Paying a substantial deposit for a new home can feel like a major commitment. But what happens if the building project never proceeds and the builder did not have the required home building insurance in place?
A recent NSW Civil and Administrative Tribunal (NCAT) Appeal Panel decision shows that the answer is not as straightforward as simply asking for the deposit back.
In Olympia Homes Pty Ltd v Tian [2026] NSWCATAP 257, the Appeal Panel considered whether a prospective homeowner ‘homeowner’ (and a party to a building contract with a building contractor) could recover money paid to the builder for the deposit where the builder did not hold the requisite insurance for the building work and the work ultimately did not proceed.
What happened in Olympia Homes v Tian?
The ‘homeowner’ entered into a preliminary agreement with Olympia Homes in connection with the proposed construction of a new home.
The homeowner paid the builder $20,550. However, the land on which the home was to be built was never registered as a separate title after the land developer went into liquidation. As a result, the building project did not proceed.
Importantly, the parties agreed that the arrangement had been frustrated by circumstances beyond either party’s control.
It was also common ground that the builder did not have the required home building insurance in place for the proposed construction.
The homeowner went to the New South Wales Civil and Administrative Tribunal (NCAT) and sought the return of the deposit paid simply on the basis that the builder did not hold the requisite insurance.
At first instance, NCAT ordered the builder to refund $18,020, allowing the builder to retain $2,500 for preliminary work.
The builder appealed.
Does no insurance mean an automatic refund?
No. This was the critical issue considered by the Appeal Panel.
Section 92 of the Home Building Act 1989 (NSW) (HBA) imposes restrictions on carrying out residential building work and demanding or receiving payment where the required insurance is not in place.
However, the Appeal Panel explained that a breach of these insurance requirements does not, of itself, give a homeowner a legal right to recover money already paid.
The Appeal Panel relied on the NSW Court of Appeal decision in Field v Dettman [2013] NSWCA 147. That case established that the Home Building Act does not itself create a statutory cause of action allowing a homeowner to recover payments simply because they were received in contravention of the insurance provisions of the HBA.
In practical terms, a homeowner needs to identify another legal basis for recovering the money.
Why did the builder win the appeal?
The Appeal Panel found that the original Tribunal had erred in the application of the law.
The builder was not bringing proceedings to enforce the contract or recover money from the homeowner. It was simply defending the homeowner’s claim and retaining money it had already received.
The Appeal Panel found that retaining the deposit was not the same as exercising a “right of action” prohibited by section 94 of the Home Building Act.
Because the homeowner’s application, as considered by the Tribunal, did not disclose another cause of action supporting repayment, the Appeal Panel allowed the appeal and dismissed the application.
The $18,020 being held by NCAT was ordered to be paid to the builder.
Does that mean the homeowner has no other options?
Not necessarily. Importantly, the Appeal Panel expressly stated that its orders did not prevent the homeowner from bringing another lawful claim against the builder.
This distinction matters.
A claim to recover a building deposit may depend on the terms of the contract, what caused the project to end, whether the contract was frustrated or terminated, what work was actually performed, and whether another legal cause of action is available.
Simply establishing that a builder did not have the required insurance may not be enough.
What should homeowners do before paying a building deposit?
Before paying a builder, homeowners should carefully review the building contract and confirm that any required insurance is in place.
If a building project falls through, obtain legal advice before assuming that a deposit must automatically be refunded. The legal basis of the claim can be critical to its success.
Frequently asked questions
Can a builder take payment without the required home building insurance?
The Home Building Act 1989 (NSW) places restrictions on builders demanding or receiving payment for residential building work where the required insurance is not in place.
Can I automatically recover my deposit if the builder was uninsured?
No. As Olympia Homes v Tian demonstrates, the absence of required insurance does not itself create a statutory right to recover money already paid.
Can I still have another claim against the builder?
Potentially. Your rights will depend on the contract, the circumstances in which the project ended and the legal basis available for recovering the money.
If you are involved in a dispute about a building deposit, preliminary agreement or residential building contract, The Law Office of Conrad Curry can advise you about your rights and the options available under NSW law.