Getting paid for work done (Quantum Meruit): the importance of expert evidence

By Alicia Hill, Principal and Harrison Breer, Law Clerk

In the recent case of Roude v Helwani [2020] NSWCA 310, the Court of Appeal of New South Wales considered an appeal from a judgment of a Local Court of New South Wales Magistrate regarding a claim for reasonable remuneration for electrical and plumbing work performed (quantum meruit). This case illustrates the complexities that can arise regarding claims for payment, the importance of expert evidence in showing what is fair and reasonable remuneration, and the need for a correct strategy in making a claim.

Background

Mr Adib Helwani (Mr Helwani) was engaged to carry out extensive electrical and plumbing work for Mr Ali Roude and Mrs Susan Roude (Mr and Mrs Roude) over a five-year period beginning in 2008 at their large property.

This agreement occurred without a written contract, quotation or defined scope of the work to be carried out.

Mr and Mrs Roude paid Mr Helwani a total of $37,500 during the course of this work.

Mr Helwani claimed that he had been asked by Mr Roude to prepare invoices for the work that he had completed. He did so for the first time on the 21 January 2015, with the work totalling $123,571.50. The balance after the previous payments were considered remained at $86,071.50. At the time of these invoices being sent, no disputes arose as to their reasonableness.

On 12 August 2015, Mr Helwani provided his bank account details to Mr and Mrs Roude and on 24 October was paid $2000. After Mr Helwani pressed for further payments, Mr Roude sent a text message in June 2016 claiming to still have financial issues and promised to pay once this was alleviated.

After no further payments occurred, proceedings commenced on the 29 September 2017 in the Local Court for a claim for restitution utilising the law of quantum meruit (being paid a reasonable sum for the work that was done).

Mr Helwani was successful in his claim in the Local Court.

He provided the Court with a detailed breakdown of the prices charged for the items of work in the invoices, and the Magistrate was satisfied that this information had not simply been prepared for the purposes of litigation. The Magistrate did not admit affidavits from either side which contained quotations from third parties as to what they would have charged for the work once they were challenged.

Mr Helwani was classed as an expert by the Magistrate, having been a licensed builder, electrician and plumber for the past 30 years. The Magistrate determined that Mr Helwani, on the balance of probabilities, had carried out the work he had claimed, correctly calculated the amounts owed to him by Mr and Mrs Roude, and that these figures were fair and reasonable in the circumstances with no expert evidence to the contrary.

Mr and Mrs Roude unsuccessfully appealed to the Supreme Court, and so further appealed to the Court of Appeal.

Grounds for appeal

Mr and Mrs Roude argued that Mr Helwani had provided no evidence of a ‘market rate’ with regards to his work, and as such there was no evidence that could illustrate that the invoices were fair and reasonable.

Whilst Mr Helwani had provided a schedule which gave detailed evidence of his cost calculations, this did not show that these prices were objectively ‘fair’.

Mr and Mrs Roude further said that Mr Helwani was not challenged on this fact, which in turn incorrectly reversed the onus of proof, as Mr Helwani had to establish the reasonableness of his prices.

What is ‘fair and reasonable’?

In the Local Court, the only evidence that was utilised to determine the reasonableness of the costings was that provided by Mr Helwani. The affidavits of quotes from third parties from both sides were not utilised after objections. Mr Helwani was not challenged in the Local Court as to the reasonableness of his costings, nor to justify the listed prices.

In the appeal to the Supreme Court, Mr and Mrs Roude raised that the invoices alone could not constitute evidence to show the cost of works being fair and reasonable (Horley v Sector 7G Architecture Pty Ltd (in liq) [2011] NSWSC 827 (‘Horley’)). However, the case of Horley could be distinguished from the current facts, as in that case the invoices were prepared with no explanation as to the work it related to and was created years after the works were completed and only after proceedings had commenced.

The Justice in the Supreme Court agreed with the findings of the Magistrate, that the level of detail provided in the invoices, and the fact his expert evidence remained uncontested, was sufficient to show the reasonableness of the costs.

The Honourable White J A also agreed with these findings in the Court of Appeal. By not challenging the invoices themselves, and instead challenging the interpretation of them in Court, Mr and Mrs Roude had made a tactical decision that ultimately failed. Instead, His Honour found that the failure of Mr and Mrs Roude to challenge the invoices, and instead agree and partly pay them, provides strong evidence as to their reasonableness.

Market rate

Mr and Mrs Roude also argued that Mr Helwani had provided no evidence that his work was in line with the ‘market rate’, which, according to the case of Pavey Matthews Pty Ltd v Paul (1987) 162 CLR 221, is key for determining what is “fair and reasonable remuneration”.

Mr and Mrs Roude raised that the fact Mr Helwani was not challenged in cross-examination as to the reasonableness of his charges incorrectly reversed the onus of proof.

His Honour found that this was not the case.

• Mr Helwani had given sufficient evidence (which remained uncontested) that his charges were reasonable, and there was nothing unreasonable about these charges on the face of the invoice and the descriptions of the work completed;
• his expertise of over 30 years in the industry, meant that Mr Helwani was qualified to provide his expert opinion as to the reasonableness of the charges according to section 79 of the Evidence Act 1995 (NSW).

As such, His Honour found that there was no reversing of the onus of proof, and enough evidence to provide for the reasonableness of the charges without considering a ‘market rate’.

Outcome

The Honourable White J A, with Brereton JA and McCallum JA in agreement, dismissed the appeal with costs. This meant that Mr and Mrs Roude were required to pay Mr Helwani the balance amount of $86,071.50 as the reasonable price for the work he had completed, despite the fact that no written contract existed.

Take-aways

This case provides several important points regarding claims for payment for work completed.

This case illustrates:

• the ability of contractors, whom have the standing as experts in their field, to provide their own evidence as to the reasonableness of their costs. This evidence can replace evidence of a ‘market rate’ should it not be challenged.
• the importance for contractors to keep detailed and updated descriptions of their workings as a means of justifying their costs, should issues such as what occurred in this case arise.
• the importance of correct strategic decisions to be made when challenging claims for work performed (quantum meruit or other claims in restitution). In this case, by not challenging the invoices, the claims made by Mr and Mrs Roude were severely weakened, as it provided evidence as to the reasonableness of the figures.
• that in order to avoid court cases about what is a fair and reasonable price for work completed and the uncertainty and cost of doing so, it is critically important that you document the agreement for works or provision of services so that it can be clearly understood what is to be done and how the cost is to be determined.

If you have any queries about these type of  claims, or claims more generally, please contact Alicia Hill on (03) 8540 0292 or alicia.hill@mst.com.au