Carbone v Fowler Homes: Why '$1 a Day' Liquidated Damages Don't Cap Your Delay Liability

There is a piece of folk wisdom in contracting that goes: if the liquidated damages rate is nominal — a dollar a day, or nothing at all — then delay costs the builder nothing, because the LD clause is the whole of the other party's remedy. Carbone v Fowler Homes Pty Ltd [2024] NSWCA 192 is the New South Wales Court of Appeal telling the industry, again, that this is wrong. A token LD rate does not silently exclude general-law damages for delay. If you want liquidated damages to be the exclusive remedy, the contract has to say so — clearly.

The facts

Giuseppe and Matthew Carbone, father and son, each engaged Fowler Homes under materially identical fixed-price HIA standard-form contracts to build duplexes on neighbouring lots at Oran Park in Western Sydney. The building period was 48 weeks; works commenced in August 2018; practical completion should have arrived around mid-2019. The owners did not obtain possession until April 2021 — roughly 21 months late — after disputes over the state of accounts.

The contracts' liquidated damages item was completed not with a genuine pre-estimate of delay loss but with a token figure — the schedule entry was $0.00 per working day against the form's default of $1 — so that the entire contractual remedy for 21 months of delay was, on the builder's argument, a few hundred dollars at most.

The owners' litigation began in the Supreme Court, settled in part, and was transferred to the District Court, where their remaining claims substantially failed. On appeal, the contract damages question crystallised: could the owners recover their actual delay losses (chiefly lost rent), or did the nominal LD clause exhaust their rights?

The issue

The builder contended, by notice of contention, that the liquidated damages provision was an exclusive remedy: whatever the delay, the owners' compensation was fixed at the nominal rate. The question was one of construction — does a liquidated damages clause completed at $1 (or $0) per day evince an intention to exclude the owner's common-law right to damages for late completion?

What the Court of Appeal held

The Court — Ward P, Leeming JA and Mitchelmore JA, with Leeming JA writing the lead judgment — rejected the exclusive-remedy argument. The Australian line of authority is consistent: Baese Pty Ltd v RA Bracken Building Pty Ltd (1990) 6 BCL 137 held that clear words are required before an LD clause is treated as the entirety of a proprietor's rights; J-Corp Pty Ltd v Mladenis [2009] WASCA 157 reached the same result for a $nil rate in Western Australia; and Cappello v Hammond & Simonds NSW Pty Ltd [2020] NSWSC 1021 held a $1-a-day clause "should not be interpreted as providing an exclusive remedy for delay" — reasoning the Court expressly approved.

Leeming JA's point at [106] lands on the asymmetry: the HIA form already gives the builder an automatic extension for every day's delay in progress payments, and there was "no reason" to read the clause as leaving an owner "with a nominal return in circumstances where the builder fails to adhere to its promised timing and the owner can establish loss caused by the builder's delay". A clause in a trifling amount, utterly negligible against the contract price, attracts the clear-words requirement rather than satisfying it.

The outcomes then turned on proof and the contract's own machinery — a useful reminder in itself. Matthew Carbone recovered lost rent (assessed at $31,500 on the comparable-lease evidence). Giuseppe Carbone recovered nothing for delay: his own late progress payments had triggered the contract's automatic extension regime, so the builder was not in breach. Same clause, same delay period, opposite results — driven by contract administration facts.

What this means in practice

1. A nominal LD rate is not a cap. Contractors and builders pricing delay risk on the assumption that "$nil LDs" means no delay liability are carrying an unpriced exposure to general damages — proved delay loss at large. The Australian position (Baese, J-Corp, Cappello, now Carbone) is settled and diverges from the English reading of "£nil" in Temloc-style cases; do not import UK instincts.
2. If exclusivity is the deal, write it. "Liquidated damages are the principal's sole and exclusive remedy for delay in achieving practical completion" — words to that effect, prominently, in the amended conditions. Anything less invites the Carbone construction.
3. Principals: a nominal rate may be better than you thought — but an enforceable, realistic rate is better still. Recovering general damages requires proving loss (the Carbones' own evidentiary struggles over rental loss show how that can go); a defensible LD rate avoids the proof fight entirely.
4. Contract administration decides who wins the same argument. Giuseppe Carbone lost not on the law but on the extension machinery his own payment delays had triggered. Both sides should track extension events — automatic or claimed — as diligently as the works themselves.
5. The principle travels. This was a residential dispute, but the construction reasoning applies to commercial forms wherever the LD item is completed nominally — including the common negotiation compromise of "LDs: $nil" on subcontracts. Treat that compromise as shifting delay risk to general damages, not extinguishing it.

Key takeaways

• Nominal liquidated damages ($1 or $0 per day) do not exclude general-law damages for delay absent clear words (Carbone [2024] NSWCA 192, applying Baese, J-Corp and approving Cappello).
• To make LDs exclusive, the contract must say so expressly — the clear-words requirement is settled Australian law.
• Proof still rules: delay damages must be evidenced (comparable rentals, finance costs), and contractual extension machinery can defeat the claim entirely.
• Review every "$nil LDs" compromise in your subcontracts and head contracts: it changes the remedy, not the risk.

This article is general information only and is not legal advice. For advice on a specific contract or dispute, seek legal counsel or contact Sumit Consulting for commercial and claims advisory support.