Zephyr Property Developments Pty Ltd v Contractors Bonding Limited
[2008] VSC 122
•24 April 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 8912 of 2007
| ZEPHYR PROPERTY DEVELOPMENTS PTY LTD (ACN 106 072 904) | Appellant |
| V | |
| CONTRACTORS BONDING LIMITED | Respondent |
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JUDGE: | JUDD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 and 13 March 2008 | |
DATE OF JUDGMENT: | 24 April 2008 | |
CASE MAY BE CITED AS: | Zephyr Property Developments Pty Ltd v Contractors Bonding Limited. | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 122 | |
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Administrative law – Appeal from Victorian Civil and Administrative Tribunal pursuant to Victorian Civil and Administrative Tribunal Act 1998 s 148(1)(b) – Building Act s 135(6) – Whether the Appellant was a ‘person covered by the required insurance’ – Appeal Dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Dr J Bleechmore | MNG Lawyers |
| For the Respondent | Mr P Murdoch QC and Mr S Stuckey | Moray & Agnew Solicitors |
HIS HONOUR:
The appellant, Zephyr Property Developments Pty Ltd (Zephyr), appeals from the decision of the Victorian Civil and Administrative Tribunal constituted by Senior Member Walker (the Tribunal) made 19 September 2007. The appeal is brought pursuant to s 148(1)(b) of the Victorian Civil and Administrative Tribunal Act 1998.
The respondent is Contractors Bonding Limited (the insurer) whose business includes the provision of Home Owners’ Warranty Insurance in the form required by Ministerial Order made pursuant to s 135(1) of the Building Act 1993.
The proceeding before the Tribunal was brought pursuant to s 59A of the Domestic Building Contracts Act 1995 following the insurer’s refusal to indemnify Zephyr in respect of incomplete and defective building works undertaken pursuant to building contracts entered into between Zephyr and P3 Constructions Pty Ltd (P3) for works to be carried out at properties at Lots 120-128 and 220-228 Waterways Boulevard, Truganina (the works).
There is no dispute about the facts. They are set out in an affidavit sworn by Vito Bove on 26 June 2007 and filed in the Tribunal on behalf of Zephyr and an affidavit sworn by Anthony Thomas on 23 July 2007 and filed in the Tribunal on behalf of the insurer. Both affidavits were before this court. The relevant facts are set out in some detail in the reasons published by the Tribunal and there is no complaint about the accuracy of the facts so stated. I set out below a more abridged, although sufficient, statement of the facts. I have, where appropriate, adopted the structure and terminology employed by the Tribunal.
Mr Leo Bordin is a registered building practitioner. He is also the director of IC Creations Pty Ltd (Creations), a company that carries on business as a builder doing domestic building work. Although Creations is not itself a registered building practitioner, it is lawful for it to carry out domestic building work by reason of the provisions of s 29(c) of the Domestic Building ContractsAct because one of its directors, Mr Bordin, is so registered. It is not possible for a company to be registered as a building practitioner.[1]
[1]Building Act 1993 s 169(1).
Pursuant to s 135(1) of the Building Act, by an order published in the Government Gazette on 23 May 2003, the relevant minister has required building practitioners who carry out domestic building work to be covered by insurance in the terms specified in the Ministerial Order. Section 136(2) of the Building Act prohibits a builder from carrying out building work unless covered by the required insurance.
In July 2003 Creations requested the insurer to provide it with an insurance facility with respect to building projects that it proposed to undertake. The application for the facility was forwarded to the insurer by an insurance broker, Safety Net Insurance (Safety Net). Accompanying the application were references and financial statements relating to Creations.
The insurer agreed to provide the insurance facility to Creations, subject to the execution by Creations of a deed of indemnity and execution by Mr Bordin of a director’s guarantee. The deed and guarantee were in a single document which was subsequently executed by Creations and Mr Bordin. By the indemnity, Creations indemnified the insurer with respect to any claims that might be made against the insurer by the building owner under a policy of insurance issued pursuant to the facility. Mr Bordin guaranteed performance by Creations of its obligations.
The facility was provided by the insurer for an annual fee of $3,000.00. When a Certificate of Insurance was issued by the insurer with respect to a domestic building contract insured under the facility, there was an administration fee as well as a premium payable. A limit was imposed on the number of uncompleted projects that were to be covered by the facility at any one time with a maximum value of $500,000 for any one dwelling unit.
The detailed terms of an insurance policy issued under the facility are set out in a document entitled Home Warranty Insurance Policy [Victoria] which is exhibited to the affidavit of Vito Bove (the Policy Document). While the schedule to the Policy Document refers to a company other than the insurer it was common ground that it contained the relevant terms.
It was not suggested that the Policy Document was not in accordance with the Ministerial Order. According to its terms the insurer agreed that it would, during the period of insurance, indemnify the Building Owner in respect of loss and damage arising from defective or incomplete work by the builder. The Policy Document contains a definitions section in which “Building Owner” is defined as meaning “...the person for whom the domestic building is being built under the Contract...”. The word “Contract” is defined as “...the domestic building contract entered into between the Builder and the Building Owner.” The term “Builder” is defined as meaning the builder specified in the schedule. The copy of the Policy Document exhibited to Mr Bove’s affidavit does not contain a completed schedule but a copy of the relevant schedule was exhibited to Mr Thomas’ affidavit and this specifies that the builder is Creations. The schedule to the Policy Document provides that the details in regard to each property, namely, the site address, the owner, the policy commencement date, the policy period and the contract value in regard to any property were all to be “as per” the insurance certificate issued with respect to that property.
The facility was expressed to be for a period of 12 months from 21 August 2003. Creations requested the issue of Certificates of Insurance from time to time for various domestic building projects that it undertook. For each of these, it would complete a “Certificate of Insurance Application” setting out its own details and details of the domestic building contract for which insurance was required. Details of this contract were the site address, the type of building, the contract price, the owner’s name and the builder’s name.
On 18 November 2003 Safety Net informed the insurer that Creations was to be “incorporated” within a consortium known as “P3 Constructions Pty Ltd”. The persons involved in the consortium were said to be Creations, a Mr George Dimaris and a Mr Simon Chamas. The expressed purpose of the consortium was to construct an initial 100 residential units, with the possibility of more to be built in the future.
Safety Net asked the insurer if it would provide an insurance facility to P3. The insurer referred the matter to its solicitor who, after confirming that the builder of the units was to be P3, prepared an indemnity and guarantee for execution by P3, Mr Dimaris (a shareholder in P3) and, Mr Hadad and Mr Bordin, who were both directors. A letter dated 23 December 2003 enclosing this document was sent by Safety Net to “Mr L Bordin, P3 Constructions Pty Ltd Group” with a request that the indemnity and personal guarantees be executed. The indemnity and guarantee were never executed or at least never provided to the insurer, notwithstanding follow up correspondence from Safety Net.
On 12 February 2004 Safety Net sent a facsimile to the insurer requesting the issue of 41 certificates for three projects to be built “under the name of IC”. Details of the projects are provided and the final paragraph states:
Trusting all is in order to enable the issuing of certificates for which the builder has already signed ICD/Guarantees.
It is clear from the words “has already signed ICD/Guarantees” that the last paragraph of this facsimile refers to the documents already executed in respect of the facility provided to Creations.
Accompanying this facsimile were applications, in the name of Creations, for Certificates of Insurance for work including that which was to be undertaken at Lots 120 to 128 and 220 to 228 Waterways Boulevard, Truganina. In each case the “Owner” is said to be Zephyr and the “Builder” named is Leo Bordin. The start and completion dates in each case are said to be 12 January 2004 and November 2004 respectively. Under “contractor details” the contractor is said to be Creations.
The insurer subsequently issued Certificates of Insurance for the work to be undertaken at each of these allotments addressed to Creations. In each certificate the work is said to be carried out by Leo Bordin as builder for Zephyr and states:
Subject to the Act, the ministerial order and the conditions of the insurance contract, cover will be provided to the building owner named in the building contract and to the successors in the title to such building owners. [Emphasis added]
It is common ground that work referred to in each certificate was not done by Leo Bordin or Creations. The work was done by P3, pursuant to building contracts between Zephyr and P3. Creations is not a party to any of the relevant building contracts. The contracts for works at lots 120 to 128 are dated 27 February 2004 and there is a single contract for the other units dated 30 September 2004.
Notwithstanding the dates on these contracts and the start and finish dates on the certificates, construction of units 120 to 128 did not commence until March or early April 2005. Part of the way through construction, Zephyr became dissatisfied with the performance of P3 and engaged another contractor to carry out rectification and completion work in respect of the nine February contracts.
A liquidator was appointed to P3. Zephyr later discovered that the insurer had issued the Certificates of Insurance to Creations purporting to cover the work and claimed indemnity from the insurer which was denied.
The Tribunal set aside a question for preliminary determination, namely:
Whether the respondent is liable at law to indemnify the applicant in respect of domestic building works undertaken pursuant to major domestic building contracts entered into between the applicant and P3 Constructions Pty Ltd in respect of properties at Lots 120-128 and 220-228 Waterways Boulevard, Truganina?
The Tribunal answered the question: “No.”
In this appeal from the Tribunal, Zephyr has identified the following questions of law:
(a)whether P3 Constructions Pty. Ltd. is a person covered by the required insurance, being the Home Owners’ Warranty Insurance issued by the respondent on or about the 12th February 2004 (“the relevant insurance”) within the meaning of s. 135(6) of the Building Act 1993,
(b)whether the appellant, as owner, is a person covered by the required insurance, being the relevant insurance, within the meaning of s. 135(6) of the Building Act 1993.
In its formulation of the questions and the grounds of appeal, Zephyr has identified the two limbs of its claim for indemnity: first, seeking to have cover extend to P3 and the building works carried out by it; and second, to itself as owner.
The grounds of appeal relied upon by Zephyr are as follows:
(a)The Tribunal erred in concluding that the building works undertaken by P3 Constructions Pty. Ltd. were not covered by the Home Owners’ Warranty Insurance issued by the respondent on or about the 12th February 2004 (“the relevant insurance”).
(b)The Tribunal should have held that section 135(6)(b) of the Building Act 1993 applied so as to enable the Tribunal to conclude the P3 Constructions Pty. Ltd. was covered by the relevant insurance.
(c)The Tribunal erred in holding that the relevant insurance covered only building works undertaken by the builder to whom the relevant insurance was issued, namely IC Creations Pty. Ltd.
(d)The Tribunal erred in holding that the building works carried out by P3 Constructions Pty. Ltd., pursuant to certain building contracts between it and the appellant, and which were the subject of the appellant’s claim against the respondent for indemnity, were not covered by the relevant insurance.
(e)The Tribunal erred in its construction of s. 135(6)(d) in holding that it did not apply so as to enable the Tribunal to conclude that the appellant was a person covered by the relevant insurance because it was specified and referred to, both by name and otherwise, in the relevant insurance as a person to whom the insurance cover extended.
For Zephyr to succeed in this appeal it must demonstrate an error of law by the Tribunal. If the Tribunal has answered the preliminary question incorrectly, then, in my view, there exists an error of law such as to entitle Zephyr to relief under s 148(7) of the Victorian Civil and Administrative Tribunal Act 1998.
This appeal turns upon the construction of s 135(6) of the Building Act. That section forms part of a package of measures designed to protect home owners and successors in title for a limited period of time against default by “building practitioners”, which include a domestic builder as that term is defined in s 3 of the Domestic Building ContractsAct. The legislative scheme is substantially embodied in the Domestic Building ContractsAct and amendments made to the Building Act in 1995. Division 3 of Part 9 of the Building Act deals with insurance.
As its name suggests, the Domestic Building ContractsAct regulates building contracts entered into for domestic building work. Building work to which the Act applies is defined as “domestic building work”.[2] A “domestic building contract” is defined in s 3. There is no dispute that the work to be undertaken at the properties was domestic building work to be undertaken pursuant to a “major domestic building contract”,[3] made between P3 and Zephyr.
[2]Section 5 Domestic Building Contracts Act.
[3]Section 3 Domestic Building Contracts Act.
Part 2 of the Domestic Building Contracts Act prescribes warranties to be implied into all domestic building contracts. The warranties run with the building. A major domestic building contract attracts additional requirements under Part 3 of the Act. Where the builder is a corporation the contract must identify the directors who are registered as builders under the Act.[4] The contract must also set out details of the required insurance under the Building Act that applies to the work.[5] That requirement is to be found in Division 3 of Part 9 of the Building Act and the Ministerial Order. I note that cl 7 of the building contract for Lot 122 Waterways Boulevard deals with “Building Act Insurance”, noting that “the insurance policy is all of the terms and conditions of the insurance policy and not just the certificate of insurance”. The contracts are, in all material respects, identical. Under the contracts the builder is required to give a copy of the insurance policy to the owner within seven days after it has issued. The contract also contains a check list for the parties prior to signing. The first item is: “Has an insurance policy or certificate of currency for builders insurance been issued and provided to you?” Thus, provision is made to ensure that the owner is informed of the terms of the insurance cover.
[4]Section 31(f)(iii), Domestic Building Contracts Act.
[5]Section 31(l), Domestic Building Contracts Act.
Part 11 of the Domestic Building ContractsAct deals with the registration of building practitioners. A “building practitioner” is defined to include “a builder including a domestic builder”. Only a natural person can apply to the Building Practitioners Board to be registered as a building practitioner.[6]
[6]Section 169(1), Building Act.
Division 3 of Part 9 of the Building Act requires that a building practitioner be covered by insurance specified by the Minister. Section 135(1) authorises the Minister by order, published in the Government Gazette, to require building practitioners to be covered by insurance and to specify the terms of the insurance cover which they are required to obtain.
Of particular importance in this appeal is s 135(6) of the Building Act which provides,
For the purposes of this Act, a person is covered by the required insurance if—
(a) the person holds the required insurance; or
(b)the building work carried out by or on behalf of the person is covered by the required insurance; or
(c)in the case of a person who manages or arranges the carrying out of domestic building work, the work carried out by the person and the building work which the person manages or arranges is covered by the required insurance; or
(d)the person is not a party to the required insurance but is specified or referred to in the insurance, whether by name or otherwise, as a person to whom the insurance cover extends.
Section 136(2) of the Building Act provides that a builder must not carry out or manage or arrange the carrying out of domestic building work under a major domestic building contract unless the builder is covered by the required insurance. The contracts entered into between Zephyr and P3 were major domestic building contracts and the work to be carried out thereunder, domestic building work.
Section 137AA(1) of the Building Act provides that if an order under s 135 requires a builder to be covered by insurance relating to the carrying out of domestic building work or managing or arranging the carrying out of domestic building work, the insurance required by the order must be provided by a designated insurer. The insurer was a designated insurer.
The Ministerial Order, published on 23 May 2003, stated its purpose thus:
The Purpose of this Order
(1)This Order specifies the insurance that a builder is required to be covered by in order to carry out or manage or arrange the carrying out of domestic building work under a domestic building contract of a specified kind.
Part 2 of the Order provides:
(1)Before entering into an insurable domestic building contract, a builder must ensure that –
(a)a policy is issued that complies with this Order (except Part 3); and
(b)the policy covers the building work to be carried out under the contract.
The central issue in this appeal is whether s 135(6)(b) or (d) requires the insurer to indemnify Zephyr as the owner of the properties in respect of defective or incomplete works carried out by P3 as builder under the building contracts entered into between P3 and Zephyr.
It is common ground that the insurer did not agree to accept an insurance risk in relation to work undertaken by P3 as builder. The insurer, had, however, contracted with Creations to provide a facility under which it would indemnify the owner of building works undertaken by Creations as builder for loss and damage suffered by the owner as a result of breaches by the builder, under a major domestic building contract, of specified warranties or the non-completion of the work in the event of the builder becoming insolvent or placed under administration. The insurer issued Certificates of Insurance to Creations in respect of the work, naming Zephyr as owner. These are the basis of Zephyr’s claim for indemnity.
Zephyr does not contend that the insurance facility granted to Creations was entered into by Creations on behalf of P3. Nor does Zephyr contend that the building works were undertaken by or on behalf of Creations. It is common ground that P3 was the builder and carried out all work at the properties.
In the first limb of its argument, Zephyr contends that s 135(6)(b) of the Building Act has the effect of extending the cover under the insurance facility granted by the insurer to the “building work” carried out by P3. Zephyr points to the description of the work in the Certificates of Insurance issued to Creations contending, by reference to the words of s 135(6)(b), that P3 is “covered by the required insurance” because “the building work carried out by or on behalf of the person (P3) is covered by the required insurance”.
Zephyr argues that s 135 forms part of a series of major amendments designed to protect home owners and subsequent purchasers. It is remedial legislation to protect the consumer from defective and incomplete work done by builders who, relevantly, become insolvent. Zephyr argues that the insurance cover is not for the benefit of the builder or the party obtaining the insurance but is intended to benefit the class of person specified in the Ministerial Order made under s 135(1). Zephyr submits that s 135(6) defines what is covered (the work), and the persons who may claim indemnity under insurance obtained by a building practitioner as required by the Ministerial Order.
Zephyr accepts that their construction of s 135(6) of the Building Act would have the effect of extending the insurer’s liability in respect of work carried out by a builder beyond the contracted risk under the policy of insurance. Zephyr argues that the contracted risk cannot dictate the answer to the question “whether there should be indemnity because of the Act and the certificate which states that the insurance contract is subject to the Act” and seeks to fit the works carried out by P3 and thus P3 into the words of s 135(6)(b) as a person “covered” under the insurance policy.
I note that at times counsel for Zephyr seemed to engage in a slide between accepting P3 as the builder (with an obligation to be covered) and referring to Mr Bordin as the building practitioner required to obtain insurance under s 135 of the Building Act. At other times Mr Bordin was said to be the builder operating through different entities, Creations and P3. It was argued that the risk accepted by the insurer was the same whether P3 or Creations was the builder because the Act required building practitioners to be covered. As Mr Bordin was a building practitioner and a director of both companies he had, so it was argued, discharged his obligation. Thus, Zephyr contends, the insurer having accepted liability in relation to the work, the identity of the company entering into the construction contract as builder is irrelevant. Mr Bordin was not, however, the builder under the building contract and was not the person required to obtain cover under the Ministerial Order.
The second limb of Zephyr’s argument relies, once again, upon an interpretation of s 135(6) that side steps the contracted risk undertaken by the insurer and the related identity of the builder as the party under the policy of insurance whose work is covered in favour of an owner. In its attempt to extend cover to itself, Zephyr relies upon s 135(6)(d) of the Building Act, contending that because it is not a party to the required insurance, but is specified in the insurance as a “person to whom the insurance cover extends”, it falls squarely within the words of that section. Zephyr argues that the legislation discloses an intention to permit claims by persons who are not parties to the contract of insurance.
On behalf of the insurer it was contended that the insurance facility did not extend to cover defective and incomplete work undertaken by P3. When agreeing to provide an insurance facility and accepting liability to indemnify an owner, the insurer makes an assessment of the creditworthiness of the builder because it must first be satisfied that it can exercise its rights as insurer against the builder in the event of defective or incomplete work and recover under the indemnity and guarantee. Thus, so the insurer argues, the identity of the builder is crucial to its agreement to extend cover under an insurance facility. The insurer had been requested and agreed to provide an insurance facility to P3, but on conditions which were never satisfied because P3 and its directors, declined to provide the necessary indemnity and guarantees. In the result, the only facility that was granted by the insurer was to Creations which had provided the appropriate security.
The insurer argues that the terms of the insurance cover provided make it clear that a building owner is indemnified in respect of works undertaken by a specified builder under a building contract in respect of which a Certificate of Insurance has issued. The builder under the relevant contracts was P3. No Certificates of Insurance were issued in respect of work to be undertaken by P3. The nature of the risk undertaken by the insurer necessitates, so the insurer argues, its agreement to extend the cover to a particular builder under a particular contract. In this case it agreed to extend cover only to Creations who did not enter into any building contract to undertake the works on the properties, nor did it undertake any of the works.
In response to Zephyr’s reliance on s 135, the insurer argues that those provisions prescribe the obligation of a building practitioner to obtain cover to protect the owner and a subsequent purchaser. When reference is made to a person being covered it is a reference to those obliged to be covered for the benefit of the owner and others. The insurer argues that s 135(6) does no more than prescribe circumstances in which those required to be covered under the Ministerial Order may be taken to have the required cover and thus satisfied the statutory requirement.
While Zephyr points to Mr Bordin as the registered building practitioner and the reference to him in the Certificates of Insurance as builder it was, in my opinion, P3 as the builder under the building contracts, who was required to be covered in compliance with the Ministerial Order. This could have been achieved by P3 obtaining insurance cover as the holder of the required insurance [s 135(1)(d)], or by ensuring that the work to be performed by it was covered [s 135(1)(b)], or by ensuring that it was specified or referred to in the insurance [s 135(1)(d)]. The policy of insurance did none of these things.
The Certificates of Insurance were issued “subject to the Act, the ministerial order and the conditions of the insurance contract”. Under the policy of insurance the insurer undertook the risk of indemnifying the owner for defective and incomplete work done by Creations, not P3. The insurer held securities given by Creations and by Mr Bordin supporting Creations liability to indemnify the insurer. It did not hold any securities to indemnify it in the event of defective or incomplete work carried out by P3. P3 and its directors had refused or declined to give any such security.
In my view, Zephyr’s reliance on s 135 of the Building Act is not sustainable. The “person” referred to in the preamble to s 135(6) is the person required to be covered by insurance as stipulated by the Ministerial Order. The insurance cover required is for the builder under the major domestic building contracts. The plain object of the section as a whole is, in the case of a domestic builder, to ensure that the builder is covered by insurance, obtained from a designated insurer.[7] The “person” so referred to is not the intended beneficiary of the required cover, namely, the owner. A review of the penalty provisions found in s 136(2), which prohibit a builder from carrying out domestic building work under a major domestic building contract “unless the builder is covered by the required insurance”, reveals a consistent theme. Where the building practitioner proposing to undertake domestic building work is a builder, it is the builder that must be covered. This theme is also apparent in ss 137, 137AA and 137A.
[7]See s 137AA of the Building Act.
In my opinion Zephyr’s reliance on s 135(6)(b) is misconceived. While the work ultimately carried out by P3 as builder was identified or described in the Certificate of Insurance the insurer had only agreed to indemnify the owner for such work to be carried out by Creations. The identity of the party undertaking the work is crucial as it identifies the party giving the warranties under the building contract and in respect of whose performance the insurer sought and obtained securities.
The reference to Mr Bordin in the Certificate of Insurance as builder is probably a reflection of the requirement that the company entering into a building contract must identify its directors who qualify the company as a “building practitioner” entitled to enter into a building contract.[8] In any event, Mr Bordin did not enter into the contracts or purport to carry out the work.
[8]Section 29(c) of the DBC Act; see also s 31(1)(iii) of the DBC Act.
The terms upon which cover is to be provided by a designated insurer is prescribed in the Ministerial Order. An insurer is under no obligation to provide cover to any and all builders. In this regard, it is worth noting that while the Tribunal may review any decision of an insurer with respect to anything arising from any required insurance under the Building Act 1993, the Tribunal does not have any power to review a decision of an insurer to refuse to insure, or refuse to renew or extend insurance of a building, or concerning premiums or charges to be paid for any insurance where the conditions under which the insurance will be offered, renewed or extended.[9]
[9]Section 60(2) of the DBC Act.
In my opinion, the legislative scheme under which s 135 was introduced establishes a regime requiring builders, such as P3, to be covered by the required insurance. The regime does not purport to otherwise interfere with the contractual relationship between the parties to a contract of insurance, except to prescribe the terms upon which the cover must be provided. In particular, it does not purport to increase or vary the risk undertaken by an insurer, so as to extend cover to work done by a builder who did not comply with its obligation to obtain insurance cover or on whose behalf insurance cover was never obtained from an insurer.
Division 3 Part 9 of the Building Act, when read as a whole with the Ministerial Order makes it clear, in my view, that it is the contract of insurance (in terms specified by the Order) that defines the cover provided to the owner, including the identity of the builder whose work is covered, and the obligation of the insurer under the policy of insurance to indemnify the owner.
The argument advanced by Zephyr in reliance on s 135(6)(d) is also misconceived. In my opinion paragraph (d) is intended to qualify a building practitioner (in this instance the builder) as having satisfied its obligation to be covered by insurance if the builder is specified. Thus, Creations might have specified P3 as builder, requesting Certificates of Insurance to issue on that basis. It did not do so. Had it done so the insurer would no doubt have sought the execution of the indemnity and guarantee which were requested but never executed.
Zephyr sought to draw comfort from Trident General Insurance Co Ltd v McNiece Bros Pty Ltd[10] and s 48 of the Commonwealth Insurance Contracts Act 1984 to assist its argument for the extension of cover under paragraph 135(6)(d) to itself as owner. Zephyr’s argument which relies upon the similarity between s 135(6)(d) and s 48 of the Insurance Contract Act 1984 and the principles enunciated in Trident v McNiece overlooks the terms of the required insurance. Clause 8 of the Order expressly requires that the cover extend to the owner; and cl 11 requires that the policy must extend to benefit each person who becomes entitled to the warranties under s 8 of the Domestic Building ContractsAct. Zephyr, as owner of the works, was entitled to be covered under a policy of insurance indemnifying it for the defective or incomplete work of P3 or its subcontractors under domestic building contracts. Unfortunately, the work done by P3 was never covered by the required insurance and consequently P3 was in breach of its obligation under the Ministerial Order and s 136(2) of the Building Act.
[10](1988) 165 CLR 107.
Because there was no contract of insurance under which P3 or the work carried out by it was covered by the required insurance, the insurer is not liable to indemnify Zephyr for defective and incomplete works by P3 under the building contracts entered into between P3 and Zephyr.
In my opinion none of the grounds for appeal are made out and both questions must be answered, “No.” I find no discernable error in the reasons of the Tribunal and respectfully agree with the answer given by the Tribunal to the question for determination by it.
For the foregoing reasons the appeal will be dismissed with costs, including any reserved costs.
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