except as or on behalf of an individual, partnership or corporation that is the holder of a licence authorising its holder to contract to do that work.
Maximum penalty: 100 penalty units."
34 I think all that s 4 is saying is that residential building work must be performed by the holder of a licence under the Act, and anybody contracting to do that work, must do so as, or on behalf of, such a holder of a licence. I accept that that provision would extend to a sub-contractor contracting to perform residential building work and that such a sub-contractor must be a holder of a licence under the Act. In my view that has nothing to say about the operation of s 92.
35 As it happens, I think s 92 is capable of extending to sub-contractors, but not in the way submitted by Multiplex. That section prohibits a person from contracting to do any residential building work "unless a contract of insurance that complies with [the] Act is in force in relation to the proposed work" (emphasis added). S 92(1) does not say that the contract of insurance is one that is required of the sub-contractor under a head contract where the head contractor is obliged to insure under s 92. All that is required is that there be a contract of insurance in force in relation to the work. That requirement is satisfied by the head contractor's contract of insurance. That construction has to be read in conjunction with s 92(2). I think the latter subsection is satisfied in the last mentioned situation where the head contractor's certificate of insurance is attached to the sub-contract. That construction, in my view, is also consistent with the obligation of a sub-contractor, who is engaged in the performance of residential building work, to hold a licence under the Act.
36 That construction of s 92 is consistent with the operation of s 98 as advanced in these reasons and is also consistent with the limited operation of s 94 which is concerned with a "person who enters into a contract in contravention of section 92 (1)…", pointedly, I think, omitting any reference to s 92 (2): pointedly, because the operation of s 92 (1) and (2) which I have advanced would lead to an anomaly if s 94 (1) precluded enforceability of a sub-contract by a sub-contractor, where the head contractor, under an obligation not to contract without having in place a contract of insurance in relation to the head contract works, had failed to attach the certificate of insurance to the sub-contract.
37 It will be seen that the construction of s 92 as presented in these reasons is at odds with the form of the question in par 1.1 of the separate questions. If s 92 applied to ACS, it would not be "required to have in force a contract of insurance in compliance with Pt 6 of the …Act". The section would prohibit ACS from contracting to do "residential building work unless a contract of insurance that complies with [the] Act [was] in force in relation to the proposed work". If under a head contract there is "a contract of insurance…in force in relation to the proposed work" of a sub-contactor there is no prohibition against the sub-contractor contracting to do that work.
38 Expressed shortly, the s 92 requirement is to have in place a contract of insurance which complies with the Act in relation to the proposed work. It is silent as to the manner in which that insurance is put in place. Hence, the requirement in relation to sub-contract works is satisfied by there being in place the requisite contract of insurance in relation to the head contract works. Although not germane to my construction of s 92, that construction is underscored by cl 41 of the Regulation under the Act which is in the following terms:
"41 Persons who may arrange insurance contracts
An insurance contract may be entered into for the purposes of Part 6 of the Act by a contractor or supplier, or by a beneficiary in respect of the work done or kit home supplied, and may be arranged by any such person."
39 Multiplex relied upon the express exemption of sub-contractors from the requirements of s 6 of the former Act, requiring residential building contracts to be in writing, as indicative of the intention in Pt 6 of the Act to include sub-contractors in the obligations to insure: pointing to the absence of any express exemption of sub-contractors. This exemption was provided by cl 11 of the Regulation under the former Act (as amended under the Building Services Corporation Amendment Regulation 1997). An exemption in similar terms, is provided for in cl 13 of the Regulation under the Act. That regulation commenced on 1 September 1997, after the parties had entered into the sub-contract. In any event, I see no significance in the absence of an express exemption of sub-contractors from compliance with Pt 6 of the Act. On the construction of Pt 6 advanced in these reasons, sub-contractors may well be embraced within the operation of the insurance provisions of the Act. As I read s 92 the obligation is cast upon a party contracting to perform residential building work, whether as head contractor or sub-contractor, to ensure that there is in place a contract of insurance, "in force in relation to the proposed work".
40 It was submitted on behalf of ACS that Multiplex was a developer within the meaning of s 3A of the Act. The evidence does not permit such a finding. In any event, the reliance by ACS on the operation of s 96, requiring a contract of insurance to be in place where residential building work is undertaken by a developer, does not add to the construction of s 92 of the Act advanced on behalf of ACS.
41 It was also submitted on behalf of ACS that the description of beneficiaries under the required contract of insurance is indicative of a legislative intention that the benefit of the insurance provisions is for the consumer and has no application to a head contractor/ sub-contractor relationship. There is some support for this in the second reading speech for the Building Services Corporation Legislation Amendment Bill 1996 (the bill).
42 The same observations may be made in relation to the explanatory memorandum which accompanied the bill and which is silent on the relationship of head contractor and sub-contractor in the performance of residential building work.
43 Similar support for the position of ACS is found in the form of the contract of insurance required under the Act and which requires an indemnity in respect of loss arising from breach of statutory warranties some of which are of a kind that one would not normally associate with the performance of work by a sub-contractor under a head contract for the performance of residential building work. However, in my view, it does not follow that the prohibition in s 92 does not apply to a sub-contractor. Nor does it mean that the s 18B warranties are not implied in the sub-contract, however inappropriate that implication may be in a particular case.
44 It is my view that it is not necessary to construe Pt 6 of the Act as having no application to a sub- contractor. Clearly Pt 6 of the Act is designed to ensure that in the performance of residential building work there is in place a contract of insurance complying with the provisions of the Act and while the primary responsibility for effecting that insurance will, in nearly all such cases, fall upon the shoulders of the head contractor, nevertheless, it remains the obligation of a sub-contractor not to contract to do any residential building work under a head contract, without being satisfied that a contract of insurance is in place.
45 In considering the separate question in par 1.2 of the separate questions I think it has to be approached on the basis that my construction of the transitional and insurance provisions of the Act is erroneous: that question 1.1 should be answered in the affirmative: that Pt 6 of the former Act applies to the whole of the head contract works and that, additionally, Pt 6 of the Act applies to the sub-contract works.
46 In my view, on the basis of the agreed facts, there is really only one matter that calls for attention, namely, whether public policy considerations preclude ACS from relying on waiver or estoppel to preclude Multiplex's reliance on the provisions of s 94 of the Act. Otherwise, the facts of the case readily satisfy the requirements of estoppel as identified by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429. It has been submitted on behalf of Multiplex that there is no element of unconscionability in its conduct in relying upon ss 92 and 94 of the Act on the facts of this case. I disagree and see no point in elaborating upon that conclusion other than to observe that:
1. The unconscionability involved in Multiplex's conduct in reliance upon s 94 of the Act is, in my view, embarrassingly obvious, and
2. The fact that Multiplex did not turn its mind to the operation of Pt 6 of the Act prior to the commencement of these proceedings is, in my view, irrelevant in the context of its unconscionable conduct.
47 Whether the question is approached as raising an issue of estoppel or waiver is immaterial, in that either path, if they are separate ones at all in this case, converge at the point of public interest.
48 The question to be addressed, in my view, is whether the provisions of Pt 6 of the Act, in particular ss 92 and 94, evince an intention to protect interests that may not be jeopardised by the agreement or the conduct of those bound by the legislation. The public interest in Pt 6 of this legislation is clear: the protection of an ultimate 'consumer' of a residential building, usually its owner, from shoddy or non-performance of residential building works by having in place statutory warranties and a contract of insurance indemnifying the beneficiaries under the Act from loss, inter alia, through non-performance or breach of those warranties.
49 Even if ss 18B and 92 of the Act are construed to impose statutory warranties upon ACS for the benefit of Multiplex and a requirement that there be in place a contract of insurance which complies with the Act indemnifying Multiplex as a beneficiary under the policy, I think such a scheme is only a servant of the underlying objective of protecting the ultimate consumer and one beyond the power of either Multiplex or ACS to circumvent, at least to the extent that the ultimate consumer's interests are involved. Beyond that, there is no public interest, in my view, in the protection of the interests of Multiplex under such a scheme of insurance.
50 Part of the difficulty in examining the availability of estoppel to preclude reliance by Multiplex upon ss 92 and 94 of the Act lies in the absurdity that results from the application of s 92 as construed by Multiplex to residential building works of the magnitude of the head contract works. In modern construction practices it would result in a multiplicity of contracts of insurance, each indemnifying the head contractor from loss resulting from defective sub-contract works. I fail to see any public interest in providing such protection to major building contractors who themselves would have in place a contract of insurance, in compliance with the Act, for the benefit of the ultimate consumer in respect of the whole and each part of the works.
51 If I am entitled to look at the effect of the successful application of estoppel in the context of the facts of this case then, in my view, there is no disservice to the public interest, which is protected under Pt 6 of the Act, in precluding Multiplex from relying upon ss 92 and 94 of the Act.
52 However, the penal nature of the s 92 prohibition, the provision against contracting out in s 103D and the severity of the consequences of contravention of s 92 imposed under s 94 of the Act, I think are clear enough legislative indications of the public's vested interest in the adherence to the provisions of s 92 and of the legislative intention that the operation of s 92 is not to be circumvented by agreement, conduct of the parties or otherwise. I think that line of reasoning accords with the authorities, see: Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 at 1016 -1017; Barilla v James (1964) 81 WN (Pt 1) (NSW) 457, a decision of the Full Court, particularly at 461- 464 in the judgment of Walsh J; and cf Beckford Nominees Pty Ltd v Shell Co of America Ltd (1987) 73 ALR 373 at 378-9 and Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367 at 371.
53 Whether these conclusions are an end of the matter depends upon the question which one addresses, namely, whether the estoppel acts to circumvent the operation of ss 92 and 94 of the Act, or whether the estoppel acts to circumvent the protection of the public interest which the sections are designed to provide. If the former then, clearly, in this case, ACS may not avail itself of the benefit of estoppel. If the latter, I think just as clearly, estoppel is available to it. I prefer the latter approach in a legal action of this kind. It permits an analysis or distilling of the essential interest at stake and permits recourse to the particular facts of a case in deciding whether, in that case, the estoppel will leave the subject public interest untrammelled.
54 Accordingly:
The question in par 1.1 of the Pt 31 order is answered in the negative.
The question the subject of par 1.2 of that order does not arise.
The defendant is ordered to pay the plaintiff's costs of the separate determination of
those questions.