Vivekananda v Insurance Australia Ltd t/as NRMA Insurance [2014] FCA 161

FEDERAL COURT OF AUSTRALIA

Vivekananda v Insurance Australia Ltd t/as NRMA Insurance [2014] FCA 161 Citation: Vivekananda v Insurance Australia Ltd t/as NRMA Insurance [2014] FCA 161

Parties: RAVICHANDRA VIVEKANANDA v INSURANCE AUSTRALIA LTD (ACN 000 016 722) T/AS NRMA INSURANCE

File number: ACD 62 of 2011

Judge: FOSTER J

Date of judgment: 28 February 2014

Catchwords: INSURANCE – whether, upon the true construction of a home buildings insurance policy issued by the respondent as insurer to the insured and upon the correct interpretation of the Building Act 2004 (ACT) and the Building (General) Regulation 2008 (ACT), the respondent is obliged to indemnify the insured up to the limit of the policy in respect of loss or damage caused to the insured's home by fire upon the basis that, because the repair and reinstatement required must comply with the Building Code of Australia as applied in the ACT, the entire house must be demolished and rebuilt, or whether, because the repair and reinstatement works do not need to comply with the said code, indemnity should extend only to the cost of repair and reinstatement so as to produce a residence which conforms to the configuration and condition of the house immediately before the fire.

Legislation: Australian Consumer Law Australian Securities and Investments Commission Act 2001 (Cth) Building Act 2004 (ACT) ss 3, 4, 6, 7, 29 and 136, Part 3 and the dictionary Civil Law (Wrongs) Act 2002 (Act) s 15 Legislation Act 2001 (ACT) ss 126, 127, 132, 136, 138, 140 and 142 Building (General) Regulation 2008 (ACT) ss 3, 4 and 23 and the dictionary Building (ACT Appendix to the Building Code) Determination 2012 Building Code of Australia

Texts cited: Pearce and Geddes: Statutory Interpretation in Australia (7th Ed, Lexis Nexis, 2011) The New Shorter Oxford Dictionary

Date of hearing: 7 February 2013

Date of last submissions: 6 February 2013

Place: Sydney (via videolink to Canberra)

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 84

Counsel for the Applicant: Mr C Erskine SC

Solicitors for the Applicant: Snedden Hall and Gallop

Counsel for the Respondent: Mr G Carolan

Solicitors for the Respondent: William Roberts Lawyers

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACD 62 of 2011

BETWEEN: RAVICHANDRA VIVEKANANDA

Applicant

AND: INSURANCE AUSTRALIA LTD (ACN 000 016 722) T/AS NRMA INSURANCE

Respondent

JUDGE: FOSTER J DATE OF ORDER: 28 february 2014 WHERE MADE: SYDNEY (VIA VIDEOLINK TO CANBERRA)

THE COURT ORDERS THAT:

1. The questions which, on 19 December 2012, the Court ordered be tried separately from and before all other questions arising in the proceeding, be answered as follows: (a) Question 1 – The substantial alteration question In circumstances where the residential premises more particularly described in paragraph 1 of Schedule 1 hereto (the insured building) were damaged by fire on 24 July 2011 necessitating, amongst other things, the demolition and replacement of the entire roof of the insured building and the other works specified in the respondent's reinstatement "Scope of Works" document which is more particularly described in paragraph 3 of Schedule 1 hereto, does such building work amount to a substantial alteration as defined in and for the purposes of the Building Act 2004 (ACT) and the Building (General) Regulation 2008 (ACT), with the consequence that the insured building, including its concrete footings, must be entirely rebuilt so as to comply with the current requirements of the Building Code of Australia"? Answer: No (b) Question 2 – The indemnity question If the answer to Question 1 is "Yes", does the indemnity provided to the applicant under the policy of insurance described in Schedule 1 hereto extend to cover the cost of rebuilding so as to make the rebuilt building comply with the current requirements of the Building Code of Australia? Answer: This question need not be answered as it does not arise. 2. The applicant pay the respondent's costs of and incidental to the determination of the said separate questions. 3. The proceeding be listed for directions at 9.15 am on 6 March 2014 before the ACT List Judge. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACD 62 of 2011

BETWEEN: RAVICHANDRA VIVEKANANDA

Applicant

AND: INSURANCE AUSTRALIA LTD (ACN 000 016 722) T/AS NRMA INSURANCE

Respondent

JUDGE: FOSTER J DATE: 28 february 2014 PLACE: SYDNEY (VIA VIDEOLINK TO CANBERRA)

REASONS FOR JUDGMENT 1 At all times in the period between early August 1969 and 24 July 2011, the original applicant in this proceeding, Jayammal Vivekananda (Mrs Vivekananda), resided at the residential house property known as 6 Macrobertson Street, Mawson, ACT (the property), which was, until mid-1980, owned by her jointly with her late husband. Upon her husband's death, Mrs Vivekananda became the sole owner of the property. Until damaged in the fire to which I refer at [3] below, the residence constructed at the property (the house) comprised a single storey, five bedroom, brick residence which had undergone two significant extensions, the first in 1986 and the second in 2007. Construction commenced on the original house in 1967. 2 Mrs Vivekananda's youngest son, Ravichandra Vivekananda, also lived at the property for most of the 42 years that his mother lived there. In more recent times, Mr Vivekananda lived there with his wife. 3 On 24 July 2011, the house was severely damaged by fire (the fire). It is common ground that, as a result of the fire, the entire roof of the house must be demolished and replaced. It is also common ground that the house sustained other significant damage in the fire. The house was rendered uninhabitable by the fire. 4 At the time of the fire, the house was insured with the respondent (NRMA) under a Home @ 50 Buildings Policy which had been renewed on 19 December 2010 for the period from 11.59 pm on that date to 11.59 pm on 19 December 2011 (Policy No HOM 217 404 740) (the policy). The policy comprised the relevant Certificate of Insurance and Home Insurance Buildings and Contents Product Disclosure Statement and Policy Booklet dated 1 June 2009 (Edition 1 GO 13129 08/09) (the PDS). 5 Under the policy, Mrs Vivekananda was insured against loss or damage caused to the house by one or more specified events occurring during the period in which the policy was in force. Included in those events was loss or damage to the house caused by fire. According to the relevant Certificate of Insurance, the sum insured was $956,776. Subject to certain qualifications which are not presently relevant, the sum insured was the maximum amount payable under the policy in respect of claims made during the 2010-2011 policy year. The basic excess was $300. 6 Mrs Vivekananda made a claim under the policy immediately after the fire. 7 In her Originating Application, Mrs Vivekananda claimed indemnity under the policy in respect of the damage caused to the house by the fire and also claimed damages against NRMA for breaching the contract of insurance constituted by the policy. Her principal claim was for the sum insured ($956,776) less the basic excess ($300). She also claimed interest and costs. In her Amended Statement of Claim filed on 3 February 2012, Mrs Vivekananda added claims under the Australian Consumer Law, cognate State and Territory legislation and the Australian Securities and Investments Commission Act 2001 (Cth), for damages for misleading and deceptive conduct and for unconscionable conduct. 8 Mrs Vivekananda died on 13 July 2012. 9 Pursuant to s 15 of the Civil Law (Wrongs) Act 2002 (ACT), all causes of action vested in Mrs Vivekananda at the time of her death survived for the benefit of her estate. Upon probate being granted to him, Mr Vivekananda, as Mrs Vivekananda's sole Executor, became entitled to pursue the present action for the benefit of his late mother's estate. By order made by me on 23 October 2012, Mr Vivekananda, in his capacity as Executor of the Estate of the Late Jayammal Vivekananda, was substituted as the applicant in this proceeding. There will be a question at trial as to whether all of the causes of action pleaded in the Amended Statement of Claim have survived the death of Mrs Vivekananda. 10 NRMA accepts that the policy responds to the applicant's claim for indemnity in respect of the damage caused to the house by the fire. It does not rely upon any of the exclusions specified in the PDS (whether specific or general) and does not seek to argue that Mrs Vivekananda or the applicant did not comply with the conditions set out on p 47 of the PDS. 11 The principal issue between the parties is whether, upon the true interpretation of the policy, NRMA is obliged to indemnify Mr Vivekananda for such amount as will be required to demolish and rebuild the entire house (including its footings) so that the rebuilt building complies with the current requirements of the Building Code of Australia (BCA) and the relevant ACT appendix to the BCA (together, the building code) or whether, upon the true interpretation of the policy, NRMA's obligation to indemnify Mr Vivekananda extends only to the cost of reinstating the house to its configuration and condition immediately before the fire upon the basis that there is no need to demolish and rebuild the entire house. The answer to this question is, in turn, informed by a consideration of the Building Act 2004 (ACT) (the Act) and the Building (General) Regulation 2008 (ACT) made under the Act (the regulation). 12 In light of the significance which the parties attached to the questions to which I have referred at [11] above, on 19 December 2012, I ordered that: … pursuant to r 30.01(1) of the Federal Court Rules 2011 and upon the basis of the facts specified in Schedule 1 hereto and the facts proven by documents to be tendered in the Agreed Bundle of Documents ordered in par 3 below, the following questions arising in the proceeding be heard separately from and before all other questions arising in the proceeding: (a) Question 1 – The substantial alteration question In circumstances where the residential premises more particularly described in paragraph 1 of Schedule 1 hereto (the insured building) were damaged by fire on 24 July 2011 necessitating, amongst other things, the demolition and replacement of the entire roof of the insured building and the other works specified in the respondent's reinstatement "Scope of Works" document which is more particularly described in paragraph 3 of Schedule 1 hereto, does such building work amount to a substantial alteration as defined in and for the purposes of the Building Act 2004 (ACT) and the Building (General) Regulation 2008 (ACT), with the consequence that the insured building, including its concrete footings, must be entirely rebuilt so as to comply with the current requirements of the Building Code of Australia"? (b) Question 2 – The indemnity question If the answer to Question 1 is "Yes", does the indemnity provided to the applicant under the policy of insurance described in Schedule 1 hereto extend to cover the cost of rebuilding so as to make the rebuilt building comply with the current requirements of the Building Code of Australia? 13 On the same occasion (19 December 2012), I noted the Statement of Agreed Facts and Documents specified by the parties in Schedule 1 to the orders which I made on that day. That Statement is in the following terms: For the purpose of determining the separate questions ordered this day (19 December 2012) and for the purposes of this proceeding generally, the parties have agreed that: 1. The respondent issued to Jayammal Vivekananda a policy of insurance (policy) in respect of the residential premises constructed on the land at Block 15 Section 43 Division of Mawson in the Australian Capital Territory (the insured building) (which land and premises are together known as "6 Macrobertson Street, Mawson, A.C.T.") which policy was in force throughout the period between 20 December 2010 and 19 December 2011 and which comprised: (a) Certificate of Insurance for policy number HOM 217 404 740; and (b) Product Disclosure Statement and policy wording, Edition 1 GO13129 08/09. 2. The Policy covers the damage caused to the insured building by a fire which occurred on 24 July 2011, although the extent of that cover is a matter of dispute between the applicant and the respondent. 3. The minimum amount of work required to repair the damage to the insured building caused by the said fire is contained in a reinstatement Scope of Works document, identified as "Ver 1.1" prepared by Mr John Dossetor of Beckford Pty Limited, a true copy of which is annexed to the respondent's Statement Pursuant to Orders made on 13 April 2012, filed on 1 May 2012 and marked with the letter "C". 14 The Statement of Agreed Facts and Documents was supplemented at the hearing of the separate questions by the tender of an Agreed Bundle of Documents (Exhibit A1) which comprised the policy, a report prepared by John Dossetor of Beckford Pty Limited dated 6 August 2011 (Mr Dossetor's report) and a Scope of Works document provided to Mrs Vivekananda's solicitors on 1 May 2011 (Scope of Works document). The parties also provided an Agreed Set of Plans which became Exhibit A2 at the hearing. Mr Dossetor's report is the report referred to in par 3 of the Statement of Agreed Facts and Documents. The Scope of Works document is also referred to in that paragraph as Annexure "C". Mr Dossetor's report was commissioned by NRMA's solicitors. 15 These Reasons for Judgment determine the separate questions ordered by me on 19 December 2012.

the relevant terms of the policy 16 In the Certificate of Insurance, under the heading Buildings, Key police features, the relevant part of the cover provided is specified as: • Replacement cover for your buildings 17 The PDS contains the standard terms applicable to both the buildings and the contents insurance provided by NRMA to its customers in 2010-2011. In the present case, the Certificate of Insurance covered only the house not its contents. 18 The expression buildings sum insured is defined on p 7 of the PDS as "… the amount of insurance you purchase for your home". It is similarly defined on p 70. There, it is also said to be the amount shown on the relevant current Certificate of Insurance. 19 At p 8, it is made clear that indemnity is provided under the policy when the loss or damage the subject of the claim is caused by a listed event. Fire is a listed event within the meaning of that expression in the policy (see p 19 of the PDS and the definition of listed event on p 71). Cover is provided for "… the cost to repair or rebuild the part of the [insured building] that was damaged". Some additional cover is provided in accordance with the terms set out at pp 26 and 33 of the PDS and Table 6.1 on p 50. The maximum amount that will be paid is the sum insured. 20 On p 31 of the PDS, the second and third columns which appear on that page are in the following terms: 21 On p 50 of the PDS, the following appears: 22 On p 54, under the heading Matching materials, Under Buildings Insurance, there is a term to the effect that NRMA will only repair the damaged parts of the insured building. On the same page, and under the same heading, it is said that NRMA will not pay for materials to match the undamaged parts of the insured building in order to create a uniform appearance. 23 Definitions of terms and expressions in the policy are found at pp 70-72 of the PDS. In addition to the definitions of Buildings sum insured and Listed event, appearing on those pages, the following definitions are relevant to this case: Home is any enclosed building at your site that has walls and a roof and can be locked up which you use mainly for domestic purposes: ► for buildings insurance, your home includes any home improvements or fixtures ► for contents insurance, if your home is a flat or unit, your home is your flat or unit and includes any lockable storage compartment that is reserved for you in another section of the building or complex that your flat or unit is part of. Home improvements are any permanent additions at your site that add to the cost of rebuilding or repairing your home, such as a garage, in-ground pool, above ground pool (when enclosed by decking), carport, pontoon, boat jetty and permanent landscaping features. We do not consider soil or bushland to be home improvements.

THE FIRE DAMAGE AND ITS IMPACT 24 According to Mr Dossetor, the fire appears to have originated in or near the Dining Room in the house. He observed that: (a) The roof of the house has been completely destroyed and must be completely rebuilt. (b) Part of the roof being that part which is over the northern side of the house remains in place. That part of the roof is, to some extent, protecting the rooms beneath from further weather damage. (c) Part of the roof has collapsed into the rooms at the front of the house – the Lounge Room, the Dining Room, the Entry Hall, the Kitchen and the Family Room. This has caused significant damage to those areas. (d) The external walls of the house were not structurally damaged by the fire. (e) The internal walls have been extensively damaged. This damage is not structural. (f) The hardwood floor of the Dining Room is damaged and will have to be demolished and replaced. The concrete floors are undamaged. There is damage to the tiles in the tiled areas. (g) Most of the fixtures and fittings in the house have been destroyed. 25 Mr Dossetor recommended the following reinstatement work: Removal of fire debris and the demolition and reconstruction of the roof. This work requires the demolition of the whole of the roof including cladding, insulation, framing and trusses. The reconstruction of the severely damaged front and southern wings of the house. The repair of the northern wing of the house. The reinstatement of all wet areas, cladding, joinery, finishes, fittings and appliances. 26 These works are more particularly described in the Scope of Works document. I shall refer to these works as the reinstatement works. They do not involve the demolition and rebuilding of the entire house. Mr Dossetor noted in his report that the reinstatement works would need to be approved by the ACT Government under the Act and under the regulation.

CONSIDERATION

Separate Question No 1 – The Substantial Alteration Question 27 I have set out the separate questions at [12] above. 28 The applicant argued that the Court should answer Question No 1, "Yes" while NRMA said that it should be answered: "No". 29 The applicant contended that the fire damage to the house and the minimum work required to be done under the Scope of Works document is to more than 50% of the floor area of the house. He then submitted that the reinstatement works constitute a substantial alteration within the meaning of s 29 of the Act (as to which see s 29 of the Act and s 23 of the regulation). If, as submitted by the applicant, the reinstatement works constitute a substantial alteration to the house within the meaning of s 29 of the Act, then the house as reinstated must comply with the Act and with the building code. The parties agreed that, given that the house was originally constructed in the late 1960's and subsequently underwent alterations in 1986 and in 2007, the footings of the house which were put in place as part of the original building in the late 1960's and as part of the 1986 extensions do not comply with the requirements of the building code which now govern the construction of footings for new houses built in the ACT. The original footings and the 1986 footings comprise a very substantial part of the footings now in place. Upon the assumption that the above propositions are correct, the applicant then submitted that, in order to render the reinstated house building code-compliant, the entire house must be demolished and all of its footings rebuilt to current standards. 30 It is common ground that, if the reinstated house is required to be building code-compliant, the existing house must be demolished and all of its footings must be rebuilt to current standards. 31 The starting point for the applicant's argument is s 29(1)(a) of the Act which provides: Approval requirements (1) Each of the following is an approval requirement for plans: (a) if the plans are for the substantial alteration of a building—the building as altered will comply with this Act and the building code; Note 1 Substantial alteration —see s (2). Note 2 A reference to an Act includes a reference to the statutory instruments made or in force under the Act, including regulations and the building code (see Legislation Act, s 104). 32 Sections 29(2) of the Act is in the following terms: (2) A regulation may declare that— (a) an alteration of a building is or is not a substantial alteration; or (b) a part of a building (the unaltered part) that has not been altered need not comply with the building code despite subsection (1)(a). 33 Section 3 of the Act provides that the dictionary at the end of the Act is part of the Act. Note 2 to s 3 provides: Note 2 A definition in the dictionary (including a signpost definition) applies to the entire Act unless the definition, or another provision of the Act, provides otherwise or the contrary intention otherwise appears (see Legislation Act, s 155 and s 156(1)). 34 Section 4 of the Act provides that a note included in the Act is explanatory and is not part of the Act. The note to s 4 directs the reader to s 127(1), (4) and (5) of the Legislation Act 2001 (ACT) (Legislation Act) for the legal status of notes. 35 The house is a building within the meaning of that term under the Act (see the definition in the dictionary and s 7). Under the Act, generally speaking, fittings are not within the definition of building. Nor are fixtures which are not integral to the building. 36 Building work (relevantly) means work in relation to the erection, alteration or demolition of a building and work in relation to repairs of a structural nature to a building (see the definition in the dictionary and s 6). The regulations may exempt certain building work from the application of the Act or part of the Act. 37 Some (if not all) of the reinstatement works are building work within the meaning of the Act. The demolition and reconstruction of the roof is building work. The regulations do not exempt those works from the definition of building work. 38 In the dictionary, building code is defined by reference to s 136(1) of the Act. Section 136(1) provides that building code means the BCA and the ACT Appendix to the BCA (as to which see s 136(2), (3) and (4)). Section 136(5) provides that the regulation may make provision in relation to the application of the building code. 39 In the dictionary, alteration, of a building, is specified as including: (a) demolition of part of the building; and (b) an addition to the building. 40 Substantial alteration is not defined in the Act. To be a substantial alteration, however, the work to be undertaken must, first of all, be an alteration. 41 Thus, if the reinstatement works constitute a substantial alteration to the house, then it is an approval requirement under the Act that the house as reinstated must comply with the Act and with the building code. Under s 29(2)(a) of the Act, a regulation may declare that a particular type of alteration of a building does or does not constitute a substantial alteration for the purposes of s 29(1)(a) of the Act. 42 Section 23 of the regulation provides: Substantial alteration—Act, s 29 (2) (a) (1) An alteration of a building is a substantial alteration if, during the 3 years immediately before the day the application for building approval for the alteration is made— (a) for a class 1 building—the total floor area of the proposed alteration, not including any internal alteration, is more than 50% of the floor area of the original building; and … (2) However, neither refitting a building nor replacing the internal elements of the building is an alteration of the building unless the layout and function of the internal spaces of the building are changed. (3) In this section: floor area, of a building, means the area of floor measured from the outer walls of the building, and includes the area on each storey of the building if there is more than 1 storey. 43 Under s 23, five examples of the effect of s 23 are provided. Examples 1 and 2 are in the following terms: 1 The floor area of a house is extended by 51%. The whole house must comply with the Act and the building code, not just the extension (see s (1)(a)), other than the parts of the building code that do not apply to the unaltered part of the house because of s 24. 2 A 40m2 sunroom is added to a building, adding only 10% floor area to the building. The sunroom must comply with the Act and the building code, but the rest of the building need not comply if no other floor area has been altered in the previous 3 years (see s (1) (a)). 44 Examples 3 to 5 do not directly relate to residential premises. 45 In the present case, s 24 of the regulation does not operate to exempt that part of the house which will remain substantially intact after the reinstatement works have been completed from the need to comply with the building code as a whole. Nor does the relevant Appendix (the Building (ACT Appendix to the Building Code) Determination 2012) exempt the footings or foundations of a building from the requirements of the building code. The 2012 Determination is relevantly the same as its predecessor which was promulgated in 2011. 46 Section 4 of the regulation provides that a note included in the regulation is explanatory and is not part of the regulation. Under s 126(4) of the Legislation Act, an example is stated to be part of the relevant Act. Examples are not exhaustive and may extend but do not limit the meaning of the Act or instrument or (as here) the regulation to which they relate (see s 132(1)(a) and (b) of the Legislation Act). 47 The house is a class 1 building for the purposes of s 23 of the regulation. For this reason, it is s 23(1)(a) of the regulation which must be considered, not s 23(1)(b). 48 Thus, in order to answer Separate Question No 1, the Court must determine: (a) Whether the reinstatement works constitute an alteration to the house within the meaning of the Act; and (b) If so, whether those works constitute a substantial alteration to the house within the meaning of s 29(1)(a) of the Act. 49 If both of the questions set out at [48] above are answered in the affirmative, the consequences for which the applicant contended will inevitably follow. 50 NRMA submitted that the reinstatement works do not constitute an alteration within the meaning of the Act. In addition, it also contended that, even if those works do constitute an alteration, they do not amount to a substantial alteration. 51 Senior Counsel for the applicant went to considerable lengths in order to persuade me that the reinstatement works constitute a substantial alteration within the meaning of the Act. He submitted that: (a) Section 140 of the Legislation Act requires that, in working out the meaning of an Act (as to which, see s 138), the provisions of the Act must be read in the context of the Act as a whole. (b) Section 136 of the Legislation Act extends the definition of "Act" to include subordinate legislation (such as the regulation). (c) An important distinction which is drawn throughout the Act is the distinction between the definition or description of the internal parts of a building and the external parts of the building. Generally, internal works of a non-structural nature are rarely regulated by the Act and the regulation. By way of contrast, external works of any kind are almost always regulated by the legislation. (d) The internal parts of a building and the external parts of the building do not overlap. The terms are mutually exclusive. That which is internal is enclosed within the external elements of the building (the external walls, the roof, the floor and the foundations). (e) The roof of a building is not an internal element. It is part of the external structure of the building. Works which are to be carried out to the external walls, the roof, the floor and the foundations cannot fall within s 23(2) of the regulation because none of those parts are internal elements within the meaning of that subsection. Nor could such works be part of any broader notion of internal alteration. Works carried out in such parts of a building are not works carried out to the internal spaces of the building. (f) In any event, the reinstatement works could not be characterised as "refitting" the house. Refitting for the purposes of s 23(2) relates to the internal elements of the building only, not to the external elements. (g) For all of the above reasons, s 23(2) is not engaged in the present case. (h) The whole of the roof has to be demolished and replaced. By definition, the work required to repair the roof affects the entire area of the house because the roof spans the entire floor area of the building. (i) Thus, "… the entire floor area of [the house] is involved in the alteration, even though only one of the surfaces of that floor area (i.e. the roof and its beams and ceiling) involves building work". Hence, for the purposes of s 23(1), the total floor area of the proposed alteration is, in fact, the entire floor area of the house, because the proposed alteration involves the entire roof of the house. (j) The alteration is, therefore, a substantial alteration for the purposes of s 29(1)(a) of the Act. 52 Senior Counsel for the applicant referred me to the Explanatory Memorandum in respect of s 23 of the regulation. He extracted the following from that memorandum: Section 23 contains criteria to be used to determine if plans are for the substantial alteration of a building, as referred to in section 29(2) of the Act. An intention is that if the floor area of the proposed building work on a class 2 to 9 building, when added to the floor area of building work carried out on the same building in the previous 3 years, comprises more than 50% of the floor area of the building, then under the Act the plans ought to also reflect any work required to ensure the entire building will meet current requirements of the Act (and not just the otherwise proposed work) (emphasis added). The same applies for a class 1 or class 10 building except that internal alterations carried out on the pre-existing building do not need to count towards the altered floor area. The anticipated outcome is that in the long term many old buildings will be upgraded to better keep pace with changes in building code requirements (emphasis added). Section 23 also gives 5 examples of the effect of those provisions to endeavour to illustrate the intent of the section. 53 The following may be gleaned from the extract from that memorandum which I have set out at [52] above: (a) Additions to the floor area of the relevant building made within 3 years of the date of lodgment of the application for the proposed alteration are to be added to the addition to the floor area effected by the proposed alteration for the purposes of s 23(1) of the regulation. (b) The anticipated impact of s 23(1) over time is that, in the long term, many (but not all) old buildings will be upgraded to reflect current building standards. 54 Section 142 of the Legislation Act provides that the Court may have regard to a document such as the Explanatory Memorandum referred to at [52] above in order to work out the meaning of the regulation. 55 It was also submitted on behalf of the applicant that those parts of the reinstatement works which did not concern the roof, looked at separately, also satisfied the definition of substantial alteration. An attempt was made to identify certain structural elements within the building envelope of the house in order to support a submission that s 23(1) was engaged even if the works required to be done to the roof were ignored. 56 I am not persuaded that the propositions which I have summarised at [55] above have been made good. I reject them. In any event, for reasons which I shall shortly explain when dealing with the question posed by the nature and extent of the repairs required to be carried out to the roof of the house, the applicant's arguments as to the correct interpretation of s 29(1)(a) of the Act and s 23(1) of the regulation must be rejected. 57 NRMA focussed on the concept of alteration within the meaning of the Act as the first step in addressing the applicant's contentions. 58 Counsel for NRMA referred to the definition of alteration in the dictionary forming part of the Act (as to which see [39] above). 59 After referring to that definition, Counsel for NRMA submitted that the definition suggests a process which involves two phases and which results in a change to the character or appearance of the building, consistent with the meaning attributed to the word "alteration" by The New Shorter Oxford English Dictionary. It was then submitted that the definition of alteration in the Act contemplates a process involving an addition to the building which results in an increase in the floor area, rather than simply reinstating the building in accordance with its existing format. 60 The word "alteration" is a word of broad meaning. Meanings attributed to a word by dictionaries are often useful in order to obtain an understanding of the general notion contemplated by the word. However, the present conundrum will not be solved by reference to dictionaries alone. 61 The long title of the Act is: An Act to Regulate Buildings and Building Work, and for Other Purposes. There is no objects clause in the Act. 62 Part 3 of the Act deals with building work as defined in the dictionary and in s 6 of the Act. Div 3.1 of Part 3 contains certain preliminary matters. Div 3.2 deals with certifiers and government certifiers. Div 3.3 deals with building approvals. 63 Section 29 is in Div 3.3. 64 Sub-paragraphs (a) to (c) of s 29(1) of the Act specify the types of building work that require approval. Subparagraph (a) deals with the circumstance where a substantial alteration of an existing building is proposed. In the event that such an alteration is planned, the building as altered must comply with the Act and with the building code. Subparagraph (b) addresses the circumstance where a building is to be erected or altered (as distinct from being substantially altered). In that event, the building must comply with the Act alone. There is no express requirement in s 29(1)(b) that the building as erected or altered must comply with the building code. Subparagraph (c) of s 29(1) of the Act addresses the circumstance where a building is to be demolished. In that event, the demolition work must be carried out in accordance with the requirements of the Act. 65 An alteration to an existing building which is not a substantial alteration need only result in a building which complies with the Act. The same may be said of the demolition of an existing building and the erection of a new building. 66 A substantial alteration to an existing building is subject to the express requirement that the building as altered must comply with the Act and with the building code. 67 The definition of alteration in the dictionary forming part of the Act is an inclusive definition. For that reason, in my view, the definition does not operate to narrow the broad meaning which the word ordinarily has. The word "includes" is very often used to enlarge the ordinary meaning of a word when used as part of the definitional language. I think that that is the case here (see the discussion at pp 248-252 [6.61]-[6.64] of Pearce and Geddes: Statutory Interpretation in Australia (7th Ed, 2011)). 68 It seems to me that the concept of alteration within the Act encompasses any change to the building whether internal or external. This interpretation is supported by the terms of s 23 of the regulation. Subsection (1) of s 23 is a general provision which applies according to its terms subject to the carve-out provided for by subsection (2). Subsection (2) of s 23 does not address the meaning of substantial alteration. Rather, it addresses the meaning of alteration. Subsection (2) provides that neither a refit nor an internal renovation or redesign of a building is an alteration of that building for the purposes of subsection (1) "… unless the layout and function of the internal spaces of the building are changed". The substance of that carve-out, it seems to me, is that repairs and maintenance carried out to a building (whether externally or internally) and repairs, maintenance, renovations and redesign of internal elements of a building are generally not to be viewed as alterations to the building within the meaning of that word in subsection (1) of s 23. The only circumstance in which activities of this latter kind might constitute alterations would be if the layout and function of the internal spaces of the building are changed. 69 This interpretation leads to the ultimate proposition that, even if, in the Act, alteration is to be given a broad meaning which extends beyond the two notions mentioned in the definition in the dictionary forming part of the Act (demolition of part of a building and an addition to a building), when one comes to consider the term substantial alteration as used in s 29(1)(a) of the Act and as explained by s 23 of the regulation, that broad meaning is to be read down by reference to s 23(2). Thus, whatever substantial alteration in s 23(1) means, it does not include refitting a building or replacing the internal elements of the building (unless the layout and function of the internal spaces of the building are changed). 70 I agree with Senior Counsel for the applicant that the concept of "refitting" when used in s 23(2) is not apt to describe the demolition and total rebuild of the roof of the house which is required in the present case. As submitted on behalf of the applicant, "refitting" is not apt to describe such major external works. 71 But the fact that s 23(2) does not cover the reinstatement work required to the roof is not the end of the matter. The correct interpretation of s 23(1) must be discerned and then applied to the roof work required in the present case in order to determine whether that work constitutes a substantial alteration within the meaning of that expression in s 23(1) and thus within the meaning of that expression in s 29(1)(a). 72 This is the issue which Senior Counsel for the applicant addressed in the submissions which I have summarised in subpars (h) and (j) of [51] above. 73 For reasons which I will now explain, those submissions must be rejected. They do not address the relevant comparison called for by the terms of s 23(1) of the regulation and impermissibly equate the surface area of the roof with the concept of floor area as defined in s 23(3). 74 In my judgment, s 23(1) is directed to enlargements of the floor area of the building by the enlargement of the building envelope or by the addition of an extra storey. The subsection is not directed to the replacement of an existing roof structure across an existing building envelope. 75 The language of 23(1) is inelegant. The meaning intended to be conveyed by that subsection is difficult to grasp. The alteration contemplated by the subsection is the alteration the subject of the application for building approval. It is, therefore, an alteration which has not yet been carried out because approval has not yet been obtained. The expression original building is not defined in the regulation. To me, that expression refers to the building as originally constructed (i.e. before any extensions or additions or, at least, as it stood at the point in time which is 3 years before the date of lodgment of the application in question). Therefore, subject to considering the relevance of the specified 3 year period, what is required to be compared is the total floor area of the proposed alteration (excluding the floor area of any internal alteration) and the floor area of the original building. 76 What, then, is the significance of the 3 year period? 77 Examples 2 and 3 and the Explanatory Memorandum referrable to s 23 of the regulation cast some light on this. When regard is had to those examples and that memorandum, it appears that the stipulation concerning the 3 year period is intended to require that all alterations to the floor area of the building made within the period of 3 years prior to the day when the application for the building approval for the proposed alteration is made, must be aggregated with the floor area of the proposed alteration (excluding the floor area of any internal alteration) for the purpose of making the necessary comparison with the floor area of the original building. If the aggregated (i.e. the total) floor area arrived at in this way exceeds 50% of the floor area of the original building, then, subject to the operation of s 23(2), the proposed alteration is a substantial alteration within s 23(1) of the regulation and thus also a substantial alteration within s 29(1)(a) of the Act. 78 Floor area is defined in s 23(3) of the regulation (as to which, see [42] above). 79 Such a construction of s 23(1) meets the objectives of s 23 of the regulation as described at [52] and [53] above. 80 Here, the demolition and reconstruction of the roof of the house called for by the Scope of Works document does not lead to an enlargement of the floor area of the house at all let alone to the extent of 50% as contemplated by s 23(1). The reinstatement work to the roof does not, therefore, constitute a substantial alteration within the meaning of s 23(1) of the regulation and s 29(1)(a) of the Act. I have already held that the reinstatement works other than the demolition and reconstruction of the roof do not constitute a substantial alteration within the meaning of those provisions. 81 For these reasons, the house when repaired and reinstated in accordance with the Scope of Works document will not need to comply with the building code. It will only need to comply with the relevant provisions of the Act. Therefore, the house will not need to be demolished and totally rebuilt in order to be repaired and reinstated in accordance with current building regulations. 82 The answer to Separate Question No 1 must therefore be: "No".

Separate Question No 2 – The indemnity question. 83 This question only needs to be answered if the answer to the first question is: "Yes". I have answered that question: "No". For that reason, this question does not arise and need not be answered.

CONCLUSIONS 84 There will be orders giving effect to the above Reasons. Costs should follow the event. I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

Associate: Dated: 28 February 2014