What Two New QCAT Decisions Mean for Builders

By Damon Laffin, Director | Odyssey Legal | Queensland | Building & Construction

Two QCAT decisions handed down a day apart in early August 2026 sit at opposite ends of the same statutory scheme, and read together, they tell builders more about how a QBCC claim actually gets won or lost than either does alone.

Akhavan v Queensland Building and Construction Commission and Anor [2026] QCAT 361 is a caution about how a stalled variation dispute gets characterised once it lands before the Tribunal, and it did not go the builder’s way.

Rizzo v Queensland Building and Construction Commission [2026] QCAT 362, decided the next day, is the mirror image: a buyer’s claim knocked out before the underlying defects were ever assessed on their merits, on grounds a builder facing a recovery action should know how to raise.

Key Takeaways

• Akhavan v QBCC and Anor [2026] QCAT 361 confirms that a builder who tells a client it is “no longer engaged” on a project, and stops work over an unresolved variation, does not thereby create a mutual abandonment, where the homeowner keeps pursuing performance or a proper remedy.
• QBCC had approved Mr Akhavan’s claim, then reversed itself on internal review to find mutual abandonment. QCAT overturned that reversal and restored the original decision that the contract was validly terminated for the Builder’s default, keeping a subsequent recovery claim against the Builder alive.
• The Tribunal preferred the homeowner’s account of the key meeting over the Builder’s, partly because the Builder’s own project manager could not clearly recall important details.
• Rizzo v QBCC [2026] QCAT 362 confirms that the known defect exclusion (section 60 under Schedule 6 of the *Queensland Building and Construction Commision Regulation 2018*) and the statutory claim time limits can defeat a claim entirely, independently of one another, before the underlying defects are assessed on their merits.
• For builders facing, or anticipating, a QBCC recovery action, Rizzo is a useful precedent: if a buyer was objectively on notice of a defect before settlement, that awareness can defeat the underlying claim, and with it, the exposure that would otherwise flow through to the builder.

Case One: When Does a Stalled Contract Become “Abandoned”?

Mr Akhavan contracted with Iconic Line Constructions Pty Ltd (the Builder) in June 2022 to build a new home for $951,966, paying a deposit of $47,598. In May 2023, after obtaining building approval, the Builder issued a variation purporting to increase the price by $253,265.

At a meeting on 11 July 2023, Mr Akhavan pushed for the variation to be withdrawn and for work to start. The Builder’s representative refused to proceed without the variation being accepted and suggested Mr Akhavan instead sell the property, with the approved plans, to a new purchaser willing to pay the higher price. Mr Akhavan said he would only consider ending the contract if he received a full deposit refund and express permission to use the drawings. The Builder would not commit to either, offering only a partial refund and saying it would come back to him.

Over the following weeks, the Builder released drawing files to Mr Akhavan, and the parties exchanged emails about costs, refunds, and use of the drawings, without ever reaching agreement. By early August, the Builder told Mr Akhavan that some of his cost calculations were “not relevant” because it was “no longer engaged” on the project. In September and November 2023, Mr Akhavan’s solicitors sent a formal demand to commence works, a notice to remedy breach, and ultimately a termination notice.

QBCC initially decided, in January 2024, that the Builder had defaulted and the contract had been validly terminated, entitling Mr Akhavan to claim under the statutory insurance scheme. In March 2024, QBCC reversed itself on internal review, finding instead that the contract had been mutually terminated or abandoned around July 2023. Mr Akhavan sought QCAT’s review of that reversal and won it back.

The legal test for abandonment

Whether a contract has been abandoned is assessed objectively: does the conduct of both parties, viewed as a whole, show that neither maintained an intention to perform any longer? It is not enough that one party’s conduct raises the possibility of an alternative outcome, and it does not turn on what a party actually intended, only on what their conduct, objectively viewed, manifested.

Courts have drawn the inference more readily where an inordinate length of time passes with neither side attempting to perform, or calling on the other to perform, but what counts as inordinate is relative to the circumstances; the point can be reached in under five months in one case and not reached after 26 years in another. Abandonment by inactivity requires more than mere silence; there must be a clear inference that one side no longer wishes to proceed and that the other side has effectively agreed to that.

Why the Tribunal found no abandonment here

The Tribunal preferred Mr Akhavan’s account of the 11 July meeting over the Builder’s, partly because the Builder’s own witness, its project manager, could not clearly recall key details. On the evidence accepted, the meeting’s purpose was to discuss the disputed variation, not to end the contract, and no final agreement to terminate was reached.

What followed mattered just as much as the meeting itself. Mr Akhavan set two clear conditions for agreeing to end the contract, a full deposit refund and permission to use the drawings, and the Builder never satisfied either. Rather than walking away, he kept pressing: for cost breakdowns, for a refund, and eventually for a meeting to discuss settlement.

The Tribunal found this materially different from a case where a homeowner simply goes quiet; here, one side remained active and engaged throughout, which is inconsistent with a shared, mutual decision to abandon the contract.

QBCC had argued that Mr Akhavan’s own request for drawings, made so he could potentially engage a new builder or sell the property if the dispute wasn’t resolved, showed he was moving on. The Tribunal rejected this, finding it a rational, contingent step, exactly the kind of leverage a homeowner might reasonably use to press a reluctant builder into performing, not proof of an intention to abandon.

The Tribunal also found the Builder had never actually given the express written permission to use the drawings that its own contract required, which weakened any suggestion a mutual release had genuinely been agreed. Finally, the roughly two-month period between the disputed meeting and Mr Akhavan instructing solicitors was found not to be the kind of inordinate delay that supports an abandonment inference, particularly where that period was filled with active, if unsuccessful, negotiation rather than silence.

Case Two: The Known Defect Exclusion and Claim Time Limits

Mr and Mrs Rizzo signed a contract to purchase a property on 8 March 2024, after a successful auction offer. At a pre-settlement inspection on 4 April 2024, Mr Rizzo noticed water coming down an internal wall, with bubbled paint and water visibly sitting behind it, and a gap at the base of a rock feature wall. Within hours, the vendor’s side agreed by email to a “major repair” for the water leak, and settlement proceeded on 8 April 2024.

The repair turned out to be a patch job. Mr Rizzo later complained to QBCC about six defect items, but QCAT confirmed QBCC’s decision to disallow all of them. The two lead items, water ingress at two separate points in the house, were independently out of time and independently caught by section 60 of Schedule 6 under the QBCC Regulation (known defect exclusion), because QCAT found Mr Rizzo’s awareness arose at the 4 April inspection, before he settled. The remaining four items were disallowed as consequences of those two lead defects, on Mr Rizzo’s own submission that they related to the same underlying issues.

Mr Rizzo argued that noticing bubbled paint or a plaster blemish was not the same as knowing the cause, source or extent of any water ingress or knowing the house was defective before he bought it.

QCAT rejected the distinction, applying three established principles:

1. A consumer's knowledge of how a defect would ultimately be classified is not relevant to when the time limit starts running (Messaoudi v QBCC [2021] QCAT 124);
2. The bar for awareness is low, with no requirement for technical expertise, and the clock starts from the moment there is or ought to be an awareness of a defect (Ahmet v QBCC [2022] QCAT 417); and
3. The test is objective, not subjective, as the statutory language “ought to have known” makes plain (King and McDonald v QBCC [2024] QCAT 138).

The result: it did not matter that Mr Rizzo had no idea whether the water was coming from an air-conditioning unit or somewhere else. Seeing water and bubbled paint was enough to put a reasonable person on notice, both for the three-month time limit on structural defects and for the section 60 exclusion to arise.

What This Means for Builders

Read together, Akhavan and Rizzo point to a few things worth checking on any live QBCC matter:

• Telling a client you’re “no longer engaged”, or simply stopping work over a variation dispute, does not create a mutual abandonment by itself. Without evidence the homeowner also intended to walk away, the Tribunal is likely to treat the standoff as your default, which keeps a recovery action against you alive.
• A homeowner’s conditions for ending a contract (a refund, permission to use drawings) matter. If you never satisfy them and never document a mutual release, that gap can be read against you later, as it was here.
• Any request from a client to use plans, drawings, or approvals should be handled with express written permission if your contract requires it. Ambiguity on this point weakened the Builder’s abandonment argument in Akhavan.
• If you’re facing, or anticipating, a QBCC recovery action arising from a buyer’s claim, check when the buyer first had an opportunity to notice the defect, particularly around a pre-settlement or pre-purchase inspection. Rizzo confirms that awareness of a defect’s existence, not its cause or extent, can be enough to defeat the underlying claim, and with it, your exposure.
• Preserve correspondence from around any pre-settlement inspection, including any written agreement about repairs. That contemporaneous record is exactly what carried the known defect exclusion in Rizzo, and it can do the same work in a matter involving your business.
• Time limits cut both ways. A claim against you can fail purely on timing, even where the underlying defects are genuine, so check the relevant three or seven-month period before assuming a stale complaint still has legs.

Need Advice?

Damon Laffin is the Legal Practice Director at Odyssey Legal, a Queensland boutique litigation and business law firm.

Odyssey Legal is a boutique commercial litigation and business firm on the Sunshine Coast. We advise builders and subcontractors on various building disputes, from debt recovery to defective works claims across Queensland.

07 5370 8759 | info@odysseylegal.com.au | odysseylegal.com.au

If you need advice or are considering your options, contact Odyssey Legal at odysseylegal.com.au or (07) 5370 8759.

Frequently Asked Questions

What’s the difference between valid termination and mutual abandonment of a building contract?

Termination is a deliberate ending of the contract by one party, generally for the other’s default. Mutual abandonment requires objective conduct from both sides showing neither intends to perform any longer, assessed on what their conduct manifests, not what either side actually intended. The distinction matters under the home warranty scheme, which treats a mutually abandoned contract differently to one validly terminated at a builder’s default. Akhavan confirms that a homeowner who keeps pursuing the builder for performance or a remedy weighs against a finding of abandonment.

Does asking for drawings or approval documents suggest a homeowner has abandoned the contract?

Not necessarily. Akhavan confirms that requesting these as a contingency, in case the dispute isn’t resolved, can be a rational step rather than evidence of an intention to abandon, particularly where the homeowner continues actively pursuing performance or a remedy.

Can QBCC’s own internal review decision be successfully challenged?

Yes. Akhavan is a clear example: QBCC approved the claim, its internal review reversed that decision to a finding of mutual abandonment, and QCAT then overturned the reversal and restored the original finding, a result adverse to the builder.

What is the known defect exclusion under the QBCC Act?

section 60 of Schedule 6 under the QBCC Regulation excludes a claim where a buyer knew, or ought reasonably to have known, that the built work was defective before completing the purchase contract. Rizzo confirms that a pre-settlement inspection can be enough to establish that awareness, even where the buyer did not know the precise cause or extent of the defect.

How does the known defect exclusion help a builder facing a QBCC recovery action?

If QBCC pays a claim and then seeks to recover that amount from the builder, the builder’s exposure ultimately depends on the claim having been valid in the first place. Evidence that the buyer was objectively on notice of the relevant defect before settlement, of the kind that succeeded in Rizzo, can support an argument that the claim should never have been paid or that comparable items in a live claim should be excluded.

Is there a time limit on making, or defending, a QBCC home warranty claim?

Claims are subject to strict statutory time limits: three months from awareness of a structural defect and seven months from substantial completion for other defects. A claim can be disallowed for being out of time even where the underlying defects are genuine, as occurred in Rizzo, which is a live consideration whenever a claim, or a recovery action, is disputed.