Murray v Insurance and Care NSW t/as iCare
[2025] NSWCATCD 131
•25 September 2025
|
New South Wales |
Case Name: | Murray v Insurance and Care NSW t/as iCare |
Medium Neutral Citation: | [2025] NSWCATCD 131 |
Hearing Date(s): | 30 June 2025 |
Date of Orders: | 25 September 2025 |
Decision Date: | 25 September 2025 |
Jurisdiction: | Consumer and Commercial Division |
Before: | JA Rose, Senior Member |
Decision: | (1) Nicholas Murray is removed as an applicant to the proceeding. |
Catchwords: | BUILDING AND CONSTRUCTION — Home Building Act 1989 (NSW) — Building dispute — Jurisdiction — NSW Civil and Administrative Tribunal Consumer and Commercial Division — Jurisdiction and powers — whether a claim by a building owner for a refund of insurance premium paid by a builder for compulsory home building compensation insurance is a “building claim” |
Legislation Cited: | Civil and Administrative Tribunal Act 2013 (NSW) |
Cases Cited: | Amirbeaggi v NSW Self Insurance Corporation [2023] NSWCATCD 171 |
Texts Cited: | Philip Bambagiotti, Building Disputes & The Home Building Act 1989 (NSW) Thomson Reuters [2012] |
Category: | Principal judgment |
Parties: | Nicholas Murray (First Applicant) |
Representation: | N Murray, in person (Applicants) |
File Number(s): | 2025/77296 |
Publication Restriction: | Nil |
REASONS FOR DECISION
Introduction
This is an interlocutory decision addressing only the question of whether the Tribunal has jurisdiction to hear and determine the claim in this proceeding under Part 3A of the Home Building Act 1989 (NSW) (the HB Act).
The applicant (17WSC) is the owner of a residential apartment building at [address] NSW (the building). The respondent is a statutory body that administers the Home Building Compensation Fund (HBCF) under the HB Act on behalf of the NSW Self-Insurance Corporation, providing home building compensation (HBC) insurance under the terms of the HB Act.
As is set out in more detail below, 17WSC engaged an original builder (Remedial Building Services Australia Pty Limited – RBS), to undertake fire systems upgrade works at the building. The value of the works was well in excess of $20,000, which required RBS to obtain HBC insurance under the Act (which I will refer to as the first HBC policy). The terms of the contract with RBS required 17WSC to pay RBS the cost of that insurance, in addition to the contracted price of that work. Accordingly, 17WSC paid RBS $33,523 to cover the cost of that insurance.
RBS abandoned work under the contract shortly after beginning the project. 17WSC then engaged a second builder (FJG) to complete the work. That builder was also required to obtain an HBC insurance policy from iCare, which involved the payment of a separate premium. On a similar basis, the second builder charged 17WSC the cost of that insurance policy as an “over extra” cost. On completion of the works by the second builder, 17WSC sought a refund from iCare of a large proportion of the premium that 17WSC had paid RBS (and RBS had paid to iCare) on the first HBC policy.
iCare has denied that 17WSC is entitled to receive any refund of the premium that was paid for the first HBC policy, principally on the ground that 17WSC is not a party to the policy, which is between iCare and RBS. That denial has prompted 17WSC to commence this proceeding, seeking to recover that money from iCare under section 48O of the HB Act.
In conjunction with its denial of liability, iCare disputes that the Tribunal has jurisdiction to hear or determine the claim under the HB Act; asserting that 17WSC’s claim is not a “building claim” as defined in section 48A of that Act. To that end, iCare has lodged a Miscellaneous Matters application in the proceeding (iCare application), seeking an order that the proceeding be dismissed under s 55(1)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the CAT Act), on the ground that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance.
That objection to jurisdiction was then listed for this separate hearing, in advance of the substantive claim. Both parties were directed to lodge and give to the other party the documents that they relied on in relation to iCare’s challenge to the Tribunal’s jurisdiction, including documentary evidence and submissions. Both parties were also given leave to be legally represented at that hearing.
For the reasons set out below, the Tribunal has determined that 17WSC’s claim against iCare is not a “building claim” under section 48A of the HB Act, Consequently the Tribunal does not have jurisdiction to determine the claim under section 48K of that Act. The proceeding must therefore be dismissed.
The hearing
Mr Daniel Farinah of counsel represented iCare at the hearing, instructed by the NSW Crown Solicitor, while 17WSC was represented by Mr Murray, one of its officers. The hearing proceeded in the usual manner, with iCare (as the applicant on the jurisdiction application) having the burden of proving any facts that it relies on in support of its application to the balance of probabilities.
It was agreed at the start of the hearing that Mr Murray does not have standing to be an applicant in the proceeding, as he is not a party to any of the relevant dealings outside his capacity as an officer of 17WSC. Mr Murray can therefore be removed as a party to the proceeding.
After each party made brief opening statements the parties presented the evidence that they relied on in respect of the iCare application, relying solely on the bundles of documents that they had lodged in accordance with the Tribunal’s earlier directions:
(1)iCare relied on the bundle of documents that it had lodged with the Tribunal on 8 April (exhibit R1, comprising 68 pages) which included:
(a)the policy wording of the iCare insurance HBC policy, as at 1 June 2018;
(b)extracted pages of the building contract between 17WSC and RBS, dated 18 October 2021;
(c)the iCare HBC policy certificate for that contract, dated 23 February 2022; and
(d)a bundle of emails between Mr Murray and iCare, dated variously.
(2)17WSC relied on the bundle of documents that it had lodged with the Tribunal on 22 April (exhibit A1, comprising 21 pages), which included:
(a)a bundle of emails between Mr Murray and iCare, dated variously;
(b)an extract of sections 28 and 55 of the CAT Act;
(c)extracts of sections 48A and 48O of the HB Act;
(d)the iCare HBC policy certificate for the building contract between 17WSC and RBS;
(e)the iCare HBC policy certificate for the building contract between 17WSC and FJG; and
(f)iCare’s HBCF Homeowner Fact Sheet.
Neither party objected to any of those documents being used as evidence in the proceeding.
The parties also relied on the written outlines of submissions that they had lodged with their documents, which they supplemented orally at the hearing. They also had the opportunity to respond to the arguments made by the opposing party. I then reserved my decision.
The issues to be determined
Section 28(1) of the CAT Act provides that:
“The Tribunal has such jurisdiction and functions as may be conferred or imposed on it by or under this Act or any other legislation.”
Consequently, the Tribunal’s power flows from the enabling legislation that imposes jurisdiction on the Tribunal. In this case, that is Part 3A of the HB Act.
Within Part 3A, there are several provisions that work together to give the Tribunal jurisdiction to hear and make orders in respect of a claim under the HB Act:
Firstly, the claim must be a “building claim”, as that term is defined in section 48A of the Act; if it is not a building claim then it automatically falls outside the Tribunal’s jurisdiction under the Act.
Secondly, a building claim must satisfy the procedural preconditions for the Tribunal’s jurisdiction to be engaged, as outlined in section 48J – such as the obligation to have most building claims investigated or mediated by NSW Fair Trading before the claim can be lodged (unless exempted under the Act).
Thirdly, the building claim must fall within the jurisdictional limits imposed by section 48K – including limits on the value of the claim and the time in which the claim may be brought in the Tribunal.
Lastly, section 48O gives the Tribunal specified powers that may be used in “determining a building claim” within its jurisdiction under section 48K, including the power to order payment of a monetary sum.
However, for sections 48J, 48K and 48O to have any function, it is first necessary to confirm that an applicant’s claim is a “building claim” over which the Tribunal has jurisdiction.
The iCare application only takes issue with whether 17WSC’s claim is a “building claim” within the meaning given to that term in section 48A of the HB Act. No other arguments were raised on the subsequent provisions. Consequently, the only question to be determined in identifying whether the Tribunal has jurisdiction to hear and determine 17WSC’s claim, is whether 17WSC’s claim is properly characterised as a “building claim” under the definition in section 48A.
The applicable law
Section 48A(1) of the HB Act defines “building claim” in the following terms:
(1) In this Part--
“building claim” means a claim for--
(a) the payment of a specified sum of money, or
(b) the supply of specified services, or
(c) relief from payment of a specified sum of money, or
(d) the delivery, return or replacement of specified goods or goods of a specified description, or
(e) a combination of two or more of the remedies referred to in paragraphs (a)-(d),
that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim.
…
(2) Without limiting the definition of “building claim”, a building claim includes the following--
(a) an appeal against a decision of an insurer under a building cover contract required to be entered into under this Act,
(b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C.
The definition of “building cover contract” in Schedule 1 of the HB Act includes a HBC insurance policy obtained by a builder from iCare.
“Building goods or services”, “goods”, “services” and “supply”, as used in that definition, are also defined in section 48A(1):
“building goods or services” means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services--
(a) supplied by the person who contracts to do, or otherwise does, that work, or
(b) supplied in any circumstances prescribed by the regulations to the person who contracts to do that work.
“goods” ,
“services” and
“supply” have the same meanings as in Part 6A of the Fair Trading Act 1987.Relevantly, sections 79D to 79H of the Fair Trading Act 1987 (NSW) (FT Act) define:
(1)“services” to include “the provision of insurance cover”, and “any other rights (including rights in relation to, and interests in, property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce”; and
(2)a supply of services to include (a) providing, granting or rendering services for valuable consideration; (b) agreeing to supply services; and/or (c) supplying services together with goods.
The facts
The NSW Self Insurance Corporation (SICorp) is a statutory body established under the NSW Self Insurance Corporation Act 2004 (NSW). It plays a central role in managing insurance schemes for the New South Wales Government, including the HBCF. SICorp is the insurer of record under all HBC insurance policies.
HBC insurance policies are generally arranged by a broker, acting on behalf of either a builder or an owner. Under Part 6 of the HB Act, no residential building work may be commenced without a HBC insurance policy. The standard terms and conditions of HBC insurance policies were in evidence as part of exhibit R1.
iCare is a government agency tasked with administering the HBCF on behalf of SICorp. iCare handles the day-to-day operations of the Fund, including assessing builder eligibility, issuing certificates of insurance and managing claims and dispute resolution. iCare also ensures compliance with Part 6 of the HB Act. Pursuant to iCare’s premium guidelines, the premium and the total price for HBC insurance policies are set by reference to the value of the contracted works to be covered by the policy.
17WSC (as “The Principal”) and RBS (as “The Contractor”) entered into the first building contract on 18 October 2021 – under which 17WSC engaged RBS to undertake the remedial work defined by the contract for a lump-sum price of $752,514.40, including GST. The notes to the contract excluded the cost of HBC insurance from the value of the contract, noting that this cost would be an “over-extra cost”. RBS then obtained the first HBC policy from iCare, to cover the work to be undertaken at the property under that contract. 17WSC was named as the “Homeowner” on the certificate of insurance.
The certificate of insurance issued by iCare for the first HBC policy recorded the contract amount ($752,514), the premium paid ($33,522.99) and that the total price for the policy, including GST and stamp duty, was $40,194.07. The certificate also recorded that the policy covered both the construction period and the warranty period for the work. RBS issued an invoice to 17WSC for the price of that insurance as an over-extra cost, which 17WSC duly paid.
RBS began work under the contract in 2022. However it stopped work in about July 2022 after undertaking some initial or preliminary work, and never returned to the project. After an unspecified process, 17WSC entered into a fresh contract with FJG on 1 November 2023, under which 17WSC engaged FJG to undertake fire hydrant and sprinkler works at the property for a new contract sum of $357,994.
On 15 November 2023, Mr Murray wrote to iCare in his capacity as a board member of 17WSC, setting out the above facts and indicating that 17WSC wished to apply for a refund of the premium on the first HBC policy. iCare responded on 17 November 2023, referring to section 20.9.4— Early Termination of the Building Contract in iCare’s underwriting manual, stating:
Should the building contract [have] been terminated with the below mentioned builder [RBS]. Please kindly request builder to forward required supporting information to their HBCF Insurance broker so the HBCF Certificate can be amended accordingly.
We will also notify the builder’s builder [sic – broker?] with the below email received so broker can advise the builder and request the appropriate supporting information for next step of action.
FJG obtained its own HBC insurance policy from iCare on 30 November 2023, covering the work to be undertaken at the property under FJG’s contract with 17WSC. 17WSC was again named as the “homeowner” on the certificate of insurance, which recorded the contract amount under the new contract ($357,994) the premium paid ($14,871.61) and the total price, including GST and stamp duty ($17,831.06). 17WSC similarly reimbursed FJG for the cost of obtaining that policy.
Mr Murray wrote back to iCare several months later, on 21 June 2024, referring to his letter of 17 November and writing (my underlining):
We have attempted to contact the builder RBS to get them to inform iCare about their cessation of work. The result was they have now come after us via a lawyer for work they haven’t done. This is the first contact from RBS for approximately 18 months.
I can’t see how we can get RBS to agree to iCare releasing the part premium to us. The premium was based on a contracted amount of $684,104 (excluding GST). The work they actually completed was valued at only $43,550 (excluding GST) made up of concrete core drilling ($15,800) and dry fire penetration sealing ($27,750). I have copies of the 2 progress claims to support this.
The rest of the work has now been completed by others covered by a separate HBCF policy, meaning we have paid twice for the cover.
There must be a method where a part premium can be reclaimed while a builder and client are in dispute and the contract is no longer being pursued.
Could you please assist us receiving a part refund of the premium which was $36,700.06 (excluding GST). Any refund should not be paid to RBS. It was paid by 17 Wylde Street Cooperative Limited.
iCare responded to Mr Murray about four weeks later, on 17 July, informing him that RBS had responded by claiming that it had completed the work to the full contract value covered by the first HBC policy, and asking Mr Murray to review and confirm whether the work the builder claimed as completed was correct. Mr Murray responded on 18 July, asserting that RBS’s numbers did not correspond with the claims they made at the time or what was approved by the project manager and paid.
iCare responded on 23 July, advising that:
(1)iCare is unable to cancel a HBC policy in circumstances where a building contract between the builder and homeowner is terminated after work has started or monies have been paid under the building contract and before the work is completed, as iCare is at risk in those circumstances.
(2)iCare HBCF has determined to treat any early termination of the contract as a variation and to amend the premium to reflect the value of the works completed. The partial refund of the premium in those circumstances would be the difference between the premium (including GST and Stamp Duty) paid on the original contract price (including variations) and the revised premium (including GST and Stamp Duty) based on the amount of the final accounts/invoice.
(3)For a refund to occur, iCare must:
• obtain the original Certificate of Insurance
• obtain a statutory declaration from the Builder detailing the stage of works completed
• confirm the final contract value
• get confirmation that there is no dispute between the parties as to the value of the work performed
• confirm that there are no monies outstanding to icare(4)Where there is a dispute between the customer and the builder, it will not be possible to partly refund the premium until the dispute is resolved.
Mr Murray wrote a long email in response on 15 August 2024, pressing for a refund and asking whether there was an avenue of appeal where the builder would not respond or engage at all. iCare responded the same day, suggesting that Mr Murray contact the Tribunal or otherwise seek independent advice.
17WSC then lodged its claim in the Tribunal. As noted above, the claim seeks payment of money from iCare, being a refund of a large part of the premium paid for the first HBC policy.
The HBC insurance scheme
Part 6 of the HB Act sets out the scheme for provision of home building warranty insurance under that Act. In short compass:
(1)By section 92, a contractor must not do residential building work under a contract unless a contract of insurance that complies with the Act is in force in relation to that work in the name of the contractor and a certificate of insurance evidencing the contract has been provided to at least one other party to the contract.
(2)By section 99, the insurance contract must insure the person on whose behalf the work is being done against the risk of loss resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor, and against the risk that they would be unable to have the contract to rectify the breach of statutory warranty, or recover compensation from the contractor for any such breach, because of the insolvency, death or disappearance of the contractor.
(3)Section 92C provides that the benefit of a contract of insurance taken out by a contractor under the HB Act extends to any non-contracting owner in relation to the land at the time the contract to do residential building work was entered into, as if the non-contracting owner were a person on whose behalf the work is done.
(4)Section 102 provides for the general requirements for that insurance, including through regulations made under the HB Act.
(5)Section 103BD enables the State Insurance Regulatory Authority to issue “Insurance Guidelines” that may provide for the determination of insurance premiums for contracts of insurance required to be entered into under Part 6, including the manner in which premiums are to be determined on the factors to be taken into account in determining premiums.
Clause 7 of the Home Building Compensation (Premium) Insurance Guidelines issued by the State Insurance Regulatory Authority in December 2021 provides that:
(1)[At 7.1]: Licensed insurers must quote a premium for all contractors the licensed insurer has deemed eligible in accordance with the home building compensation (eligibility) insurance guidelines.
(2)[At 7.3.1]: Factors that a licenced insurer must consider in pricing each contract of insurance include (amongst other things) the contract value.
(3)[At 7.8]: Licensed insurers must price contracts of insurance in accordance with the contract price of the contract for the works to be insured, excluding the cost of the home building compensation insurance and excluding any applicable taxes and insurance intermediary fees.
As contained in exhibit R1, the terms of the iCare insurance contract under Part 6 of the HB Act provide:
(1)[At 1.1(a)]: The policy covers “you” [which is defined to mean the person on whose behalf the work is done or is to be done including any owner of the land at the time the building contract is entered into, on which residential building work is done and any successor in title to that person] for specified losses or damage in respect of the work covered by the policy, namely:
(a)loss or damage resulting from non-completion of the work because of the insolvency, death or disappearance of the builder [which is defined to mean the builder described in the insurance application for the policy]; and
(b)loss or damage arising from a breach of statutory warranty by the builder, the loss or damage in respect of which “you” cannot recover compensation from the builder or have the builder rectify because of the insolvency, death or disappearance of the builder.
(2)[At 2]: There are specific time limits on the coverage of the policy, referred to as the “period of insurance”.
(3)[At 4.1]: The conditions for making a claim under the policy, including that the claim must be made during the period of insurance.
Consideration
As described above, the Tribunal’s jurisdiction must be tethered to the statute. In this case, that is Part 3A of the HB Act. The authorities confirm that the Tribunal cannot extend its jurisdiction under Part 3A by implication.
Putting aside section 48A(2) for the moment, the part of the definition of building claim that is contained in section 48A(1) is not framed by reference to any particular causes of action as such. A building claim can therefore represent a right of action in one or more aspects of law, such as contract, tort, statutory duty or other rights, provided that it: (a) seeks one or more of the defined remedies, and (b) has a sufficient relationship with building work – by either:
(1)arising “from” the supply of “building goods or services” (as defined) (the first limb); or
(2)arising “under” a “collateral” contract (the second limb).
The relationship of those types of claims to “building goods or services” is wide and expansive - not only does it include goods or services supplied “for” the carrying out of residential building work or specialist work by a person who contracts to do that work or otherwise does that work; but it also includes goods or services supplied by such a person “in connection with” the carrying out of residential building work or specialist work.
The expanded definitions of building claim in section 48A(2) add further layers to that definition, adding complexity to the definition of building claim – including by introducing as a building claim the concept of “an appeal against a decision of an insurer under a contract of insurance required to be entered into under this Act”.
As was set out in its written and oral submissions, iCare asserts that 17WSC’s claim:
(1)is not a claim that arises from a supply of building goods or services (whether under a contract or not), under the first limb of section 48A(1);
(2)is not a claim that arises under a contract that is collateral to a contract for the supply of building goods or services under the second limb of section 48A(1); and
(3)is not an appeal against the decision of an insurer under a building cover contract required to be entered into under the HB Act under the additional limb in section 48A(2)(a).
17WSC’s argument in response disputes that assertion, submitting that the claim is a building claim within the second or third of those categories – as it either arises from a collateral contract or as an appeal against a relevant decision that has been made by an insurer (iCare).
It is appropriate to consider the grounds on which iCare has opposed the claim separately, by reference to each of those limbs.
Is 17WSC’s claim one “that arises from a supply of building goods or services”?
iCare submitted that the phrase “arising from” in the first limb of the definition in section 48A(1) (which it asserted was a relational term that requires a causal connection) means that the dispute must be about the supply of building goods or services. This, it argued, means that the subject matter of the dispute must concern the supply of building goods or services. It argued that a dispute about the refund of part of an insurance premium does not fall within the scope of this first limb because the subject of the claim was not the supply of building goods or services, but an insurance premium.
By contrast, 17WSC submitted, that the first HBC insurance policy was “absolutely essential to any major residential building work” and “an insurance policy without which no building work can commence”, arguing that the Tribunal was the appropriate forum for the issue to be decided.
I agree with iCare that the phrase “arising from” in section 48A(1) requires there to be a causal connection between an applicant’s claim and a supply of building goods or services. Without establishing a causal connection between the claimed payment and the “supply” of “building goods or services”, as both of those terms are defined, the claim cannot be considered a building claim: Grygiel v Baine [2005] NSWCA 218 at [59] (Basten JA, Mason P agreeing).
The definition of “services” is defined by reference to the FT Act. The provision of insurance cover is expressly included within the scope of “services” for the purpose of that Act: section 79F(1). It also constitutes the conferral or provision of an intangible benefit or privilege in trade or commerce – granting the benefitted party a statutory right to claim compensation in certain circumstances. This fits squarely with the definition of services under section 79F of the FT Act.
As noted above, “supply” is also defined by reference to the FT Act, where it is defined inclusively (and not exhaustively). The definition of “supply” in section 79G(2) of that Act in relation to services, as so defined, expressly includes the rendering or granting of such services, such as the provision of insurance coverage..
The FT Act (and, to a significant extent, the HB Act) is a consumer protection statute. Australian courts and tribunals have consistently taken a functional and expansive view when interpreting consumer protection statutes. This extends to the consideration of what constitutes a “service” for the purpose of consumer protection law. Under that broad interpretation, third-party beneficiaries can be considered as recipients of services if the benefit of the service is deliberately conferred on the beneficiary, particularly under a statutory mandate.
Drawing this together, the benefit of insurance coverage provided to a building owner under the HBCF scheme constitutes a “service” under the FT Act provisions, that is supplied by iCare to the building owner even though the building owner is not a party to the insurance contract. This interpretation aligns with both the consumer protection purpose of the legislation and the broad judicial approach to defining “services” in similar contexts. On this basis, the insurance coverage benefit provided by iCare to 17WSC is a service to which the HB Act applies. The next question is whether it is within the scope of “building goods or services” under the definition in section 48A?
The definition of “building goods or services” in section 48A of the HB Act has several components: assuming that a relevant good or service is identified, in order to come within the definition the good or service concerned must be:
(1)(firstly) supplied “for or in connection with” the carrying out of residential building work or specialist work; and
(2)(secondly) either:
(a)supplied by the person who contracts to do, or otherwise does, that work, or
(b)supplied in circumstances prescribed by the regulations to the person who contracts to do that work.
The words “for or in connection with” are words of wide application. They are sufficiently wide to capture goods or services that are supplied by a third party where the third party’s goods or services are supplied either for or have a logical connection with the carrying out of residential building work or specialist work by a particular builder. On this analysis, third-party insurance coverage provided by a statutory insurer and which is connected with (because it covers) the conduct of residential building work or specialist work would arguably fall within the first part of the definition of “building goods or services”. Assuming that this is the case leads to an analysis of the two alternate limbs mentioned at (2) above.
Dealing with the second limb first, the Home Building Regulation 2014 (NSW) does not prescribe any particular circumstances for the purpose of paragraph (b) in the definition of “building goods or services” under section 48A(1). This renders limb (b) effectively inactive or empty, and the definition of “building goods or services” is strictly limited to what the builder supplies; the result being that any service that is supplied by a third party is excluded from the definition of “building goods or services”.
It follows that the first HBC policy, while conferring insurance coverage for the benefit of 17WSC as the building owner, is not a service that was supplied by RBS to 17WSC. RBS merely facilitated the procurement of the insurance policy; the actual supply of the insurance service was made by iCare, as a third-party statutory insurer. There are no circumstances prescribed by the regulations that would bring the supply of that insurance service within the scope of paragraph (b) of the definition of “building goods or services” under section 48A(1). Accordingly, 17WSC’s claim for payment of money against iCare does not “arise from a supply of building goods or services” within the meaning of paragraph (a) of section 48A(1), and therefore does not constitute a “building claim” under that limb for the purposes of Part 3A of the HB Act.
Is 17WSC’s claim one “that arises under a contract that is collateral to a contract for the supply of building goods or services”?
This limb requires the Tribunal to be satisfied that 17WSC’s claim arises under a contract that is collateral to the supply of building goods or services – in this case, the supply of building work by RBS to 17WSC under the original building contract. 17WSC argues that the first HBC policy was a collateral contract to that supply.
iCare submitted that the phrase “collateral contract” in the second limb of section 48A(1) does not simply mean any contract that has some connection with the building contract or work, arguing that a collateral contract in this context will arise where a contractual representation is made as to the terms on which the building services are to be supplied, which is not apt to describe a building cover contract, which is a statutory precondition to any building services being carried out.
In opposition to that argument, 17WSC submitted that the first HBC policy was collateral to a contract for the supply of building services:
… as it is a compulsory element of the building contract – ie the Home Building Act requires an HBCF insurance contract to be entered into, before any work can commence”.
…
… In the current dispute, the collateral contract (the HBCF policy) is a requirement in the main building contract between [17WSC] and the builder RBS at clause 2.2.1.3 and mentioned in two other parts of the building contract.
…
[17WSC] would not have entered into the building contract with RBS but for the promise in 3 places in that contract, that RBS would enter into an HBCF insurance contract with the Respondent. In those circumstances, particularly where the Respondent is the only issuer of HBCF policies, it seems clear that the HBCF policy is a collateral contract for the purposes of clause 48A(1) of the Home Building Act.
17WSC further argued that:
… The repayment of a wrongly paid premium must logically arise “under” the policy. The policy requires the payment of the premium before it commences (and the Applicant has an obligation under the building contract to pay for that policy). The policy would not exist but for the payment of the premium. Accordingly payment of the premium and by extension, a refund of the premium is a fundamental element of any policy of insurance and therefore, must be “under” the policy.
iCare sought to rebut each of those arguments in its reply submissions.
Grygiel v Baine concerned a claim about legal services that were supplied to a homeowner. The homeowner argued that the legal services were provided under a contract that was collateral to the supply of building services, under the second limb in section 48A(1). At [8], the Court of Appeal (Basten JA; Mason P agreeing) identified the issues arising on the second limb, as follows (my underlining):
The second limb requires an address to the terms and factual settings of both the supposed collateral contract and the supply contract to produce a decision whether or not the supposed collateral contract is collateral to the supply contract. The question whether a contract is collateral to the supply contract requires reference to the terms, express or implied, of both contracts and consideration of how the terms of the first bear on the operation of terms of the supply contract; collaterality is a characteristic of the collateral contract, not a reference to acts done in performance of it, nor a reference to contemporaneity of the two contracts. It seems that consideration is required of the bearing of the supposed collateral contract and the rights and obligations under it on the supply contract and the rights and obligations under it; and that some commonality of parties is necessary.
In examining what constitutes a collateral contract, Basten JA said at [66]-[69] (my underlining):
The question is whether the statutory reference to a contract being “collateral to” another contract invokes a term of art, having a particular legal connotation. The concept of a collateral contract was developed in relation to a promise or representation by one party to another, as a result of which the latter either enters into a separate contract with a third party, or enters into a contract with the representor. In each case, the promise or representation is the consideration for the subsequent contract: see generally Heilbut Symons & Co. v Buckleton [1913] AC 30 at 47; Kavanagh v Blissett [2001] NSWCA 79 and Matland Holdings Pty Ltd v NTZ Pty Ltd [2004] FCA 710 (Kenny J). It follows that a “collateral contract” cannot be formed after the main contract has come into existence, as otherwise that contract would constitute an inadequate (past) consideration for the new contract: see Hercules Motor Pty Ltd v Schubert (1953) 53 SR(NSW) 301.
The term “collateral contract” may be used in relation to a contract involving at least one third party, namely a person not party to the principal contract, to which the other was collateral. As is illustrated by State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170, pre-contractual representations could attract equitable relief where “the enforcement of strict rights is unconscionable because the assurances given before the execution of a written contract were made orally”: per McHugh J at p.195C. Relief of a similar kind may now be obtained under the Trade Practices Act 1974 (Cth) or the Fair Trading Act 1987 (NSW). Indeed, these considerations suggest that reliance on a collateral contract will rarely be necessary if the supplier or recipient of building services has some claim for payment of money (or other relevant relief) arising from the supply. Where services are supplied which fail to meet some expectation based upon a representation, the supply will be an inevitable element of the claim and the claim will, in that sense arise from the supply, as well as from breach of the representation.
Even if there are some cases in which it is necessary to rely upon a contract collateral to the contract for supply, this reasoning suggests that no constrained meaning should be given to the word “collateral” in this statutory context. In this regard, counsel for the Claimant took the Court to David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, where the High Court considered the meaning of the term “collateral agreement” in s 261(5) of the Income Tax Assessment Act 1936 (Cth). That section related to payment of income tax on interest payable under a mortgage and defined the term mortgage to include “any charge, lien or encumbrance to secure the repayment of money, and any collateral or supplementary agreement …”. The case involved loan agreements and securities by way of mortgage, and the argument below had turned upon whether the concept of a collateral agreement involved the notion of primacy and, if so, which agreement was primary and which subordinate. In the course of rejecting such a notion, the joint judgment of Mason CJ and Deane, Toohey, Gaudron and McHugh JJ stated, at 365:
“Collateral contracts are so-called not because they are subordinate or of lessor importance (although they may well be, depending on the facts of the case), but because they impinge upon and are related to another contract. … Once the notion of primacy is jettisoned, ‘collateral’ must be understood in the sense of ‘related to’ or even ‘in addition to’.”
There is no reason to be derived from the present statutory context not to apply a similar analysis. (See also Spigelman CJ in Solution 6 Holdings Ltd v Industrial Relations Commission of NSW [2004] NSWCA 200 at [41].)
This conclusion is supported by the fact that the definition in s 48A expressly makes provision for the supply of services “whether under a contract or not”, and uses the term “arises” both in relation to a supply and in relation to a contract. Further, where there are both services for residential building work and services “in connection with” residential building work there may be, as already noted, a causal nexus which is not directly dependent upon contract. For these reasons, the concept of a collateral contract, in this statutory context, will be satisfied where there is an appropriate connection with the supply of building services. In my view, that connection will exist, as a matter of law, in a case where a representation is made, or legal advice provided, in relation to the terms or conditions upon which building services are, or are to be, supplied.
Bell J (as her Honour then was) applied those principles in Stevens v Gary Lewin trading as Gary Lewin Architecture [2006] NSWSC 1232 at [31]ff, finding at [57]-[58] that:
… The architect’s claim under the agreement on the pleadings seems to have no appropriate connection with the supply of building services by Woodfast [the builder] and is not a claim that arises under a contract that is collateral to the Woodfast contract”.
… The connection is as to the manner in which the Woodfast contract was carried out and not to the terms of it. I do not consider that this connection is such as to characterise the Stevens claim as one that arises under a contract that is collateral to the Woodfast contract.
Applying those authorities to this case, the first HBC policy also fails to meet the concept of a “collateral contract” within the meaning employed by the second limb of section 48K(1), for several reasons. Firstly, the first HBC policy was entered into after the building contract between 17WSC and RBS, not before it. It therefore does not “impinge upon” that building contract in the way contemplated by the quoted passage from the joint judgment in David Securities Pty Ltd v Commonwealth Bank of Australia. Secondly, the HBC policy is a statutory insurance arrangement between RBS, as the builder, and iCare that is mandated under Part 6 of the HB Act, as a statutory precondition to the carrying out of building work under a building contract – and not the entry into or the terms of that building contract. It is not a separate bargain being made with 17WSC and it is not a promise that was intended to induce 17WSC to enter the building contract, as it contains no contractual representation to 17WSC as to the terms on which RBS’s building services were to be supplied which resulted in 17WSC entering into a separate contract with either RBS or a third party.
Separately, for a claim in respect of a collateral contract to be considered as a building claim, the second limb of section 48A(1) requires that the claim arise “under” the collateral contract – which is a narrower construction than simply “relating to”, or “arising out of”, or being “in connection with” the contract concerned: Rinehart v Welker (2012) 95 NSWLR 221 (Rinehart) at 248 [123] (per Bathurst CJ, McColl and Young JJA agreeing). A claim arises “under” a contract when its outcome is “governed, controlled or bound by; in accordance with” the contract itself: Rinehart at 248-249 [125], citing BTR Engineering (Australia) Ltd v Dana Corporation [2000] VSC 246 at [27], per Warren J (as her Honour then was) and TCL Airconditioner (Zhongshan) Co Ltd v Castel Electronics Pty Limited [2009] VSC 553 at [34] per Hargrave J, adding:
As I indicated earlier (at [36]) the primary judge took the view that the words “under this deed” in the present case involved enforcing or invoking some right created by the Settlement Deed. It seems to me that consistent with the authorities to which I have referred, if the outcome of the dispute was governed or controlled by the Settlement Deed, then there would be a dispute under the Settlement Deed irrespective of whether the claimant was invoking or enforcing some right created by the Settlement Deed. It may be that that was what the primary judge was referring to when he said the dispute must derive from or depend on the Settlement Deed.
It cannot be said that 17WSC’s claim in this proceeding “arises under” the first HBC policy. 17WSC’s claim: (a) does not seek to enforce a right created by the policy; (b) does not rely on or seek to enforce any terms of the policy; and (c) the claim is not governed or controlled by the terms of the policy. To the contrary, 17WSC seeks to take issue with the pricing of the premium payable for the policy, as a contract between iCare and RBS, which is determined separately, outside the terms of the policy, and in accordance with the guidelines issued by the State Insurance Regulatory Authority and iCare itself.
Consequently, as 17WSC’s claim does not arise under a collateral contract to the building contract with RBS, it does not constitute a “building claim” under the second limb of section 48A(1).
Is 17WSC’s claim an appeal against a decision of an insurer under a building cover contract required to be entered into under the HB Act?
In its written and oral submissions, iCare accepted that the first HBC policy is a building cover contract that is required to be entered into under the HB Act. That conclusion is inescapable given the definition of “building cover contract” in Schedule 1 of the HB Act, which defines a building cover contract to mean a contract of insurance under Part 6 of the Act – which includes the obligation to have HBCF insurance under section 92 of that Act. iCare nevertheless argues that the applicant’s claim is not an appeal against a decision under that policy, asserting that iCare has not made any decision under the first HBC policy because no term of the policy provided for the refund of the premium in circumstances where the building work did not occur, and any decision about a refund would not involve a decision based on the rights and duties created by the insurance policy.
In opposition to those submissions, 17WSC argued that iCare had admitted that it had made a decision on 24 February to refuse the refund and that it made decisions about, and issued HBCF policies, on behalf of the insurer, which made this proceeding an appeal against “a decision of an insurer” pursuant to section 48A(2)(a) of the HB Act.
The extended definition of “building claim” in section 48A(2)(a) of the HB Act was enacted to ensure that homeowners could challenge substantive coverage outcomes in the Tribunal. It does so by giving homeowners and the beneficiaries of a building cover contract – including (but not limited to) HBCF insurance policies – an express right to “appeal” substantive insurer decisions that are made “under” a building cover contract.
An “appeal” is a “creature of statute”, and is not a procedure known to the common law. It is the proper construction of the terms of the particular statutory grant of a right of appeal which determines the nature of the right: Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 234 CLR 124 at [2]. While the word “appeal”, as used in section 48A(2)(a), is not defined in the HB Act, an appeal to the Tribunal under section 48A(2)(a) operates in practice as a suit for a breach of the insurance contract, with the Tribunal exercising original, not appellate, jurisdiction: Defence Housing Authority v Building Insurers’ Guarantee Corporation [2005] NSWSC 206 at [9] (Hidden J). The Tribunal determines an “appeal” brought under section 48A(2)(a) on the basis of a re-hearing of the insurance claim: Hawli v NSW Self Insurance Corporation [2017] NSWCATCD 38 at [56] per Senior Member Sarginson (as the Deputy President of the Tribunal then was), citing Barry v Royal & Sun Alliance Pty Ltd [2003] NSWCTTT 805 and the commentary in Bambagiotti Building Disputes & The Home Building Act 1989 (NSW) Thomson Reuters [2012] at pp. 127-132. That statement has been cited with apparent approval in several recent cases, including Benson v NSW Self Insurance Corporation [2023] NSWCATCD 103 at [38], Amirbeaggi v NSW Self Insurance Corporation [2023] NSWCATCD 171 at [94]; CN1 Pty Limited v NSW Self Insurance Corporation [2024] NSWCATCD 38 at [16] and Amirbeaggi v NSW Self Insurance Corporation [2025] NSWDC 10, per Cole DCJ.
The extension of the definition of “building claim” in section 48A(2)(a) of the HB Act was not designed to give the Tribunal jurisdiction over administrative or restitutionary claims about premiums. The observations made in the authorities cited above, about the use of the word “under” in relation to a collateral contract, also apply to this part of the claim: the decision to which the appeal must relate must arise “under” the building cover contract, in the sense of being “governed, controlled or bound by; in accordance with” the contract itself. Accordingly, decisions to which the subsection directly applies typically includes (a) decisions to refuse indemnity under the policy; (b) decisions to cancel or avoid the policy; or (c) decisions about the extent of cover or quantum of liability in a particular instance, all of which are normally made under the terms of the applicable policy, and concern whether and how cover is provided. They do not extend to premium payments, which are administrative matters that are required by the insurer and made by the builder as a condition for a HBC insurance policy to be issued, and are not part of the insurance policy itself.
In the same way that 17WSC’s claim is not made under a collateral contract, iCare’s refusal of 17WSC’s claim for a disgorgement to 17WSC of part of the premium that was paid by RBS to iCare is not a decision made by the relevant insurer (iCare, on behalf of SICorp) under the first HBC policy. The claim is about insurance administration, not construction or workmanship issues. The relevant premium was paid by RBS to iCare as a condition of issuing the HBCF insurance policy under the HB Act, but it is not itself part of the terms and conditions of the policy itself – which was before the Tribunal.
17WSC’s claim for a refund of premium paid by RBS to iCare is a claim about money paid for the policy. The refund request is an administrative matter that concerns a financial transaction that took place between RBS and iCare which is governed by iCare’s internal procedures and the oversight of the State Insurance Regulatory Authority; and not an insurer’s decision under the terms of the policy about whether to grant, deny, or limit cover. It is therefore not an appeal – or challenge – against a decision of an insurer under a building cover contract and does not fall within the extended operation of the “building claim” definition in section 48A(2)(a).
Conclusion and orders
For these reasons, the Tribunal finds that 17WSC’s claim against iCare is not a “building claim” within the meaning of Part 3A of the HB Act. Consequently the Tribunal does not have jurisdiction to determine the claim under that Part. iCare’s application to dismiss the proceeding for want of jurisdiction therefore succeeds.
I note that the parties have agreed to bear their own costs of this jurisdictional issue. The Tribunal should make an order to this effect.
The Tribunal therefore makes the following orders:
(1)Nicholas Murray is removed as an applicant to the proceeding.
(2)The proceeding is dismissed pursuant to section 55(1)(b) of the Civil and Administrative Tribunal Act 2013 (NSW), on the grounds that the Tribunal does not have jurisdiction under Part 3A of the Home Building Act 1989 (NSW) to hear or determine the claim.
(3)There is no order as to costs, with the intent that each party is to bear its own costs.
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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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