Quantum Meruit Claims in NSW Construction Disputes
24 September 2025 in Building and Construction Law | 3 min read | skip to FAQsThis article briefly examines the concept of quantum meruit in construction law. We discuss the landmark case of Pavey and Matthews Pty Ltd v Paul 1987 (HCA) which highlights this legal concept and sets out the circumstances in which payment for construction work without a written contract may occur.
What is Quantum Meruit?
Quantum meruit is a legal term that contends that a reasonable sum of money should be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract. The landmark case of Pavey and Matthews v Paul considered whether there was a quantum meruit claim independent of an existing oral contract and therefore not subject to the Building Licensing Act 1971 (NSW).
Pavey & Matthews v Paul
Background
The building and construction 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. This was only a portion of what they claimed they were owed, which they believed to be the prevailing rate of $63,000.
The Issue of quantum meruit and the 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 did indeed uphold that the case was independent of the Builders Licensing Act 1971 (NSW). The basis of this was not Mrs Paul’s promise to pay, rather it was the work done and her acceptance of this work.
The Court contended that although the Licensing Act allowed owners to withdraw from oral commitments, it did not enable them to avoid payment for work that they had requested and approved.
The builders would have received the lower amount only if Mrs Paul had withdrawn her promise before the work had begun and the builders had gone ahead anyway.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”
The factors the High Court considered: A summary of Quantum Meruit.
- Unjust enrichment. That is, Mrs Paul unfairly benefited at the expense of the builders, Pavey and Matthews.
- Awarding restitution for this enrichment. That is, making Mrs Paul pay Pavey and Matthews.
- The amount of this restitution or payment being an equitable remedy. That is, the payment was ‘what the job is worth’. In this case the market value of the work.
How can BSM Sydney Lawyers assist you?
The highly experienced building and construction lawyers at Brander Smith McKnight Sydney Lawyers have decades of construction law experience and are aware of the nuances of construction law. We have represented a wide range of clients, including individuals, small and medium builders through to major building companies. Our construction lawyers are able to effectively and carefully draft contracts to mitigate the risk of future problems and strongly advocate for you in all contract disputes. We will fiercely advocate for you at all levels of negotiation and dispute resolution including litigation. The senior construction lawyers at BSM Sydney Lawyers offer a free 20 minute consultation.
Call us to arrange a free 20 minute no obligation consultation that includes case evaluation and cost estimate.
FAQs
What is Quantum Meruit in Construction Law?
Quantum meruit is a latin phrase literally meaning ‘as much as he deserves’, or put another way ‘what the job is worth’. In construction law it essentially means that a reasonable sum of money should be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract.
The underlying legal assumption is the prevention of unjust enrichment. Unjust enrichment means that one party shouldn’t unfairly benefit at the expense of the other party. If one party does unfairly benefit, the courts can award restitution for this enrichment. This restitution should be a fair and reasonable amount and is determined by the courts.
When does Quantum Meruit usually apply in Construction Law?
Instances when quantum meruit is commonly claimed in construction disputes are when
- No enforceable contract exists.
- The contract is incomplete.
- The contract is terminated.
- Work has been performed which is outside the scope of the terms of the contract.
- No price is specified in the contract.
The expert construction lawyers at BSM Sydney Lawyers have represented many clients claiming quantum meruit.
Why is Pavey and Matthews vs Paul considered an important case for Quantum Meruit?
Pavey and Matthews vs Paul is a construction case between a builder and home owner which demonstrates and upholds a quantum meruit claim.
- There was an oral contract agreed between the builder, (Pavey and Matthews) and the home owner, (Mrs Paul) prior to the commencement of building.
- The building work was completed and Mrs Paul accepted the work and paid $36,000.
- The builders claimed that the building work was worth the prevailing rate of $63,000 and made a claim based on quantum meruit.
- They claimed that despite having an oral contract, which was based on the Building Licensing Act, the work was worth more.
- The High Court of Australia agreed on the basis that it was not Mrs Paul’s promise to pay, (in the form of the oral agreement), rather it was the work done and her acceptance of this work that determined the amount paid
- The High Court assessed that based on the objective market rate, Mrs Paul had been unjustly enriched and that there should be restitution for this enrichment. In simple terms, she should pay the builders what the job was worth.
The building and construction lawyers at BSM Sydney Lawyer offer a free 20-minute consultation.
BSM Lawyer Sydney has offices conveniently located in Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong.
About the Author
Joshua VangiBachelor of Laws I Graduate Diploma of Legal Practice I Admitted to Supreme Court of NSW & High Court of Australia
View profileJoshua Vangi holds a Bachelor of Laws from the University of Wollongong and a Graduate Diploma of Legal Practice from the College of Law. Joshua is admitted to the Supreme Court of NSW and the High Court of Australia. Joshua specialises in Building and Construction Law with a special interest in complex building disputes and contracts. He also works in property disputes and civil litigation. Joshua has industry expertise across a wide range of construction law including building defects, delays and extensions of time and building contracts and quantum meruit. He has expertise in dispute resolution strategies, contract negotiation and drafting, payment claims and adjudication and expert litigation strategies.
