On 2 December 2020, the NSW Court of Appeal delivered a judgment in the matter of Roude v Helwani [2020] NSWCA 310. This was an appeal from orders made by Harrison AsJ in the Common Law division of the Supreme Court, which was an initial appeal from a judgment of the Local Court of NSW in favour of the respondent in the amount of $87,000.
The Facts
The respondent, Mr Helwani had previously carried out extensive electrical and plumbing work for the appellant, Mr Roude commencing in 2008 for a period of five years. The works were not completed subject to a written contract, nor was a written quotation provided and there was no defined scope of work.
During the course of the work, the Mr Roude paid the Mr Helwani the sum of $37,500, however in January 2015, the respondent issued invoices for the work to the appellant for the first time in 2015, in the amount of $123,571.00. The difference between the amount paid and the invoices was $86,071.50. At no point did Mr Roude take issue with the invoices provided to him.
Appeal and Decision
The appellant contended:
- There was no evidence of the fair and reasonable cost of performing the work;
- The Magistrate failed to give adequate reasons; and,
- The Magistrate failed to apply the correct standard of proof.
The first question is an important concept in terms of evidence adduced at a hearing in support of a claim for quantum meruit. A builder’s entitlement to make a claim on a quantum meruit basis arises from the entitlement to receive a fair and reasonable amount of money for works completed and goods provided by the builder. This is often used by builders to try to recover monies for out of scope works that were provided but not set out in the original contract, or where the is no contract in place at all.
A claim for quantum meruit may arise if:
- there is no specified sum to be paid under a contract;
- there is an express agreement to pay a reasonable sum;
- work is completed outside the scope of the contract, at the request of the principal/homeowner; and/or,
- the contract is found to be void or unenforceable.
Ordinarily, a claim for quantum meruit would require expert evidence to support the claim, however, in the absence of such evidence, it is open to the judges or magistrates to make a determination based on other evidence before them. Given the lack of other independent expert evidence provided by either party, the Court considered that Mr Helwani was an expert by virtue of his 30 years expertise as a licensed builder, electrician and plumber with extensive experience in the industry. The Court found that the magistrate was correct in her acceptance of the evidence of Mr Helwani.
Finally, the Court found that the failure of the Mr Roude to deny any liability, nor challenge the value of the invoices when provided to him could be construed as an admission that the amount claimed was reasonable.
Key takeaways
The decision is important for the following reasons:
- In terms of understanding the required evidence to support claims for quantum meruit (particularly where there is no written contract or quotation). If you are a principal or head contractor, it is vital that you ensure that a contract or quotation governs the project or works to be completed under scope. Where you request work to be completed that is outside of the scope of the contract, any such direction for that work should be made in writing and as an appropriate variation prepared in accordance with the contract.
- How a contractor can be considered as an expert and their evidence be accepted for the reasonableness of invoices.
- How a principal or head contractor should promptly respond to an invoice as soon as possible after receipt of the invoice, otherwise, the lack of response can be construed as an acceptance of the full amount of that invoice.
If you need further assistance in understanding your contract or are currently in a contractual dispute relating to a property or building contract, please do not hesitate to contact a member of Coleman Greig’s Building and Construction team who would be more than happy to assist you.
