objectives of the icare HBCF Eligibility model” (cl 2 of the eligibility manual).

Discussion and consideration

57. As explained during submissions, the plaintiff’s argument was that the first defendant misconstrued or misapprehended the eligibility guidelines because, having concluded that cl 9.1 of the eligibility manual was engaged, it “neglected to consider” any other matters – specifically, it failed to consider two eligibility principles:

1. Principle 3: “Eligibility is assessed reasonably” – specifically, cl 5.9 of the eligibility guidelines, which provides:

“Licence holders must assess contractors reasonably, taking into consideration factors relevant to their claim risks while avoiding unreasonable barriers to contractors’ ability to trade. The eligibility criteria and assessment process should be easily understandable for contractors to navigate and avoid undue cost”.

2. Principle 6: “Eligibility supports a strong and viable residential building industry” – specifically, cl 5.13 of the eligibility guidelines, which provides:

“Licence holders’ eligibility criteria must not unduly limit eligibility, such that only a small segment of contractors would be able to access building cover contracts. Eligibility models must provide reasonable access for new contractors entering the market. Examples of unacceptable criteria include limiting eligibility only to contractors that have previously entered into building cover contracts, or requiring contractors to have long continuous trading histories”.

58. The plaintiff argued that the first defendant’s misconstruction or misunderstanding of the eligibility guidelines was evident from its use of the word “fatal” on two occasions in the ineligibility decision. The use of that word, so the argument went, made it plain that the first defendant considered no other matters once it had made its eligibility finding. That is, once the first defendant had established the existence of a scenario within cl 9.1 of the eligibility manual, the plaintiff submitted that it should be inferred that the first defendant “discounted any other consideration through its use of the word ‘fatal’ as it appears and because there is nothing else by way of background that would indicate they’ve given consideration to any other issue”.

59. The premise of the plaintiff’s argument was that adherence to the eligibility guidelines (particularly cll 5.9 and 5.13), given the statutory setting (see [53]ff, above), was a pre-condition to the valid exercise of the first defendant’s functions in determining eligibility for insurance: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [93]. Precisely why that resulted remained largely undeveloped.

60. During submissions, the plaintiff drew attention to s 8A(2) of the SIC Act and submitted that this section “requires that the decision-maker comply with the [eligibility] guidelines” and, given they were “created under the [HBA]”, they were “not simply a policy document”. In my view, neither submission materially advances the matter.

61. As to the first matter, the broad subject matter of the eligibility guidelines is licence holders’ eligibility models. The requirement is for those eligibility models to comply with the “overarching principles” (cll 5.3 and 6.1 of the eligibility guidelines), rather than to impose obligations upon “decision-makers”, as the plaintiff argued.

62. As to the second matter, it may be accepted that the eligibility guidelines are not “simply a policy document”. Even accepting as much does not explain why non-compliance with them is a pre-condition to the valid exercise of the first defendant’s functions, in the present context.

63. To the extent that this issue was addressed by the plaintiff in its written submissions, it was confined to a reference to the decision in Granville Hotel Operations Pty Ltd v Independent Liquor and Gaming Authority [2023] NSWCA 248; (2023) 413 ALR 499 at [27] (‘Granville Hotel’). Whilst acknowledging the “different context”, the plaintiff relied upon general statements made in that case about the purpose of a guideline – namely, that it “articulates matters which the [Independent Liquor and Gaming] Authority must consider when deciding whether to grant an approval…”. 

64. It is important to understand the context of these last remarks. The guidelines in Granville Hotel that were under consideration were required to be taken into account by the Authority when exercising its statutory power to approve a shorter mandatory shutdown period of gaming machines (at [3]):

“The Authority’s approval may only be given if it has taken into consideration such guidelines as may be approved by the Minister. A brief guideline has been so approved (the Guideline). Clause 1.2 of that Guideline states that ‘approval may be given if the Authority is satisfied that…[t]he venue falls within an area where other hospitality and entertainment venues are open to 6 am on Saturdays or Sundays or public holidays’”.

65. Two matters should be noted about the decision in Granville Hotel, and the plaintiff’s general reliance upon remarks made in that case.

66. The first is that, once the context is understood, the statement from Granville Hotel about what the Authority was required to consider when making its determination is clearly directed to the statutory scheme in question, rather than a freestanding principle of general application.

67. The second is that the statutory scheme in Granville Hotel is far removed from the present one. Here, as earlier noted, the eligibility guidelines apply to “all insurers…that are holders of a licence…and includes [the second defendant]”, and contains “overarching principles” for their eligibility models: cll 4.1 and 5.3 of the eligibility guidelines.

68. In my view, cll 5.9 and 5.13 of the eligibility guidelines are not directed to the present situation, less still do they impose direct obligations upon “all insurers” that must be addressed when (relevantly here) they determine eligibility for insurance, with the consequence that, if not complied with, any determination by them is invalid.

69. In any event, I do not accept the plaintiff’s argument for the following further reasons.

70. First, in my view, the use of the word “fatal” does not dictate that the first defendant approached its consideration of the plaintiff’s eligibility in the way argued – viz., that no other matters were required to be, or in fact were, considered. That is because the word, where it first appears in the ineligibility decision, formed part of the summary of the background – background that included the earlier, but challenged, eligibility application.

71. Further, to the extent that the first defendant made reference to the word elsewhere (it appears on page one of the ineligibility decision: “The adverse events noted above are still within the immediate 5-year history and deemed a fatal scenario”; see [28], above), it remains necessary to approach the task of considering the reasons of the first defendant, and its use of the word “fatal”, with the well-established principles relating to the limits of judicial review and the need for “principled restraint” firmly in mind (see [21]ff, above).

72. Undertaking the exercise guided by these principles, it is apparent, in my view, that the first defendant did consider other matters beyond the terms of cll 9.1(7) and 9.1(11) of the eligibility manual. That is evident from the various references in its ineligibility decision to other matters, including the following:

1. The initial part of the ineligibility decision records that the first defendant received “additional information submitted” by the plaintiff and that it has “considered the dispute and all the supporting information”. That reference provides some, albeit limited, support for the first defendant having considered matters beyond cl 9.1.

2. In the part of the ineligibility decision headed “Resigning or removing a company director” (the “resignation lodgement and effective date…”), the first defendant addressed and engaged with the explanation referred to in its earlier decision. That explanation related to the alleged failure by Mr Agha to action Mr Marroun’s instructions and its determination of when he was taken to have resigned. This explanation was essentially the plaintiff’s “case”; however, the first defendant was not persuaded to accept it. Whether the first defendant did so – involving, as it does, the merits – was a matter for the first defendant, and not this Court.

3. The conclusion of the ineligibility decision referenced that “the eligibility considerations per section 12.1 of the [eligibility manual] are not applicable” to the plaintiff. That the first defendant turned its mind to cl 12.1 further supports, in my view, that its consideration of matters extended beyond cl 9.1.

73. It follows from the above that I do not accept that the use of the word “fatal” leads to the inference that the first defendant confined its consideration only to cl 9.1 of the eligibility manual, as the plaintiff argued.

74. It is worth emphasising, as the third defendant did during submissions, the limit of the plaintiff’s challenge under this ground. Its argument was that there was no consideration of any matter beyond the terms of cl 9.1, contrary to the eligibility guidelines. It did not argue (for example) that, to the extent any consideration was given to matters beyond the terms of cl 9.1, such consideration was vitiated by some form of error. Further, it is worth observing that the plaintiff’s argument tended to drift into the terms of the eligibility manual when the ground was directed to the eligibility guidelines and failed to explain (or, as the third defendant submitted, “glosse[d] over”) how any non-compliance with the eligibility manual resulted in non-compliance with the eligibility guidelines.

75. Secondly, I accept, as the third defendant argued, that the plaintiff’s argument concerning the eligibility guidelines was flawed because, even assuming there was a misconstruction or misunderstanding in the way argued, any purported failure to apply the eligibility guidelines does not result in invalidity, given the terms of s 8A(3) of the SIC Act.

73. To explain why I consider that to be so, it is necessary to refer to s 8A of the SIC Act and the common ground between the parties in relation to this argument. That section relevantly provides:

“8A   Specific functions in relation to insurance under Home Building Act 1989

(1) General functions The Self Insurance Corporation has the following functions with respect to insurance under Part 6 of the Home Building Act 1989—

(a)  to carry on the business of providing insurance for building work done in New South Wales that requires insurance under that Part,

(b)  to manage the Home Building Compensation Fund,

(c)  to enter into contracts, agreements or other arrangements with building management service providers and other persons (including re-insurers) for services relating to the exercise of the Corporation’s functions in connection with the provision of insurance under that Part and the management of the Home Building Compensation Fund.

…

(2) Insurance guidelines In exercising its functions with respect to insurance under Part 6 of the Home Building Act 1989, the Self Insurance Corporation is to comply with any Insurance Guidelines issued under the Home Building Act 1989.

(3) A failure to comply with any such guidelines does not affect the validity of any action taken (or omitted to be taken) by or on behalf of the Self Insurance Corporation in connection with the exercise of its functions with respect to insurance under Part 6 of the Home Building Act 1989.

(4)-(8) …”.

77. It was common ground that the function being exercised by the first defendant was “with respect to insurance under Part 6” of the HBA, and that the eligibility guidelines were “Insurance Guidelines issued” under the HBA: s 8A(2) of the SIC Act.

78. I return now to the third defendant’s argument. The plaintiff did not contest the above propositions drawn from s 8A of the SIC Act, nor that s 8A(3) would answer this ground of review. However, it sought to escape the engagement of s 8A(3) by arguing that the error was not a “failure to comply” but, rather, of a different character – namely, a “misapprehension” of the eligibility guidelines, causing “it to miscarry the exercise of power” (plaintiff’s reply submissions at [14]).

79. I do not accept the plaintiff’s argument. In my view, seeking to describe the alleged error as being a misconstruction, misunderstanding or a misapprehension is no more than a variation on the theme of non-compliance, and would, as a matter of substance, amount to a “failure to comply” with the eligibility guidelines. It follows, therefore, that s 8A(3) mandates that invalidity does not result from the suggested non-compliance with cll 5.9 and 5.13 of the eligibility guidelines.

80. For these reasons, this ground of review should be dismissed.

Orders

81. For the above reasons, I make the following orders:

1. Extend the time for the plaintiff to file the amended summons, and to commence proceedings, in this Court to 21 December 2024.

2. Order the amended summons filed 20 December 2024 be dismissed.

3. Order the plaintiff to pay the third defendant’s costs of and incidental to the proceedings in this Court.

4. Order the plaintiff to pay the first and second defendants’ costs of and incidental to the proceedings in this Court up to, and inclusive of, 19 December 2024.

**********

Decision last updated: 22 July 2025