Background
Five co-owners acquired land at Rosehill and obtained approval to build 10 townhouses. They entered a deed of partition allocating proposed strata lots among themselves, so that after subdivision and registered transfers no individual would hold more than three lots. They jointly contracted with Dominium Homes Pty Ltd to construct the development.
After a dispute about the builder’s performance, the owners terminated the building contract and obtained judgment against the builder. The builder later entered liquidation. The owners claimed under statutory home building insurance issued by NSW Self Insurance Corporation, but SICorp declined the claim under a policy exclusion for a “developer”.
The Court’s Holding
Brereton J answered the separate question “yes”: each plaintiff was a developer for the purposes of s 3A of the Home Building Act 1989 (NSW) and the insurance policy. The policy therefore did not cover their claim, and the proceedings were dismissed.
The relevant inquiry under s 3A(2)(a) was whether four or more proposed dwellings would be owned by a person when construction was completed. At that time contemplated by the legal arrangements, all five plaintiffs would still be registered proprietors of the land as tenants in common and hence would jointly own all 10 dwellings at law. The later registration of a strata plan and transfers under the partition arrangement did not change that conclusion.
Even assuming the deed created separate equitable interests in the proposed lots, that did not displace the plaintiffs’ legal ownership. The statutory definition of “owner” expressly encompasses ownership “at law or in equity”; legal owners and equitable owners can both fall within it.
Key Takeaways
- A co-owner may be a developer under s 3A where, on completion, they will jointly own four or more dwellings at law.
- A future subdivision and transfer arrangement does not avoid developer status if legal ownership of the completed dwellings remains joint until those later steps occur.
- The developer exclusion in statutory home building insurance defeated the owners’ claim against SICorp.
Why It Matters
The decision confirms that the developer definition looks to the legal arrangements governing ownership when the dwellings are expected to be completed, rather than only to each participant’s eventual post-subdivision allocation. Participants in multi-dwelling projects cannot assume that a deed allocating future lots preserves homeowner insurance protection.
Although the owners had obtained a substantial judgment against an insolvent builder, the court held that the statutory insurance scheme did not respond because they were developers. The ruling underscores the need to assess insurance eligibility at the project-structuring stage.