Building disputes can arise in even the most well-managed construction projects. When parties are unable to resolve issues directly through communication or informal negotiation, they may pursue resolution through NSW Fair Trading or by lodging an application with the NSW Civil and Administrative Tribunal (NCAT). Each pathway has its own procedures, limitations, and benefits.

Understanding the distinct roles of NSW Fair Trading and NCAT can help homeowners, builders, and contractors make informed decisions in the event of a dispute.

NSW Fair Trading Complaint

Initial Process

As a first step, either party to a home building contract may notify and file a complaint with NSW Fair Trading. This process is designed to be accessible, informal, and cost-effective. Fair Trading offers free dispute resolution services, typically involving telephone-based mediation between the parties.

However, it is important to note that participation is voluntary. NSW Fair Trading cannot compel either party to attend or remain in the process. If one party declines to participate or withdraws, NSW Fair Trading cannot enforce any resolution or make binding determinations.

Contractual Requirements

Many standard building contracts (e.g., HIA or MBA contracts) include provisions requiring parties to:

  • provide written notice of the dispute;
  • attempt informal resolution, possibly through direct communication;
  • confer with a mutually agreed third party, such as a mediator or expert;
  • only refer the matter to NSW Fair Trading or another authority if these steps fail.

Failing to comply with these contract terms may affect your ability to pursue other remedies later, including legal action or an NCAT application.

Timing Considerations

Fair Trading may decline to accept a complaint if the statutory limitation period is due to expire within three months, to prevent prejudice to either party. Additionally, during the dispute process, parties are expected to continue fulfilling their contractual obligations, unless the contract states otherwise.

NCAT Application

Pre-requisite

Pursuant to Section 48J(a) of the Home Building Act 1989 (NSW) (the Act), the Tribunal must reject any application of a building claim unless the subject-matter of the building claim has been investigated in accordance with Division 2 of Part 3A of the Act. This means that most home building disputes must first be referred to NSW Fair Trading before NCAT can accept the application. 

Exemptions to the Pre-requisite

In some circumstances, the building claims can be lodged with NCAT directly without NSW Fair Trading investigation, common circumstances outlined on NCAT website include the following:

  • appeal against a decision of an insurer under a contract 
  • recovery of a debt by a contractor;
  • a cross-claim to an existing NCAT matter;
  • when the time for lodging a claim is due to expire within 3 months;
  • claims involving unlicensed contractors;
  • claims by a trader against a subcontractor regarding defective work;
  • claims involving companies or individuals that have been de-registered, liquidated, or bankrupted.
Jurisdiction and Authority

Pursuant to Section 48K of the Act, NCAT has the jurisdiction to hear and determine building claims of up to $500,000. 

However, NCAT does not have jurisdiction to hear and determine building claims relating to building goods and services generally. 

Preferred Outcome

Notably, NCAT has the authority to issue rectification work orders, and under Section 48MA of the Act, the principle is that NCAT must consider making a rectification order wherever possible before awarding damages, which helps ensure that defective work is remedied effectively.

Statutory Limitations

To lodge a valid claim with NCAT, parties must observe the time limits. Pursuant to Section 18E, proceedings for a breach of statutory warranties must be commended within 6 years for a breach that results in a major defect in residential building work or 2 years in any other case.

Conciliation

In most of the circumstances, before NCAT formally hears your building claims, the parties will be required to attend conciliation. 

Key Considerations 

  1. Procedures

The building disputes should referred to NSW Fair Trading first.

If the building dispute is unable to be resolved by NSW Fair Trading, then either party may file an application with NCAT, with exemptions allowed. 

  1. Jurisdictional Limitations

Some matters, such as highly complex contractual disputes, negligence claims, claims exceeding $500,000 or those involving third parties, may fall outside NCAT’s jurisdiction. These matters may require court proceedings instead.

  1. Limitation Periods

Whether pursuing a claim through NSW Fair Trading or NCAT, parties must act within the applicable statutory timeframes. Delay can result in losing the right to enforce your claim altogether.

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 social media accounts.

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.