Builder’s appeal fails: order to repay $130,516 paid before any work began stands (NCAT, 2026)

What happened

The home owner and the builder signed a residential building contract for a house. The contract value was recorded as about $1.85 million, and emails between the parties discussed the possibility of it rising to $2.4 million. One of the special conditions in Schedule 4 of the contract was that the contract was conditional on a construction certificate being obtained (a council or certifier approval needed before building work can start).

The home owner paid the builder $130,516. The evidence included emails between the builder, the home owner and an insurance services representative showing that this was the amount the builder needed in order to be eligible for the home warranty insurance required for the contract, and that the money would then be treated as a deposit credited in full against the contract price. The builder accepted at the hearing that the money was to be a credit against the contract. The insurance was never actually taken out, and no certificate of insurance was ever issued.

A separate $25,000 deposit had earlier been paid for work towards the construction certificate. The home owner accepted that the builder had done that work and did not ask for the $25,000 back.

There were delays in obtaining the construction certificate. The home owner terminated the contract before any building work was carried out. It was not in dispute that no work had been done under the contract. On 26 March 2026 the Tribunal ordered the builder to pay the home owner $130,516 on or before 9 April 2026. The builder appealed. An application to stay (pause) those orders was refused on 10 April 2026 and dismissed again after a hearing on 29 April 2026, so the orders were never paused.

What each side wanted

At first instance the home owner asked for the return of the $130,516 paid under the contract, and also argued the builder had breached section 92 of the Home Building Act 1989 (NSW) by receiving a payment before insurance was in place. The builder argued the building contract was a "sham" signed only so the home owner could obtain finance, that the only real agreement was a service contract worth $250,000, and that the $130,516 was a capital injection into the builder's company in exchange for an offer of a directorship (which the home owner refused) and shares. The builder also said it was owed substantial money for consulting work and wanted that set off against the home owner's claim on a quantum meruit basis (a claim for the reasonable value of work actually done), and that subcontractors were still owed money. On appeal, the builder argued the Tribunal had wrongly treated the $130,516 as a payment received under the contract, had failed to deal with its set-off and quantum meruit argument, had denied it procedural fairness by not letting it run a quantum meruit claim or cross claim, had decided against the weight of the evidence, and that significant new evidence had since become available.

What the tribunal decided

The Appeal Panel refused leave to appeal and otherwise dismissed the appeal. The effect is that the first-instance orders stand: the builder must pay the home owner $130,516, which had been payable on or before 9 April 2026.

The home owner had also applied for the costs of the appeal. Because the builder had not yet had a chance to respond to that application, the Appeal Panel made a timetable instead of deciding costs. The home owner is to file and serve any costs submissions, limited to three typed pages, within 14 days of the orders; the builder is to file and serve any submissions in response, also limited to three typed pages, within a further 14 days; and the home owner may file submissions in reply on costs only within a further 7 days. All costs submissions must also address whether an order should be made under section 50 of the Civil and Administrative Tribunal Act 2013 (NSW) dispensing with a hearing on costs.

Why the tribunal decided it that way

An internal appeal at NCAT is limited. Under section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) a party can appeal as of right only on a question of law; on any other ground they need the Appeal Panel's leave (permission). For a Consumer and Commercial Division decision, clause 12 of Schedule 4 to that Act allows leave only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because the decision was not fair and equitable, or was against the weight of the evidence, or because significant new evidence has arisen that was not reasonably available at the earlier hearing. The Appeal Panel also repeated that an appeal is not a chance for the losing party to run its case again.

On the first ground, the Appeal Panel accepted that the Tribunal's summary of section 92 of the Home Building Act 1989 (NSW) was incomplete. Section 92(2) says a builder must not demand or receive a payment under a residential building contract, including a deposit and whether or not work has started, unless insurance complying with the Act is in force and a certificate of insurance has been given to the other party. Both limbs must be met. Here no insurance was ever in place, so the exception could not apply in any event. The Appeal Panel also noted the Court of Appeal's reasoning in Field v Dettman that a breach of section 92(2) attracts a penalty but does not by itself give the payer a right to recover the money. That mattered because the refund was not ordered on the basis of the section 92 breach at all. Looking at the emails and the builder's own acknowledgement at the hearing, the Appeal Panel found no error in the conclusion that the $130,516 was a payment received under the contract. The refund followed from four findings together: the contract was validly terminated because the Schedule 4 conditions, including the construction certificate, were not met; no work was done under the contract; the money was a payment credited under that contract; and the builder had shown no legal basis to keep it.

On the second ground, the Appeal Panel accepted the principle that a decision maker can fall into error by failing to respond to a substantial, clearly articulated argument based on established facts, but also that a tribunal need not engage with every point put to it. No transcript or recording of the hearing was provided by either party, and the Appeal Panel was not taken to any point where a clearly articulated quantum meruit argument was actually put. No cross claim had been filed. The Tribunal had in fact dealt with the material the builder relied on: the three invoices were dated after the contract was terminated, the service contract in the evidence related to a different address, and there was no supporting evidence for the claimed subcontractor debts. Those issues were considered and given no weight.

The leave grounds failed for related reasons. Without a transcript the builder could not show any unfairness in how the hearing was run or that it had been refused the chance to put evidence or argument, so the decision was not shown to be other than fair and equitable. The decision was not against the weight of evidence, because the email evidence pointed strongly towards the money being a payment under the contract. As to new evidence, the test is objective: whether no person could reasonably have obtained the material at the time. Every document said to be new was dated before the hearing, and no explanation of its significance was given, so it was neither unavailable nor significant new evidence. Because none of the grounds showed a significant possibility of a different and more favourable result, leave was refused and the appeal was dismissed.

What this means if you are in a similar position

If you are in a similar position, this decision shows how money handed over before a build starts is usually characterised. Where the paperwork and the correspondence show that a payment is to be credited against the contract price, the tribunal is likely to treat it as a payment under that contract, even if it was handed over for a particular purpose such as funding the builder's insurance. Where a contract is then validly ended because a special condition was never met and no work was ever done, the party holding the money needs to identify a legal basis for keeping it. Arguments that the written contract was never really meant to operate, or that the money was actually an investment, carry little weight against a signed contract and the parties' own emails, particularly where the oral evidence conflicts.

The decision also shows how narrow a tribunal appeal is. An appeal is not a second hearing. A claim you want set off against the other side's claim generally needs to be brought properly as a cross claim and supported by evidence at the original hearing, not raised afterwards. If you say you were denied a fair hearing, the tribunal will usually want the transcript or recording to show what actually happened. And documents that existed before the hearing are rarely accepted as new evidence on appeal, because the system expects each side to put its whole case forward the first time.

If you are in a similar position, the step most people take first is a written demand or notice that sets out what was paid, what the contract required, and why the agreement came to an end, with a clear deadline to repay. If that is not resolved, the next step is usually an application to the tribunal or court that handles the dispute.

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

Source: Sharai Projects Pty Ltd v Premaratne [2026] NSWCATAP 347 (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.