Hristoforidis v Fair Trading Administraiton Corporation

Supreme Court of NSW|2007-08-23|Before: Latham J

CITATION : Hristoforidis v Fair Trading Administraiton Corporation [2007] NSWSC 1243 This decision has been amended. Please see the end of the judgment for a list of the amendments.

DECISION : A declaration that the decisions made by the defendant under clause 5(1)(d) of the BSC Comprehensive Insurance Scheme in Form 4 of Schedule 1 to the Building Services Corporation Regulation 1990 (NSW) to grant indemnity to the Proprietors of Strata Plan 39162 in response to their insurance claim dated 25 October 1996 and subsequent extensions thereof ("the indemnity"), were null and void and of no effect; A declaration that the defendant has no right or entitlement to bring recovery proceedings for any amount paid pursuant to the indemnity against the plaintiff under section 98 of the Building Services Corporation Act 1989.; An order restraining the defendant from prosecuting District Court proceedings No. 1311 of 2005; An order that the defendant be permanently restrained from bringing any recovery proceedings under section 98 of the Building Services Corporation Act 1989 against the plaintiff in relation to the indemnity or any amount paid pursuant to it; I award costs in favour of the plaintiff.

CATCHWORDS : ADMINISTRATIVE LAW - whether exercise of power by defendant, declining claim under statutory insurance scheme, was spent - re-consideration of claim by defendant ultra vires - whether initial decision affected by jurisdictional error.

Building Services Corporation Act 1989 LEGISLATION CITED : Interpretation Act 1987 Building Services Corporation Regulation 1990 (NSW)

The Owners of Strata Plan 43551 v Fair Trading Administration Corp; Walter Construction Group Ltd v Fair Trading Administration Corporation [2004] NSWSC 158 Walter Construction Group v FTAC; FTAC v Owners S/P 43551 [2005] NSWCA 65 CASES CITED : Minister for Immigration v Kurtovic (1990) 92 ALR 93 Kabourakis v The Medical Practitioners Board of Victoria [2006] VSCA 301 Craig v The State of South Australia (1994-1995) 184 CLR 163 FTAC v Owners Corp. SP 43551 [2002] NSWSC 624

PARTIES : Plaintiff - John Hristoforidis Defendant - Fair Trading Administration Corporation

COUNSEL : Plaintiff - John Griffiths SC/MS WHite Defendant - M Leeming SC/GM Elliott

SOLICITORS : Plaintiff - DLA Phillips Fox Defendant - Holding Redlich

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

30162/06 JOHN HRISTOFORIDIS v FAIR TRADING ADMINISTRATION CORPORATION

JUDGMENT Introduction 1 The plaintiff is a builder who constructed a block of flats in North Wollongong between mid 1990 and mid 1991. In October 1996, the owners of the units made a claim under a scheme established by legislation, which effectively insured unit owners against bad workmanship by builders, provided that the claims fulfilled certain criteria. The insurance scheme allowed for the assessment of claims and payment of those claims by the defendant (FTAC, which administers the scheme on behalf of the Building Services Corporation, referred to in these reasons as BSC) directly to the owners, with a right in the defendant to seek recovery of that amount from the builder. 2 The owners' claims were initially refused on 3 June 1997, because the defects the subject of the claims were assessed as general defects that had not been notified within time. However, after some representations were made to the defendant by the relevant Minister on behalf of the owners, the claims were allowed about nine months later. An amount of $173,866 was ultimately paid to the owners between October 1998 and July 2000. 3 The defendant has commenced proceedings in the District Court against the plaintiff to recover that amount. The plaintiff's proceedings in this Court seek to stay the District Court proceedings, on the basis that the defendant's power to consider the claims was spent when it refused them. Accordingly, the plaintiff maintains that the defendant's later decision to re-consider and allow the claims was of no effect. 4 In response to this argument, the defendant asserts that the doctrine of 'functus officio' does not apply in the circumstances of this case. It is said that there was no finality to the decision of 3 June 1997 and that the defendant was free to re-consider the claims, essentially because the legislation governing the scheme is of a beneficial nature and there is nothing on the face of the legislation that precludes the defendant from taking a flexible approach to claims.

5 Assuming that the doctrine does apply, the defendant submits that the decision to refuse the claims was affected by jurisdictional error, so that there was no valid exercise of power on 3 June 1997. Alternatively, it is said that the defendant's decision to allow the claims was a fresh exercise of power in relation to a second claim.

The History of the Claims 6 The circumstances giving rise to the litigation are not in dispute and can be conveniently summarised as follows. 7 The first complaint made to the BSC was lodged by the owner of unit 10 on 24 June 1992. It did not relate to defects within the building generally and was finalised on 12 August 1992 by way of a rectification order issued to, and carried out by, the plaintiff. 8 The next complaint was lodged by the owner of unit 7 on 28 March 1996. This complaint marked the beginning of the owners' dealings with the defendant for the purposes of the later insurance claim. The complaint referred to water leaking from the level four balcony and seeping down the core wall side of the deck into the apartment below. On 3 April 1996 the defendant wrote to the owners, advising them that "the items about which you are concerned appear to be general defects and the … time limit has expired." The owners were also informed that "should you consider special circumstances apply in your case which would warrant the waiving of the time limit, you may resubmit your complaint immediately together with the reasons why you consider special circumstances apply". Further, that if the owners considered that a major structural defect existed "then the Department requires substantiation of this prior to accepting your complaint. This will require the provision of a structural engineer's report detailing the nature of the defect and how it satisfies the … definitions." 9 Following further correspondence, the complaint was ultimately accepted, with the defendant attempting to resolve the complaint by mediation. However, the plaintiff declined to participate. 10 In the course of this exchange of correspondence, the defendant reiterated its finding that the defects the subject of the complaint appeared to be general defects. The engineer's report supplied by the owners provided no evidence that the problems were due to defective work on the part of the plaintiff. On 30 August 1996 the defendant's letter to the owners provided information about the BSC insurance scheme and suggested that the owners may be eligible to lodge an insurance claim. The last paragraph of that letter informed the owners of their right of appeal to the New South Wales Commercial Tribunal should the owners be aggrieved by any decision in relation to such an insurance claim. On 30 September 1996 the owners were invited to lodge a claim for benefits under the insurance scheme, although they were informed at that time they may not meet all the necessary conditions to substantiate a valid claim. 11 A claim form was submitted to the BSC on 25 October 1996 and acknowledged by the defendant on 11 November 1996. The defendant's inspectors proceeded to investigate the claim. An insurance assessor determined that the defects were general defects on 19 February 1997. On 16 April 1997, an internal memorandum notes that the defendant considered that there was insufficient evidence to establish a valid claim. It was further noted that the body corporate's engineer had not established that the defects were attributable to the plaintiff's faulty workmanship and that the claim was substantially out of time. In the meantime, a further complaint was lodged by the owner of unit 8, although this complaint took the matter no further. 12 A further note by a claims officer on 21 April 1997 recommended that the claim be declined on the basis that there was insufficient evidence to establish a valid claim and the time limits provided by the Regulations had expired. That recommendation was confirmed by the claims officer's supervisor on 25 April 1997. 13 On 3 June 1997 the defendant wrote to the owners in the following terms :- Following consideration of this matter I regret to advise that your claim under clause 5(1)(d) of the Comprehensive Insurance Scheme has been declined. In reaching this decision, the Department noted that … the items of defect which are the subject of the current claims were not considered to have been raised in the Body Corporate's original complaint lodged in June 1992. Negligence on the part of the original contractor has not been substantiated. The current claim items are considered to be some 18 months out of time in accordance with ….. the Comprehensive Insurance Scheme. …….. [If] you are dissatisfied with the decision, you have the right to appeal to the Commercial Tribunal within 30 days of receipt of this letter. 14 On 7 July 1997 the defendant received a letter from the owners objecting to the decision to decline the insurance claim. The delay in responding was attributed to the absence of the secretary of the body corporate between 2 June and 23 June 1997. Allowing for that absence, it was nonetheless open to the owners to exercise their right of appeal before 23 July 1997. The letter invited the defendant to reconsider the claim. The owners were advised by letter dated 12 August 1997 that the matter was being reviewed. 15 On 9 September 1997 an internal memorandum noted that representations had been made by the owners to their local Member of Parliament and in turn, Ministerial staff had made enquiries of the defendant of the progress of the claim. A further site inspection was arranged to re-investigate the claims. That site inspection took place on 11 September 1997. A memorandum of that date noted that the complaint initially lodged in 1992 and the complaint lodged in 1996 were reviewed and discussed. The defects, the subject of those complaints, were detailed within the memorandum. The owners were informed again of the relevant time limits and the classification of defects under the insurance scheme. It was further noted that the body corporate had commissioned a local engineer to prepare a further report. In conclusion, the memorandum suggested that the insurance claim be reviewed when the engineer's report became available. 16 The further engineer's report was received by the defendant on 9 October 1997. On 20 February 1998 an insurance claim assessment report prepared by an officer of the defendant considered the further engineer's report and concluded that all of the matters identified within that report, with the exception of the defects underlying the complaint from the owner of unit 8, were capable of being classified as major structural defects. 17 It is pertinent to observe that the defects so classified did not vary in substance from those underpinning the complaints in 1996. The rectification of the wall flashings at level 5, the rectification of the deck tiling and the membrane, the rectification of the balustrade, and the connection of the roof drains to the downpipes were within the terms of the 1996 complaint, namely water penetration due to inadequate waterproof membrane and inadequate roof drainage. These had all been classified as general defects, claims for which were outside the relevant time limit. There is nothing in the defendant's documents that explains the re-classification, apart from a simple "change of heart" on the part of the defendant. 18 On 6 March 1998, the first of a number of claims were approved by the defendant and the owners were advised by way of letter dated 25 March 1998. Relevantly for present purposes, the plaintiff was advised by the defendant of the approval of the claim by letter dated 25 March 1998. The plaintiff was put on notice that recovery action for the amounts paid by the defendant would be pursued. Further sums were approved on 5 June 1998, 25 November 1998 and 1 March 1999, following further representations to the defendant through the local Member and the relevant Minister's Office. 19 On 12 April 1999 the plaintiff wrote to the defendant requesting an explanation for the approval of the claim, specifically whether the defects could be said to be within the liability period. The defendant replied by letter dated 15 April 1999, advising that "as the complaint was made around September/October 1996, if the defects were assessed as general defects the defect liability period had well expired. However, if the defects were assessed as major structural defects, the complaint was well within the defect liability period. The complaint was originally classified as general defects and therefore declined, but later assessed as major structural defect and therefore approved". 20 The plaintiff wrote again to the defendant on 16 April 1999 asking for confirmation of the reclassification of the defects and whether special circumstances or reasons existed which led to the approval of the claim. A draft response from the defendant indicated that the defendant was unaware whether any such special circumstances existed, but in view of the re-classification of the defects, it was not necessary to determine that issue. 21 A further payment under the scheme was approved on 3 June 1999 and the plaintiff was notified accordingly. Subsequent approvals for payment of sums under the claim were given up until July 2000. 22 The proceedings against the plaintiff in the District Court were commenced on 12 April 2005. 23 It is against this background that the question whether the defendant exhausted its power to determine a claim under the insurance scheme on 3 June 1997 falls to be considered. Whatever the history of the complaints in 1992 and 1996, the legislative framework provided for time limits and criteria for claims under the insurance scheme. However, some relevance attaches to the views expressed in the course of determining those complaints. The defendant always considered the 1996 complaint and the insurance claim to be related to general defects, that is, until the owners sought a review and a degree of political pressure was brought to bear upon the defendant. Was the defendant's decision to refuse the claims "final" ? 24 It is common ground that the answer to this question resides in the construction of the Building Services Corporation Act 1989 and the Building Services Corporation Regulation 1990. 25 The most salient provisions of the Act for present purposes are those appearing in Part 4 (Divisions 1, 2 and 3), Part 5 and Part 6. 26 Part 4 deals with dispute resolution and includes section 55, which provides that a complaint may be made to the Corporation by any person about the holder of a licence who is guilty of improper conduct, which includes carrying out work otherwise than in a good and workmanlike manner. Section 56 provides that the Corporation is not to accept a complaint, in the absence of special circumstances, about defective residential building work (including work not carried out in a good and workmanlike manner) if the defects are not major structural defects and the work was substantially commenced more than 3 years before the complaint was made, or the defects are major structural defects and the work was substantially commenced more than 7 years before the complaint was made. 27 These provisions pick up the definition of "major structural defects" in reg 29, which is replicated in reg 31 (see below). The limitation on the acceptance of complaints also mirrors the time limits imposed on claims for payments under the insurance schemes, depending on whether the defects are major structural defects or otherwise. 28 Part 5 deals with appeals from determinations or orders made in respect of complaints and from any decision of the Corporation relating to insurance by a claimant under BSC insurance. Section 86 provides that an appeal must be lodged within 30 days after notice of the decision, determination or order is served on the aggrieved person. The Corporation is taken to have refused an application that has not been withdrawn where the Corporation has not served notice of a decision within 40 days of it being lodged at the Corporation's offices. That time frame can be extended by agreement between the claimant and the defendant.

29 Part 6 of the Act and the Regulations made pursuant to section 91 establish the relevant insurance schemes known as "BSC Insurance". Part 6 of the Regulations contain reg 33, which provides that the relevant insurance scheme is prescribed in Form 4 to be found in Schedule 1 to the Regulations. The relevant clause of Form 4 under which the claims were made in this case was cl 5(1)(d) which is in the following terms; 5. (1) Subject to the maximum payment provisions (clause 6), the method of assessing claim benefits (clause 8) and the exclusions specified in this Scheme (clause 9), the Corporation will indemnify the following losses reasonably incurred by a beneficiary in respect of residential building work; ……. (d) losses in rectifying defects in insured building work or insured owner-builder work due to ; (i) bad workmanship; or (ii) faulty or unsuitable materials; or ………………………………………………… 30 Regulation 31 defines "major structural defect" for the purposes of Part 6 of the Regulation. The distinction between major structural defects and general defects becomes particularly important when consideration is being given to whether or not claimants for benefits under the scheme meet the time constraints imposed by cl 7 of Form 4. 31 In the case of major structural defects, claimants are required to notify the BSC in writing of matters that could give rise to losses under the scheme within six months from first becoming aware of the defect, but not later than seven years from the commencement of the insured building work. In the case of defects other than major structural defects, claimants are required to give notice not later than three years from the commencement of the insured building work. 32 Clause 7(2) under Form 4 allows for an extension of that time period if BSC "is satisfied that the delay in notification was due to circumstances outside the control of the beneficiary." I pause to observe that there was no identification of any circumstances outside the control of the owners in this case that might justify an extension of time. Rather, the time limit impediment was overcome by a change in the classification of the defects. 33 Under cl 10 of Form 4, BSC has no further liability under the scheme more than 10 years after the commencement of the building work, notwithstanding cl 7(2). This provision indicates on its face that, notwithstanding the existence of circumstances justifying the lodgement of a claim more than 3 years or more than 7 years after the commencement of building work, no claim would be entertained after 10 years. 34 Thus, running through the provisions of the Act and the Regulations outlined above is the expression of a legislative intention to provide both complainants and potential beneficiaries under the insurance schemes with a timely resolution of disputes affecting the interests of owners and purchasers of residential premises. Indeed, senior counsel for the defendant placed great reliance upon the essentially beneficial nature of the legislation in support of the argument that the powers of the defendant were able to be exercised on an ongoing basis in order to deliver those benefits to owners. However, those submissions ignored those aspects of the Act and Regulations that promote finality in the resolution of complaints and insurance claims, in particular, time limits with respect to the notification of claims and the lodgement of complaints according to the classification of the defect(s), deemed refusal of a complaint 40 days after lodgement, and time limits with respect to the lodgement of appeals. 35 The defendant maintained that its power was able to be exercised from time to time, as long as the object of the exercise of that power was to resolve a complaint or a claim in favour of a claimant, who was initially refused relief (as in this case) but writes back promptly and requests reconsideration on the basis of further information. The defendant acknowledged that the power expires when a claim is resolved in favour of a claimant, and after the passage of some time, that claim is sought to be re-litigated. The defendant was driven to this concession by the decisions in The Owners of Strata Plan 43551 v Fair Trading Administration Corp; Walter Construction Group Ltd v Fair Trading Administration Corporation [2004] NSWSC 158 and Walter Construction Group v FTAC; FTAC v Owners S/P 43551 [2005] NSWCA 65. 36 Walter Construction Group was concerned with an attempt by the defendant to renege on a settlement of an insurance claim, one year after the owners had received a favourable result on appeal from an initial refusal by the defendant to accept the claim. Similar arguments to those advanced by the defendant in the instant case, with respect to the inapplicability of the doctrine of functus and the legal effect of the exercise of power in the event that it was infected by jurisdictional error, were canvassed by Grove J at first instance. Grove J found that the statutory construct, the scheme under the legislation, and the conduct of the defendant combined to prevent the re-opening of the settlement decision. Reliance was also placed upon section 48 of the Interpretation Act 1987 in Walter Construction Group (as it was in this case) in order to justify the ongoing exercise of power, to which Grove J. responded :- I do not construe that provision as vesting the power to make and unmake decisions infinitely. If power does not stretch to infinity, there must be in the circumstances of the particular case and "as occasion requires" a terminus. 37 Grove J's decision, rejecting the defendant's arguments, was upheld by the Court of Appeal. Apposite to the circumstances of the instant case, the leading judgement of Santow JA in the following respect is, in my view, determinative of this matter :- [Having] embarked upon a decision-making process, whether that decision be simply to settle the claims of the owners, or to resolve a dispute in relation to the claims by so doing, FTAC was now functus in the sense used in Minister for Immigration v Kurtovic … . [Even] had FTAC failed to consider factual material available, …. , any such failure could not deny its ability to make a decision. It is therefore not open to FTAC, having thereby spent its decision-making powers, to now seek to unravel its decision-making processes ….. 38 The relevant passage from Minister for Immigration v Kurtovic (1990) 92 ALR 93 appears at 112 :- The result is that when the decision maker attempts to resile from his earlier position he is prevented from doing so not from any doctrine of estoppel, but because his power to do so is spent and the proposed second decision would be ultra vires. The power is one of interpretation of the statute conferring the particular power. 39 I can see no relevant, principled basis upon which to distinguish the rationale underlying the decision in Walter Construction Group from the circumstances of this case. Whether the power is exercised in favour of a claimant or against, it is still an exercise of power under the rubric of the legislative scheme. The claimants in the present case were in fact in the same position as the claimants in Walter Construction Group, at the point when the claims were initially refused. The claimants in Walter Construction Group exercised their right of appeal and were successful, whereas the claimants here adopted an altogether different course, despite being advised by the defendant of the availability of an appeal, which brought with it the opportunity to present further evidence. The finality of the decision making process cannot depend upon the perseverance of a claimant who wishes to avoid the appeal mechanisms established by the Act, nor can it depend upon favourable intervention by Ministerial staff on the claimant's behalf. Such factors introduce a capriciousness to the decision making process that can only tend to defeat a clear legislative intention to the contrary. 40 To like effect is the decision of the Court of Appeal of Victoria in Kabourakis v The Medical Practitioners Board of Victoria [2006] VSCA 301. In determining the status of an administrative decision, the question is :- whether the statute manifests an intention to permit or prohibit reconsideration in the circumstances that have arisen. But, …. , as a rule a statutory tribunal cannot revisit its own decision simply because it has changed its mind or recognizes that it has made an error within jurisdiction. More often than not, the requirements of good administration and the need for people affected directly or indirectly by decisions to know where they stand mean that finality is the paramount consideration, and the statutory scheme, including the conferring and limitation of rights of review on appeal, will be seen to evince an intention inconsistent with capacity for self correction of non-jurisdictional error. In the bulk of cases, logic and common sense so much incline in favour of finality as to permit of no other conclusion. (bold not in original) 41 It cannot seriously be suggested that the plaintiff in this matter was not liable to be directly or indirectly affected by the resolution of the owners' claims. So much is clear from the attempt by the defendant to recover the funds from the plaintiff that were paid out under the claims, by way of the proceedings in the District Court. Moreover, s 105(2) and (3) of the Act evince a legislative purpose, amongst others, of setting and maintaining building standards. Whilst those objects are no doubt consistent with the interests of owners and purchasers of residential dwellings, they also affect the interest of builders, such as the plaintiff. For these reasons, I do not regard the exception to the doctrine of functus, said to arise where the parties affected by the administrative decision agree to set it aside, to have any application in the circumstances of this case.

42 I would resolve the first issue in the plaintiff's favour. The powers of the defendant to determine the 1996 claim under the insurance scheme were spent on 3 June 1997. The purported review of the decision to decline the claim and the subsequent approvals were ultra vires, in the absence of jurisdictional error.

Was the defendant's decision to refuse the claims affected by jurisdictional error ? 43 In effect, the defendant seeks to escape the consequences of the above finding by submitting that it fell into jurisdictional error. In the event that it did so, no exercise of power occurred on 3 June 1997, thus leaving the defendant free to re-determine the claim. 44 The defendant disavowed any reliance upon jurisdictional error on the basis that its decision-making processes depended upon a jurisdictional fact. That species of jurisdictional error was addressed and decided against the defendant in Walter Construction Group. Rather, the defendant relied upon the following characterisation of jurisdictional error in Craig v The State of South Australia (1994-1995) 184 CLR 163 at 177-178 :- Again, an inferior court will exceed its authority and fall into jurisdictional error if it misconstrues that statute or other instrument and thereby misconceives the nature of the function which it is performing or the extent of its powers in the circumstances of the particular case. In the last mentioned category of case, the line between jurisdictional error and mere error in the exercise of jurisdiction may be particularly difficult to discern. 45 The misconstruction, it is submitted, was of the term "major structural defects" within the meaning of cl 7 of Form 4. The definition of "major structural defect" appears in reg 31 of the Regulations, and means, relevantly :- an inherent or damage-induced defect : (a) in an element that provides essential supporting structure to the whole or any part of a dwelling …. which renders the element inadequate for its structural purpose ; or (b) in a substantial functional element essential to the habitability of a dwelling (for example, a panel wall, masonry veneer wall or slab on ground) which is of such a kind that the element itself does not have adequate structure for its purposes. 46 The officers of the defendant based the decision, that the defects the subject of the claim were general defects, upon an interpretation of "major structural defect" that excluded water penetration into a unit from the balcony above it. More particularly, the defendant's inspector reported that the water entry was "due to either a failed or inadequate membrane [on the balcony] which is not considered a structural member." The defendant seizes upon this statement to substantiate its claim that the term "major structural defect" was fundamentally misunderstood, in that the word "structure" in (b) is to be distinguished from the term "supporting structure" in (a). In reliance upon a decision of Burchett AJ in FTAC v Owners Corp. SP 43551 [2002] NSWSC 624 at [21], the defendant maintains that "structure" in the second limb of the definition means no more than "composition, makeup [or] form", so that a substantial functional element, essential to the habitability of a dwelling, which is not constructed so as to fulfil its purpose, qualifies as a "major structural defect", notwithstanding that it does not provide structural support for anything. 47 It is not altogether clear that the defendant's inspector considered the balcony, or the membrane on the balcony, as the relevant "structural member". Given the view that I have formed, it matters not. The remarks of the inspector set out above must be read in the light of the material supplied by the owners in support of the claim. In particular, at page 2 of the report of Mulvey Raile and Associates the following appears :- The main concern is the leakage of water from the level 4 balcony through the concrete slab to unit 7 below. This leakage is occurring at the internal edge of the balcony where it meets the external southern wall to unit 10. Minor cracking of the concrete slab is unavoidable since some cracking occurs during the drying and subsequent shrinkage of concrete after placement. However water leakage of the type experienced in this property at unit number seven would indicate that the cracks are larger than anticipated and adversely affecting the habitability of unit number seven. Although the size of the cracks could not be determined at this site inspection, they would appear to be of such a size as to allow considerable water penetration. This would indicate that a major structural defect could exist. Exposure of the reinforcing to the elements leads to the corrosion of this reinforcement and subsequent deterioration of the concrete slab. Remedial work to stop water leakage would entail re-waterproofing of the level 4 balcony. This would require the removal and replacement of the existing tiles and tile bedding and other associated works. Drainage of the balcony although inadequate is not a structural defect however it would be improved by the above remedial works provided adequate cross falls and dish drains are completed. Although several cracks are evident in many locations around the building none could be classified as a major structural defect at this stage, however they do affect the overall serviceability of the building. (bold not in original) 48 In short, there is nothing in this material or in the inspector's remarks that necessarily lead to the conclusion that "structural member" was used to connote a supporting structural member. The highest the report went was that the defects could be major, but that expansion and contraction of the concrete was possibly responsible for the size of the cracks, that is, they may not be attributable to the builder's negligence. That was a finding consistent with the terms of the letter to the owners declining the claim. I do not accept that Burchett AJ's decision necessarily warrants the conclusion that the defendant here fell into jurisdictional error. 49 The defendant's last submission may be briefly dealt with. I am unable to accept the argument that the defendant's re-determination of the claim was in effect a decision based upon a second claim, unrelated to the October 1996 claim. Nothing in the documents suggests that such was the case, in fact, everything points to the contrary. 50 I make the following declarations and orders:

A declaration that the decisions made by the defendant under clause 5(1)(d) of the BSC Comprehensive Insurance Scheme in Form 4 of Schedule 1 to the Building Services Corporation Regulation 1990 (NSW) to grant indemnity to the Proprietors of Strata Plan 39162 in response to their insurance claim dated 25 October 1996 and subsequent extensions thereof ("the indemnity"), were null and void and of no effect.

A declaration that the defendant has no right or entitlement to bring recovery proceedings for any amount paid pursuant to the indemnity against the plaintiff under section 98 of the Building Services Corporation Act 1989 . An order restraining the defendant from prosecuting District Court proceedings No. 1311 of 2005. An order that the defendant be permanently restrained from bringing any recovery proceedings under section 98 of the Building Services Corporation Act 1989 against the plaintiff in relation to the indemnity or any amount paid pursuant to it.

I award costs in favour of the plaintiff **********

11/12/2007 - Year 1995 should read 2005 - Paragraph(s) Par 22 Date should read 12 April 2005

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Building Services Corporation Regulation 1990(NSW)

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