Luxy Homes Pty Ltd v Li

1. The Tribunal ordered the appellant to pay the respondent a refund of $48,170 by 30 June 2025.
2. The Decision records why the other claims of the respondent (for increased building costs, loss of rent, and interest) were not allowed. The Decision also records why part of the refund claim was dismissed, which was to allow costs incurred by the appellant in the sum of $5,000.
3. The appellant appeals the Decision to refund the sum of $48,170. The respondent has not filed a cross appeal in relation to the other claims.
4. The materials before the Appeal Panel were:

(1) the Notice of Appeal lodged on 30 June 2025;

(2) the respondent's Reply lodged 20 August 2025;

(3) the appellant's submissions lodged 1 October 2025 with a bundle of documents;

(4) the respondent's submissions lodged 23 October 2025;

(5) the appellant's submissions in reply lodged 30 October 2025.

1. The appellant's materials also included a typed transcript of the hearing.

1. The parties had entered into two agreements, one titled "Preliminary Works Authorization" and dated 20 November 2021, and the other titled "NSW Residential Building Contract for New Dwellings" dated 22 November 2021, for construction of a new home. The land was purchased under a separate contract between the respondent and the owner of the land which settled on 8 January 2024.
2. The document dated 20 November 2021 is defined in the Decision as "PWA". The document dated 22 November 2021 is defined in the Decision as the "Building Contract". There was an issue before the Tribunal whether both documents formed a single contract or separate contracts. This is not an issue relevant to the appeal. For ease of reference, we will use the same definitions as the Tribunal, but in doing so, we are not making any determination on whether the two documents are separate contracts or a single contract.
3. The respondent paid a total of $53,170 to the appellant between 2 November 2021 and 22 November 2022 (Fee). The PWA provided that the Fee would be credited towards the Building Contract upon satisfaction of a number of requirements.
4. The respondent claimed that the Fee represented the deposit under the Building Contract but the appellant submitted that it was a payment under the PWA and did not constitute the deposit under the Building Contract.
5. Special Condition 3.6 of the Building Contract provided that if the Building Contract was terminated or came to an end by no fault of the respondent, the appellant would refund the Fee, less costs and expenses which must not exceed $5,000.
6. On 23 February 2024, the appellant issued a notice to the respondent to increase the price under the Building Contract by 12.5% by way of a Price Increase Notice (Price Increase Notice).
7. On 29 August 2024, the respondent's solicitor served on the appellant's solicitor a notice requiring the appellant to perform the Building Contract by carrying out the preliminary works.
8. On 11 September 2024, the respondent filed proceedings 2024/00336738.
9. On 8 October 2024, the respondent served on the appellant a notice of default under cl 27.3 of the Building Contract (Notice of Default).
10. On 30 October 2024, the respondent served a notice of termination of the Building Contract on the appellant.
11. The respondent filed Points of Claim on 12 November 2024.
12. The appellant filed Points of Defence on 2 December 2024.
13. The hearing took place on 3 February 2025.
14. For the reasons given at [33]-[43] of the Decision, the Tribunal found that the appellant was not entitled to issue the Price Increase Notice, and that service of that notice amounted to a repudiation of the Building Contract by the appellant.
15. At [43], the Tribunal also found that the appellant's attempt to increase the price was a breach of a fundamental term of the Building Contract.
16. At [44]-[47], the Tribunal found that the respondent accepted the repudiation of the appellant and was entitled to terminate the contract.
17. Pursuant to Special Condition 3.6 of the Building Contract, the Tribunal found that the Fee less the sum of $5,000 was refundable to the respondent which was calculated at $48,170.

1. An appeal does not provide an appellant with the opportunity to run its case again (Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]).
2. To succeed with an appeal from a decision of the Consumer and Commercial Division, an appellant must demonstrate either an error by the Tribunal on a question of law, which may be argued as of right, or that leave (that is, permission) should be granted to bring the appeal for a reason under cl 12(1) of Sch 4 of the NCAT Act.
3. Any "question of law" being raised on an internal appeal must be articulated by the appellant with precision: Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204 at [25].
4. In terms of leave to appeal, cl 12 of Sch 4 of the NCAT Act provides that the Appeal Panel may grant leave to appeal a decision from the Consumer and Commercial Division pursuant to s 80(2)(b) of the NCAT Act, only if it is satisfied that the appellant may have suffered a substantial miscarriage of justice because:

(a) the decision of the Tribunal under appeal was not fair and equitable; or

(b) the decision of the Tribunal under appeal was against the weight of evidence; or

(c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal The appellant has submitted that the appeal only raises questions of law.

1. In the Notice of Appeal, the appellant set out nine grounds of appeal in Annexure A to the Notice of Appeal.
2. At [5] - [23] of the appellant's submissions dated 1 October 2025, the appellant submitted that all grounds of appeal only raised questions of law and that leave was not required and therefore not sought.
3. At the hearing, the appellant confirmed that it had reduced the number of grounds to seven:

(1) Ground 1 - whether the Tribunal erred in determining the matter on a basis not pleaded or argued by the respondent, namely repudiation;

(2) Ground 2 - whether the Tribunal applied the correct legal test of repudiation under contract law, including whether it properly considered the appellant's conduct objectively evinced an intention not to be bound by the Building Contract or to perform it in a manner substantially inconsistent with its obligations;

(3) Ground 3 - whether the Tribunal erred in law by concluding that the issuance of the Price Increase Notice constituted repudiation, without determining whether it was merely a contractual variation, request or negotiation;

(4) Ground 4 - whether the Tribunal failed to consider whether a party's insistence on an incorrect interpretation of the Building Contract, if made bona fide, could constitute repudiation, including whether the respondent was willing to perform the Building Contract according to its true construction once determined;

(5) Ground 5 - whether the Tribunal failed to consider whether the respondent was "in clean hands" before finding that that party was entitled to accept any alleged repudiation;

(6) Ground 6 - whether the Tribunal failed to provide adequate reasons, or failed to allow the appellant full opportunity to make submissions for its finding of repudiation contrary to its obligations under s 62(3) of the NCAT Act amounting to a failure to accord procedural fairness or natural justice;

(7) Ground 7 - whether the Tribunal erred in law by misconstruing the Building Contract, including when it found that clause 15 did not permit price variations arising from increased costs of trades and suppliers, thus impacting the conclusion of the repudiation.

1. This ground is based on a claim that the appellant was denied procedural fairness and as such, it is appropriate for us to determine this ground first: YHY v YHZ [2024] NSWCATAP 117 at [54].

1. The gravamen of Ground 1 is the contention that by the Tribunal's determination of the proceedings on the basis of repudiation by the appellant, the appellant was deprived of procedural fairness.
2. Specifically, the Tribunal characterised the appellant's conduct (service of the Price Increase Notice) as repudiation of the Building Contract and proceeded to uphold termination on that basis at [42] and [47], which was not pleaded or argued by the respondent.
3. We summarise the appellant's submissions with respect to Ground 1:

(1) repudiation was not pleaded in the respondent's default or termination notice nor in the pleadings;

(2) the respondent's case was put on the basis of substantial breach/unilateral variation, not repudiation;

(3) section 38(2) of the NCAT Act provides that the Tribunal may inquire into and inform itself on any matter in such manner as it thinks fit, but subject to rules of natural justice;

(4) whilst the Tribunal was entitled in principle to raise the question of repudiation, it was required to ensure that the appellant had proper notice and a genuine opportunity to be heard;

(5) the appellant was not on notice that repudiation (as distinct from breach) would be determinative; the Tribunal did not exercise its discretion under s 51 of the NCAT Act to adjourn and allow submissions;

(6) the appellant was not given a full opportunity to consider and make submissions on this issue which meant it was unfairly prejudiced amounting to a failure to accord natural justice;

(7) a finding of repudiation is of particular gravity and went to the continuation of the contract and directly determined the Tribunal's conclusion on the refund under Special Condition 3.6;

(8) yet the finding of repudiation was:

(a) not pleaded by the respondent,

(b) introduced for the first time during the hearing,

(c) unexpected and prejudicial to the appellant; and

(d) central to and directly influenced the Tribunal's decision;

(9) the appellant was deprived of procedural fairness because it neither knew the case it was required to meet until raised at the hearing nor had a fair opportunity to respond; this amounted to an error on a question of law.

(1) one of the breaches notified in the Notice of Termination was the "unilateral increase in price" which stated:

The Builder attempted to unilaterally increase the Contract Price beyond the agreed terms, in contravention of the Contact, without the Client's agreement.

(2) the term "repudiation" was not used in the Points of Claim, but the conduct pleaded and relied upon plainly constituted repudiation;

(3) the factual basis of repudiation was identified in the Notice of Termination;

(4) the appellant had ample opportunity to respond on the issue of repudiation both prior to and during the proceedings;

(5) repudiation was pleaded in substance or by implication in the Points of Claim as the conduct alleged clearly amounted to repudiation;

(6) repudiation was raised by the Senior Member at the hearing at Transcript (T) 24:25; at which time the appellant could have sought an adjournment or leave to file further submissions;

(7) the Tribunal was entitled to find repudiation regardless of whether the expression was used;

(8) the Tribunal was entitled to inform itself of any matter subject to natural justice;

(9) the issue was neither prejudicial nor unexpected and the appellant was afforded procedural fairness and had a fair opportunity to address the factual issue.

35 On 23 February 2024, the Builder served a Price Increase Notice. The Builder claimed a 5% plus GST increase in the Price pursuant to clause 3.2 of the Contract. It claimed in addition a 7% increase (GST inclusive) pursuant to clause 15 of the Contract.

...

40 The Builder stated in the Price Increase Notice that:

"As a building business that heavily relies upon and is therefore impacted by trades and materials, the trades and suppliers have significant powers to affect the building works (including their costs). Any increase in costs and charges introduced by our trades and suppliers will cause cost increases in the cost of the building works."

41 I do not accept that trades and suppliers come within the amended definition of statutory or other authority, because trades and suppliers do not have power to affect the works which are to be completed and handed over to the owner. I do not accept that the Builder is entitled to rely upon Clause 15 to adjust the price because of increases in its costs to complete the building works where those increased costs are not related to a statutory or other authority either introducing or increasing any tax, charge, levy or other regulation or introducing or increasing any requirement that affects the building works, causing the increase in the cost of the building works.

42 I therefore find that the Builder was not entitled to the price increase which it demanded in the Price Increase Notice. The service of that notice amounted to a repudiation of the Building Contract by the Builder.

43 The respondent submits that if the Tribunal finds that the attempt to increase the price was not in accordance with the contract, the attempt to increase the price was not a breach of a fundamental term of the contract. I do not accept this submission. I am satisfied that the price of the building works in a building contract is a fundamental term of that contract, and any attempt to increase the price beyond what is permitted in the contract is a breach of a fundamental term.

(emphasis added).

1. The respondent submits that what matters is the pleaded facts set out in the Points of Claim.
2. There is no issue that the Points of Claim did not expressly refer to repudiation.
3. The affidavit of Danni Li sworn 12 July 2024 filed for the respondent, relevantly provided (particulars omitted):

Unilateral Increase in Price

11 On 23 February 2024, I received an email from the Respondent, demanding that I either accept a price increase of 12.5%, or proceed with an alternative builder who requires a price increase of 10% ("Price Increase Email.

12 My own calculation based on the Building Contract shows that the price was subject to increases of 2.5% on 1 April 2023, 1 October 2023, and 1 April 2024, resulting in the Respondent being entitled to a cumulative price increase of 7.69% at most.

13 On or about 23 February 2024, I phoned Respondent's agent, Candy, from the Sales Agent's office. Candy said words to me to the effect:

Danni, leave it with me. The price increase is way too high. Let me talk to the builder about reducing it. I will come back to you.

14 I have received no further updates from the Respondent or their agent thereafter.

15 On 4 July 2024, I took the initiative to contact Hanging Liu (also known as "Clement"), who is the director of the Respondent company, via phone call. During our conversation, Clement said words to the effect:

We cannot carry out the building works anymore for the price stated in our contract. However, If you switch to a new builder, their price increase will be capped at 10%. They will also acknowledge the 10% Deposit you paid to us. The building work will be completed within 40 weeks after signing the contract. If it is not completed within that timeframe, compensation will be provided at a rate of $70 per day. Think about it. It's in your best interest to switch to the new builder.

16 On 5 July 2024, Clement emailed me and offered me a even more discounted contract price of $580,000 if I were to transfer to a new builder, and Clement asked me to choose a floor plan and confirm the price so the new builder could issue the new building contract.

17 On 7 July 2024, after careful consideration, I emailed Clement twice and requested a refund of the Deposit, instead of going with Clement's recommendations in entering into a new contract with another builder.

18 On 9 July 2024, Clement emailed me and refused to refund the deposit.

19 On 9 July 2024, I emailed Clement, requesting a full refund of $53,170.00 being the Deposit I paid.

20 On 11 July 2024, Clement replied and refused to refund the Deposit.

21 From July to August 2024, I engaged my former solicitor, Erica Yen-Hung Liu from GOH Lawyers (also known as "Erica"), to dispute the Price Increase Email. On 9 August 2024, Erica wrote to the Respondent, disputing the price increase and the Respondent's former solicitor replied.

22 In or about August 2024, there were without prejudice correspondence between the parties.

23 On 19 August 2024 and 22 August 2024, Erica followed up with two more emails but no further responses were received from or on behalf of the Respondent.

24 On 8 October 2024, I requested my current solicitor to send a Notice of Default to the Respondent and their solicitors.

1. There is no suggestion that the Notice of Default expressly or implicitly raised the issue of repudiation. The Notice of Default relevantly stated:

This Notice of Default is issued pursuant to Clause 23.7 of the Contract due to the Builder's substantial breach of the Contract.

Details of Breach

Failure to Deliver Preliminary works

...

2. Unilateral Increase in Price: The Builder has attempted to increase the project price beyond the agreed contractual terms in the Contract, without any agreement from the Client, further constituting a breach.

3. Invitation to Seek Alternative Builder The Builder's suggestion that the Client engage another builder is inconsistent with the obligations under the contract and evinces the Builder's unwillingness or inability to perform the work at the price as agreed.

1. The parties agreed at the appeal hearing that the first reference to repudiation in the transcript was a comment by the appellant's solicitor at T: 24.20 namely:

Our client does not accept the repudiation by the applicant.

1. In our view, this reference to repudiation was not a reference to the appellant's alleged repudiatory conduct, but should be understood as referring to what was said in the context of the appellant still considering that the Building Contract was on foot, a position that was still maintained by the appellant at the time of the appeal hearing.
2. The next reference to repudiation was by the Senior Member immediately after the first reference at T: 24:25 with the following exchange with the appellant's solicitor:

Senior Member: But if I find that the builder was not entitled to ask for the price rise and I find that that was a repudiation by the builder, the owner has accepted that, why would I not then apply cl 3.6.1 and .2 and find that your client did not incur any costs pursuant to the preliminary work agreement?

Mr Chan: If NCAT finds that the building contact has been terminated.

1. Senior Member: Yes.
2. Mr Chen: ... then 3.6 will be operative.
3. Senior Member: Yes, all right, continue. From my point of view that's what I have to look at.
4. The issue raised in Ground 1 is whether the appellant had a reasonable opportunity to be heard on the issue of repudiation before the Tribunal made its decision.
5. The Tribunal must apply principles of procedural fairness and natural justice, as well as give parties a reasonable opportunity to be heard and have submissions considered (ss 38(2) and 38(5) of the NCAT Act). Given this express requirement, a failure to afford procedural fairness will generally raise a question of law: see YHZ v YHZ [2024] NSWCATAP 117 at [23].
6. "Fairness" was discussed by Gleeson CJ in Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 at [37]:

Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.

1. The Tribunal determined that the Fee was refundable under Special Condition 3.6 of the Building Contact because the Senior Member found at [43] of the Decision that the price of a building contract was a fundamental term and any attempt to increase it beyond what was permitted in the contract was a breach of a fundamental term. The Senior Member in effect found at [47] the respondent was entitled to terminate the Building Contract by accepting the appellant's repudiation of the Building Contract upon issuing the Price Increase Notice. We are satisfied that this finding was made in the absence of oral or written submissions from the parties on the issue.
2. We reject the respondent's submission that repudiation was pleaded either in substance or by implication in the Points of Claim. We are satisfied that the issue was not pleaded nor the subject of any affidavit evidence, oral evidence, cross examination or submissions at the hearing (except as noted above at T 24:25).
3. The Appeal Panel discussed the principles of "procedural fairness" in McNeill v Clarence Valley Council [2025] NSWCATAP 184 at [180]- [184]:

[180]....The term "procedural fairness" is synonymous with natural justice (the latter term is used in s 38(2) of the NCAT Act, which expressly requires the Tribunal to observe the rules of natural justice). Reflected in s 38(5)(c) of the NCAT Act, those rules require NCAT to take such measures as are reasonably practicable to "ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings".

[181] ....It is well established that NCAT must conduct a hearing that gives procedural fairness to all parties, even taking into account the less formal nature of Tribunal proceedings (s 38(4) and (5) of the NCAT Act). What is necessary and appropriate to ensure a fair hearing depends on the particular facts and statutory context, rules of procedural fairness being flexible and adaptable so as to be appropriate in a given case so as to avoid practical injustice: see eg SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63 at [26], [29]. How the requirement for procedural fairness is satisfied will depend on the circumstances of the particular case and the particular parties.

[182] Section 38(5)(c), and the principles of procedural fairness imported by s 38(2) of the NCAT Act, require NCAT to give a party a reasonable opportunity, not every requested opportunity, to be heard or otherwise to have the party's submissions considered.

[183] A failure to accord procedural fairness must be material and be capable of affecting the decision: see eg Kudrynski at [49]; Nathanson v Minister for Home Affairs (2022) 276 CLR 80; [2022] HCA 26 at [1], [33]. The question whether any such error was material to the Tribunal's decision also raises a question of law.

[184] Here, if the Tribunal breached the requirements of procedural fairness by denying the appellant the right to ask relevant questions or make relevant submissions in the manner contended by him, the question then would then arise whether the Tribunal's error was material to its decision, in the sense that there is a realistic possibility that the decision that was made in fact could have been different if the error had not occurred: LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2024) 280 CLR 321; [2024] HCA 12 (LPDT) at [6]- [7]. The High Court said in that case that "realistic" is used to distinguish the assessment of the possibility of a different outcome from one where the possibility is fanciful or improbable. Meeting the threshold of materiality "is not demanding or onerous": LPDT at [14].

(emphasis added)

1. The circumstances of this case are as follows. Repudiation was not raised as an issue in the pleadings, nor was it raised in the affidavit evidence filed before the hearing, nor in cross examination nor in oral submissions. The contention that the appellant's conduct of issuing the Price Increase Notice might have been repudiatory conduct was first raised by the Senior Member at T: 24:25.
2. Although the Senior Member raised repudiation, it was brief and given the circumstances as set out above, we are of the view that the Senior Member's reference to repudiation did not meet the threshold of the appellant being given a reasonable opportunity to be heard or to make submissions on the factual and legal issues regarding repudiation. It follows that we are satisfied that the Tribunal, by determining the refund of the Fee on the basis of repudiation, the Tribunal failed to afford procedural fairness to the respondent and this was an error on a question of law.
3. In determining whether the appeal ought be allowed on this ground, we also need to consider whether the error was material to the decision. The question to be satisfied of is whether there is a realistic possibility that the decision could have been different if the error had not occurred: McNeill v Clarence Valley Council at [184], applying LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2024) 280 CLR 321; [2024] HCA 12 at [6] - [7].
4. The factual issues concerning the question of whether there has been conduct by a party which constitutes repudiation of the contract require careful consideration.
5. We are satisfied that there is a realistic possibility that if the appellant had been given a reasonable opportunity to provide submissions on the issue of repudiation, the Senior Member might not have found that the issuance of the Price Increase Notice was a repudiation of the contract by the appellant. If no such finding was made, then there is a realistic possibility that the appellant might have successfully defended the refund claim made against it.
6. It follows that we consider that the error of failing to afford procedural fairness was material to the decision and on this basis the appeal ought to be allowed and the proceedings remitted to the Tribunal for redetermination.

1. The appellant contended that Grounds 2-7 all raised errors on a question of law. Each of Grounds 2-7 follows on from the central complaint that the proceedings were decided on the basis of repudiation.
2. As the appellant has succeeded on the ground of denial of procedural fairness and the proceedings are to be remitted to the Tribunal for redetermination, it is not necessary to consider the other Grounds 2-7: see Boreland v Brewis [2024] NSWCATAP 140 at 63.

(1) The appeal is allowed.

(2) Order 1 made on 2 June 2025 in proceedings 2024/00336738 is set aside.

(3) Proceedings 2024/00336738 are remitted for redetermination by the Tribunal.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.