Was the Builder’s case properly prepared and presented? Builder losses in excess of $560,000 of a reduced claim by the Builder of approximately $575,000 at NCAT. Appropriate Evidence required.

03/09/2024

Watson & Watson Lawyers have years of extensive experience in commercial litigation in particular, in relation to building and construction and strata disputes and advice. We refer to our article 20 March 2020 following a Decision of His Honour Justice Fagan who allowed an Appeal by Ms Paraiso, which was an appeal against NCAT Appeal Panel’s refusal to allow an Appeal against a Senior Member’s Decision.  We refer to the Decision in Paraiso v CBS Build Pty Limited [2020] NSWSC 190.

Watson & Watson received instructions from Ms Paraiso, after the original Decision of the Senior Member at NCAT. 

Paraiso’s case was paramount and continues to be of significance as to the obligations on the Builder to complying with the obligations under the terms of the Contract in particular, relating to Variations.  The basis of the Decision relied upon the Home Building Act and in particular Sections 6, 7 and 10, and the written Contract. This requires that written detailed Variations are required to be signed by the Builder to be enforceable and claimable under the Contract.

Separately from a claim under the Contract, there is a question whether the Builder would have a right for restitution or claim based on quantum meruit. 

A NCAT Decision of Senior Member Graham Ellis, SC 3 October 2023 in Gray v Unique Building and Construction Services Pty Limited, the Senior Member of the Civil and Administrative Tribunal, New South Wales considered firstly, an amendment to the claim as filed was sought by the Builder to make a quantum meruit claim, which application was rejected.  Secondly, NCAT considered the consequences to the Builder’s claim as made in the proceedings. 

The Builder made a claim initially for $625,000 which was reduced by the Builder to a claim of approximately $575,000. 

Of this claim, the Civil and Administrative Tribunal NSW only allowed the sum of $52,325.71 to the Builder.

In this case 15 claims (14 claims by the Builder and 1 claim by the Owner) were considered by NCAT.  The Owner was not successful in the claim for $935 for reimbursement of the cost of a Building Inspector’s Report. The Builder was successful in only one claim (of 14 claims) namely, the final claim under the Contract of $50,000 plus interest totalling approximately $52,000. 

The Builder’s claims were based on claims for Variations, claims for additional costs incurred by the Builder and interest.  Senior Member Graham Ellis, SC reviewed each of the claims in the Decision and as we have indicated above, allowed only one of the Builder’s claims and rejected the Owner’s only claim for $935.

The fundamental issue in the Builder’s claim was the failure to properly make at the relevant time, a claim based on quantum meruit and secondly, to prepare the appropriate evidence required in relation to a claim based on quantum meruit. 

To make a claim based on quantum meruit is not a simple statement by the Builder, stating that the Builder is making a claim based on quantum meruit and that the Builder incurred costs.

There needs to be the appropriate evidence to support a claim on quantum meruit.  This is not necessarily the same evidence as the claim made based on the Contract.  There are numerous issues that arise in a quantum meruit claim and those have to be dealt with, with the appropriate evidence.

In many cases, a Builder does not comply with the requirements of the Home Building Act or the Contract and does not have a valid claim under the Contract, and the Builder may have the fallback position to claim on the basis of a quantum meruit claim. 

Most cases that we see in particular at NCAT presented by the Builder, do not satisfactorily deal with the evidence required to establish the appropriate claim in quantum meruit.

If you are a Builder in dispute with an Owner or an Owner in dispute with a Builder, careful consideration must be had as early as possible, in relation to the issues that arise and the evidence required.

Please contact the experienced Building and Construction Lawyers at Watson & Watson by contacting Richard Watson who is an Accredited Specialist by the Law Society of New South Wales in Commercial Litigation in the stream of building and construction.  Please contact us by contacting Richard Watson’s Personal Assistant, Shereen Da Gloria for an initial conference to discuss your very important matters.  There are other important issues that arise and each of the Builders and Owners should be aware of their rights and obligations during the Contract administration process. 

If you in particular the Builder, are involved in undertaking building works or are in a dispute, it would be helpful for you to make contact and seek our advice as early as possible.  Similarly if you are an Owner, it would be helpful for you to contact us to obtain 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.