Builder’s appeal fails after tribunal refuses to order costs against a home owner (NCAT, 2026)

What happened

The home owner owned a residential property and had entered into a building contract with Mavid Construction Pty Ltd. He said that, despite numerous attempts over an extended period, the builder had not fixed all of the defects in the work, including 20 separate water leaks. In April 2025 he sent the builder photos of six unresolved issues, among them four water leaks into the home and a leak from the water tank. In May 2025 he told the builder about two more leaks.

The statutory warranty period for major defects under the Home Building Act 1989 (NSW) expired on 25 June 2025. A statutory warranty is a promise about the quality of building work that the Act puts into the contract automatically. The home owner, who had no lawyer, read guidance on a NSW Government website which said the warranty periods are extended by six months if the owner becomes aware of a defect in the last six months of the period. Relying on that, he lodged his claim with the tribunal on 3 August 2025, alleging breaches of the statutory warranties and seeking $30,000. At the first case management hearing on 26 August 2025 the builder said the claim was out of time. The tribunal asked the home owner to set out his claim in a document called Points of Claim, and when he did, quotes he had obtained lifted the value of the claim to $95,000.

On 31 October 2025 and again on 3 December 2025 the builder sent the home owner two letters on each occasion: an open letter explaining the time limit problem and warning about costs, and a letter marked "without prejudice save as to costs" offering to settle on a walk away basis, meaning the home owner would withdraw and each side would bear its own costs. Those settlement letters also required broad releases and indemnities, including a mutual release covering all claims however arising in relation to the building works. The home owner replied to the first set saying his advice did not match the builder's, and did not accept. He did not reply to the later letters. A further walk away offer was sent on 19 February 2026, again reserving the builder's right to use it on costs.

At the hearing of the preliminary time limit question on 6 March 2026, the tribunal dismissed the home owner's claim, finding it had not been made within the time required by s 18E of the Home Building Act. The builder then applied for its costs, which by then came to $39,499.83 up to that hearing. The tribunal dismissed the costs application, and the builder appealed that refusal.

What each side wanted

In the costs application the builder argued it had been wholly successful, that the claim had no tenable basis in law, that it was frivolous, vexatious or an abuse of process, and that the home owner had unreasonably rejected three walk away offers. On appeal it ran four grounds: that the tribunal had wrongly treated "each party pays their own costs" as the general position where rule 38 applies; that it had wrongly taken into account the home owner's own belief that his claim was good; that it had applied the test for indemnity costs instead of the ordinary costs discretion; and that it had made an error of fact in finding the rejection of the offers was not unreasonable. The builder also sought leave to appeal on the basis that the decision was not fair and equitable and was against the weight of evidence, and asked for its appeal costs on an indemnity or ordinary basis. The home owner, who represented himself, said he had started the case in good faith on the published guidance, that his belief had not been treated as decisive, that refusing the offers at that stage was not objectively unreasonable, and that each side should pay its own costs.

What the tribunal decided

The Appeal Panel made three orders: leave to appeal is refused; the appeal is dismissed; and each party is to pay their own costs.

No money was ordered to be paid either way. The effect is that the original order dismissing the builder's costs application stands, so the builder is left bearing its own legal costs, which the evidence put at $39,499.83 up to the hearing of the preliminary issue, together with the cost of the appeal. The home owner's underlying building claim remains dismissed as out of time.

Why the tribunal decided it that way

Normally under s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) each party in the tribunal pays its own costs unless there are "special circumstances". Rule 38 of the Civil and Administrative Tribunal Rules 2014 is an exception: in the Consumer and Commercial Division, where the amount claimed or in dispute is more than $30,000, the tribunal may award costs even without special circumstances. Because the claim had grown to $95,000, rule 38 applied. The Appeal Panel accepted that, but stressed that rule 38 only gives the tribunal a discretion to award costs; it does not guarantee them to the winner.

An appeal against a discretionary decision is hard to win. Following House v The King, the Appeal Panel said the builder had to show the first tribunal made an error of legal principle, made a material error of fact, took an irrelevant matter into account, failed to give weight to a relevant matter, or reached a result so unreasonable that an error must have occurred. The Panel found the builder had not identified any of those. Reading the decision as a whole, the tribunal had correctly stated that a successful party is the starting point for costs and had cited the established principles. Some of its wording was "loose or infelicitous", but that was not the same as applying the wrong test. The Panel said the builder's complaint came from inspecting the reasons with a "fine-tooth comb attuned to identify error" rather than reading them as a whole.

On the settlement offers, the Panel applied Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) and the list of factors from Hazeldene's Chicken Farm: the stage of the proceedings when the offer arrived, the time allowed to consider it, how much was really being given up, the offeree's prospects at that date, how clearly the offer was expressed, and whether it warned that indemnity costs would be sought. An offer of this kind, sometimes called a Calderbank offer, only exposes the other side to extra costs if refusing it was unreasonable. The Panel held that the surrounding circumstances can include why the person refused, so the home owner's genuine but mistaken reading of the government guidance was a legitimate part of the picture. It was not treated as decisive. It sat alongside the timing of the offers, which were all made before the time limit question had been decided and very early in the case, and the fact that the s 18E point turned on a nuanced distinction between when a defect becomes apparent and when the underlying breach of warranty becomes apparent.

Leave to appeal was also refused. Under cl 12(1) of Sch 4 of the Act the builder had to show it may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or was against the weight of evidence. The Panel found neither. It observed that the three offers were almost identical apart from updated costs figures, that each required unconditional releases and indemnities which on their face went beyond the subject matter of the case, and that it was not apparent why three offers were needed before the time limit issue had been determined. It rejected the builder's submission that it could have done nothing to avoid the costs it incurred, saying there was a lot the builder could have refrained from doing without jeopardising its position. On the appeal costs, the builder had been directed to file costs submissions with its appeal submissions and filed none, and the appeal had failed, so each side bore its own costs.

What this means if you are in a similar position

If you are in a similar position, this decision shows two things about costs in the tribunal. The first is that passing the $30,000 mark changes the costs rules: above that figure the tribunal can order one side to pay the other's legal costs without needing "special circumstances". The second is that the power is only a discretion. Winning on a technical point, even winning completely, does not make a costs order automatic, and the tribunal will look at how the whole dispute was conducted.

It also shows how settlement offers are weighed. A written walk away offer can expose the other side to costs, but only if refusing it was unreasonable when it was made. Here the offers landed before the key legal question had been decided, they asked for releases wider than the dispute itself, and the person refusing had a genuine, if wrong, reason drawn from published government guidance. The volume and cost of the correspondence also counted against the party that sent it. Separately, the case is a reminder that time limits for building warranty claims are strict, and that plain-language guidance on a website is a summary, not the words of the Act.

In disputes about defective building work, most people start with a written notice to the builder that lists the defects and asks for them to be fixed by a set date, keeping the photos, dates and replies together as a record. If that does not resolve it, the next step is usually an application to the tribunal, lodged within the time limits that apply to the type of defect.

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

Source: Mavid Construction Pty Ltd v Blair [2026] NSWCATAP 352 (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.