Builder’s appeal fails: $201,807.56 defects orders stand and director stays personally liable (NCAT, 2026)

What happened

In June 2023 the owners of a house at Winston Hills in New South Wales signed a building contract with Bahrami Group Pty Ltd, which trades as Build1 Australia, for alterations to the ground floor, the first floor and the façade of the house, plus landscaping. The contract price was $510,862 and the parties used the November 2020 Master Builders Residential Building (BC4) standard form. The company's sole director was also the nominated supervisor named on its contractor licence while the work was carried out. The owners gave evidence, which was not challenged, that they saw him on site almost every day at the start of the job and once or twice a week later, directing staff and trades.

The owners told the builder on 16 June 2023 that their finance had been fully approved. They paid a deposit of $46,086.20 before 23 June 2023 (the contract deposit of $51,086.20 less an agreed $5,000 credit) and paid progress claim no 1 of $102,172.40 on 2 October 2023. In about mid-April 2024 the builder issued invoice 6 for $54,086.20. On 26 April 2024 the director emailed the owners saying this was a formal notice suspending work because invoice 6 had not been paid, and the owners replied the same day agreeing work would need to be suspended until a resolution was reached. The builder received payment of invoice 6 on 10 June 2024.

On 18 September 2024 the owners sent a letter headed "notice of default" on three grounds, including that the builder had failed to proceed with due diligence and complete the works. The builder denied the allegations on 11 October 2024. On 6 November 2024 the owners wrote terminating the contract under clause 28, the clause that lets an owner end the contract if a default continues for 25 days after a written notice specifying the default and the owner's intention to terminate.

Two cases followed in NCAT's Consumer and Commercial Division and were heard together over three days. The owners claimed damages for defective and incomplete work and out-of-pocket expenses from the company, and damages for negligence from the director. The builder claimed the amount it said was still owing under the contract. The owners relied on affidavits from each of them and two reports from a building expert; the builder and the director relied on a single expert report. On 24 March 2026 the Tribunal dismissed the builder's claim and ordered the company to pay the owners $201,807.56, with the director jointly and severally liable for $201,094.32 of that sum, being the rectification cost of 22 defective items including sub-soil and sanitary drainage, stormwater pipework, cavity flashings and weepholes, termite management, balcony waterproofing and balustrading, retaining wall blockwork, rendered finishes, stair riser heights, the rear deck, and moisture and shower waterproofing issues. The owners also recovered out-of-pocket expenses of $713.24. On 16 July 2026 the Tribunal made costs orders against the builder, and against the builder and the director in the owners' case, with the costs of one hearing day on the indemnity basis.

What each side wanted

On appeal the builder and the director asked the Appeal Panel to set aside the money orders and the costs orders, to replace the money order with a work order under the Home Building Act 1989 so the builder could return and fix the defects itself, to dismiss the claim against the director under section 37 of the Design and Building Practitioners Act 2020, and to order the owners to repay $201,807.56 within 14 days. Their four grounds argued that the expert's table did not identify the precautions the director should have taken or how those precautions would have avoided the defects, that the Tribunal reversed the onus of proof on the work order question, that the contract had been suspended by agreement on 26 April 2024 and so was never validly terminated, and that the commencement date was 30 October 2023 rather than 16 June 2023, which would have pushed out the date for practical completion and made the owners' default notice invalid. The owners argued that none of the grounds raised a question of law, that leave to appeal should be refused, and that the expert's table did set out the steps the director should have taken for each defect.

What the tribunal decided

The Appeal Panel (a Deputy President and a Principal Member) ordered, in respect of the appeal against orders 2 and 3 made on 24 March 2026, that as to ground 1 leave to appeal is granted and the appeal is dismissed, and that as to grounds 2 to 4 leave to appeal is refused. The appeal against orders 2 and 3 made on 16 July 2026, the costs orders, was dismissed. The appellants were ordered to pay the costs of the appeal of the respondents on the ordinary basis as agreed or assessed.

The practical effect is that the first-instance orders stand: the company must pay the owners $201,807.56 immediately, and the director is jointly and severally liable with the company for $201,094.32 of that amount for the defective work. The costs orders made on 16 July 2026 also stand, including the order that part of the owners' costs be paid on the indemnity basis.

Why the tribunal decided it that way

The Appeal Panel began with how NCAT appeals work. Under section 80 of the Civil and Administrative Tribunal Act 2013, a party can appeal as of right only on a question of law; on any other ground the Appeal Panel's leave is needed. It said the grounds in the amended notice of appeal asserted various errors but did not articulate any question of law, and the appellants' submissions never answered the owners' point that no question of law arose. So the appeal was not as of right and leave was required. For cases from the Consumer and Commercial Division, Schedule 4 clause 12 allows leave where the appellant may have suffered a substantial miscarriage of justice because the decision was not fair and equitable, was against the weight of the evidence, or significant new evidence has arisen. The Panel noted that a weight-of-the-evidence argument needs an exceptionally strong case, and that it is not enough to show a decision was arguably wrong.

On the commencement date (ground 4), the Panel found the issue had not been run below at all: the builder and the director had admitted the owners' pleading about the commencement date in their points of defence and made no submission about it in closing. They were not permitted to raise it for the first time on appeal. The Panel added that, even if they could, the argument was without merit, because clause 10(a) read with Schedule 2 item 5(a) picked the date the owners notified the builder that finance was approved as the commencement date, and the deposit had in fact been fully paid before 23 June 2023 once the agreed $5,000 credit on the builder's own invoice was taken into account.

On termination (ground 3), the Panel did not accept that the parties had agreed to suspend the works and never lifted the suspension. The builder's own email of 26 April 2024 validly suspended the works under clause 21(a)(i) and (b) for non-payment. The owners' reply the same day was not an agreement to suspend and, properly read, was simply an acknowledgement that the works were already suspended. Once the builder received payment of invoice 6 on 10 June 2024, clause 21(d) obliged it to recommence within 20 days. On that footing the Panel was not satisfied there may have been a substantial miscarriage of justice, and said it would not have exercised its discretion to grant leave in any event because the ground raised no issue of principle, no question of general public importance and no reasonably clear injustice. Ground 2, about a work order instead of a money order, did not arise because the appellants' counsel conceded it was only pressed if the termination ground succeeded.

Ground 1 concerned section 37 of the Design and Building Practitioners Act 2020, which gives a person who carries out construction work a duty to exercise reasonable care to avoid economic loss caused by defects, owed to each owner of the land, and which under section 41 is subject to the Civil Liability Act 2002 (including the sections on when a failure to take precautions is negligent and on causation). "Construction work" includes supervising, coordinating, project managing or otherwise having substantive control over building work, and the Tribunal below had found the director did all of those things. The published text sets out the statutory provisions and the parties' competing arguments about whether the owners' expert had identified the precautions the director should have taken, but it ends partway through the owners' submissions, so the Appeal Panel's own reasoning on this ground is not in the text available here; the orders record that leave was granted on ground 1 and the appeal on it was dismissed.

What this means if you are in a similar position

If you are in a similar position, this decision shows two things about how the rules are applied. First, the duty in section 37 of the Design and Building Practitioners Act 2020 can reach beyond the building company to an individual who supervises, coordinates or project manages the work, or otherwise has substantive control of it, because that activity is itself "construction work" under the Act. Here the person who held the role of nominated supervisor on the licence was found jointly and severally liable with the company for the rectification cost.

Second, an NCAT appeal is not a second go at the same hearing. An appeal is only as of right on a question of law, and the Appeal Panel expects that question to be identified precisely rather than wrapped up in a list of disagreements. On anything else, leave is needed, and leave is not given just because a decision might arguably be wrong. This decision also shows how hard it is to raise a new argument on appeal: a point that was admitted in the defence and left out of closing submissions was not allowed to be argued for the first time at the appeal, and the appellants ended up paying the other side's costs of the appeal.

In disputes like this about defective residential building work, the step most people take first is a written notice to the builder that lists each defect and asks for it to be fixed by a date, usually supported by an inspection report, before any tribunal application is lodged.

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

Source: Bahrami Group Pty Ltd v Moriarty [2026] NSWCATAP 294 (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.