GRAY (CONSTRUCTIONS) PTY LTD v HOGAN [2000] NSWCA 26

New South Wales Court of Appeal

CITATION : GRAY (CONSTRUCTIONS) PTY LTD v HOGAN [2000] NSWCA 26 FILE NUMBER(S) : CA 40365/98 HEARING DATE(S) : 22 February 2000 JUDGMENT DATE : 3 March 2000

PARTIES : W C GRAY (CONSTRUCTIONS) PTY LTD v NOELENE HOGAN JUDGMENT OF : Mason P at 1; Sheller JA at 37; Heydon JA at 38

LOWER COURT JURISDICTION : District Court LOWER COURT DC 5906/94 FILE NUMBER(S) : LOWER COURT Mahoney DCJ JUDICIAL OFFICER :

COUNSEL : Appellant: R W Seton Respondent: M S Jacobs QC SOLICITORS : Appellant: Symons & Co Respondent: Gillis Delaney Brown CATCHWORDS : Building contract - unwritten - s6(1) Building Services Compensation Act 1969 - referee's report - cost plus contract - quantum meruit - fair and just restitution - reasonable profit margin - ND DECISION : Appeal allowed.

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40365/98 DC 5906/94

MASON P SHELLER JA HEYDON JA

Friday 3 March 2000

W C GRAY (CONSTRUCTIONS) PTY LTD v NOELENE HOGAN

JUDGMENT 1 MASON P: The appellant did building work for the respondent at her Belrose home. A dispute ensued. The appellant sued in the District Court for the balance of moneys claimed due and the respondent cross-claimed for damages for delay and defective work. The entire matter was referred out to a referee, Mr Chapman, for inquiry and report (see District Court Rules Pt 28B r 2 (1)). 2 The appellant's principal, Mr Gray, was known personally to the respondent. He had been asked to quote a price for doing work depicted in architectural drawings. He told the respondent that the drawings lacked the necessary specificity for him to quote a fixed price. There were further discussions which resulted in a "budget estimate". Work commenced on about 5 July 1993 without a written agreement. Subsequent events suggest that the parties may have been somewhat at cross purposes as to the agreed basis of costing. During the work there were changes in the drawings and other variations to the work. 3 In his Report, the referee rejected the respondent's submission that there was a lump sum or fixed price contract. He concluded that the reference in discussions to "budget estimate" meant that the price discussed was an approximate statement of what would be charged and, in that sense, the intended contract was a "cost plus" contract. The referee rejected the respondent's claim that the sum recoverable was capped at $250,000. Since, however the contract was not in writing it was unenforceable in view of s6(1) of the Building Services Corporation Act 1969 as it then stood. (The Act is now known as the Home Building Act 1989.) 4 The referee nevertheless decided that the appellant could recover at common law on the basis of quantum meruit (see Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221). This conclusion is accepted by both parties. 5 The referee proposed that there should be an award in the appellant's favour in the sum of $43,116.25 made up as follows: Quantum meruit $337,543.00 Less payments made $280,000.00 $ 57,543.00 Less damages for defective work and materials $ 14,426.75 $ 43,116.25