Syed Ahmad Shoaib Ali Pty Ltd v Jandson Pty Ltd; Jandson Pty Ltd v Syed Ahmad Shoaib Ali Pty Ltd

The Parties' Submissions to the Tribunal

1. To explain one matter arising in the Builder's appeal it is necessary to set out, in summary, the parties' submissions to the Tribunal.
2. The Builder submitted that it was entitled to damages for breach of contract from the Owner for the costs of the preliminary work (including its liability for the commission) and for lost profit on the Contract. It submitted that the Guarantor was liable for those same amounts pursuant to the terms of the Guarantee.
3. In response, the Owner and Guarantor submitted that the Builder was precluded from claiming any damages from the Owner because the Builder had not taken out HOW insurance, and ss 92 and 94 of the HBA precluded recovery of damages in those circumstances.
4. The Builder submitted that ss 92 and 94 of the HBA did not apply because the Builder had not undertaken any "residential building work" within the meaning of that term in those sections. The Builder accepted (in its written submissions in reply to the Tribunal) that the Contract was for residential building work but submitted that the preliminary work for which it sought compensation was not, itself, residential building work. Accordingly, the Builder submitted, ss 92 and 94 did not preclude the Builder from recovering damages notwithstanding the lack of HOW insurance.
5. Alternatively, the Builder said that it had taken out (retrospectively) HOW insurance on 8 December 2016, and that that insurance satisfied ss 92 and 94 such that its claim for damages was not precluded by that section.
6. In response, the Owner and Guarantor submitted that there was no retrospective HOW insurance because, as QBE had stated in correspondence, the policy (sic) of insurance had been issued in error or cancelled.
7. In response to the Owner's contention that any policy of insurance had been issued in error or cancelled, the Builder submitted that the evidence was insufficient to prove the HOW insurance policy had been cancelled. The Builder's point was that the documentary evidence tendered did not establish, on the balance of probabilities, that the policy had been cancelled.
8. Alternatively still, the Builder submitted that, should its first two submissions not be accepted, the Tribunal ought award it the sums claimed for the preliminary work on a quantum meruit basis because it was "just and equitable" to do so as provided for in s 94(1A) of the HBA. It also sought its lost profit as part of its quantum meruit quantum but that claim was correctly abandoned on appeal.
9. The Owners further submitted that, in the circumstances of this case, it was not "just and equitable" that the Builder recover any amounts on a quantum meruit basis. They further submitted that lost profits were not recoverable on a quantum meruit, and no amounts ought to be awarded on a quantum meruit basis in relation to the preliminary work because the Owner had not received any benefit in relation to those matters.
10. The Owner submitted that if a sum was to be awarded to the Builder by way of quantum meruit, it should be offset against the $5,000 deposit paid by the Owner which had not (but should have) been returned to it.
11. The Guarantor submitted that, even if the Builder were awarded some amount against the Owner on a quantum meruit basis, the Guarantee, on its proper construction, did not oblige the Guarantor to pay the Builder monies awarded on that basis.
12. The Guarantor also submitted that the absence of a HOW insurance policy precluded claims being made under the Guarantee because of the operation of s 94 of the HBA.
13. After the parties had filed Points of Claim (including an Amended Points of Claim) and Points of Defence, exchanged evidence, conducted the hearing, delivered oral submissions and the Owner delivered written submissions (with leave), the Builder delivered written submissions dated 31 January 2018 which included, for the first time, a submission that QBE had failed to give written notice of the cancellation of the policy to the Builder and thus the policy had not been cancelled because written notice to the Builder was required by s 59 of the Insurance Contracts Act 1984 (Cth) (which, the Builder submitted, applied to this insurance), and thus the policy had not been cancelled.

The Tribunal's Reasons

1. The Tribunal made a preliminary determination as to jurisdiction on 13 December 2016. It appears both parties agreed that the Tribunal had jurisdiction to hear the Builder's claim against both the Owner and Guarantor pursuant to the terms of s 48K of the HBA.
2. The main proceedings were heard on 30 November 2017. Following the close of submissions, the Tribunal distilled the issues to be decided as follows: 1. Did the Builder perform "residential building work" within the meaning of that term in s 94 of the HBA? 2. Was a HOW insurance policy (taken out by the Builder) in force? 3. Was the Builder precluded from claiming any amounts by the operation of ss 92 and 94 of the HBA? 4. If the answer to (3) above was in the negative, was it "just and equitable" for the Builder to recover on a quantum meruit basis?
3. The Tribunal decided those issues as described below.
4. On the first issue, the Tribunal held that the decision of the Court of Appeal in Grygiel v Baine [2005] NSWCA 218 was determinative of the issue whether work was or was not "residential building work", and was binding on the Tribunal. In short, the Tribunal held that preparatory (or preliminary) work which had a sufficient connection to the carrying out of building work was itself "residential building work" within the meaning of that term in the HBA.
5. The Tribunal found that the work for which the Builder sought compensation, the preliminary work we have described at [12] above, had a sufficient connection to the carrying out of building work under the Contract, and thus fell within the definition of "residential building work".
6. Accordingly, the Tribunal held that the Builder was required to have taken out HOW insurance in order to avoid the preclusion set out in s 92 of the HBA against the demanding of any payment under a contract for residential building work in the absence of such insurance.
7. Against the event that the Tribunal erred in that finding, the Tribunal said that the words "contract for residential building work" in s 92(2) of the HBA was a description of the type of contract to which Part 6 of the HBA applied and did not draw a distinction between preparatory work and work of a building nature. Thus, the Tribunal held, all work specified in a "contract for residential work" must be, by definition, residential building work.
8. The Tribunal said that s 92(2) of the HBA was clear in that that subsection provided that a person must not demand or receive a payment under a contract for residential building work unless a contract of insurance that complied with the HBA was in force.
9. On the second issue, the Tribunal rejected the Builder's submission that it had obtained retrospective HOW insurance. The Tribunal held that there was no "valid HOW insurance at material times". There is some uncertainty attending to quite what the Tribunal meant by "valid" in this context as one either has a contract of insurance or not. A contract of insurance may be voidable, or avoided, if relevant circumstances exist, but those concepts would not fall within the ordinary meaning of the word "valid".
10. The Tribunal said that the application form for the insurance was incorrect in referring to "vacant land" (when the land was not vacant but had a dwelling erected upon it).
11. The Tribunal said that there was no contract of insurance for the work because the Builder never carried out "the work" under the Contract as specified in the certificate of insurance.
12. The Tribunal found that a valid certificate of insurance had not been issued. The Tribunal then said that the Certificate of Insurance had been issued in error and once QBE had been notified, it was cancelled. By the expression "valid certificate" we take it that the Tribunal was expressing the view that because it had been issued in error, it was not a certificate satisfying the requirements of the Home Building Act, 1989.
13. The Tribunal then said that the Builder was not applying for insurance cover in respect of work performed prior to 8 December 2016 (the date of application for insurance).
14. The Tribunal then said that on the basis of the matters we have outlined at [45] - [48] above it found that there was no valid HOW insurance at material times.
15. The Tribunal then said that it was not persuaded that a certificate, which was either in force for one month or not at all, permitted a builder to circumvent the statutory insurance requirements of the HBA.
16. The Tribunal went on to say that the "insurance cover was issued in error and cancelled" and so there was no insurance cover "for the work" either retrospectively or at all. The Tribunal said that the work for which the Builder sought cover did not exist because the Contract had been terminated earlier, the site was in the possession of another builder, the work had been completed and "a valid certificate was not issued".
17. The Tribunal then referred to the Builder's submission that the correspondence from QBE saying that the certificate had been issued in error, and cancelled, was not probative of the fact that the insurance cover had been issued in error or had been cancelled. The Builder submitted it was not possible to go behind the Certificate of Insurance which was proof that the insurance was "valid". The Tribunal expressed its disagreement with that submission and said the onus of proof rested on the Builder to prove that the 'insurance was valid'. The Tribunal held that it was not satisfied, on the balance of probabilities, that the Builder held "valid insurance cover for the purpose of Part 6" of the HBA.
18. The Tribunal returned to the insurance issues later in its reasons and under the heading "Additional issues raised by the applicant in reply", the applicant being the Builder. The Tribunal recorded that the Builder raised the question of the Insurance Contracts Act in reply submissions. This is a reference to the Builder's written submissions dated 31 January 2018 to which we have referred at [35] above.
19. In those submissions, but not earlier, the Builder raised for the first time the argument that, assuming a policy of insurance had been in existence, it had not been cancelled because QBE had not followed the cancellation procedure set out in the Insurance Contracts Act (the "non-cancellation argument").
20. The Tribunal repeated its finding that there had not been any policy in force. The Tribunal then said, against the event that that finding was in error, that the non-cancellation argument had only been raised by the Builder in reply, and it should have been part of the Builder's case in chief because the Builder was required to prove it had the relevant insurance. Thus, the Tribunal said it was "procedurally unfair" to raise this issue in reply and would not be "taken into account".
21. The Tribunal also said, as "an aside", that s 59 of the Insurance Contracts Act, which relates to the procedure required of insurers if they wish to cancel policies of insurance which are subject to the Act, had no application in this case. That was because QBE had not "exercised its right to cancel a contract of insurance" but had only informed the Owner that the policy had been "issued in error and cancelled". The Tribunal also said that QBE's notification to the Owner (it is not clear whether the Tribunal meant the correspondence of 20 December 2016 or 3 January 2017 or both) was "arguably ... notification in writing to the insured" [as required by s 59(1) of the Insurance Contracts Act].
22. Accordingly, on the third issue, the Tribunal found that the residential building work performed by the Builder was "uninsured work" for the purposes of s 94 of the HBA, and s 94(1) precluded the Builder from claiming any damages against the Owner or Guarantor.
23. The Tribunal then turned to the fourth issue, namely the question whether the Builder could make a claim against the Owner (and Guarantor) on a quantum meruit basis.
24. The Tribunal rejected the Builder's claim for lost profit on a quantum meruit basis because the Tribunal said, in the circumstances, it was not just and equitable that the Builder be entitled to do so. This finding was correct although in our respectful view, the reasoning was erroneous.
25. The Tribunal did find it was just and equitable to award the Builder the sum of $2,972.76 on a quantum meruit basis for the preliminary work (excluding the commission). The Tribunal found that the Owner had derived a benefit from those expenditures. There is no appeal from those findings (other than that the amount awarded ought to have been offset by the deposit).
26. The Tribunal found that the Builder had incurred a liability to the agent under the Agency Agreement, and the Owner had benefitted from that expenditure (being the transfer of land from the developer to the Owner). The Tribunal said that because the land and dwelling had been "sold" to the Owner as a "package", then but for the Owner entering into the (building) Contract it would not have been entitled to have "the rights of the land sale contract".
27. In those circumstances, the Tribunal found that it was just and equitable that the Builder be awarded the sum of $14,957.80 being the amount the Builder submitted was its liability under the Agency Agreement.
28. Finally, the Tribunal dismissed the Builder's claim against the Guarantor on the basis that the successful claim by the Builder on a quantum meruit basis did not arise "out of the subject matter of the contract" (emphasis by the Tribunal) and the Guarantee was therefore not enforceable.
29. The result was that the Tribunal ordered the Owner to pay the Builder $2,972.76 for expenses incurred in relation to the preliminary work (excluding the commission), and $14,957.80 for the Builder's liability to the agent for the commission, making a total of $17,930.56.
30. The Tribunal ordered each party to pay its own costs of the proceedings.
31. Both parties appealed. It is convenient to deal with the Owner's appeal first.

Grounds of Appeal

1. The Owner appealed on the following grounds: 1. The Tribunal erred in law in failing to address substantial, clearly articulated arguments raised by it in defence to the Builder's claim, namely that: 1. there was no evidence that the Builder had an obligation to pay the developer under the Agency Agreement as the complete Agency Agreement was not in evidence; 2. on the proper construction of such of the terms of the Agency Agreement as were in evidence; 1. the Builder had no liability to pay the developer anything; or 2. had no obligation to pay anything in circumstances where the (building) Contract had been terminated. 1. The Tribunal erred in finding that the terms of the Agency Agreement, properly construed, gave rise to a liability of the Builder to pay the developer. 2. The award of $2,972.76 to the Builder for expenses incurred was erroneous because that amount ought to have been offset against the deposit paid by the Owner (of $5,000).
2. Against the event that one or more of its grounds of appeal did not give rise to questions of law, the Owner sought leave to raise the same issues as non-question of law grounds pursuant to s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 No 2 (NSW) (the "NCAT Act"). Those grounds are regulated by cl 12 of Sch 4 of the NCAT Act.
3. Where a decision-maker has failed to respond to a substantial argument there is a failure to accord natural justice, that is, procedural fairness - Rodger v De Gelder [2015] NSWCA 211 per Gleeson JA, with whom Macfarlan and Leeming JJA agreed, at [93].
4. A denial of procedural fairness is an error of law - Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, citing Italiano v Carbone [2005] NSWCA 177; Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143 at [8].
5. The proper construction of vital agreements/contracts is a question of law - Re R [2000] NSWSC 886 at [25], cited with approval in C v W [2015] NSWSC 1774 at [48].
6. Accordingly, grounds 1, 2 and 3 each raise questions of law.

The Owner's Submissions

1. The Owner submitted that the liability the Builder had to the agent for a commission was a contingent liability, and a contingent liability could not be recovered on a quantum meruit basis. The contingency was said to be whether the agent sought to enforce a claim against the Builder under the Agency Agreement, and there was no evidence that it had done so.
2. The Owner submitted (correctly) that the evidence before the Tribunal was that no commission had in fact been paid by the Builder to the agent. It submitted that, if there was a liability to pay the commission (which it disputed), the contingency referred to above had not occurred, and therefore the commission was not recoverable on a quantum meruit.
3. As a corollary to that submission, the Owner submitted that no benefit had accrued to the Owner as a result of that commission, and, because the Builder had not paid it, there was no detriment to the Builder. The Owner submitted that both benefit and detriment were essential conditions for the awarding of a sum in quantum meruit.
4. The Owner submitted that it had raised an argument before the Tribunal that the Agency Agreement, or the totality of it, was not in evidence, and therefore the terms of that agreement (including the circumstances in which the commission became payable) were unknown.
5. Although barely dealt with in written or oral submissions, the Owner also submitted that any award in favour of the Builder ought to have been off-set against the deposit paid by the Owner.

The Builder's Submissions

1. The Builder submitted that the Owner had only submitted at the hearing before the Tribunal that the Agency Agreement was not in evidence, and not that the totality of the Agency Agreement was not in evidence, and that the Owner should not be allowed to raise the totality argument for the first time on appeal.
2. In the alternative, the Builder submitted that the totality of the Agency Agreement was, in fact, in evidence, and that the Tribunal had not erred in construing its terms in the manner it had.
3. A note in Item C of the document tendered, which relates to commission, says: "However, if the buyer is introduced by the owner then no Commission is otherwise payable to the Agent."
4. The Builder submitted that, as it was never the owner of the land, it could not have been the "owner" under the Agency Agreement, the Owner was clearly the "buyer", and thus the exclusion for any liability for commission where the "buyer is introduced by the owner" could not apply.
5. The Builder properly accepted that the Tribunal's reasons were silent as to the submissions by the Owner that the Agency Agreement, or the totality of it, was not in evidence, but submitted that no error of law was involved because that argument was not relevant. The Builder submitted that there was no issue that the land had been sold to the Owner, that the land had been sold for the price stated in the Schedule to the document tendered, that the package price was as stated in that Schedule and that the commission became a liability owed by the Builder to the agent upon the sale of the land to the Owner.
6. The Builder submitted that it was never put to Mr Matheson (a director of the Builder) in cross-examination that the totality of the Agency Agreement was not in evidence, nor that the quantum of the commission was other than that claimed. Therefore, the Builder submitted, the submission that the totality of the Agency Agreement was not in evidence should be rejected because of the rule in Browne v Dunn [1] .
7. The Builder submitted that such a commission was recoverable in quantum meruit, and that the Owner had derived the benefit identified by the Tribunal.
8. In relation to the deposit, the Builder submitted that the deposit was paid pursuant to clause 17 of the Contract, that clause provided that the deposit would be brought to account with the first progress payment, no progress claims were issued by the Builder because of the Owner's repudiation of the Contract, and therefore there was no obligation to bring the deposit to account.
9. The Builder submitted there was no right of set-off (to set off the deposit against any amounts owed) because of clause 17.6 of the Contract which said that other than in relation to the final progress claim the "owner has no right of set off".
10. The Builder also submitted that the deposit was an assurance or security for the performance of the Owner's obligations under the Contract, and thus it was entitled to retain the deposit when the Owner had repudiated the Contract.
11. The Builder further submitted that the deposit issue was not raised before the Tribunal and should not be allowed to be raised on appeal.

Decision

1. In our opinion the Owner had submitted below that the totality of the Agency Agreement was not in evidence, and the Tribunal erred in law in failing to consider and determine that submission. As we shall now explain, the Tribunal ought to have found that the totality of the Agency Agreement was not in evidence and therefore the Builder had failed to prove that a commission was payable to the agent.
2. In the Owner's written submissions in the proceedings below the Owner submitted that: "The agency agreement is not in evidence. There is only the 'Item Schedule - Sales Inspection Report' to the agreement. ... Importantly, the terms of the agreement (including the circumstances in which the agency fee was to be paid ...) are not in evidence."
3. In our opinion this submission raised the totality of the Agency Agreement argument. It refers to what is in evidence and refers to what is not in evidence.
4. In its reasons the Tribunal did not address this argument, as is fairly and properly conceded by the Builder. It is not mentioned in those parts of the Tribunal's reasons where the Tribunal summarised the parties' submissions. It is not mentioned in the Tribunal's summary of the issues to be decided. It is not mentioned elsewhere in the reasons.
5. The closest the Tribunal came to the issue was at [96] of the Tribunal's reasons where the Tribunal said: "It is clear from the face of the agreement that the 'agent shall be entitled to a fee of 2.2%', and that the fee is calculable in accordance with the attached schedule. It is not contested that, at least on the face of the agreement, the agent (the applicant) was liable for a fee $14,957.80 (sic) upon the sale of the land to the (Owner)".
6. In our opinion, the submission by the Owner set out above was a substantial argument, and the Tribunal failed to address it. It follows, on the authorities to which we have referred at [69] above, that the Tribunal erred in law in failing to address that substantial argument, and thus deprived the Owner of procedural fairness. It follows that the Tribunal erred in law in failing to address that substantial argument.
7. It is also our opinion that the Tribunal ought to have found that the totality of the Agency Agreement was not in evidence, and ought to have found that it was unknown whether there was, in fact, any liability on the part of the Builder to pay the commission. There are three incontrovertible facts which, in our opinion, establish on the balance of probabilities that the document tendered was not the totality of the Agency Agreement.
8. First, the page numbering on the document tendered is in the form of "Page X of Y". The document tendered contained pages enumerated as "1 of 6", "2 of 6", "3 of 6" and "4 of 6" but not pages 5 of 6" and "6 of 6". By necessary implication there were two further pages, being pages "5 of 6" and "6 of 6", to make up the complete document. Those two pages were not in evidence before the Tribunal.
9. Second, Items 1, 2, 4, 5, A - D, F and G of the document in evidence each contain an express reference to a "clause" with a clause number on the right-hand side of the page. For example, Item C, headed "Commission", contained an express reference to "Clauses 4.4 and 7". There are no clauses 4.4 or 7 in the document tendered. There are Items 4.4 and 7, but neither relates to a commission. Item 4.4 says that if the property is occupied or subject to tenancy then details ought be set out in the box provided. Item 7 refers to special instructions for the showing and marketing of the property. These facts strongly suggest that clauses 4.4 and 7 related to commission, are not contained in the document tendered, but are to be found in other pages not tendered, in all probability being pages 5 of 6 and 6 of 6.
10. Third, the document tendered is sub-titled "Item Schedule". It is common, in real estate and building contracts for example, for there to be a number of pages containing standard terms and a schedule containing information relating to particular subject matters of the contract such as the parties' names, contract sum, identification of the land involved and the like. The document tendered, both in form and content, has the appearance of such a schedule. That is also consistent with the use of the word "schedule" in the document's title.
11. Therefore, in our opinion, the Tribunal should have found that the totality of the terms of the Agency Agreement were not in evidence.
12. It is also our opinion that, in the absence of the totality of the Agency Agreement's terms, it is not possible for a finding to be made that there was a liability owed by the Builder to pay the commission.
13. Whilst it is common practice for principals to be liable to pay agents a commission on the sale of property, it is far from obvious that this was the case in the present circumstances.
14. In the document tendered the principal is defined to be the Builder and the agent was Lend Lease Realty Pty Ltd. A note in Item C of the document tendered, which relates to commission, says that: "However, if the buyer is introduced by the owner then no Commission is otherwise payable to the Agent."
15. There are no definitions of "buyer" and "owner" in the document tendered. The Builder had a put and call option to purchase the property, and the evidence was that the call option was exercised by the Builder who then nominated the Owner as the purchaser.
16. Whilst the Builder's submissions as to who was the buyer and who was the owner have the virtue of common sense, a finding that the proper construction of the Agency Agreement was as submitted by the Builder should not be accepted in the absence of the full terms of the Agency Agreement.
17. For all that is known, the unknown terms of the Agency Agreement may have defined the "buyer" as the Builder (because of the existence of the put and call option) or the Owner. It may have defined the "owner" as the Developer or as the Builder (again, because of the existence of the put and call option).
18. The evidence of Mr Matheson, a director of the Builder, was to the effect that the Owner contacted the Builder's sales office to enquire about a house and land package. Thereafter, the only evidence was of negotiations and communications between the Owner and Builder regarding, inter alia, the purchase of the land. There is no reference to any introduction or other involvement of the agent.
19. Therefore, if the unknown terms of the Agency Agreement defined the "buyer" as the Owner, and the "owner" as the Builder, and the Owner was introduced to the Builder through the Builder's own endeavours (and not the agent's), then, at least according to the note to which we have referred, no commission would have been payable to the agent.
20. That example simply demonstrates that, depending upon the definition of "owner" and "buyer", which is not found in the document tendered but which may appear, expressly or by implication in the pages of the Agency Agreement not in evidence, a commission may or may not have been payable to the agent by the Builder.
21. In our opinion the Owner was not required, as the Builder submits, to put to Mr Matheson that the totality of the Agency Agreement was not in evidence. Questioning as to what further pages may or may not have been attached to the parts of the Agency Agreement tendered when Mr Matheson signed it (assuming he did so) may have been allowable, but any answers could only have been of assistance to the Owner (if he said there were further pages) or neutral (if there were no further pages). The physical absence of further pages at the time of execution would not mean that there were no further pages of the Agency Agreement (incorporated by reference by the matters to which we have referred at [96] - [98] above), and any opinion that there were no further pages would be opinion evidence involving the application of legal principles, matters upon which Mr Matheson could not have given evidence.
22. The cross-examination of Mr Matheson at T 17.20 - .41 (Appeal Book p 407) to which our attention was drawn, and the use of the expression "apparently incurred", seen in context, was not a tacit acceptance that a commission was payable. It was questioning which was directed to the fact that the Builder had never been invoiced for the commission assuming, for the purpose of argument, that the commission had, in fact, been incurred.
23. It was the Builder's onus to establish that it had a liability to the agent and it failed to discharge that onus by failing to tender the totality of the Agency Agreement. The Tribunal erred in finding that the Builder had a liability to pay the commission to the agent.
24. We should also note that, assuming we are wrong on that point, it is far from clear that the agent was entitled to the sum claimed. That sum represented 2.2% of the package price (being $362,750 for the land and $679,900 for the building costs). The document tendered said that the agent's commission was based on the agent's maximum estimated selling price set out in Item 5.2. Item 5.2 refers to an attached schedule, but the expression "selling price" is not defined in the document tendered. The only thing sold was land. No dwelling had been constructed, and so no land with existing dwelling was sold. Instead, land would be sold and the purchaser would enter into a building contract with the Builder.
25. Item 5.1 said that the price of "the Property" was to be listed at "as per attached schedule". The expression "the Property" is not defined in the documents tendered, and so it is not obvious that "the Property" was the house and land package as distinct from the land alone.
26. These reasons are sufficient to uphold ground 1(a) of the Owner's appeal.
27. As the totality of the Agency Agreement was not in evidence, the Tribunal's construction of the Agency Agreement was in error because it was based upon incomplete terms of the full agreement and in ignorance of the content of the unknown terms.
28. Not having the full agreement before us (assuming leave were granted to tender the remainder of the agreement) it is not possible for us to construe the Agency Agreement, and so we cannot further consider grounds 1(b) and 2 other than to observe that the Tribunal was not in a position to construe the Agency Agreement in circumstances where the full terms of that agreement were not in evidence.
29. For completeness, we do not accept the Owner's submissions that, assuming there was a liability to pay commission pursuant to the Agency Agreement, that liability was a contingent liability, the contingency being whether or not the agent sought to enforce the agreement.
30. With respect, the Owner's submissions conflate the separate notions of the existence of a liability and satisfaction of that liability.
31. The liability in this case, on the assumption the commission was owed, was the legal obligation to pay the commission, the chose in action. Again, on the assumption it was owed, as the Builder submits, there was nothing contingent about the existence of that liability.
32. Satisfaction of that liability is a different question. It is true that it may or may not be satisfied, and in that sense satisfaction of the liability might be described as being contingent upon the creditor enforcing the obligation (the liability) to pay. However, a true contingent liability is one in which the liability, the legal obligation to pay, only arises (comes into existence) if certain other events occur.
33. So, in Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, an authority relied upon by the Owner, the liability under consideration only arose (came into existence) under an indemnity if and when the indemnity was called upon. Nothing was owed, there was no liability, until, pursuant to the terms of the indemnity, it was called upon. The contingency was the calling upon the indemnity. That action triggered, and gave rise to, the legal obligation to pay. Satisfaction of that liability may or may not occur, but that did not make the liability a contingency in the sense used by the Owner.
34. In this case, on the assumptions we have made, the liability arose immediately on the sale of the land. Before the sale of the land the liability to pay commission was contingent on, inter alia, the sale of the land. If the sale did not occur, there was no liability to pay commission.
35. Given the conclusion we have reached on the question whether the Builder had a liability to the agent for the commission claimed, it is strictly unnecessary to deal with the Owner's submission that the commission was not recoverable in quantum meruit because no benefit had accrued to the Owner as a result of that commission, and, because the Builder had not paid it, there was no detriment to the Builder. However, out of deference to the parties' arguments, and because the authority to which we refer in the following paragraph is also relevant to aspects of the Builder's appeal, we will express our brief conclusions on this aspect of the case.
36. As explained by Edelman J, as his Honour then was, in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 3) [2014] WASC 162 at [48] (citations omitted): "In Pavey & Matthews Pty Ltd v Paul, a majority of the High Court of Australia recognised that forms of action in indebitatus assumpsit, including money had and received and quantum meruit, were part of a legal concept of unjust enrichment. In a passage in Pavey & Matthews Pty Ltd which was later quoted with approval by five justices of the High Court, Deane J said that unjust enrichment is: 'a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case.' "
37. Quantum meruit, Edelman J said at [94], describes a form of action and says nothing of the underlying cause of action.
38. His Honour went on to say (citations omitted): "[49] Deane J had earlier explained in Muschinski v Dodds, that the use of unjust enrichment is an 'informative generic label for the purposes of classification, in Australian law' of a 'notion underlying a variety of distinct categories of case ... [in which] a benefit [is] derived at the expense of a plaintiff.' ... [50] The concept of unjust enrichment is, in Australia, limited to this taxonomic function. ... [51] Provided that unjust enrichment is not applied as a direct source of liability, in Australia the taxonomic category of unjust enrichment has served a useful function and might continue to do so. Like the category of 'torts' the category of unjust enrichment assists in understanding even though it is not a direct source of liability. The category directs attention to a common legal foundation shared by a number of instances of liability formerly concealed within the forms of action or within bills in equity. The common features of actions within the 'label', 'concept', or 'notion' of unjust enrichment has generally been thought to be that, subject to defences, a plaintiff can prove its entitlement to restitution of the value of a benefit derived at the plaintiff's expense, if the Court is satisfied that the plaintiff has succeeded on any issues falling within three broad enquiries:56 (i) The defendant must be enriched. (ii) The enrichment must come at the expense of the plaintiff. (iii) The enrichment must be unjust.
39. In this case it is apparent from the Builder's submissions to the Tribunal that the taxonomic category relied upon was that where a contract for building works was terminated as a result of repudiation by the owner. In those circumstances, as explained by Meagher JA in Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 277: "The law is clear enough that an innocent party who accepts the defaulting party's repudiation of a contract has the option of either suing for damages for breach of contract or suing on a quantum meruit for work done. ... If the former remedy is chosen the innocent party is entitled to damages amounting to the loss of profit which he would have made if the contract had been performed rather than repudiated; it has nothing to do with reasonableness. If the latter remedy is chosen, he is entitled to a verdict representing the reasonable cost of the work he has done and the money he has expended; the profit he might have made does not enter into that exercise." (Our emphasis)
40. The reference to work done and money expended, in this context, is a reference to work done and money expended which would have been done and expended under the contract, or to matters directly connected to such work such as unauthorised variations.
41. In Pavey & Matthews v Paul [1987] HCA 5; (1987) 162 CLR 221 Deane J said, at p .257: "The fact that the action which can be brought on a common indebitatus count consistently with the Statute of Frauds is founded on an obligation arising independently of the unenforceable contract does not mean that the existence or terms of that contract are necessarily irrelevant. In such an action, it will ordinarily be permissible for the plaintiff to refer to the unenforceable contract as evidence, but as evidence only, on the question whether what was done was done gratuitously."
42. In this case, the Contract is silent as to the asserted benefit arising from the commission, other than stating in Special Condition 7 that the Contract was subject to the Owner entering into a land contract with the Developer by a certain specified date. In that sense it may be said that the asserted benefit was gratuitous.
43. In the context of the taxonomic category relied upon, and taking into account the terms of the Contract, there was no work done under or pursuant to the Contract to which the commission appends.
44. Further, we do not agree that the Owner benefitted, or was enriched, as submitted. The Owner received the land for which it paid the advertised price. It is true that the occasion for that purchase may have arisen by reason of the Builder's retention of the agent, but the benefit, the land, was obtained by the Owner from the Developer in exchange for the agreed price for the land.
45. In an ordinary case of quantum meruit the owner receives something of value for which it has not paid. Value is, generally speaking, arrived at by valuing the work done which has enriched the owner. But in this case the owner paid exactly what the property was worth. Further, the Owner paid the purchase sum to the owner of the land, the Developer. The Builder was not the owner of the land, and so could not be said to be the one supplying the benefit (the land) to the Owner.
46. The final matter argued by the Owner was in relation to the deposit paid to the Builder. No oral or written submissions were made by the Owner in relation to the deposit other than a submission that any amount awarded to the Builder ought be offset against the deposit.
47. In our opinion the Builder's submissions on the deposit issue are correct as far as they go. That is, ordinarily, it would be entitled to keep the deposit. But it is not entitled to do so in this case because of its failure to take out HOW insurance.
48. First, and contrary to the Builder's submissions, the Owner did raise the issue of the deposit before the Tribunal. It did so in paragraphs 3, 10, 14, 18, 52(c), 61, 62 and 69 of the Owner's "Closing Submissions" to the Tribunal dated 22 December 2017.
49. Second, the Tribunal's reasons are silent on this issue. Accordingly, on the authorities set out at [69] above, this was a substantial argument not addressed by the Tribunal and was therefore an error of law.
50. Third, the Builder correctly submits that the Contract is silent as to what was to happen if the Contract was terminated early due to the repudiation by the Owner ie. it is silent as to forfeiture. In those circumstances, as Howe v Smith (1884) 27 ChD 89 held, a right to forfeiture of the deposit is implied.
51. In Havyn Pty Ltd v Webster [2005] NSWCA 182; (2005) 12 BPR 22,837 Santow JA, with whom Tobias JA and Brownie AJA agreed, said: "[130] Before doing so, it is instructive to recall the basic function of a deposit, and the basic principles at common law and in equity pertaining to its forfeiture. A deposit is primarily an earnest of performance. As Fry LJ explained in Howe v Smith , above, at 101-2, the practice of giving something to signify the conclusion of the contract (to be repaid or redelivered on completion), was of great antiquity in the earliest legal systems. Moreover, the character of an earnest was not lost because the same thing might also constitute part-payment of the purchase price. The contract in Howe v Smith stated expressly that the money was paid as a deposit and in part payment of the purchase money, which Fry LJ interpreted as declaring that "in the event of the purchaser making default the money is to be forfeited, and that in the event of payment of the purchase being completed the sum is to be taken in part payment": at 102. [131] The vendor's right to retain the deposit upon default is of ancient origin; so much so that by the time of Howe v Smith , it had been established that express provision to the contrary is required before the vendor's right to retain a deposit will not be implied into a contract. ... [132] Equity took the view that since the intention of the parties was that the money be an earnest of due performance by the payer, if the contract was terminated for his default, there was no equity in the payer to recover the deposit thus properly forfeited at law, as long as it was not penal."
52. Lockhart J, with whom Fisher J agreed, put it pithily in Lombok Pty Ltd Supetina Pty Ltd [1987] FCA 79; [1987] 14 FCR 226 when his Honour said at [41]: "A deposit is a guarantee by the purchaser that the contract shall be performed. Where the sale goes off, as it did here by mutual abandonment, the deposit is generally refundable; but the position is different if it is the default of the purchaser that brings the contract to an end. In those circumstances the vendor is entitled to retain it unless the contract provides that it is to be repaid to the purchaser: Howe v Smith (1884) 27 Ch D 89 at pp 95-98."
53. So here. There is no express provision in the Contract concerning forfeiture of the deposit, and so there was an implied term that the deposit would be forfeited to the Builder upon the Owner's repudiation of the Contract. There is no assertion, nor could there be in circumstances where the deposit was $5,000 against a contract sum of $317,150, that the deposit was penal.
54. For the reasons to which we will come in relation to the Builder's appeal, the Builder was required to have taken out HOW insurance and had failed to do so. That placed the Builder in contravention of s 92 of the HBA, and subject to the preclusions set out in s 94. Those preclusions did not make the Contract void, but did have other effects.
55. In Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd [2004] NSWSC 273 Barrett J, as his Honour then was, was called upon to determine the effect on a building contract in circumstances where the builder was in contravention of s 92 in the form it was in August 1998. At that time s 92 provided: A person must not contract to do any residential building work unless a contract of insurance that complies with this Act is in force in relation to the proposed work.
56. At that time s 94 provided: (1) A person who enters into a contract in contravention of section 92(1) or 93(1): (a) is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract or to recover money in respect of work done under the contract under any other right of action (including a quantum meruit action), but (b) is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person. (2) This section does not affect the liability of any such person for an offence against a provision made by or under this or any other Act.
57. Barrett J held that those provisions did not have the effect of rendering the building contract void. His Honour held: "[21] This section made it clear that a contract entered into in contravention of s 92(1) was capable of being breached by the person the subject of the statutory prohibition (s 94(1)(b)) and by another "party to the contract" (s 94(1)(a)). It was thus recognised that a contract came into existence and subsisted, despite the prohibition. This is at odds with any notion that the statute rendered the contract void. Section 94 preserved the contractual liability of the person affected by the prohibition but deprived that person of certain entitlements flowing from breach of the contract by another party. [22] The recognition of the contract as a source of rights and liabilities and as capable of breach means that there was no statutory intention that it be void. A contract to do work purportedly made by a person forbidden by s 92(1) to make that contract was, despite the illegality attending its formation, still a contract, albeit one upon which the contravening party could not only rely as a source of any entitlement of the kind described in s 94(1)(a)." [We read the word "only" in his Honour's last sentence as being a typographical error and a word to be ignored.]
58. Thus, the Contract was not void by reason of the Builder's failure to take out HOW insurance.
59. However, to be entitled to retain the deposit, the Builder must rely upon the implied term as to forfeiture in the Contract (and cl 17.6 if the Builder wished to assert there is a contractual bar to a set off). It is only by reason of contractual rights that the Builder would be entitled to the deposit. To keep the deposit the Builder would be asserting an "entitlement flowing from the breach of the contract" by the Owner (to use Barrett J's words). Whilst the Contract was not void, the Builder could not, because of ss 92 and 94 of the HBA, rely on the Contract as a source of entitlement to retain the deposit.
60. Section 92(2) of the HBA, as it was when the parties entered into the Contract, is set out at [211] below. Inter alia, it provided that a person may not demand or receive a payment under a contract for residential building work (including a deposit) unless a HOW insurance policy is in force and a certificate of insurance had been provided to the other party to the contract. In this case, and in breach of that section, the Builder received the deposit notwithstanding its failure to obtain that insurance policy.
61. Thus, the Builder received the deposit when it should not have, and it should not retain the deposit because to do so would involve the Builder in asserting an entitlement under s 94(1)(a) of the HBA (set out below at [212]) to enforce a remedy in respect of a breach of the Contract committed by the Owner. As we have held (as later explained in these reasons) that the Builder had not obtained the insurance the HBA required, s 94 applied and the Builder is disentitled from retaining the deposit.
62. In those circumstances the Owner is entitled to a credit for the deposit.
63. The Tribunal erred in finding that the Owner was liable to the Builder for the commission. The Owner did owe the Builder $2,972.76 on a quantum meruit basis for the preliminary work (excluding the commission) but was entitled to a credit in relation to the deposit. The deposit was $5,000 but the Owner does not seek the balance. As the deposit exceeds the sum awarded of $2,972.76 the net result is that the Builder was entitled to a nil sum.
64. The Owner's appeal is upheld.

Extension of Time

1. Notification of the Tribunal's decision was received by the Builder on 27 February 2018. The time for lodging a Notice of Appeal was within 28 days of that date, ie. by 28 March 2018. The Builder lodged its Notice of Appeal on 12 April 2018, some 15 days late.
2. In its Notice of Appeal, but not in an affidavit, the Builder said that it did not appeal within time for commercial reasons but changed its mind once it received the Owner's Notice of Appeal (on the last day for lodgement of that appeal). In other words, the Builder was content not to appeal if the Owner was similarly content, but since the Owner appealed the Builder also desired to appeal.
3. The Builder submits it ought be granted an extension of time to appeal because its appeal raises significant legal issues and no prejudice would be occasioned to the Owner.
4. The Owner, who lodged its appeal on 27 March 2018, submitted that no extension of time should be granted because the Builder made a conscious and informed decision not to appeal within time, its failure to appeal within time is consistent with its failure to comply with the insurance requirements of the HBA, the Builder would suffer no prejudice if an extension of time were refused, the Owner would suffer prejudice if an extension of time were granted (being the need to defend the appeal) and the prospects of success of the Builder's appeal are not good.
5. The Owner also submitted that for an extension of time to be granted there must be "proof" of why an extension of time should be granted (meaning an affidavit going to that issue) relying upon the judgment of McHugh J in Gallo v Dawson [1990] HCA 30; (1990) 93 ALR 479, and submitted that the absence of that "proof" was fatal to an application to extend time.
6. The Builder drew attention to Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 and submitted that there is no absolute requirement for an affidavit to support an application for an extension of time, there just needs to be grounds. Alternatively, the Builder said it could call oral evidence from the Builder's solicitor if "proof" were needed.
7. The relevant principles applicable are those set out in Jackson and need not be repeated.
8. The length of the delay is minor, being some 15 days. The prejudice to the Owner, in having to defend the appeal, is not prejudice of the relevant kind. Relevant prejudice would be, as an example, taking some irreversible step in reliance upon the expiration of the time to appeal. On the other hand, if an extension of time were not granted the Builder would be shut out from contesting those aspects of the Tribunal's decision it desired to challenge.
9. The Builder's appeal raises some significant and complex issues. They have sufficient prospects of success to justify an extension of time.
10. We are not persuaded that there is an absolute requirement for an affidavit to be provided on every application for an extension of time. In Gallo McHugh J said (citations omitted): The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties ... This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time ... When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal ... It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has "a vested right to retain the judgment" unless the application is granted ... It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice.
11. As can be seen, McHugh J did not require "proof" of the type identified by the Owner i.e. an affidavit. McHugh J said that proof was needed that strict compliance with the rules would work an injustice, and there had to be "material" upon which a decision maker could be satisfied that refusal of the application would work an injustice.
12. An affidavit is often necessary in circumstances where an excuse is offered to explain the delay, such as the applicant being indisposed for medical reasons or the existence of other intervening or frustrating events. In this case the explanation for not filing the appeal within time was that the Builder did not appeal within time for commercial reasons and changed its mind once it received the Owner's Notice of Appeal (on the last day for lodgement of that appeal). That explanation was contained in the Notice of Appeal and is "material" to which we can have regard, particularly where we are not bound by the rules of evidence (whereas McHugh J was). Putting that explanation into an affidavit would not materially alter its substance, and the Owner did not suggest that it was prejudiced in being unable to cross-examine the Builder as to the bona fides of that explanation due to it not being contained in an affidavit.
13. Whilst it is true that at the expiration of 28 days the Owner acquired a vested right to retain the judgment, it is more accurate to say that the Owner acquired a vested right to retain the benefits of the orders made pursuant to the judgment. Since appeals are from orders and not judgments, the fact that the Owner also seeks to disturb the Tribunal's orders in this case lessens the significance of that matter as a ground to refuse leave to extend time.
14. The history of the proceedings is neutral on this issue. Both parties have conducted themselves appropriately in terms of the conduct of the proceedings. The Builder's conduct in not taking out HOW insurance is not relevant to this application. The delay is minor. The Builder would suffer prejudice if the application were refused. The Owner will not suffer any (relevant) prejudice if the application is granted. The Owner seeks to disturb the orders made below.
15. In all of those circumstances it is our opinion that the interests of justice require that the Builder be granted an extension of time to appeal.

Grounds of Appeal

1. The Builder's Notice of Appeal listed 15 separate grounds of appeal, many containing sub-grounds.
2. A distillation of those grounds, as refined in the Builder's written and oral submissions, results in the following grounds: 1. The Tribunal erred in finding that the preliminary work was "residential building work" within the meaning of that term in ss 92 and 94 of the HBA. 2. The Tribunal erred in finding that the Builder had not retrospectively obtained HOW insurance in relation to that preliminary work in that the Tribunal erred in: 1. finding there had been no policy in force; 2. if there had been a policy in force it did not cover the work for which the Builder claimed; 3. refusing to consider the non-cancellation argument raised by the Builder, erred in failing to find that the cancellation provisions of the Insurance Contracts Act applied in this case, had not been followed by the insurer and therefore the policy had not been cancelled. 1. On the assumption insurance was required, and had not been obtained, the Tribunal erred in holding that s 94 precluded the Builder from claiming for lost profits. 2. The Tribunal erred in failing to find the Guarantor liable to the Builder for such amounts as the Owner was found liable to the Builder, whether as damages for breach of contract or in quantum meruit. 3. The Tribunal failed to give adequate reasons in relation to the matters referred to in grounds 1, 2 and 4.
3. Ground 1, as explained in submissions, essentially contends that the Tribunal applied incorrect legal principles. Accordingly, this ground raises a question of law - Chapman v Taylor [2004] NSWCA 456 at [33], per Hodgson JA (Beazley and Tobias JJA agreeing).
4. Grounds 2(a) and (b) essentially contend that the relevant ultimate findings of fact were not rationally open on the evidence. Such a contention raises a question of law - Wesiak v D & R Constructions (Aust) Pty Ltd [2016] NSWCA 353 at [73].
5. Ground 2(c) raises the issue of procedural fairness, and thus raises a question of law.
6. Ground 4 involves the proper interpretation of the Guarantee. Accordingly, this ground raises a question of law - Re R [2000] NSWSC 886 at [25], cited with approval in C v W [ [2015] NSWSC 1774 at [48].
7. Ground 5 raises a question of law - Stoker v Adecco Gemuale Constructions Pty Ltd [2004] NSWCA 449 per Santow JA, with whom Mason P and Sheller JA agreed, at [41].

The Builder's Submissions

1. Put simply, the Builder contends that the preliminary work in relation to which it seeks compensation was not "residential building work" within the meaning of that term in ss 92 and 94 of the HBA. It submits that "residential building work" is only that work which consists of the physical construction of the dwelling, and not preparatory work which precedes the actual construction of the dwelling. Therefore, the Builder was not required to take out HOW insurance for the work done and was not precluded by ss 92 or 94 from claiming damages from the Owner.
2. The Builder submits that there are a number of binding, first instance decisions which held that "residential building work" only refers to actual construction work and does not include work which is preparatory to actual construction work.
3. The Builder submits that a subsequent Court of Appeal decision (Grygiel v Baine [2005] NSWCA 218) did not overrule those first instance decisions, and in any case is distinguishable because it was concerned with jurisdiction and s 48K of the HBA rather than the meaning of "residential building work" in ss 92 and 94. The Builder submitted that a subsequent decision of the Appeal Panel in Allcastle Homes Pty Ltd v Wilkinson [2016] NSWCATAP 3, insofar as it found that residential building work is not confined to physical construction, was similarly concerned with the Tribunal's jurisdiction under s 48K of the HBA and not the definition of "residential building work" in ss 92 and 94.
4. The Builder drew attention to the fact that the words "residential building work" in ss 92 and 94 are not preceded by the words "for or in connection with" which precede the words "the carrying out of residential building work" in the definition of "building goods or services" in s 48A.
5. Thus, the Builder submits, the question of jurisdiction under s 48K (which includes, as one element, "goods or services supplied for or in connection with the carrying out of residential building work") is a wider question (because of the words "for or in connection with") than the narrower question of what is "residential building work" in ss 92 and 94.
6. As the combined operation of ss 92 and 94 is to preclude builders from claiming for work done (in the defined circumstances) the Builder submits those provisions should be strictly construed.
7. The Builder further submits that HOW insurers would not be wanting to cover preparatory work such as feasibility studies, solicitors' conveyancing, structural engineers plans and the like because those who did that work would have professional indemnity insurance. The Builder submits that if a HOW insurer was asked, it would say that it did not insurer preparatory work and only insured actual construction work.
8. The Builder submits that if a builder asked a structural engineer to draft structural plans, or a solicitor to effect a conveyance, then the structural engineer and the solicitor would need to take out HOW insurance if their work fell within the broader definition of "residential building work". That situation could not be what Parliament intended, and militated against the broader interpretation.
9. Accordingly, the Builder submits s 92 of the HBA did not require HOW insurance to be taken out before the preliminary work was done (because that work was not "residential building work") and s 94 of the HBA does not preclude the Builder's claims for damages (including its claim for loss of profit) and contractual entitlement to retain the deposit.
10. The Builder also draws attention to the word "done" in s 94(1). The Builder submits the preclusion provided for by s 94 only applies in relation to "residential building work done" (our emphasis). The Builder submits that its claim for lost profit arising from the Owner's repudiation of the Contract does not fall within that expression, and so s 94 does not preclude its claim for damages for lost profit.
11. In the alternative, if those submissions are not accepted, the Builder submits that it had taken out (retrospectively) HOW insurance in relation to the preliminary work, and thus ss 92 and 94 were satisfied and it was entitled to maintain its claims for damages and contractual entitlement to retain the deposit. The Builder submits the Tribunal erred in finding otherwise.
12. The Builder submitted that the Certificate of Insurance tendered in evidence proved that a policy of insurance had come into existence.
13. It submitted the Tribunal erred in finding the period of cover under the policy commenced on 8 December 2016 because no such term exists in the policy or the Certificate of Insurance. The Builder submitted that the policy did extend cover to the work it had done under the Contract.
14. The Builder submitted that its non-cancellation argument should have been considered by the Tribunal, and that the raising of that argument in reply was appropriate because that argument was in reply to the Owner's argument that the policy (assuming one existed) had been cancelled.
15. The Builder submitted that the cancellation provisions of the Insurance Contracts Act 1984 (Cth), and particularly s 59, applied to this insurance policy, those provisions had not been followed by QBE, and thus the policy had not been validly cancelled. It followed, the Builder submitted, that the policy had not been cancelled.
16. In relation to the Guarantee, the Builder submitted that if it was successful on its grounds to the effect that it was not precluded (by ss 92 or 94 of the HBA) from claiming damages for the Owner's repudiation, it would follow that the Guarantor would be liable for the same amounts as was the Owner under the terms of the Guarantee.
17. Alternatively, the Builder submits that if it was only entitled to recover on a quantum meruit, the Tribunal erred in finding that the Builder's quantum meruit claim against the Guarantor did not fall within the terms of the Guarantee.
18. The Builder submitted that guarantees generally fall into two categories: an obligation to pay a stipulated amount or an obligation to fulfil the obligations under a contract. This Guarantee was, the Builder submitted, of the latter kind. Thus, the submission continued, the Guarantor was obliged to guarantee the due performance of the Owner under the Contract. In other words, there was an obligation to pay the quantum meruit because it arose by reason of restitution (sic), therefore the Guarantor has that obligation. The Guarantor, the Builder submitted, had a separate contract which was not caught up with insurance.
19. The Builder also submitted the Tribunal erred in failing to provide adequate reasons in relation to grounds 1, 2 and 4.

The Owner's Submissions

1. The Owner submitted the Tribunal had not erred in applying Grygiel, and in finding the work done by the Builder was "residential building work".
2. The Owner drew attention to reg 40(2)(a) of the Home Building Regulation 2014 which provided (at the date of entry into the Contract) that HOW insurance was required to indemnify beneficiaries against loss or damage resulting from faulty design where the design was provided by the contractor, and said this regulation could be used as an aid to interpretation of "residential building work" in the HBA. The Owner submitted that the fact that the insurance extended to something preparatory to the actual construction of a dwelling indicated Parliament's intention that the phrase "residential building work" extended to preparatory work.
3. The Owner submitted that the Tribunal had no jurisdiction to determine the Builder's claim for lost profit because such a claim did not arise from a supply of goods or services.
4. The Owner also submitted that the terms of s 94 precluded claims for damages for lost profit.
5. The Owner submitted that because the Builder had not taken out HOW insurance the Builder could not make any claim for lost profits because the Contract was unenforceable as a matter of public policy, and also because its claim for damages was not caused by the Owner's repudiation but by the preclusion in s 94 of the HBA arising from the Builder's failure to take out the relevant insurance.
6. The Owner submitted that any claim for damages by the Builder was subject to a contractual limitation which appeared in clause 4 of the Contract.
7. The Owner submitted that the Tribunal made factual findings in relation to the insurance policy, and that a challenge to those factual findings would not involve an error of law. Accordingly, the Owner submitted, the Builder required leave to appeal on that issue.
8. The Owner submitted that the policy obtained by the Builder was prospective, not retrospective. That is, the Owner submitted the policy only covered work done by the Builder on or after 8 December 2016 (and not the work done earlier for which the Builder was claiming).
9. The Owner submitted that the cancellation provisions of the Insurance Contracts Act were not relevant because the Builder had breached its duty of utmost good faith and duty of (full) disclosure in failing to inform the insurer at the time it submitted its proposal for insurance that the Contract had been terminated, the Second Builder had constructed a dwelling on the site and there was no work to be done by the Builder.
10. The Owner also submitted that the Tribunal has no jurisdiction to decide questions under the Insurance Contracts Act because the Tribunal is not a federal court or a state court exercising federal jurisdiction, and the insurer should have been, but was not, joined to the proceedings.
11. The Owner submitted that the Tribunal did not err in failing to consider the non-cancellation argument because it had been raised in reply.
12. The Owner submitted that the Builder had conceded in the Tribunal below that if it (the Builder) was unsuccessful against the Owner because of the operation of ss 92 and 94 of the HBA, it could not succeed against the Guarantor under the Guarantee.
13. The Owner submitted that guarantees are strictly construed, and the terms of the Guarantee did not extend to amounts awarded against the Owner on a quantum meruit basis.

The Builder's Submissions in Reply

1. The Builder submitted the Tribunal had jurisdiction to determine the question of cancellation because HOW insurance is "state insurance". Section 5 of the Insurance (Application of Laws) Act 1986 (NSW) says that the provisions of the Insurance Contracts Act apply as laws of New South Wales to and in respect of all contracts of insurance and proposed contracts of insurance entered into, or proposed to be entered into, in the course of State insurance, including contracts and proposed contracts entered into, or proposed to be entered into, by the State and some other insurer as joint insurers. In that way, the Builder submits, the Insurance Contracts Act is a law of the state of NSW and thus the Tribunal has jurisdiction to determine questions arising under that Act in relation to state insurance.

The Statutory Context

1. It is first appropriate to set out the relevant provisions of the HBA and the Home Building Regulation 2014 as they were at the date of entry into the Contract.
2. Section 48A of the HBA then provided: 48A Definitions (1) In this Part: building claim means a claim for: (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim. building dispute means a dispute that has been notified as referred to in section 48C. building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services: (a) supplied by the person who contracts to do, or otherwise does, that work, or (b) supplied in any circumstances prescribed by the regulations to the person who contracts to do that work. (2) Without limiting the definition of building claim, a building claim includes the following: (a) an appeal against a decision of an insurer under a contract of insurance required to be entered into under this Act, (b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C.
3. The term "residential building work" is defined in Schedule 1, clause 2(1) of the HBA. That clause was then in the following terms: 2 Definition of "residential building work" (1) In this Act, residential building work means any work involved in, or involved in co-ordinating or supervising any work involved in: (a) the construction of a dwelling, or (b) the making of alterations or additions to a dwelling, or (c) the repairing, renovation, decoration or protective treatment of a dwelling.
4. Section 92(1) and (2) of the HBA then provided: 92 Contract work must be insured (1) A person must not do residential building work under a contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name under which the person contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract. Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (2) A person must not demand or receive a payment under a contract for residential building work (whether as a deposit or other payment and whether or not work under the contract has commenced) from any other party to the contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name under which the person contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract. Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case.
5. Section 94 of the HBA then provided: 94 Effect of failure to insure residential building work (1) If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the uninsured work), the contractor who did the work: (a) is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and (b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit). (1A) Despite section 92 (2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis. (1B) A contractor who applies to a court or tribunal for a remedy under this section, or who is awarded money under this section, is not guilty of an offence under section 92 (2) by virtue only of that fact. (1C) Without limiting the factors that a court or tribunal may consider in deciding what is just and equitable under subsection (1A): (a) in relation to any contract - the court or tribunal may have regard to the impact on the resale price of the property if no contract of insurance is provided, and (b) in relation only to a contract entered into before 30 July 1999 - the court or tribunal is not to be limited by the fact that the required contract of insurance was not obtained until after the date of the contract. (2) However, the contractor remains liable for damages and subject to any other remedy in respect of any breach of the contract committed by the contractor. (3) Residential building work that is uninsured work at the time the work is done ceases to be uninsured work for the purposes of this section if the required contract of insurance for the work is subsequently obtained. (4) If a person commenced residential building work before 30 July 1999 and entered into a contract of insurance that complies with this Act in relation to that work after the contract for the residential building work was entered into, that contract of insurance is, for the purposes of this section or any previous version of this section, taken to have been in force in relation to the residential building work done under the contract for the residential building work whether that work was done before or after the contract of insurance was entered into. Note. If a contract of insurance is in force in relation to part of the residential building work, this section applies only in relation to the part of the work that is not insured.
6. Section 98(1) of the HBA then provided: 98 Employees and others not required to insure (1) Nothing in this Part: (a) requires a person who carries out work for a person required by this Part to obtain insurance in respect of that work to obtain insurance, or (b) makes the first-mentioned person liable for an offence for failing to do so.
7. Section 99(1) of the HBA then provided: 99 Requirements for insurance for residential building work done under contract (1) A contract of insurance in relation to residential building work required by section 92 must insure: (a) a person on whose behalf the work is being done against the risk of loss resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor, and (b) a person on whose behalf the work is being done and the person's successors in title against the risk of being unable, because of the insolvency, death or disappearance of the contractor: (i) to have the contractor rectify a breach of a statutory warranty in respect of the work, or (ii) to recover compensation from the contractor for any such breach.
8. Regulation 40 of the Home Building Regulation 2014 was then in the following terms: 40 Losses indemnified (1) An insurance contract must indemnify beneficiaries under the insurance contract for the following losses or damage in respect of residential building work covered by the insurance contract: (a) loss or damage resulting from non-completion of the work because of: (i) the insolvency, death or disappearance of the contractor, and (ii) for policies issued on or after 19 May 2009, the suspension of a contractor licence pursuant to section 42A of the Act, and (b) loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of: (i) the insolvency, death or disappearance of the contractor, and (ii) for policies issued on or after 19 May 2009, the suspension of a contractor licence pursuant to section 42A of the Act. (2) Without limiting subclause (1), an insurance contract must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor and for policies issued on or after 19 May 2009, suspension of a contractor licence pursuant to section 42A of the Act: (a) loss or damage resulting from faulty design, where the design was provided by the contractor, or (b) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor's wrongful failure or refusal to complete the work, or (c) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of an event referred to in subclause (1), or (d) loss of deposit or progress payment due to an event referred to in subclause (1), or (e) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage. (3) The insurance contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause. (4) For the purposes of subclause (1), if residential building work has not commenced, the loss or damage indemnified against may only include the loss of any deposit paid.

The Tribunal's Preliminary Decision

1. The Tribunal had earlier determined that the Builder's claim against the Owner, and the claim against the Guarantor, were "building claim(s)" within the meaning of s 48A of the HBA, and therefore the Tribunal had jurisdiction to hear and determine those claims pursuant to s 48K of the HBA. There is no appeal from that finding.
2. The finding that the Builder's claim was a "building claim" encompasses subsidiary findings which necessarily arise from the definition of that term and the definition of other terms found within the definition of "building claim".
3. "(B)uilding claim" is expressly defined in part by reference to what is a supply of "building goods or services". In turn, "building goods or services" are defined, in part, by what is "residential building work".
4. Stripped of complexity, the question on jurisdiction was whether the Builder's claims arose from the supply of building goods or services which were supplied for or in connection with the carrying out of work involved in the construction of a dwelling.
5. In its preliminary decision the Tribunal answered that question in the affirmative, and there is no appeal from that decision. Therefore, the parties are bound by the finding that the Builder's claims for the preliminary work and lost profits were both claims that arose from the supply of building goods or services which were supplied for or in connection with the carrying out of work involved in the construction of a dwelling.
6. The Tribunal made no express finding whether the claims were "for" the carrying out of work involved in the construction of a dwelling, or only "in connection with" the carrying out of work involved in the construction of a dwelling. Rather, the Tribunal applied what it perceived to be the holding in Grygiel v Baine [2005] NSWCA 218. The Tribunal said that: "a building claim is not limited to activities such as the laying of foundations and painting a building on site, but extends to work of a preparatory nature ... Preparatory work could be said to have a sufficient connection with the carrying out of building work because its purpose was to give rise to residential building work and it had the sufficient causal nexus with such work."
7. As the Owner has not appealed from that preliminary decision, we reject its submission that the Tribunal had no jurisdiction to determine the Builder's claim for lost profit. To allow that point to be taken now would allow for a collateral attack on a decision not appealed from.

Ground 1: "Residential building work"

1. The Builder's appeal is not directed to the finding of jurisdiction, but to the findings in relation to insurance. Whilst accepting the Tribunal had jurisdiction to hear its claims, the Builder's point is that the requirements for insurance are more narrowly expressed than those relating to jurisdiction.
2. Put simply, the Builder contends that whilst the Tribunal has jurisdiction to hear claims arising from building goods or services supplied "for or in connection with" the carrying out of residential building work, it is only work involved in the construction of a dwelling that is required to be insured, and not for goods or services supplied in connection with work involved in the construction of a dwelling.
3. This contention means that the question in this case is whether the preliminary work fell within the definition of "residential building work" ie. was it work "involved in" the construction of a dwelling.
4. The resolution of that question requires the examination of a number of authorities which, although centrally concerned with the Tribunal's jurisdiction, touch on or concern the definition of "residential building work". The resolution of that question also depends upon resolving apparent conflicts between earlier first instance decisions and a later Court of Appeal decision.
5. We shall firstly address those authorities and how the conflict between them should, in our opinion, be resolved.

Woolfe

1. In Woolfe v Alexander Sussman [2001] NSWSC 702 McClellan J, as his Honour then was, heard an appeal from a decision of the Fair Trading Tribunal which determined a dispute between the owner of land and a firm she retained to assist her to determine an appropriate redevelopment outcome for her property. The services supplied were by way of valuations, feasibilities, potential cash flows, inquiries as to finance and quotes from project builders. Generally, the defendant was called upon, and did advise, in relation to the "best use" of the property.
2. The fundamental issue in that case, his Honour said at [14], was whether the Tribunal had jurisdiction to determine that dispute.
3. Section 48A as it was on entry into this Contract is relevantly identical to the then s 84(1) of the Act insofar as it defines "building claim". Equally, the definitions of "building goods and services" and "residential building work" are, in their relevant respects, identical to the presently applicable provisions.
4. His Honour said: [17] ... Although the expression "in connection with" is an expression of wide meaning and would give the Tribunal a broad jurisdiction, it is nevertheless necessary that the goods or services be supplied in relation to residential building work or specialist work. [18] In my opinion, residential building work is, as the definition makes plain, confined to building work in pursuance of the physical construction or alteration of a dwelling. It does not extend to goods or services provided in the course of considering the feasibility of the re-development of a property or the means by which utilising suitable valuations and cash flow projections the re-development of a property may be financed. [Our emphasis]
5. His Honour's finding was that the defendant's services, which went to the feasibility of developments, did not fall within the definition of residential building work. Although not expressly stated, it is implicit that his Honour found that the defendant's services were not work involved in, or involved in co-ordinating or supervising any work involved in, the construction of a dwelling.

Collings Homes

1. In Collings Homes v Head [2002] NSWSC 1219 Master Malpass heard an appeal from the Consumer, Trader and Tenancy Tribunal which determined a dispute between the owner of land and a company (Collings Homes) which provided services to the owner in the nature of designs of project homes which could be modified to meet individual requirements, costings for building work, the obtaining of development approval, the introduction to a licensed builder who was prepared to enter into a building contract for a fixed price and procuring the execution of such building contract. Again, the relevant statutory provisions are identical in their relevant respects to those now under consideration.
2. The threshold question determined by Malpass M was whether the Tribunal had erred in finding it had jurisdiction to determine the dispute because, as the Tribunal found, the dispute was a "building claim".
3. The appeal was upheld. Malpass M held: [27] There are inter alia two reasons why the application is not a "building claim". Firstly, the services to be provided by the plaintiff did not fall within the definition of "residential building work". Secondly, there was then no "residential building work" supplied by the person who had contracted to do that work. [28] To satisfy the definition of "residential building work", the work must be involved in or involved in co-ordinating or supervising any work involved in the construction of a dwelling. [29] In this case, the building of the dwelling was to be done by a licensed builder and it was to be done pursuant to a home building contract that had been executed by him. As a consequence of the conduct of the defendants, no building contract came into being and no building of a dwelling took place involving only work done by the plaintiff or that builder. [30] The relevant statutory provisions need to be construed having regard to their context, with regard also being had to the purpose of the legislation. [31] The Act is expressed to be a statute inter alia "to make provision concerning the residential building industry". The provisions appear in Pt5 (which deals with appeals and applications to the Tribunal). [32] The dictionary meaning attributed to "construction" connotes inter alia building and the way in which something is put together. [33] When regard is had to the literal meaning and matters of context and purpose I consider that it was intended that "construction" be seen as the building process itself. [34] Accordingly, I reached the view, that the services which were to be provided by the plaintiff did not fall within the definition of "residential building work". They are not work involved in the construction of a dwelling. They are not work involved in co-ordinating or supervising any work involved in the construction of a dwelling. [35] The services may be seen as work that preceded or was preliminary to work involved in the construction of a dwelling. There was no co-ordination or supervision of any such latter work required from the plaintiff. [Our emphasis]
4. We should note here that McDougall J, in AIM Partnership v Rathchime [2010] NSWSC 860 at [21], considered that in Grygiel v Baine [2005] NSWCA 218 Basten JA, with whom Mason P agreed, implicitly disapproved of the approach of Malpass M set out in [33] and [34] of the Master's judgment as quoted above.
5. It is important to recognise that the Master's ultimate finding that the work was not work "involved in" the construction of a dwelling arose from facts that Collings Homes never contracted with the owner to construct anything, and no building contract came into existence.

Provincial Homes

1. In Provincial Homes v Doyle [2004] NSWSC 624 Wood CJ at CL heard an appeal from the from the Consumer, Trader and Tenancy Tribunal which determined a dispute between an owner of land and Provincial Homes. The central issue was the jurisdiction of the Tribunal to hear the claim. Again, the relevant statutory provisions are identical in their relevant respects to those now under consideration.
2. His Honour determined that the parties had contracted for Provincial Homes to prepare plans and specifications for a proposed home, and to obtain the necessary approvals from the relevant authorities. No building contract, although contemplated, had been signed. In relation to the construction aspect his Honour found, at [37], that: "I consider the case to be one that, in relation to the construction aspect, fell within the second limb of Masters v Cameron, being one where the parties had agreed on all of the terms of their bargain and intended no departure from, or addition to, their terms, but had made the performance of the building work conditional upon execution of the formal HIA contract."
3. Turning to the jurisdictional issue, his Honour said: [43] As I read the relevant legislation, which I have set out earlier, the jurisdiction of the Tribunal is not enlivened by, nor does it depend simply upon, the existence between the parties of a contract to construct a dwelling. Rather, for the Tribunal to have jurisdiction, there must be a claim which is of the kind referred to in s 84 that is a claim which arises from "a supply of building goods or services". [44] As I have also noted earlier, residential building work means, relevantly "any work involved in … the construction of a dwelling". [45] Since it is by reference to the nature of the claim, and the services supplied that the question of jurisdiction is to be determined, rather than the nature of the contract between the parties, it is necessary to focus upon the precise basis of the claim which the Doyles brought.
4. As can be seen from [45] of his Honour's judgment, his Honour's view was that the focus of attention, in relation to jurisdiction, was the nature of the claim rather than the nature of the contract between the parties. His Honour then said: [52] It is clear from the foregoing that the claim which the Doyles made, and which was determined by the Tribunal, related to the performance by Provincial of the preliminary design and approval services which it was obliged to supply, and which it was held not to have supplied in a competent and timely manner. [53] ... [54] It is clear from the foregoing that while some of the relief which was given comprised damages assessed by reference to the additional costs of constructing a dwelling, the claim itself arose from the asserted inadequate and untimely supply of design and approval services. Those services were preparatory to the supply of any work that would have been involved in the construction of the dwelling, or in the co-ordination or supervision of any work involved in its construction. [55] It was the dissatisfaction of the Doyles, not with any construction work, but with the delays in preparing adequate plans and complying with Council requests, and in securing the necessary development approval, that led to the contract being terminated, and to the claims for recoupment of the moneys paid and for damages. [56] The critical question which arises in relation to the Tribunal's jurisdiction is whether the services which were supplied, and in respect of which the claim arose, were services that fell within the meaning of "building services" as defined by s 84(1) of the HBA. [57] In my view they did not fall within the meaning of that expression, which is defined to mean "services supplied for or in connection with the carrying out of residential building work". In this regard the authorities previously mentioned have, in my view correctly, confined the services that fall within that definition to those that relate to the carrying out of physical construction work. Preparatory design and approval work has been excluded, even though its performance was a necessary precursor to a potential home owner having a dwelling constructed. [58] The present case is not on all fours with Collings Homes or Woolfe, however the interpretation of the legislation there adopted seems to me to bring about the same result. That follows from the circumstance that it is the categorisation of the claim, which must be one that "arises from a supply of building … services" that determines jurisdiction. [59] While it may be relevant to refer to any contractual arrangement between the parties to determine what services were to be supplied, the mere fact that the contract includes a commitment to construct a dwelling will not, of itself, be enough to attract jurisdiction. As I have observed, the touchstone for jurisdiction depends upon the services supplied from which the claim arises. [60] I do not consider that the words "supplied for or in connection with" the carrying out of residential building work, can properly be regarded as extending jurisdiction to claims that arise in relation to services that were supplied in relation to feasibility, design, procurement of approvals, and similar preliminary work, prior to the commencement of building. The legislative intent, in my view, was to regulate the building or construction phase and those services which are directly supplied for or in connection with its performance. [Our emphasis]

Grygiel

1. Grygiel was an appeal from a decision of Master Malpass which dismissed Mr Grygiel's appeal from a decision of the Consumer, Trader and Tenancy Tribunal. In the Tribunal Mr Grygiel claimed payment of $39,739 from Mr Baine and Dr Wiley for building work he did on their house. Mr Grygiel's services were terminated without the work being completed. Mr Grygiel did not have HOW insurance, and this fact was one of the defences raised in relation to Mr Grygiel's claim. In response, Mr Grygiel contended that he did not take out HOW insurance because of advice Mr Baine, who was a solicitor, gave him in the course of a conversation about the building work and its cost.
2. Relevantly, in the Tribunal, Mr Grygiel sought leave to add a claim against Mr Baine for professional negligence. The Tribunal decided that it did not have jurisdiction over such a professional negligence claim because it was not a "building claim" within s 48A of the HBA. In essence, Master Malpass came to the same opinion and dismissed Mr Grygiel's appeal. Mr Grygiel then appealed, by leave, to the Court of Appeal.
3. In finding it did not have jurisdiction the Tribunal relied upon, inter alia, the decisions in Woolfe and Collings Head, both of which are referred to by Basten JA, although Provincial Homes is not referred to and was apparently not cited.
4. The facts concerning work done, and the contractual arrangement between the parties, was summarised by Master Malpass in Grygiel v Baine [2004] NSWSC 308 at [1]. The Master observed: "Discussions took place between (Mr Grygiel) on the one hand and (Mr Baine and Dr Wylie) on the other hand concerning building work on a house at Vaucluse. Certain contractual arrangements were made (the work was to be done on a "do and charge" basis) in or about September 2001. Building commenced in about October 2001. Later, the plaintiff and the first and second defendants fell into dispute. Some claims for progress payments were met. Others were not paid. The first and second defendants took the view that there had been defective work and that overpayments had been made. The contractual arrangements were brought to an end."
5. Basten JA, with whom Mason P agreed, upheld the appeal and held that the professional negligence claim Mr Grygiel desired to bring against Mr Baine was a "building claim" within s 48A and thus the Tribunal had jurisdiction to hear that claim.
6. In His Honour's judgment his Honour refers to the first and second limbs of "the definition". It is apparent from [64] of his Honour's reasons that his Honour was there speaking of the definition of "building claim". The first limb was whether the claim arose from a supply of goods or services under a contract. The second limb was whether the claim arose under a contract that was collateral to a contract for the supply of building goods or services.
7. In our opinion the ratio of Grygiel is found at [59] - [63] of Basten JA's judgment, and more particularly in [62] and [63]. His Honour said: "[59] By reference to the first limb of the definition, the question in this case was whether the claim for damages might be said to "arise from" a supply of building services, in circumstances where the loss allegedly suffered flowed from the failure of the solicitor to advise that, without compliance with the statutory pre-conditions of the Home Building Act, the builder would not be able to recover for the services provided. ... The causal relationship between the legal advice and the supply of services for which a contractual price could not be recovered is apparent from those pleadings. Without establishing that causal relationship, the Claimant must fail. However, if the causal relationship is established, it is clearly arguable that the loss suffered would "arise from" the supply of building services. [60] If this reasoning is correct, the same result would presumably apply where the solicitors who advised the builder had nothing to do with the homeowner. It might also apply where the advice given did not relate to the Home Building Act, nor obligations under it, but rather concerned doubts the builder had as to the assets of the other contracting party and, for example, the failure of the solicitor to ascertain whether the other party in fact owned the premises on which the work was to be undertaken. If the builder is not paid for the supply of building services, it is equally possible to say that the claim will arise from the supply of the building services and from the negligent legal advice. In the case where, as a result of negligent legal advice, the contract under which the building services were supplied is not in writing the connection will be closer. [61] Similar questions will arise on the other side of the record. Thus, if a homeowner obtains legal advice in relation to a contract entered into with a builder, which does not allow for recovery in the case of defective work, the loss suffered by the homeowner may equally be said to arise from the defective work and from the negligence of the solicitor. [62] The question is whether each of these cases gives rise to a "building claim" for the purposes of s 48A. In my view, the cases in which the section is satisfied include those which specifically involve the terms of the contract between the homeowner and the builder. The case where the negligence of the solicitor was in failing to comply with a request to search the title to see if the occupant having the work done was in truth the homeowner, would not involve a "building claim" because, whilst the supply of building services provides the occasion on which the builder suffers a loss, the claim against the solicitor gives rise to no substantial dispute about the nature of the supply or the terms on which the building services were supplied. In such a case the claim should not be characterised as a claim for a specified sum arising from the supply of building services. This construction may be understood to flow from a reading of the definition of "building claim" as a whole and adopting a purposive approach, consistent with the objects and scheme of the Home Building Act. [63] Whilst such a line must be drawn in an appropriate case, in my view the claim in the present case is a building claim because, as pleaded, it related to the terms on which the builder supplied building services." [Emphasis ours]
8. Grygiel was a case in which building work had commenced (albeit not completed), and that fact set the context for what Basten JA said at [57] and [58]. In those passages his Honour said: "[57] It is not necessary to determine whether, in relation to the first limb of the definition, services can be supplied "for or in connection with" the carrying out of residential building work, for the purposes of the definition of "building goods or services", where no residential building is in fact carried out. On one view, the definition of "residential building work" is not limited to activities, such as laying foundations and painting a building, on site, but extends to work of a preparatory nature. Alternatively, preparatory work could be said to have a sufficient connection with the carrying out of building work because its purpose was to give rise to residential building work and it had a sufficient causal nexus with such work: see generally, Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45 at 47-48 (Brennan, Deane and Gaudron JJ). Accordingly, it is at least arguable that project management arrangements, of the kind address in both Collings Homes cases, would fall within the definition of "building claim". Were that not the case, distinctions would need to be drawn which might have an arbitrary result, at least from the perspective of the homeowner. Thus, where an architect or project manager provides plans and designs, locates a builder and coordinates and supervises the actual building work, any loss suffered as a result of inadequate coordination and supervision would fall within the building claim, but other conduct would not. [58] That is not to say that the jurisdiction of the Tribunal under the Home Building Act should be expanded beyond the proper construction of the terms used in Pt 3A. The fact that the Tribunal has a jurisdiction under that Part up to $500,000, whereas its current jurisdiction under the Consumer Claims Act is limited to $25,000, demonstrates the need to maintain proper limits on the jurisdiction. Nevertheless, to the extent that the statutory terminology permits, those limits should not be arbitrary, nor should an unduly restrictive construction be given to the words of the statute, especially to the extent that they mirror the terminology of the Consumer Claims Act. Of particular concern would be a construction which meant that services of a project manager might fall within the definition of "building claim" where residential building works actually eventuated, but not otherwise. Such a distinction can be avoided if the phrase "the carrying out of residential building work" is treated as adjectival, in the sense that it is descriptive of the services with which a connection must be established, rather than being treated as a factual pre-condition to the necessary connection." [Emphasis ours]
9. As we read Grygiel, its ratio is that set out in [62] and [63] of Basten JA's judgment. That is, a claim may be a building claim if it specifically involves the terms of the contract between the homeowner and the builder.
10. This appears to be contrary to the holding of Wood CJ at CL in Provincial Homes at [59] where his Honour said that while it may be relevant to refer to any contractual arrangement between the parties to determine what services were to be supplied, the mere fact that the contract included a commitment to construct a dwelling will not, of itself, be enough to attract jurisdiction, and that the touchstone for jurisdiction depended on the services supplied from which the claim arose. It also appears contrary to the reasoning of McClellan J in Woolfe that the focus is on the categorisation of the goods or services supplied and appears to be contrary to the reasoning of Malpass M in Collings Homes at [33] and [34] (as McDougall J observed in AIM). However in Woolfe, there was a factual distinction which may have been significant. The case concerned an agreement to provide services concerned with assessing the redevelopment outcome of a property [1] and the Court held that the residential building work is confined to "building work in pursuance of the physical construction or alteration of a dwelling. It does not extend to goods or services provided in the course of considering the feasibility of the redevelopment..." [18]. Here, the builder was required to do more than consider the feasibility of the proposed building.
11. However, the ratio of Grygiel did not include that which is set out in [57] and [58] of his Basten JA's judgment, as his Honour expressly said that it was not necessary to determine a number of matters, and that "on one view" the definition of "residential building work" was not limited to activities such as laying foundations and painting a building, but extended to work of a preparatory nature.

Stevens

1. Our conclusion that [57] and [58] of Basten JA's judgment did not form part of Grygiel's ratio is fortified by the decision of Bell J, as her Honour then was, in Stevens v Gary Lewin t/a Gary Lewin Architecture [2006] NSWSC 1232.
2. At [40] her Honour said: "In Grygiel Basten JA considered, without finding it necessary to decide, that preparatory work may have a sufficient nexus to the carrying out of residential building work to fall within the first limb of the definition of a building claim." [Our emphasis]
3. Her Honour then went on to decide the case, at [51], on the basis that neither of the two claims the subject of consideration were building claims because they arose out of the architect's agreement with the owner, and not the builder's contract with the owner.

Vero

1. In Vero Insurance Ltd v Buckle; Reynell v Buckle [2008] NSWSC 73 Master Malpass heard an appeal from the Consumer, Trader and Tenancy Tribunal, which decided that it did have jurisdiction to hear a dispute about the alleged breach of Terms of Settlement which related to the settlement of a building dispute. Master Malpass agreed on the question whether the claim was a "building claim", but held that that claim was out of time under s 48K(3) of the HBA and, for that reason, the Tribunal lacked jurisdiction to hear the claim. On the question of "building claim" the Master seems to have applied the ratio of Grygiel as we perceive it. At [48] - [53] his Honour said: [48] The application claims payment of a specified sum of money. The Tribunal will have jurisdiction if the claim is one that arises from either a supply of building goods or services or arises under a contract that is collateral to a contract for the supply of building goods or services. [49] The relevant dictionary meanings attributed to the word "arising" invoke the concepts of "to come into being", "to originate", "to emerge" or "to result from". [50] In Grygiel v Baine [2005] NSWCA 218, observations were made concerning the approach to be taken to the construction of Pt 3A (see Basten JA at, inter alia, [58]). [51] There has been a supply of building goods and services by Reynell to the Buckles subsequent to the building contract. The supply of building goods and services gave rise to the disputes that were the subject of the agreement comprised in the Terms of Settlement. [52] Reynell places emphasis on the claim being founded on breach of the Terms of Settlement and it is said that as such it cannot be characterised as a "building claim". In my view, this approach misconceives the task that has to be undertaken by reason of the language of the section. [53] The question is whether the claim for breach of the Terms of Settlement arises from that supply of building goods and services. In my view, it does. What will fall within the definition will depend on the facts of each particular case. It seems to me that the claim which the Buckleys now wish to prosecute had, inter alia, its origin in the supply of building goods and services."
2. Thus, the Master reasoned that if the claim made in the proceedings came into being, originated from, emerged or resulted from the supply of goods or services under such a contract, it was a building claim.

Resolving the Conflict between Woolfe, Collings Head, Provincial Homes and Grygiel

1. The ratio of Grygiel, that one could look to the nature of the supply, or the terms on which the building services were provided, seems directly inconsistent with the reasoning process in Provincial Homes (at [56]) that one only looks at whether the services supplied (and from which the claim arose) fell within the meaning of "building services" in what is now s 48A of the HBA, and (at [59]) that whilst any contractual arrangement may be relevant to determine what services were to be supplied, the mere fact that the contract includes a commitment to construct a dwelling will not, of itself, be enough to attract jurisdiction.
2. It also seems directly inconsistent with the reasoning process in Collings Head and possibly inconsistent with Woolfe, in that in both of those cases the focus of attention was limited to the categorisation of the services as was the case in Provincial. It is arguable that the result in each of those cases would not have differed had the ratio in Grygiel been applied, but that need not be explored.
3. The significance of the ratio in Grygiel, and its inconsistency with the reasoning process in Woolfe, Collings Head and Provincial Homes is that, in our opinion, Grygiel impliedly overrules the reasoning in those three cases. If that reasoning process has been overruled, we do not consider ourselves bound by the holdings in those first instance cases as to what is, or is not, "residential building work" because their Honours' consideration of that issue was part of their reasoning process on jurisdiction which are inconsistent with that in Grygiel.
4. In those circumstances, the obiter in Grygiel as to what is or is not "residential building work" may be applied by us without our decision being in conflict with the ratio of the otherwise binding authorities of Woolfe, Collings Head and Provincial as to the meaning of "residential building work".
5. We note that Grygiel was considered by the Appeal Panel in Allcastle Homes Pty Ltd v Wilkinson [2016] NSWCATAP 3. In that case the Appeal Panel held that the passages of Basten JA's judgment we regard as obiter were binding. With respect, we do not agree that those passages are binding because they were not part of the ratio of Grygiel. Be that as it may, and for the reasons we have given, we consider that we are free to follow Basten JA's obiter observations as to the meaning of "residential building work".

The Resultant Statutory Interpretation

1. Despite Basten JA expressing that "on one view" and "it is at least arguable" that "residential building work" is not limited to activities such as laying foundations and painting a building, but extends to work of a preparatory nature, it seems tolerably clear that that was the view his Honour preferred. Bell J in Stevens and McDougall J in AIM seem to have read his Honour's judgment in that way.
2. The Builder submitted that Basten JA's reasoning was confined to jurisdictional matters (involving the expression "for or in connection with the carrying out of residential building work") and not to the meaning of the narrower expression "residential building work" in ss 92 and 94.
3. Whilst it is true that "residential building work" is not preceded by the words "for or in connection with the carrying out of" in ss 92 and 94, Basten JA, at [57], made the narrower point that: "On one view, the definition of "residential building work" is not limited to activities, such as laying foundations and painting a building, on site, but extends to work of a preparatory nature."
4. In that passage his Honour was referring to the definition of "residential building work" in clause 2 of Schedule 1, and not the wider expression "for or in connection with the carrying out of residential building work" found in s 48A. Therefore, we do not accept the Builder's submission that Grygiel was not concerned with the meaning of the term "residential building work" but only with jurisdictional questions.
5. Subsequent to the passage we have quoted at [265] above his Honour goes on to say that: "Alternatively, preparatory work could be said to have a sufficient connection with the carrying out of building work because its purpose was to give rise to residential building work and it had a sufficient causal nexus with such work ..."
6. In that passage, as we read his Honour's judgment, his Honour was there referring to the expression "for or in connection with the carrying out of residential building work" because his Honour spoke of a "sufficient connection".
7. Therefore, his Honour was setting out two pathways to a finding of jurisdiction. The first was a broader (than in Woolfe, Collings Homes or Provincial Homes) interpretation of residential building work". The second was a broader (than in Woolfe, Collings Homes or Provincial Homes) interpretation of "for or in connection with the carrying out of residential building work".
8. In our opinion, Basten JA's preferred view of the meaning of "residential building work" is contrary to the views expressed in Woolfe, Collings Homes and Provincial and should be preferred.
9. We would add to his Honour's reasoning by drawing attention to the words "involved in" in the definition of "residential building work". The ordinary dictionary definition of the word "involved" includes having or including (something) as a necessary or integral part or result, connected by participation or association. Its synonyms include associated with, connected with and concerned with.
10. Those words, "involved in", were not expressly considered in the authorities to which we have referred. Rather, attention was given to the word "arise" in the definition of "building claim" and "for or in connection with" in the definition of "building goods or services". But it was perhaps the words "involved in" which Basten JA had in mind when his Honour said in [57], without expressly stating why, that: "On one view, the definition of 'residential building work' is not limited to activities, such as laying foundations and painting a building, on site, but extends to work of a preparatory nature."
11. Interpreting the expression "involved in" is consistent with its dictionary definition and its synonyms accommodates the approach and result in AIM Partnership v Rathchime [2010] NSWSC 860.
12. The legislation is beneficial legislation and needs to be interpreted having regard to its purpose or object per s 33 of the Interpretation Act 1987 (NSW).
13. The HBA itself says it is: An Act to make provision concerning the residential building industry and certain specialist work; and for other purposes.
14. The residential building industry is not confined to the construction of dwellings but is also concerned with the preparatory or preliminary work needed to be done, and done properly, in order for dwellings to be properly constructed. The HBA does not say, for example, that it is to make provision concerning residential construction work and certain specialist work. Interpreting the provision more broadly as we have identified would accord with the purpose of the HBA to regulate the "residential building industry".
15. Further, there does not seem to be any logical reason why Parliament would require insurance for the construction phase of a dwelling, and yet not require insurance for the necessary preparatory work for that construction phase. A failure by a builder to complete preparatory work, or to do preparatory work with due care and skill to take but two examples, could be as injurious to a homeowner as failing to complete the construction of a dwelling or failing to undertake construction with due care and skill.
16. As Basten JA also observed, arbitrary results would flow from the more narrow view taken of the meaning of the terms mentioned, and would be avoided (completely or largely) by giving that term a broader interpretation.
17. In Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 McHugh, Gummow, Kirby and Hayne JJ said of the common law rules of statutory interpretation (at [69], citations and footnotes omitted): "[69] 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. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out 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'. Thus, the process of construction must always begin by examining the context of the provision that is being construed."
18. The language and purpose of the provisions relating to insurance seem to us to favour an interpretation of residential building work as including the preparatory work which precedes construction.
19. We do not accept the Builder's submission that professionals undertaking preparatory work for the construction of a dwelling, such as structural engineers and solicitors for example, would themselves be required to take out HOW insurance because of the terms of s 98(1) of the HBA which we have set out at [213] above.
20. In short, s 98 says that the HBA does not require persons who do work for a person required to take out HOW insurance to themselves obtain HOW insurance.
21. In Australasian Concrete Services v Multiplex Constructions [1999] NSWSC 1140 the plaintiff was a sub-contractor to the defendant head-contractor. The sub-contractor had agreed with the head-contractor to supply and install Rapidwall panels on stage 1 of the project. Those walls were part of the head contract works to be performed by the head-contractor.
22. Disputes arose between the parties. One dispute concerned the head-contractor's contention that the sub-contractor was required to take out HOW insurance pursuant to s 92 of the HBA. The legislation considered in that case was not identical to that applicable in this case but is not different in any relevant way.
23. Hunter J determined that the then s 98(1)(a) of the HBA applied to sub-contractors. His Honour said at [31]: "In the written submissions on behalf of Multiplex reliance was placed upon the heading to the section as evidencing a legislative intention to restrict the ambit of s 98 to employees "and others of that ilk, such as consultants", relying upon the operation of s 35(4)(b) of the Interpretation Act 1987. However, during the course of oral submissions that proposition was abandoned, that is, to the extent that it relied upon the terminology of the heading to the section. However, in my view, whether one has regard to the heading or not, the section should not be construed to have the limited operation advanced on behalf of Multiplex. It is wide enough to embrace a sub-contractor for works in respect of which the head contractor is required to obtain insurance pursuant to Pt 6 of the Act. However, I do not think that it follows that s 92 has no application to sub-contractors generally.
24. The final sentence was expanded upon by his Honour at [35]: "As it happens, I think s 92 is capable of extending to sub-contractors, but not in the way submitted by Multiplex. That section prohibits a person from contracting to do any residential building work "unless a contract of insurance that complies with [the] Act is in force in relation to the proposed work" (emphasis added). S 92(1) does not say that the contract of insurance is one that is required of the sub-contractor under a head contract where the head contractor is obliged to insure under s 92. All that is required is that there be a contract of insurance in force in relation to the work. That requirement is satisfied by the head contractor's contract of insurance."
25. Thus, the head contractor's policy will cover the work of sub-contractors.
26. This is confirmed by reg 40(3) of the Home Building Regulation 2014 which sets out various requirements for the insurance required by Part 6 of the HBA (which Part includes ss 92 and 94). That sub-regulation says: The insurance contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
27. Therefore, we reject the Builder's submission that the broader interpretation of "residential building work" would require sub-contractors or consultants to the head or principal contractor to themselves take out HOW insurance.
28. The Owner also directs our attention to reg 40(2)(a) of the Home Building Regulation 2014 which is set out at [215] above. That regulations says that HOW insurance must provide cover for, inter alia, loss or damage resulting from faulty design, where the design was provided by the contractor. The Owner says that that regulation may be used as an aid to the interpretation of ss 92 and 94 of the HBA, the point being that such design work is preparatory work, and if the regulation requires HOW insurance to cover it then ss 92 and 94 must extend to include preparatory work.
29. As logical as that submission may be, regulations do not fall within s 34 of the Interpretation Act 1987 (NSW) as matters that may be considered in interpreting statutes and so may not be used as an aid to the interpretation of provisions in the HBA.
30. We do not accept the Builder's submission that if a HOW insurer was asked it would say that it did not insure preparatory work and only insured actual construction work done. An insurer's opinion as to what a policy covered is neither admissible nor relevant to the question of statutory construction.
31. The result of what we have said is that, in our opinion: 1. The construction of a dwelling refers to the building process itself (such as the laying of foundations and painting a building). 2. Work that is "involved in" (meaning included as a necessary or integral part, connected by association, associated with, connected with or concerned with) the construction of a dwelling is "residential building work". Thus, work of a preparatory nature (that which precedes construction) is "involved in" the construction of a dwelling if that work is included as a necessary or integral part of the construction, or associated with, connected with or concerned with the construction work. 3. The "carrying out of residential building work" is descriptive of (and not a factual pre-condition to) the goods or services with which a connection must be established. 4. Goods or services supplied could be said to be sufficiently "connected with" the carrying out of residential building work if: 1. their purpose was to give rise to residential building work; and 2. they had a sufficient causal nexus with such work. 1. A building claim may "arise" from the supply of building goods or services under a contract if the claim specifically involves the terms of the contract between the homeowner and the builder.
32. What we have said above is, of course, subject to the statutory exclusions that may appear, for example, in regulations [see the concluding words in s 48A(1)] and in Sch 1, cl 2(3) (exclusions from the definition of "residential building work").

Did the Builder Do Any Residential Building Work

1. The Builder submits it did not do any residential building work (although such work would have been done had the Contract not been terminated) and therefore it was not required to take out HOW insurance as required by s 92 of the HBA, and thus is not precluded from bringing his claim for damages against the Owner by s 94.
2. Given the views we have expressed above we think the Tribunal was correct in finding that the work for which the Builder was claiming in these proceedings (excluding the commission) was residential building work for the purposes of ss 92 and 94 of the HBA.
3. The non-commission preliminary work was included as a necessary or integral part or result of the construction of a dwelling as set out in the Contract. Such work was connected by participation or association with that dwelling by the terms of the Contract between the Owner and Builder.
4. It follows that we do not accept the Builder's submission that the Tribunal erred in finding that the preliminary work was "residential building work" within the meaning of that term in ss 92 and 94 of the HBA and thus dismiss ground 1 of the appeal.

Ground 2: Insurance

1. We have set out a summary of the Tribunal's reasons on the insurance issue at [44] - [57] above. We do not consider that the Tribunal erred in rejecting consideration of the non-cancellation argument. That is because we agree with the Tribunal that it would have been procedurally unfair to the Owner for the Tribunal to have considered the argument.
2. The result of that conclusion is that the Tribunal correctly found that the policy (assuming other matters in the Builder's favour) was cancelled on 3 January 2017, and thus the Builder did not comply with the HBA. As it did not comply with the HBA the preclusion in s 94 of the HBA operated against the Builder.
3. The non-cancellation argument's success depends upon two things: holding that the Insurance Contracts Act applies; and finding that QBE did not give written notice to the Builder as required by s 59 of the Insurance Contracts Act. It follows that the service of notice on the Builder was a factual issue relevant to the non-cancellation argument.
4. The Builder's submissions on the appeal assert that no written notice of cancellation was served on the Builder, but that factual matter was not in issue in the proceedings below and had not been notified to the Owner prior to the hearing.
5. Mr Matheson provided two written statements of evidence which were tendered below. In neither one did he give evidence that the Builder did not receive a written notice of cancellation from QBE.
6. Following receipt of those two statements, Mr Ali provided a witness statement (which was tendered in the Tribunal) to which was annexed the correspondence from QBE referring to the issuance of the certificate of insurance in error and its cancellation. The Builder did not serve or tender to the Tribunal any further witness statement containing evidence that no written notice of cancellation was sent by or received from QBE.
7. At the hearing on 30 November 2017 the Builder sought leave to adduce some further oral evidence from Mr Matheson in relation to the cancellation of the policy.
8. Despite the Owner raising the issue of the cancellation of the policy in its Amended Points of Defence dated 24 March 2017, and the hearing not occurring until 30 November 2017, the non-cancellation argument (as put on this appeal) was not raised in the Builder's Amended Points of Claim (dated 27 February 2017), any Further Amended Points of Claim, was not raised in any Points in Reply (to the Owner's Amended Points of Defence), was not mentioned during the hearing, was not mentioned in oral submissions or the Builder's written submissions which preceded the oral submissions. The non-cancellation argument was first mentioned in the Builder's written submissions dated 31 January 2018 delivered in response to the Owner's written submissions dated 22 December 2017 which followed the close of oral submissions at the hearing on 30 November 2017.
9. It is true that Mr Matheson was asked in evidence whether the Builder had ever been informed that the HOW certificate had been cancelled, to which the answer was in the negative. But at the time of that question and answer the non-cancellation argument had not been notified to the Owner and was not in issue in the proceedings. Other submissions were made about cancellation such as the burden and onus of proof, but the non-cancellation argument now advanced had not been previously raised.
10. Therefore, at the time Mr Matheson gave his oral evidence it would not have appeared to the Owner's counsel to be relevant to any issue between the parties, and not to an argument (the non-cancellation argument) which had not previously been raised.
11. This is confirmed by the Builder's oral submissions delivered the same day as Mr Matheson's oral evidence. In those submissions there was no mention of the non-cancellation argument.
12. Indeed, the Builder's oral submissions (Appeal Book A 456.29 - A 457.28) seem to have accepted that the HOW policy had been cancelled on 3 January 2017. The point made in those oral submissions was that there was no evidence as to the force and effect of the cancellation, the correspondence from QBE was insufficient to prove that QBE had cancelled the policy (a standard of proof submission) and the fact that the policy had been in effect for about a month was sufficient to satisfy ss 92 and 94 (because the sections only required a HOW policy to be "obtained", and once the policy was obtained on 8 December 2016 s 94 was satisfied irrespective of what happened to the policy thereafter).
13. It was only when the Builder delivered further written submissions dated 31 January 2018 that the non-cancellation argument appeared for the first time. No leave was sought by the Builder at that time, or previously, to amend its Amended Points of Claim, or to file Points of Reply, to include the non-cancellation argument.
14. We agree with the Tribunal that the raising of that matter in those circumstances was procedurally unfair to the Owner.
15. Most fundamentally the Owner was denied the opportunity to investigate with QBE whether a notice of cancellation had been sent to the Builder and, depending upon the answer to that inquiry, cross-examine Mr Matheson on the evidence we have identified. If the Builder desired to lead evidence that no written notice of cancellation was received by it from QBE, natural justice required the Owner to be given notice of that allegation in sufficient time to make such investigations as it deemed necessary in relation to that asserted fact.
16. Accordingly, we see no error in the Tribunal's refusal to consider the non-cancellation argument and dismiss ground 2(c).
17. We do not need to consider the submission that the Insurance Contracts Act applies to the HOW insurance purportedly obtained by the Builder because, even if it did apply, the Tribunal was, in our view, correct not to consider the non-cancellation argument.
18. It follows that we agree with the Tribunal's finding that, if a policy was obtained and did cover the work for which the Builder claimed, it was cancelled on 3 January 2017, having only been in existence from 8 December 2016.
19. The remaining challenges in relation to insurance are to the findings of the Tribunal that there was no policy in force [ground 2(a)], or if there was, such a policy did not extend to cover the work done by the Builder and for which it claimed in these proceedings (ground 2(b)).
20. We need not consider those challenges because, even if the HOW insurance was obtained and did cover the work, it was not "a contract of insurance required by section 92" as stipulated in s 94. That is, the preclusion in s 94 is only avoided if there is a "a contract of insurance required by section 92" obtained, either at the time or retrospectively, and in this case it was not.
21. It was not a "contract of insurance required by section 92" because it was only in existence from 8 December 2016 to 3 January 2017, and, for the reasons that follow, that term failed the requirements of the HBA.
22. Section 92 provided that a person must not do residential building work under a contract unless a "contract of insurance that complies with this Act is in force in relation to that work".
23. Sections 99, 102 and 103B of the HBA set out a number of requirements of that insurance. Section 103B(1) and (2) provided: 103B Period of cover (1) A contract of insurance must provide insurance cover for loss arising from non-completion of the work for a period of not less than 12 months after the failure to commence, or cessation of, the work the subject of the cover. (2) A contract of insurance must provide insurance cover for other loss insured in accordance with this Act for a period of not less than: (a) in the case of loss arising from a major defect in residential building work (within the meaning of section 18E) - 6 years after completion of the work, or (b) in the case of any other loss - 2 years after completion of the work.
24. As can be seen, if the policy was only in effect from 8 December 2016 until 3 January 2017, it did not provide the cover for the periods set out in sub-sec (2). There was no finding when work ceased for the purposes of sub-sec (1), but that date was either the date of the Owner's repudiation (7 January 2016) or the date of the Builder's termination of the Contract (4 February 2016). In either case, and assuming the policy obtained by the Builder was retrospective in operation, it did not provide cover for loss arising from non-completion of the work for 12 months from either 7 January or 4 February 2016, it having been cancelled on 3 January 2017.

Ground 3: Lost Profits

1. Ground 3 contends that, on the assumption insurance was required, and had not been obtained, the Tribunal erred in holding that s 94 precluded the Builder from claiming for lost profits.
2. In essence, the Builder submitted that the express terms of s 94 are limited to "residential building work done" and lost profits arising from the Owner's wrongful repudiation of the Contract do not fall within the term "residential building work done".
3. Section 94 (set out at [212] above) provided (at the date the contract was entered into) that if a contract of insurance required by section 92 was not in force in relation to any residential building work done under a contract the contractor who did the work was not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work and was not entitled to recover money in respect of that work under any other right of action (including a quantum meruit).
4. The terms of s 94 at the time the Contract was entered into were different to those applying in Eddy Lau Constructions. The terms of s 94 considered in that case are set out at [144] above but did not include the words "in relation to that work" or "in respect of that work" which appeared in s 94 subsequent to its amendment by the Home Building Amendment Act 1999 (NSW).
5. The Builder's submission, in essence, is that s 94 has been narrowed by the inclusion of the words identified such that it is only precludes claims for relief in relation to particular work, and not lost profits. That is because lost profits arise from the wrongful repudiation of a contract and relate to work agreed to be done but not in fact done.
6. The earlier version of s 94 considered in Eddy Lau Constructions provided that a person who entered into a contract in contravention of section 92(1) or 93(1) was not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract or to recover money in respect of work done under the contract under any other right of action (including a quantum meruit action).
7. In Eddy Lau the plaintiff was the builder and the defendant the owner of land. The builder sued the owner for various amounts. One defence raised by the owner was the builder's failure to take out HOW insurance with the consequence that the builder was precluded from recovering any sum for any breach of contract by the owner.
8. In the earlier decision in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd & Anor [2001] NSWSC 1136 Einstein J considered three separate questions which were ordered to be heard and determined separately and in advance of all other issues in the proceedings. His Honour considered the meaning of the earlier version of s 94. His Honour answered question 1(a) as follows (at [34]): "Question 1(a) s92 and s94 of the Home Building Act 1989(NSW) in force at the relevant time precludes the plaintiff from recovering as against the first defendant any damages or other remedy in respect of a breach of contract or the recovery of money in respect of work done under the contract."
9. Subsequent to Einstein J's decision the builder commenced fresh proceedings and relied upon the terms of s 94 after amendment in 1999 and 2001. That is the version of s 94 which applies in the present case.
10. In the subsequent hearing determined by Barrett J his Honour found that the owner had repudiated the building contract, the builder had accepted that repudiation and terminated the contract. His Honour said the following about the amended s 94 at [39]: "The natural consequence of these events would be that the contract came to an end. In the present case, however, it is necessary to consider whether that consequence is forestalled by s 94 of the Home Building Act, in so far as that section, in both the form in which it existed at the time and in its present form, says that a person in the position of the plaintiff "is not entitled … to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract". Einstein J decided in December 2001 that the section in its earlier form precluded the plaintiff's claim for damages for breach by repudiation, as well as recovery of any other remedy in respect of any such breach. The position under the present section which, in material respects, is unchanged must be the same."
11. At [62] his Honour said: "The policy behind s 94(1A) is, clearly enough, that the statutory disentitlement under s 94(1) to sue for damages under or otherwise to enforce the contract made in contravention of s 92(1) may be offset by the court's allowing recovery on a quantum meruit basis, provided that it is satisfied, according to the 'just and equitable' criteria, that the builder is deserving of such recovery."
12. Therefore, Barrett J determined that s 94 (as it applies in the present case) precludes claims for damages for lost profit.
13. We are bound by Barrett J's holding as to the meaning of s 94(1). Accordingly, we dismiss ground 3.

Ground 4: The Guarantee

1. The Tribunal held that the Guarantor was not liable to the Builder under the Guarantee in relation to the amounts awarded to the Builder in quantum meruit. The Builder contends this was in error.
2. Clauses 1 and 2 of the Guarantee say: "1. Guarantee The Guarantor guarantees to the Builder the fulfilment of the Owner's obligations under the Contract including but not limited to the due payment of all moneys arising out of the subject matter of the Contract. 2. Indemnity The Guarantor indemnifies the Builder against any claim, loss or damage arising out of the subject matter of the contract caused by or resulting from any non-fulfilment of the Owner's obligations under the Contract." [Emphasis is per the original]
3. It is clear from the Builder's written submissions below that the Builder relied upon both clause 1 and clause 2.
4. The Tribunal said that the Guarantee held the Guarantor liable against any claim, loss or damage arising out of the subject matter of the contract (emphasis by the Tribunal). The Tribunal said that the Builder was awarded a sum in quantum meruit and not damages for breach of contract and therefore, under the circumstances, the Guarantee was not enforceable.
5. The words "claim, loss and damage" appear in clause 2 of the Guarantee, but not clause 1. The words "subject matter of the contract" appear in both clauses. It may be that the Tribunal was only referring to clause 2 and did not address clause 1. Or it may be that the Tribunal thought both clauses contained the two expressions to which we have referred.
6. In any event the reasoning of the Tribunal is not clear and, in our view, the reasons are inadequate. The Tribunal does not explain why the Guarantee is unenforceable, does not set out any reasoning as to the proper construction of the terms of the Guarantee, and does not identify the "circumstances" relied upon or how they made the Guarantee unenforceable.
7. It is trite to say that the Tribunal had a duty to provide adequate reasons, and on this issue, has, in our view, not done so.
8. The next question is whether the Builder should succeed under the Guarantee.
9. General contractual principles of construction apply to the terms of a guarantee or indemnity, with certain modifications which arise from the nature of these types of contract. One of those modifications is, as the Owner correctly submitted, that guarantees and indemnities are generally construed strictly and in favour of the surety.
10. In Simic v New South Wales Land and Housing Corp (2016) 260 CLR 85; [2016] HCA 47 the plurality said (footnotes omitted): "[78] ... The proper construction of each Undertaking is to be determined objectively by reference to its text, context and purpose. As was stated in Electricity Generation Corporation v Woodside Energy Ltd: "[T]he objective approach [is] to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contracts is to be determined by what a reasonable businessperson would have understood those terms to mean … [I]t will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd [2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties … intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'." (footnotes omitted) Proper construction of the undertakings [79] The starting point for the proper construction of the Undertakings is the language used in each Undertaking."
11. In our opinion clause 1 of the Guarantee does not respond in circumstances where the Builder only succeeds against the Owner on the basis of quantum meruit. That is because clause 1 guaranteed the fulfilment of the Owner's obligations "under the Contract" and the claim in quantum meruit did not arise "under the Contract". The cause of action upon which the Builder relied arose from general law principles and arose because the Builder could not claim damages under the Contract.
12. The words "obligations under the Contract" refer to contractual obligations set out in the Contract, and that may arise from a breach of the Contract, but not general law obligations where the cause of action is not contractual.
13. The succeeding words, "including but not limited to the due payment of all moneys arising out of the subject matter of the Contract" do not qualify the words "obligations under the Contract", but are to be read, naturally, as subject to the preceding words.
14. Clause 2 is different. It is not confined by any expression such as "obligations under the Contract". Rather, its subject matter is any claim, loss or damage arising out of the subject matter of the contract.
15. The claim in quantum meruit falls within the meaning of the word "claim" since the ordinary meaning of that words includes a demand or request for something considered one's due.
16. "Arising out of" is a wide expression, and, in other circumstances, such as where appearing in arbitration clauses, is usually given a wide meaning - Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 per Gleeson CJ at p 165. We consider it should be given a wide interpretation in this case.
17. "Subject matter of the contract" is an expression which directs attention not to the contract, but to the subject matter of the contract. "Subject matter" means the topic dealt with or the subject represented in a debate, exposition, or work of art. In this case there are a number of subject matters, but one important subject matter is the work described in and to be done pursuant to the Contract.
18. In our view the Builder's claim in quantum meruit is a claim which arises out of the work described in and to be done pursuant to Contract, and thus arises out of the subject matter of the Contract.
19. The next question is whether that claim has been caused by or has resulted from any non-fulfilment of the Owner's obligations under the Contract. There is little doubt that the claim has arisen from the Owner's repudiation of the Contract and thus from the non-fulfilment of the Owner's obligations under the Contract.
20. It would follow that the Builder would be entitled to indemnity from the Guarantor under clause 2 of the Guarantee but for s 94(1)(b) and the absence of the HOW insurance policy.
21. Section 94(1)(b) says that, if the relevant policy has not been obtained, the contractor is not entitled to recover money in respect of that work "under any other right of action". A claim under clause 2 of the Guarantee is an attempt to recover money in respect of the work done and is a right of action, being an action in contract.
22. Section 94(1A) provides that, should a court or tribunal consider it just and equitable, a contractor may recover money "in respect of that work on a quantum meruit basis".
23. That final expression, as we read it, is not a reference to a cause of action, but rather the basis of how one calculates the amount owing. That is, the amount owing is calculated by reference to the principles applying to actions in quantum meruit. As Edelman J explained in Lampson, quantum meruit is not a cause of action. At [94] his Honour said (footnotes omitted): "... Quantum meruit (more strictly, when pleaded by a plaintiff, a plea to pay quantum mereret) describes a form of action. It was a form of action which, by the 19th century, had been incorporated within indebitatus assumpsit. It said, and says, nothing of the underlying cause of action. It means only "as much as he or she deserved". The cause of action might have been contractual. It might have been part of the category of unjust enrichment."
24. One will observe that in s 94(1)(b) the statute says that a contractor is not entitled to recover money under any other "right of action (including a quantum meruit)". Subsection(1A) does not include the words "cause of action" but says that a contractor may recover on a quantum meruit basis. The ordinary dictionary meaning of the word "basis" refers to a system or principles according to which an activity or process is carried on.
25. Therefore, subsection (1A) seems to refer to a system or principles by which an entitlement is to be calculated, rather than a cause of action.
26. Subsection(1A) also says that it operates "despite section 92(2) and subsection 1". Both s 92(2) and 94(1) are widely expressed provisions which forbid a contractor from demanding or receiving any payment under a contract [s 92(2)] and says that a contractor is not entitled to damages or to enforce any other remedy in respect of a breach of contract committed by the other party to the contract. Neither of those provisions are cause of action specific. That is, they are wide enough to capture causes of action founded upon not only building contracts but also guarantees and indemnities entered into in respect of building contracts.
27. In our opinion, applying the approach to statutory construction set out in Project Blue Sky, the meaning to be given to sub-sec (1A) is that if a court or tribunal considers it just and equitable, a contractor may recover money from a contracting party, guarantor or indemnifier, calculated by reference to quantum meruit principles. Of course this general statement is dependent upon the terms of the guarantee.
28. It seems to us that Parliament intended a contractor, disentitled from claiming damages because of a failure to obtain the relevant insurance, but able to recover monies on a quantum meruit basis from the other contracting party because a court or tribunal considered it just or equitable to make such an award, would also be able to recover the same sum from a guarantor or indemnifier in those circumstances (subject to the terms of the guarantee or indemnity).
29. Therefore, whilst we agree with the Builder that the Tribunal erred in its reasoning, we find that the Tribunal's result was correct. Accordingly, we dismiss ground 4.

Ground 5: Adequate reasons

1. The Builder submits the Tribunal failed to provide adequate reasons in relation to its findings which are the subject of grounds 1, 2 and 4.
2. The requirements for reasons were summarised in Qushair v Raffoul [2009] NSWCA 329 at [52] ff per Sackville AJA (Campbell JA and Bergin CJ in Eq agreeing) and need not be repeated.
3. Whilst there is some substance to some of the Builder's complaints as to the adequacy of reasons in relation to grounds 2 and 4, we need not decide this ground. That is because we have dismissed grounds 2 and 4, and in deciding those grounds we have decided the issues about which the Builder complains in relation to adequacy of reasons.

Orders

1. The Appeal Panel makes the following orders.
2. In the Owner's appeal no. AP 18/14573: 1. Appeal allowed. 2. Set aside the Tribunal's orders dated 26 February 2018. 3. In lieu thereof, order the proceedings be dismissed.
3. In the Builder's appeal no. AP 18/17165: 1. Extend time for the lodgement of the Notice of Appeal up to and including 12 April 2018. 2. Appeal dismissed.

Costs

1. The Tribunal considered that each party had been partly successful and ordered each party to pay their own costs of the proceedings.
2. We make the following directions as to costs: 1. the Owner is to file and serve any submissions setting out its position on costs of the appeal and of the proceedings below, and any submissions in support, limited to four pages, within 14 days of the date of these orders; 2. the Builder is to file and serve any submissions setting out its position on costs of the appeal and of the proceedings below, and any submissions in support, limited to six pages, within 28 days of the date of these orders; 3. the Owner is to file and serve any submissions in reply, limited to two pages, within 35 days of the date of these orders; 4. the parties' submissions are to include submissions identifying the power to award costs upon which the party relies and whether an order should be made dispensing with a hearing of any costs application pursuant to s 50(2) of the NCAT Act.

Endnote

1. (1893) 6 R. 67, H.L I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 28 September 2018