Residential focus - 11 November 2015

A recent decision of the NCAT Appeal Panel highlights that the operation of s.10 or s.94 of the Home Building Act 1989 (the Act) is not always to the owner's advantage.

The Act provides that non compliant building contracts (relevantly where a contract is not in writing or where there is no contract of insurance in force) are unenforceable, although quantum merit remains available.

InThompson v Chapman [2015] NSWCATAP 233 it was common ground that the contract was unenforceable - variations were not in written form and there was no contract of insurance required by s.92 of the Act.

Accepting the evidence of an expert, the Tribunal below allowed a profit margin of 20% in its assessment of quantum merit, whereas under the contract the builder would have been limited to an hourly labour rate plus GST for additional work. The decision variously refers to this producing a result that the builder was entitled under quantum meruit to close to or more than he had