CN1 Pty Ltd v NSW Self Insurance Corporation

1. [1]

   The plaintiff, CN1 Pty Ltd, claimed to have the benefit of insurance policies issued by the NSW Self Insurance Corporation (which I shall call “the defendant”) in relation to residential building work undertaken on two non-adjoining lots in North Kellyville, NSW (Lots 544 and 547). The builder contracted to do the work became insolvent, leaving work on Lot 544 that was said to be incomplete and defective (the Plaintiff had sold Lot 547 by that time). The plaintiff sought indemnity under the two insurance policies which applied in relation to that lot. The policies were relevantly in the same terms and I will refer to them collectively as the Policy.

2. [2]

   Clause 3.4(a) of the Policy stated that it did not apply to anyone who was “in relation to the work … a developer”. The term “developer” was defined as having the same meaning as in the Home Building Act 1989 (NSW) (HBA). The defendant refused the plaintiff’s claim for indemnity on the basis that the plaintiff was a developer in relation to the work being done on Lot 544.

3. [3]

   The plaintiff filed proceedings in the Civil and Administrative Tribunal of New South Wales claiming that it was entitled to indemnity from the defendant. The Tribunal allowed the application, finding that the plaintiff was not a developer within the meaning of the HBA and the Policy in relation to the work on Lot 544: CN1 Pty Limited v NSW Self Insurance Corporation [2024] NSWCATCD 38 (T). The defendant appealed to the Appeal Panel, which allowed the appeal, finding in favour of the defendant: NSW Self Insurance Corporation v CN1 Pty Ltd [2025] NSWCATAP 27 (AP).

4. [4]

   The plaintiff filed a summons in this Court seeking leave to appeal from the Panel’s decision. The summons also sought judicial review of the Panel’s decision in the alternative. The defendant consented to a grant of leave to appeal. The Tribunal, which had been joined as second defendant, filed a submitting appearance (presumably it was joined because of the judicial review application – cf s 84(3) of the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act)).

5. [5]

   Section 83(1) of the CAT Act provides that a party to an internal appeal “may, with the leave of the Supreme Court, appeal on a question of law … against any decision made by the Tribunal in the proceedings”. This jurisdictional gateway is not opened “merely [by asserting] that the Tribunal erred in law”: Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 at [32]. Rather, the question of law alone is the subject matter of the appeal and the Court’s role is to determine that question: see Targeted Property Investments Pty Ltd v Look Up Technologies Pty Ltd (No 2) [2023] NSWSC 416 at [32]-[35]; Davis v Land and Housing Corporation (NSW) [2016] NSWCA 325; (2016) 18 BPR 36,459 at [77]; also Osland v Secretary to the Department of Justice (No 2) (2010) 241 CLR 320; [2010] HCA 24 at [21]. Identification of a question of law is foundational to exercising the right to seek leave to appeal under s 83(1).

6. [6]

   The plaintiff’s summons identified various grounds. However, the plaintiff did not in terms identify questions of law either in its summons or in its written submissions. It thus failed to address the correct starting point for any such application to the Court.

7. [7]

   Prior to the hearing my Associate sent an email to the parties advising that the Court would be assisted “if the plaintiff could identify in the hearing, with precision, the questions of law on which it seeks to appeal”. Shortly before the hearing commenced the plaintiff’s counsel responded to that email, identifying the following questions:

8. [8]

   The defendant did not object to proceeding by reference to those questions. I will grant leave to appeal with respect to those questions, only.

9. [9]

   The plaintiff did not explain how its application for judicial review added anything to its application under s 83 of the CAT Act. At general law the Court may refuse relief in its discretion where there is another equally effective and convenient remedy which the party could have pursued: Fong BHNF Fong v Weller [2024] NSWCA 46 at [29]. More specifically, pursuant to s 34(1)(c) of the CAT Act the Court may “refuse to conduct a judicial review of a decision of the Tribunal if an internal appeal or an appeal to a court could be, or has been, lodged against the decision” (discussed eg in Shapkin v The University of Sydney [2024] NSWCA 156). To refuse to conduct an application for a judicial review entails the application being dismissed. That provision applies here. As no good reason has been shown why judicial review should be permitted in addition to the appeal on the identified questions of law, I consider that the judicial review application should be dismissed pursuant to that discretionary power.

10. [10]

    As for the four identified questions, the answer to each of questions 1, 2(a) and 3 is “no”, and the answer to question 4 is “unnecessary to answer”. The answer to question 2(b) is: “The Appeal Panel proceeded upon a misconstruction of cl 3.4(a) of the Policy by addressing the question of whether the plaintiff was a developer as at a time prior to when the residential building work was done”. That answer suffices to uphold the appeal.

11. [11]

    In what follows I will first outline the background to the matter, then consider the meaning of the notions of “developer” and “a residential development”, before addressing the questions in turn.

Background

1. [12]

   Lots 544 and 547 in Deposited Plan (DP) 1204342 are in North Kellyville, Sydney, within the local government area of The Hills Shire Council. There are two lots between them on the road frontage (being Lots 545 and 546). There is one lot between them as the crow flies (being Lot 546) due to one being around the corner from the other (the two lots are on different streets).

2. [13]

   The DP was created via a development application (DA) lodged in November 2014 by a third party, Kavshan Pty Ltd. The DA proposed the subdivision of 10 existing lots so as to create a total of 17 lots. The plaintiff was the registered proprietor of part of the land in question, including the land which became Lots 544 to 547 once the proposed subdivision was effected. The Council approved the DA and DP1204342 was registered in January 2016.

3. [14]

   On 17 February 2021, following a tender process, the plaintiff and Willoughby Homes Pty Ltd executed two contracts for Willoughby Homes to construct a house and studio (ie dual occupancy dwellings) on each of lots 544 and 547. There was one contract with respect to each of the lots. This meant that four dwellings were to be constructed.

4. [15]

   Two policies of insurance were taken out by Willoughby Homes with respect to the building work to be carried out at Lot 544. It is not apparent why there were two contracts. Nor is it apparent why the two certificates of insurance say the “policy date” was 23 December 2020 and the certificates were “issued on” 1 February 2021. It is not necessary for me to resolve these mysteries. It is not in dispute that both contracts incorporated the Policy, being the terms set out in version 4.0 of the respondent’s “Policy of Insurance under Part 6 of the Home Building Act 1989 (NSW)”.

5. [16]

   The plaintiff sold Lot 546 in September 2020, prior to entry into the contracts of insurance. The defendant sought to draw an inference – seemingly based on the sale price – that the plaintiff had constructed a dwelling on that lot prior to the sale. No such factual finding was made below and I decline to draw the inference (which in any event is not material).

6. [17]

   The plaintiff sold Lot 547 in December 2021.

7. [18]

   Willoughby Homes became insolvent in July 2022. By that stage the build at Lot 544 was almost, but not fully, complete. The plaintiff also considered that some of the work which had been done was defective. It sought indemnity under the Policy for the claimed defective and incomplete work. The defendant rejected the claim on the basis that the plaintiff was a “developer” in relation to the work on Lot 544 and thus ineligible to claim under the terms of the Policy. The plaintiff then filed a home building application in the Consumer and Commercial Division of the Tribunal.

8. [19]

   The Policy’s scope as relevant to this application was expressed in cl 1:

9. [20]

   This provision engages a number of defined terms in the Policy, which are contained in cl 7. In relation to the terms relevant to this matter, cl 7 provides:

10. [21]

    The key term of the Policy giving rise to the present dispute is cl 3.4(a). That term appears in cl 3, titled “Loss and damage for which the policy provides no cover”. Clause 3.4 relevantly provides:

11. [22]

    The Policy therefore does not cover any person who is, in relation to the insured work, a developer within the meaning of the HBA, where that term is addressed in s 3A of that Act (as set out below at [35]).

12. [23]

    The Tribunal at first instance held that the plaintiff was not a developer within the meaning of s 3A of the HBA and that the defendant had wrongly denied the plaintiff indemnity. Its key finding was as follows:

13. [24]

    The Tribunal ordered that the matter be listed for further directions with a view to determining the quantum of the plaintiff’s claim. However, the defendant appealed pursuant to s 80(2) of the CAT Act, contending that:

14. [25]

    The Appeal Panel concluded that the Tribunal had erred in its construction of s 3A of the HBA, stating:

15. [26]

    The Appeal Panel also considered the meaning of “in connection with” in s 3A, holding that the phrase should be “construed broadly so as to give effect to one of the purposes of the amendments to s 3A, being ensuring protection for consumers by broadening the scope of ‘developers’” (AP [95]).

16. [27]

    Having found error in the Tribunal’s approach, the Appeal Panel went on to consider for itself whether the plaintiff was a developer, holding that it was. The Appeal Panel had regard, amongst other things, to the subdivision that had preceded the building work. That subdivision had been described in the materials as the “Stage 5 Blue Horizons” development. The Appeal Panel said:

The notion of “a residential development”

1. [28]

   The Policy states that “Developer has the same meaning as it does under the Act”. The Dictionary to the HBA contains the following: “developer – see section 3A”. It is that section – and particular its subsidiary element, “a residential development” – which is at the heart of the appeal. Before addressing the terms and effects of the provision it is useful to outline something of its context and legislative history.

2. [29]

   The HBA originated as the Building Services Corporation Act 1989 (NSW) and was renamed by the Building Services Corporation Legislation Amendment Act 1996 (NSW) (BSCLA Act). That Act inserted s 3A as part of the introduction of a “statutory warranties scheme”, the substance of which is contained in Pt 2C of the HBA. The scheme implies various warranties into all contracts to do residential building work entered by “the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract” (HBA, s 18B).

3. [30]

   Section 3A does not in terms define what the word “developer” means for the purposes of the HBA, but it does identify who/what is a developer in relation to particular residential building work.

4. [31]

   The notion of being a developer relevantly has the following significance under the HBA:

   1. (1)

      Pursuant to s 18C, certain persons are entitled to the benefit of the statutory warranties as against the developer with respect to the residential building work in question (note Baron Corporation Pty Ltd v Owners of Strata Plan 69567 [2013] NSWCA 238 at [12]-[13]).

   2. (2)

      Part 6 of the HBA sets out a detailed regime dealing with insurance with respect to residential building work. However, pursuant to s 99(2), such work is not required to be insured insofar as it is carried out on behalf of a developer. That is the statutory context for the exclusion of developers in the Policy (see also cl 37(2)(a) of the Home Building Regulation 2014 (NSW)).

   3. (3)

      Pursuant to s 96A, a developer must not enter into a contract for the sale of land on which residential building work has been or is to be done on the developer’s behalf unless a certificate of insurance evidencing the required contract of insurance for the residential building work is attached to the contract of sale.

5. [32]

   Section 3A was amended in 2011 by the Home Building (Amendment) Act 2011 (NSW) (2011 Amendment), which added subs 1A into s 3A. The amendment was a response to the Court of Appeal’s decision in Ace Woollahra Pty Ltd v Owners Strata Plan 61424 (2010) 77 NSWLR 613; [2010] NSWCA 101. The Court had considered the meaning of the phrase “corporation on whose behalf residential building work is done” in s 3A(1) of the HBA. The Court held that residential building work could only be described as having been done “on behalf of” a corporation if that corporation was party to the contract under which the work was done (at [49]-[54]).

6. [33]

   In the second reading speech on the 2011 Amendment, the Minister for Fair Trading said (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 13 October 2011 at 6188-6189):

7. [34]

   The legislative response to Ace Woollahra suggests that Parliament intended the s 3A definition not to be unduly limited by legal concepts and to have practical application as part of a consumer protection scheme.

8. [35]

   Section 3A provides as follows:

9. [36]

   The term “residential building work” is defined in cl 2 of Sch 1 of the HBA. There are many aspects to the definition but in substance it means any work involved in undertaking, co-ordinating or supervising the construction of a dwelling; the making of alterations or additions to a dwelling; or the repairing, renovation, decoration or protective treatment of a dwelling. The term “dwelling” is defined in cl 3 of Sch 1 of the Act. The core notion is “a building or portion of a building that is designed, constructed or adapted for use as a residence”.

10. [37]

    Section 3A(1) presupposes that certain residential building work has been or is being done by someone, whom I shall call the builder. It presupposes that that work was/is done on behalf of some person or persons, being an individual, partnership or corporation, whom I shall call the person in question. Necessarily that work must be occurring somewhere.

11. [38]

    In this context, elements of s 3A relevant to this matter can usefully be identified as follows:

    1. (1)

       residential building work is done by a builder on behalf of the person in question;

    2. (2)

       that work is done in connection with an existing or proposed dwelling in a building or a residential development, which building/development contains or will contain at least four dwellings; and

    3. (3)

       four or more of the dwellings in that building or residential development are or will be owned by the person in question.

12. [39]

    Element (1) specifies a thing that is done on behalf of the person in question, namely residential building work.

13. [40]

    Element (2) identifies something about the location of that residential building work, namely that it must be connected with an existing or proposed dwelling or dwellings in either a building or in a residential development. The requirement that the building or development contains at least four dwellings arises from the element (3) requirement, which presupposes that number. The residential building work need not relate to all of the dwellings, nor even to all four of the dwellings which the person in question does or will own. The work could just relate to one dwelling.

14. [41]

    The residential building work in question need not be undertaken at or in the location of the dwelling/s in the building or residential development. That is the significance of the reference to the work being done “in connection with” the dwelling/s (cf AP [95]). That could encompass, for example, work done offsite on infrastructure or services which will benefit the dwelling/s on the site. Consistently with that understanding, the definition of residential building work in cl 2 of Sch 1 includes “specialist work done in connection with a dwelling”, where “specialist work” is defined in cl 1 of Sch 1 to include, amongst other things, plumbing and drainage work (other than roof plumbing) and electrical wiring work.

15. [42]

    Element (3) links the site and the person in question by requiring that the person owns or will own at least four of the dwellings on the site.

16. [43]

    The issue here relates to element (2). Of course, s 3A must be construed as a whole and taking of account of its text, context and purpose. No difficulty would relevantly arise if the residential building work was connected with a dwelling in an apartment block containing at least four dwellings. An apartment block would be a “building”. That is not this case – hence the focus on what is encompassed by the term “a … residential development”. The term is not defined in the Act. As the defendant argued, the term must extend to encompass a situation where there are two or more buildings, as otherwise it would add nothing to the reference to a building. That does not mean that the notion is exhausted by reference to buildings.

17. [44]

    The word “development” is also not defined in the Act. That word can refer to a process of development, such as the use or subdivision of land or the erection or demolition of a building (see eg s 1.5 of the Environmental Planning and Assessment Act 1979 (NSW)). It can also refer to the thing which is the result of that activity. Here the notion is used more as the result than as the process – the provision refers to a residential development. As explained, the second element involves identifying a physical place where there are at least four dwellings, in connection with which some residential building work has been or is being done. That being said, the sense of it being a result encompasses it having been the result of some development activity.

18. [45]

    That aspect suggests that development activity must have some meaningful connection to the result – ie to the character of the site as a “a residential development” – as opposed to being a mere historical feature of the site. That understanding is reinforced by the fact that s 3A uses the term “developer” to identify the person in question. That label is part of the context in which the whole of s 3A must be construed: note SkyCity Adelaide Pty Ltd v Treasurer of South Australia [2024] HCA 37; (2024) 98 ALJR 1273 at [32]. The notion of being a developer carries with it a connotation of activity or agency which tends to suggest that the person in question has some connection to the development process which leads to the characterisation of the place as a residential development. Again, that suggests that development activity must have some proximate connection to characterisation of the site as a residential development.

19. [46]

    The indefinite article “a” qualifies both “residential development” – which is expressed in the singular – along with “building”. The “a” indicates that it is addressed to one such place. The place must have some features which mean it can be regarded as one residential development. That involves an issue of characterisation. It will inevitably involve various matters of fact and degree. As senior counsel for the defendant submitted, “the question of residential development is multifactorial”. A range of factors may be relevant which may have different significance in different cases, including there having been some temporally proximate development process (and I address some further potentially relevant factors below). The issue is whether some set of four or more current or proposed dwellings can meaningfully and reasonably be characterised as a residential development. The issue is to be assessed in a practical way (see above at [34]).

20. [47]

    The ultimate issue for the purposes of s 3A is characterising whether the person in question is a developer in relation to particular residential building work. The time at which it is relevant to assess that question is when the residential building work is done. And thus it is as at that time at which the question arises of whether there is “a residential development”. A question could arise as to what particular time or times should be the focus if it is possible that the person in question was a developer when the residential building work in question was begun but had ceased to have that character by the time that work ended. But no argument was addressed to that issue in this case and it is not necessary for me to address it.

21. [48]

    This conclusion that the relevant time for the characterisation assessment is when the work is done is supported by what I have said above about a development process having some proximate connection to characterisation of the site as a residential development. Further, the question is not whether the person can be characterised as a developer in terms of their usual course of business, or as a matter of history, or with respect to other sites (cf eg s 53, Electoral Funding Act 2018 (NSW)). Section 3A(1) says the person in question “is a developer” in relation to the residential building work in question if it is done in the circumstances set out in subss (2)(a) or (b), where those circumstances relate to particular existing or proposed dwellings. The focus of the provision is thus characterising the person in question in relation to particular residential building work in connection with a place where there are four or more actual or proposed dwellings in a building or residential development. The reference in subs (2)(a) to “4 or more of the existing or proposed dwellings” which “are or will be owned by” the person in question contemplates assessing a state of affairs about dwellings and ownership as at a particular point in time. That time is when the residential building work is done, albeit that the assessment can look forward to what is proposed as at that time (both as to the dwellings and ownership). A similar point can be made about subs (2)(b), which addresses where residential building work is done in connection with an existing or proposed retirement village or accommodation built for disabled persons where all of the units are or will be owned by the person in question.

22. [49]

    That the provision requires a focus on when the residential building work is done does not mean that broader contextual matters are irrelevant to the practical exercise of characterisation, including what has occurred in the lead-up to the work and what is proposed in the future. For example, if the person in question had subdivided land for residential purposes and was building houses on blocks one by one, then it may be reasonable to say that residential building work was being done in connection with a residential development of four or more dwellings even if the particular building contract related to one dwelling.

23. [50]

    On the other hand, there is a limit to how far back and in what circumstances the history can meaningfully affect that issue. The mere fact that the land had been subdivided some years before for the purposes of residential development does not necessarily mean that if the person in question owns or will own four or more dwellings in that subdivision then they are a developer. For example, in our changing housing market, it is conceivable that a government body or an investor or a superannuation fund might buy a number of houses in a subdivision in order to rent them out. That does not mean that if that entity has some residential building work done on one of the dwellings it would be reasonable to characterise the four-or-more-dwellings as a residential development and thus characterise the owner as a developer. The process of development would be a mere historical fact; it would not be practically meaningful to characterise the dwellings as together constituting one residential development.

24. [51]

    As the examples given illustrate, the role (if any) played by the person in question in subdividing the land might also be a relevant factor. If the person in question (or perhaps related persons) undertook the subdivision then that fact might militate in favour of a conclusion that there is a residential development. If they did not that might cut the other way.

25. [52]

    In terms of other possible factors, that there is more than one building contract, or insurance contract, or DA or other regulatory approval may also be relevant to the characterisation exercise, but cannot be definitive. It is commonplace for developers to contract with a range of building contractors, whether to undertake particular tasks or to construct distinct portions (including distinct buildings) within a larger project. One project can involve more than one contract between the same parties. Or the contracts may involve similar tasks but with different specifications – a developer of a new subdivision may offer several model homes for prospective purchasers to choose from. As for insurance, this very case illustrates that even one limited project, such as that undertaken at Lot 544, may involve more than one insurance contract. And it is quite possible that a significant development may depend upon more than one development consent or other regulatory approval. There might, for example, be a master or concept plan approved and then subsidiary consents given for particular aspects of the overall development.

26. [53]

    In sum, the notion of “a residential development” in s 3A(2) of the HBA refers to a site with four or more existing or proposed dwellings which can, at the time that the residential building work in question was undertaken, meaningfully and reasonably be characterised as a (ie one) residential development. That is a practical issue of characterisation involving various matters of fact and degree. A range of factors may be relevant including (without seeking to be exhaustive): when the site was developed as such (ie was there some proximate development process or was that process merely an historical fact); whether the site was product of a subdivision for residential purposes and, if so, when that occurred and whether the person in question (or some related person) played a role in that occurring; whether the land in question is contiguous (see the discussion below in relation to question 1); and whether there was more than one DA or other regulatory approval, building contract, and/or insurance contract.

Question 1: non-contiguity of land in the application of s 3A

1. [54]

   Question 1 asks:

2. [55]

   The plaintiff’s challenge, raised by Question 1, is directed to one legal issue and (appropriately) not to the characterisation issue as a whole. The question focuses on the issue raised by the Appeal Panel’s holding that the expression “a residential development” cannot be limited to “development for residential purposes that occurs only on a single parcel of land” (AP [86]). The plaintiff’s position was that a residential development “only describes development on one parcel of land; it does not include development across multiple parcels of land”. It conceded that this could not sensibly mean that a residential development can only ever involve construction on one lot. It is not uncommon for one residential dwelling to be built over multiple lots: see, eg, Lamalfa Investments Pty Limited v City of Canada Bay [2015] NSWLEC 1442 at [4]-[9]. The plaintiff’s real argument was that lots which were not contiguous could not together form one residential development.

3. [56]

   There can be little doubt that whether or not land is contiguous is a relevant, indeed an important, factor in the characterisation task. That the claimed residential development is said to encompass land which is separated must weigh significantly against a conclusion that those parcels form part of one residential development. But that factor is not of itself necessarily conclusive.

4. [57]

   Suppose a development company purchases an industrial site in some inner-city location with the intention of building a housing precinct. The site may be divided by an open stormwater drain of which the relevant governmental authority is registered proprietor: see eg the facts in Aussie Skips Recycling Pty Ltd v Strathfield Municipal Council (2020) 103 NSWLR 834; [2020] NSWCA 292. However, both sides of the site may be developed in one process, under one development consent, with the work done by one builder pursuant to one contract. Such a site could meaningfully and reasonably be described as a residential development despite the partial lack of contiguity. The point illustrates that what is involved is a practical, factorial analysis of the particular circumstances.

5. [58]

   The plaintiff sought to place some reliance on the fact that s 3A(1A) refers to residential building work “done on land”, saying that that implies the section does not address “development across multiple parcels of land”. As set out above, I agree that the provision is identifying a particular place in connection with which the residential building work in question is done. But the word “land” can encompass more than one lot in a deposited plan (as the plaintiff accepted in argument) and does not of itself require that all lots be contiguous. The plaintiff made a similar argument based upon use of the words “owner” and “owned”, and much the same response applies.

6. [59]

   The plaintiff argued that taking a broader view of “a residential development” turns “an additional class of persons into developers, depriving them of remedies under the HBA”. That argument does not sit well with the legislative history outlined above, in which the Parliament quickly overturned a Court of Appeal decision which had the effect of restricting who could be seen as a developer. In any event, the plaintiff is adversely affected here as a result of a term of the insurance policy which it entered. That term was permitted by the statutory scheme but was not required by it. Its argument says little as to how s 3A should be construed.

7. [60]

   The answer to the question of whether it is only permissible for the purposes of s 3A to have regard to existing or proposed dwellings in a single parcel of land, rather than in multiple parcels of land, is therefore “no”. The Appeal Panel did not err in law in the manner alleged.

Question 2: construction of “in relation to the work … a developer”

1. [61]

   Question 2 raises two sub-questions:

2. [62]

   The plaintiff argued that the Appeal Panel failed to apply a correct construction of cl 3.4(a) of the Policy, and that the correct construction would have required the Panel to “connect” work done on the plaintiff’s land to a residential development. Specifically it was argued here (as it had been before the Appeal Panel) that:

3. [63]

   Senior counsel for the plaintiff then referred to, and criticised, AP [111] (which is quoted above at [27]). But that paragraph refers in terms to particular residential building work, being that undertaken at Lot 544. And the Panel concluded that Lot 544 was part of “a residential development” comprised of what had been described as “Stage 5 Blue Horizons” (AP [107] and [111]).

4. [64]

   The Appeal Panel did not make the claimed error of characterising the plaintiff as a developer in the abstract in the sense of being divorced from residential work. To the extent that the plaintiff’s argument on this issue overlapped with question 2(b) by raising a temporal issue, I address that immediately below. The Appeal Panel was considering whether the plaintiff was a developer for the purposes of s 3A with respect to the residential building work undertaken on Lot 544. The answer to Question 2(a) is “no”.

5. [65]

   The plaintiff contended that the Appeal Panel erred in not considering whether “there was a residential development that was extant at the time of contract, and [failing to] connect work done on CN1’s land to that development (not a historical one)”. The parties agreed that there were various potential times at which the plaintiff’s status as a developer could be assessed, including when the insurance contract was entered, when the residential building work commenced or was done, or when the claim was made on the Policy.

6. [66]

   The plaintiff argued:

7. [67]

   Senior counsel for the plaintiff said that the issue of the timing of when it was or was not a developer was “not dealt with at all”, and “the building contract barely gets a mention because the focus of the panel was back on the old – the earlier subdivision”. I understand his reference to the building contract to be meant to refer to the insurance contract, consistently with the written argument, and with identification of the date of 1 February 2021 (the building contract was entered on 17 February 2021).

8. [68]

   I do not accept the plaintiff’s argument as to the relevant time, but that is not fatal to its overall contention. As explained above at [47]-[50], the time at which it is relevant to characterise the claimant as a developer or not for the purposes of s 3A is (broadly speaking) when the residential building work is done. The Policy picks up the meaning of developer in the HBA. Thus the relevant time is not when the contract of insurance is entered. Further, the plaintiff’s argument on question 2(b) in this regard is somewhat inconsistent with its argument on question 2(a). Clause 3.4 provides that the policy “does not cover a claim by any person who is, in relation to the work … a developer”. The question is not whether the person making the claim is a developer in the abstract, or with respect to some other site, or such like. It is whether they are a developer in relation to the work, where “work” is defined in the Policy to mean “the residential building work which is done or is to be done by the builder to the dwelling under the contract”. This focus simply reflects s 3A, subs (1) of which talks of the person in question being “a developer in relation to that residential building work”, being the work identified in subs (2).

9. [69]

   Here, the residential building work in question commenced around 17 February 2021 when the building contract was entered. The plaintiff’s argument that the Appeal Panel erred in applying cl 3.4(a) to an earlier point than 1 February 2021 is thus still open, as if it was before that date it was also before 17 February 2021.

10. [70]

    The plaintiff is correct that the Appeal Panel erroneously focused on an earlier time. Its reasoning on point is quoted above at [27]. The Appeal Panel gave particular emphasis to the “context” provided by SEPP 2006 and the North Kellyville DCP. It concluded at [107] that “[w]hen regard is had to those planning instruments it is apparent, and we find, that Stage 5 Blue Horizons was a ‘residential development’ within the meaning of s 3A HBA”. It added at [108] that the facts that each house built there was on a separate parcel of land, constructed under a separate DA, and may have had a separate policy of insurance, “does not mean that it was no longer part of the Stage 5 development”. At [111] it concluded that “the “residential building work” on Lot 544 was done in connection with a proposed dwelling in the Stage 5 development (being a ‘residential development’)”. The DA for the subdivision said the “site is located in what is a development site, known as stage 5 Blue Horizons currently being developed in 4 stages into 96 lots” (quoted at AP [13]). Thus the Appeal Panel characterised the whole of the Stage 5 Blue Horizons subdivision as one residential development.

11. [71]

    That approach involved legal error. As explained above at [47], inherent in the statutory notion of “residential development” is that there are four or more existing or proposed dwellings specifically in contemplation, and in connection with which residential building work is done. That issue was not considered by the Appeal Panel; it simply characterised all land in the subdivision as one residential development. That subdivision was approved in May 2015 and the new DP was registered to give effect to it in January 2016. The relevant time as at which to consider the issue was around February 2021.

12. [72]

    At times the Panel seemed to construe “a residential development” as a process or objective rather than as a place (cf above at [44]). The Panel stated that “the subdivision into residential lots was a necessary step in, and part of, the residential development of Stage 5” (at [106]). The taking of a “step” in “the residential development of” a thing uses the phrase residential development in a context more akin to a plan, goal or process. That being said, at other times the Panel uses the spatial sense of the phrase; for example, when it discusses “prospective residences to be built in that development” (at [105], emphasis added).

13. [73]

    The Appeal Panel also relied on the fact that a s 94 contribution was required to be paid for or on behalf of the landowners of the land comprising the Stage 5 development. Again, that focus was on the whole of the Stage 5 development, as approved, and as considered well prior to February 2021. Payment of that contribution was a condition of the development consent for the subdivision granted in May 2015 (see AP [14(4)]).

14. [74]

    I have explained above that such matters of history might be relevant to the characterisation exercise. But there is a difference between being relevant and being definitive. The Appeal Panel treated these matters as sufficient of themselves, regardless of the subsequent history or the position as at February 2021.

15. [75]

    The defendant submitted that:

16. [76]

    That submission manifests the same error as the Appeal Panel. It also tends to treat the notion of “a residential development” as a process rather than a place.

17. [77]

    The answer to question 2(b) is not a simple “yes”, because the question focuses on the date of 1 February 2021. However, the Appeal Panel did proceed upon a misconstruction of the phrase “in relation to the work … a developer” in cl 3.4(a) of the Policy by considering the issue at a time prior to (at least) February 2021. It did so by proceeding upon an erroneous understanding of the statutory term “a residential development”, leading to an erroneous understanding of the statutory term “developer”, and thus an erroneous understanding of the contractual term which picked up the statutory term. The appropriate answer to the question is: “The Appeal Panel proceeded upon a misconstruction of cl 3.4(a) of the Policy by addressing the question of whether the plaintiff was a developer as at a time prior to when the residential building work was done”.

18. [78]

    The Appeal Panel’s error was material as there is a realistic possibility that the error could have made a difference to the result (see further below at [90]): note Fisher v Nonconformist Pty Ltd (2024) 114 NSWLR 1; [2024] NSWCA 32 at [50].

Question 3: onus

1. [79]

   Question 3 asks:

2. [80]

   The plaintiff submitted that cl 3.4(a) of the Policy was “an exception” to coverage such that the defendant bore the onus of proving that the plaintiff was a developer. It argued that the Appeal Panel had proceeded on the misapprehension that it bore the legal burden of proof and persuasion. It cited Wallaby Grip Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444; [2010] HCA 9 at [25].

3. [81]

   The defendant submitted that in fact that burden lay with the plaintiff as claimant, on the basis that the issue was one of the coverage of the Policy. It said the Policy offered no coverage to developers and that fact was not properly characterised as an exception to coverage. However, the argument was not developed by reference to authority. Distinguishing between what is a matter of the insurer’s promised coverage and what is an exception to that coverage can be a matter of some complexity: note, further to Wallaby Grip, McLennan v Insurance Australia Ltd (t/as NRMA Insurance) [2014] NSWCA 300; (2014) 313 ALR 173; D St L Kelly and M Ball, Kelly and Ball Principles of Insurance Law (Butterworths) at 8490-8495; WIB Enright, R Merkin and F Hawke, Sutton on Insurance Law (5th ed, 2025, Lawbook) at [9.210]. It is not necessary for me to resolve the issue here and, in the absence of submissions grappling with its complexities, I do not propose to do so.

4. [82]

   It is unnecessary because the Appeal Panel did not manifest a view either way as to where the burden of proof and persuasion lay. When “the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found”: Briginshaw v Briginshaw (1938) 60 CLR 336 at 361; [1938] HCA 34. A legal burden addresses the risk of non-persuasion. If the tribunal of fact does not feel the requisite degree of persuasion then the party bearing the legal onus loses on that point. However, if “the tribunal of fact is satisfied to the appropriate standard as to the existence or non-existence of the facts representing the issues in the case, then of course no question of burden of proof arises”: CR Williams, “Burdens and Standards in Civil Litigation” (2003) 25 Sydney Law Review 165 at 166.

5. [83]

   When considering the issue for itself, the Appeal Panel reached a positive finding that the Stage 5 development was “a residential development”, and the plaintiff was a “developer”, for reasons it explained by reference to the evidence (as quoted above at [27]). As I have explained in addressing question 2(b), I consider that it misdirected itself in so doing. But that is not currently to the point. The Appeal Panel did not address in terms the question of where the burden of proof and persuasion lay. It did not need to do so given its reasoning and conclusion. Thus it did not make any error on the point.

6. [84]

   The answer to question 3 is “no”.

Question 4: irrational and illogical fact finding

1. [85]

   Question 4 states:

2. [86]

   The plaintiff’s argument on this question was essentially a variation on the theme introduced by question 2(b). The plaintiff submitted that the Panel’s reasoning process was irrational and illogical because its ultimate finding that the plaintiff was a developer in relation to the work on Lot 544 depended on a “necessary intermediate factual finding … that Stage 5 Blue Horizons was still an extant plan or goal by the time of contract”, being a finding which the plaintiff contends the Panel did not make. This was said to form a “gap in the reasoning”.

3. [87]

   There is some force in this argument but that is so because of error that I have identified with respect to question 2(b). Beyond that, and taking account too of what I have just said with respect to question 3, the plaintiff’s arguments do not establish that the Appeal Panel engaged in irrational and illogical fact-finding. Its fact-finding and logic was unexceptionable given its understanding of the issue. The problem is that it misdirected itself as to that issue.

4. [88]

   In a sense, thus, the question could be answered “yes and no”. But given my answer to question 2(b), the appropriate answer to question 4 is simply “unnecessary to answer”.

Orders

1. [89]

   The plaintiff has succeeded in establishing that the Panel erred in relation to one of the questions of law it has identified. It sought that the orders of the Appeal Panel be set aside and in their place it be ordered that the appeal to the Appeal Panel be dismissed. Alternatively, it sought that the orders be set aside and the matter be remitted for redetermination. The defendant, conversely, submitted that “[i]n any event, the doing of the residential building works on Lots 544 and 547 … undertaken as it was together, itself constituted a residential development”, thus submitting that the appeal to this Court should be dismissed on that basis even if error was found.

2. [90]

   Neither side’s primary position should be accepted. As explained above at [38]-[49], the issue of whether or not the plaintiff was a developer for the purposes of the HBA and the Policy raises an issue of characterisation. It cannot be said that there is only one lawfully open finding: note RH v Director of Public Prosecutions (NSW) [2014] NSWCA 305; (2014) 244 A Crim R 221 at [43]; Donohoe v Albulario [2025] NSWSC 9 at [45]-[49]. The orders of the Appeal Panel should be set aside and the matter remitted to the Appeal Panel for determination according to law. That redetermination would encompass dealing with any costs order that should be made with respect to the first hearing before the Appeal Panel.

3. [91]

   I see no reason to order that the Appeal Panel should be differently constituted. The Panel took a particular view of how a rather unclear statutory provision should be construed and applied. I consider that view was erroneous in one respect. But there is no reason to consider that it might reasonably be apprehended by a fair-minded lay observer that the Panel might be wedded to a particular conclusion when reconsidering the issue applying a somewhat different construction.

4. [92]

   Although the plaintiff has succeeded with respect to only one of the questions of law it identified, that is sufficient to uphold the appeal, and costs should follow the event in this Court.

5. [93]

   The orders of the Court are as follows:

   1. (1)

      Dismiss the plaintiff’s summons insofar as it seeks judicial review of the decision of the Appeal Panel, pursuant to s 34(1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW).

   2. (2)

      Grant leave to appeal with respect to the questions identified at [7] of this Court’s reasons for judgment.

   3. (3)

      Appeal upheld.

   4. (4)

      Set aside the orders of the Appeal Panel made on 12 February 2025.

   5. (5)

      Remit the matter to the Appeal Panel.

   6. (6)

      The first defendant is to pay the plaintiff’s costs in this Court.