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Most building disputes in NSW fall into a handful of types. What decides the outcome is usually not the type of dispute, but how quickly you pick the right direction and whether a deadline has already been missed. This guide helps you do that. For the detail on each dispute, follow the links.
If you want advice on your situation now, call (02) 9233 7737.
Which route suits your dispute?
| If your dispute is about | The usual first route | Read more |
|---|---|---|
| An unpaid or underpaid progress claim | Statutory payment claim and, if needed, adjudication | Security of payment lawyers |
| A variation or scope disagreement | The contract’s variation clause, backed by written records | Building contract disputes |
| Delay, extensions of time or liquidated damages | The contract’s written notice process | Building contract disputes |
| Defective or incomplete work | Written defects notice, then the contract or statutory warranty route | Defective building work lawyers |
| Threatened or actual termination | Check the notices before acting | Contract termination lawyers |
| A debt that is not a progress claim | Letter of demand, then proceedings | Debt recovery lawyers |
| Residential warranties | Statutory warranty claim | Statutory warranties guide |
| An owner-builder project | A different contract framework | Owner builder projects in NSW |
Which forum hears a building dispute?
The right forum depends on who the parties are and how much is at stake.
| Forum | Typically used for |
|---|---|
| Security of Payment adjudication | Progress payment claims on commercial and residential contracts. Fast and document-based |
| Contract dispute process (negotiation, mediation, expert determination) | Often a required first step before court. Check the contract |
| NCAT | Building claims about residential building work or specialist work (such as plumbing or electrical), up to $500,000 |
| Local Court | Lower-value commercial claims |
| District Court | Medium-value commercial building claims |
| Supreme Court | High-value or complex commercial building disputes |
What decides whether NCAT can hear a dispute is the work, not who the parties are. A dispute between builders, contractors or developers can go to NCAT if the claim is about residential building work, or specialist work such as plumbing, gasfitting or electrical work (even on a commercial site), and is no more than $500,000. Other disputes about commercial building work go to the Local, District or Supreme Court, depending on value. See NCAT or court for commercial disputes. Our civil and commercial litigation lawyers act in the Local, District and Supreme Courts, and we can tell you which suits your claim.
Three deadlines people miss
- The payment schedule. A respondent to a Security of Payment claim must reply with a payment schedule within the contract time or 10 business days of service, whichever is earlier (s 14 of the Building and Construction Industry Security of Payment Act 1999 (NSW)). Miss it and you can become liable for the full claimed amount.
- The extension of time notice. Most building contracts require written notice of a delay within a short period. A late notice can lose the extension.
- The claim period. Statutory warranties under the Home Building Act 1989 (ss 18B and 18E) and limitation periods set outer limits on when a claim can be brought. Waiting for a dispute to settle down can cost you the claim.
What to do in the first week
- Stop and gather. Collect the contract, variations, drawings, correspondence and payment records in one place before you respond to anything.
- Check what has been served. A payment claim, a notice to show cause or a defects notice can start a clock. Note the date you received it.
- Do not terminate or suspend yet. Terminating without a valid right can leave you in breach. Check the notice requirements first.
- Photograph and date everything. Defects, incomplete work and site conditions change quickly.
- Keep communications in writing. Confirm calls by email, and keep the tone factual.
- Get advice early. Many of the options narrow once a deadline passes.
What to do first, depending on who you are
The same dispute looks different depending on which side of the contract you sit on.
Builders and head contractors. Your priorities are protecting your payment entitlement and limiting your own exposure. Serve payment claims in the form the Security of Payment Act requires, give delay and variation notices on time, and respond to defects notices promptly, because a quick, documented offer to rectify usually reduces the amount in dispute.
Subcontractors. Check who you contracted with, because that is who you claim against. Look at the time limits and notice requirements that flow down from the head contract. The Security of Payment Act limits the effect of “pay when paid” clauses (s 12), so a head contractor waiting on its own client is not automatically a defence. If you are worried the head contractor cannot pay, raise it early, because options such as security and statutory remedies are time-sensitive.
Developers and principals. Do not withhold money informally. If you dispute a payment claim, the response has to be in the right form and on time, with your reasons stated. Check your entitlement to liquidated damages, the security you hold and the retention terms before you act, and document the reasons for every deduction.
Homeowners. Keep paying amounts that are not in dispute, notify defects in writing, and check the builder’s licence and insurance. Get advice before you engage a replacement builder to finish or fix the work, because the order of steps can affect what you can later recover.
Evidence that usually decides the dispute
Building disputes are won and lost on documents. This is what usually matters for each type.
| Dispute | Documents that usually decide it |
|---|---|
| Payment | The payment claim and proof of when and how it was served, any payment schedule, the contract payment clause, valuations and measurement records |
| Variation | The direction (written or otherwise), the quote or price, emails and texts, site diary entries, before and after photos, and who was present |
| Delay | The programme and updates, delay notices, weather records, site diaries, and requests for information or late drawings |
| Defects | Dated photos, an independent expert report, the plans and specifications, inspection and certifier records, and rectification quotes |
| Termination | The termination clause, every notice with proof of service, evidence of the breach relied on, and the surrounding correspondence |
If you do not yet have these, start collecting them now. Records created at the time are far more persuasive than recollections later.
Seven mistakes that make a building dispute worse
- Ignoring a payment claim. Silence is not a defence. A late or missing payment schedule can make you liable for the full amount.
- Withholding money without written reasons. Deductions you cannot explain in writing are hard to defend later.
- Carrying on with extra work on a verbal promise. If the variation is not recorded, the cost is often unrecoverable.
- Terminating or walking off site without checking the notices. An invalid termination can turn a payment dispute into a claim against you.
- Fixing defects or replacing the builder without notice. It can weaken your claim if the other side was never given a fair chance to inspect or rectify.
- Sending heated messages. Angry texts and emails become evidence, and admissions are difficult to retract.
- Letting the claim sit. Contract notice periods, Security of Payment deadlines and limitation periods keep running while you wait for things to cool down.
Is the claim worth pursuing?
Before you spend money on a dispute, work through these questions.
- How much is in dispute, and what will it cost to recover? A strong claim is not always a worthwhile one if the cost of pursuing it approaches the amount.
- How good is your evidence? The table above is the test. Gaps in the paper trail are often the main risk.
- Can the other side pay? A judgment is only useful if it can be enforced. Check for security, retention, guarantees and signs of financial trouble.
- Do you need the relationship? Some disputes are better settled early to keep a project or a client.
- What are the deadlines? A short deadline can decide the route before the merits do.
- Would an early offer help? A properly made offer to settle can affect who pays costs if the matter proceeds.
A short call can often answer these before you commit to a course of action.
How a dispute usually escalates
Most building disputes follow a similar path, and most resolve before the last step.
- A complaint, a notice or a rejected claim.
- A letter setting out the claim and the response required.
- The contract’s dispute process, often negotiation and then mediation or expert determination.
- A formal step: a Security of Payment application, or court or NCAT proceedings, depending on the dispute.
- A hearing or determination, if the matter has not settled.
The earlier a dispute is organised and the right route chosen, the more options remain at each step.
Examples of choosing a route
A subcontractor owed money. A subcontractor is owed $180,000 across a disputed progress claim and a separate invoice for site cleanup. The progress claim can go through the Security of Payment process. The cleanup invoice is an ordinary debt and follows the debt recovery route. Splitting them correctly keeps both claims alive.
A homeowner with defects. A homeowner finds waterproofing defects 14 months after completion. This is a residential matter, so the statutory warranty route and NCAT are likely relevant, and the timing matters. A builder in the same position would look at the same rules from the other side before agreeing to rectify.
Licensing
In NSW, a contractor licence under the Home Building Act 1989 is needed for residential building work worth more than $5,000 (including GST) in labour and materials, and for specialist work such as electrical and plumbing work at any value. Working unlicensed can limit your ability to recover payment. Check the licence category and status with the NSW Fair Trading licence check before work starts.
Speak to a Sydney building dispute lawyer
Whether you are chasing a payment, responding to a claim, or deciding what to do about a delay or a defect, the right first step usually depends on a deadline you cannot see yet. Citilawyers acts for builders, contractors, subcontractors, developers and property owners in building and construction disputes. Call (02) 9233 7737 and we will listen to what has happened. We will identify the deadlines and the most sensible route, and tell you what to do next.
