NCAT Appeal Panel confirms that Contracts and Variations must be in writing and signed to be enforceable – Appeal also allowed on basis Tribunal rejected some evidence

21/10/2020

In the recent case of Rice v JR & SD Farmer trading as TA Urban Bespoke Homes [2020] NSW CATAP 208 allowed an Appeal against at Decision of NCAT at first instance.  One of the main issues in this case related to the enforceability of variations undertaken during the process of building work in relation to residential building work. 

Fundamentally the NCAT Appeal Panel confirmed the Decision of the Supreme Court in the case of Paraiso v CBS Pty Limited [2020] NSW SC 19 in which the Supreme Court allowed an appeal against the Decision of the NCAT Appeal Panel.  Watson & Watson received instructions to act on behalf of Ms Paraiso in relation to the Appeal after Ms Paraiso lost her case at first instance, at NCAT. 

Prior to the Supreme Court’s Decision in Pairaso’s case, NCAT often would allow the Builder to claim for Variations without proper consideration of the Contract.  NCAT in Paraiso’s case has confirmed that the Builder must comply with various sections of the Home Building Act in relation to contracting.  The Rice case affirmed the view held in Paraiso’s case.

For the Builder to be able to enforce the Contract, the Builder needs an enforceable Contract which complies with the many provisions of the Home Building Act.  Also the Builder must comply with other provisions of the Home Building Act including those relating to insurance.  Essentially the Contract must be in writing and signed by the parties.

Variations also need to be in writing and signed by the parties to be enforceable.

Even though the Contract is not enforceable by the Builder, the Builder is liable for damages and subject to any other remedy in respect of breach of the Contract committed by the person.  In other words in the usual case the Owner will have the benefit of the Contract however the Builder will not have the benefit of the Contract.

This does not mean that there is no prospect of the Builder recovering on the basis of quantum meruit.

However there is a further complication which was confirmed in Paraiso’s case which was confirmed in Rice’s case that there is a cap on the amount that the Builder could claim namely, the amount that would be payable under the terms of the Contract.  This does not mean that the amount recoverable by the Builder cannot be less than the amount that would be determined pursuant to the Contract as the cap.  In other words, the Builder may recover less than and sometimes significantly less on the basis of a quantum meruit in the event the Contract is unenforceable.

Further a second issue arose in Rice’s case in that the Appeal Panel also allowed the appeal on the basis that the Tribunal’s Decision was based on a mistaken view of relevant facts and the refusal to admit evidence because it was not in proper form.  The NCAT Appeal Panel was of the view that the refusal of evidence (although not in proper form) did not allow for the just quick and cheap resolution of the real issues in the proceedings.

Each of these issues gives rise to difficulties for parties in proceedings in how they prepare for and conduct their case.

Also in Rice’s case there was an issue raised as to whether there was actual or preserved bias by the Tribunal Member.  This was unsuccessful based on the factual matters that arose.

If you have any issues in relation to any matters pertaining to issues relating to residential buildings (including residential strata buildings) or building contracts matters, our highly experienced Senior Building and Construction Solicitors have the expertise to assist you.  Do not hesitate to contact Richard Watson Accredited Specialist Building & Construction or his Personal Assistant Shereen Da Gloria to discuss your matter and seek the appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.