NSW Court of Appeal considers evidence of value for Quantum Meruit claims

Key Points:
  • A contractor is not strictly required to independently prove a market rate or objective standard in order to succeed in a claim for quantum meruit
  • If a head contractor or principal does not put the contractor’s evidence of value in issue, it is open for the Court to accept that evidence as the proper value
  • Deliberate tactical and strategic decisions made at trial can limit arguments on appeal

On 2 December 2020, the Supreme Court of NSW – Court of Appeal, delivered judgment in the matter of Roude v Helwani [2020] NSWCA 310 and, in a decision that is important to the ability of builders and contractors to pursue claims over amounts in smaller jurisdictions, the Court of Appeal has confirmed that it is not necessary to incur the costs of obtaining an expensive independent expert report in order to succeed in a claim in quantum meruit.

In this matter the Court considered an appeal from a matter originally in the Local Court of NSW, where the building contractor had successfully sought to recover approximately $87,000 for works performed at the home owners’ property.

The contractor initially succeeded in his claim against the home owners, who appealed to the Supreme Court. That appeal was unsuccessful and the home owners’ further appealed to the Court of appeal.

The home owners’ argument on appeal was that there was no available evidence of the fair and reasonable cost of the works performed by the contractor and that a finding in favour of the contractor on a quantum meruit basis could not be made.

The Court held that although the relevant authorities established that a claim in quantum meruit can be proven through expert evidence, in the absence of expert evidence from either side a judge or magistrate can make an assessment of the reasonable and proper value of works based on other evidence before him or her. In this case it was open to the learned magistrate to accept the evidence of the builder of the value of the work performed and how that value was calculated.

Further, the Court held that the decision of the home owners in not challenging the evidence of the contractor in the Local Court, and rather challenging the weight that the Court should apply to that evidence, was a deliberate strategic decision which ultimately failed.

Importantly, the Court found that evidence of the failure of the home owners to deny liability on receipt of the invoices could amount to an admission that the amounts claimed were reasonable.

What this means (why is it important)?

This case is important for both contractors and principals.

For contractors or sub-contractors who are owed money, it shows that it is not strictly necessary to incur the costs of an expensive expert report in order to prove the value of works done where there is not a written contract, unless the value of that work is directly challenged. It also shows that evidence of a head contractor or principal’s behaviour in response to an invoice can be evidence as to the reasonableness of the claim.

For head contractors or principals defending claims, this case highlights how important it is to make sound and considered strategic decisions as to what evidence is challenged at trial. If facing a claim for quantum meruit and the contractor relies on direct evidence from him or herself, this evidence can be accepted if it is not challenged in the proper way.

Hicksons has an extensive team of experts in construction law and commercial disputes, who are experienced in acting on behalf of principals, head contractors and sub-contractors in such matters. If this bulletin raises any issues or concerns for your own matters, please do not hesitate to contact us.

Post by Hicksons Partner, Lachlan Wilson

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