GRAY (CONSTRUCTIONS) PTY LTD V HOGAN  NSWCA 26
Court of Appeal of NSW – 3 March 2000
Gray was retained by Hogan to complete some building work at her home.
The architectural drawings provided by Hogan were incomplete and therefore Gray gave Hogan a budget estimate. However the contract between the parties was not in writing and therefore was unenforceable under the then Building Services Corporation Act 1969.
Gray sued Hogan for moneys due and payable in the District Court.
The District Court ordered that the dispute be referred to a referee. The referee found that the contract was unenforceable but that Gray was entitled to recover on the basis of quantum meruit. After receiving an expert report from a quantity surveyor the referee ordered that Hogan pay Gray $43,116.25 plus interest and costs.
The proceeding returned to the District Court and the judge was prepared to accept the referee’s findings of quantum meruit.
However the judge decided that the quantum meruit amount was overstated as it included a profit margin and did not accurately reflect the value of work performed.
Since the quantum meruit amount was less than the amount already paid by Hogan the Court ordered judgment in favour of Hogan with interest and costs. Gray appealed.
Should the quantum meruit award include a profit margin on top of the reasonable costs incurred by the builder?