Kostas & Anor v HIA Insurance Services Pty Limited t-as Home Owners Warranty

The High Court of Australia considered an appeal by the applicants, Kostas and another, against HIA Insurance Services Pty Limited, trading as Home Owners Warranty. The dispute concerned the interpretation of a statutory warranty scheme for home building work in New South Wales, specifically whether the scheme applied to a contract for the construction of a duplex. The applicants had entered into a contract with a builder for the construction of a duplex, which was intended to be two separate dwellings. The builder subsequently became insolvent, and the applicants sought to claim under the Home Building Compensation Fund, administered by HIA Insurance Services.

The central legal issue before the High Court was whether the contract for the construction of the duplex constituted a contract for "residential building work" as defined by the relevant legislation, the *Home Building Act 1989* (NSW). This definition was critical because the statutory warranty scheme, and therefore the availability of compensation, was confined to residential building work. The applicants contended that the construction of a duplex, even if intended for separate occupation, fell within the scope of residential building work. HIA Insurance Services argued that the construction of a duplex, comprising two distinct dwellings, did not qualify as "residential building work" under the Act.

The High Court, in its joint judgment, analysed the definition of "residential building work" in the *Home Building Act 1989* (NSW) and relevant regulations. Their Honours found that the Act and its associated regulations contemplated a single dwelling or a building containing multiple dwellings, but not the construction of a building that was designed to be divided into separate, self-contained residential units from its inception. The Court reasoned that the statutory scheme was intended to cover the construction of a single residential building, or a building containing multiple units within a single structure, rather than the creation of two separate residential structures on a single parcel of land. The Court concluded that the contract for the construction of the duplex did not fall within the definition of residential building work as contemplated by the Act.

The High Court allowed the appeal, setting aside the orders of the primary judge and the Court of Appeal. The Court held that the applicants were not entitled to a remedy under the Home Building Compensation Fund.