District Court New South Wales

• Medium Neutral Citation: Darin v Olzomer [2011] NSWDC 51
• Hearing dates: 9 May 2011
• Decision date: 20 May 2011
• Before: Judge Peter Johnstone

Decision

Appeal dismissed with costs

• Catchwords: CTTT - appeal from a decision of the CTTT on a question with respect to a matter of law whether there was any material before the Tribunal to support its finding as to the amount of a quantum meruit
• Legislation Cited: Consumer, Trader and Tenancy Tribunal Act 2001
• Cases Cited: Kostas v HIA Insurance Services Pty Limited [2010] HCA 32; Liebe v Molloy (1906) 4 CLR 347; Pavey & Matthews Pty Limited v Paul [1987]HCA 5; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Sopov v Kane Constructions Pty Ltd (No 2)[2009] VSCA 141
• Category: Principal judgment
• Parties: John Darin (First Plaintiff); Valda Darin (Second Plaintiff); Richard Anthony Olzomer t/as Olzomer; Building Services (Defendant)
• Representation: Mr M R Gracie (Plaintiffs); Mr G Jenson (Defendant); Spinks Eagle Lawyers (Plaintiffs); Sparke Helmore (Defendant)
• File Number(s): 2010/414921

Judgment

1 The plaintiffs have appealed to the District Court from a decision of the Consumer, Trader and Tenancy Tribunal (the Tribunal) made on 17 November 2010 in respect of a building dispute between the plaintiffs (as owners) and the defendant (as builder).

2 The Tribunal determined the building dispute, so far as is relevant to this appeal, by concluding that there was an oral variation of the building contract entered into between the parties for the construction of a house. This oral variation was not made in accordance with the variation regime provided for in the contract, such that the builder was not entitled to make any claim under the contract, but was entitled to recover the cost of the variation on a quantum meruit. So much was not in dispute in this appeal.

3 The plaintiffs' complaint in this appeal concerns the determination of the amount of the quantum meruit entitlement. The Tribunal allowed the builder's claim in an amount of $58,313.86.

4 The appeal, commenced by Summons filed on behalf of the plaintiffs on 14 December 2010, is brought under s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001, which provides for an appeal as of right from a decision on a question with respect to a matter of law. The Summons set out three grounds of appeal, but at the hearing, only the third ground was pressed. That ground was, in summary:

The Tribunal erred in finding that the builder was entitled to a quantum meruit in the amount awarded, namely the amount of $58,313.86.

5 The basis of the plaintiffs appeal is that there was no evidence before the Tribunal upon which it could have found that the amount of $58,313.86 was the amount of the claimed variation, and therefore erred in law in finding the builder's entitlement in that amount: Kostas v HIA Insurance Services Pty Limited [2010] HCA 32 at [91].

6 To understand the plaintiffs' contention, it is necessary to examine how the Tribunal came to the figure of $58,313.86. In his Reasons for Decision the Senior Member of the Tribunal who decided the case said at [32] - [33]:

"Based on the principles in Liebe v Molloy and the above findings, I conclude that there was an oral variation and that Mr Olzomer is entitled to recover the cost of that variation on a quantum meruit . I note that Mr Gracie makes no submission as to Liebe v Molloy or Pavey & Matthews .

The schedule attached to Mr Jensen's submissions is taken from account summaries attached to Mr Olzomer's statement. From those he has calculated that the shortfall in payments by the Darins after credits totalled $58,313.86. That figure is reached by taking the total of variation claims, adding that to the contract price, and deducting the total payments made. I have carried out the same calculation and reach the same figure. There is no contrary evidence at all which would cast doubt on the Builder's claims. Bearing in mind the comments in Renard v The Minister (1992) 26 NSWLR 234, per Meagher JA, and in the absence of any contrary evidence or challenge to Mr Olzomer's figures, I find that to be the sum owing."

7 The plaintiffs submit that there was no evidence concerning the other variation claims relied on by the Tribunal in making its calculation, such that it made the following errors:

(a) It treated the total amount claimed as the reasonable cost of the split level variation when in fact the amount claimed by the builder ... was not the amount claimed in relation to the one variation allowed. Rather, [it] was an amount calculated by taking the contract price, adding all the variations (including the other variations) and then applying deductions. There was no evidence in relation to the "other variations" or as to why or how they should be allowed and indeed they were not specifically allowed or even referred to.

(b) It did (by default) allow the amount claimed for the other variations in circumstances where it made no finding (and indeed there was no evidence in support of the contention) that the other variations should be allowed.

(c) It allowed on one variation (the split level) representing the entire amount claimed by the builder for the entire works.

(d) In the absence of any evidence, it made a finding that the deductions allowed by the builder were fair and reasonable.

(e) To the extent that it found all the works claimed related to the split level variation that was allowed (which is not clear) then there was no evidence that all the works claimed related to the split level variation. In fact, such a finding would be inconsistent with the submissions of the builder, the points of claim filed by the builder and the evidence of the builder.

(f) There was no evidence as to what invoices or hours claimed related to which variation.

8 The plaintiffs further submitted:

"The Tribunal simply accepted a jumble of invoices and diary notes (which appear to relate to the entire works) and then allowed the builder the entirety of his claim and did so in the absence of any evidence from the builder as to what costs related to that one variation claim that was allowed": [33] of the written submissions.

9 In his oral submissions, counsel for the plaintiffs expanded on these written submissions to criticise the Tribunal for "conflating" the calculation of the quantum meruit by reference to contract calculations that are derived from the price methodology provided for in the contract, rather than by reference to reasonable cost, that is, market price. But the builder's entitlement to the other variations, or their reasonableness, were never established.

10 Counsel further submitted, therefore, that the methodology for calculating the value of the quantum meruit was flawed, because it had reference to the other variations, not to the reasonable cost of the extra work necessitated by the variation found by the Tribunal to which the quantum meruit related.

11 It is difficult to distil from the plaintiff's submissions any decision by the Tribunal on a question with respect to a matter of law in respect of the calculation of the value of the quantum meruit. Properly analysed, the only matter of law that arises from the way in which the Tribunal made its calculation was whether it was entitled to utilise the material before it in the builder's account summaries attached to his statement, or whether that material had no relevance at all to the ascertainment of a fair and reasonable value of the additional work necessitated by reason of the variation. If not, there was no evidence before it. If so, there was an abundance of evidence.

12 In my view, the Tribunal was entitled to take into account the builder's evidence, including the account summaries attached to his statement, in determining the value of the quantum meruit.

13 It is to be observed firstly that the plaintiffs called no evidence to refute the builder's evidence. That was a deliberate forensic decision, but the effect was to leave the Tribunal with the builder's final account summary as the only evidence before it as to the value of the additional work performed pursuant to the variation.

14 The question of the quantification of a quantum meruit claim was most recently considered by the Victorian Court of Appeal in Sopov v Kane Constructions Pty Ltd (No 2) [2009] VSCA 141. There, the court held that the proper approach to assessment of a quantum meruit claim is to ascertain the fair and reasonable value of the work performed:

"Axiomatically, the measure of the restitutionary remedy is the value of the benefit conferred on the party which received it." [24]

15 The court rejected the notion that the contract between the parties has some continuing influence when the value of the work is being assessed on a quantum meruit, because the quantum meruit remedy rests on the fiction of the contract having ceased to exist. Thus the alternative remedy "ignores the bargain which the parties struck." [21]

16 However, the court went on to say:

"It is true that the contract price is relevant on a quantum meruit, but not because of any 'continuing influence' of the contract. The price is merely a piece of evidence, showing what value the parties attributed - at a particular time - to the work which the builder was agreeing to perform." [21]

17 Thus, the contract price, which is struck prospectively, does not operate as a ceiling on the value of the work done, but it may nevertheless act as a guide to the reasonableness of the remuneration claimed. [24] The court went on to say that the contract price is not the 'best evidence' of the value of the benefit conferred. [26] Nevertheless, proof of the costs incurred in performing the work can be used to establish the value of the work done. [30] Furthermore, the contractor entitled to the quantum meruit was entitled to a margin for profit and overhead. [35]

18 The evaluation of the quantum meruit by the Tribunal in the present matter was carried out entirely in accordance with these principles. The Tribunal was entitled to utilise the material before it in the builder's account summaries attached to his statement, particularly when there was no other evidence before it to assist in the ascertainment of the fair and reasonable value of the work performed, and therefore the amount that should be awarded in respect of the quantum meruit claim.

19 It follows that there was evidence before the Tribunal upon which it could find, as it did, that the builder was entitled to a quantum meruit in the amount awarded, namely the amount of $58,313.86.

20 There was, therefore, no erroneous decision on a question with respect to a matter of law made by the Tribunal.

21 For these reasons the appeal fails.

22 Costs should follow this event: UCPR r 42.1

Disposition

23 I dismiss the appeal.

24 I order the plaintiffs to pay the defendants costs of the appeal.

Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.

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Decision last updated: 28 June 2011