The Owners of Strata Plan 43551 v Fair Trading Administration Corporation; Walter Construction Group Limited v Fair Trading Administration Corporation

CATCHWORDS : ADMINISTRATIVE LAW - TRIBUNAL - JURISDICTIONAL OR FACTUAL ERROR - ESTOPPEL - PROCEDURAL FAIRNESS - CONSTRUCTION OF CLAUSES IN STATUTORY INDEMNITY SCHEME - SEPARATE QUESTIONS DIRECTED Building Services Corporation Act 1989 LEGISLATION CITED : Fair Trading Act 1987 Home Building Act 1989 Administration of Papua & New Guinea v Daera Guba 1972 130 CLR 353 Builders Registration Board of Queensland v Rauber 1983 57 ALJR 384 FTAC v Owners of Strata Plan 54421 [2003] NSWSC 338 FTAC v Tebbutt [2003] NSWSC 340 Henderson v Henderson 1843 3 Hare @ 115 Leung v The Minister 1997 79 FLR 400 CASES CITED : McCallum Developments Pty Ltd v Owners of Strata Plan 53908 [2002] NSWSC 1103 Minister for Immigration v Bhardwaj 2002 209 CLR 603 P & V Sammut Homes Pty Ltd v Building Services Corporation, unreported, NSWSC 24 April 1997 Port of Melbourne Authority v Anshun Pty Ltd 1981 147 CLR 589 R.T. & Y.E. Falls Investments Pty Ltd v New South Wales [2001] NSWSC 1027 The Minister v Kurtovic 1990 92 ALR 93 The Minister v Yusuf 2001 180 ALR 1 PARTIES : The Owners Strata Plan 43551 v Fair Trading Administration Corporation Walter Construction Group Limited v Fair Trading Administration Corporation FILE NUMBER(S) : SC 30087/03; 30112/03 G. Flick SC with J. Young (P 30087/03) COUNSEL : M. Pembroke SC with R. Dubler (P 30112/03) A. Robertson SC with D. Meltz (D) Andreones Pty Limited (Owners Strata Plan 43551) SOLICITORS : Corrs Chambers Westgarth (Walter Construction Group) D. Catt (Solicitor for Fair Trading)

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

30087/03 - THE OWNERS STRATA PLAN 43551 v FAIR TRADING ADMINISTRATION CORPORATION

30112/03 - WALTER CONSTRUCTION GROUP LTD v FAIR TRADING ADMINISTRATION CORPORATION

1 HIS HONOUR: "The requirements of good administration, and the need for people affected directly or indirectly by decisions to know where they stand, mean that finality is a powerful consideration". Per Gleeson CJ, Minister for Immigration v Bhardwaj 2002 209 CLR @ 603. 2 Between about October 1991 and December 1992 Walter Construction Group Limited (Walter) then named Concrete Constructions Group Limited built a nine-storey residential tower, with a ground floor commercial space and underground car park at Bondi Junction. The owners of Strata Plan 43551 (the owners) became the proprietor of the land from a developer in a conventional fashion. Multiple defects were claimed to be appearing in the building. Pursuant to the Home Building Act 1989 (formerly entitled the Building Services Corporation Act) a potential indemnity became available to the owners in respect of defects in accordance with the Building Services Corporation Comprehensive Insurance Scheme (the scheme). The scheme is administered by the Fair Trading Administration Corporation (FTAC). No one suggested that there was any need for present purposes to distinguish FTAC from the Department of Fair Trading and I shall, as a matter of convenience, simply refer to the former. 3 Several claims for the cost of rectification of items were paid under the scheme to contractors with the owners. From time to time FTAC advised Walter of these payments. Relevant statutory provision placed Walter at risk of FTAC recovering the amount of such payments from it. 4 There remained outstanding, however, significant claims by the owners under the scheme. These were lodged pursuant to clause 5(1)(d) of the scheme. I shall also set out sub-paragraph (e) having regard to a reference in the preamble to a set of separate questions which will later be recited herein. The clauses are: "5. (1) Subject to the maximum payment provisions (clause 6), the method of assessing claim benefits (clause 8) and the exclusions specified in this Scheme (clause 9), the Corporation will indemnify the following losses reasonably incurred by a beneficiary in respect of residential building work: ………. (d) losses in rectifying defects in insured building work or insured owner-builder work due to: (i) bad workmanship; or (ii) faulty or unsuitable materials; or (iii) failure to comply with plans and specifications; or (iv) faulty design used by the contractor in a design-and-construct contract; or (v) faulty design provided by the beneficiary when the design fault should have been obvious to a reasonably competent holder of an appropriate licence; or (vi) failure to comply with legislation or subordinate legislation applicable to the work;

(e) losses in repairing: (i) damage caused to the dwelling by a defect in the insured building work or insured owner-builder work; or (ii) damage to the dwelling in or on which insured building work is done, being damage caused by the holder of the licence doing the work under a contract or by that holder's agents or employees. " 5 The owners are beneficiaries within the meaning of that expression in the scheme. 6 By letter dated 15 January 1999 FTAC advised the owners (through its strata manager): "Following consideration of this matter for additional works, I regret to advise that your claim under Clause 5(1)(d) has been declined. In reaching this decision it was considered that, based on all of the information available, a valid claim could not be established for the following reason(s): Under the Comprehensive Insurance Scheme, building work is covered for three years for general defects and seven years for major structural defects, from date of contract or substantial commencement, whichever is the later. All items of your additional claim have been classified as general defects and as such have been notified three years and three months outside the statutory time limitation. " 7 It might be observed that "general defects" is not an expression found in the scheme but no doubt it is a convenient way of distinguishing what are other than "major structural defects" which is an expression to be found there. 8 The owners exercised a right of appeal which was heard by a body eventually titled The Consumer Trading and Tenancy Tribunal (the Tribunal). On 5 November 2001 the Tribunal "set aside the decision made by the respondent (FTAC) on 15 January 1999 and in its place find that the Corporation is liable to indemnify the applicant (the owners) with respect to all the losses relating to the defects the subject of this appeal." 9 Following this decision, FTAC appealed to this Court pursuant to provisions which limit such an appeal to error of law. On 12 July 2002 Burchett AJ dismissed the appeal. 10 On 24 October 2002 FTAC wrote to the solicitors for the owners: "I wish to advise that approval has been granted to settle your claim for the amount of $852,598 under Clause 5(1)(d) of the Comprehensive Insurance Scheme ("CIS"). "

This has been referred to as "the earlier decision". 11 As above noted, the scheme has maximum payment caps (clause 6) and, making allowance for the claims already made and paid, $852,598 is the maximum which the owners could now claim by way of indemnity under the scheme. Although it is common ground that in some circumstances a lump sum payment might be made to a claimant who enters an appropriate deed, that is not an applicable situation in this case. The letter presently under reference sets out procedures in respect of obtaining the release of money from FTAC to pay contractors who carry out rectification work. What was obviously contemplated was that the owners would have a notional credit of the specified amount which would be "drawn down" in favour of contractors who performed aspects of rectification work. 12 The concluding paragraphs of the letter are also significant: "I further note that you have instituted proceedings in the Supreme Court against the contractor, Walter Construction Group. It may be that as a result of such proceedings, you recover from the contractor a sum greater than the difference between the maximum amount for which FTAC is liable under the CIS and the total costs to you of the rectification work. Please provide your written confirmation, by return, that should this prove to be the case, upon the hearing or settlement of the Supreme Court proceedings, you will immediately: 1. Advise FTAC of the particulars of any such Judgment or Terms of Settlement in your favour and you will immediately 2. Refund to FTAC whatever moneys FTAC has paid to you under the CIS." 13 There is some ambiguity about when written confirmation was sought. Ms Nairn, the owners' solicitor understood that what was required was notification when hearing or settlement took place. Neither has yet occurred. The other view is that confirmation was sought "by return" and that there would be compliance with the request in the future. Having regard to the issues presently before the Court I do not find that anything turns upon this difference. 14 In 2001 the owners commenced action against Walter claiming damages in respect of defects in the building. The owners concede that these are the same defects as were the subject of the insurance claim under the scheme but they assert a shortfall between the damages calculated by reference to cost and availability of insurance under the scheme by reason of the cap on the latter. An estimate of actual damages of $2 million has been mentioned. 15 The action between the owners and Walter was referred by a judge administering the Building and Technology List for mediation. A mediation session was held on 13 August 2003. A solicitor representing FTAC attended as a non party observer. The action was not settled. 16 Mr Elliott, the Director of Insurance Services, FTAC acquired a copy of the pleadings in that action from the solicitors for Walter on 12 September 2003. On the previous day he had attended a conference with the solicitor who had observed the mediation session on behalf of FTAC and with counsel. 17 On 12 September 2003 Mr Elliott also received an e-mail from Ms Nairn, advising, inter alia, that the owners were negotiating to enter a contract for the performance of rectification work. He telephoned her to advise that FTAC was going "to rescind" the relevant authority to pay. 18 This conversation was followed by despatch of a letter that day by facsimile to the owners' solicitors parts of which read: "Since issuing the above letter the Corporation has received information concerning the Supreme Court proceedings commenced by your client against Walter Construction Group Pty Ltd (Walter) (the proceedings). Straesser Poli Little & Associates Pty Ltd (Straesser) Micos Aluminium Pty Ltd and Bettertiles Projects Pty Ltd have been joined to the proceedings by a Cross Claim filed by Walter. It is apparent from paragraphs 8(i)(iv)(v)(vii) & (ix) of the Further Amended Statement of Claim filed on your clients behalf that damages are sought in relation to the same defects that are the subject of the claim lodged with the Corporation under the Comprehensive Insurance Scheme (the CIS). It is also apparent from paragraphs 9, 10 & 11 of the Cross-Claim against Straesser that Walter claims that it had carried out construction pursuant to designs instructions & certificates provided by Straesser. Further, a witness statement by Gavin Rea filed in the proceedings makes reference to instructions being given on behalf of Straesser to proceed with works in circumstances where Mr Rea brought issues of faults in the design to Straessers attention. Were the Supreme Court to make findings in accordance with the matters set out in the paragraph above, or if the available evidence supported such a conclusion in the absence of the Supreme Court being required to determine these issues, the Corporation would not be liable due to the provisions of clauses 9(e) and (g) of the CIS. In addition, clause 8(1)(c) of the CIS provides that in assessing claims the Corporation may set off against its liabilities any amount received by a beneficiary under a settlement with a contractor or the judgment of any Court relating to the head or heads of claims. The pleadings indicate that the Supreme Court is dealing with issues that relate to the heads of claim for which indemnity is sought under the CIS. In the event that your clients have complete success in the proceedings in respect of the items claimed under the CIS, it may be that your client will suffer no loss for which the CIS may provide indemnity. Alternatively, in the event of partial success in the proceedings or the proceedings being settled, any amount awarded or received in settlement may be taken into account by the Corporation in assessing your clients claim. Accordingly, the Corporation revokes the approval contained (in) its letter of 24 October 2002."

This has been referred to as "the later decision". 19 Whilst no challenge was offered to the evidence of Mr Elliott, and I accept his evidence of his personal state of knowledge and the implication that it was only after acquiring information about the litigation between the owners and Walter that the possibility of the provisions in clauses 9(e) and 9(g) being applicable came to his attention, it may be noted that there is, similarly unchallenged, evidence in an affidavit of Mr Dale, the former Commercial Manager (NSW) of Walter, which includes description of a meeting and conversation about the building and the owners' claims with a Mr Kelaart of FTAC. Included in the recounting of conversation is: "DALE: …… I should explain that this project was designed and specified by Architects employed by the Developer, and we acted only as Builders. WCG (Walter) believes that the problems on the roof have come about as the result of design issues, and that this whole claim should have been directed to the Architect. KELAART: I'm sorry, but it doesn't matter to us who was responsible for the design……….." 20 Clause 9 of the scheme schedules some fourteen occasions for exclusions ranging from claims for less than $100 to loss of rent due to late completion. Argument in the present dispute centred upon sub-clauses (e) and (g) but, again, having regard to reference in the preamble of a set of separate questions I will also set out sub-paragraphs (h) and (i). " EXCLUSIONS 9. The Corporation is not liable under the Scheme in respect of: ………. (e) defects due to a faulty design provided by the beneficiary or beneficiary's predecessor in title, if the fault would not have been obvious to a reasonably competent holder of an appropriate licence; or …… (g) defects due to an obviously faulty design, or materials which were obviously faulty or unsuitable, provided by the beneficiary or the beneficiary's predecessor in title when, though the fault or unsuitability was drawn to that beneficiary or predecessor's attention, the beneficiary or predecessor instructed the licensed contractor to comply with the design or to use the materials; or (h) visible defects in insured building work or in a kit home or compulsory or optional I.O.B. work of which the beneficiary should reasonably have been aware when acquiring the dwelling or a kit home or defects in any such I.O.B. work specified in a council letter or notice given when a building certificate is issued or in a report on such work by an approved person; or (i) damage caused by an act of nature the force of which exceeds that allowed for by the relevant Australian Standard or by good building practice; or ……. " 21 On 24 September 2003 the owners commenced proceedings seeking relief in effect against the revocation of approval notified by the later decision. By Statement of Claim filed on 16 December 2003 Walter commenced action against FTAC seeking, inter alia, a declaration that the approval in respect of $852,598 notified to the solicitors for the owners in the letter of 24 October 2002 was "a nullity, void, made without power and ultra vires". 22 Consequent upon interlocutory directions hearings it was ordered that pursuant to SCR Pt 31 r 2, certain separate questions be tried and answered in each action. At the hearing all parties agreed that evidence should be taken as received in both actions and it was so ordered. 23 In the action between the owners and FTAC the questions (the first set) were formulated thus: "Assuming the existence of defects within the meaning of exclusion clauses 9(e) & (g) of the Comprehensive Insurance Scheme (Form 4, Building Services Corporation Regulation 1990 (NSW)) ("the Excluded Defects"):- 1. Whether the failure on the part of the Defendant to rely upon such exclusions:- (a) in refusing the claim on 15 January 1999; (b) in the conduct of the appeal to the Tribunal from that refusal; (c) in the conduct of the appeal from the Tribunal to the Supreme Court; precludes later reliance by it on the Excluded Defects. 2. If the Defendant is not later precluded from relying on the Excluded Defects, whether the decision of the Defendant on 24 October 2002 to approve a payment of $852,598 ("the Earlier Decision") was a nullity by reason of jurisdictional error. 3. If the Earlier Decision was not a nullity, whether it was able to be revoked by the later decision of the Defendant on 12 September 2003 ("the Later Decision"). 4. If it is open to the Defendant to revoke its earlier decision, whether the Defendant is estopped from so doing or is liable for misleading and deceptive conduct. 5. If the Defendant is not estopped from revoking the Earlier Decision and it (is) not liable for misleading & deceptive conduct, then whether the Defendant denied the Plaintiff procedural fairness in making the Later Decision, with the consequence that the Later Decision is a nullity. 6. Whether clause 10 of the Scheme can be relied upon by the Defendant to deny liability. 7. Whether the failure of the Plaintiff to actually carry out rectification work can be relied upon by the Defendant to deny liability. 8. Whether Clause 8(1)(c) of the Scheme prevents the Defendant from indemnifying any loss until the finalisation of the proceedings between the Plaintiff and the builder, or else entitles the Defendant to withhold payment of any assessed loss until judgment or settlement in those proceedings." 24 In the action by Walter against FTAC the questions (the second set) were formulated as follows: "Assuming the existence of defects which are not due to causes specified in clause 5(1)(d) and (e) and/or the existence of defects within the meaning of exclusion clauses 9(e), (g), (h) and (i) (' Excluded Defects ') of the Comprehensive Insurance Scheme (Form 5 Building Services Corporation Regulation 1990 (NSW)) (' Scheme '). 1. Whether the failure on the part of the Defendant to rely upon such exclusions: (a) in refusing the claim on 15 January 1999; (b) in the conduct of the appeal to the Tribunal from that refusal; (c) in the conduct of the appeal from the Tribunal to the Supreme Court; precludes later reliance by it on the Excluded Defects. 2. If the Defendant is not later precluded from relying on the Excluded Defects, whether the decision of the Defendant on 24 October 2002 to approve a payment of $825,598 (' the Earlier Decision ') was a nullity by reason of jurisdictional error. 3. If the Earlier Decision was not a nullity, whether it was able to be revoked by the later decision of the Defendant on 12 September 2003 (' the Later Decision '). 4. Whether clause 10 of the Scheme can be relied upon by the Defendant to deny liability. " 25 Given the traverse of the same matters, it will be convenient to deal initially with the first set. To answer these questions it is necessary to turn to matters of dispute, some of which are based in broad argument and others less so. 26 A dispute revolves around whether FTAC had the power to revoke its earlier decision as notified in the letter of 12 September 2003 by reason of the earlier decision being in the category of jurisdictional error. To determine this, it is apt to examine how, and in what circumstances, the letter of 24 October 2002 came into existence. 27 In 1996 and 1997 claims were made or on behalf of the owners concerning rectification of works to prevent water entry through the roof membrane on the top floor units, and in connection with a walled plant room. Amounts were approved to be paid in respect of these claims. 28 Further claims were lodged on 14 September 1998 and 3 November 1998 relating to failed waterproofing to balconies at level 3, to tiling faults at that level and to the coping of a swimming pool, to distorted aluminium and glass balcony balustrades and leaking window and door units. 29 These claims were rejected in terms of the letter of 15 January 1999 of which an extract is set out above. 30 It is the contention of FTAC that the letter comprehends no more than the determination of a "preliminary" issue, namely that these claims were barred by operation of the limitation provisions in the scheme. It is true that the "statutory time limitation" was the recorded reason for rejection (on the basis that the defects were not major structural defects) but it is also true that the decision was expressed to have been made on "all of the information available". 31 I have already noted the information available via the exchange between Mr Dale and Mr Kelaart. FTAC sought advice from Block Developments Pty Limited as to whether the defects were major structural defects and as to the cause of the defects. A report of 27 June 2000 specifically adverted to movement jointing in tiling and paving as "both a design and construction practice issue". The summary by this consultant reported that all of those problems could have been avoided with "better design and workmanship". 32 It is argued, however, the only determination by the Tribunal and the following appeal was this "preliminary" question of classifying the defects and applying the appropriate limitation provision. I do not accept that the exercise of jurisdiction by the Tribunal was so narrow. It may be noted that, in rejecting an attempt by FTAC to belatedly raise an issue about a notification requirement the Tribunal observed: "It needs to be understood that throughout the pre-trial process, which in this case were lengthy, the Tribunal endeavours to ensure that the parties refine the issues for determination so that the Tribunal can deal with its case load efficiently and expeditiously in accordance with its statutory objectives. This is done in the absence of pleadings. Those issues which are not in issue are taken as admitted." 33 A further indication that the Tribunal was not engaged in a discrete exercise only focussed upon the limitation provision can be drawn from the earlier recording in the reasons for decision: "There are also a series of issues raised by the Applicant with respect to waiver and estoppel, and with respect to a claim for damages against the Respondent for misleading and deceptive conduct in breach of the Fair Trading Act 1987 which, in view of the conclusions I have reached, it will not be necessary to explore in these reasons." 34 It is true that in the course of the hearing before the Tribunal an objection by counsel for FTAC included an assertion that the substance of the claim had not been addressed but the context of his objection was that bad workmanship or design was outside the express issue that his client had chosen to litigate not that it was outside of issues which, in the expression of the Tribunal above quoted, would be "taken to be admitted". 35 Despite the stance taken at the time of that objection, cross examination by counsel for FTAC of an architect (Mr Skinner) included: "Q. So that if there was a defect it may not be attributable to any deficiency on the building, might it? A. That might be right. Q. It might be a design problem? A. It might be or, as I say, it may be a conscious price decision made by somebody to leave off a component that lifted its performance." 36 Although the content of knowledge obviously would vary from individual to individual, I do not accept that FTAC should be taken only to have become aware of the facts and circumstances which may give rise to an exclusion under clause 9 of the scheme at or shortly after the mediation session which took place in connection with the action by the owners against Walter. 37 However, the terms of the preamble to the separate questions assume the existence of defects within the meaning of exclusions in clause 9 and, on such assumption, the question reduces to enquiry about the effectiveness of the purported revocation. 38 The thrust of FTAC's argument was that there exists no power to authorize payment where there is an applicable exclusion pursuant to clause 9. If jurisdictional error has occurred it can be repaired at any time and this was effected by the later decision, or alternatively, FTAC can treat the earlier decision as a nullity. 39 Reference was made to s48 of the Interpretation Act 1987 viz: " Exercise of statutory functions (1) If an Act or instrument confers or imposes a function on any person or body, the function may be exercised (or, in the case of a duty, shall be performed) from time to time as occasion requires. " 40 I do not construe that provision as vesting a power to make and unmake decisions infinitely. If power does not stretch to infinity, there must be in the circumstances of a particular case and "as occasion requires" a terminus. In this case it was reached with the communication of decision by the letter of 24 October 2002. 41 In the course of argument, there was reference at some length to the consequences (or lack of them) where jurisdictional error has occurred. It was put that, given the existence of circumstances of exclusion under clause 9, FTAC had no power to make the decision to settle the owners' claim. Those circumstances may be taken to attract the description of invalidity to the decision but an invalid decision (identified in this case in hindsight) can nevertheless have operational effect: Leung v The Minister 1997 79 FLR 400. 42 In Bhardwaj Gleeson CJ observed @ 604: "To say that a tribunal has considered an application, reached a conclusion, and informed affected parties of its decision, is to make a statement of fact. But the legal consequences of that fact depend upon the Act; and the answer to a question about those consequences may depend upon the purpose of which the question is asked. The answer to the question whether a legally effective decision has been made may depend upon the kind of legal effect that is under consideration, and upon further facts as to what was done, or not done, following the communication of the decision." 43 It is, in my view, clear that clause 9 is directed to assessment of fact. In addition to the expression in the subparagraphs which are recited above, there are, for example, references to FTAC not being liable for damage arising from normal wear and tear (clause 9(k)) and to work not completed in a reasonable time (clause 9(l)). A common thread running through the descriptions of exclusions in clause 9 is a need for factual evaluation. 44 Jurisdictional error is not a singular concept and may arise in different ways. In The Minister v Yusuf 2001 180 ALR 1 it was observed (McHugh, Gummow and Hayne JJ): "What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made the decision maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it. " 45 This case does not lie within those parameters. In the present case, the owners made a claim on the scheme. FTAC, on its own assertion, had considered all the information available but declined the claim. The reason expressed related to time limitation but it was notable that there was no suggestion that consideration of other possible grounds had been deferred. The owners appealed. The remedy sought, and after hearing granted, was an acceptance of the claim. It was open to FTAC to resist the appeal to the Tribunal on any basis that they chose to argue. The resistance and the appeal failed. There was a discernible deliberate formality about the acceptance of the claim communicated by the earlier decision. 46 The subsequent stance that defect may be due to design fault (assumed so to be for the purpose of the questions) was based on conception that the claim may have been able to be excluded and declined on that basis. FTAC contemplated that it may have mistaken the defects as construction defects (whether major structural or general) rather than design defects. A factual mistake of that character in relation to the scheme does not constitute jurisdictional error. 47 Having reached that conclusion, I consider it unnecessary to express views about vested power being spent after first exercise nor to engage in analysis on that topic in the light of published opinions relating thereto in judgments of various English and Australian courts. The owners sought to rely upon received doctrine in relation to estoppel or res judicata and questions 4 and 5 in the first set relate to this. Reference was made to the citation of the expression of principle by Wigram VC in Henderson v Henderson 1843 3 Hare @ 115 in the joint judgment (Gibbs CJ Mason and Aickin JJ) in Port of Melbourne Authority v Anshun Pty Limited 1981 147 CLR 589: "Where a given matter becomes the subject of litigation in and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time." 48 Senior counsel for FTAC remarked that this expression was the subject of further analysis after its citation and that is correct. Of course, Anshun was dealing with litigation in a court of pleading and in that context and in reference to some English authorities their Honours said: "In these cases in applying the Henderson v Henderson principle to a plaintiff said to be estopped from bringing a new action by reason of the dismissal of an earlier action, Somervell LJ and Lord Wilberforce insisted that the issue in question was so clearly part of the subject matter of the initial litigation and so clearly could have been raised that it would be an abuse of process to allow a new proceeding. Even then the abuse of process test is not one of great utility. And its utility is no more evident when it is applied to a plaintiff's new proceeding which is said to be estopped because the plaintiff omitted to plead a defence in an earlier action. In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding." 49 It was submitted that "Anshun estoppel" did not apply to administrative decision makers or tribunals but the doctrine of estoppel extends to any tribunal which has jurisdiction to decide finally a question arising between parties and such a jurisdiction was exercised by the Tribunal in this case: Administration of Papua and New Guinea v Daera Guba 1972 130 CLR 353. 50 I have already referred to the capacity of FTAC to raise, in the absence of pleadings, any arguments it chose in resistance to the owners' claims. In my view FTAC may not re-litigate the owners' claims. I am conscious that in The Minister v Kurtovic 1990 92 ALR 93, Gummow J observed: "The result is that when the decision maker attempts to resile from his earlier position he is prevented from doing so not from any doctrine of estoppel, but because his power to do so is spent and the proposed second decision would be ultra vires . The matter is one of interpretation of the statute conferring the particular power." 51 In the present case the statutory construct, the scheme and the conduct of FTAC combine so as to prevent reopening of the earlier decision whatever approach may be adopted. 52 Question 4 is formulated on the premise that FTAC can revoke its earlier decision and asks whether it is estopped from so doing or is liable for misleading and deceptive conduct. 53 A consequence derived from misleading or deceptive conduct is dependent upon FTAC being engaged in "trade or commerce" within the meaning of the Fair Trading Act 1987. Having regard to the Home Building Act 1989 (s107) and the Fair Trading Act (ss3 and 4) the possibility of FTAC being obligated by the provisions of the latter is dependent upon its carrying on "business", whether or not this is done for profit. 54 Enquiry is directed to whether there exists an element of commerce or trade such as a private citizen might undertake. Counsel for both FTAC and the owners referred to the decision of Palmer J in R T and Y E Falls Investments Pty Limited v New South Wales [2001] NSWSC 1027 where certain activities in connection with payment under the Cattle Compensation Act were held not to constitute carrying on a business by the relevant Crown instrumentality. There were two aspects dealt with by his Honour, the first, he found were in character gratuitous payments to encourage cooperation with a government policy to eradicate cattle disease. This he rejected as carrying on a business. But the second, involved obtaining by the agency of the right to receive the proceeds of sale of cattle consigned to the abattoir. He found this had the character of carrying on a business. 55 The structure of the statute and scheme presently under consideration is comparable to a form of insurance against building defects (without, of course, payment of premium by the claimants or conventional contractual relationship) and any disbursements of funds by FTAC is followed by the vesting of a right, akin to subrogation, to recover that payment from a builder. Whilst mere right to recovery does not involve possible profit, that is not required and in my view the activity is sufficiently comparable to a person carrying on a form of insurance business that the provisions of the Fair Trading Act are applicable in the circumstances to FTAC. 56 It was misleading to proffer the earlier decision to settle the claim for the stated amount without mention of any reservation that FTAC may choose to revoke if it later came to a view that it might be able to rely upon an exclusion clause in the scheme or for any other reason. 57 Question 5 is premised on FTAC not being estopped from revoking the decision to settle the claim and not being liable for misleading conduct and asks whether, in those circumstances, the decision communicated in the letter of 12 September 2003 was a nullity by reason of the owners being denied procedural fairness. 58 FTAC's contention is that, if the earlier decision was infected by jurisdictional error then it cannot be contended that there has been a denial of natural justice by any proposition. That would be correct, however, my finding is that there had not been such jurisdictional error. 59 It is not in dispute that the later decision was communicated without any notice to the owners other than the immediately preceding telephone call to Miss Nairn. There were matters upon which the owners might have made relevant representations. Suggested were representations about the assertions of Walter, which were being urged, among other ways, by its cross claim, the content of the documentation provided by Walter to FTAC and the stance now being sought to be taken by FTAC that the earlier decision was revocable. 60 It is convenient to turn to Walter's assertion that it was denied procedural fairness in connection with the making of the earlier decision and that it was thereby vitiated. Walter's submission is essentially that the approval by FTAC to settle the claim by the owners "detrimentally affected Walter's interests, rights and expectations". In the event of a payment by FTAC to the owners, it became vested with a statutory right of recovery from the builder: Building Services Corporation Act 1989 s98(1). 61 FTAC and the owners are ad idem in opposing Walter's contention in this regard. The opponents are correct. If FTAC brings a recovery action against Walter of the nature suggested, Walter can in defence of that action put forward anything and everything it wishes. Walter's "rights" are not affected at some earlier point and it must follow that there has been no denial of natural justice to it: Builders Registration Board of Queensland v Rauber 1983 57 ALJR 384; P & V Sammut Homes Pty Limited v Building Services Corporation, unreported, NSWSC 24 April 1997; McCallum Developments Pty Limited v Owners of Strata Plan 53908 [2002] NSWSC 1103. That conclusion is not altered by the circumstance that FTAC kept Walter informed from time to time concerning acceptance of some claims.

62 Clause 10 of the scheme provides: "FINALISATION OF LIABILITY 10. Despite clause 7(2), the Corporation has no further liability under this Scheme more than 10 years after: (a) the commencement of the residential building work in relation to which the Scheme applies, for any reason attributable to that work …….." 63 Clause 7(2) relates to extension of time for notification and is in these terms: "7. (2) The Corporation may extend the times specified in subclause (1) if it is satisfied that the delay in notification was due to circumstances outside the control of the beneficiary." 64 FTAC argued that this reference to clause 7(2) meant that there is no jurisdiction to "extend" the ten year period. The qualification in the opening words of clause 10 inhibits the use of clause 7(2) to extend a time for notification beyond the ten years but does not thereby contribute to the meaning of clause 10. 65 Clause 10 is directed to termination of liability but liability is not the same concept as payment. I would construe the words "has no further liability" to mean that there can be no determination of such a liability after the designated span of ten years. I would not construe the words to exclude requirement to make actual payment for a liability which has been established within the time. Payment is a discharge of a liability, and as I have said, the establishment of liability is distinguishable from that financial activity. 66 It might be observed that FTAC's argument in this regard is apparently inconsistent with the alternative proposal in the penultimate paragraph of the later decision letter that the owners' claim might be assessed at some time after partial success or settlement of the action against Walter. 67 Walter argued that such a construction could have the practical effect of a notified claim having no time limit on performance of the rectification work. It is conceivable, however, that undue delay would place the claimant at risk of exclusion by failure to take reasonable and timely action to minimize the damage (clause 9 (k)(iii)). On the other hand the owners point out that there is a practical converse to Walter's submission, namely that if obligation to pay can be extinguished by mere effluxion of time, then this could be achieved by simple delay, deliberate or otherwise. For example, an appeal process might be invoked simply to allow time to elapse or mere procrastination might be allowed to have sway.

68 It can also be observed without retracing what was said in relation to Anshun that in this case the Tribunal decision was handed down one month after an elapse of ten years can be calculated but, if as a matter of law, possible liability was then at an end, the issue was not raised by FTAC at all in the subsequent appeal to this Court. 69 It is common ground that relevant rectification work has not yet been carried out, however an e-mail from Ms Nairn to Mr Elliott on 12 September 2003 advised that the owners were "currently negotiating to enter into a building contract for rectification works and we expect that those rectification works will commence on 1 November 2003. Consequently (the owners) will shortly begin to draw down on its authority to pay." The decision to revoke was of course communicated later on the same day. 70 Although there is force in both the practical speculations above described, I do not construe clause 10 as an arbitrary bar discharging FTAC from fulfilling a liability which has been established within the relevant period of time. 71 That conclusion has a bearing on question 7 which relates to the circumstance that rectification work in this case has not in fact been carried out. No doubt the purported revocation was germane to this further delay. 72 FTAC argued that the scheme is to indemnify for losses incurred (clause 5) and prospective loss is not such. Reliance was placed upon two decisions of Palmer J and "the reasoning therein" expressly relied upon. Those decisions should therefore be examined. 73 In FTAC v Owners of Strata Plan 54421 [2003] NSWSC 338 an appeal had been before the Tribunal which, when it was discovered that the builder was in truth and contrary to earlier belief, duly licensed, was compromised on the basis of an agreed sum of $374,957. The owners contended that the sum should be paid forthwith whereas FTAC contended that payment should be made only when amounts became due to contractors carrying out the rectification work. The Tribunal accepted the former argument and purported to make an order for payment. There were problems about the competence of the appeal and the purported issue before the Tribunal which I need not detail, but his Honour expressed views including one that, if rectification work is never done and the owner is not required to make a payment, then the structure of the scheme is such that neither is FTAC liable to make payment to the owner. 74 That opinion is not inconsistent with the view that establishment of liability and actual payment are separate concepts. 75 The second decision, FTAC v Tebbutt [2003] NSWSC 340 concerned a dispute centring upon a deed of release, a procedure which I have noted was not adopted in the present case. His Honour reiterated his views about payment by FTAC being obliged only after an owner has incurred a liability to pay for rectification work. 76 Neither of these decisions provides authority for the affirmative answers sought by FTAC to question 7. If the final words of the question were "to refuse payment" (for work not done), the answer would be so, but the final words are "to deny liability" and for the reasons given, the answer to that should be in the negative. 77 I am conscious that my reasons differ from argument by the owners based upon an assertion (of which, apart from the facts in Tebbutt, I have no knowledge) that FTAC routinely makes lump sum payments for approved claims, and upon the expressed intention and willingness of the owners to contract as advised in Ms Nairn's e-mail of 12 September 2003. I would not answer question 7 in the negative for those reasons. 78 Clause 8(1)(c) of the scheme provides: "8 (1) In assessing claims, the Corporation may set off the following amounts against its liabilities listed in clause 5 or 5A: ………. (c) any amount received by the beneficiary under a settlement with the contractor, an arbitration award of an award by a Building Disputes Tribunal referee or Consumer Claims Tribunal or under the judgment of any Court relating to the head or heads of claim. …….." 79 FTAC submitted that "may" in clause 8(1) should be interpreted as meaning "shall" but that approach ignores the work which the clause has to do, which is to ensure that an owner does not obtain a windfall as a result of successful proceedings against the builder responsible for defects. The position of FTAC is secured by its subrogation-like entitlement under s98 and clause 8(1)(c) protects it in the event that there is settlement, award or judgment in favour of the owners. It does not make FTAC an interested party in the issues of litigation, including cross claims if any, brought by an owner against a defaulting builder. 80 The parties were agreed, although a separate set of questions were advanced in the action between the owners and Walter, that the answers would depend upon those given in the first set and there is no need to deal with them separately. 81 I answer the questions in the first set:

1. Yes. 2. No. 3. No. 4. Does not arise, however, I refer to my finding that FTAC would be relevantly estopped and did engage in misleading and deceptive conduct. 5. Does not arise, however, I refer to my finding that the owners were denied relevant procedural fairness. 6. No. 7. No. 8. No. 82 I answer the questions in the second set:

1. Yes. 2. No. 3. No. 4. No.

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