Construction work without a Written Contract and Quantum Meruit

19 May 2022 in Building and Construction Law, Debt Recovery, Dispute Resolution Law

The Landmark case of Pavey and Matthews v Paul

The case of Pavey and Matthews Pty Ltd v Paul 1987 High Court of Australia sets out the circumstances in which payment for construction work without a written contract may occur.

The High Court judgement was based on the concepts of

Unjust enrichment
Awarding restitution for this enrichment, (to the plaintiffs who were the builders Pavey and Matthews).
The amount of this restitution being an equitable remedy referred to as quantum meruit.

Background

The case involved the renovation of a property belonging to Mrs Paul and performed by Pavey and Matthews. The contract was orally agreed. At the end of the renovation, Pavey and Matthews were paid $36,000, only a portion of what they claimed they were owed, which they believed to be the prevailing rate of $63,000.

The Issues and Judgment

The question that the case needed to answer was whether a quantum meruit claim could be independent of a contract and therefore avoid the Building Licensing Act 1971 (NSW). The High Court of Australia held that the case was independent of the Builders Licensing Act. The basis of this was not Mrs Paul’s promise to pay, but the work done and her acceptance of this work. The Licensing Act was designed to allow building owners to withdraw from oral commitments, not to enable them to pay nothing for work that they requested and approved. The builders would have received less only if Mrs Paul had withdrawn her promise before the work had begun, but the builders had gone ahead anyway. The court also noted that the amount rewarded could be no higher than the objective market rate for the work, even if Mrs Paul’s promise was for a higher price.

” Unjust enrichment in the law of this country constitutes a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make a fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case”

How can Brander Smith McKnight Lawyers assist you?

The building and construction lawyers have many years of experience in construction and have represented a wide range of clients, including individuals, small and medium companies through to major corporations. We are able to effectively and carefully draft contracts to mitigate the risk of future problems and strongly advocate for you in all building and contract disputes. We will fiercely advocate for you at all levels of negotiation and dispute resolution including litigation if required.