A recent decision of the Supreme Court of NSW highlights an important issue for parties undertaking multi-dwelling residential developments being, can a person, corporation or partnership escape being a “developer” through the use of a deed of partition for the purposes of the Home Building Act 1989 (NSW) (HBA)
In Succar v Dominium Homes Pty Ltd [2026] NSWSC 1117 (Succar), Brereton J considered whether five co-owners of land were “developers” under s 3A of the HBA. The Court held that they were, meaning that the relevant home building compensation insurance did not respond to their claim.
This decision provides a reminder that the way a development is legally structured and owned can have significant consequences, particularly if a builder loses their building licence during construction.
Background
The plaintiffs were five co-owners involved in a development and construction of a 10 dwellings, basement carpark and a strata subdivision thereafter pursuant to a deed of partition. The plaintiffs contracted with Dominium Homes Pty Ltd (Builder) to undertake the building work.
The plaintiffs terminated the building contract due to concerns regarding the adequacy of the Builder’s performance following which the plaintiffs commenced proceedings against the Builder. The Builder’s licence was suspended, and the Plaintiffs subsequently made an insurance claim under the relevant home building compensation insurance policy.
The insurer argued that the owners were “developers” within the meaning of s 3A of the HBA and were therefore excluded from cover.
The owners disputed that characterisation. Among other things, they relied upon a deed of partition under which the beneficial interests in the individual dwellings were allocated between the co-owners. Their position was, in substance, that each owner would ultimately have an interest in fewer than four dwellings and therefore should not be treated as a developer.
The Court ultimately rejected that argument.
Legal ownership was sufficient
Section 3A of the HBA sets out the criteria for determining whether a person, corporation or partnership can be deemed a developer. In CN1 Pty Ltd v NSW Self Insurance Corporation [2025] NSWSC 1464 at [38], Kirk J identified the relevant elements of s 3A of the HBA as:
- residential building work is done by a builder on behalf of the person in question;
- that work is done in connection with an existing or proposed dwelling in a building or a residential development, which building/development contains or will contain at least four dwellings; and
- four or more of the dwellings in that building or residential development are or will be owned by the person in question.
The plaintiffs contented that they were not developers pursuant to the HBA because the deed of partition contemplates that once construction is complete, there will be a formal subdivision, registration of a strata plan, and the dwellings would be transferred to the five plaintiffs such that no individual plaintiff will own more than 3 dwellings.
A significant issue in Succar was the meaning of the words “at law or in equity” in the statutory definition of “owner”. The Court held that those words means that in circumstances where there is one owner in law and another in equity, both will be owners. Accordingly, a person who is an owner at law, including as a registered proprietor, can satisfy the definition even if their equitable interest is different.
The deed of partition therefore did not alter the position for the purposes of determining developer status. As such, the five plaintiffs remained the registered proprietors of the land on which the 10 dwellings were being constructed.
The Court also considered the expression “will be owned” in s 3A. The relevant question was who would own the dwellings when the building work was expected to be completed, having regard to the legal arrangements in place.
The Court did not accept that potential future transfers or dispositions could be relied upon to avoid developer status. Accordingly, each plaintiff was a “developer” for the purposes of s 3A and the insurance exclusion applied. The proceedings against the insurer were dismissed.
What does this mean for developers and investors?
The decision demonstrates that developer status under the HBA is a matter of statutory interpretation, rather than simply how the parties describe and/or identify themselves.
A project may involve individuals who regard themselves as private owners or investors rather than developers. That does not necessarily prevent them from falling within s 3A and thereby becoming subject to the obligations and liabilities that accompany that status.
This is particularly relevant to:
- family or investor groups purchasing land together;
- townhouse developments;
- joint ventures involving multiple individual owners;
- developments where dwellings are intended to be divided between participants; and
- projects involving deeds of partition or other arrangements allocating beneficial interests.
The fact that participants have agreed between themselves who will ultimately receive particular dwellings and how many dwellings each participant will receive will not necessarily prevent them from being treated as developers.
The importance of HBCF
HBCF can provide an important avenue of recovery where a residential builder dies, disappears or becomes insolvent. However, the statutory regime contains exclusions, including in relation to developers. Relevantly, s 99(2) of the HBA provides that a builder does not have to obtain insurance for a developer.
Succar demonstrates the risk of discovering that exclusion only after a substantial building dispute has arisen.
Here, the plaintiffs had a significant claim arising from defective and incomplete building work and had obtained judgment against the builder. Nevertheless, the developer exclusion prevented them from obtaining the benefit of the relevant insurance policy.
For parties embarking on development involving the constructions of four or more dwellings, the availability and scope of HBCF should be considered before construction commences.
Implications for builders and strata managers
The decision is also relevant to builders and strata managers.
Builders should be conscious of the ownership and development structure of projects involving multiple dwellings. The identity of the person contracting with the builder is not necessarily the end of the statutory analysis.
Strata managers dealing with defects in an established strata schemes should similarly investigate the scheme’s original development structure when considering potential avenues of recovery. This may include identifying who owned the land when the work was undertaken, how many dwellings were being constructed, who was intended to own them at completion and whether any statutory insurance exclusions apply.
These issues can become particularly important where the original builder is insolvent or otherwise unable to meet a defects claim.
Key takeaway
Succar reinforces the important principle that the legal structure of a residential development should be considered prior to construction. Where four or more dwellings are involved, parties should not assume that a deed of partition will prevent developer status from arising under s 3A of the HBA.
For developers and investors, the ownership and insurance position should be assessed at the outset of the project.
For builders, understanding the client’s status and the structure of the development can assist in identifying the applicable statutory and insurance regime.
For strata managers, the decision highlights the importance of looking beyond the current strata scheme when investigating defects and potential recovery.
Succar v Dominium Homes Pty Ltd [2026] NSWSC 1117 was decided by Brereton J on 16 September 2026. This article provides general information only and should not be relied upon as legal advice.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
Liability limited by a scheme approved under Professional Standards Legislation.
Author: Maysaa Parrino & Christopher Chin
OUR AUTHORS
