Walter Construction Group v FTAC; FTAC v Owners S/P 43551

Court of Appeal (NSW)|2004-11-02|Before: Santow JA, Tobias JA, Grove J, Sheller JA

CITATION: Walter Construction Group v FTAC; FTAC v Owners S/P 43551 [2005] NSWCA 65

JUDGMENT OF: at 1; Santow JA at 12; Tobias JA at 135

DECISION: (1) Leave to appeal be refused to FTAC and Walter respectively. ; (2) FTAC to pay the opponent's costs of its application for leave to appeal and Walter to pay the opponent's costs of its application for leave to appeal, but with liberty on the opponent's part to apply by way of written submissions filed and served on or before 18 March 2005 for indemnity costs with any submission in reply to be in writing filed and served on or before 23 March 2005.

CATCHWORDS: ADMINISTRATIVE LAW - Statutory interpretation - Anshun estoppel - Proper construction of the statutory insurance scheme under the Building Services Corporation Act 1989 subsequently re-named Home Building Act 1996 ("the Act") and of Building Services Corporation Regulation 1990 - Whether approval by administrator of the Scheme, Fair Trading Administration Corporation ("FTAC"), could be revoked in the circumstances and having regard to belated contention not previously made before Consumer Trader and Tenancy Tribunal and on appeal on question of law to the Supreme Court that building defects fell outside clause 9 of the Regulations being design defects - Jurisdictional fact or matter decided in course of decision-making process and relevant factors or indicators - Capacity to revoke earlier approval of payment prior to payment being made and after ten years having regard to clause 10 of Regulations - Capacity to settle disputed claims under s101(1) and s105(3) of the Act - FTAC as model litigant - Effect of statutory interpretation producing oppressive or absurd result further reason for rejecting it when not compelled by language of the statute - Indemnity costs where abuse of process - Capacity to make cost orders against builder when builder a party in only one set of proceedings against it and not the parallel proceedings brought by FTAC.

Building Services Corporation Act 1989 (subsequently re-named Home Building Act 1989 from 1996) Part 6, s85(d); s96(2) Building Services Corporation Regulation 1990 LEGISLATION CITED: Fair Trading Tribunal Act 1998 s61 Interpretation Act 1987 s48

Commonwealth v Verwayen (1990) 170 CLR 394 Colonial Bank of Australasia v Willan [1874] LR 5 PC 417 Fair Trading Act 1987 (NSW) Fair Trading Administration Corporation v Tebbutt [2003] NSWSC 340; (2003) 19 BCL 467 FTAC v Owners Corporation SP43551 [2002] NSWSC 624 FTAC v Tebbutt [2003] NSWSC 340 Greyhound Racing Authority (NSW) v Bragg [2003] NSWCA 388 CASES CITED: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 The Minister v Kurtovic (1990) 92 ALR 93 The Minister v Yusuf (2001) 206 CLR 323 In re 56 Denton Road Twickenham (1953) 1 Ch 51 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 Sutherland Shire Council v Finch (1969) 123 CLR 657 Wentworth v Wentworth (2000) 52 NSWLR 602 Woolworths Ltd v Pallas Newco Pty Ltd & Anor [2004] NSWCA 422

CA 40257/04 WALTER CONSTRUCTION GROUP LIMITED (ACN 008 390 074) (Claimant) FAIR TRADING ADMINISTRATION CORPORATION (Opponent) PARTIES: CA 40269/04 FAIR TRADING ADMINISTRATION CORPORATION (Claimant) THE OWNERS STRATA PLAN 43551 (Opponent)

R E DUBLER, SC (Walter) COUNSEL: A ROBERTSON, SC/ G A SIRTES (FTAC) G A FLICK, SC/ J YOUNG (Owners)

Corrs Chambers Westgarth (Walter) SOLICITORS: D Catt, Solicitor for the Office of Fair Trading (FTAC) Andreones Pty Limited (Owners)

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

SC 30112/03 LOWER COURT FILE NUMBER(S): SC 30087/03

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40257/04 CA 40269/04 SC 30112/03

SHELLER JA SANTOW JA TOBIAS JA

14 MARCH 2005 WALTER CONSTRUCTION GROUP LTD v FAIR TRADING ADMINISTRATION CORPORATION FAIR TRADING ADMINISTRATION CORPORATION v THE OWNERS, STRATA PLAN 43551 Judgment 1 SHELLER JA: Between December 1991 and December 1992 the appellant, Walter Construction Group Limited, (then known as Concrete Constructions Pty Ltd), (Walter), constructed a residential strata apartment block at 17-25 Spring Street, Bondi Junction. On 30 March 1993 the respondent, the owners, Strata Plan 43551, came into existence and represents the collective interests of the strata title owners of the building. The owners lodged a series of claims under the Building Services Corporation Comprehensive Insurance Scheme against the respondent, Fair Trading Administration Corporation, (FTAC) the administrator of that scheme. Two of those claims are relevant to these appeals, one dated 14 September 1998 and the other, 3 November 1998, both of which were declined by FTAC. The claims were based upon FTAC's liability to indemnify losses reasonably incurred by a beneficiary in respect of residential building work in rectifying defects in insured building 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 contractors 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 the legislation or subordinate legislation applicable to the work." 2 However, the controlling cl 7(1) distinguished between major structural defects, as defined, and other defects commonly referred to as "general defects". In the case of major structural defects, the beneficiaries were required to notify FTAC or its predecessor within six months from first becoming aware of the defect but not later than seven years "from the commencement of insured building work". In the case of defects other than major structural defects, the beneficiaries were required to give such notification not later than three years from that commencement. There was a discretion to extend the time period if FTAC, or its predecessor, was satisfied that the delay in notification was due to circumstances outside the control of the beneficiary. FTAC resisted the claims on the basis that the claims were to indemnify for rectification of defects and not major structural defects. 3 On 12 February 1999, the owners lodged an appeal to the Commercial Tribunal of New South Wales, by then called the Fair Trading Tribunal and now known as the Consumer Trading and Tenancy Tribunal, under s85(d) of the Building Services Corporation Act 1989. In its decision of 5 November 2001, the senior member of the Tribunal observed that there was little dispute as to the nature of the defects the subject of the appeal. What was in dispute was whether the defects were major structural defects or general defects for the purposes of the scheme. The Tribunal upheld the owners appeal and found that FTAC was liable to indemnify the owners in respect of all losses relating to the defects subject to the claims. The Tribunal held that the defects were major structural defects. 4 FTAC's appeal to the Supreme Court of New South Wales under s61 of the Fair Trading Tribunal Act 1998, an appeal limited to questions of law, failed and was dismissed by Burchett AJ on 12 July 2002. It is to be observed that by that time probably at least seven years had passed since the claims were made. What occurred before this and during the hearing before the Tribunal makes doleful reading. I refer to the Tribunal's decision. After the decision of Burchett AJ on 24 October 2002, FTAC wrote to the owners to advise that "Approval has been granted to settle your claim for the amount of $852,598 under cl5(1)(d) of the Comprehensive Insurance Scheme." That sum was the difference between what had already been paid out and the maximum sum for which indemnity could be obtained. The letter continued: "Settlement of the claim is subject to: 1. Completion of the works described on the written quotation. 2. Execution of the enclosed 'Authorisation of Payment' form. 3. The production of a final account from the rectifying contractor. 4. Verification by FTAC of satisfaction rectification/completion of the residential building work. All settlement conditions must be complied with before any payment can be made by FTAC." 5 Separately on 5 July 2000, the owners had instituted proceedings against Walter in respect of the alleged defects. Walter's defence and cross-claim against sub-contractors raised the issue of whether the defects were excluded by cl 9 of the scheme, in short, faulty design. On learning of the FTAC letter to the owners, Walter communicated to FTAC that in its view FTAC would have no right to recovery against Walter in respect of amounts paid under the claim. Apparently as the result of a mediation conference in September 2003, FTAC stated it had become aware that the pleadings in those proceedings showed there was a contention of substance that the defects were of a character excluded by cl 9. Relying on this, FTAC sent a letter to the owners on 12 September 2003 purporting to revoke its earlier approval of the insurance claim. 6 On 24 September 2003, the owners instituted proceedings against FTAC seeking relief against the revocation of the approval of the claims. Walter commenced proceedings against FTAC seeking declaratory relief that FTAC had no right to institute recovery proceedings against Walter in respect of the claims because its approval of the claims was a nullity. Walter supported the right of FTAC to revoke the earlier decision in reliance on cl 9. 7 I have had the benefit of reading in draft the judgment prepared by Santow JA where there are set out the questions considered by Grove J in determining these claims. Grove J held that FTAC was not entitled to revoke the earlier decision to indemnify based as it was on the decision of Burchett AJ nor was the decision to approve a nullity which could not be revoked. Further, Grove J found that FTAC had engaged in misleading and deceptive conduct under the Fair Trading Act in its course of dealing with the owners. 8 FTAC and Walter now seek the leave of this Court to appeal against Grove J's decision. It is to be observed that FTAC has amongst its objectives to "promote and protect the interests of owners and purchasers of dwellings" and to provide a "centralised, simplified and logical one stop shop" and to "address complications that have existed in the past". 9 A prominent argument now put in support of this application is that assuming the defects for the rectification of which the owners now seek indemnity were due to faulty design of the sort described in cl 9, the FTAC had no power to make the offer contained in the letter of 24 October 2002 or alternatively, no "jurisdiction" to make the offer. This was an offer made following a decision of the Supreme Court upholding a decision of the Tribunal that FTAC was liable to indemnify the owners in respect of all losses relating to the defects the subject of the claim. There has now been yet another decision of the Supreme Court in which the trial Judge, Grove J, held that "the statutory construct, the scheme and the conduct of the FTAC combined so as to prevent re-opening of the earlier decision." Importantly there reference was made to the decision of Gummow J in The Minister v Kurtovic (1990) 92 ALR 93 at 112 where his Honour 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 power is one of interpretation of the statute conferring the particular power." 10 The decision of Burchett AJ upholding the decision of the Tribunal was not challenged by FTAC. Further, FTAC acted upon it. The fact that FTAC apparently was persuaded by Walter to revoke its approval of 24 October 2002 adds nothing to its legitimacy and detracts in no way from its impropriety. In any event, as Santow JA has explained, it has no merit. Now after the deplorable delay brought about by FTAC's failure to accept a decision of the Tribunal and two decisions of the Supreme Court, it has what I can only describe as the effrontery to seek to rely upon cl 10 and the ten year limitation expressed in terms that it has no further liability under the scheme more than ten years after the commencement of the residential building work. If such were the law, which in my opinion, as the reasons of Santow JA demonstrate, it is not, it would open the scheme to be administered irresponsibly, lazily and, though obviously not in this case, corruptly. 11 I would refuse leave to appeal on both claims and order the claimants to pay the opponent's costs of these applications. As Santow JA has pointed out, the revocation and the reliance of the claimants upon it involved an abuse of process. I would afford the opponent an opportunity to apply for an order that its costs be paid on an indemnity basis, in the manner proposed by Santow JA. 12 SANTOW JA: OVERVIEW There is one central issue in these proceedings. In the events that happened, was the administrator of the New South Wales statutory building insurance scheme entitled under that legislation to revoke its approval of the strata title owners' claim against the builder for deficient work, or treat it as a nullity? 13 The statutory administrator, Fair Trading Administration Corporation ("FTAC"), in seeking leave to appeal claims that entitlement, contrary to the holding of the trial judge, Grove J. FTAC relies on the terms of the statutory scheme for insurance against deficient building work under Part 6 of the Building Services Corporation Act 1989 (subsequently re-named Home Building Act 1989 from 1996). It relies also upon the regulations under that Act defining the scope of the scheme, in particular Schedule 1 of the Building Services Corporation Regulation 1990. (I shall refer to these respectively as "the Act" and "the Regulation"). 14 The builder Walter Construction Group Ltd ("Walter"), now in liquidation, supports FTAC in that application. 15 That application is opposed by the Owners' Corporation, called "the Owners-SP 43551". It represents the collective interest of the strata title owners of the building. I shall refer to that entity as "the Owners". 16 The challenge sought to be mounted turns on the nature of the approval given, and on its permissibility and status under the terms of the statutory scheme. FTAC variously contends: (a) that any approval was provisional only, so revocable, (b) that even if not a nullity it could be revoked before any losses were incurred by the Owners as beneficiaries of the statutory policy and was revoked, (c) such approval was in any event a nullity as indemnity was only available under the statutory scheme for "major structural defects" this being a jurisdictional fact; any defects here were not of that character. 17 These contentions form the basis of challenge to the decision of the trial judge, Grove J, which was in favour of the Owners on these issues. Grove J also concluded in favour of the Owners on another basis, namely, the doctrine referred to as Anshun estoppel. It is more accurately described as a species of abuse of process. If applicable in the circumstances, it would preclude agitation by FTAC and Walter of matters which they had failed previously to raise; this is provided these matters now raised were so relevant to the original proceedings that it was unreasonable for FTAC to have failed to raise them. 18 Grove J accepted that FTAC had originally resisted payment on one basis only. That basis, one of time limitation, was decided against FTAC in separate proceedings both at first instance and on appeal. FTAC had unsuccessfully contended that the Owners' claim was for general defects, not major structural ones. Hence it was said that the claim was time barred as it fell outside the three-year statutory time limitation for general defects as against seven years for major structural ones. In successive proceedings before the Consumer Trader and Tenancy Tribunal ("CTTT" ) and then on FTAC's appeal to Burchett AJ in the Supreme Court from CTTT on a question of law, FTAC raised that defence only. At no stage did FTAC rely on the defences now sought to be raised. Hence Grove J concluded that Anshun estoppel defeated FTAC and Walter in any event. The present application for leave to appeal is now the fourth attempt at resistance by FTAC to the Owners' claim, having so far failed at each juncture. 19 The key factual events of the purported revocation were these. Following the Owners' success against FTAC before Burchett AJ, FTAC had written to the Owners on 24 October 2002 approving, subject to various matters, payment of the full amount available under the Comprehensive Insurance Scheme, taking into account payments that had already been made. Thereafter FTAC purported to revoke that approval in a letter dated 12 September 2003 to the Owners. This revocation was put on an entirely new basis. This was that the claim in reality was for design defects which were excluded from insurance coverage altogether under the relevant provisions of the Comprehensive Insurance Scheme. This was said to render any approval by FTAC outside its statutory power and thus a nullity.

SALIENT FACTS 20 What follows by way of salient facts is essentially uncontroversial, save where indicated.

The Defects and Claims 21 From December 1991 to December 1992, Walter (then known as Concrete Constructions Pty Limited) constructed a residential strata-apartment block situated at 17-25 Spring St, Bondi Junction. The building was an eleven-storey residential tower comprising 52 residential apartments, with a commercial floor at ground level and car parking underneath. On 30 March 1993, upon registration of Strata Plan No. 43551, the Owners Corporation came into existence. 22 Some time after construction was completed, the Owners found that there were a number of defects with the building. They lodged a series of claims under the Building Services Corporation Comprehensive Insurance Scheme ('the Scheme'), the statutory basis of which I describe hereunder. 23 The Owners made four claims under the Scheme. The first two claims were approved and settled by the predecessor body to FTAC, the Building Services Corporation ("BSC"). That settlement resulted in a payment of $111,164. The latter two claims were declined by BSC, and were initially the subject of the earlier proceedings which culminated in this Court. The details of the four claims made are as follows: (a) The first claim, dated 26 April 1996, related to water entry on the top floor units through the roof-top waterproofing membrane. By letters dated 18 and 25 March 1997, BSC approved this claim in the sum of $57,465. A further sum of $8,830 was approved in respect of professional services associated with carrying out rectification work in respect of this claim. (b) The second claim, dated 14 January 1997, related to constructing a roof over a walled plant room on the roof to prevent water leaks to the units below. This claim was approved in the sum of $40,409 by letter dated 4 September 1997. Further approval was given for the sum of $4,460 in relation to professional services associated with rectification work in respect of this claim. (c) The third claim, dated 14 September 1998, related mainly to failed waterproofing, dislodged tiles and distorted aluminium and glass balustrades on balconies. This claim was declined by letter dated 15 January 1999. (d) The fourth claim, dated 3 November 1998, related to leaking window and door units. This claim also was declined by the letter dated 15 January 1999.

The Scheme 24 The Scheme was constituted by Part 6 of the Act and Part 6 and Schedule 1 of the Regulation. BSC administered the Scheme until BSC was abolished by the Building Services Corporation Legislation Amendment Act 1996 and replaced by the Fair Trading Administration Corporation ("FTAC"). FTAC has administered the Scheme since the commencement of the Amendment Act on 1 May 1997. 25 The relevant clause under which the claims were made was cl 5(1)(d) of Schedule 1 to the Act, which was in the following terms: 5. (1) Subject to the maximum payment provisions (clause 6), the method of assessing claim benefits (clause 8) and the exclusions specified in this Scheme (clause 9), the Corporation will indemnify the following losses reasonably incurred by a beneficiary in respect of residential building work: … (d) losses in rectifying defects in insured building work or insured owner-builder work due to: (i) bad workmanship; or (ii) faulty or unsuitable materials; or (iii) failure to comply with plans and specification; or (iv) faulty design used by the contractors 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 the legislation or subordinate legislation applicable to the work" 26 The Scheme drew a distinction between "major structural defects" (defined in Regulation 31(1)) and other defects commonly referred to as 'general defects'. The distinction is particularly significant when it comes to the different time limitations applicable to claims. With regards to claims under cl 5(1)(d), in the case of major structural defects, the beneficiaries are required to notify BSC in writing of the "matters that could give rise to the losses" within six months from first becoming aware of the defect, but not later than seven years "from the commencement of insured building work": cl 7(1)(b)(i). In the case of defects other than major structural defects, the beneficiaries are required to give notification not later than 3 years from the commencement of the insured building work: cl 7(1)(c)(i). There is discretion in cl 7(2) to extend the time period if BSC "is satisfied that the delay in notification was due to circumstances outside the control of the beneficiary." In the proceedings between the Owners and FTAC, at issue was whether the defects in Claims 3 and 4 were major structural defects or not, with the consequence being that if not major structural defects, as defined, the claims would be out of time. 27 The Scheme contained certain exclusions in cl 9, which is relevantly in the following terms: "9. The Corporation is not liable under this Scheme in respect of: … (e) defects due to a faulty design provided by the beneficiary or beneficiary's predecessor in title, if the fault or unsuitability 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 28 In the proceedings between the Owners and Walter, there was an issue as to whether the defects were excluded by cl 9. 29 BSC (and its successor, FTAC) has a right to recover any amount paid under the Scheme as a debt from the person by whom the residential building work concerned was done or contracted to be done: Act s96(1). There is a further right of subrogation, in the case of amounts paid out because of defective materials or designs, to the rights of any contractor against the manufacturers or suppliers of defective materials or the against the designers of the defective design: Act s96(2). Furthermore, if the insured recovers any amount against the contractor relating to the heads of claim under the Scheme, BSC is entitled to set off that amount against its liability to the insured: cl 8(1)(c). 30 A final provision of the Scheme which is relevant is cl 10, which falls under the heading "Finalisation of Liability". It provides: "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 …" 31 As referred to previously, cl 7(2) refers to the power of the Corporation to extend time for notification. Clause 10 was sought to be relied upon by FTAC to deny liability. While at first it was understood by the Owners that FTAC (as distinct from Walter) had conceded on the appeal that clause 10 would not be relied upon as a basis to deny or reject the Owners' claim against FTAC, that was sought to be put in issue in subsequent written submissions by FTAC, joining here with Walter for that purpose. This became clear when FTAC sought to amend its draft Notice of Appeal, relying upon its submissions of 8 November 2004 if leave were granted. 32 The Owners opposed the granting of that leave, but if leave were granted, advanced reasons in its written submissions for why cl 10 should not be available to FTAC in the circumstances; see Owners' written submissions of 11 November 2004. Clause 10 remains an issue between Walter and FTAC, insofar as Walter relies upon clause 10 to resist any consequential claim by FTAC, should FTAC be unsuccessful against the Owners.

The attempts to resolve the disputed claims 33 FTAC declined the third and fourth claims on the ground that all the defects subject of the claims were general defects, and thus the claims were outside the statutory time limitation. Its letter dated 15 January 1999 was relevantly in the following terms: "In reaching this decision it was considered that, based on all 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 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." [emphasis added] 34 It is important to note that no additional reason for declining the claim was provided by FTAC apart from this time limitation point. 35 On 12 February 1999 the Owners lodged an appeal to the Commercial Tribunal of NSW (by then called the Fair Trading Tribunal and now known as the Consumer Trader and Tenancy Tribunal, and which I will refer to for convenience as "CTTT" or "the Tribunal". This appeal was under s85(d) of the Act. It was heard from 9 to 12 April, 2001. The primary issue in the proceedings before the Tribunal was whether the defects were of their nature major structural defects or not. The evidence and legal argument was directed to that issue, not to whether they were design defects excluded altogether from indemnity by clauses 9(e) and (g). If they were not major structural defects, the issue which would then arise was whether the Tribunal should exercise its jurisdiction to accept the claims outside the time limits in the Scheme (see [15-16] of Tribunal's reasons). No issue had been taken as to the applicability of various exclusions from cl 9 or otherwise with respect to the defects (at [22]). The Tribunal declined to make any money order in the applicant's favour, considering it had no jurisdiction to do so (at [86-7]). 36 The Tribunal delivered its decision and reasons on 5 November 2001, the Senior Member commenting that: "There is little dispute as to the nature of the defects the subject of this appeal. What is in dispute is whether those defects are major structural defects or general defects for the purposes of the scheme." (para 22) 37 The Tribunal upheld the Owners' appeal and found that FTAC was liable to indemnify the Owners in respect of all losses relating to the defects the subject of the claims. The Tribunal held that the defects were major structural defects, notification of which was within the 7-year time limitation. 38 Importantly, the Tribunal at [88] and in its orders not only set aside the decision made by FTAC on 15 January 1999 to the contrary (when FTAC determined that the defects were general defects and so outside the statutory time limitation for notification) but in its place, found that "the Corporation is liable to indemnify the Applicant with respect to all the losses relating to the defects the subject of this appeal" (at [88]). The Tribunal made orders in those terms. It did not find it necessary to deal with estoppel arguments or misleading and deceptive conduct (at [85]). 39 FTAC appealed to the Supreme Court of NSW under s61 of the Fair Trading Tribunal Act 1998, such appeals being limited to questions of law. The appeal came before Burchett AJ who delivered judgment on 12 July 2002. He dismissed FTAC's appeal, on the basis that the Tribunal had not erred in law in determining the question of fact before it, namely, that the defects were major structural defects (see FTAC v Owners Corporation SP43551 [2002] NSWSC 624). Burchett AJ, after noting that an appeal was limited to a question of law, stated: "[4] The first issue before the Tribunal was whether the defects in respect of which the claims were made were "major structural defects", so as to attract a time limit of 7 years under cl7(1)(b) of the Scheme, rather than the time limit of 3 years applicable to other defects (commonly referred to, I understand, as "general defects", although this is not a term used in the Regulation). The Tribunal held that all the defects in question were major structural defects, and the question before me is whether it erred in law in doing so. So far as its conclusion was one of fact, I have, of course, no jurisdiction to reconsider it. …… [7] In order to determine whether a defect fell within the definition of a major structural defect, it was necessary for the Tribunal first to make findings as to the nature of the defect. That, of course, was a fact-finding function from which no appeal lies. … …… [23] This examination of the definition of 'major structural defect' reveals no error affecting the conclusions of the Tribunal in the present case." 40 On 24 October 2002, FTAC wrote to the Owners 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", that sum being the difference between what had already been paid out and the maximum sum for which indemnity could be obtained. The letter went on to state that: "Settlement of the claim is subject to: 1. Completion of the works described on the written quotation. 2. Execution of the enclosed "Authorisation of Payment" form. 3. The production of a final account from the rectifying contractor. 4. Verification by FTAC of satisfactory rectification/completion of the residential building work ALL SETTLEMENT CONDITIONS MUST BE COMPLIED WITH BEFORE ANY PAYMENT CAN BE MADE BY FTAC."

I shall refer to this decision as "the First Decision". 41 On about 5 July 2000, the Owners had commenced proceedings against Walter in respect of the alleged defects. Walter's defence and cross-claim against subcontractors raised the issue of whether the defects were excluded by cl 9 of the Scheme. Walter was obviously concerned at the spectre of further recovery by FTAC in respect of amounts paid out under the Scheme. On becoming aware of the FTAC letter of 24 October 2002 to the Owners, Walter communicated to FTAC that in its view FTAC would have no right of recovery against Walter under s98(1) Act in respect of amounts paid out under the claim (Section 98(1) of the Act provides that "Any amount paid by [FTAC] under BSC Insurance may be recovered by [FTAC] in a court of competent jurisdiction as a debt from the person by whom the residential building work was done or contracted to be done".) Walter invited FTAC to attend the mediation conference between it and the Owners in September 2003. 42 By virtue of this, FTAC stated that it had become apprised that the pleadings in the proceedings between the Owners and Walter revealed that there was a contention of substance that the defects were of a character excluded by cl 9 of the Scheme. (That is disputed by the Owners relying upon material showing FTAC had an earlier awareness.) Relying on this, FTAC sent a letter by facsimile to the Owners on 12 September 2003 whereby it purported to revoke its earlier approval of the insurance claim. In that letter it recited its contentions on the exclusions and stated that: "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." 43 FTAC then noted the provisions of cl 8(1)(c) allowing set-off of judgments recovered by the insured against the contractor, and stated that: "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 client's claims.

Accordingly, the Corporation revokes the approval contained in its letter of 24 October 2002.

The Corporation will wait until either the Supreme Court delivers a decision in respect of the proceedings or a settlement is reached before determining the claim and assessing amounts of indemnity that will be provided.

In the current situation of the revocation of the Corporations earlier approval it is suggested that your client give careful consideration to its position in relation to entering any contract for rectification work."

I shall refer to this decision of 12 September 2003 to revoke as "the Second Decision". Its efficacy in revoking the First Decision (were that decision not a nullity but capable of being made within FTAC's jurisdiction) remains a central issue in the dispute. So too whether the First Decision was outside jurisdiction or whether Anshun estoppel precluded it being put in issue.

The current proceedings 44 On receipt of this letter, on 24 September 2003 the Owners commenced proceedings against FTAC (SC 30087/03) seeking relief, inter alia, against the revocation of the First Decision. In turn, Walter commenced proceedings against FTAC (SC 30112/03) seeking declaratory relief that FTAC had no right to institute recovery proceedings against Walter in respect of the claim because its approval of the claim was a nullity. Where it mattered, Walter supported the right of FTAC to revoke the First Decision and rely on the exclusions in cl 9 of the Scheme.

THE FIRST INSTANCE JUDGMENT 45 Both proceedings came before Grove J. In broad terms, he determined that FTAC was not entitled to revoke the First Decision since it had not relied on the excluded defects in its initial denial of the claim before the Tribunal or the Supreme Court. Further, he found that the decision to approve the claim was not a nullity and could not be revoked. Additionally, His Honour found that FTAC had engaged in misleading and deceptive conduct under the Fair Trading Act in its course of dealing with the Owners. For obvious reasons, the Owners constitute the only party content with the decision. Both FTAC and Walter now seek leave to appeal from it to this Court. 46 The hearing before Grove J proceeded on the basis of a set of questions to be answered by him in respect of each proceeding. There were eight questions in the Owners/FTAC proceedings, and four questions in the Walter/FTAC proceedings. The following table sets out in summary form the questions and answers as given by Grove J: Assuming the existence of defects within the meaning of exclusion clauses 9(e) and (g) of the Comprehensive Insurance Scheme … ("the Excluded Defects"): 1. Whether the failure on the part of FTAC to rely upon such exclusions: (a) in refusing the claim on 15 January 1999 (b) in the conduct of the appeal to the CTTT from that refusal; (c) in the conduct of the appeal from the CTTT to the Supreme Court precluded later reliance by FTAC on the excluded defects. Yes 2. If FTAC is not later precluded from relying on the excluded defects, whether the decision on 24 October 2002 to approve a payment was a nullity by reason of jurisdictional error. No 3. If the earlier decision was not a nullity, whether it was able to be revoked by the later decision of FTAC on 12 September 2003. No 4. If it is open to FTAC to revoke its earlier decision, whether FTAC is estopped from so doing or is liable for misleading and deceptive conduct. Does not arise, however I refer to my finding that FTAC would be relevantly estopped and did engage in misleading and deceptive conduct. 5. If FTAC is not estopped from revoking its earlier decision and it is not liable for misleading & deceptive conduct, then whether FTAC denied the Owners procedural fairness in making the later decision with the consequence that the later decision is a nullity. Does not arise, however I refer to my finding that the owners were denied relevant procedural fairness. 6. Whether cl 10 of the Scheme can be relied upon by FTAC to deny liability. No 7. Whether the failure of the Owners to actually carry out rectification work can be relied on by FTAC to deny liability. No 8. Whether cl 8(1)(c) of the Scheme prevents FTAC from indemnifying any loss until the finalisation of proceedings between the Owners and Walter or else entitles FTAC to withhold payment of any assessed loss until judgment or settlement in those proceedings. No

47 The questions in the FTAC/Walter proceedings were identical to questions 1, 2, 3 and 6 in the first set, and it was agreed that there was no need to deal with them separately because the answers would be the same. Consequently, henceforth in this judgment those questions are referred to by the numbers given them in the Owners/FTAC proceedings (as above). FTAC seeks leave to appeal against the decision with respect to all questions, with the exception of Question 6. Walter appeals with respect to Questions 2, 3, 6 and 7. As a result, all the answers to these questions are in one form or another sought to be challenged on appeal.

Questions 1 and 2: estoppel 48 The trial judge dealt with Questions 1 and 2 together, there being an obvious connexion between them. The judge referred to the doctrine of jurisdictional error, but decided that no such error had occurred of the kind identified in The Minister v Yusuf (2001) 206 CLR 323 per McHugh, Gummow & Hayne JJ (at 351): "… 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." 49 Grove J concluded: "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.

The subsequent stance that defect may be due to design fault (assumed so to be for the purpose of the questions) was based on the 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." [45]-[47] 50 Accordingly, it was not open to FTAC simply to re-exercise its decision-making power and make another decision within jurisdiction. 51 The trial judge then held that "the statutory construct, the scheme and the conduct of FTAC combine so as to prevent reopening of the earlier decision" regardless of whether the basis of the inability was Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) or that species of ultra vires referred to by Gummow J in The Minister v Kurtovic (1990) 92 ALR 93 at 112. Gummow J there 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." 52 The relevant facts included the finding by the trial judge that FTAC should be taken to have become aware of the facts and circumstances giving rise to an exclusion under cl 9 at or shortly after the mediation session between Walter and the Owners which it attended as a non-party in September 2003. Grove J concluded that since: (a) the Tribunal exercised jurisdiction finally to determine a question arising between the parties (Anshun estoppel being no less applicable to proceedings before an administrative decision-maker or tribunal) and (b) FTAC had the capacity before the Tribunal, in the absence of pleadings, to raise any argument it chose in resistance to the claims by the Owners; therefore FTAC could not rely on the Exclusions. Having not raised any objection based on cl 9 of the Scheme at the earlier time, it was not now open to FTAC to attempt to re-litigate the claims: [49]-[50].

Questions 3 and 4: revocation 53 Furthermore, the trial judge held that it was not open to FTAC simply to revoke the decision already made (there being no jurisdictional error so as to render the decision vulnerable to being remade or declared a nullity). He dismissed the submission that s48 of the Interpretation Act 1987 conferred a power to make and unmake decisions infinitely. Any such power naturally must contain a terminus, which in this case was the communication of the decision by the letter of 24 October 2002: [40] 54 Given this conclusion, Question 4 did not arise. Nevertheless, Grove J expressed the view that the structure of the Act and the Scheme was analogous to a form of insurance against building defects and was within the misleading and deceptive conduct provisions of the Fair Trading Act: "[I]n 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.

It was misleading to proffer the earlier decision to settle for the claimed amount without mention of any reservation that FTAC might choose to revoke if it later came to a view that it might be able to rely on an exclusion clause in the scheme or for any other reason." [54]-[55]

Question 5: procedural fairness 55 The judge commented that the decision purporting to revoke the acceptance of the claim in the letter of 24 February 2002 was communicated without any notice to the Owners other than one telephone call. Furthermore, the Owners might have made relevant representations on certain matters, including the assertions of Walter in the cross-claim in the other proceedings (now relied on by FTAC to deny liability) [59]. It is implicit from these comments, and the trial judge's answer to Question 5, that he considered that the Owners had been denied procedural fairness.

Questions 6-8: terms of the Scheme 56 Question 6 turned on the construction of cl 10 of the Scheme. The trial judge drew a distinction between the concepts of liability and payment, and construed the clause to mean that after 10 years there can be no determination of a liability under the Scheme. This could not affect the present case because the requirement was to make an actual payment in order to discharge a liability which had been earlier established within the 10 year period [65], [70]. The trial judge did not accept Walter's submission that such a construction would mean there was no time limit on performance of the rectification work. 57 The trial judge considered that his answer to Question 6 had a bearing also on Question 7, insofar as the purported revocation was relevant to the delay in commencement of rectification works. He noted that on 12 September 2003, the same day that the purported revocation was communicated, Ms Nairn, solicitor for the Owners, had communicated with Mr Elliott (of FTAC) in order to advise that the Owners were negotiating to enter a building contract and expected rectification works to commence on 1 November 2003. The judge referred to the submission of FTAC that the purpose of the Scheme was only to indemnify for loss incurred and not prospective loss, but held that the authorities relied on were not inconsistent with the distinction between establishment of liability and actual payment. In his view, while FTAC might have been able to rely on failure to commence rectification work to deny payment, it could not rely on it to deny liability [76]. 58 Finally, on Question 8, the judge refused to read the word "may" as "shall". Clause 8(1)(c) confers a right of set-off, the purpose being to "ensure that an owner does not obtain a windfall as a result of successful proceedings against the builder responsible for defects" [79]. Since the position of FTAC is secured by its subrogation-like entitlements under s98 of the Act in the event there is a judgment, award or settlement in favour of the Owners, there was no need to construe cl 8(1)(c) as preventing indemnity until finalisation of those proceedings or otherwise entitling FTAC to refuse payment pending their determination.

The issues in respect of which leave to appeal is sought. 59 The principal issues underlying the appeal for which leave is sought are as follows: (a) The first issue: Whether the trial judge ought to have found that there was in law no First Decision, that determination having been made where, on the express assumption of the existence of defects falling within the exclusions in clauses 9(e) and (g) of the Scheme, there was (it is submitted by FTAC) no jurisdiction to do so; (b) The second issue: Whether, on the evidence, the trial judge erred in finding that the 15 January 1999 decision of FTAC and the proceedings before the CTTT (including the appeal to the Supreme Court on a question of law from that decision) were limited to the preliminary question of determining time limitations; (c) The third issue: Whether the trial judge erred in finding that the First Decision of FTAC and the decision of CTTT gave rise to an Anshun estoppel; (d) The fourth issue: Whether the trial judge erred in finding that FTAC could not revoke the First Decision notwithstanding its terms and legal status in light of FTAC v Tebbutt [2003] NSWSC 340 and the fact that at that time the Owners had incurred no losses within the meaning of clause 5 of the Scheme; (e) The fifth issue: Whether the trial judge erred in concluding that FTAC engaged in trade or commerce within the meaning of the Fair Trading Act 1987 (NSW) and that it engaged in misleading or deceptive conduct. 60 In subsequent written submissions exchanged after the hearing: (a) The sixth issue: The Owners sought to argue Verwayen estoppel ( Commonwealth v Verwayen (1990) 170 CLR 394) if necessary by way of notice of contention, based on those principles subsequently elaborated in Nigel Watts Fashion Agencies Pty Ltd v GIO General Limited (1995) 8 ANZ Ins Cases 61-235, that being opposed by FTAC, and (b) The seventh issue: FTAC sought to argue, by seeking leave, opposed by the Owners, to amend its draft notice of appeal, so as to contend that clause 10 of the Scheme, quoted earlier, precluded any claim by the Owners against FTAC, with Walter also relying on cl 10 as a defence against any claim by FTAC to recover against Walter should FTAC be adjudged liable to pay the Owners. 61 Walter adopted the arguments advanced by FTAC on these issues, which it saw as common to the appeal it sought leave to bring. In addition, Walter sought to rely on cl 10 against both FTAC and the Owners, and sought leave to agitate the costs order made by the trial judge. Walter contended, as to the costs order, that the trial judge erred in ordering Walter to pay to FTAC half of the costs FTAC was ordered to pay to the Owners in the Owners' proceedings to which Walter was not a party. Walter submits that this was an impermissible use of the costs discretion as it was seeking to make Walter pay indirectly the costs of a non-party, the Owners, in circumstances where such a direct order is outside the power of the Court by virtue of SCR Part 52A r4.

DISPOSITION OF LEAVE TO APPEAL 62 I would not be disposed to grant leave to appeal to FTAC or Walter and will explain my reasons. FTAC and Walter seek to uphold FTAC's purported revocation of its decision to approve the Owners' claim under the Scheme. The grounds it invokes are highly technical and, as I will explain, unmeritorious. They are relied on notwithstanding that the First Decision was given following lengthy disputation. It was given in clear and unqualified terms. It was about to be acted upon by the Owners when nearly a year later FTAC issued its letter of purported revocation - the Second Decision. 63 The issuance of that letter of revocation followed lengthy litigation unsuccessfully pursued by FTAC both before the Tribunal and then, on a question of law, before Burchett AJ in the Supreme Court. Moreover, the present application to this Court follows yet further proceedings before Grove J. Anshun estoppel necessarily focuses upon that litigious context. It does so in considering whether it was unreasonable for the party against whom the estoppel is alleged to have failed to raise a particular claim in earlier proceedings.

The First issue 64 However, I will consider the contention comprised in the first issue now sought to be advanced first on the basis that Anshun estoppel does not prevent it from being raised. That contention is that which I have identified as the first issue, namely, whether the trial judge ought to have found that there was in law no First Decision, that determination having been made where, on the express assumption of the existence of defects falling within the exclusions in clauses 9(e) and (g) of the Comprehensive Insurance Scheme, there was (it is submitted by FTAC) no jurisdiction to do so; 65 The First Decision was conveyed by the letter of 24 October 2002. To answer whether it was a nullity as outside jurisdiction, the starting point is to construe what it conveyed. FTAC contends that the letter, on its face unqualified, only approved settlement of the Owners' claim on the basis that there was no time limitation preventing payment. The argument is that the letter in context must be taken to have left open any other basis to disapprove the claim. If that were correct, it would mean that even if FTAC were wrong in contending that the approval was beyond power, the approval would nevertheless have a limited ambit leaving it open to revocation; at least if revocation occurred before any contract for rectification work were entered into or (possibly) monies spent on rectification. 66 A fair reading of the letter leaves no room for contending that in terms it was other than an approval to settle the Owners' claim for $852,598 in unqualified terms, with a comprehensive delineation of the further steps required before payment would be made. Thus settlement by payment was subject to completion of the works of rectification, with FTAC to verify satisfactory rectification/completion of the residential building work. It was also subject to execution of an "Authorisation of Payment" form and the production of the final account from the rectifying contractor. 67 These matters actually underline the otherwise unqualified nature of the approval. The Owners were thereby invited to commit themselves to a contract for rectification of the very matters the subject of the approved claim. This they could only reasonably be expected to do if able to rely on the approval being unqualified. Otherwise they would be at total risk in paying for the rectification work should the indemnity be capable of revocation. 68 Nor is the wider context of any assistance, even were it permissible for FTAC to resort to it in construing the letter of 24 October 2002. True it is that on 24 October 2002 and previously, the issue between the parties concerned whether a time limitation applied. That in turn depended entirely upon whether the defects in question could properly be described as major structural defects. Those issues were directly before the Tribunal and were precisely stated at paras 15 to 18, though it was unnecessary for the Tribunal, as it concluded, to deal also with issues concerning waiver and estoppel and with respect to a claim for damages for misleading and deceptive conduct. When the Tribunal gave the decision in favour of the Owners on the "major structural defects" issue, there was no other issue before the Tribunal which could defeat the Owners. That in turn led to the orders made by the Tribunal setting aside the decision made by FTAC on 15 January 1999. 69 It would be manifestly absurd to construe FTAC's consequential letter of approval of 24 October 2002 as in some way qualified by the fact that FTAC had chosen to take issue with the Owners' claim on one basis only reserving any basis upon which to resist the claims until some indeterminate time in the future. Not only did the Tribunal dismiss the time limitation issue raised by FTAC, but Burchett AJ saw no reason to disturb that conclusion, when considering that, and only that, as a question of law. 70 Nor can it be relevant that the settlement requirements of entering into a rectification contract and the like, had not actually taken place when the purported revocation occurred. The approval set no time limit for those matters to occur. 71 I turn now to the question whether the decision by FTAC communicated in the approval was beyond power. The basis upon which that contention is advanced appears to be epitomised in appeal ground 8 of the draft Notice of Appeal, which I quote below: "His Honour erred in finding that, on the express assumption that the defects were Excluded Defects, there was no jurisdictional error in the decision by the Appellant of 24 October 2002 when it purported to approve the payment for defects included under clause 9 of the Scheme and thus the decision of 24 October 2002 was a nullity." 72 Draft appeal grounds 9 to 11 should be read in conjunction, and I quote these below: "9. His Honour erred in finding that clause 9 was directed to assessment of fact and in finding that that proposition had the consequence that the error was not jurisdictional.

His Honour erred in concluding that a factual mistake as to the nature of the defects did not constitute jurisdictional error.

His Honour erred in not accepting that the Appellant should be taken only to have become aware of the facts and circumstances which might 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 Respondent owners against Walter." 73 The trial judge was asked to assume the existence of defects within the meaning of exclusion clauses 9(e) and (g) of the Regulation that were to be found in Form 4. 74 I have earlier quoted clauses 9(e) and (g) of the Regulation but they require closer consideration. This is in order to determine whether, if the defects were within clauses 9(e) and (g), this necessarily led to the conclusion that a jurisdictional fact essential to the validity of FTAC's decision must thereby be taken to be lacking or absent, so vitiating that decision. On this basis, the First Decision, accepting that it represented an approval unqualified in terms, was indeed for that reason beyond the power of FTAC under the relevant legislation. 75 I would adopt as a starting point the analysis of jurisdictional fact in the recent judgment of a five member bench of this Court in Woolworths Ltd v Pallas Newco Pty Ltd & Anor [2004] NSWCA 422. I refer in particular to what is said by Spigelman CJ, concurred in by Mason P, Handley and Sheller JJA and Cripps AJA as follows: "[5] The case law and legal literature contains a great deal of terminological confusion about the concepts of "jurisdiction" and "jurisdictional facts". The authoritative statement of the relevant concept for Australia is set out in the joint judgment of the High Court in Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 at [28]: 'The term 'jurisdictional fact' (which may be a complex of elements) is often used to identify that criterion, satisfaction of which enlivens the power of the decision-maker to exercise a discretion. Used here, it identifies a criterion, satisfaction of which mandates a particular outcome.'

[6] The issue is one of statutory construction. What is required is a careful analysis of the statute which confers the jurisdiction. Consideration must be given to the language of the power under consideration and to the total context of the legislative scheme in which the power is conferred, including the scope and nature of the jurisdiction and of the fact said to be jurisdictional." 76 What was at issue in Woolworths Limited (supra) was whether the characterisation of a proposed development in an environmental planning instrument under the Environmental Planning and Assessment Act 1979, as a "drive-in-takeaway establishment" was a jurisdictional fact, such that unless the proposed development is accurately characterised, any purported consent based on that characterisation is not valid, and is subject to certiorari. The bench unanimously concluded that it was such a jurisdictional fact. But what is important is the Court's articulation of the factors or indicators pointing to jurisdictional fact as against merely "a fact to be adjudicated upon in the course of the enquiry" (Colonial Bank of Australasia v Willan (1874) 5 PC 417 at 443). The former is an essential preliminary to jurisdiction while the latter falls to be determined by reference to Wednesbury unreasonableness or, it appears manifest illogicality (cf Spigelman CJ in Woolworths Limited at [92]; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 esp at [32], [37], [52], [73], [173] and [126]-[128], cf [9]. See also Greyhound Racing Authority (NSW) v Bragg [2003] NSWCA 388 at [57]-[66].). 77 An indicator against a jurisdictional fact, though by no means invariable, is where the matter in question involves consideration of fact and degree when determining whether or not that particular matter answers a statutory description. This is more especially where the administrative decision involves an assessment of a wide range of matters of considerable complexity involving the formation of value judgments where "such a decision-making process is unlikely to involve jurisdictional fact"; per Spigelman CJ at [53] and [58]. 78 After citing a number of cases where, notwithstanding, matters of judgment involved in determining the existence of facts, including matters of fact and degree, were held not to be jurisdictional, Spigelman CJ concludes: "[61] In each case it was the overall statutory context that proved determinative as to whether or not Parliament intended the existence of the fact to both objectively exist and be essential, notwithstanding the element of fact and degree, or even of judgement, that was required in the process of determining whether or not the relevant fact existed." 79 Significantly at [63] Spigelman CJ emphasises the degree of inconvenience that could arise if a consent valid on its face could not be relied upon in relation to land development, that is, either by the person receiving consent or by those dealing with that person. That will be the consequence if the decision-maker's determination entails consideration of a jurisdictional fact reviewable on appeal. The Chief Justice observed: "[63] The most significant element suggesting that classification is not a jurisdictional fact arises from the degree of inconvenience that can arise if a consent which is valid on its face and, indeed, is entered upon a register of consents maintained by the Council under reg 264 of the Environmental Planning and Assessment Regulation 2000, cannot be relied upon either by the person receiving consent or by all those dealing with that person in relation to the land." 80 Clauses 9(e) and (g) of the Scheme require FTAC as the primary decision-maker to make a judgment inherently one of fact and degree, often complex, and capable of involving some elements of value judgment such as what is reasonably competent. Appeals to the expert, specialised Tribunal put that Tribunal in the same position. Thus clause 9(e) requires a causal determination as to whether there is a defect "due to" faulty design, and a judgment as to its obviousness or otherwise "to a reasonably competent holder of an appropriate licence". 81 Clause 9(g) requires a judgment likewise as to whether defects are "due to an obviously faulty design". In the case of both clauses 9(e) and (g), the design, to be within the exclusion, must have been provided by the beneficiary of the Scheme, or by a predecessor in title. Clause 9(g), requires that the fault was drawn to the owner or his predecessor's attention but the licensed contractor was instructed to comply with what was "an obviously faulty design". 82 Questions of fact and degree are therefore clearly involved. Moreover establishing causation of the defect as due to faulty design can be difficult, as illustrated by the very defects here in question. Take the deflection of the balustrades, said to be due to pressure from expanding balcony tiles. Is this causation made out? And if made out, is it an example of faulty design (there being no suggestion of faulty materials) or simply due to the kind of structural defect that is not design related? Finally, there is the question of whether the defect would have been obvious "to a reasonably competent holder of an appropriate licence"? 83 The Tribunal dealt with these questions only in the context of whether the relevant defects constituted major structural ones. It similarly dealt with whether windows and doors allowed water penetration (at para 40). The latter poses similar questions of fact and degree as well as of causation, when it comes to determining whether these are matters of faulty design, and if so, whether "obviously" faulty in the sense used in clauses 9(e) and (g). 84 Indeed the Tribunal expressly concluded that whether windows and doors suffer major structural defects involves considerations of degree (at para 49). By parity of reasoning one would conclude that the various defects illustrated by the present case involve questions of fact and degree of considerable complexity. There is also an element of value judgment inherent in whether the fault would have been obvious to a "reasonably" competent holder of the builders licence. 85 But, as Spigelman CJ illustrated in Woolworths Ltd by the cases cited at [60] such as Sutherland Shire Council v Finch (1969) 123 CLR 657 at 663-6, these matters are not necessarily determinative. Here, however, there was present one additional significant element, present in Woolworths only in attenuated form. That element tends strongly against there being any jurisdictional fact involved. Here, there would be a high degree of inconvenience if a claim approval, valid on its face and without apparent qualification, could not be relied upon by the Owners. Indeed third parties, too, will frequently need to rely on that approval. Consider, for example, a financier advancing money for rectification work, or a purchaser acquiring a unit in the building. Indeed that inconvenience is especially great where one considers the hardship involved here. Thus the Owners would be at serious risk if they were to do that which they were required to do in order to receive settlement, were FTAC then free to revoke its approval in the manner it did. I refer to carrying out the rectification work, thereby incurring actual liability and costs of a very high order. When one turns to the overall statutory context to test whether so onerous a result is congruent with it, such a result would be plainly inconsistent with the objects sought to be achieved by the Act as explained in the second-reading speech. Those objectives include to "promote and protect the interests of owners and purchasers of dwellings" and to provide a "centralised, simplified and logical one-stop shop" and to "address complications that have existed in the past …". Nor is it any answer to say that the Owners had not yet incurred the liability to rectify when the purported revocation occurred. The validity or efficacy of that revocation on FTAC's own jurisdictional fact argument cannot depend on when the revocation occurred in that sequence. 86 Owners, on the position contended for by FTAC, hardly have their interests promoted and protected. This is if they can never be confident that an approval given could not be revoked after they had embarked on the rectification work which was the condition precedent to receiving indemnity. This is more especially if revocation were, as here, for reasons never adumbrated by FTAC in any of its dealings with the Owners. Purchasers would be in an especially vulnerable position if they were to purchase from an owner relying upon an approval of an earlier claim for defective work. 87 Here the purported revocation is by FTAC itself. However if, as the present case illustrates, the contention of FTAC were correct, even if FTAC were not of a mind to revoke its own decision, the builder could invoke the supposed jurisdictional fact, and force revocation on the ground that FTAC was wrong in its decision. The builder faces action under s98 of the Act for recovery of any amount paid by FTAC under the Scheme, so has every incentive to challenge an approval. Such a result would undermine any suggestion of a simplified and logical one-stop shop. It would not comport with the expertise expected to be exercised by FTAC as the authority in charge of administering the Scheme or of the specialised Tribunal in the event of appeal. That is itself a powerful argument for rejecting the position here contended for by FTAC. 88 Thus, as the Privy Council identified in Colonial Bank of Australasia v Willan [1874] LR 5 PC 417 at 442-3, the question of whether the exclusion in clauses 9(e) or (g) applies (as also other exclusions in clause 9 similar in character) does not involve ascertaining a fact which was an "essential preliminary to the decision-making process". Rather what we have is a "fact … to be adjudicated upon in the course of the inquiry", and thus not a jurisdictional fact. 89 Moreover it is by no means made out that these defects are within the meaning of exclusion clauses 9(e) and (g). There is simply no identification of evidence pointing decisively in that direction. Indeed, there is a significant amount of evidence to indicate that FTAC had been alerted to the possibility of the defects coming within these exclusions well before; yet presumably either did nothing or were then satisfied that they were not of a kind which fell within those exclusions. 90 I refer first to Ms Nairn's affidavit of 23 January 2004 on behalf of the Owners. There she lists the extensive discovery before the Tribunal hearing as having been available for FTAC to inspect. More significant still are paragraphs 13-14 of Mr Elliott's affidavit of 20 October 2003 on behalf of FTAC. He was responsible for determining insurance claims made on FTAC under the Scheme. I quote what he said: "13. In the appeal proceedings before the Commercial Tribunal the Defendant relied upon expert evidence by Warren Dickinson, building consultant, and Professor Marton Marosszeki in respect to the defects. Mr Dickinson prepared two reports dated 19 October 1998 & 22 February 2000. Professor Marosszeki prepared two reports dated 27 June 2000 & 24 July 2000. At pages 10 to 25 of RGE1 are the two reports of Mr Dickinson. At pages 26 to 32 of RGE1 are the two reports of Professor Marosszeki.

As the primary issue before the Commercial Tribunal related to whether the various defects which were the subject of appeal were of their nature either major structural defects or general defects, the evidence and legal argument was directed to that issue. Although Professor Marosszeki referred to some problems being associated with design issues, and in particular that the tiling defects related to poor design of the expansion joints, there was no information available that I am aware of as to whether the design was determined by the original contractor or by the architect for the project." 91 It is therefore readily apparent that FTAC's own expert, Professor Marosszeki, to the knowledge of Mr Elliott, had identified "some problems being associated with design issues" and "in particular that the tiling defects related to poor design of the expansion joints". If there was a point to be taken, it was certainly not taken before the Tribunal or indeed before. 92 To this should be added the affidavit of Mr Dale dated 17 February 2004. He was the commercial manager of Walter who recounts at para 15 a conversation with the person at FTAC with administrative responsibility for the Scheme. I quote the paragraph below as illustrative of the fact that information clearly existed as early as February 1998 that the builder intended to take the point about design defects. The significance of that is not to be dispelled by the fact, as FTAC appear to argue, that this conversation took place some years earlier. I quote: "15. On 19 February 1998 I had a meeting with Tom Kelaart of the DFT. At that meeting we had a conversation in the following words or words to that general effect:

I said: 'In September 1996 you advised WCG that you had approved a claim by the Owners for $61,465. In March 1997 you sent a letter saying that the approved sum had been reduced to $56,465, then in September 1997 you told us that an additional amount of $40,409 had been approved bringing the total amount now approved to $106,704. Thee has been no account taken of the $5,000 reduction notified in March 1997, and there also seems to be a calculation error in the total amount now claimed at $106,704.'

I said: 'WCG wrote to the DFT in September 1997 outlining its difficulty with the additional amount of $40,409. I don't accept that WCG should now be forced to pay for additional work under these circumstances.'

I said: 'WCG is very concerned that due to its own internal oversight it became necessary for the DFT to approve the claim and sanction the rectification works to the roof, and our internal procedures have been amended to help prevent any reoccurrence of this situation. We regret the fact that the DFT has become involved in one of our projects, something that has never happened before, and would prefer to have had the opportunity to rectify the problem ourselves.'

I said: 'We reluctantly accepted that we left it too late to deal with the claim for roof works ourselves, but we can't accept that we should pay an additional unsubstantiated amount. I should explain that this project was designed and specified by Architects employed by the Developer, and we acted only as Builders. WCG believes that the problem on the roof have come about as the result of design issues, and that this whole claim should have been directed to the Architect.'

Mr Kelaart said: 'I'm sorry, but it doesn't matter to us who was responsible for the design. We don't have any recourse to designers or developers, only to the builder who holds a license issued by us. If you feel you have a case against the designer, then you must take that up with him yourselves.'

I said: 'So, what you're saying is that regardless of who is actually responsible for the design of the various building elements, you will always hold the builder responsible. Even more reason why we would prefer that the DFT not be involved. What's the point? If we're going to end up with the problem anyway, we might as well get on with it in the first place.'

Mr Kelaart said: 'We still have the issue of $40,000 to resolve. I understand the points you have made, but as I've explained it's still your responsibility. However, in an attempt to settle this, and without making any admissions on either side, how about this, we'll deduct the $5,000 reduction that we advised you of in our letter dated 20 March 1997, and split the balance? What if you pay an additional $18,000 to settle it?'

I said: 'Obviously WCG is not happy about paying any of it, but in the interests of a commercial settlement we will agree to that as being full and final settlement of the insurance claim.'" 93 I have mentioned this background for two reasons. First, it provides context for viewing the letter of 15 January 1999 as being a letter that fairly could be described as "based on all the information available" rather than one written in a situation where critical information was not yet available to FTAC. Moreover, it provides a context for the letter of 24 October 2002 as being indeed a commercial settlement of the Owners' claim. It aptly falls within the power to enter into such arrangements or agreements in s100(1) of the Act quoted below and under s105(3) to which I come later. Section 101(1) empowers FTAC as follows: "(1) The Corporation may enter into arrangements or agreements for the purpose of reducing its liability or potential liability under BSC Insurance." 94 The examples given in s100(2) were relied upon by FTAC to narrow the scope of s100(1) and I quote subsection (2) to indicate the basis for that argument: "(2) For example, the Corporation may, for that purpose: (a) participate in proportional insurance, or

(b) effects top-loss reinsurance or other reinsurance, or

(c) with the consent of the Minister, lend money for the purpose of allowing residential building work to be completed, if failure to complete the work would or might result in liability under BSC Insurance." 95 I do not, however, find a common genus in the examples given which would lead me to preclude a wider interpretation to the s100(1) as would embrace a settlement reducing FTAC's potential liability to make payment under the Scheme, here by crystallising it at the figure in the letter of 24 October 2002 at $852,598. Even if that were not expressed in terms as a reduction of potential liability, it does so by discharging and, in that sense reducing, FTAC's actual liability following the Tribunal resolving against FTAC. 96 I would thus conclude that s100(1) provides at least one statutory power to make an arrangement in settlement of a claim of that sort. This is even if it were open to FTAC to contend that clause 9(e) or (g) operated as an exclusion of that claim, as it failed to do until much later. In any event, for the reasons earlier given, I consider that the correct analysis is that FTAC in no sense purported to determine a jurisdictional fact when by its letter of 24 October 2002, it agreed to settle the relevant claims as satisfying clause 5(1)(d) of the Scheme. 97 I should also refer to s105(3)(a) which provides that: "For the purpose of attaining its objects, the Corporation may:

(a) bring about under this Act the resolution of disputes which may involve residential building work, or specialist work, that is defective or incomplete or in relation to which there may have been unfair conduct, or which may involve kit homes." 98 Here, the dispute could be said to be first with FTAC itself and second with the builder, Walter. Even if the expression "resolution of disputes" referred only to disputes with the builder, the dispute so far as concerns the Owners and Walter in relation to the indemnified claims would be resolved by settlement in the amount of $852,598. This is so, though there may be other disputes between them.

The Second and Third issues 99 The second issue concerns whether, on the evidence, the trial judge erred in finding that the 15 January 1999 decision of FTAC and the proceedings before the Tribunal were not limited to the preliminary question of determining time limitations. The third issue concerns Anshun estoppel in not raising the design issue and jurisdictional fact argument before the Tribunal and, I would add, Burchett AJ. 100 Grove J dealt with the second issue and its implications for what could be said to be properly before the Tribunal, at [30] to [36], which for convenience I quote below. I agree with the trial judge's reasoning and the conclusion he reaches: "[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 Ltd 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 cl 9 of the scheme at or shortly after the mediation session which took place in connection with the action by the owners against Walter." 101 FTAC's submission to the contrary relied first on Mr Elliott's evidence not having been challenged. I have already dealt with that evidence and the reasons why I consider it, if anything, supports the trial judge's conclusion, particularly when read with the evidence of Mr Dale. In any event, that the exclusions in clauses 9(e) and (g) were not in the forefront of Mr Elliott's mind at the time of the Tribunal is nothing to the point when the potential availability of those exclusions should have been apparent, if indeed there were any factual basis for them. 102 The argument from FTAC then proceeds as follows: "21. In relation to the CTTT, his Honour relied on two extracts from the Tribunal transcript to the effect that matters that were not in issue were taken to be admitted, and that Counsel before the Tribunal made reference to arguments as to waiver and estoppel (although such submissions were not necessary to be entertained as a result of the ultimate finding).

The error in this reasoning is that the preliminary nature of the proceedings before the CTTT necessarily led to the manner in which the issues were ventilated before the CTTT. Consequently there was no onus on the parties to plead or otherwise raise matters which were not in issue, nor likely to be in issue, at such a preliminary hearing.

In the Claimant's submission it is clear that the proceedings were limited to the limitation question and matters relevant to that issue." 103 The contention in para 22 quoted above, that the proceedings before the Tribunal were of a "preliminary nature", assumes what it has to prove. A fair reading of the Tribunal judgment dispels any suggestion of it being a preliminary proceeding. 104 It is undoubtedly true that the proceedings agitated before the Tribunal were limited to the limitation questions and matters relevant to that issue. But that is because FTAC chose so to limit the matters advanced by it in the proceedings before the Tribunal when resisting payment. It is precisely that which led the trial judge, correctly in my view, to conclude that Anshun estoppel applied so far as the Tribunal was concerned. It was plainly unreasonable for FTAC to fail to raise the design defect issue before the Tribunal, if it was to be raised subsequently. Moreover, it was plainly unreasonable for FTAC to fail to raise the design defect issue before Burchett AJ in so far as any question of law were concerned. There could hardly be a clearer case of abuse of process by way of Anshun estoppel for that issue to be raised now. 105 In referring to the proceedings before Burchett AJ, I recognise that Grove J did not deal with Anshun estoppel in that context. However, by parity of reasoning, the question of law inherent in the contention that the First Decision was beyond power could have been raised before Burchett AJ and it was unreasonable not to do so, if reliance were now to be placed upon it. However, it is not necessary to reach a concluded view on that matter as the jurisdictional fact argument based on it is itself wrong, for the reasons I have earlier set out.

The Fourth issue 106 What is said above deals with the second and third issues, the latter being concerned with Anshun estoppel. The fourth issue concerns whether the trial judge erred in finding that FTAC could not revoke the First Decision notwithstanding its terms and legal status in light of FTAC v Tebbutt [2003] NSWSC 340 and the fact that at the time the Owners had incurred no losses within the meaning of clause 5 of the Scheme. 107 I have already dealt with the terms of the First Decision, concluding that there is nothing in its terms to indicate that the decision was in any way provisional or qualified. It was simply a decision to settle the claim for a stated sum with no further step required for the decision to be complete so far as FTAC was concerned. I have already referred to s100(1) and s105(3)(a) of the Act, the latter empowering FTAC to bring about the resolution of disputes, as here. 108 I would agree with the submission of the Owners that having thereby embarked upon a decision-making process, whether that decision be simply to settle the claims of the Owners, or to resolve a dispute in relation to the claims by so doing, FTAC was now functus in the sense used in Minister for Immigration v Kurtovic (supra) to which I have earlier made reference. I also agree that even had FTAC failed to consider factual material available, and in a context where no evidence was adduced as to what the decision-maker did or did not consider when making its decision, any such failure could not deny its ability to make a decision. It is therefore not open to FTAC, having thereby spent its decision-making powers, to now seek to unravel its decision-making processes by (in the words of Owners' written submissions) "matters unknown and unknowable to the claimants and not the subject of evidence before Grove J". The statement of principle by Vaisey J In re 56 Denton Road Twickenham (1953) 1 Ch 51 at 56-7 is directly applicable: "… On the second point the plaintiff's counsel offered for my acceptance the following proposition: that where Parliament confers upon a body such as the War Damage Commission the duty of deciding or determining any question, the deciding or determining of which affects the rights of the subject, such decision or determination made and communicated in terms which are not expressly preliminary or provisional is final and conclusive, and cannot in the absence of express statutory power or the consent of the person or persons affected be altered or withdrawn by that body. I accept that proposition as well founded, and applicable to the present case. It is, I think, supported by Livingstone v Westminster Corporation ([1904] 2 KB 109) and Robertson v Minister of Pensions ([1949] 1 KB 227)." 109 One may take it that in making the decision it did, FTAC as the statutory body entrusted with the relevant power did so having regard to such matters as it thought appropriate. When it concluded in favour of admitting the claims, it must be taken to have decided that the claims should not be rejected under any potential exclusion which must be taken to include potential exclusion under clause 9(e) or (g). 110 There is, however, an argument with which I have still to deal based upon the decision of Palmer J in Fair Trading Administration Corporation v Tebbutt [2003] NSWSC 340; (2003) 19 BCL 467. 111 That argument is best stated in the way in which FTAC put it in its written submissions of 18 October 2004: "25. As earlier submitted clause 5 provides, relevantly, that 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 [6 specified matters].

These provisions were considered by Palmer J in Fair Trading Administration Corp v Tebbutt [2003] NSWSC 340; (2003) 19 BCL 467. At [32] Palmer J posed the question whether the FTAC was obliged to indemnify a beneficiary under clause 5(1)(d) or clause 5(1)(e) of the Scheme prior to the beneficiary incurring a liability for the cost of actually carrying out rectification work. Palmer J answered that question at [46] by concluding, in relation to clause 5(1)(d), that the losses to be indemnified are either payments already made by the beneficiary in the course of carrying out rectification work or else payments for the carrying out of rectification work for which the beneficiary has incurred a contractual obligation. What is essential, however, is that the reimbursement or saving harmless be in respect of loss incurred 'in rectifying defects', that is, in actually carrying out rectification work. At [47] Palmer J said that the FTAC's liability arises only when the beneficiary's loss is incurred 'in rectifying' and not otherwise. Thus, in the FTAC's submission, it had no power under the Scheme to make a decision other than a decision in principle where, as were the facts of this case, no contract for the rectification work had been entered into by the Owners." 112 However, the critical conclusion reached by Palmer J in Tebbutt is to be found at [46-7] which I quote below: "[46] I now turn to the critical clause in this case, cl5(1)(d). Construed together with the introductory words of the clause, the obligation of the Corporation under cl5(1)(d) is to "indemnify losses reasonably incurred by a beneficiary ... in rectifying defects". When the words of the clause are read and attention is paid to cl8(5), cl8(6) and cl8(7), in my view it is plain, for the reasons I have given in relation to cl5(1)(c), that the losses to be indemnified are either payments already made by the beneficiary in the course of carrying out rectification work or else payments for the carrying out of rectification work for which the beneficiary has incurred a contractual obligation. In the first case, the Corporation is liable to indemnify by making reimbursement; in the second case the Corporation is liable to indemnify by saving the beneficiary harmless and making payments on his or her behalf at the time stipulated in the contract for rectification work. What is essential, however, is that the reimbursement or saving harmless be in respect of loss incurred "in rectifying defects", that is, in actually carrying out rectification work.

[47] When a beneficiary discovers defects in building work requiring rectification, he or she may be said to have suffered a loss in the sense that he or she has paid for, but has not received, a building which is free from substantial defect. But that is not a loss which cl5(1)(d) indemnifies because the beneficiary may choose to do no rectification work. The Corporation's liability arises only when the beneficiary's loss is incurred "in rectifying", and not otherwise." 113 Palmer J at [53-4] sought to dispel any suggestion that this interpretation of the Scheme resulted in any practical difficulty or unfairness to a person in the position of the owner in that case. Thus Palmer J indicated that there was nothing to stop the owner arranging a written indemnity with FTAC both to himself and to the builder stating that if he entered into a contract for rectification, FTAC would indemnify him and make the necessary payments, possibly direct to the builder. 114 All of this, however, does not establish that FTAC could simply revoke the letter of 24 October 2002 until such time as a written contract were entered into to carry out the rectification work or, if that is how FTAC's argument is to be understood, until rectification was at least commenced. I do not understand the reasoning in Tebbutt to go further than identifying when there is a liability to make payment pursuant to a loss requiring indemnification, in terms of clause 5(1)(c) and (d). FTAC may under the Act commit itself to discharge the obligation to make payment upon the events set out after the reference to "settlement of the claim" in its letter of 24 October 2002; indeed, that is precisely what it did commit to do. So far as any decision-making process is concerned, that was complete when the letter was written. What followed in relation to complying with the settlement conditions were pre-conditions to effecting the already committed payment. They principally fell upon the Owners, subject to final verification by FTAC of satisfactory rectification/completion of the defective building work. Were the position otherwise, FTAC would not be able to bring about the resolution of disputes in the manner contemplated by s105(3)(a). This is because no one could safely enter into an agreement with FTAC to settle a claim unless a rectification contract were first entered into coincident with settlement. That temporal coincidence in most cases would be totally impossible of practical achievement. In particular, FTAC would be unable in that vital respect to attain its object to "promote and protect the interests of owners and purchasers of dwellings" set out in s105(2)(a) of the Act.

The Seventh issue 115 I should here deal briefly with a related issue which FTAC sought to argue and which I have described as the seventh issue. It is that relating to clause 10 and whether any claim was thereby rendered out of time by reason of FTAC ceasing to have any liability under the Scheme after 10 years. Initially only Walter intended to rely on clause 10 on appeal (both FTAC and Walter relied on clause 10 at trial), FTAC disavowing reliance in oral submission, though with the possibility of reverting to reliance in written submissions to follow shortly. However, in written submissions after oral argument, FTAC did rely on clause 10 seeking an affirmative answer to Question 6, which Grove J answered in the negative. Question 6 was "Whether clause 10 of the Scheme can be relied upon by FTAC to deny liability". 116 Leave to amend FTAC's draft Notice of Appeal was opposed by the Owners as unfair, and on other grounds. Walter continued to rely on clause 10 as a defence against any claim by FTAC under s98 of the Act in turn to recover against Walter should FTAC be adjudged liable to pay the Owners. 117 I have earlier quoted clause 10 which commences with the words "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 …". 118 Clause 7(2) of the Regulation provides that FTAC "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". Clause 7(1) earlier elaborates various time limitations for written notification. 119 If clause 10 were construed as operating to exonerate FTAC from a liability it would otherwise have under the Scheme if it could dispute and delay payment beyond 10 years from the time the original residential building work commenced, it would place a premium on the kind of litigious point-taking that has, regrettably, characterised these proceedings. In particular it would give rise to an oppressive outcome against bona fide and blameless claimants, hardly consonant with the objects of the legislation.

Conclusion 120 Consonant with those objects, a more natural interpretation, given the opening reference to "despite clause 7(2)", is that clause 10 is simply designed to make sure that FTAC does not under clause 7(2) extend the times specified in clause 7(1) beyond the ten years. But where the beneficiary has in fact complied with the notification requirement, FTAC is able to ascertain the nature of the liability in question within a reasonable timeframe, even if the execution of rectification work is delayed by ongoing dispute as to the full quantum of that liability. I should particularly note here that clause 10(a) does not require the ten years to run from the commencement of the rectification work but from the commencement of the original residential building work in relation to which the Scheme applies. Thus clause 10 could not be construed as operating as a bar upon any beneficiary who fails to commence or complete the rectification work within the ten year time frame. 121 It follows that clause 10 provides no answer to the Owners' claims. That conclusion means Walter cannot rely on clause 10 either, so resolving the seventh issue also. I should add that, since dictating the above, I have had the advantage of reading Sheller JA's judgment in draft and in particular at [10]. I agree with Sheller JA's conclusion that FTAC cannot take advantage of its own delay and obdurate resistance in meeting the Owners' proper claim. An interpretation to the contrary would lead to absurdity and an oppressive result, contrary to the objects of the Act, and is reason for rejecting a result in no way compelled by the language of the clause. In the words of Sheller JA, "If such were the law, which in my opinion it is not, it would open the scheme to be administered irresponsibly, lazily and, though obviously not in this case, corruptly".

Remaining Issues 122 In view of my earlier conclusions, there is no necessity for me to deal with what is described as the fifth issue, namely, whether the trial judge erred in concluding that FTAC engaged in trade or commerce within the meaning of the Fair Trading Act 1987 (NSW) and that it engaged in misleading or deceptive conduct. Nor is there any need to consider what is described as the sixth issue which the Owners seek to argue, namely, Verwayen estoppel.

OVERALL CONCLUSION 123 In my view, of each of the appeal grounds sought to be raised by FTAC and, as joined in by Walter, none warrant leave being granted. I cannot forbear to add that FTAC has with this present application brought the Owners to court now on four occasions, at what must be enormous cost and delay in rectifying defective building work for the Owners. One might fairly ask how this comports with FTAC being a model litigant. Even if, with the wisdom of delayed hindsight, FTAC genuinely believes that the defects in question were design defects within a relevant exclusion, the unreasonableness which led to a conclusion of Anshun estoppel applies equally to the belated resuscitation of that consideration in its resistance to honouring the letter which gave effect to its approval of the Owners' claims in October 2002, over two years ago. 124 Save as to the costs order in relation to Walter, this resolves the present application for leave to appeal which must be refused.

Costs 125 I should however deal briefly with the matter of costs, the subject of Walter's application for leave to appeal. The main questions identified in the claimant's summary of argument have been dealt with earlier. As to clause 10 of the Scheme, it provides no defence to Walter for the reasons that I have earlier explained in relation to FTAC. 126 The costs question is formulated by Walter as follows: "Whether the trial judge erred in ordering Walter to pay to FTAC half the costs FTAC was ordered to pay to the Owners in the Owners' Proceeding to which Walter was not a party. Walter submits that this was an impermissible use of the costs discretion as it was seeking to make Walter pay indirectly the costs of a non-party, the Owners, in circumstances where such a direct order is outside the power of the Court by virtue of Part 52A rule 4." 127 Oral argument on this aspect of costs is to be found in the transcript of 2 November 2004 (T, 90 and following). In the course of argument, Mr Dubler, SC clarified the position he was putting. While he relied on Part 52A r4(2) precluding the court ordering costs against a non-party, he fairly conceded that because Walter was technically a party in proceedings 30112/2003, though not the parallel proceedings brought by FTAC in 30087/2003, he could not say that the costs order was actually directly contrary to the injunction in Part 52A r4(2) (T, 91.25 and following). 128 Mr Dubler, SC however maintained that, consistent with the reasoning in Wentworth v Wentworth (2000) 52 NSWLR 602, such a costs order should nonetheless not have been made. 129 Mr Dubler, SC further clarified the position he was taking when he indicated that his instructions were to submit to the costs order insofar as Walter contradicted the position of FTAC, namely as to whether it had been denied natural justice by FTAC in originally approving the claim without any notification to Walter (T, 89.30 and following). 130 Finally, Mr Dubler, SC fairly conceded that as a matter of rough justice, there was probably nothing wrong with the order made in the sense that he readily conceded that Walter had a direct interest in the success of FTAC's submissions as, if they were accepted, Walter would not be subject to recovery proceedings under s98 of the Act. 131 I would conclude that in all the circumstances, given that the two proceedings were inextricably connected and the non-joinder of Walter simply meant that the proceedings proceeded in parallel, there is no reason for departing from the trial judge's exercise of his discretion in awarding costs as he did against Walter. While the Supreme Court Rules might have provided an impediment to that result, they do not do so here. 132 In the circumstances, as I have found them, and taking into account what is contained in the draft judgments of Sheller JA and Tobias JA so far as relevant to costs, I would give liberty to the opponent to make an application for an order that the costs of the appeal be paid on an indemnity basis. Such application should be filed and served together with submissions in writing on or before Friday 18 March 2005 and any submissions in reply thereto on or before Wednesday 23 March 2005.

ORDERS 133 I would propose the following orders: (1) Leave to appeal be refused to FTAC and Walter respectively. (2) FTAC to pay the opponent's costs of its application for leave to appeal and Walter to pay the opponent's costs of its application for leave to appeal, but with liberty on the opponent's part to apply by way of written submissions filed and served on or before 18 March 2005 for indemnity costs with any submission in reply to be in writing filed and served on or before 23 March 2005. 134 It is noted that by far the major proportion of the costs of the applications for leave to appeal should fall on FTAC. It is to be hoped that proportion is agreed but if it is not, I would propose the matter be dealt with on written submission so as not to add further to costs. 135 TOBIAS JA: I have had the benefit of reading in draft the judgment of Santow JA together with the additional remarks contained in the draft judgment of Sheller JA. I agree with both. At the conclusion of the hearing of the appeal I was convinced that the arguments of the claimants had no merit. Having read their Honours' reasons I am confirmed in that view. 136 Of considerable concern are the matters referred to by Sheller JA in [8] and [10] of his judgment. Like his Honour, I find the conduct of the Corporation inimical not only to its statutory objectives under its charter but also to the public's confidence in the proper, fair, efficient and just administration of the Act and Regulation with which it has been charged and for which it is solely responsible. Its conduct in the present case has been obdurate and has done it no credit. It has caused nothing but unnecessary stress and hardship to those whom the Act and Regulation were intended to benefit. **********

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