Developer Wins VCAT Dispute Over Insurance Coverage for Building Defects

On 1 November 2024 the Victorian Civil and Administrative Tribunal (VCAT) annulled a decision of the Victorian Managed Insurance Authority (VMIA) and declared that Enpresionante Pty Ltd, the developer of three townhouses in Balwyn, was entitled to be indemnified under its domestic building insurance policy. The developer’s claim was for $569,115.57, the amount incurred in rectifying the builder’s defective work.

Background: Faulty Construction Leads to Financial Strain

Enpresionante Pty Ltd contracted Ridgecon Pty Ltd, a construction company of which Muhammad Bardan was a director, to build three townhouses at Iramoo Street, Balwyn, under a domestic building contract dated 14 October 2014. The project was not delivered as contracted. It was an agreed fact between Enpresionante and VMIA before the Tribunal that “the works done by the Builder were defective and incomplete.”

Enpresionante’s financier, Australian Securities Limited (ASL), as mortgagee went into possession of the land and the three townhouses on 22 March 2017, and on 24 May 2017 engaged another builder, Blue Pearl Group Pty Ltd, to rectify Ridgecon’s work and complete the project. ASL later sold the townhouses at a loss. ASL sued Ridgecon in the County Court for breaches of a tripartite deed between ASL, Enpresionante and Ridgecon. Judgment was given for ASL on 13 September 2019, and on 21 October 2019 damages were assessed at $700,300.61. That sum was made up of rectification and completion costs of $887,115.57 (including $270,280.52 for incomplete works and $549,620.30 for defective works paid to Blue Pearl), less a credit of $318,000.00, giving $569,115.57 for damages, plus $131,185.04 for loss of use of monies. Ridgecon went into liquidation on 22 January 2020, on ASL’s winding-up application.

Legal Battle Over Insurance Coverage

ASL then claimed under the VMIA policy in March 2020. On 4 June 2020 VMIA denied liability, because ASL was not a party to the building contract and was not named on the policy, was not an owner for the purposes of the Ministerial Order, and no application had been made to extend cover to it. ASL applied to VCAT to review that decision. On 14 July 2022 the Tribunal held that ASL was not entitled to indemnity under the policy; ASL appealed to the Supreme Court of Victoria, and the appeal was stayed pending the decision in this case.

Reinstating Enpresionante Pty Ltd to Strengthen the Claim

Enpresionante had been deregistered on 9 March 2018. After the first VMIA decision, ASL took steps to have it reinstated so that a claim could be lodged by the building owner named on the policy. On 26 October 2020 the Supreme Court ordered that Enpresionante be reinstated, wound up and a liquidator appointed.

On 11 November 2020 the liquidator lodged claims under the policy for $569,115.57, the rectification costs ASL had incurred and debited to Enpresionante’s loan account. On 8 February 2021 VMIA denied that claim too. It said the proximate cause of Enpresionante’s loss was its default under its loan agreement with ASL, so that the loss was “too remote to fall within the scope of the policy”, and in the alternative that the loss was “consequential loss” excluded by the policy.

VCAT’s Ruling: Recognising Developer’s Right to Indemnity

The Tribunal annulled VMIA’s decision of 8 February 2021. It noted that the Ministerial Order requires the policy to indemnify the building owner for “loss or damage resulting from” domestic building work that is defective, and that the Order prevails over any inconsistent wording in the policy. It found that Enpresionante suffered loss resulting from the defective work at the time the work was done, because Ridgecon was then immediately liable to pay damages measured by the cost of rectification.

The Tribunal found that the increase in Enpresionante’s debt to ASL, by the amount ASL spent rectifying Ridgecon’s work, was loss resulting from the defective work and did not result from the actions of ASL. It rejected VMIA’s submission that ASL’s rectification had “made good the applicant’s loss”. It also found that the claim was for the cost of rectification, the normal measure of damages, and not for finance costs or other consequential loss, so the policy’s consequential-loss exclusion did not apply. VCAT declared that Enpresionante was entitled to be indemnified by VMIA under the policy and ordered VMIA to pay all monies owing under it. Interest and costs were reserved, with submissions due by 24 November 2024.

Updated 19 October 2026: the headline, title and description of this article previously gave $700,300 as the amount VCAT ordered VMIA to pay. VCAT ordered no figure; $700,300.61 was the County Court’s 2019 assessment of damages against the builder. The description of VMIA’s first decision has also been corrected. The article has been checked against the published decision.

Related reading

The domestic building insurance scheme considered in this case was replaced on 1 July 2026. Our explainer on Home Warranty, what it covers and for how long, sets out the new scheme from the Act and the Regulations, including why a waterproofing defect now carries six years of cover rather than two.

For owners still on the old scheme, the Victorian Court of Appeal has confirmed how its time limits are read: builders warranty insurance can expire before you buy the house.