Gardez Nominees Pty Ltd -v- NSW Self Insurance Corporation

HIS HONOUR: The Home Building Act 1989 (NSW) (the Act) is a complex legislative enactment which makes provision concerning the residential building industry. Amongst others:

Unless the context otherwise requires, all references to sections are references to the Act.

The Act contains provisions which extend the benefit of the statutory warranties to successors in title to persons entitled to the benefit of those warranties, and to a person who is a non-contracting owner in relation to a contract to do residential work on land, being a person who is the owner (under an extended definition of the that term) of the land, but is not a party to the contract.

It also contains provisions that a person must not do residential building work under a building contract unless a contract of insurance that complies with the Act is in force in relation to that work, and which insures a person on whose behalf the work is being done and the person’s successors in title, against the risk of being unable, because of the insolvency, death or disappearance of the contractor, to recover compensation from the contractor for breach of a statutory warranty in respect of the work, or to have the contractor rectify any such breach. A provision of a contract of insurance providing cover for the benefit of a person on whose behalf work is done on land is to be read as providing (and to have always provided) for the same benefit in relation to a non-contracting owner of the land. The Act requires a certificate of insurance evidencing the contract of insurance to be provided to the other party to the building contract.

A number of provisions of the Act are directed to developers. One example is that a person who is the immediate successor in title to the developer is entitled to the benefit of the statutory warranties as if the developer was required to hold a contractor licence and had done the work under a contract with that successor in title to do the work. Another is that a compulsory contract of insurance does not require a developer on whose behalf residential work is being done to be insured. The combination of making developers liable under the statutory warranties and not requiring compulsory insurance is undoubtedly intended to spur developers on to making sure residential building work is competently done before they on sell to buyers.

Railway Land Holdings Pty Ltd (Railway or the developer) embarked upon the development of a residential strata development.

Railway employed Lifestyle Property Development (the builder) to build it.

The plaintiff (Gardez) financed Railway, and took a registered mortgage over the development to secure the monies which it lent Railway.

The developer took out home warranty insurance with the defendant (the insurer) covering Railway for loss or damage resulting from non-completion of the work because of the insolvency of the builder or arising from a breach of the statutory warranties, which Railway could not recover from the builder or have the builder rectify because of the builder’s insolvency. Partway through building the strata development, the builder became insolvent. The work it did is defective.

Railway defaulted under its mortgage to Gardez and Gardez took possession of the land.

Gardez claims that as a consequence of taking possession it has become entitled to claim directly against the insurer for the loss which it has suffered because of its inability to recover from the insolvent builder the cost of completing and rectifying the builder’s work.

These proceedings raise for consideration the significant issue whether the Act gives a mortgagee in possession of an unfinished and defectively constructed strata residential development, the entitlement to claim the benefit of home owners warranty insurance to pay for the cost of completing and rectifying residential building work carried out on behalf of a developer, where the builder has become insolvent.

The final disposition turns on the answers to a number of separate questions which the parties articulated, and which the court pursuant to Pt 28 r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) ordered be decided separately from any other question before further trial.

The facts are not in issue.

Railway is, and at all material times has been, the registered owner of land situated 3 Brompton Road, Bellambi, New South Wales, which is in the vicinity of the city of Wollongong.

By written building contract (the building contract) entered into on 25 September 2012, Railway retained the builder to build 15 strata lot dwellings and restore a heritage listed stationmaster’s cottage on the land (the development). Clause 1(b) of the building contract provides, relevantly, that pursuant to s 18B of the Act, the builder warrants that the work will be performed in a proper and workman like manner and in accordance with the plans and specifications set out in the contract.

Gardez financed the development pursuant to a written Loan Agreement and General Security Agreement, which it entered into with Railway in November 2012. As part of its security for money lent to Railway, Gardez took a registered mortgage under the Real Property Act 1900 (NSW) (the Real Property Act) over the land.

As well, Gardez, Railway and the builder entered into a builder’s Side Deed (the side deed) intended to give Gardez certain rights in connection with the building contract. Under cl 2.3, of the side deed the builder undertook to Gardez to perform its obligations under the building contract. Under cl 4.1, Gardez was entitled to give a Step-in Notice to the builder, upon the giving of which Gardez would become entitled to exercise and enforce all rights, powers, discretions and remedies and perform all obligations of Railway under, or in connection with, the building contract as though Gardez was a party to the building contract, instead of Railway. For convenience, relevant clauses of the side deed are set out in the Schedule to this judgment.

On 1 February 2012, the insurer issued a Home Warranty Insurance Policy (the policy) covering Railway for loss or damage resulting from non-completion of the work because of the insolvency of the builder or arising from a breach of the statutory warranties under the Act, being loss or damage in respect of which Railway could not recover compensation from the builder or have the builder rectify because of the builder’s insolvency.

Clause 3 of the policy provides:

Clause 7 of the policy contains the following definition:

The builder did not complete the building work under the building contract and as such, work it did do was not performed in a proper and workmanlike manner. As a consequence, Railway suffered loss and damage. Completing and rectifying the builder’s defective and unfinished residential building work will be costly.

On 27 June 2014, Gardez gave Railway notice that an event of default had occurred under the mortgage and that Gardez had entered into possession of the land. It seems that this meant possession.

Gardez remains in possession.

On 5 September 2014, a liquidator was appointed to the builder and on 30 September 2014 Gardez terminated the building contract.

On 11 November 2014, Gardez lodged a claim with the insurer. By letter dated 22 January 2015, the insurer denied liability. These proceedings are an appeal from that rejection.

The following are the relevant provisions of the Act as they applied to this dispute, which is as they stood on 11 November 2014, when Gardez lodged its claim with the insurer.

Section 3(1) contains the following definitions:

Section 3A defines ‘developer’ as:

Section 18B provides:

Section 18C provides:

Section 18D provides:

Section 92 provides:

Section 92B provides:

Section 92C provides:

Section 99 provides:

Gardez, for which Mr P J Bambagiotti of Counsel appeared, argues that as mortgagee Gardez acquired an interest in the land, which interest “was augmented” with it taking possession of the land, from which point it “could take the profits from it, but had obligations to the land in the nature of upkeep, and it could sue to eject trespassers and anyone else that did not have a superior title and to this end it was a successor to [Railway] a title, being an interest in land”.

The thrust of this argument is that exercise of the right of possession by a mortgagee amounts to a conveyance to it of important incidents of ownership and should be regarded as a succession by the mortgagee to the title of the mortgagor.

Gardez draws attention to the fact that s 3(1) gives an extended meaning to the term ‘owner’, which includes a person who at law or in equity is entitled to receive, or receives, or if the land were let to a tenant would be entitled to receive, the rents and profits of the land as mortgagee in possession. It puts that this reveals a statutory intention that possession by a mortgagee is to be equated with title.

The insurer, for which Mr M Orlov of Counsel appeared, argues that Gardez cannot be a successor in title to Railway because as a mortgagee of land under the Real Property Act (Torrens title land), registered in the name of Railway, Gardez never acquired any title to it.

Gardez relies on United Starr-Bowkett Co-operative Building Society (No 11) Ltd v Clyne [1968] 1 NSWR 134; (1967) S.R (N.S.W) 331 (United Starr-Bowkett) where the Court of Appeal (Sugerman and Walsh JJA, Herron C.J. not deciding) held that a mortgagee of land under the Real Property Act, who was bound by a pre-existing tenancy, on default by the mortgagor, became a successor in title within the meaning of that term as used in s 8(1) of the Landlord and Tenant (Amendment) Act 1948 (NSW) (the Landlord and Tenant (Amendment) Act).

‘Successor in title’ is not a term of art: Souglides v Tweedie [2013] Ch 373 at 376. It is protean. Its meaning in any given case will depend on the specific context in which it is used.

For this reason, resort to general common law concepts, other statutes and decisions on the operation of other statutes is of limited assistance. United Starr-Bowkett is a case in (or rather not in) point. It turned on the application of specific provisions of a statute enacted to achieve a particular outcome, to a set of unique facts: see: Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628; [1966] HCA 74; Moreton Bay Regional Council v Mekpine Pty Ltd [2016] HCA 7 (French CJ, Kiefel, Bell and Nettle JJ).

Section 8(1) of the Landlord and Tenant (Amendment) Act defined ‘lessor’ and ‘lessee’ to mean the parties to a lease or their respective successors in title, and to include in respect of premises which were subject to a mortgage, a mortgagee who enters, or has entered into, possession of the premises under the mortgage, and a person who was a lessee of the premises under the mortgagor immediately prior to the mortgagee entering into possession.

Clyne purchased a number of tenanted properties, which he then mortgaged to the Society. He then (apparently as part of a deliberate strategy to circumvent the rights of the tenants) defaulted on the mortgages and the Society, as mortgagee, obtained writs in ejectment directed to Clyne as the sole defendant claiming possession of the properties. The question was whether the rights of the tenants prevailed against the Society as Clyne’s successor in title as lessor. The Society did not satisfy the express requirements of the definition of successor in title in the Landlord and Tenant (Amendment) Act because it was not in possession. Nevertheless, the Court held that the Society could be Clyne’s successor in title for the purposes of the statute.

At page 343, Sugerman JA held that under the definition of lessor in that Act the question was whether the mortgagee succeeded to, that is became entitled to and subject to, the mortgagor’s rights and duties, as between himself and the tenant under a lease granted by the mortgagor prior to the mortgage. His Honour went on to hold that where the mortgagee had notice of the tenancy before obtaining a registrable instrument, then being bound by the tenancy, it became subject to the same duties as the mortgagee as against the tenant, at least in the sense that it was bound to recognise the continued subsistence of the tenancy and could only put an end to the tenant’s possession in the circumstances and in the manner in which the mortgagor could do so. Significantly, the Society in each case had, prior to the mortgages, full knowledge and notice of the legal interest in the land of the tenants. His Honour concluded that the mortgagee was bound by the pre-existing tenancy, and at least on default by the mortgagor, became a successor in title of the lessor.

Walsh JA engaged in a similar reasoning process. At page 348, his Honour held that the question whether the Society was a successor in title was not to be determined solely by reference to common law concepts of the passing of title, but was affected in an important way by a consideration of statutory provisions. His Honour noted the importance of the fact that the mortgagees took their interests subject to those of the tenants, and not free of them. At pages 349–350, his Honour concluded that if, after default, a mortgagee wished to take steps to recover possession, it did so on the basis of a succession to the rights which the mortgagor formally had against the tenant, and that a mortgagee was therefore to be regarded as a lessor within the meaning of the statutory provision under consideration and accordingly, was a successor in title to the mortgagor.

One can readily understand the Court’s conclusion, especially given that the specific mischief the provision being considered sought to avoid was the defeat of a tenant’s rights of occupation because the land had been mortgaged. Additionally, the right of possession was the very subject of the contest, and one can readily understand the Court’s conclusion that the mortgagee’s right to possession derived from the mortgagor, and the mortgagee was, in that context, the mortgagor’s successor in title.

The present circumstances and the object of the provisions in this case are materially distinguishable from those at play in United Starr-Bowkett. I also respectfully suggest that the process of reasoning engaged in by the Court is not apt to the present case. The Court reasoned that the mortgagee was the mortgagor’s successor in title because it was bound by the rights of the tenant against the mortgagor, rather than that it was bound by the rights of the tenant because it was a successor in title. The entitlement of Gardez to the benefit of the statutory warranties and covering insurance depends on it being Railway’s successor in title within the meaning of that term in ss 18D(1) and 99(1)(b), not the other way around.

In its general meaning, ‘successor in title’ connotes no more than a person who holds title after another. The Oxford Australian Law Dictionary definition is, unexceptionally:

The concept is used in both s 18D(1) and s 99(1)(b) to achieve transmission from the original object of the statutory warranties and corresponding insurance cover (the predecessor) to a person who subsequently comes to hold the title (the successor), which was held by the predecessor when the warranties were impliedly given, namely, the entering into of the contract.

The Act does not expressly state what title it has in mind. However, the mechanism for transmission of the benefit of the warranties and insurance, both where the owner contracts with the contractor and where the owner does not contract, is transmission of the owner’s title to the successor.

Thus, determination of whether party B (Gardez) is the successor in title to party A (Railway) requires identification of the relevant title held by party A at the time of the warranties, and assessment of whether that title passed to party B.

As to identifying Railway’s title, this presents no difficulty. It was the registered owner of Torrens title land, or to use the expression in subparagraph (a) of the definition of ‘owner’ in s 3(1), it was entitled to the land for an estate in freehold in possession.

Whether that title passed to Gardez turns on what the effect was of Gardez taking possession of the land under the mortgage.

Section 57(1) of the Real Property Act provides:

Section 60 of the Real Property Act provides:

Unlike the traditional form of mortgage of Old System land, where the mortgagor parted with almost all the legal title to the land, and its rights to possession depended upon the terms of the mortgage, a Torrens title mortgagee only has statutory rights, and these do not include the right to possession until it is entitled to take possession under the mortgage. It is a statutory estate: see Tyler, Young and Croft, Fisher & Lightwood’s Law of Mortgage, (3rd Australian ed 2014, LexisNexus Butterworths Australia) at 19.1.

Conversely, the mortgagor remains the registered proprietor of the land and the owner both in equity and in law: see for example Peter Butt, Land Law, (5th ed 2006, Lawbook Co) at 18.23; The English Scottish and Australian Bank Ltd v Phillips (1937) 57 CLR 302 at 321 (Dixon, Evatt, McTiernan JJ); Anderson v Liddell (1968) 117 CLR 36, Kitto J at 48; Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1999) 196 CLR 245 at 261–262 (Gaudron, Gummow and Callinan JJ); Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 at 275 (Kitto J).

The entitlement of a mortgagee of Torrens title system to possession of the land on the mortgagor’s default flows from s 60 of the Real Property Act, and its entitlement to the rents and profits of the mortgaged land whilst in possession flows from this statutory entitlement.

By taking possession, a mortgagee acquires no additional estate or interest in the land. The taking of possession is the exercise of a statutory right incidental to and flowing from the statutory security interest which s 57(1) of the Real Property Act confers on the mortgagee. It brings about no succession by the mortgagee to the title of the mortgagor.

Successor in title concerns title to the property, not its actual possession: Souglides v Tweedie [2012] Ch 373 at 13.

The extended definition of ‘owner’ in s 3(1) does not assist Gardez. There is no basis to infer from the fact that a mortgagee in possession is treated as an owner for specific purposes under the Act, for example, for the purposes of the definition of ‘non-contracting owner’, any legislative intention that such a mortgagee is a successor in title to the owner. Such a person becomes a statutory owner in its own right. If the submission was correct, it would mean that any person, who is at law or in equity, entitled to receive the rents and profits of the land, irrespective of the nature of the interest held, is to be regarded as a successor in title to the owner. I consider it unlikely that the legislature had this intention.

I answer Question 1 no.

Gardez argues that when it became a mortgagee in possession of the land it thereby became a non-contracting owner under the definition in s 3(1) in relation to the building contract, and that under s 18D(1)(A), it is entitled to the same rights that Railway as a party to the building contract had in respect of the statutory warranties.

Its further contention (which is the subject of Question 3), is that under s 99(2)(A), it is entitled to claim under the policy because it is taken to have (and to always have had) the same benefit as Railway under the policy. Gardez correctly does not put that it is a successor in title to a non-contracting owner.

The insurer puts that the definition of ‘non-contracting owner’ in relation to a contract to do residential building work directs attention to the person that is the owner of the land when a third person and the builder enter into a contract to do residential building work on the land to which the owner is not a party, and to a successor in title to such a non-contracting owner.

It puts that the Act does not provide any other pathway for a person to become a non-contracting owner in relation to a contract to do residential building work on land that the person did not own when the contract was entered into. I uphold the insurer’s submission.

The definition of ‘non-contracting owner’ in s 3(1) applies to the individual, partnership or corporation that is the owner of the land but is not a party to the contract. This is clearly directed to the state of affairs at the time the contract was entered into. The Act contains no provision whereby a person who later becomes an owner (within the expanded definition) obtains the benefits of the statutory warranties other than by succeeding to the title of the owner, and there is no good reason why it should. The non-contracting owner and its successors in title will get those benefits.

Moreover, both the expanded definition of owner and the definition of non-contracting owner were inserted (urgently) into the Act by the Home Building Amendment (Warranties and Insurance) Act 2010 NSW (No 53 of 2010) to overcome the effect of Ace Woollahra Pty Ltd v Owners – Strata Plan 61424 (2010) 77 NSWLR 613; [2010] NSWCA 101 (Ace Woollahra). Ace Woollahra held that the benefit of the statutory warranties were available only to the person who contracted with the builder to do the residential building work and to that person’s successors in title, but did not extend to a person who owned the land on which the residential building work was done but who was not a party to the contract with the builder.

So much appears from the following extracts from the second reading speech for the Home Building Amendment (Warranties and Insurance) Bill 2010 on 23 June 2010:

The legislature did not have in mind that a subsequent owner within the expanded definition who was not a successor in title to the owner at the time of the contract would get the direct benefit of the statutory warranties.

It should be borne in mind that Gardez as mortgagee in possession does get an indirect benefit because it is able to sell the land to a person who will become a successor in title and who will get the direct benefit of the statutory warranties. There is no remedy vacuum.

I answer Question 2 no.

Question 3 does not arise.

However, if Gardez was a non-contracting owner in relation to the building contract and not a successor to Railway’s title, it would not have obtained any right to make a claim under the policy against the insurer anyway, for the following reasons.

No doubt, in light of s 99(2)(a) which provides that a developer need not be insured, the policy expressly does not cover a claim by a developer.

The effect, according with the scheme of the Act, is that owners are covered whether they contract or not, whereas developers themselves are not covered. However, the benefit of cover will pass to owners who are successors in title to developers.

Under s 99(2A), a provision of a contract of insurance providing cover for the benefit of a person on whose behalf work is done on land is to be read as providing (and to have always provided) for the same benefit in relation to a non-contracting owner of the land.

Where the person on whose behalf the work is done is a developer, as in this case (it is common cause that Railway is a developer), and as will often be the case, the benefit is not being able to make a claim, but rather to pass the benefit of the statutory warranties and insurance cover to subsequent owners. That is the benefit Gardez, if it was a non-contracting owner, would have under s 99(2A) in this case where the contract of insurance provides cover for the benefit of a person on whose behalf work is done and that person is a developer. This accords with the scheme of the Act. Correspondingly, it would be discordant with the scheme of the Act for a non-contracting owner to have cover where the contracting party is a developer.

This question is intended to expose for examination the insurer’s contention that Gardez is a developer under ss 3A(1) and (2) because it is a corporation on whose behalf the residential building work was done and 4 or more of the proposed dwellings came to be owned by it (under the extended definition of ‘owner’ under s 3(1)) when it took possession (hence the inclusion of the word ‘therefore’ in the question).

The insurer puts that upon entering into the side deed with the builder, Gardez became a person on whose behalf building work was being done under the provisions of that instrument because under cl 2.3(a) of the side deed, the builder undertook to Gardez to observe and perform all of the builder's obligations under the building contract, including to execute and complete the works required by the building contract, and to comply with the statutory warranties under s 18B of the Act in accordance with cl 1 of the building contract.

It puts that upon Gardez exercising its Step-in Rights, it became a person on whose behalf building work was being done under the provisions of the building contract because under cl 4.1(a) of the side deed, when Gardez took possession of the land as mortgagee in possession, it became entitled to exercise and enforce all of the rights, powers, discretions and remedies and to perform all of the obligations of Railway under the building contract, as though it was a party to the building contract instead of Railway.

Gardez puts that it was never a person on behalf of whom the work was done because it was not a contracting party to the building contract and the side deed did not make it one. It puts that it did not become a party either when it exercised its right to take possession.

In my view, Gardez is correct. It took security over Railway’s interest in the building contract, and the side deed contained a comprehensive mechanism for it to realise that security. Recital B of the side deed makes this clear. Clause 2.3 is a separate undertaking by the builder to Gardez to comply with its obligations under a contract with someone else (Railway). Clause 4.2 contemplates novation as a possibility, but this did not happen in the present case. Clause 4.1 also does not result in Gardez being the contracting party under the building contract. To the contrary, where the clause uses the words “as though the Enforcing Party was a party to the Building Contract instead of the Developer” it makes it clear that Gardez was not becoming a party.

In addition, I do not consider that the circumstances described in s 3A(2)(a) are present. It seems to me that the section contemplates that the individual, partnership or corporation will be an owner while the work is being done, or that it will become an owner when the dwellings come into existence. This conclusion is consistent with the way in which I consider s 3A(1A) is to be construed, a matter which is dealt with below.

I answer Question 4 no.

This question is intended to expose for examination the insurer’s contention that Gardez is a developer under s 3A(1) because, when as mortgagee in possession (it became an owner within the expanded definition in s 3(1)), the work which had to that date been done is deemed, by virtue of s 3A(1A), to have been done on its behalf as owner.

It is not in dispute that no work has been done since Gardez took possession and that all the defective and incomplete work was done before it did so.

The issue which divides the parties is whether, on its true construction, s 3A(1A) deems work to be done ‘on behalf of an owner’, only where the work was done at a time when the owner had that status (as Gardez contends), or operates to deem work done before the owner acquired that status, nevertheless to have been done on its behalf (as the insurer contends).

Gardez argues that where ss 3A(1) and 3A(2) use the words ‘is done’, s 3A(1A) uses the words ‘is a developer in relation to the work’, and s 3A(2) uses the words ‘are or will be owned’, they make it clear that no retrospectivity is intended.

It puts that there are ‘substantial reasons’ why retrospectivity should be avoided, including, that every person who comes to ‘own’ 4 or more dwellings would become a ‘developer’.

For its part, the insurer argues that the construction for which Gardez contends requires a temporal limitation to be placed on the operation of s 3A(1A) that is not apparent from the ordinary meaning conveyed by the text of the section.

It puts that Gardez’s construction would lead to anomalous and inconvenient results which would run counter to the evident consumer protection and anti-avoidance purposes of the developer provisions of the Act. It cites as an example, a person becoming an owner of land on which residential building work has been done in connection with a building, residential development, retirement village or disabled accommodation, but the work is incomplete at the time and is completed subsequently. It puts that the owner would be a developer only in relation to that part of the work that was done after it became an owner, but not the earlier work, all of which may have been a necessary and integral part of the residential building work done as part of a development, and that this would mean that for the purpose of determining the scope of the statutory warranties available to a successor in title under s 18C(1), it would be necessary for the successor in title to establish what work had been done before and after the owner/developer became an owner of the land, and that the loss or damage the successor in title has suffered was caused by a breach of the statutory warranties with respect to work done after, rather than before, the owner/developer became an owner of the land.

It puts that this would create practical difficulties for a successor in title to an owner/developer in attempting to obtain recourse for shoddy building work and would run counter to the consumer protection objectives of the Act.

It puts that the construction would create a new incentive for developers to attempt to structure their projects to avoid or minimise their statutory warranty and insurance obligations, which would go some way towards defeating the purpose served by the insertion of s 3A(1A).

For the reasons that follow, I prefer the construction contended for by Gardez.

I consider that the words of the section do not indicate any retrospective operation. The most natural meaning, taking into account the purpose of the section, and the context of the phrase, is that it relates to something done during the period to which the section refers, which I consider to be when the work is done: see Suntory (Aust) Pty Ltd v Commissioner of Taxation [2009] FCAFC 80 at 37.

Section 3A, before the amendment, and as construed in accordance with Ace Woollahra, applied to work done under or pursuant to an existing contractual relationship. This meant that there was a lucuna.

An individual, partnership or corporation was a developer, relevantly, if residential work was done on its behalf in connection with a residential development where 4 or more of the existing or proposed dwellings were, or were to be owned, by it. Given the holding in Ace Woollahra, these requirements would not be satisfied if the owner was not the contracting party because the work would not then be done on its behalf. Section 3A(1A) was inserted by the Home Building Amendment Act 2011 (NSW).

The amendment was intended to close this lacuna by deeming (for the purpose of determining who is a developer in relation to the work) the work to be done on behalf of the owner of the land in addition to any person on whose behalf it was actually done.

So much is clear from the following extract from the Second Reading Speech on 19 October 2011 for the Home Building Amendment Bill 2011 (NSW):

The earlier amendments referred to above had extended the definition of owner. I can discern no legislative intention that a person would become a developer and be liable in that capacity because at some time after the contract, or after the work was done (even years after), it became an owner under the extended definition because it exercised rights which gave it an entitlement to the rents and profits of the land in any capacity. Section 3A(1A) was directed to persons seeking to escape their obligations as a developer by having the land owned by one person and the contract entered into by another.

I answer Question 5 no.

The conclusion is that Gardez has not established any entitlement to claim against the insurer.

It seems to follow that the proceedings are to be dismissed.

I will hear the parties on any issues that remain, including as to costs.

The exhibits are to be returned.