Michael & Rosemary Foy v Calliden Insurance Limited [2017] NSWDC 33

This decision concerns the insurer’s rejection of a claim under a policy of home warranty insurance.  Among other matters, the owners claimed that in failing to advise of them of a change in legislation, the insurer had engaged in behaviour amounting to misleading or deceptive conduct.

Background

The owners purchased a property in 2008 and on settlement, they obtained a certificate of insurance issued by the insurer. Within the first six months of occupation the owners became aware of various defects. The owner gave evidence that in early 2009 he called the insurer’s agent to notify the defects. He claimed that he was told that “the policy does not operate unless the builder had died, disappeared or become insolvent… you should contact us against when one of those things occur.” In response to this, he did not lodge any claim with the insurer and instead commenced an action against the vendor in the then CTTT which was determined in the owners’ favour. The owners subsequently successfully petitioned the Federal Court seeking orders for the bankruptcy of the vendor.

The owners lodged a claim form with the insurer on 10 May 2013. The insurer rejected the claim on the basis that the period of cover, being six years from the date of the completion of the work, had expired on 14 May 2009 and accordingly, indemnity was not available.

The homeowners then commenced proceedings against the insurer on several bases.

Contract claim

On the contract claim, the court accepted the arguments of the insurer in finding that the owners did not adequately notify the insurer of their claim as the 2009 phone call did not comply with written notice requirements and the subsequent correspondence did not provide sufficient information as to loss to be considered a notification of a claim under the Home Building Act 1989.

Misleading or deceptive conduct claim

The owners argued that the insurer’s response in the 2009 phone call amounted to a misleading and deceptive representation which they relied upon to their detriment. Specifically, the owners contended that the statement “you should contact us against if one of those things occur” was an express and continuing representation that became misleading and deceptive on the commencement of the 2009 amendments, which required notice to the insurer in writing:

“This is an express representation as to what the Foy’s [sic] needed to do in the future. It is a continuing representation on behalf of the defendant who owes the Foys a duty of good faith as to what they should do in the future… Whilst it may be accurate at the time, it imports with it first, a representation that there is no likelihood of change of circumstances, or, if there is that the Foys will be notified. It thus becomes misleading if Calliden remains silent in the face of legislative change when it has created in the Foy’s [sic] an expectation that the representation would be corrected if circumstances changed.

Conversely, the Insurer argued and the court agreed that the statement referred to future conduct but made no representation about it. Further, the court held that the statement did not import a representation that there was no likelihood of change of circumstances or that if there was, that the owners would be notified. In essence, the statement reflected no more than what were the requirements of the policy at the time. The court also held that there was insufficient evidence that the owners had, in fact, relied on the statement to this effect.

To this end, the misleading and deceptive conduct claim also failed. Related claims based on unconscionability and estoppel also failed.

In the media

MBA: Housing Affordability Reforms Must Focus on Impediments to Homeownership

There has been a solid start to the year for housing, with dwelling finance up by 1.5 per cent in January. The statistics support a national outlook for strong residential building activity in the year ahead, but the challenges for first home buyers continue to mount, with the number of loans falling by over 20 per cent in January (10 March 2017). More…

Affordable housing bond aggregator should be accessible to private sector housing providers

The Federal Government’s proposed affordable housing bond aggregator should be accessible to private sector housing providers as well as not for profit community housing providers, says the Urban Taskforce. More…

MBA: Spike In Strikes Data Justifies ABCC But More Reforms Needed

ABS disputes data released today supports the Parliament’s decision to restore the ABCC, but shows why further broader reforms are necessary,” Wilhelm Harnisch, CEO of Master Builders Australia said.
(09 March 2017). More…

OECD warns of 'rout' in house prices if investors head for the doors

The OECD has warned of a "rout" in Australian house prices, leading to a new economic downturn, saying both prices and household debt have reached "unprecedented highs" (03 March 2017). More…

Building Approvals Confirm Housing Activity Still Firmly Centred in Sydney and Melbourne

 “The latest ABS building approvals data shows residential building activity remains highly concentrated in Sydney and Melbourne,” Master Builders Australia’s National Manager – Housing, Matthew Pollock says
(02 March 2017). More…

MBA: Bouncing From Boom To Boom; Housing Slips But Transport Infrastructure Takes Off

Master Builders welcomes the more positive GDP growth presented in the latest ABS national accounts statistics released earlier today which shows GDP growth of 1.1 per cent during the December quarter 2016 (01 March 2017). More…

Social and affordable housing fund first phase to deliver thousands of homes

The NSW Government has taken a major step towards delivering thousands of additional homes for vulnerable people across the State, with contracts awarded for the first phase of the Social and Affordable Housing Fund (SAHF) (10 March 2017). More…

Lieutenant General Ken Gillespie appointed Regional Infrastructure Coordinator

Former Australian Army Chief Lieutenant General Ken Gillespie AC DSC CSM has been appointed the NSW Government’s first Regional Infrastructure Coordinator, charged with accelerating the roll-out of infrastructure across the State (09 March 2017). More…

Tamworth homes offered free loose-fill asbestos insulation testing

The NSW Government today announced it would undertake 250 free tests for loose-fill asbestos insulation in the Tamworth Regional Council area after a property in the area was confirmed to have contained the product. (09 March 2017). More…

TradieSafe targets Hunter residential construction sector

SafeWork NSW has launched a new TradieSafe project in an effort to reduce injuries in the Hunter region’s residential construction industry. Over the next 12 months, SafeWork NSW inspectors will visit construction sites across the region to help tradespersons improve work health and safety in their businesses. 
(03 March 2017). More…

Published

Australia Bureau of Statistics

02/03/2017 Building Approvals, Australia, Jan 2017 (cat no. 8731.0)

Practice and courts

ABCB: Consultation RIS released

The Consultation RIS Considers the application of the requirements for temperature control when replacing water heaters in private residences Responses to the questions contained within the RIS are invited until COB Friday 21 April 2017. Read the Consultation RIS. (09 March 2017)

RET: A number of solar water heater products are no longer eligible for small-scale technology certificatesSolar Now International Pty. Ltd. and Solar First Pty. Ltd. brand products impacted.
(08 March 2017)

Standards Australia Draft for Comment - AS 4349.2

Standards Australia have released a draft of AS 4349.2 Inspection of buildings: Part 2 - Common areas of group titled properties for public comment. The closing date for comment is 21 March 2017

ABCB's 2017 NCC Information Seminars Registrations Now Open

Registrations are NOW OPEN for the Australian Building Codes Board's (ABCB) 2017 NCC Information Seminars. The series will include presentations from the ABCB, Standards Australia and local Building Control Administrations

Senate Inquiry Update

Non-conforming building products
Status: Accepting Submissions; Date Referred: 11 October 2016; Submissions Close: 01 December 2016; Reporting Date: 25 May 2017

NSW BPB: Certifiers, be firm with builders to avoid missed inspections

It's important for certifiers to make sure builders and property owners understand their obligations regarding critical stage inspections. Mandatory inspections, as set out in the Environmental Planning and Assessment (EP&A) Act 1979 and regulations, are important to help ensure an occupation certificate (OC) can be issued ( 09 March 2017)

NSW BPB:  Home building contracts can't be used for swimming pool certification

A contract for swimming pool certification work must include all the information required by the Building Professionals Regulation (clause 19A) (01 March 2017) 

Cases

Henry v Management Business Services Pty Ltd t/as AA Affordable Flooring Services [2017] NSWCATAP 55

Consumer claim; Principles for leave to appeal.

O’Connell v Commissioner for Fair Trading [2017] NSWCATOD 32

HOME BUILDING – contractor licence electrical wiring work – instrument made under repealed 2004 regulation – whether applicant meets qualification requirements.

C & I Zubrycki t/as President Homes Building & Construction v McCaughan [2017] NSWCATAP 52

Appeal – Proceedings determined in the absence of a party – party applied to set aside decision – application refused – no error of law.  

Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2017] NSWSC 203

CONTRACT – construction – dispute resolution clause – expert determination – whether pending expert determination arises from a ‘dispute’ within the meaning of dispute resolution clause - wo agreements concerning the construction of a residential apartment block by the Builder on property owned by the Principal at Cronulla – building contract.

Samuel Homes Pty Ltd v Derek Raithby [2017] NSWSC 205

BUILDING AND CONSTRUCTION – Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) – Claim for relief in the nature of certiorari quashing an adjudication determination – necessity to bring proceedings expeditiously - delay in bringing proceedings – deliberate decision to delay – discretion to deny relief for delay – HELD relief to be withheld because of unacceptable delay.

Johnson T/As One Tree Constructions & Ors v Lukeman & Anor [2017] NSWCATAP 45

CIVIL AND ADMINISTATIVE TRIBUNAL (NSW) costs – discretion to award costs – general rule is each party is to pay their own costs – where party has been unsuccessful on some issues – where those issues have not significantly added to costs – characterisation as a mixed result - application made by the respondents (the home owners) against the appellants (the builders) for defective building works.

Michael & Rosemary Foy v Calliden Insurance Limited [2017] NSWDC 33

CONTRACT LAW – INSURANCE – home building insurance – last resort policy – whether insurer breached contract – whether notification of loss was adequate – whether grace period applied –– whether failure to advise as to change in legislation amounts to misleading or deceptive conduct – unconscionable conduct – estoppel – whether insurer failed to pay claim contrary to s 54 of the Insurance Contracts Act   CONSTITUTIONAL LAW – whether Home Building Act 1989 (NSW) s 103BB inconsistent with Insurance Contracts Act 1984 (Cth) s 54

Legislation - NSW

Regulations and other miscellaneous instruments

Building and Construction Industry Security of Payment Amendment (Trust Account Holders) Regulation 2017 (2017-61) — published LW 10 March 2017

 

Editorial: Christine Jones and Georgia Appleby

Contacts:

Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution)
T: +61 2 8083 0477
E: christine.jones@holdingredlich.com

Cameron Sheather, Partner - Planning, Property & Environment
T: +61 2 8083 0461
E: cameron.sheather@holdingredlich.com

Disclaimer

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.

Michael & Rosemary Foy v Calliden Insurance Limited [2017] NSWDC 33

This decision concerns the insurer’s rejection of a claim under a policy of home warranty insurance.  Among other matters, the owners claimed that in failing to advise of them of a change in legislation, the insurer had engaged in behaviour amounting to misleading or deceptive conduct.

Background

The owners purchased a property in 2008 and on settlement, they obtained a certificate of insurance issued by the insurer. Within the first six months of occupation the owners became aware of various defects. The owner gave evidence that in early 2009 he called the insurer’s agent to notify the defects. He claimed that he was told that “the policy does not operate unless the builder had died, disappeared or become insolvent… you should contact us against when one of those things occur.” In response to this, he did not lodge any claim with the insurer and instead commenced an action against the vendor in the then CTTT which was determined in the owners’ favour. The owners subsequently successfully petitioned the Federal Court seeking orders for the bankruptcy of the vendor.

The owners lodged a claim form with the insurer on 10 May 2013. The insurer rejected the claim on the basis that the period of cover, being six years from the date of the completion of the work, had expired on 14 May 2009 and accordingly, indemnity was not available.

The homeowners then commenced proceedings against the insurer on several bases.

Contract claim

On the contract claim, the court accepted the arguments of the insurer in finding that the owners did not adequately notify the insurer of their claim as the 2009 phone call did not comply with written notice requirements and the subsequent correspondence did not provide sufficient information as to loss to be considered a notification of a claim under the Home Building Act 1989.

Misleading or deceptive conduct claim

The owners argued that the insurer’s response in the 2009 phone call amounted to a misleading and deceptive representation which they relied upon to their detriment. Specifically, the owners contended that the statement “you should contact us against if one of those things occur” was an express and continuing representation that became misleading and deceptive on the commencement of the 2009 amendments, which required notice to the insurer in writing:

“This is an express representation as to what the Foy’s [sic] needed to do in the future. It is a continuing representation on behalf of the defendant who owes the Foys a duty of good faith as to what they should do in the future… Whilst it may be accurate at the time, it imports with it first, a representation that there is no likelihood of change of circumstances, or, if there is that the Foys will be notified. It thus becomes misleading if Calliden remains silent in the face of legislative change when it has created in the Foy’s [sic] an expectation that the representation would be corrected if circumstances changed.”

Conversely, the Insurer argued and the court agreed that the statement referred to future conduct but made no representation about it. Further, the court held that the statement did not import a representation that there was no likelihood of change of circumstances or that if there was, that the owners would be notified. In essence, the statement reflected no more than what were the requirements of the policy at the time. The court also held that there was insufficient evidence that the owners had, in fact, relied on the statement to this effect.

To this end, the misleading and deceptive conduct claim also failed. Related claims based on unconscionability and estoppel also failed.

In the media

MBA: Housing Affordability Reforms Must Focus on Impediments to Homeownership

There has been a solid start to the year for housing, with dwelling finance up by 1.5 per cent in January. The statistics support a national outlook for strong residential building activity in the year ahead, but the challenges for first home buyers continue to mount, with the number of loans falling by over 20 per cent in January

(10 March 2017). More…

Affordable housing bond aggregator should be accessible to private sector housing providers

The Federal Government’s proposed affordable housing bond aggregator should be accessible to private sector housing providers as well as not for profit community housing providers, says the Urban Taskforce. More…

MBA: Spike In Strikes Data Justifies ABCC But More Reforms Needed

ABS disputes data released today supports the Parliament’s decision to restore the ABCC, but shows why further broader reforms are necessary,” Wilhelm Harnisch, CEO of Master Builders Australia said (09 March 20917). More…

OECD warns of 'rout' in house prices if investors head for the doors

The OECD has warned of a "rout" in Australian house prices, leading to a new economic downturn, saying both prices and household debt have reached "unprecedented highs" (03 March 2017). More…

Building Approvals Confirm Housing Activity Still Firmly Centred in Sydney and Melbourne

 “The latest ABS building approvals data shows residential building activity remains highly concentrated in Sydney and Melbourne,” Master Builders Australia’s National Manager – Housing, Matthew Pollock says (02 March 2017). More…

MBA: Bouncing From Boom To Boom; Housing Slips But Transport Infrastructure Takes Off

Master Builders welcomes the more positive GDP growth presented in the latest ABS national accounts statistics released earlier today which shows GDP growth of 1.1 per cent during the December quarter 2016 (01  March 2017). More…

Social and affordable housing fund first phase to deliver thousands of homes

The NSW Government has taken a major step towards delivering thousands of additional homes for vulnerable people across the State, with contracts awarded for the first phase of the Social and Affordable Housing Fund (SAHF) (10 March 2017). More…

Lieutenant General Ken Gillespie appointed Regional Infrastructure Coordinator

Former Australian Army Chief Lieutenant General Ken Gillespie AC DSC CSM has been appointed the NSW Government’s first Regional Infrastructure Coordinator, charged with accelerating the roll-out of infrastructure across the State (09 March 2017). More…

Tamworth homes offered free loose-fill asbestos insulation testing

The NSW Government today announced it would undertake 250 free tests for loose-fill asbestos insulation in the Tamworth Regional Council area after a property in the area was confirmed to have contained the product.

(09 March 2017). More…

TradieSafe targets Hunter residential construction sector

SafeWork NSW has launched a new TradieSafe project in an effort to reduce injuries in the Hunter region’s residential construction industry. Over the next 12 months, SafeWork NSW inspectors will visit construction sites across the region to help tradespersons improve work health and safety in their businesses.

(03 March 2017). More…

Published

Australia Bureau of Statistics

02/03/2017 Building Approvals, Australia, Jan 2017 (cat no. 8731.0)

Practice and courts

ABCB: Consultation RIS released

The Consultation RIS Considers the application of the requirements for temperature control when replacing water heaters in private residences Responses to the questions contained within the RIS are invited until COB Friday 21 April 2017. Read the Consultation RIS. (09 March 2017)

 

RET: A number of solar water heater products are no longer eligible for small-scale technology certificatesSolar Now International Pty. Ltd. and Solar First Pty. Ltd. brand products impacted (08 March 2017)

Standards Australia Draft for Comment - AS 4349.2

Standards Australia have released a draft of AS 4349.2 Inspection of buildings: Part 2 - Common areas of group titled properties for public comment. The closing date for comment is 21 March 2017

 

ABCB's 2017 NCC Information Seminars Registrations Now Open

Registrations are NOW OPEN for the Australian Building Codes Board's (ABCB) 2017 NCC Information Seminars. The series will include presentations from the ABCB, Standards Australia and local Building Control Administrations

Senate Inquiry Update

Non-conforming building products
Status: Accepting Submissions; Date Referred: 11 October 2016; Submissions Close: 01 December 2016; Reporting Date: 25 May 2017

NSW BPB: Certifiers, be firm with builders to avoid missed inspections

It's important for certifiers to make sure builders and property owners understand their obligations regarding critical stage inspections. Mandatory inspections, as set out in the Environmental Planning and Assessment (EP&A) Act 1979 and regulations, are important to help ensure an occupation certificate (OC) can be issued ( 09 March 2017)

NSW BPB:  Home building contracts can't be used for swimming pool certification

A contract for swimming pool certification work must include all the information required by the Building Professionals Regulation (clause 19A) (01 March 2017) 

Cases

Henry v Management Business Services Pty Ltd t/as AA Affordable Flooring Services [2017] NSWCATAP 55

Consumer claim; Principles for leave to appeal.

O’Connell v Commissioner for Fair Trading [2017] NSWCATOD 32

HOME BUILDING – contractor licence electrical wiring work – instrument made under repealed 2004 regulation – whether applicant meets qualification requirements.

C & I Zubrycki t/as President Homes Building & Construction v McCaughan [2017] NSWCATAP 52

Appeal – Proceedings determined in the absence of a party – party applied to set aside decision – application refused – no error of law.  

 

Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2017] NSWSC 203

CONTRACT – construction – dispute resolution clause – expert determination – whether pending expert determination arises from a ‘dispute’ within the meaning of dispute resolution clause - wo agreements concerning the construction of a residential apartment block by the Builder on property owned by the Principal at Cronulla – building contract.

Samuel Homes Pty Ltd v Derek Raithby [2017] NSWSC 205

BUILDING AND CONSTRUCTION – Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) – Claim for relief in the nature of certiorari quashing an adjudication determination – necessity to bring proceedings expeditiously - delay in bringing proceedings – deliberate decision to delay – discretion to deny relief for delay – HELD relief to be withheld because of unacceptable delay.

Johnson T/As One Tree Constructions & Ors v Lukeman & Anor [2017] NSWCATAP 45

CIVIL AND ADMINISTATIVE TRIBUNAL (NSW) costs – discretion to award costs – general rule is each party is to pay their own costs – where party has been unsuccessful on some issues – where those issues have not significantly added to costs – characterisation as a mixed result - application made by the respondents (the home owners) against the appellants (the builders) for defective building works.

Michael & Rosemary Foy v Calliden Insurance Limited [2017] NSWDC 33

CONTRACT LAW – INSURANCE – home building insurance – last resort policy – whether insurer breached contract – whether notification of loss was adequate – whether grace period applied –– whether failure to advise as to change in legislation amounts to misleading or deceptive conduct – unconscionable conduct – estoppel – whether insurer failed to pay claim contrary to s 54 of the Insurance Contracts Act   CONSTITUTIONAL LAW – whether Home Building Act 1989 (NSW) s 103BB inconsistent with Insurance Contracts Act 1984 (Cth) s 54

Legislation - NSW

Regulations and other miscellaneous instruments

Building and Construction Industry Security of Payment Amendment (Trust Account Holders) Regulation 2017 (2017-61) — published LW 10 March 2017

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