Major building defects in a strata development can quickly become expensive. What happens when an owners’ corporation starts a building defect claim in NCAT, but expert evidence later shows the rectification costs may exceed NCAT’s $500,000 monetary jurisdictional limit?
The recent decision in The Owners Strata Plan No. 98325 v Ericon Building Pty Ltd [2026] NSWCATCD 86 provides useful guidance for owners’ corporations pursuing significant strata building defect claims in NSW.
What was the building defect dispute?
The dispute concerned a strata development in Burwood, NSW.
The owners’ corporation commenced proceedings against the builder and developer alleging breaches of the statutory warranties under the Home Building Act 1989 (NSW).
More than 800 alleged defects had been identified. They included waterproofing and drainage issues, structural defects, water ingress, fire safety defects, corrosion of door jambs and defective crash barriers.
As the proceedings progressed, the potential cost of rectification works became a major issue.
An expert report ultimately estimated the cost of rectifying the fire safety defects alone at approximately $1.32 million.
That presented a problem because NCAT’s monetary jurisdiction for this type of building claim was limited to $500,000.
Can an NCAT building dispute be transferred?
Yes, in appropriate circumstances.
The owners’ corporation applied to NCAT to transfer the proceedings to the Supreme Court of New South Wales.
NCAT considered that there was a sound basis for doing so. The available evidence indicated that the damages claim was likely to exceed $500,000, and the Supreme Court had jurisdiction to determine the dispute.
There was another important consideration: the owner’s corporation had commenced its NCAT proceedings before what it considered to be the applicable limitation period expired. By the time the transfer application was considered, commencing fresh Supreme Court proceedings may have been out of time.
NCAT ultimately ordered that the existing proceedings be transferred to the Supreme Court and continue there as though they had originally been commenced in that Court.
Did a $500,000 payment end the claim?
No.
After receiving the expert report estimating fire safety rectification costs at more than $1.3 million, the builder paid the owners corporation $500,000.
The builder argued that this represented the full amount claimed in NCAT and brought the dispute to an end.
The owners’ corporation disagreed. It treated the payment as a contribution towards its claim and maintained that more than $800,000 remained in dispute based on the fire safety rectification estimate alone.
NCAT rejected the argument that the $500,000 payment ended the proceedings.
Importantly, the owners’ corporation was seeking unliquidated damages. In simple terms, the amount of damages still needed to be assessed based on the evidence. It was not simply a fixed $500,000 debt that could necessarily be extinguished by paying that amount.
Is an NCAT claim automatically capped at $500,000?
The decision highlights an important distinction between the amount entered when proceedings are commenced and the actual loss ultimately established by evidence.
NCAT found that the owners’ corporation was not automatically restricted to $500,000 simply because that figure appeared as the value of the claim on its application.
As further expert evidence became available, it indicated that the actual claim could substantially exceed NCAT’s monetary jurisdiction.
This is particularly relevant in strata building defect disputes, where the full extent and cost of rectification may not be known when proceedings first commence.
What does this mean for owners’ corporations?
For an owners’ corporation dealing with serious building defects, early investigation and expert evidence can be critical.
The true cost of rectifying waterproofing, structural, façade and fire safety defects may only become apparent after detailed inspections, expert reports and quantity surveying evidence are obtained.
The case also demonstrates why limitation periods and the choice of forum require careful attention. Where a claim may exceed NCAT’s monetary jurisdiction, obtaining advice about the appropriate strategy early can help protect the owners’ corporation’s position.
At The Law Office of Conrad Curry, we advise owners corporations and property owners in strata building defect disputes throughout NSW, including claims involving statutory warranties, defective building work, rectification costs, NCAT proceedings and Supreme Court proceedings.
Contact our friendly team today to discuss your building defect dispute.
Frequently Asked Questions
Can an owners corporation sue a builder for defects?
Depending on the circumstances, an owners corporation may be able to pursue remedies for defective building work, including claims involving statutory warranties under the Home Building Act 1989 (NSW).
What happens if a building defect claim exceeds $500,000?
For building claims of the kind considered in this case, NCAT’s monetary jurisdiction was $500,000. Where evidence shows a damages claim is likely to exceed that amount, transferring the proceedings to a court with appropriate jurisdiction may be considered.
Can NCAT transfer a building dispute to the Supreme Court?
Yes. NCAT has statutory power in appropriate circumstances to transfer proceedings to a court that has jurisdiction to determine the matter.
Does paying $500,000 automatically settle an NCAT claim?
Not necessarily. In this case, the builder’s $500,000 payment did not bring the owners corporation’s unliquidated damages claim to an end.
Why is expert evidence important in strata defect claims?
Expert evidence can help identify defects, determine appropriate rectification methods and establish likely rectification costs. In this case, expert quantum evidence showing fire safety rectification costs of approximately $1.32 million was central to the transfer application.
DISCLAIMER
This article reflects the current law at the time of publication. Please note that cases may have been the subject to appeal or subsequent judicial consideration since the date of posting. The decisions referred to are summarised for general understanding only. It is intended for informational purposes only and does not constitute legal advice. For specific legal guidance in relation to your situation, please consult with a qualified legal professional.