Builder may claim against Owner - Quantum Meruit even though does not comply with Home Building Act – Principles Applied

16/05/2018

A recent case Watson & Watson Solicitors conducted in the New South Wales Civil and Administrative Tribunal (NCAT) demonstrates the way in which Courts or Tribunals determine quantum meruit claims.

In this case, the Builder v the Owner was decided in 2018 by NCAT.  The Builder who agreed to do building work for the Owner had not signed a building contract with the Owner for building work to be carried out on her house in Sydney.

The Builder had carried out some work but had fallen into dispute with the Owner. The Owner alleged some defective building work by the Builder and had terminated the building contract.  The Builder brought a proceeding under the Home Building Act in which it alleged that the Owner owed the Builder money for work it had carried out but had not been paid for.

Since the Builder had not complied with requirements under the Home Building Act as to the form of the building contract, it could not seek payment under the terms of the contract for breach of contract. It could only make a claim on a quantum meruit basis. A quantum meruit basis is one where a Builder is compensated for the reasonable value of work done which the Owner has received.

In order to determine what the reasonable value of the work done, the NCAT had to resolve a dispute.  The Builder claimed that the value of the work done could be determined by it simply handing up its invoices for that work.  The Builder’s expert said that the hours worked by the Builder were reasonable; one reason was because the Owner had not complained about the hours claimed in the invoices.  Further the Owner has been on site regularly and saw the progress of the works.  The Owner received the invoices and paid them until near the end of the project.

The Owner however argued that the Builder’s expert evidence was deficient because it did not set out the Scope of Work to be undertaken or the hours necessary to perform the work nor attempt to quantify the value of the work. NCAT preferred a different method adopted by the Expert engaged by Watson & Watson on behalf of the Owner.  This method was to describe in detail the actual work performed, estimate the number of hours necessary to carry out the work and then apply the rate agreed by the parties of $65 per hour to come up with a value of the work carried out.

The next stage NCAT took was to deduct from the value of the work done from the cost of rectifying the defects in the work.

The two experts provided different estimates for these costs of rectifying those defects. Again, NCAT preferred the method which involved detailed reasons and preferred the evidence on behalf of the Owner.

In the result, consequent on this method of estimating the value of the work and the cost of rectifying the defects, NCAT found that the Builder had been paid enough for the work it had done and the Owner did not owe the Builder anything.  NCAT dismissed the Builder’s claim.

Watson & Watson can assist you with advice on building and construction matters including court cases, building contracts and other building documents and building and security for payment claims, quantum meruit claims and proceedings issued out of NCAT.  Please contact Richard Watson Accredited Specialist Building & Construction or his assistant Shereen Da Gloria to discuss your concerns or if you are faced with a building dispute.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.