How to Resolve Building Contract Disputes in NSW & QLD

By 11 March 2021 Litigation
Resolving Building Contract Disputes

Unfortunately disputes arising from domestic building contracts are a common story. Just ask anyone who has built or renovated a house.

While most disputes can be resolved amicably either before or during mediation on the areas of disagreement, this is not always the case. In both NSW and Queensland there are well-established dispute resolution processes managed initially through the NSW Department of Fair Trading and, in Queensland, the Queensland Building and Construction Commission (QBCC).

In both states the advice and guidance of Felicio Law Firm should be sought before you enter dispute resolution.

Of course, using a state-run dispute resolution services does not prevent either of the parties from seeking legal advice or taking independent legal action in a contractual dispute… but you should definitely seek expert legal advice if this is your preferred course of action.

Terminating a contract for breach requires a number of important procedural steps to be taken in order for it to take effect. There are potentially serious consequences for a party who wrongly terminates a building contract.

Common disputes in regard to domestic building contracts include disagreements about the contract price, the contract clauses relating to variations (of fixtures, or plans, for e.g.), extensions of time, implied warranties (defective work, non-completion, etc) and more.

Contract dispute resolution in NSW

In any dispute with a contractor, it is best to first raise the issue directly with them to see if the area of contention can be resolved to mutual satisfaction.

If that is not possible, NSW Fair Trading provides a dispute resolution service through its Home Building Service. This service aims to provide early intervention to avoid an escalation of the dispute. Statistics on the effectiveness of the service show that over 70 per cent of disputes over building contracts are resolved at the initial mediation or inspection stage.

This process can be commenced by the homeowner/consumer, or the contractor, by a formal request to Fair Trading. If the contractor initiates the request, the homeowner must agree to enter into dispute resolution but if the consumer lodges a complaint, the trader does not need to agree to resolving the dispute (though is strongly encouraged to do so).

Resolution of disputes relies on the work of experienced, trade-qualified building inspectors located throughout NSW who will provide an opinion on whether work performed under a contract is defective or incomplete.

This process may be conducted in the presence of the homeowner and contractor on site, or through inspection of material submitted by both parties combined with phone interviews. If the issue in contention can be resolved, the inspector will compile a complaint investigation report detailing what actions have been agreed upon and what each party has to do.

Where the inspector is satisfied the contractor bears responsibility for defective or incomplete work, a rectification order is issued directing the trader to rectify or complete the work by a due date. Should work not be fixed by the nominated date, the builder will be breach of the Home Building Act 1989.

If on the balance of probabilities the inspector is not satisfied that fault for the dispute solely resides with the contractor, a homeowner can choose to lodge an application with the NSW Civil and Administrative Tribunal (NCAT) to have the complaint heard and determined. Expert legal advice should be sought at this stage.

Statutory warranties under the Home Building Act apply for six years for major defects and two years for all other defects from the date of the completion of home building work. A claim must be lodged with the NCAT within these periods in order for it to deal with the issue.

Resolution of building disputes in Queensland

In Queensland the QBCC provides an Early Dispute Resolution (EDR) Service provided your building contract is not completed or has been terminated. A complaint before a contract has been completed may relate to defective or incomplete building work, or an issue about the contract itself. This service is only available for domestic building contracts worth $3,300 or more.

The aim of the EDR service is to facilitate a speedy resolution of the issue in dispute. Similar to the NSW process, the QBCC will rely on a building inspector to make a visual inspection of a property if work is alleged to be defective or incomplete under the terms of the contract, and make a decision as to what action is required. This may include issuing a Direction to Rectify to the contractor.

The QBCC can help parties reach agreements when contractual disputes arise (progress payments, delays, defective work, for e.g.) but it cannot make orders about a contract, nor force a party to pay or refund monies, or comply with any agreement the parties may reach.

Instead, for enforcement action or in the case of termination of the contract, parties need to take the dispute to the Queensland Civil and Administrative Tribunal (QCAT). In most cases, applications to QCAT need to demonstrate that the parties have tried to achieve a resolution through the QCCB EDR process.

QCAT exercises jurisdiction over most legal disputes involving domestic building contracts in Queensland, including commercial building disputes involving work of a value up to $50,000.

Before initiating legal action in QCAT, the parties to the contract are encouraged to seek advice from a legal representative with experience and expertise in Queensland building legislation, such as Felicio Law Firm.

The importance of good legal advice

Building contracts usually involve significant sums of money and for that reason, emotions can run high when there is disagreement between a homeowner and a building contractor.

But these emotions need to be kept in check. An owner’s inclination to terminate a contract and find new builders can have very detrimental consequences if the document is incorrectly terminated under the terms of the contract.

If you have questions or concerns about how to resolve a dispute about a building contract, contact the professionals with extensive experience in NSW and Queensland building contracts, Felicio Law Firm. Call us today on (02) 4365 4249.