Builder owed no duty to cover owners’ pure economic loss from defects claimed 13.5 years on (QCAT, 2026)

What happened

In April 2012 the homeowners contracted Jon Nott Building Pty Ltd to build a new house on their property in Millaa Millaa, on the Atherton Tablelands in Far North Queensland. The tribunal noted the area regularly has high rainfall and other harsh weather. The house was finished on 21 December 2012.

In about July 2019 the homeowners noticed 'white spots' on the metal beams under the house and the deck. They said this got worse by December 2021. In August 2023 a different builder inspected the house and described the problem as 'rusting and corrosion', suggesting the work might be defective. The homeowners then contacted the builder for the first time.

By July 2024 the two sides had not reached any agreement. The homeowners complained to the Queensland Building and Construction Commission (QBCC), which said the complaint was out of time. The tribunal noted the period for that step was six years and six months from completion, and 11.5 years had passed. The homeowners then had consultants inspect the whole house and prepare a scope of repair work. In April 2025 they obtained a repair estimate. The decision gives the figure as $285,096.20 in one place and $278,096.20 in another.

The homeowners started this case on 2 May 2025. They first relied on the Australian Consumer Law. They later dropped that and pressed their claim only in negligence. Negligence is a claim that someone failed to take reasonable care when they owed you a legal duty to do so. The tribunal decided to deal first with a 'preliminary point': whether the builder owed the homeowners a duty of care at all, and whether the claim was too late.

What each side wanted

The homeowners asked for the cost of having someone else repair the work. They argued that a builder and the owner it builds for have a special relationship in which the builder takes on responsibility and the owner relies on the builder's skill. They relied on the High Court case Bryan v Maloney and earlier tribunal decisions. They said the builder did not follow the structural drawings for the tie-down rods and fixed the cladding to only every second stud. They described their loss as the damage and defects needing repair, higher building costs over time and a likely drop in the property's value. They also said they were not experienced in contracts and simply relied on the builder. The builder argued the claim was 'statute barred', meaning brought outside the legal time limit. It said all the work complained of could have been found by a proper detailed inspection at completion in December 2012. Its solicitor argued the claim was really for pure economic loss (money lost because the work itself was faulty, rather than damage to other property or injury). He said the building contract already set out the builder's duty to use due care and skill, so no separate duty arose in negligence.

What the tribunal decided

The tribunal declared that the builder did not owe the homeowners a duty of care to avoid causing them pure economic loss. It also declared that the builder did owe them a duty of care not to cause damage to their property.

Because no duty existed for pure economic loss, the tribunal said it did not need to decide whether that part of the claim was out of time. As for any claim based on damage to property, it said the time-limit question could not be decided without evidence about the facts. That would need to be dealt with at a full hearing.

No money was ordered. The case was listed for a directions hearing at 3:30 pm on Friday 9 October 2026, by video link on MS Teams, to decide how the case would continue. A directions hearing is a short hearing to set the next steps in a case.

Why the tribunal decided it that way

The tribunal said a builder doing domestic building work clearly owes the owner a duty not to cause property damage or personal injury. Pure economic loss is different. Here that meant the financial loss that comes from the building work itself being faulty. The tribunal said that, under Bryan v Maloney as later High Court cases have explained it, the original owner who has a contract with the builder is generally not owed a duty for this kind of loss. That is because the contract governs their relationship.

The homeowners relied on the idea of 'assumption of responsibility', meaning the builder took on the job for them and they relied on it. The tribunal looked at the High Court's decision in Mallonland v Advanta Seeds. It read that case as keeping 'vulnerability' as a relevant factor. Vulnerability means whether the person could have protected themselves. The tribunal said that if a person could have protected themselves, no duty of care arises even where responsibility has been taken on. The homeowners had a building contract. That contract carried statutory warranties, which are promises about the work that the law adds to every domestic building contract. At the time these were in the Domestic Building Contracts Act 2000 (Qld), and they are now in Schedule 1B of the QBCC Act. The homeowners' own description of the builder's responsibility was 'to build the works with reasonable care and skill'. The tribunal said any duty to do that came from the contract, not from negligence. It found the contract's terms were inconsistent with a separate duty to avoid economic loss, so that part of the claim had to fail.

The position was different for property damage, where a duty did exist. The tribunal said that to go further, the homeowners would need to show their claim was for damage to their property caused by the builder while doing the work, rather than a claim that the work itself was defective. It made no final finding on this. It did note that this was not how their claim was framed at that stage. The question of when the problems could have been found with reasonable care is a matter of fact that needs evidence. The homeowners also relied on section 9 of the Civil Liability Act 2003 (Qld), which deals with when a person breaches a duty to take precautions against a risk of harm.

The published text stops partway through the tribunal's discussion of whether the homeowners' loss was property damage or pure economic loss, so the rest of its reasoning is not available.

What this means if you are in a similar position

If you are in a similar position, this decision shows how the tribunal can treat a claim against your own builder framed in negligence rather than under the contract. Where you had a valid building contract, the tribunal saw the contract and the warranties the law adds to it as your protection for faulty work. On that view, a separate negligence claim for the cost of fixing the defects themselves may not be available. A claim for damage the builder caused to other parts of your property is treated differently, but it still has to be shown on the evidence.

The decision also shows how time limits can become a central issue. Here the regulator said a complaint was out of time after six years and six months. The builder argued the whole claim was too late because the problems could have been found at completion. When defects could reasonably have been discovered is a question of fact, and it was left for a full hearing.

In disputes about building work, the first step people most commonly take is to set out the problem and what they want done in a written notice to the builder. If that does not resolve it, they may then make an application, such as a complaint to the QBCC or an application to the tribunal.

How to apply: our step-by-step guide to a QCAT application. More decisions: QCAT cases and builders and building defects.

Source: Coulson v Jon Nott Building Pty Ltd [2026] QCAT 460 (read the full decision). This summary was prepared from the published decision for general information. It is not legal advice, and the tribunal’s own reasons are the authoritative record.