Introduction

Builders often need to know how to handle a building dispute with a difficult homeowner, which may end up at the New South Wales Civil and Administrative Tribunal, or NCAT, sometime during their career. The NCAT process might seem like a maze. Here are the basic steps to follow under this system, along with the immediate actions builders should take when they get a Notice of Directions Hearing. You’ll learn how to make the right moves in a dispute. Dive in to discover how practical strategies can help steer you through these choppy waters, much like a skilled captain navigating a storm. So, get ready to arm yourself with savvy know-how that matches stories of success you’ve heard from those who have been there before.

Understanding NCAT Hearing Procedure: Steps Involved in an NSW Home Building Dispute

The NCAT provides a mechanism for resolving disputes across a wide range of areas, including consumer claims, tenancy issues, guardianship, strata disputes and administrative and equal opportunity matters. The procedure before NCAT can be broken down into several key stages:

Submission and Notices

For most home building disputes, the process begins before an application is lodged with NCAT. A homeowner must first refer the dispute to Building Commission NSW (which has taken over the dispute resolution functions of NSW Fair Trading). Only after this mandatory step is completed, or if the matter is exempt, can a party submit an application to NCAT, which then leads to the issuance of a Notice of Hearing.

First Directions Hearing

This initial meeting clarifies the dispute and explores settlement possibilities. For claims under $30,000, this first listing is often a combined conciliation and hearing, meaning builders must be prepared for a final decision to be made on the day if no agreement is reached. For claims over $30,000, it is more likely to be a Directions Hearing to set a timetable for exchanging evidence.

Exchange of Documents and Evidence

Parties are instructed to share documents and evidence they plan to use, ensuring both have access to relevant information, which aids in transparent and fair proceedings.

Efforts to Settle

Before the hearing, there’s an emphasis on resolving construction disputes without courts through methods like mediation and negotiation. If an agreement is reached, it can either lead to the withdrawal of the application or be formalised by NCAT.

Hearing and NCAT Orders

If settlement isn’t achieved, the matter proceeds to a hearing where parties present their cases, evidence, and witnesses. The tribunal then decides based on this evidence and relevant laws.

Appeal/Enforcement

Dissatisfied parties may consider appealing an NCAT decision within a specified timeframe on legal grounds. Decisions in favour of a party may require enforcement actions if not complied with voluntarily.

What to do After Receiving a Notice of Hearing? Tips for Builders 

Upon receiving a Notice of Directions Hearing from the NCAT, indicating that a homeowner has initiated proceedings, there are several important steps a builder should take to prepare effectively for the process ahead:

Check the Parties’ Names

This initial step is more than a formality. It’s essential for confirming the legal accuracy of the proceedings. Misidentification or incorrect details could affect the legitimacy of the notice or your response. This verification includes ensuring that the homeowner named is indeed the individual you have a contract with, and also clarifying whether the case is against you personally or your business entity. Mistakes in this area can have significant legal ramifications.

Check the Enclosed Copy of the Homeowner’s Home Building Application

This document is pivotal as it outlines the homeowner’s allegations, the remedies they seek from NCAT, and their claimed damages. A detailed review helps you understand the scope of the dispute, grounds of the claim, and potential financial implications. It enables you to start gathering counter-evidence, prepare your defence, or even assess the feasibility of a settlement before the matter escalates further.

Look for the Hearing Type, Date, Time, and Location

This logistical information is critical for planning your attendance. The type of hearing can also indicate the procedural stage of the case and what to expect, be it a directions hearing, a conciliation, or a full tribunal hearing. Knowing the date, time, and location allows you to schedule accordingly, avoiding any conflicts that could result in a failure to appear, which could have negative consequences on the outcome.

Inform NCAT if You are Unable to Attend

Timely communication with NCAT about any inability to attend is crucial. Providing as much notice as possible demonstrates respect for the tribunal’s time and the process, potentially leading to a rescheduling of the hearing rather than a decision being made in your absence. This action helps maintain your ability to influence the outcome actively.

Seek Right Legal Advice

Engaging a solicitor experienced in construction disputes is critical. In 2025, this advice must extend beyond NCAT procedures to include the significant risks and duties under the Design and Building Practitioners Act 2020 (NSW) and how to respond to regulatory action from Building Commission NSW. They can offer strategic advice on responding to the claim, represent you in dealings with NCAT and the homeowner, assist in document preparation and evidence gathering, and potentially negotiate a settlement. Legal advice at this stage ensures that your response is legally sound and strategically astute.

Check if You can File a Cross Claim

This is an important strategic move. If you have a claim against the homeowner (for example, for unpaid invoices), you can file a cross-claim. It is essential to note that filing a cross-claim for the recovery of a debt is one of the specific exemptions that allows you to bypass the mandatory first step of going to Building Commission NSW. A cross claim can be related to unpaid work, breach of contract by the homeowner, or other issues. Filing a cross claim requires careful legal consideration and strategy, as it introduces additional elements to the proceedings but can also serve as a strong countermeasure in your overall defence strategy.

Addressing each of these steps with the necessary depth and attention to detail is crucial for effectively managing the legal challenge presented by a Notice of Directions Hearing and positioning yourself for a favourable outcome in the NCAT proceedings.

Options After Receiving Notice of Hearing: How to Resolve the Dispute?

Once you receive a Notice of Directions Hearing from the NCAT, you essentially have three options regarding how to proceed with the dispute brought by a homeowner:

Settle the Dispute

Proactive Approach: Contacting the applicant (homeowner) to discuss and possibly resolve the dispute before the hearing can be beneficial. Open communication might lead to an agreement, thereby negating the need for a hearing.

Withdrawal of Application: If you manage to settle the dispute, request the homeowner to formally withdraw their application from NCAT. This action removes the necessity for either party to attend the scheduled hearing.

Conciliation: Even if the dispute is not settled before the hearing date, NCAT often encourages parties to engage in conciliation (a form of mediation) on the day of the hearing to attempt to reach an agreement before proceeding to a formal hearing.

Go to the Hearing

Preparation: If settling the dispute is not an option, either due to disagreement with the claims or failure to reach a satisfactory agreement, preparing to attend the hearing is crucial. This preparation involves organising all key documents. A recent NCAT case saw a builder’s claim of over $575,000 reduced to just over $52,000 primarily because they failed to provide written, signed, and dated variation documents as required by the Home Building Act 1989 (NSW). Essential evidence includes the signed contract, all written correspondence (including emails and text messages), and crucially, any contract variations that have been signed and dated by both you and the homeowner.

Present Your Side: At the hearing, you will have the opportunity to present your evidence, articulate your side of the story, and counter the claims made by the homeowner. It’s your chance to influence the outcome directly by providing context, clarifications, and your perspective on the dispute.

Do Nothing

Risks: Choosing not to respond or attend the hearing carries significant risks. NCAT can, and likely will, proceed with the hearing in your absence. This situation often results in decisions and enforceable orders made against you without your input or defence being considered.

Enforceable Orders: Orders made in your absence are legally binding. To enforce the order, the homeowner can have it certified by NCAT and register it with the Local Court. It then becomes a court-enforceable debt, which can lead to actions such as having money taken from your bank account or wages (garnishee orders) and can negatively impact your credit rating.

Each option has its implications and potential outcomes, and the best choice depends on the specific circumstances of the dispute, the strength of your position, and your willingness to engage in negotiations or legal proceedings. Given the complexity and potential consequences of NCAT proceedings, seeking legal advice to navigate this situation is highly recommended to ensure that your interests are adequately protected and represented.

Common and Costly Mistakes to Avoid in NCAT

Many strong cases are lost in NCAT due to simple, avoidable errors. Be sure to avoid these common pitfalls:

• Poor Documentation: As noted earlier, failing to have written, signed, and dated contracts and variations is the most common reason builders lose money claims. Verbal agreements are extremely difficult to prove.  
• Incorrect Party Names: Make sure the homeowner’s name on the application matches the name on your contract. Also, ensure your correct legal entity (e.g., “Your Company Pty Ltd” vs. your personal name) is used. An order made against the wrong entity can be unenforceable. Always check company names on the ASIC register.  
• Missing Deadlines: NCAT sets strict timetables for providing documents and evidence. If you miss a deadline set in a Directions Hearing, the Tribunal may refuse to let you rely on that evidence, which could cripple your case.  
• Using a Biased Expert: If you need an expert report, the expert’s primary duty is to the Tribunal, not to you. An expert who acts like a “hired gun” or advocate for your side will quickly lose credibility and their evidence may be disregarded by the Tribunal Member. The new NCAT Procedural Direction 3 – Expert Evidence effective from April 7, 2025, sets out strict rules for expert evidence in claims over $30,000. This includes a new requirement to disclose if generative artificial intelligence (Gen AI) was used in preparing the report, which must be read with the NCAT Procedural Direction 7 – Use of Generative Artificial Intelligence (Gen AI).

A Critical First Step: Dealing with Building Commission NSW

Before a dispute ever reaches NCAT, builders are now more likely to deal with Building Commission NSW. The Building Legislation Amendment Act 2023 (NSW) gave the Commission significant powers to investigate complaints and issue binding orders for all classes of residential buildings, including freestanding homes.  

If a homeowner lodges a complaint, the Commission can:

• Conduct an Investigation: An inspector may review documents, speak to both parties, and conduct an on-site inspection to assess the work.  
• Issue a Rectification Order: If the inspector finds defective or incomplete work, they can issue a Rectification Order. This is not a suggestion; it is a legal direction that lists the work you must complete or rectify by a specific date.  

Failing to comply with a Rectification Order is a breach of the Home Building Act 1989 (NSW) and is a direct violation of a condition of your contractor licence. This can lead to fines and disciplinary action, including the potential suspension of your licence, entirely separate from the homeowner’s claim.  

Key Takeaway: Importance of Legal Representation Before NCAT

Facing a dispute in NCAT is an integral part of a builder’s professional journey, highlighting the importance of a well-informed and strategic approach to dispute resolution. From the moment a Notice of Directions Hearing lands in your hands, every step taken can significantly influence the outcome of your case. For builders entangled in or anticipating a dispute with a homeowner, the key to dealing with the complexities of NCAT lies in thorough preparation and seeking expert advice.

With an in-depth understanding of the process and a commitment to safeguarding your professional interests, contact PBL Law Group’s building and construction lawyers for tailored legal support.

Frequently Asked Questions (FAQ)