Last Updated on 18/03/2026 by Damin Murdock
In the New South Wales residential building industry, insurance is not just a safety net for homeowners; it is a legal prerequisite for a builder’s right to be paid. While we previously discussed the penalties for failing to obtain insurance, this article explores a more immediate commercial threat: can a licensed contractor legally demand payment or suspend works if they are uninsured?
The Statutory Bar: Section 92 of the Home Building Act
Under Section 92 of the Home Building Act 1989 (NSW), a person who enters into a contract to do residential building work must not demand or receive any payment under the contract unless a certificate of insurance is in force and a copy has been provided to the homeowner.
Crucially, if you fail to comply with this section:
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You cannot recover any money under the contract.
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You cannot enforce any other “remedies” provided by the contract (such as charging interest on late payments or suspending work).
Case Analysis: Huk v Da & Da McKenzie Pty Ltd [2011] NSWCTTT 128
The risks of ignoring Section 92 were clearly demonstrated in the case of Huk v Da & Da McKenzie Pty Ltd.
The Dispute: A builder issued a formal notice to suspend works, citing the homeowner’s failure to pay a progress claim as permitted by their written contract. The homeowner challenged this in the Tribunal, alleging that the suspension was unlawful.
The Legal Outcome: The Tribunal found in favor of the homeowner. Because the builder had failed to obtain the required home warranty insurance (now HBC insurance), they had no legal right to demand the progress payment in the first place. Therefore, the homeowner was not in “default” for non-payment, and the builder’s notice to suspend works was found to be invalid and unlawful.
Applied Lessons for Licensed Contractors
This case serves as a critical warning that a builder’s contractual rights are only as strong as their statutory compliance:
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Insurance is a “Condition Precedent”: Before you send your first invoice or a notice of suspension, you must verify that your insurance certificate is active and has been served on the client. Without it, your contract is effectively unenforceable regarding payment.
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The Suspension Trap: Suspending work for non-payment is a high-risk move. If it is later found that you were uninsured (or your insurance was insufficient), your suspension could be deemed a repudiation of the contract, allowing the owner to terminate and sue you for damages.
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Quantum Meruit Risks: While some builders try to claim a “reasonable price” for work done (quantum meruit) when a contract is unenforceable, courts are increasingly restrictive where there has been a flagrant breach of mandatory insurance laws.
How Leo Lawyers Can Help
Insurance compliance is often treated as “admin,” but in a dispute, it is the difference between getting paid and losing your business. At Leo Lawyers, we provide the support you need to audit your compliance before a payment dispute arises.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube, LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article, and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
