Pavey & Matthews Pty Ltd v Paul

Case [1987] HCA 5


HIGH COURT OF AUSTRALIA

Mason, Wilson, Brennan, Deane and Dawson JJ.

PAVEY &MATTHEWS PTY. LTD. v. PAUL

(1987) 162 CLR 221

4 March 1987

Contract

Contract—Quantum meruit—Restitution—Unjust enrichment—Building contract not enforceable unless in writing—Claim for reasonable remuneration for work done under oral agreement—Basis of entitlement—Builders Licensing Act 1971 (N.S.W.), s. 45.

Decisions


MASON AND WILSON JJ.: The important issue in this appeal is whether a builder may bring an action in indebitatus assumpsit for the value of work done and materials supplied under an oral building contract, notwithstanding the provisions of s.45 of the Builders Licensing Act 1971 (N.S.W.) ("the Act"). That section provides:

"A contract (in this section referred to as a 'building contract') under which the holder of a licence undertakes to carry out, by himself or by others, any building work or to vary any building work or the manner of carrying out any building work, specified in a building contract is not enforceable against the other party to the contract unless the contract is in writing signed by each of the parties or his agent in that behalf and sufficiently describes the building work the subject of the contract."
Section 3 of the Act defines, subject to the existence of any contrary intention, the expression "building work" to mean:

"3. (1) ...
(a) the work involved in the carrying out of
the construction of, the making of alterations or additions to, or the repairing, renovation, decoration or painting of, a dwelling, where that work does not consist solely of work of one class or description that is prescribed for the purposes of the definition of 'trade work' in this subsection; or
(b) trade work,

but does not include any work, or work of any class or description, that is prescribed for the purposes of this definition...."


2. The appellant, which holds a builders' licence under the Act, sued the respondent in the Supreme Court of New South Wales for $26,945.50 being an amount claimed to be due and payable under a quantum meruit. The appellant calculated this amount as the sum payable, after alleging that the amount of $62,945.50 "represents a reasonable sum for the work done and materials provided" and giving credit for a payment of $36,000. The respondent, after putting in issue some allegations of fact in the appellant's statement of claim and denying the reasonableness of the charges, pleaded that the contract was a building contract and as such was unenforceable by reason of s.45.

3. Enderby J. made a consent order that the issue presented by the pleading of s.45 be tried as a separate preliminary issue. This issue was tried by Clarke J. on agreed facts which were as follows:

1. At all material times, the appellant was the holder of a licence under the Act.
2. Between 6 August 1980 and 2 February 1981 the appellant carried out the work, the subject of these proceedings, at the respondent's property at 16 Northcote Avenue, Swansea Heads.
3. The work was…

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AGLC
Pavey & Matthews Pty Ltd v Paul [1987] HCA 5
Case
[1987] HCA 5
Decision Date

CaseChat Overview and Summary

Pavey & Matthews Pty Ltd (the builder) sought to recover payment for work performed under an oral building contract with Paul (the owner). The builder had undertaken renovations to the owner's residential property. The dispute arose because the *Builders Licensing Act 1971* (N.S.W.) stipulated that building contracts must be in writing to be enforceable. The builder's claim was for the reasonable value of the work done, not based on the contract itself, but on the principle of restitution. The matter was heard by the High Court of Australia.

The central legal issue before the High Court was whether a builder could recover the reasonable value of work performed under an oral contract that was rendered unenforceable by statute. Specifically, the court had to determine if the doctrine of unjust enrichment provided a basis for a claim in quantum meruit, notwithstanding the statutory prohibition on enforcing oral building contracts.

The High Court, by majority, held that the builder was entitled to recover the reasonable remuneration for the work performed. The court rejected the argument that the statutory requirement for written contracts extinguished any right to claim for work done. Instead, it affirmed that the law of restitution, based on the principle of unjust enrichment, provided an independent basis for recovery. The court reasoned that it would be unjust to allow the owner to retain the benefit of the work performed without paying for it, simply because the contract did not meet the statutory formality requirements. The statutory provision was interpreted as preventing enforcement of the contract, not as negating the obligation to pay for work already done and accepted.

The High Court ordered that the builder was entitled to recover the reasonable value of the work performed.

Orders

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Background

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Evidence

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Decision

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Ratio Decidendi

Legal Principle Established

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