Building and construction law is very complex. It gives rise to an infinite number of possible scenarios and accompanying questions. Below is a list of frequently asked questions and answers that you may find useful.
We recommend that you contact us to discuss your particular issue before taking any action. It is always better to try and resolve matters up front than later on when it is before a court or tribunal.
1.I have a dispute with my house builder and plan to go to NCAT. Is there a dollar $ limit on the amount I can claim?
The New South Wales Civil and Administrative Tribunal (“NCAT”) can hear applications where the amount claimed does not exceed $500,000. For claims over this threshold, you will need to file a claim in Court. Generally, the District Court can hear claims up to $750,000. Beyond that threshold you will need to file in the Supreme Court.
2. I have made a building claim in NCAT. Will I get my legal costs back if I win?
As a general rule, each party bears its own legal costs unless there are exceptional circumstances. This means that even if you win you will not recover any money you have paid your Building and Construction Lawyer unless there are “special circumstances”. Such circumstances could include where the proceedings were frivolous or vexatious or lacking in substance.
However, if the amount sought or in dispute is greater than $30,000, there is no requirement for ”special circumstances”. Therefore, if you win you may recover some of your legal fees. However, any award is still at the discretion of NCAT and it’s very unlikely you will recover all your legal fees.
3. Can I recover for work done as a variation to the building contract but there was no written variation as required under the contract?
Potentially yes. You may be able to make a claim under the principles of quantum meruit. Quantum meruit claims are based on the law of restitution and flow from the principles of unjust enrichment.
They can arise in certain circumstances: where there is a contract but no price has been fixed by that contract; quasi-contract, such as work carried out prior to contractual terms being settled, work done outside the scope of a contract; and, importantly, work under a void, unenforceable, or terminated contract.
In general, five components must be complied with by the builder before the builder can recover with respect to a variation claim under quantum meruit:
A “reasonable sum” can be recovered for the work undertaken.
4. Is there a time limit on making a claim for defective building work?
A claim for a breach of the statutory warranties in the Home Building Act 1989 (NSW) must be brought within 6 years for a “major” defect. A claim for other defects must be brought within 2 years.
Applications to the New South Wales Civil and Administrative Tribunal (“NCAT”) for the supply of building goods or services must be lodged:
For all other claims relating to a contract or collateral contract, a claim to NCAT must be lodged within 3 years from the date of the contract.
A claim for a breach of contract must be brought within 6 years from when the breach occurred.
A claim relating to building work cannot be brought more than 10 years after the final occupancy certificate was issued or the last date on which the building work was inspected by a certifying authority, or if no such inspection has been conducted, the date on which that part of the building in relation to which the building work was carried out is first occupied or used.
5.Security of Payment Claims against Homeowners
From 1 March 2021, residential builders will be able to make payment claims against their homeowner clients and utilise the NSW Security of Payment legislation payment dispute resolution mechanism.
What does the change mean?
Builders will be able to make a payment claim under Security of Payment laws against homeowners who they are carrying out residential building work for and recover moneys owed to them by homeowners through the security of payment rapid adjudication process.
The laws will generally apply between builders and homeowners, the same way they currently do between builders and their subcontractors.
Does this change apply to my current residential building contracts?
No, this change only applies to new residential building contracts signed after 1 March 2021.
What is a payment claim?
A payment claim is a short statement that details the payment owed for building and construction works.
A payment claim may be your usual invoice, as long as it includes some mandatory details.
How do I issue a valid payment claim?
To claim payment under the laws, you must do so within 12 months of performing the work, or supplying the goods and services.
What happens after I have issued a payment claim?
The homeowner must either:
If the homeowner does not make the payment claimed or respond with a payment schedule the claimed amount becomes a debt due and owing that the builder can enforce in court.
If the homeowner responds with a different amount, the builder can proceed to adjudication.
Can I still claim progress payments in accordance with my contract?
Yes. Provisions in your contract that set out payment terms and time frames continue to apply and can be enforced against your clients.
Security of payment laws operates in addition to any contractual options in relation to non-payment that may be available.
Are there any changes to my contracts?
It is likely that you will need to include a Fact Sheet regarding Security of Payment laws in your building contracts. The purpose of the Fact Sheet is to inform homeowners of their responsibilities under the laws.
It is likely that the HIA, MBA and Fair Trading will shortly update their contracts to ensure compliance with the new requirements.
*credit to the HIA for the above summary