Quantum Meruit Claims – “Market Rates” and Reasonableness
A recent decision of the NSW Court of Appeal (NSWCA) considered whether evidence of a “market rate” for work performed is required in order to establish a quantum meruit claim.
In Roude v Helwani  NSWCA 310 Mr Helwani (the Builder) carried out extensive electrical and plumbing work on a residential building owned by Mr Roude (the Homeowner) over a five year period, commencing in 2008. The parties did not enter into a written contract, no quote was provided by the Builder and there was no defined scope of work. The Homeowner paid the Builder $37,500 for work undertaken during the 5 year period. In January 2015, the Builder issued the Homeowner with three invoices totalling $123,571.50 for all of the electrical and plumbing works performed on the building. After deducting the payment already made to the Builder there was an outstanding balance of $86,071.50.
In preparing the invoices the Builder relied on a detailed schedule which set out the amounts charged for items of work, the basis for those charges and included quantities of items purchased and installed.
Following receipt of the invoices, the Homeowner claimed to be in financial difficulty and unable to pay the Builder. Consequently, the Builder commenced proceedings in the Local Court, claiming the outstanding amount for works performed but not yet paid on a quantum meruit basis. The Local Court Magistrate upheld the claim and gave judgement for the Builder. The Homeowner appealed to the Supreme Court of NSW and subsequently the NSWCA.
The NSWCA considered the following key issues:
whether there was evidence to support the Magistrate’s finding that the amount claimed by the Builder was fair and reasonable;
whether the Magistrate erred in finding that the Builder’s charges were reasonable; and
whether, in order to establish a quantum meruit claim, the Builder had to prove the “market rate” for the electrical and plumbing works.
White JA, with whom Brereton JA and McCallum JA agreed, held that:
the onus was on the Builder to establish the reasonableness of the invoice amounts. There was nothing unreasonable on the face of the invoice, and, given the Builder’s extensive experience in the industry, he was qualified to give an expert opinion as to reasonableness of the charges;
the detailed schedule prepared by the Builder provided some evidence as to the reasonableness of the charges and therefore the Magistrate did not err in finding that the Builder’s invoices were reasonable; and
there is no authority that requires the Builder prove a fair and reasonable “market rate” for the work performed in order to establish that the invoice amounts were reasonable. Although a quantum meruit claim may be proved by such evidence, a judge is not precluded in the absence of such evidence, from making an assessment as to whether other evidence adduced proves the reasonableness of the charges.
The appeal was ultimately dismissed.
This decision serves as a reminder that, when making a quantum meruit claim, evidence of a fair and reasonable “market rate” may establish the claimed amount is reasonable, but it is not essential to proving a claim.
The full decision can be found here.