30 June 2021
10 things you should know before commencing a home building claim in NCAT
This article looks at the top 10 answers to questions that building professionals, homeowners and practitioners may have, or should ask, before commencing or defending proceedings in the New South Wales Civil & Administrative Tribunal (NCAT) for residential building work. These issues are particularly relevant to homeowners considering a claim against a builder for defective or incomplete residential building works, but also for builders who receive such a claim or that are considering their own claim against a homeowner for non-payment.
1. What jurisdiction does NCAT have?
NCAT is a specialist tribunal divided into four divisions. Its Consumer and Commercial division has jurisdiction to determine residential building disputes up to a value of $500,000. NCAT derives this jurisdiction principally from the Home Building Act 1989 (NSW). However, the tribunal cannot determine equitable claims, common law claims or claims against building professionals pursuant to the Design and Building Practitioners Act 2020 (NSW). Further, the Tribunal does not have jurisdiction to determine any claim under the Building and Construction Industry Security of Payment Act 1999 (NSW).
2. What if I want to file my claim in court instead?
While some claimants may prefer the rigidity and process offered by the Courts, there are certainly advantages in commencing in NCAT including that it caters to self-represented persons and will usually be cheaper than commencing in a court. However, claimants should be cautious before commencing a building claim in a jurisdiction other than NCAT. Pursuant to section 48L of the Home Building Act 1989 (NSW), NCAT is chiefly responsible for resolving building claims. However, if a claimant commences a building claim in a court, and that claim could have been commenced in NCAT, the defendant can elect to transfer the proceedings to NCAT instead. If the defendant makes such a transfer application, there may be costs consequences for the claimant having commenced in the incorrect forum.
If a potential claimant wants to fall outside the NCAT jurisdiction and avoid an application for transfer, it should frame its case on causes of action beyond the Home Building Act 1989 (NSW), for example by including a claim in negligence or for a breach of statutory duty under the Design and Building Practitioners Act 2020 (NSW).
3. Do I need to do anything before commencing in NCAT?
It is a general requirement of NCAT that before a building claim is filed, it is first necessary to approach the Department of Fair Trading for the appointment of an investigator to attend and make orders or attempt to bring the parties to an informal agreement. A box must be ticked on the NCAT application to verify that this step has been undertaken.
The Fair Trading investigation process can be time-consuming, as investigators generally take some weeks to be appointed and take a further four weeks to arrange for the parties to attend site, perform their inspection and make any orders which may be considered appropriate. On many occasions, this leads to the investigator deciding that the dispute is too wide or too complex to make orders and the result is simply to direct the parties to continue to file an application to resolve the dispute.
Whilst it is possible to obtain an exemption to this prerequisite under section 48J(b) of the Home Building Act 1989 (NSW), such an exemption will normally only be granted in special circumstances such as if a party is at risk of missing a statutory time limit before filing the application or if the builder was unlicensed. A Fair Trading investigation can provide a cheap and easy solution to a building dispute, particularly if the investigator makes a rectification order, so potential claimants should carefully consider their time limits so they don’t miss the opportunity for an investigation to occur.
4. What is the difference between NCAT members and judges?
Unlike judges of the court, members of NCAT do not necessarily have to be legal practitioners. Members come from a variety of backgrounds, including lawyers, architects, engineers, project managers and other building-based disciplines. There is a tendency in our experience for the background of the member hearing a building dispute to influence their consideration of the facts and evidence in each case. Given applicants have no choice with the member or senior member hearing their case, this can be an important consideration when seeking to prosecute a residential building claim in NCAT.
5. Am I entitled to legal representation?
There is no general right to legal representation in NCAT. Pursuant to the Civil & Administrative Tribunal Act 2013 (NSW), a party may only be represented if NCAT grants that person leave. In a home building application, NCAT will usually grant leave for a party to be represented in the following circumstances:
if the claim is for more than $30,000
if another party in the proceedings is, or is represented by, a legal practitioner
if, in the opinion of NCAT, the party would be placed at a disadvantage if not represented at the hearing
if NCAT is of the opinion that representation should be permitted due to the complexity of the issues of fact or law in the proceedings.
This list is not exhaustive and there may be other circumstances in which NCAT would consider granting leave. If you are unsure of whether you are able to be legally represented, you can either consult this guideline issued by NCAT or otherwise seek legal advice.
6. How does evidence in NCAT differ?
Unlike the courts, NCAT is not bound by the formal rules of evidence. Whilst many members will still adhere to those rules, and even apply the requirements of the Evidence Act 1995, there is much greater leniency and a tendency to allow all documents which are considered relevant to the issues in dispute to be relied upon in any format in which they may be provided by the parties. This is largely due to the prevalence toward self-represented litigants, particularly in smaller claims. Whilst many members will make directions for the provision of affidavits, there is less emphasis spent on objections to affidavits in improper form, hearsay evidence and the usual objections which are enforced more stringently by the courts.
7. Do I need expert evidence and what is a Scott Schedule?
A Scott Schedule is a document setting out building defects, incomplete works or variations to a building contract along with cost estimates for labour and material for each of those items. Given that the majority of building claims commenced in NCAT are for defective and incomplete works, the level of detail in Scott Schedules are usually central to the main issues in dispute and therefore can constitute the most important evidence in the proceedings. Often, a Scott Schedule is prepared by an expert retained by the party, or it at least is completed by reference to an expert report.
NCAT has its own experts’ code of conduct (contained in NCAT Procedural Direction 3) which must be adhered to and includes a requirement that any expert report must acknowledge that the expert has read and agreed to be bound by the code. These requirements are important, as NCAT proceedings often move quickly and claimants will need to ensure that experts have been properly briefed to prepare a report in accordance with NCAT’s requirement. Additionally, the claimant should consider obtaining, or at least briefing, an expert before commencing proceedings to ensure they are able to provide the evidence within the timetable ordered by the Tribunal.
8. What orders are NCAT likely to make?
In a claim alleging defective building work, NCAT’s preferred outcome is that rectification of that work is to be performed by the responsible party. This principle is enshrined in section 48MA Home Building Act 1989 (NSW), meaning that a party opposed to such an order will need to demonstrate why it would not be appropriate for the builder to rectify the defective work.
A builder will often be more interested in obtaining a rectification order, as it is usually cheaper than having to pay damages. However, a homeowner may be less willing to accept a rectification order, particularly if there has been a breakdown in trust and confidence with the builder. Notwithstanding, NCAT will need to be sufficiently persuaded that in all the circumstances, there is a justification to make an order other than for rectification of the defective works.
By way of example, in the case of Brooks v Gannon Constructions Pty Limited  NSWCATCD 12, NCAT was not satisfied that the homeowner’s statement that he would feel “crook in the stomach” was not a sufficient reason to make an order other than for rectification by the builder. However, NCAT was concerned regarding statements made by the builder as to his company’s financial difficulties and was satisfied that the builder would most likely not have sufficient resources to comply with a work order and therefore made a money order instead.
9. Can I recover my legal costs?
Unlike the usual order in the courts that costs follow the event, the Civil and Administrative Tribunal Act 2013 (NSW) contains provisions to the contrary so that the starting point in proceedings before NCAT is that parties will pay their own costs. There is scope for NCAT to make an award of costs, but only if special circumstances are present.
In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to a number of matters including:
a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings
b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings
c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law
d) the nature and complexity of the proceedings
e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance.
Additionally, even if there are no special circumstances present, in the Consumer and Commercial Division (within which home building claims are brought), NCAT may make an award for costs where:
a) the amount claimed is more than $30,000
b) the amount claimed is between $10,000 and $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 of the Civil and Administrative Tribunal Act 2013 with regard to a party conducting the proceedings in such a way that unreasonably disadvantages another party.
For claims above the threshold, there is wide discretion for NCAT to award costs, with the general rule that costs follow the event being adopted. In our experience, there is a greater tendency for Tribunal members to make partial costs orders, especially in circumstances where a party is successful to less than 50% of their claim. It is important therefore to carefully consider, in pleading a claim, that it has not been framed in a manner that is overly ambitious. This usually necessitates the undertaking of detailed expert examination, which can often lead to increased legal costs which may come back to bite in the form of an adverse costs order if you are, either partially or entirely unsuccessful.
10. Can I appeal an NCAT decision?
Appeals to a decision of the Consumer and Commercial Division are generally available to a dissatisfied party, however, leave to appeal may be required in certain circumstances. Appeals in home building disputes are usually made to the NCAT Appeals Panel.
If an appellant is still dissatisfied after the Appeals Panel has made its decision, you may be able to appeal the decision to the Supreme Court, however leave of the Court is required to do so.
Authors: Robert Kalde and Scott Homan