Roude v Helwani

The Court of Appeal (White, Brereton and McCallum JJA), dismissed the appeal, holding:

1. [1]

   WHITE JA: This is an appeal from orders of the Common Law Division (Harrison AsJ) dismissing the appellants’ amended summons with costs (Roude v Helwani [2020] NSWSC 123).

2. [2]

   By their amended summons the appellants appealed and, to the extent necessary, sought leave to appeal, from a judgment of the Local Court (Atkinson LCM) given on 9 November 2018 in favour of the respondent (plaintiff in those proceedings). Judgment was given for $86,071.50 plus pre-judgment interest in the sum of $26,588.43. The appeal from the judgment of Harrison AsJ lies of right.

3. [3]

   The judgment in favour of the respondent in the Local Court was given on a quantum meruit claim by the respondent for reasonable remuneration for electrical and plumbing work carried out by the respondent for the appellants, who, as owner/builders, were constructing a house in Greenacre. The grounds of appeal to the Supreme Court were:

4. [4]

   The appeal from the decision of the Local Court to the Supreme Court lay as of right on a question of law (Local Court Act 2007 (NSW) s 39). An appeal lay on a ground that involved a question of mixed law and fact, but only by leave of the Supreme Court (s 40). No appeal lay on a ground that involved a question of fact only.

5. [5]

   The primary judge did not grant leave to the appellants to appeal on a mixed question of law and fact, and it may be doubted that any such mixed question arose. It is not a ground of appeal to this court that the primary judge did not give leave under s 40 of the Local Court Act to appeal on a mixed question of law and fact. Accordingly, the appeal to the primary judge was confined to questions of law.

6. [6]

   The questions of law identified were that there was no evidence of the fair and reasonable cost of performing the work, that the magistrate failed to give adequate reasons, and that the magistrate failed to apply the correct standard of proof. The alternative ground that the magistrate failed to require “sufficient evidence to discharge the standard of proof” was ambiguous. If it meant that on the evidence adduced only one result was open, then it raised a question of law, but did not materially differ from the first question. If it meant that the Magistrate’s decision was unreasonable, having regard to the quality of the evidence adduced, then it would not raise a question of law as distinct from a question of fact (Whitehaven Coal Mining Ltd v Pain [2018] NSWCA 229 at [28]-[29]). In McPhee v S Bennett Ltd (1934) 52 WN (NSW) 8 Jordan CJ said (at 9) that:

7. [7]

   The appellants relied on authorities, referred to below, that considered the adequacy or sufficiency of evidence to prove the fair and reasonable value of services and materials and whether it was necessary, in order to establish such a reasonable value, to do so by reference to an external standard, such as the market price of labour and materials. In considering those authorities it is important to bear in mind the distinction between whether there is some evidence to support a factual finding (which is a question of law) and whether there is sufficient or adequate evidence for a factual finding where the appeal lies by way of rehearing. The appellants’ submissions did not always have regard to the distinction.

8. [8]

   The respondent carried out extensive electrical and plumbing work for the appellants. The respondent described in detail the work he did. During the course of the work, the appellants paid the respondent $37,500. There was no written contract, no quotation, and no defined scope of work. No invoices were issued prior to 21 January 2015. The respondent explained this by reference to what he said was his friendship with the appellants and what he perceived to be Mr Roude’s good standing in the Lebanese Islamic community. He deposed that in early January 2015 Mr Roude asked him to prepare invoices for work he had done and he provided the appellants with three tax invoices on or about 21 January 2015. One invoice was for electrical works in the sum of $62,480, one was for plumbing works in the sum of $52,000 and one was for the supply of materials, the provision of formwork and a concrete plinth for a water tank, and certification of stormwater in a total sum of $9,091.50. These prices included GST.

9. [9]

   The sum of the invoices was $123,571.50. The balance outstanding after allowance for the $37,500 paid was $86,071.50.

10. [10]

    In an affidavit made in reply to an affidavit of Mrs Roude, the respondent deposed that:

11. [11]

    These paragraphs were read without objection.

12. [12]

    The text messages referred to in paragraph 41 quoted above included a message dated 12 August 2015 from Mr Roude to the respondent asking for the spelling of the respondent’s full name because Mr Roude was “making cash cheque”. The respondent provided his bank account details and asked for confirmation of the amount deposited. He did not receive a response. On 19 October 2015 Mr Roude said that he would “transfer some this week”. Two thousand dollars was paid on 24 October 2015. The respondent pressed for further payments. In June 2016 Mr Roude sent a text message saying:

13. [13]

    Proceedings were commenced in the Local Court on 29 September 2017 (J [58]).

14. [14]

    The respondent provided a detailed breakdown of the prices charged for the items of work in the invoices. The learned magistrate said:

15. [15]

    By way of example, under the heading “Main power supply”, communications hub and “internal sub-board” the tax invoice for electrical works provided in summary form a description of works carried out to the basement, the ground floor, the first floor, entertainment area. Under the heading “Basement” the invoice referred to “wall lights, ceiling lights, double powerpoints, power supply and control wiring to some pumps, smoke detector, provisions for three x dedicated circuits in rear storeroom, motion sensor and control, weatherproof powerpoints in front garden bed on both sides of driveway”. In the breakdown of the invoice, to take but the first item of “wall lights”, the respondent provided the following information under the heading “Method of Installation”:

16. [16]

    He then provided a statement of the quantity of wall lights installed (14), the price per unit ($150) and total amount charged for the item, including GST ($2,100).

17. [17]

    There was a similar level of specificity in relation to the other items.

18. [18]

    The respondent said, and the magistrate appeared to accept, that he had prepared the schedules containing the breakdown information at the time he prepared the invoices and that they were not prepared for the purposes of the litigation. The schedules containing the breakdown of information were not provided to the appellants when the invoices were provided.

19. [19]

    Both parties had prepared affidavits for the hearing in the Local Court to which they attached quotations from third parties as to what third parties would have charged for the work (or some of the work) done by the respondent. The magistrate recorded that the annexed quotations were not admitted when objections were raised.

20. [20]

    This left the evidence on the subject of the quantum of fair and reasonable remuneration for the work done as limited to:

21. [21]

    The respondent was himself an expert, being a licensed builder, electrician and plumber, who had been working in the industry for 30 years.

22. [22]

    In the Local Court the respondent also sought to rely upon admissions in statutory declarations made by the appellants that were an annexure to a deed of settlement of proceedings between the appellants and a third party. The statutory declarations acknowledged a liability to the respondent in the amount claimed in the invoices. The magistrate rejected that evidence and no issue was raised in this appeal as to the correctness of that ruling.

23. [23]

    The appellants submitted before the magistrate that the respondent had not provided any “objective standard” against which the amounts charged in the invoices had been gauged, and did not say how he came to derive the figures in the invoices.

24. [24]

    It was put to the respondent in cross-examination that:

25. [25]

    The respondent said, “No it’s not”. The question was later repeated in substance (Q. “The invoice has never ever reflected the true cost to you of performing the work. That’s correct isn’t it?” A. “I did.”) It is a little hard to know what to make of that evidence. The respondent was not otherwise challenged on his denial that his charges were unreasonable or excessive.

26. [26]

    Paragraph 64 of the learned magistrate’s reasons for judgment have been quoted above at [14]. Her Honour continued:

27. [27]

    The primary judge dismissed the appeal from Magistrate Atkinson’s decision. On the critical question in this appeal as to whether there was evidence to support the magistrate’s finding that the amount claimed was a fair and reasonable value for the electrical and plumbing work done for the appellants’ benefit, the primary judge said:

28. [28]

    The appellants submitted that a claim for quantum meruit is for the fair and reasonable price to be paid to the builder for the work he has performed, the benefit of which has been accepted (citing Sopov v Kane Constructions Pty Ltd (No. 2) (2009) 24 VR 510; [2009] VSCA 141 at [29]-[30]). They also submitted that:

29. [29]

    The appellants submitted that the respondent had adduced no evidence of a “market rate” and submitted that there was no evidence that the price charged by the respondent in his invoices was fair and reasonable. All that the invoices and the detailed schedule giving a detailed breakdown of the work done and, in some cases, setting out the methodology by which the amount charged was calculated, established, was the price that the respondent proposed to charge. That evidence, so it was submitted, was not capable of establishing a fair and reasonable market rate for the work done.

30. [30]

    The appellants submitted that the fact that the respondent was not challenged in cross-examination as to the reasonableness of his charges wrongly reversed the onus of proof. The onus was on the respondent to establish the reasonableness of his charges. The latter proposition can be accepted. It does not follow that either the primary judge or the magistrate reversed the onus of proof. The respondent had given evidence by affidavit (which was not objected to) that his charges were reasonable. There was nothing unreasonable about his charges on the face of the invoices and the detailed description of the work done. By reason of his experience in the industry the respondent was qualified to give an expert opinion as to the reasonableness of the charges (Evidence Act 1995 (NSW) s 79). The fact he was not called as an expert witness does not affect the admissibility of his evidence to the extent his opinions were based on his specialised knowledge (Yeats v Nominal Defendant [2004] NSWCA 259 at [12] and [35]; Sochorova v Durairaj [2020] QCA 158 at [23] and [37]-[40]). The opinion expressed, if objected to, would have been inadmissible. But the opinion was not objected to. If it had been, the respondent may have been allowed to give evidence that set out the basis for the opinion. By not objecting to the evidence, but being able to assert that it should be given little weight, counsel for the appellant made a tactical decision that could not be criticised. But it left some evidence that the respondent’s charges were reasonable.

31. [31]

    There was no error in the reasoning of either the magistrate or the primary judge in observing that the respondent was not cross-examined on that opinion.

32. [32]

    Because the opinion provided some evidence of the reasonableness of the respondent’s charges, there was no error of law in the magistrate’s finding that the charges were reasonable.

33. [33]

    There was further evidence for that finding in the failure of the appellants to dispute the reasonableness of the invoices. A failure to respond to a demand for payment may amount to an admission if there are circumstances which render it more reasonably probable that a person who denied liability for the claim would answer the claim than that he would not (L Shaddock & Associates Pty Ltd v Parramatta City Council (No. 1) (1981) 150 CLR 225 per Gibbs CJ at 230; [1981] HCA 59; Thomas v Hollier (1984) 156 CLR 152 per Gibbs CJ at 157; [1984] HCA 35; J D Heydon, Cross on Evidence at 33,435).

34. [34]

    The appellants submitted that before it could be found that the charges in the respondent’s invoices were fair and reasonable, the respondent had to prove what was a fair and reasonable market rate for the work done. Properly understood, none of the authorities relied upon establishes that proposition.

35. [35]

    The appellants first rely on the reasons of Deane J in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5 and the reasons of Nettle, Gordon and Edelman JJ in Mann v Patterson Constructions Pty Ltd [2019] HCA 32; 93 ALJR 1164 at [203]-[204].

36. [36]

    In Pavey & Matthews Pty Ltd v Paul Deane J said (at 257):

37. [37]

    Deane J elaborated on this (at 263):

38. [38]

    The appellants rely on these words.

39. [39]

    Deane J immediately went on to say:

40. [40]

    Deane J then provided examples.

41. [41]

    Deane J did not say that assessment of the “fair value of the benefit provided” was to be determined only by reference to the fair market value of work done or materials supplied, thereby implying that in the absence of evidence of market value, a claimant could not prove the fair value of the benefit provided. The appellants’ contention to the contrary ignores the fact that the words in brackets were given only by way of example. It also ignores the fact that reference to the calculation of remuneration is to be determined according to what is reasonable, rather than by reference to a market.

42. [42]

    In Mann v Paterson Constructions Pty Ltd, Nettle, Gordon and Edelman JJ said:

43. [43]

    The reasoning of Dixon J in South Australian Harbours Board v South Australian Gas Co (1934) 51 CLR 485; [1934] HCA 45 (with which Evatt and McTiernan JJ agreed) was that the appellant was entitled to an amount that should be found “as a matter of fact to represent a fair and reasonable rate of remuneration, in other words a quantum meruit.” (at 499) Dixon J said (at 501) that:

44. [44]

    It is clear from Dixon J’s reasons which were adopted by Nettle, Gordon and Edelman JJ in Mann v Paterson Constructions Pty Ltd that assessing a fair and reasonable rate of remuneration is a question of fact and that reference to a charge “commonly made by others for like services” is a usual measure for assessing that fact where such a standard is available.

45. [45]

    Far from supporting the appellant’s submission that the reference to an external standard such as market value is essential to establishing the reasonable value of the services provided, the authorities cited are to the contrary.

46. [46]

    An authority which was not cited, but which was referred to by Ward J (as her Honour then was) in Re MSU Management Pty Ltd; Urusoglu v MSU Management Pty Ltd & Ors [2011] NSWSC 54 at [366] (which was cited) is Flett v Deniliquin Publishing Co Ltd (1964–1965) NSWR 383.

47. [47]

    Flett v Deniliquin Publishing Co Ltd was an appeal to the Full Court from a judgment of the District Court where the appeal was not confined to an appeal on a question of law. There, the appellant had been employed under an oral contract for service as an incident of a contract for the sale of a business where the sale agreement was declared to be void. The appellant sued for a quantum meruit for reasonable remuneration for overtime worked by him, remuneration for which was not payable under the oral contract for service, but to which he claimed to be entitled on the basis that the oral contract of service was inextricably tied to the agreement for the sale of the business which had been declared to be void. Herron CJ was prepared to assume that all agreements, including the service agreement, became void ab initio (at 385.8) and the appellant was entitled to a fair value for the work done (at 385.9). His Honour said:

48. [48]

    Ferguson J agreed with the Chief Justice.

49. [49]

    This was a finding of fact in the particular circumstances of that case. The Full Court did not purport to lay down any general rule that in all cases evidence of such an external standard was necessarily required before a finding of reasonable remuneration could be made.

50. [50]

    The appellants relied upon the decision of Schmidt J in Horley v Sector 7G Architecture Pty Ltd (in liq) [2011] NSWSC 827 where her Honour held in the particular circumstances of that case that no evidence had been led from which it could be concluded that an amount invoiced by the plaintiff in the Local Court was evidence of a reasonable sum for the work performed (at [123]-[127]).

51. [51]

    That was a finding particular to the facts of that case made in the context of a grant of leave to appeal on a mixed question of fact and law.

52. [52]

    In the present case the primary judge did not err in her reasoning in paras [98]-[100] quoted above (or otherwise).

53. [53]

    On appeal, the contention that the magistrate and the primary judge failed to provide adequate reasons was not pressed.

54. [54]

    Each of the grounds of appeal was that there was no evidence of the fair and reasonable market rate for the work performed, or variations on that ground. For the reasons above, that is not so.

55. [55]

    For these reasons I propose that the appeal be dismissed with costs.

56. [56]

    BRERETON JA: I agree with White JA.

57. [57]

    McCALLUM JA: I agree with White JA.