Written by In Larsen as trustee for the Larsen Superannuation Fund v Tastec Pty Ltd (formerly Wonders Building Company Pty Ltd) (No 2) (2025) NSWCA 210, the High Court confirmed a key principle for the construction industry: when builders make misleading or deceptive representations about aesthetic features, the cost of rectifying the work can be recovered, even if the property’s market value is unaffected.
In this case, Mr and Mrs Larsen contracted Tastec Pty Ltd (‘Tastec’) to supply and install a prefabricated home with a specific Maxline 340 cladding, chosen for its aesthetic appeal. The builder later encouraged them to accept a substitute product, claiming it was superior and visually comparable. In fact, no such product existed, and Tastec had merely modified a cheaper alternative to mimic the look. Relying on these representations, the Larsens agreed to the variation, only to discover the finished work did not meet their expectations.
The dispute began in 2019 when Tastec brought a claim in NCAT for unpaid contract amounts, prompting the Larsens to file a counter-claim in the District Court in 2021 for misleading and deceptive conduct. The trial judge initially ruled in Tastec’s favour. On the first appeal in 2023, the NSW Court of Appeal unanimously held that Tastec had breached the Australian Consumer Law by making misleading representations about the replacement cladding, but sent the question of loss back to the District Court for determination. On reconsideration, Judge Cole DCJ again denied damages, reasoning that the replacement cladding affected only aesthetics and did not diminish the property’s value. The Larsens then appealed a second time to the NSW Court of Appeal and were successful, with rectification costs awarded. Tastec later sought special leave to appeal to the High Court, which was refused on 5 February 2026, leaving the NSW Court of Appeal’s decision in place.
The case serves as a clear reminder for builders to exercise care when proposing variations or alternative products, as honesty is crucial even for minor or cosmetic changes. Where clients are misled into giving up contractual rights, rectification costs may be recoverable, with damages assessed based on the outcome the client would have received if not misled rather than the property’s market value alone. Such costs are generally upheld unless clearly unreasonable, and aesthetic preferences are recognised as valid considerations, reinforcing the importance of transparency and integrity in construction projects.