The NSW Supreme Court has pulled up a tribunal appeal panel over its use of a “developer” exclusion in a home building insurance dispute.
On December 5, 2025, the Supreme Court of New South Wales allowed an appeal by CN1 Pty Ltd in proceedings with case number 2025/095364, setting aside a decision of the Civil and Administrative Tribunal’s Appeal Panel and sending the matter back for reconsideration.
The dispute centres on home building insurance for residential work on Lot 544 in North Kellyville, within The Hills Shire Council area. CN1 claimed to have the benefit of insurance policies issued by NSW Self Insurance Corporation after its builder, Willoughby Homes Pty Ltd, became insolvent and work on Lot 544 was said to be incomplete and defective.
Two policies of insurance were taken out by Willoughby Homes with respect to the building work to be carried out at Lot 544. Both incorporated the same terms, described in the judgment as version 4.0 of the respondent’s “Policy of Insurance under Part 6 of the Home Building Act 1989 (NSW)”. Clause 3.4(a) stated that the Policy did not cover a claim by any person who was, “in relation to the work … a developer”. “Developer” was defined to have the same meaning as under the Home Building Act, which in section 3A sets out when a person is a developer in relation to residential building work.
The background is a subdivision referred to as Stage 5 Blue Horizons. A development application lodged in November 2014 proposed the subdivision of 10 existing lots to create 17 lots, including what became Lots 544 to 547. CN1 was the registered proprietor of part of that land. The Council approved the development application and deposited plan 1204342 was registered in January 2016. CN1 later sold Lot 546 in September 2020 and Lot 547 in December 2021.
On February 17, 2021, following a tender process, CN1 and Willoughby Homes executed two contracts for construction of a house and studio (dual occupancy dwellings) on each of Lots 544 and 547. When Willoughby Homes became insolvent in July 2022, the build at Lot 544 was almost, but not fully, complete, and CN1 also considered some of the work defective. It sought indemnity under the Policy; the insurer rejected the claim on the basis that CN1 was a developer in relation to the work on Lot 544 and therefore excluded by clause 3.4(a).
At first instance, the Civil and Administrative Tribunal found that CN1 was not a developer within section 3A and the Policy and that the insurer had wrongly denied indemnity. The Tribunal treated each dual occupancy dwelling on Lots 544 and 547 as a separate instance of residential development, pointing to separate development applications, separate building contracts, separate parcels of land, differences between the contracts and separate insurance contracts.
The insurer appealed to the Tribunal’s Appeal Panel. The Appeal Panel concluded that the Tribunal had erred in its construction of section 3A, held that Stage 5 Blue Horizons was a “residential development” within section 3A and found that the residential building work on Lot 544 was done in connection with a proposed dwelling in that development. Relying on planning instruments and section 94 contribution arrangements, it found that four or more of the proposed dwellings in that residential development were owned by CN1 and concluded that CN1 was a developer for the purposes of section 3A and the Policy.
CN1 then filed a summons in the Supreme Court seeking leave to appeal on a question of law under section 83(1) of the Civil and Administrative Tribunal Act 2013 (NSW), and, in the alternative, judicial review. Kirk J dismissed the judicial review application under section 34(1)(c), on the basis that an appeal could be, or had been, lodged and no good reason had been shown to allow judicial review as well. Leave to appeal was granted in respect of four specific questions of law identified shortly before the September 3, 2025, hearing.
The Court rejected CN1’s argument that, when assessing developer status under section 3A, it was only permissible to have regard to existing or proposed dwellings in a single parcel of land. Non‑contiguity, it held, is relevant but not determinative. It also rejected a complaint that the Appeal Panel had treated CN1 as a developer “in the abstract”, and found no error in circumstances where the Panel did not need to decide who bore the legal onus of proof.
The appeal turned on timing. Kirk J held that the notion of “developer” and “a residential development” in section 3A requires a practical characterisation made at the time when the relevant residential building work is done. In this case, that was when the work under the February 2021 building contract for Lot 544 was carried out. The Appeal Panel, however, had effectively fixed on the Stage 5 Blue Horizons subdivision and related planning framework as approved in 2015, treating all of that land as a residential development without clearly asking whether, at the time of the Lot 544 work, the dwellings in question could meaningfully and reasonably be characterised as “a residential development” for section 3A purposes.
That misunderstanding of “a residential development” and of the relevant point in time was a material error of law. The Supreme Court upheld CN1’s appeal, set aside the Appeal Panel’s orders of 12 February 2025 and remitted the matter to the Appeal Panel for determination according to law. NSW Self Insurance Corporation was ordered to pay CN1’s costs in the Supreme Court.
For insurers and underwriters, the message is clear: when relying on a ‘developer’ exclusion, you must nail the timing and context of the residential building work, not just the project’s history.
