Builder’s defect claim against its own subcontractor dismissed: tribunal had no power to hear it (TASCAT, 2026)

What happened

A building company, Johns Lyng Insurance Building Solutions (Tasmania) Pty Ltd, was engaged by a residential building owner, or the owner's insurer, to carry out renovations to a home. On 23 May 2024 it entered a subcontract agreement with SJE Constructions Pty Ltd for that company to perform the bathroom renovation works.

The parties did not dispute three things: the work was residential building work; the head contractor was not the owner of the home; and the relationship between the two companies was that of principal and subcontractor under the subcontract agreement.

The head contractor said the bathroom works were finished but were defective and did not comply with legislation. It said it had to engage other contractors to carry out remediation work, and it wanted the cost of that remediation back from the subcontractor.

On 23 September 2025 the head contractor lodged a notice of dispute with the Director of Building Control and asked the Director to facilitate mediation or conciliation. A notice of dispute is the formal first step in the Tasmanian residential building dispute process. By notice dated 23 October 2025 the Director rejected it, on the basis that this was a civil dispute between a builder and a subcontractor rather than a dispute between a building contractor and an owner. The head contractor then applied to the Tribunal.

What each side wanted

The head contractor applied under the Residential Building Work Contracts and Dispute Resolution Act 2016 for orders about allegedly defective and non-compliant work, relying on s 47(1) (whether residential building work had been completed satisfactorily), s 59(1)(b) (whether the work complied with that Act or another Act that applied) and s 59(1)(c) (a dispute about the terms of a residential building work contract). It argued that the Tribunal's power under s 59 turned on the quality and compliance of the residential building work itself, not on who the contracting parties were, and pointed to s 4(2)(c) of the Act as showing that the Act contemplates disputes arising within the chain of contractual responsibility. The subcontractor argued the Tribunal had no jurisdiction, because the Act's dispute powers run between an owner and a building contractor and do not extend to a contractor's dispute with its subcontractor; it also raised a question about whether the applicant was even the right party to the subcontract, saying the agreement was with a different entity, Johns Lyng Group Pty Ltd.

What the tribunal decided

The Tribunal dismissed the application. It ordered: "The application is dismissed. Any application for an order for costs in the application is to be made in writing with supporting submissions within 21 days. If no application is so filed, then each party is to bear their own costs."

No money was ordered to be paid either way. Because the jurisdiction point decided the matter, the Tribunal did not need to resolve the separate argument about whether the applicant was the correct party to the subcontract.

Why the tribunal decided it that way

The Tribunal began with the point that it is a creature of statute: it only has the powers Parliament gives it and has no inherent jurisdiction. So the question was whether the Act actually handed it power over this kind of dispute.

The Tribunal's power under s 59(1) to decide whether residential building work was completed satisfactorily or complies with the law is not free-standing. Section 59(2) makes it conditional on there being a relevant notice of dispute, plus one of the listed triggers such as the Director rejecting that notice. Section 47(1) says who may lodge a notice of dispute: "A building contractor or an owner may lodge with the Director a notice of dispute in relation to a dispute between the building contractor and the owner." It says nothing about a subcontractor. The definitions in s 4 then separate the categories: a "building contractor" performs residential building work; a "subcontractor" contracts to perform that work for a building contractor; an "owner" is a person for whom the work is performed; and a "residential building work contract" expressly excludes a contract between a building contractor and a subcontractor or supplier. Section 45 defines "dispute" as a dispute between an owner and either a building contractor or a prescribed licensed professional. On those definitions, the Tribunal held the subcontractor here was neither a building contractor nor an owner for the purposes of ss 45 and 47, and the dispute was not one between an owner and a building contractor.

The Tribunal rejected the argument built on s 4(2)(c). That provision says a reference to performing residential building work includes work a building contractor arranges or manages under a subcontract in order to meet its obligations under the head contract. The Tribunal held this simply makes clear that subcontracted work counts as residential building work, so a head contractor remains answerable for it in a dispute with the owner. It does not create a right for a head contractor to bring a dispute against its subcontractor, and Part 10 does not give the Tribunal a jurisdiction at large over building disputes.

The Tribunal also checked the Director's rejection, even though no review had been sought. Section 48(3)(c) lets the Director reject a notice of dispute that is frivolous or vexatious, which in this context means insupportable in law, disclosing no cause of action, groundless, or disclosing a case that cannot succeed. On the reasoning above, the notice fell into that category, so any review of the Director's decision would also fail. The Tribunal added that even if the Director had instead rejected the notice under s 48(3)(d), the result would be the same, because the gateway to s 59 is a valid notice of dispute and a valid notice requires a dispute between a building contractor and an owner. On costs, the Tribunal noted the usual rule in s 120 of the Tasmanian Civil and Administrative Tribunal Act 2020 is that each party bears its own costs, subject to a discretion, and allowed 21 days for any costs application.

What this means if you are in a similar position

This decision shows how a specialist building dispute scheme is read. The residential building process in Tasmania is built around the relationship between the person who owns the home and the contractor engaged to work on it. The quality of the work is not the only question: the identity of the two parties in dispute decides whether the door to the Tribunal opens at all. If you are in a similar position, running a business that subcontracted part of a residential job and now wants the cost of rectification back from the subcontractor, this decision shows that a defect in residential building work does not by itself bring a contractor-versus-subcontractor dispute inside that scheme, and that a rejection by the Director at the notice of dispute stage can reflect that limit rather than the strength of the complaint.

It also shows that a dismissal on jurisdiction is not a finding about whether the work was good or bad. The Tribunal made no findings on the alleged defects, the remediation cost, or who was party to the subcontract. A claim between two businesses over defective subcontracted work is ordinarily a contract claim, and where it is brought is a separate question from whether the underlying complaint has substance.

In disputes like this between a head contractor and a subcontractor over defective work and the cost of putting it right, the step most people take first is a written demand or notice to the other business that sets out the defects, what was spent fixing them and the amount sought, with a deadline to respond, before any application to a tribunal or court is filed.

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

Source: Johns Lyng Insurance Building Solutions (Tasmania) Pty Ltd as Trustee for the Johns Lyng Insurance Building Solutions (Tasmania) Unit Trust v SJE Constructions Pty Ltd [2026] TASCAT 92 (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.