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  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 invoiced.
The Appeal Panel noted that the inclusion of a profit element in a quantum merit assessment was an approach supported by Court of Appeal authority.
The controversy was around whether the contract price acted as a ceiling upon the assessment of quantum merit in circumstances where one of the parties to the contract was entitled to rely on the contract and enforce the contract price.
The Appeal Panel noted that there were no special set of rules that distinguish assessment of quantum meruit in residential building cases. The Appeal Panel noted that contract and quantum meruit were two different remedies which may produce different results. The Appeal Panel explained, in dismissing the appeal (quoting from Sopov v Kane [No 2]  VSCA 141) that contract price is relevant to quantum meruit not because of continuing influence of the contract, but merely as a piece of evidence, showing what value the parties attributed – at a particular time- to the work which the builder was agreeing to perform.
In the media
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Published – articles, papers, reports
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Practice and courts
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Coroneos v Trade Compliance Group Pty Ltd 
Appeal – home building – defective and incomplete work - premature application for damages while contract on foot – construction and application of cl 12(a) of the contract that enabled the homeowner to withhold payment of a progress payment claim by the builder – adequacy of reasons. More...
Thompson v Chapman  NSWCATAP 233
APPEAL — assessment of quantum meruit. More...
Steele & Associates Pty Ltd v Heath  NSWCATAP
CONTRACT- whether repudiation or non-performance of contractual obligations precludes claim under warranties implied by Home Building Act. PROCEDURE- procedural fairness- right to cross-examine – whether party denied procedural fairness. HOME BUILDING ACT – implied warranties. More...
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