NCAT Trader Sued by Customer: Small Business Respondent Guide

A customer has filed a consumer claim against your business in the NSW Civil and Administrative Tribunal. The claim says you supplied faulty goods, did substandard work, or failed to deliver what was promised. You have a hearing date and a stack of papers you need to make sense of quickly.

What Consumer Claims Cover

NCAT consumer claims operate under Part 6A of the Fair Trading Act 1987, which applies the Australian Consumer Law (NSW). The applicant (your customer) must show they are a "consumer" and you are a "supplier" carrying on a business. The claim can involve:

• Defective or faulty goods — products that do not match their description, are not fit for purpose, or are not of acceptable quality under the consumer guarantees
• Unsatisfactory services — work that was not carried out with due care and skill, or was not fit for the purpose the consumer made known
• Non-delivery — goods or services paid for but never supplied
• Misrepresentation — claims you made about the product or service that turned out to be false

The maximum claim amount is $100,000 in the Consumer and Commercial Division.

What Is Outside NCAT's Consumer Jurisdiction

Not every dispute between a business and a customer belongs in NCAT:

• Home building work goes to NCAT's Home Building list under the Home Building Act 1989 (up to $500,000) — different procedures, different forms
• Residential tenancy disputes go to NCAT's Tenancy list under the Residential Tenancies Act 2010
• Private sales between individuals (not businesses) do not qualify as consumer claims and must be brought in the Local Court
• Business-to-business debts without a consumer guarantee element belong in the Local Court

If the claim has been filed in the wrong forum, raise this at the hearing. The member can dismiss the claim or transfer it to the correct venue.

The Operational Cost of Defending

For sole traders and small businesses, the biggest cost is not the claim itself — it is the lost working time. NCAT consumer claims use a "group list" format where multiple matters are listed at the same time. You may arrive at 9:30 AM and not be called until the afternoon. Conciliation is mandatory on the first listing, and if it fails, the matter may proceed to a hearing the same day or be adjourned with directions for a later hearing.

One day of preparation plus one day at the tribunal is the minimum. Complex cases may require a second hearing date if the first session runs out of time.

Your Response Options

As a respondent, you choose one of four paths:

1. Pay and resolve — settle the claim directly with the customer before the hearing. Get them to withdraw in writing or agree to Consent Orders.
2. Dispute — attend with evidence showing the work was adequate, the goods met their description, or the claimed amount is excessive.
3. Admit and negotiate — accept that some remedy is owed but negotiate the terms during conciliation (reduced amount, instalment plan, repair instead of refund).
4. Counterclaim — if the customer owes you money from the same transaction, file a separate counter-application.

Building Your Evidence

Focus on what the Australian Consumer Law actually requires. For services, the standard is "due care and skill" — not perfection. For goods, the standard is "acceptable quality" considering the nature, price, and any statements made about the goods.

Useful evidence for business respondents:

• The contract, quote, or written agreement showing what was promised
• Before-and-after photos of the work
• Correspondence showing the customer approved changes or acknowledged progress
• Invoices and payment records showing what was paid and when
• Independent assessments or reports supporting the quality of your work

Under Section 60 of the Civil and Administrative Tribunal Act 2013, each party generally bears their own costs, although the tribunal may award costs where special circumstances exist. Rule 38 gives the tribunal broader discretion in claims over $30,000. Self-represented parties generally cannot recover the time they spend preparing.

The Responding to an NCAT Consumer Claim guide provides evidence index templates, conciliation preparation worksheets, and step-by-step hearing procedures for business respondents.

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