NSWNSWSC

McIntosh v Lennon

[2024] NSWSC 169

Supreme Court of NSW|2023-10-05|Before: Payne JA

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2023-10-05

Before

Payne JA

Catchwords

[2007] HCA 47 Chief Municipal Inspector - Local Government v Mohamud (2021) 66 VR 1
[2021] VSC 787 Ciaglia v Ciaglia (2010) 269 ALR 175
[2010] NSWSC 341 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
[1955] HCA 27 Commissioner of Police, New South Wales Police Force v Fine (2014) 87 NSWLR 1

Source

Original judgment source is linked above.

Catchwords

[2007] HCA 47 Chief Municipal Inspector - Local Government v Mohamud (2021) 66 VR 1[2021] VSC 787 Ciaglia v Ciaglia (2010) 269 ALR 175[2010] NSWSC 341 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384[1955] HCA 27 Commissioner of Police, New South Wales Police Force v Fine (2014) 87 NSWLR 1[2014] NSWCA 327 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297[1981] HCA 26 Cooper v Owners - Strata Plan No 58068 (2020) 103 NSWLR 160[2020] NSWCA 250 De Marco v Chief Commissioner of State Revenue (NSW) (2013) 83 NSWLR 445[2013] NSWCA 86 Department for Health and Ageing v Li (2018) 130 SASR 578[2018] SASCFC 52 DPP (Vic) v Leys (2012) 44 VR 1[2012] VSCA 304 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503[2012] HCA 55 Goldsmith v Bisset (No 3) (2015) 71 MVR 53[2015] NSWSC 634 Greylag Goose Leasing 1410 Designated Activity Company v PT Garuda Indonesia Ltd (2023) 111 NSWLR 550[2023] NSWCA 134 Gunn v Steain [2003] NSWSC 1076 HFM043 v Republic of Nauru (2018) 359 ALR 176[2018] HCA 37 Holden v Nuttall [1945] VLR 171 Igaki Australia Pty Ltd v Coastmine Pty Ltd (1996) 34 IPR 37

Judgment (33 paragraphs)

[1]

ief Commissioner of State Revenue (NSW) (2013) 83 NSWLR 445; [2013] NSWCA 86 Department for Health and Ageing v Li (2018) 130 SASR 578; [2018] SASCFC 52 DPP (Vic) v Leys (2012) 44 VR 1; [2012] VSCA 304 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 Goldsmith v Bisset (No 3) (2015) 71 MVR 53; [2015] NSWSC 634 Greylag Goose Leasing 1410 Designated Activity Company v PT Garuda Indonesia Ltd (2023) 111 NSWLR 550; [2023] NSWCA 134 Gunn v Steain [2003] NSWSC 1076 HFM043 v Republic of Nauru (2018) 359 ALR 176; [2018] HCA 37 Holden v Nuttall [1945] VLR 171 Igaki Australia Pty Ltd v Coastmine Pty Ltd (1996) 34 IPR 37; (1996) FCA 207 Inco Europe Ltd v First Choice Distribution (a firm) [2000] 1 WLR 586 Jones v Wrotham Park Settled Estates [1980] AC 74 Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12 Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 Lawson v Western Australia (No 3) (2018) 85 MVR 160; [2018] WASCA 129 Lowe v The Queen (2015) 48 VR 351; [2015] VSCA 327 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Proudman v Dayman (1941) 67 CLR 536; [1941] HCA 28 R v PLV (2001) 51 NSWLR 736; [2001] NSWCCA 282 R v Young (1999) 46 NSWLR 681; [1999] NSWCCA 166 SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55 Sorbello & Donelly v Whan [2007] NSWSC 951 SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 Taylor v The Owners - Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9 Thompson v Goold & Co [1910] AC 409 Thompson v Groote Eylandt Mining Company (2003) 173 FLR 72; [2003] NTCA 5 Vitality Works Australia Pty Ltd v Yelda (No 2) (2021) 105 NSWLR 403; [2021] NSWCA 147 Texts Cited: New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 30 October 1996 at 27-28 New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 6 May 2014 at 28221 Category: Principal judgment Parties: Alan Patrick McIntosh (plaintiff) Stephen Mark Lennon (first defendant) Glenda Lennon (second defendant) Representation: Counsel: C Simpson (plaintiff) A Crossland (first and second defendants)

[2]

Solicitors: Shields Legal (plaintiff) Attwood Marshall Lawyers (first and second defendants) File Number(s): 2023/128831 Publication restriction: Nil Decision under appeal Court or tribunal: New South Wales Civil and Administrative Tribunal Jurisdiction: Appeal Panel Citation: [2023] NSWCATAP 83 Date of Decision: 29 March 2023 Before: Senior Member Curtin SC; Senior Member Fairlie File Number(s): 2022/305702

[3]

HEADNOTE [This headnote is not to be read as part of the judgment] The plaintiff, Alan McIntosh, was the beneficial owner of a property at Kingscliff in northern New South Wales. In 2014, he obtained development consent to perform "residential building work" on the property, within the meaning of the Home Building Act 1989 (NSW) ("the Act"). Although he represented to the consent authority that a licensed builder would perform the work, the plaintiff in fact had the work carried out on his own behalf. The nominated licensed builder took no part in completing the residential building work. This was in breach of s 12 of the Act, which required someone in the plaintiff's position to obtain an "owner-builder permit" before doing residential building work. In 2016, the property was sold to two buyers. In June 2020, the two buyers sold the property to the defendants, Mr and Ms Lennon. In 2021, the defendants began proceedings in the NSW Civil and Administrative Tribunal, submitting that the residential building work the plaintiff performed on the property breached the statutory warranties in Part 2C of the Act. The Tribunal ordered the plaintiff to pay the defendants $95,199.15 along with costs. That award was upheld in an internal appeal to the Tribunal's Appeals Panel. The Appeal Panel held that, by s 18C of the Act, an "owner-builder" owed the Part 2C statutory warranties to their immediate successor in title; and by s 18D, a subsequent successor in title has the same right to enforce the warranties as an immediate successor in title. Together, ss 18C and 18D would allow successors in title such as the defendants to recover from an owner-builder. The plaintiff argued ss 18C and 18D had no application because he had never obtained an owner-builder permit and was therefore not an "owner-builder" as defined by the Act (sch 1 cl 1: "a person who does owner-builder work under an owner-builder permit issued to the person for that work"). The Appeal Panel, however, held that the "legal meaning" of this definition extended its operation to a person who was required to obtain an owner-builder permit. Alternatively, the Appeal Panel held that words should be read in to the definition to the same effect. The plaintiff appealed to the Supreme Court under s 83 of the Civil and Administrative Tribunal Act 2013 (NSW). The sole substantive issue was the meaning of "owner-builder" under sch 1 cl 1 of the Home Building Act. Payne JA held, granting leave to appeal but dismissing the appeal:

[4]

JUDGMENT

PAYNE JA: The plaintiff, Mr Alan McIntosh, seeks leave to appeal from a decision of the Appeal Panel of the NSW Civil and Administrative Tribunal ("NCAT") made on 29 March 2023. The Appeal Panel's decision was an internal appeal from a decision made by Senior Member Ellis SC in the Consumer and Commercial Division of NCAT on 15 September 2022 awarding damages to be paid by Mr McIntosh for breaches of the statutory warranties contained in the Home Building Act 1989 (NSW) ("the Act").
The central question on this appeal is whether Mr McIntosh was an "owner-builder" for the purposes of the statutory warranties in Part 2C of the Act.

[5]

Relevant facts

In 1995, Mr McIntosh became the owner of a house and land ("the property") at Kingscliff in the far north of New South Wales. The property was purchased and registered in the name of his daughter but was held on resulting trust for Mr McIntosh. Mr McIntosh's son and his family lived for a time in the property.
In about 2014, Mr McIntosh obtained development consent from Tweed Shire Council to demolish the existing house and build a new house on the property. In obtaining that development consent, Mr McIntosh represented to the consent authority that the planned residential building work was to be done by a Mr Miller, a builder who was licensed under the Home Building Act to do residential building work.
Between 2014 and 2016 Mr McIntosh carried out "residential building work" on the Kingscliff property as that term is defined in sch 1 cl 2 of the Home Building Act. Mr McIntosh was an "owner" of the property for the purposes of the Home Building Act, as defined in sch 1 cl 1. In circumstances I will shortly explain in greater detail, Mr McIntosh was obliged to obtain an owner-builder permit issued under the Home Building Act in relation to this residential building work before commencing that work. It was common ground that Mr McIntosh never obtained an owner-builder permit in relation to this work.
Section 12(a) of the Home Building Act made it an offence for the plaintiff to do residential building work except as the holder of an owner-builder permit authorising him to do that work. Section 12 of the Act creates a summary offence of absolute liability. Even if the principles in Proudman v Dayman (1941) 67 CLR 536; [1941] HCA 28 apply to s 12, Mr McIntosh did not seek to prove any honest and reasonable mistake of fact in relation to his failure to obtain an owner-builder permit prior to doing residential building work on the property. Mr McIntosh has never been prosecuted for a breach of s 12 and, given that more than six months have elapsed since the date any offence occurred, he never will be: Criminal Procedure Act 1986 (NSW) s 179(1).
On 6 December 2016, the property was sold to a Ms Carberry and a Ms Clark. On 2 June 2020, Ms Carberry and Ms Clark exchanged contracts for the sale of the property to the first and second defendants, Mr Stephen Lennon and Ms Glenda Lennon ("the Lennons"). The purchase settled on 24 July 2020.

[6]

Relevant legislation

The Home Building Act commenced operation in full on 21 March 1990 and regulates the residential building industry. "Residential building work" above a nominated value is to be carried out only by a person issued with a licence under the Act to do that work. Residential building work is defined widely in cl 2 of sch 1, and under subcl (2)(1)(a) relevantly includes "the construction of a dwelling". There is no dispute that the work Mr McIntosh performed on the property was "residential building work" within the meaning of the Act. Critically, the Act provides a system of statutory warranties given to subsequent purchasers of a property about the quality of all residential building work.

[7]

The licensing scheme and owner-builder permits

The Act establishes a regime for the administration of a licensing system: see Parts 3 and 4.
One type of licence is an "owner-builder permit", issued under ss 30 and 31. An owner-builder permit must not be granted unless the applicant is over the age of 18, owns the land concerned, will occupy the land as a dwelling-house and has competed relevant education or training: s 31(2). An owner-builder permit authorises its holder to do residential buildering work as described in the permit and on the land specified: s 32(1). The Appeal Panel found that the plaintiff was an "owner" of the land and otherwise met the statutory criteria that would allow him to obtain an owner-builder permit. There was no appeal from those findings and there is no issue before me about any of these matters.
As I have said, s 12 prohibits residential building work being carried out unless certain permits have been issued: 12 Unlicensed work An individual must not do any residential building work, or specialist work, except - (a) as, or as a member of a partnership or an officer of a corporation that is, the holder of a contractor licence authorising its holder to contract to do that work, or (b) as the holder of an owner-builder permit authorising its holder to do that work, or (c) as an employee of the holder of such a contractor licence or permit. Maximum penalty - 1,000 penalty units in the case of a corporation and 200 penalty units in any other case.
Section 12 compels all those who do residential building work to have a relevant licence, or be the employee of someone holding a licence or permit. There is no class of person who can do residential building work without having a contractor licence, or an owner-builder permit, or being a relevant employee.
The first type of licence is a contractor licence: subs (a). A contractor licence is granted only to a person who meets the onerous requirements in Part 3 Div 1 and, in particular, s 33C, which requires an applicant for a contractor licence to have or propose to have certain numbers of "nominated supervisors". In effect, an applicant must be a professional builder.
Unless a person is eligible for a contractor licence or is the kind of employee envisaged by s 12(c), then the only licence the person can obtain is an owner-builder permit (s 12(b)). As explained, a person is eligible for an owner-builder permit if they meet the criteria in s 31(2).

[8]

The definition of owner-builder

The Act in its original form (then called Building Services Corporation Act 1989) did not define an "owner-builder". The definition was inserted by Building Services Corporation Legislation Amendment Act 1996. Between 1996 and 2014 the definition provided: owner-builder means a person who does owner-builder work (within the meaning of Part 6) and who is issued an owner-builder permit for that work.
The Act's current definition of "owner-builder", which applied when Mr McIntosh was carrying out residential building work on the property, is found in clause 1 of sch 1: owner-builder means a person who does owner-builder work under an owner-builder permit issued to the person for that work.
There is also a definition of "owner-builder work" contained in s 29 of the Act: owner-builder work means residential building work - (a) the reasonable market cost of the labour and materials involved in which exceeds the prescribed amount, and (b) that relates to a single dwelling-house, dual occupancy or secondary dwelling - (i) that may not be carried out on the land concerned except with development consent under Part 4 of the Environmental Planning and Assessment Act 1979, or (ii) that is complying development within the meaning of that Act.
It is notable that the provisions governing "owner-builder permits" (ss 30-32AA) do not use the defined term "owner-builder". Instead, these sections explain in their own language when an owner-builder permit is required and what its function is.

[9]

Statutory warranties

Part 2C is headed "Statutory warranties". [2] The warranties are implied in every contract to do residential building work. Section 18B provides: [3] 18B Warranties as to residential building work (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work - (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, [4] (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of 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 work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment. (2) The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the principal contractor) who has contracted to do residential building work contracts with another person (a subcontractor to the principal contractor) for the subcontractor to do the work (or any part of the work) for the principal contractor.

[10]

The constructional issue

The issue at the centre of this appeal is the meaning of "owner-builder" under the statutory warranty provisions of the Home Building Act. Mr McIntosh was an "owner" of the property when he carried out the residential building work about which complaint was made. There is no longer any dispute that, (assuming he was an owner-builder) by the work he carried out, Mr McIntosh breached the statutory warranties contained in s 18B of the Act and extended by ss 18C and 18D of the Act.
The question is whether the Lennons can enforce those warranties against Mr McIntosh. Their position is that they can do so because: 1. Mr McIntosh was an "owner-builder" when carrying out the residential work to the property and was bound by the statutory warranties in s 18B; 2. Ms Carberry and Ms Clark were immediate successors in title to Mr McIntosh, and under s 18C could enforce the s 18B statutory warranties against him, since he was an owner-builder and an immediate predecessor in title; and 3. The Lennons were successors in title to Ms Carberry and Ms Clark. Under s 18D, the Lennons therefore enjoyed the same rights to enforce the s 18B statutory warranties that Ms Carberry and Ms Clark enjoyed, including their right under s 18C to enforce the s 18B warranties against Mr McIntosh.
At all stages of this proceeding, Mr McIntosh has argued that he was never an "owner-builder" within the meaning of the Act. The definition of "owner-builder", he says, by its terms captures only those who carry out owner-builder work "under an owner-builder permit issued to the person for that work". Mr McIntosh never obtained an owner-builder permit for the work he performed on the property. He says that means he was never an "owner-builder". He submitted that neither s 18C nor 18D apply to the Lennons and they are not entitled to enforce the statutory warranties against him.
To summarise, before doing the residential building work the subject of this proceeding, Mr Mcintosh was required by the Act to obtain an owner-builder permit. He failed to do so. Whether Mr McIntosh's failure to obtain an owner-builder permit has the effect he contends for is the critical question raised by this case.

[11]

Application for leave to appeal to this Court

The present appeal arises from an "internal appeal", that is, an appeal heard by the Appeal Panel of NCAT: s 80 of the Civil and Administrative Tribunal Act
The plaintiff sought leave to appeal to the Supreme Court, purportedly pursuant to r 50.12 of the Uniform Civil Procedure Rules 2005 (NSW), rather than the correct provision, s 83 of the Civil and Administrative Tribunal Act 2013 (NSW). At the hearing, Mr Simpson, counsel for the plaintiff, accepted that it was necessary, in order for his client to succeed, that leave to appeal be granted pursuant to s 83.
Section 83 provides: 83 Appeals against appealable decisions (1) A party to an external or internal appeal may, with the leave of the Supreme Court, appeal on a question of law to the Court against any decision made by the Tribunal in the proceedings. (2) A person on whom a civil penalty has been imposed by the Tribunal in proceedings in exercise of its enforcement or general jurisdiction may appeal to the appropriate appeal court for the appeal on a question of law against any decision made by the Tribunal in the proceedings. (3) The court hearing the appeal may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) the following - (a) an order affirming, varying or setting aside the decision of the Tribunal, (b) an order remitting the case to be heard and decided again by the Tribunal (either with or without the hearing of further evidence) in accordance with the directions of the court. (4) Without limiting subsection (3), the appropriate appeal court for an appeal against a civil penalty may substitute its own decision for the decision of the Tribunal that is under appeal. (5) Subject to any interlocutory order made by the court hearing the appeal, an appeal under this section does not affect the operation of the appealable decision of the Tribunal under appeal or prevent the taking of action to implement the decision.
The plaintiff's summons sets out three reasons why leave ought to be granted: 1. The proceedings concern an issue of wider public importance regarding the interpretation of the Home Building Act; 2. The proceedings concern an issue of wider public importance regarding the interaction between the Home Building Act and the Environmental Planning and Assessment Act 1979 (NSW) as well as instruments made under that Act; and 3. The plaintiff was not given any, or any adequate, opportunity to "consider and respond to the proposed reading or alternative construction of the definition and ought to be given that opportunity by the grant of leave".

[12]

The Appeal Panel's decision

The Appeal Panel's reasons may be summarised as follows: 1. the plaintiff was the owner of the property. The plaintiff's daughter held 100% of the equity of the property on trust for the plaintiff; 2. the legal meaning of the definition of "owner-builder" in the Home Building Act includes those who (in breach of the Home Building Act) do not obtain owner-builder permits before conducting residential building work; 3. alternatively, the definition of "owner-builder" in the Act should be read as if the words "or is required to do" were inserted in the definition after the word "does" so that the definition would read: "owner-builder means a person who does, or is required to do, owner-builder work under an owner-builder permit issued to the person for that work."; 1. the plaintiff was an owner-builder who did residential building work; 2. the plaintiff was bound by the statutory warranties in s 18B of the Act in doing that building work; 3. Ms Carberry and Ms Clark were successors in title to the plaintiff for the purposes of s 18C(1) of the Act and entitled to the benefit of the statutory warranties from the plaintiff; 4. the defendants were successors in title to Ms Carberry and Ms Clark and by s 18D, entitled to the benefit of the statutory warranties from the plaintiff; and 5. by reason of the plaintiff's breach of the statutory warranties in relation to the residential building work the plaintiff was ordered to pay the defendants $95,199.15.
Central to this appeal is the Appeal Panel's construction of the Act's definition of "owner-builder". The Appeal Panel determined that there were four possible approaches: Reasons [120]-[124]: 1. first, that, as the plaintiff contended, the legislature did not intend to include owner-builders who undertook residential building work without a permit within the protective scheme provided to successors in title by the statutory warranties; 2. secondly, that they must strive to give meaning to all the words of the definition, but not that they must give meaning to all the words. It was open to treat certain words as being superfluous or insignificant if there is no other construction by which they may be made useful and pertinent; 3. thirdly, that the legal meaning given to all of the words may differ from their ordinary, grammatical meaning; or 4. fourthly, that it was open to interpret the words of the definition as if they contained additional words with the effect of expanding its operation.

[13]

Grounds of appeal

The plaintiff advanced three grounds of appeal against the decision of the Appeal Panel in his summons: 1 The Appeal Panel made an error of law in finding that the plaintiff was an "owner-builder" within the definition of that term in clause 1(1) of Schedule 1 to the Home Building Act 1989 (NSW) by: a. adopting or attributing, in [149] of the Reasons, a "legal meaning" to that term which differed from its ordinary or literal meaning; and b. determining, in [180] of the Reasons, that the term ought to be construed as if the words "or is required to do" were inserted in the term after the word "does". 2 The Appeal Panel made an error of law in making the findings that were referred to in appeal grounds 1a. and 1b. as neither finding had been argued for or contended by the defendants either at first instance or before the Appeal Panel. 3 The Appeal Panel made an error of law by denying procedural fairness to the plaintiff because it: a. made the finding or determination in appeal ground 1a. without the plaintiff being given any opportunity to respond to it. The first time that specific contention appeared in the proceedings was in the Appeal Panel's published Reasons as the primary basis for the resolution of this issue against the plaintiff; b. made the finding or determination in appeal ground 1b. without the plaintiff being given an adequate opportunity to respond to it and over objection by the plaintiff. The suggestion that the relevant term in clause 1(1) ought to be read as including the relevant words was first made by the Appeal Panel to the plaintiff during oral submissions.
Grounds 2 and 3 were advanced on the sole issue of leave and, leave having been granted, were not pressed.

[14]

Plaintiff's submissions

The plaintiff submitted that the issue in this application is whether the definition of "owner-builder" in the Home Building Act should be construed as including a person who unlawfully does building work without a permit. The plaintiff submitted that, on its face, the definition of "owner-builder" in sch 1 cl 1 does not include owners who unlawfully do work without obtaining a permit.
The plaintiff submitted that there were two errors in the Appeal Panel's conclusion that the adoption of the literal meaning of "owner-builder" as defined in the Act would lead to a plainly unjust result for obvious reasons, being the exclusion of purchasers from the protective scheme in cases where the prior owner failed to obtain a permit: 1. First, the Appeal Panel erred in finding that purchasers from an owner who performed work without a permit were not afforded the protective scheme provided by the legislation. The plaintiff submitted that the relevant protection was that purchasers had "the opportunity to avoid the purchase of a dwelling constructed in breach of the [Act] rather than extending to them warranties about the quality of an unlawfully built dwelling". 2. Secondly, the plaintiff submitted that, contrary to the Appeal Panel's findings, there are reasons why the legislature may have chosen not to extend the statutory warranties to work done unlawfully without a permit.

[15]

Submissions concerning the "Protective scheme"

The plaintiff submitted that the Home Building Act and Conveyancing Act 1919 (NSW) provide detailed schemes for the benefit of purchasers of land on which unlawful or unauthorised building has been carried out "to discover that fact and avoid the contract". He submitted that the Appeal Panel's dismissal of this submission because "there was no evidence of usual conveyancing practice in that regard or what searches might reveal" was incorrect. The Appeal Panel, he submitted, should have been informed by the context and purpose of the Home Building Act and related legislation rather than "usual conveyancing practice".
The plaintiff relied on the insurance provisions in the Home Building Act. The Act requires most residential building work to be insured. For example, s 92 requires work completed by contractors to be insured, while s 96 requires work done otherwise than under a contract to be insured. Such insurance must cover risks associated with breaches of the statutory warranties: ss 99(1)(b), 100(1). Section 95 expressly states that work completed by an owner-builder cannot be insured. Section 96(3)(a) provides an exception to the obligation to obtain insurance, for owner-builder work done by or for the holder of an owner-builder permit.
Section 12(b) prohibits the carrying out of residential building work by a person in the position of the plaintiff without first obtaining an owner-builder permit. As such, the plaintiff submitted that s 96 is "wholly or largely limited to owners who are also licensed builders". The plaintiff submitted that s 96 would still require an owner who does not obtain an owner-builder permit to obtain insurance "because the owner would not then be within the s 96(3) carve out, although such insurance would be impossible to obtain by that lay person owner and most likely unlawful".
Section 95(2) requires an owner of land in respect of which an owner-builder permit was issued who sells the land within seven and a half years of the issuing of the permit to include a consumer warning in the sale contract. Section 96(2) requires a person who does residential building work otherwise than under a contract not to enter into a contract to sell the land within the following six years unless an insurance certificate is attached to the sale of land. Failure to adhere to either of these requirements makes the contract for sale voidable at the option of the purchaser prior to completion.

[16]

Submissions about possible reasons not to extend the warranties to unlawful work

The plaintiff submitted that there may be reasons why the legislature may not have wanted to extend the statutory warranties to work done by an owner without a permit: 1. First, because the work "is illegal and done in breach of planning laws". The plaintiff submitted that the Appeal Panel's construction relied too heavily on the facts of this matter, and that there would likely be other scenarios where the work completed is not done under a development approval for the dwelling. He submitted that "the extension of the warranties to purchasers in these kinds of cases would be more irrational and unreasonable than the reverse" and that the inability for such purchasers to sue under the warranties in s 18B "is surely not so manifestly unjust or irrational as to require the court to rewrite the otherwise clear definition of 'owner-builder'". 2. Secondly, because there may be "innocent" cases where an owner carries out some residential building work without knowing the consequences under the Home Building Act, exposing themselves to a claim under the warranties. He submitted that the legislature may have considered it "too punitive" to impose the statutory warranties on lay persons involved in residential building work on their own properties. He argued that the legislature clearly only intended to impose the warranties on "owners who should know their obligations under the [Act]".
The Appeal Panel provided two alternative bases for its construction of the definition: that it should be given a legal meaning that included owner-builders who do work without the relevant permit; and that, alternatively, it would read words into the definition so as to include such persons. The plaintiff submitted that, in this case, the only way that the Panel could have reached its end result was to imply words into the definition, and so in truth there was no difference between the two approaches. Words should not be read into the definition for the following reasons, the plaintiff argued: 1. First, the words the legislature actually used are clear, precise and "simply do not permit the meaning the Panel attributed to them". The plaintiff cited SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55 at [64] (Edelman J) for the proposition that the clearer the literal meaning of the provision, the more difficult it is to displace it. The plaintiff submitted that the Appeal Panel's construction has "no foothold in the language" of the definition (Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12 at [48]) and is indeed "tortured, unrealistic and wholly unnatural". 2. Secondly, the plaintiff submitted that the Appeal Panel's construction involves the insertion or implication of words into the definition beyond a simple grammatical drafting error, and thus goes beyond the limits of such a construction set out in Taylor at [38]. He said that the words implied by the Appeal Panel are not words of explanation, but remediation, referring to HFM043 v Republic of Nauru (2018) 359 ALR 176; [2018] HCA 37 at [24]. 3. Thirdly, he argued that the Appeal Panel's construction offends against the principle of striving to give every word and provision in an enactment a purpose or meaning, referring to Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [71]. He submitted that its definition would make all of the words after "owner-builder" superfluous, as well as some of the words in s 18C. 4. Fourthly, the plaintiff submitted that the Appeal Panel "fail[ed] to consider the broader consequences of its construction", being the purported impact on the interpretation of s 6.6 of the EPA Act. 5. Fifthly, the plaintiff submitted that "context and purpose do not require the construction adopted by the Panel". The Home Building Act does not solely promote the interests of purchasers, and "[l]egislation rarely pursues a single purpose at all costs": Carr v Western Australian (2007) 232 CLR 138; [2007] HCA 47 at [5] (Gleeson CJ). He argued that the legislature might have chosen to extend the statutory warranties to purchasers of unauthorised work done without a permit, but it did not.

[17]

Overview

To understand what follows, I will address at the outset the structure of my findings. I have concluded that the application by the Appeal Panel of the principles on "legal meaning" (the third of its four possible approaches) to this case was not correct. The problem with this aspect of the Appeal Panel's reasoning is the intractable language of the definition of "owner-builder". On that language, the Appeal Panel's preferred legal meaning was not reasonably open. The words of the definition, individually or as a whole, do not bear the Appeal Panel's extended meaning, no matter how ungrammatically the definition is read.
I have, however, concluded that the Appeal Panel was correct to imply words into the definition of "owner-builder" to give effect to the legislature's clear purpose (the fourth of the four approaches). Implying words is permissible when performing purposive construction. However, as I will explain implying words involves certain special considerations, as required by the High Court in Taylor. The words to be implied are those suggested by the defendants at the hearing, which were provided to the Court and the plaintiff had the opportunity to make submissions about the implication of those words.
I have limited my consideration to the four possible constructions addressed by the Appeal Panel. It may be that there are other available constructions of the warranty provisions themselves under which the defendants would be entitled to succeed. However, as arguments turning on the construction of the warranty provisions, rather than on the construction of the definition of the term "owner-builder", were not advanced before me, I will not consider them here.
To explain why it is that I have concluded that the Appeal Panel's decision should be upheld, but only on the alternative reasoning that words should be read into the definition, I will address: 1. the general principles of statutory interpretation; 2. the requirements for reading in words into a statute explained by Taylor; 3. the subject matter, scope and purpose of the Act, and in particular Part 2C; 4. the plaintiff's submissions in light of the Act's context and purpose; and 5. an analysis of whether the requirements in Taylor are here met.

[18]

General principles of statutory interpretation

In Project Blue Sky, the majority stated at [69] that the: … primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute.
Their Honours referred to Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390; [1955] HCA 27 at 397, in which Dixon CJ stated that: … the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed.
The task that remains is the construction of the words the legislature has enacted. The beginning and end of the task of statutory interpretation is the statute that falls to be construed: Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39]. The meaning of words and phrases is influenced by the immediate context in which they are used. The correct approach to statutory interpretation uses "context" in its widest sense "to include such things as the existing state of the law and the mischief which, by legitimate means … one may discern the statute was intended to remedy": CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2 (Brennan CJ, Dawson, Toohey and Gummow JJ).
A construction that would promote the purpose or object underlying the Act (whether or not that purpose or object is expressly stated in the Act) shall be preferred to a construction that would not promote that purpose or object: Interpretation Act 1987 (NSW) s 33.
In SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34, the majority stated: [14] The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.

[19]

The requirements for reading in words into a statute explained by Taylor

It has long been recognised that "[i]t is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do": Thompson v Goold & Co [1910] AC 409 at 420 (Lord Mersey).
By the end of the 20th century, a view was sometimes expressed that words were never read into a statute; rather, the statute's words were to be construed purposively: R v Young (1999) 46 NSWLR 681; [1999] NSWCCA 166 at [3]-[31] per Spigelman CJ (Abadee and Barr JJ agreeing); R v PLV (2001) 51 NSWLR 736; [2001] NSWCCA 282 at [80]-[92] per Spigelman CJ (Simpson J and Smart AJ agreeing).
However, in DPP (Vic) v Leys (2012) 44 VR 1; [2012] VSCA 304, the Victorian Court of Appeal considered that Spigelman CJ's dicta concerning implication of words was too restrictive an approach. Redlich and Tate JJA and T Forrest AJA said: [92] We do not consider it correct to characterise the process [reading words into a statute] as one of construction of the words actually used. Where the literal meaning of a provision does not give effect to its purpose, the need to depart from the literal meaning and adopt a construction which will promote the purpose of the provision arises because the "purpose of the legislation may require a meaning to be placed on the words of a particular provision which, standing alone, they cannot reasonably bear". Such a purposive construction is adopted because the literal meaning of the words, which may lack any ambiguity or inconsistency, cannot support a construction that reflects the intended purpose of the legislation.
The substantive provision in Leys was s 37 of the Sentencing Act 1991 (Vic), which empowered the Court to impose community correction orders. The provision had been inserted by the Sentencing Amendment (Community Correctional Reform) Act 2011 (Vic) and the question was whether it applied to the respondents' offending conduct which occurred in February 2010.
The provision for construction was cl 5 of sch 3 of the Sentencing Act: "Section 37 as inserted by s 21 of the Sentencing Amendment (Community Correctional Reform) Act 2011 applies to a sentence imposed on or after the commencement of that Act, irrespective of when the offence was committed when a finding of guilt was made."

[20]

Taylor and Wrotham Park

In Taylor, a majority of the High Court, French CJ, Crennan and Bell JJ, approved the view in Leys: [37] Consistently with this Court's rejection of the adoption of rigid rules in statutory construction, it should not be accepted that purposive construction may never allow of reading a provision as if it contained additional words (or omitted words) with the effect of expanding its field of operation. As the review of the authorities in Leys demonstrates, it is possible to point to decisions in which courts have adopted a purposive construction having that effect. And as their Honours observed by reference to the legislation considered in Carr v Western Australia [(2007) 232 CLR 138; [2007] HCA 47], the question of whether a construction "reads up" a provision, giving it an extended operation, or "reads down" a provision, confining its operation, may be moot. [38] The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills "gaps disclosed in legislation" or makes an insertion which is "too big, or too much at variance with the language in fact used by the legislature". (footnotes omitted)
The majority in Taylor then referred to the "test" set out by Lord Diplock in Wrotham Park at 105-106: My Lords, I am not reluctant to adopt a purposive construction where to apply the literal meaning of the legislative language used would lead to results which would clearly defeat the purposes of the Act. But in doing so the task on which a court of justice is engaged remains one of construction; even where this involves reading into the Act words which are not expressly included in it. Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd. [1971] A.C. 850 provides an instance of this; but in that case the three conditions that must be fulfilled in order to justify this course were satisfied. First, it was possible to determine from a consideration of the provisions of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law. Unless this third condition is fulfilled any attempt by a court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed. Such an attempt crosses the boundary between construction and legislation. It becomes a usurpation of a function which under the constitution of this country is vested in the legislature to the exclusion of the courts.

[21]

Cases after Taylor

In each of the following cases, words were read into a provision to correct an error that was more than simple or grammatical. Rather, something of substance was omitted from the relevant provision that hampered its operation, when viewed against the provision's purpose in the context of the enactment: 1. Lowe v The Queen (2015) 48 VR 351; [2015] VSCA 327: A provision was engaged if a prosecutor "relies" on evidence of past incriminating conduct. The Victorian Court of Appeal read "relies" as "explicitly relies". 2. Lawson v Western Australia (No 3) (2018) 85 MVR 160; [2018] WASCA 129: Two criminal appeal provisions empowered the Western Australian Court of Appeal to allow an appeal if it believed a "different sentence" should have been imposed or if it believed "an order should have been made". The sections did not, in terms, empower the Court to act if it believed no order or a different order should have been made. The Court of Appeal implied those words, applying Taylor. 3. Department for Health and Ageing v Li (2018) 130 SASR 578; [2018] SASCFC 52: An employment Act allowed workers to claim for psychiatric injury if (a) their employment was a substantial cause and (b) the injury was not "wholly or predominantly" caused by various forms of "reasonable action" under the Act. Subsection (a) clearly excluded recovery if the injury was wholly caused by personal, non-employment factors. Subsection (b) clearly excluded recovery if the injury was caused predominantly by reasonable action. However, if read literally, (a) and (b)'s combined effect was that if a worker's injury was partly caused by non-employment circumstances and substantially (but not predominantly) by "reasonable action", then the worker could recover. The South Australian Full Court applied Taylor to correct this outcome, implying the words "to the extent that the employment caused the injury" at the start of (b). 4. Goldsmith v Bisset (No 3) (2015) 71 MVR 53; [2015] NSWSC 634: The Motor Accidents Compensation Act 1999 s 138(d) prevented "persons" from relying on the general law or enacted law of contributory negligence if they were not wearing a helmet as required. The Court implied the words "(not being a minor)" after "person". 5. Chief Municipal Inspector - Local Government v Mohamud (2021) 66 VR 1; [2021] VSC 787: Section 224 of the Local Government Act 2020 (Vic) contained several conditions which were to be met before "this Division" applied. Quigley J held that words should be implied extending the effect of s 224 only to some provisions of the Division.

[22]

The subject matter, scope and purpose of the Act, and in particular Part 2C

As I have said, a literal reading of the definition apparently requires an "owner-builder" to be a person who does "owner-builder work" under an "owner-builder permit issued to the person for that work". The use of the past participle "issued" suggests that the issue of an owner-builder permit is a necessary pre-condition to being a "owner-builder".
On the other hand, in context, statutory warranties are implied in every contract to do residential building work by s 18B(1) of the Act. Further, s 18C makes clear that a successor in title to an owner-builder is entitled to the benefit of the statutory warranties. Section 18D makes clear that a person who is a successor in title to a person entitled to the benefit of a statutory warranty under the Act is entitled to the same rights as the person's predecessor in title in respect of the statutory warranty. Sections 18B, 18C and 18D are plainly intended to be read together and as a coherent whole. A coherent reading of the statutory warranties provides a powerful basis to conclude that the legislative purpose of the statutory warranties was that they be "implied in every contract to do residential building work". This provides a proper basis to consider whether to imply words into the definition of "owner-builder". If the literal meaning of "owner-builder" was applied, without implying words, there would be an immediate conflict created within s 18B, at least, in that there would be a category of consumers not entitled to the statutory warranties which s 18B insists are "implied in every contract to do residential building work" (and which warranties ss 18C and 18D extend).
Section 12 of the Act also provides relevant context in which to discern the legislative purpose of the Act and its licensing and warranties regime. Section 12, it will be recalled, relevantly provides: 12 Unlicensed work An individual must not do any residential building work, or specialist work, except - …. (b) as the holder of an owner-builder permit authorising its holder to do that work, or
An "owner-builder" permit must authorise the holder to do the particular "residential building work" prior to that work being commenced. This provides an explanation for the wording of the "owner-builder" definition, which contemplates a particular owner-builder permit and particular work carried out under that permit. The definition is a belts and braces provision seeking to ensure that only residential building work for which a permit has been granted is conducted. When these sections are read as a whole, there is a textual indication that the assumption the legislature was operating under was that all residential building work would be the subject of the consumer protections, including the statutory warranties, given to purchasers by the Act. This suggests that the purpose of the Act is inconsistent with the literal meaning of the definition of "owner-builder" in the Act.

[23]

The statutory warranties

In the second reading speech to the Building Services Corporation Legislation Amendment Bill 1996 (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 30 October 1996 at 27-28), which introduced the statutory warranties in s 18B, the Minister for Fair Trading and Minister for Women, Ms Lo Po said, relevantly: There appears to be general agreement that the present government-operated insurance system has not worked well. The Dodd review concluded that there were far too many conflicts of interest within the Building Services Corporation to allow it to work properly. On the one hand the BSC was a regulator. As part of that role it was responsible for advising consumers and assisting to resolve disputes. On the other hand, the BSC was an insurer, and was expected to run the scheme on commercial lines. Many conflicts arose between the BSC's regulatory role and that of dispute resolution and insurance. On the election of the Carr Government an inquiry was commenced into longstanding grievances between consumers and the BSC. The inquiry, chaired by Peter Crawford, was required to examine a number of identified cases and to consider whether the consumers had received their entitlement under the legislation and whether the BSC and the former Builders Licensing Board properly discharged their statutory duties to the consumers….[5541] The legislation spells out specific inclusions and exclusions in building contracts, as well as statutory warranties which will be common to all building contracts…. The new insurance scheme will apply to all residential building work currently requiring a licence and costing over $5,000. The $5,000 insurance threshold is consistent with the level applying in other States with mandatory insurance schemes. Insurers have, however, advised that insurance cover for work under $5,000 will be available as an option….. Owner-builders will be required to arrange for insurance coverage for subsequent purchasers but only where they decide to sell their property within seven years from completion of the work. It will also be a requirement for an owner-builder selling a property within that period to attach a certificate of the insurance to the contract for sale. The contract for sale will be voidable at the purchaser's option if the owner-builder does not obtain the insurance cover…. …As I have mentioned, building contracts will have to contain relevant statutory warranties. These warranties are set out in the bill and are given by the builder. They are implied in every contract to do residential building work. The warranties relate to the performance of the work, the materials to be used, compliance with the law, completion time and fitness for occupation. The warranties will apply not only to the consumer who enters the contract but also to subsequent owners of the property. These statutory warranties will not be able to be excluded by any provision of the contract and will last for seven years from completion of the work. If the work is not completed, the warranties will run from the completion date specified in the contract or, otherwise, the contract date. (italics added)

[24]

The insurance provisions

Another section of the Act dealing with owner-builders is s 95, which addresses insurance. This section and its legislative history also reflect something of the Act's relevant purpose. As originally enacted following an amendment to the Act in 1996, s 95 required an owner-builder to obtain insurance. [7] In 2014, s 95 was amended to provide that insurance cannot be taken out in relation to owner-builder work. Instead, owner-builders were required to include in any contract of sale a disclaimer in the form of "a conspicuous note" stating that an owner-builder permit was issued in relation to the land (and when) and that work done under such a permit is not required to be insured under the Act unless the work was done by a contractor to the owner-builder. Following a minor amendment in 2017, [8] the provision currently states: 95 No insurance for owner-builder work (1) A contract of insurance under this Part cannot be entered into in relation to owner-builder work carried out or to be carried out by a person as an owner-builder. Note - Insurance under this Part cannot be offered or obtained for owner-builder work done by an owner-builder. This does not affect the requirement of section 92 for insurance to be obtained for owner-builder work done under a contract. (2) A person who is the owner of land in relation to which an owner-builder permit was issued must not enter into a contract for the sale of the land unless the contract includes a conspicuous note (a consumer warning) stating - (a) that an owner-builder permit was issued in relation to the land (specifying the date on which it was issued), and (b) work done under an owner-builder permit is not required to be insured under this Act unless the work was done by a contractor to the owner-builder. Maximum penalty - 1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (3) The requirement for a contract of sale to include a consumer warning does not apply - (a) to a sale of land more than 7 years and 6 months after the owner-builder permit was issued, or (b) if the reasonable market cost of the labour and materials involved does not exceed the amount prescribed by the regulations for the purposes of this section, or (c) if the owner-builder work carried out under the owner-builder permit is of a class prescribed by the regulations. (4) The requirement for a contract of sale to include a consumer warning applies to a person as the owner of land whether the person is the person to whom the owner-builder permit was issued or a successor in title to that person. (5) If a person contravenes this section in respect of a contract, the contract is voidable at the option of the purchaser before the completion of the contract. Note - Prior to its amendment by the Home Building Amendment Act 2014, section 95 required an owner-builder to obtain insurance under this Part before selling the land concerned. Schedule 4 provides for the continued application of the previous requirements of section 95 to sales of land before the amendment to that section.

[25]

Other provisions referring to an "owner-builder"

The other references to "owner-builder" (rather than "owner-builder permit" or "owner-builder work") in the Act are in ss 90(2), 92(6), 98(2) and 103F. Those sections relevantly provide: 90 Definitions … (2) A reference in this Part to the disappearance of a contractor, supplier or owner-builder is a reference to disappearance from Australia and includes a reference to the fact that, after due search and inquiry, the contractor, supplier or owner-builder cannot be found in Australia. … 92 Contract work must be insured … (6) To avoid doubt, this section extends to residential building work that is also owner-builder work (when the work is done under a contract between the person who contracts to do the work and the owner-builder). … 98 Employees and others not required to insure … (2) Subsection (1) does not apply in the case of a person who contracts to do owner-builder work on behalf of an owner-builder. Such a person must insure that work if otherwise required to do so by section 92. … 103F Interpretation (1) In this Part - … builder means a contractor or supplier (within the meaning of Part 6), an owner-builder or person who does residential building work otherwise than under a contract.
Sections 90, 92 and 98 each appear in Part 6, which contains the Act's insurance provisions. Section 103F appears in Part 6A, which concerns insolvent insurers. Each of these parts is remedial, designed to protect those who enter contracts for residential building work. The intention of the legislature could not have been to exclude from these Parts' operation those who ought to have, but failed to, obtain an owner-builder permit. None of these provisions, by their use of "owner-builder", militates against reading into the definition of 'owner-builder".

[26]

Cases on the earlier version of the definition of 'owner-builder"

Prior decisions of this Court also tend in favour of the conclusion reached by the Appeal Panel about statutory purpose. In Gunn, Master Harrison considered the earlier version of the definition of owner-builder. That definition read: owner-builder means a person who does owner-builder work (within the meaning of Part 6) and who is issued an owner-builder permit for that work.
Master Harrison found that the words "who is issued an owner-builder permit" were a "deeming provision" rather than an exclusive prerequisite to being an "owner-builder" within the meaning of the Home Building Act. Her Honour found that to hold otherwise would frustrate the purpose of the legislation.
The same, earlier version of the definition was also considered in Sorbello & Donelly v Whan [2007] NSWSC 951. At first instance, the Consumer, Trader and Tenancy Tribunal sought to distinguish Gunn on the basis that the first respondent there, who had not obtained a permit, would not have been eligible for one had he applied. On appeal, Price J held that the Tribunal was wrong in that conclusion, because a permit may have been issued. Contrary to the plaintiff's submission, Price J acted on the basis that Gunn was correctly decided.
I do not accept the plaintiff's submission that there is a difference of substance between the wording of the definition considered in Gunn and Sorbello and the current definition. The substantive change was from "who is issued an owner-builder permit" to "under an owner-builder permit issued to the person". Both refer to owner-builder permits which have been "issued", using a past participle.
It is clear that from 2007, two decisions of the Supreme Court have decided that an "owner-builder" under the Act comprised those persons issued with a permit prior to commencing residential building work and persons who were required to apply for a permit prior to commencing residential building work.
The High Court in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 made remarks bearing on the present controversy: [52] This understanding of the scheme of the Security of Payment Act accords with the earlier decision of the Court of Appeal of the Supreme Court of New South Wales in Brodyn Pty Ltd v Davenport. In the present case, the Court of Appeal followed Brodyn in this respect. It was right to do so. It would have been a strong thing for that Court, as indeed it would be for this Court, to have taken any other course. Since the decision in Brodyn, the Parliament of New South Wales has twice had occasion to revisit the Security of Payment Act to make substantial amendments to its provisions. No amendment was made to alter the effect of the decision in Brodyn. That circumstance is a powerful reason for rejecting any suggestion that the understanding of the legislation adopted in Brodyn, and given effect in the decision of the Court of Appeal in this case, was other than a faithful reflection of the intention of the legislature. (Footnotes omitted.)

[27]

The plaintiff's submissions in light of the Act's context and purpose

The plaintiff made two main submissions in support of the literal meaning of the definition of owner-builder being the governing principle and against the implication of words to give effect to the legislative purpose. In light of the relevant context and the Act's clear purpose, these submissions must be rejected.
The principal submission was that purchasers from an owner who did residential building work without an owner-builder permit were afforded sufficient protection by the opportunity to avoid the purchase of a dwelling constructed in breach of the Act. I do not accept that the availability of rescission rather than the statutory warranties is consistent with the carefully constructed consumer protections established by the Act. While, of course, legislation does not pursue a single purpose at all costs, it is not consistent with the extensive protective scheme of the Act for purchasers from an owner who did residential building work without a permit to be excluded from the protection afforded by the statutory warranties.
Even if a purchaser discovered that he or she had a right to rescission because an owner had done building work on the land in the previous 7 years and 6 months without a permit, the form of protection afforded to purchasers relied upon by the plaintiff demands of the purchaser that he or she assess the risk of purchase within the time between exchange and completion, and do so without good, or complete, information. This is precisely the situation the statutory warranties were intended to guard against. Contrary to the plaintiff's submission, s 102A of the Act does not require the register to be searchable and does not specify what it might be searchable for, nor where and how the register is to be publicly available. The consumer protection, if any, provided by that section is likely illusory. If the plaintiff intended to rely on the ready searchability of any register as an aid to statutory construction he bore the onus of proving it.
The right to rescind is one that may only be exercised before completion and relies upon the purchaser obtaining relevant information before that date. No protection whatever is provided to purchasers in the position of the Lennons who have purchased a property where defective work has been done by an owner who was required to obtain a permit but failed to do so.

[28]

Asserted reasons the legislature intended not to extend the statutory warranties to work done unlawfully without a permit

The plaintiff's submission that "there are reasons why the legislature may have chosen not to extend the statutory warranties to work done unlawfully without a permit" should also be rejected. Simply put there is no indication in the text, context or purpose of the provisions supporting the plaintiff's submission. I reject the plaintiff's suggestion that the legislative intention was that the principle of "caveat emptor" would apply and a purchaser would be required to search a register to determine whether a relevant permit was issued. If the relevant register were searched here, the Lennons would merely have seen the false information given by the plaintiff to the Council, naming Mr Miller as the builder of the property.
The plaintiff's suggested additional protections, drawn from other statutes, do not advance the plaintiff's case. I reject the plaintiff's submission that the legislature has enacted a scheme of consumer protection provisions such that it should be concluded that there was a legislative intent to allow owners to conduct residential building work yet escape the giving of statutory warranties to subsequent purchasers by, as in this case, deliberately failing to obtain an owner-builder permit.
It may be correct, as the plaintiff submitted, that if an owner of land does residential building work on that land without an owner-builder permit the work will be uncertified and liable to an upgrading or demolition order. That conclusion does not address the critical questions of consumer protection the legislature intended be provided by the Act at the heart of this appeal. The critical mater is the rights of subsequent purchasers including their rights during the period that the statutory warranties implied by the Home Building Act apply. An upgrading or demolition order in relation to work done by an unlicensed owner-builder will be a likely expensive burden upon successors in title and is not a consumer protection measure.
It is also correct as the plaintiff submitted that the building work must be certified. Sch 5 Part 1 of the Environmental Planning and Assessment Act 1979 (NSW) sets out various "development control orders" a council, inter alia, may make where there have been various kinds of noncompliance with that Act. Those provisions provide no relevant rights to relief to subsequent purchasers who buy property from an owner who has done residential building work without a permit. They do not provide consumer protection to subsequent purchasers from sub-standard building work done by an owner-builder. The right to rescind, if sufficient matters are discovered before completion, is no substitute for the statutory warranty rights intended by the legislature to be afforded to every purchaser of residential property.

[29]

Conclusion on plaintiff's submissions about reading words into the definition

The plaintiff made five points in conclusion in attacking the decision of the Appeal Panel that words should be implied in the definition of "owner-builder". I am not persuaded in isolation or taken together that any error in the Appeal Panel's decision was shown in this respect: 1. First, I accept the plaintiff's submission that the clearer the literal meaning of the provision, the more difficult it is to displace it. I reject, however, the submission that the Appeal Panel's construction is "tortured, unrealistic and wholly unnatural". The words introduced to the definition of "owner-builder" suggested by the defendants are coherent with the statutory warranty provisions and not inconsistent with any other part of the Act. 2. Secondly, as I will shortly explain, I reject the plaintiff's submission that the Appeal Panel's construction goes beyond the limits set out in Taylor. 3. Thirdly, I do not accept the plaintiff's submission that the Appeal Panel's definition would make all of the words after "owner-builder" superfluous. Nor do I accept that there is any superfluity created in s 18C. The words inserted are words of explanation: the inserted words simply explain that a person is an owner-builder if they actually have and also if they are required by the Act to have a owner-builder permit prior to doing residential building work. 4. Fourthly, for the reasons I have explained, I reject the plaintiff's submission that there are any broader consequences of the Appeal Panel's construction, being the purported impact on the interpretation of s 6.6 of the EPA Act. 5. Fifthly, I reject the plaintiff's submission that that "context and purpose do not require the construction adopted by the Panel". Of course, legislation rarely pursues a single purpose at all costs. The present case, however, is striking in that the Appeal Panel's construction of the definition is coherent with the provisions of the Act, and in particular Part 2C. A literal reading of the definition is not. This is one of those rare cases in which words should be read into the statute by way of explanation.

[30]

Analysis of whether the requirements in Taylor are here met

I accept the plaintiff's submission that that context and purpose alone cannot imbue the definition of "owner-builder" with a range of meanings its language simply does not have. I cannot, however ungrammatically, read the words actually used in the definition to extend to a builder who does not obtain an owner-builder permit.
On the other hand, the purpose of the statutory warranty provisions could not be clearer. To deprive a purchaser of the statutory warranties because an owner who was required by the Act to obtain a permit before doing residential building work failed to obtain that permit would give rise to an outcome correctly described as "a capricious and unjust result", to use the language of Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 313; [1981] HCA 26. To ensure the operation of the Act in the way the legislature intended requires the Court to read words into the provision. As I have explained, after Taylor, reading in words is a distinct aspect of purposive construction, with special principles. If the present case is not one where the principles on "reading in" are necessary, it is difficult to imagine where those principles would ever be necessary. To read in words so is an acceptable act of statutory construction.
As I have explained, reading words in involves close application of the principles in Taylor, approving Wrotham Park and Inco Europe. Taylor makes clear that "reading in" is an aspect of purposive construction. However, the Court also endorsed the view that special principles apply to this aspect of purposive construction, being the three considerations in Wrotham Park. These special principles have been described as inhibitory, for example by Leeming JA in Coal & Allied as quoted above at [100].
The correct approach is first to perform ordinary purposive construction. If that approach suggests words must be read in so that the provision coheres with Parliament's intention, then the inhibitory factors in Taylor should be considered and applied. Words should be read in only if the conditions in Taylor are met.
I would read in to the definition of "owner-builder" the words suggested by the defendant at the hearing which the plaintiff had an opportunity to consider and make submissions about (inserting words underlined): owner-builder means a person who does owner-builder work under an owner-builder permit issued to the person for that work or is required to hold an owner-builder permit to do that work.

[31]

Costs

Section 98(1) of the Civil Procedure Act 2005 (NSW) grants the Court a broad discretion to award costs, subject to the rules of the court, that Act, or any other legislation. The general rule is that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW) r 42.1. A party seeking a departure from this general rule bears the onus of convincing the Court that the usual order ought not be made: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at 97; Latoudis v Casey (1990) 170 CLR 534 at 542-543 (Mason CJ) and 564, 566-567 (McHugh J); [1990] HCA 59.
As the defendants have succeeded, they are entitled to an order for costs in this Court. As the defendants did not seek an order for costs of the Appeal Panel proceedings, I will not make that order.
Even if I had been persuaded to allow Mr McIntosh's appeal, I would not set aside the order for costs made by Senior Member Ellis SC and would not make any order in favour of Mr McIntosh for the costs of the proceedings before the Appeal Panel or to this Court. Multiple issues were raised before Senior Member Ellis SC. The plaintiff failed on all issues.
The only basis relied upon by Mr McIntosh before me is that by reason of his apparently deliberate contravention of the Home Building Act he is to be taken not to have given the statutory warranties contained in that Act. As the only arguable basis for success on Mr McIntosh's part is reliance upon his own apparently deliberate unlawful conduct, I would not have exercised my broad discretion to make any order for costs in his favour.
In Igaki Australia Pty Ltd v Coastmine Pty Ltd (1996) 34 IPR 37; (1996) FCA 207, the trial judge found that some misleading or deceptive conduct was proven, but the successful party was not entitled to their costs. One reason given was that the representations had been induced on the promise of "black money" withdrawn from a restaurant business and not declared for income tax purposes. The Full Court of the Federal Court refused the successful party's appeal on costs and stated at [52]: … we consider that the court ought not be involved in any way in condoning conduct which is clearly in contravention of the income tax laws. To award costs to [the second respondent] in this case would have that effect. Accordingly, we dismiss the cross-appeal on costs.
The same conclusion applies here. On the hypothesis that the plaintiff was entitled to succeed, it was only on the basis of the plaintiff's conduct in breach of the Home Building Act. The Court ought not be involved in any way in condoning conduct which is clearly in contravention of the Home Building Act.

[32]

Conclusion and orders

For the foregoing reasons I make the following orders: 1. Leave to appeal is granted. 2. The summons filed 21 April 2023 is dismissed. 3. The plaintiff is to pay the defendants' costs of the appeal to this Court.

[33]

Endnotes

And the costs of Mr McIntosh's daughter (the second respondent in those proceedings).
Part 2C was inserted in 1996.
Inserted by the Home Building Amendment Act 2014.
Amended by the Home Building Amendment Act 2014: "performed in a proper and workmanlike manner" replaced by "done with due care and skill".
Sub-section (1A) and (1B) were inserted in 2010.Subsection (1) originally provided: "A person who is a successor in title to a person entitled to the benefit of a statutory warranty under this Act is entitled to the same rights as the person's predecessor in title in respect of the statutory warranty, except for work and materials in respect of which the person's predecessor has enforced the warranty." Various amendments, not material to the present case, were made in 2006.
PAYE refers to "Pay As Your Earn" Taxpayers, a statutory predecessor to the current concept applying to most wage and salary earners, PAYG or "Pay As You Go" taxpayers.
The original s 95 dealt with insurance, but not owner-builder insurance. The Act first dealt with owner-builder insurance when s 95 (and the whole of Part 6) were amended in 1996.
Prior to this 2017 amendment, the first note said "under the Home Building Compensation Fund" rather than "under this Part". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 February 2024

McIntosh v Lennon

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