Quantum meruit: Who can get it, who can award it, when and why?

1. Murray Thornhill and Daniel Morris
HHG Legal Group

2. Two kinds of quantum meruit
• Quantum meruit: literally, as much as it is worth
• Two kinds:
(a) Contractual;
(b) Restitutionary
• Contractual quantum meruit is available when:
(a) an express and enforceable, oral or written contract provides
for payment in consideration of services rendered but does not
specify the amount or rate: Update Constructions and Rozelle
Childcare Centre (1990) NSWLR 251; Trimis v Mina [1999]
NSWCA 140; or
(b) No express contract provides for payment but an implied one
does: cf. Liebe v Malloy (1906) 4 CLR 347

3. Restitutionary quantum meruit demystified
• The other kind of quantum meruit is restitutionary.
• Used to be based in quasi-contract: cf. Sumpter v Hedges
[1898] 1 QB 673.
• Now based on concepts of unjust enrichment since Pavey
and Matthews v Paul (1987) 162 CLR 221.
• Different from contractual quantum meruit – in a juridical
sense, and, as we shall see, a practical sense too.

4. Why is there a difference?
• Theory first though…
• Contractual quantum meruit is an implied contractual
entitlement to be paid for services rendered.
• It is implied where as a matter of fact (not law), a
promise to pay quantum meruit, albeit not expressed
by the recipient, can be imputed to the recipient,
based on its conduct or dealings with the provider.
• This is because of the origin of modern concepts of
quasi-contract and implied promise in the pre-
Judicature Act form of action of indebitatus
assumpsit.

5. What exactly is the difference?
• Restitutionary quantum meruit is not a contractual entitlement
at all.
• In fact, it is only available in cases where:
 One has provided services to another;
 Those services were not intended as a gratuity;
 The recipient of those services “freely accepted” them (as Baron
Pollock famously said to illustrate this concept in Taylor v Laird
(1856) 25 LJ Ex 329 at 332:
“One cleans another’s shoes. What can the other do but put them
on?”); and
 The service provider has no express or implied contractual right
to be paid anything for their work.

6. Why can’t it all just be about implied promise
• There are two circumstances where an implied promise to
pay (contractual) quantum meruit cannot make forensic
sense:
◦ First: where, as in Pavey, the recipient has made an express,
but illegal and therefore unenforceable, promise to pay a sum
of money in consideration of a (substantially) completed
structure.
◦ It would be a forensic nonsense to impute to this recipient, a
separate promise to pay a differently calculated sum on
account of precisely the same work scope.

7. Why can’t it all just be about implied promise
(continued…)
• Further, it would be unprincipled and illogical, in the same
breath, to refuse enforcement of an express promise to pay
for fear of stultifying legislation and then to enforce the
implied promise to pay without the same fear.
• The other circumstance where quasi-contract/implied
promise does not fit is where the recipient, by its conduct,
has evinced an intention no longer to perform the contract
substantially in accordance with its express terms.
• In other words, the recipient no longer wants to pay the
agreed price for the provider’s works.

8. Why can’t it all just be about implied promise
(continued…)
• It cannot make forensic sense to say this principal, which is
manifestly disinterested in performing its express promise to
pay, has also manifested, by the same acts of repudiation, an
implied promise to pay.
• In such cases, another juridical basis for payment is required.
• That juridical basis is unjust enrichment.
• The kind of quantum meruit awarded on this basis is in the
nature of restitution.

9. Controversy of the restitutionary variety
 This has plenty of support in authority:
(a) Pavey;
(b) Renard Constructions (ME) Pty Ltd v Minister for Public Works
(1992) 26 NSWLR 234;
(c) Sopov v Kane Constructions Pty Ltd (No. 2) [2009] VSCA 141,
(2009) 24 VR 510, 257 ALR 182, [2009] ALMD 4788;
(d) Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2
Qd. R. 350
(e) Gino D’Alessandro Constructions Pty Ltd v Powis [1987] 2 Qd. R.
40, per McPherson J. at 59-60
 However, there was a “growing chorus of criticism” against awarding
quantum meruit at all in such cases where the contractual payment
regime existed, but for some reason, failed.

10. Rescission fallacy? What rescission fallacy?
 This was based on an alleged “heresy” which came to be known as
the rescission fallacy.
 Our Daniel Morris authoritatively disproved the existence of the
rescission fallacy in “Restitution sans rescission: exposing the myth
of a fallacy” [2015] 89 ALJ 117.
 In the process, Daniel reaffirmed the juridical basis of restitutionary
quantum meruit was entirely independent of any express or implied
contract.
 And is therefore an entirely different kind of quantum meruit than
contractual quantum meruit.
 Ok, now for the practical stuff…

11. How it all applies to ADR service providers
 ADR service providers who might be called upon to make
quantum meruit awards include:
(a) Arbitrators;
(b) Expert referees;
(c) Adjudicators.
 In WA , where a payment dispute requires arbitral determination
under a contractual dispute resolution clause, arbitrators are
empowered under the Commercial Arbitration Act 2012, to
determine all relevant questions of fact and law.
 Such terms of reference are broad enough to encompass
entitlements to both contractual and restitutionary forms of
quantum meruit.

12. Application to ADR service providers
(continued…)
 Arguably, then, to an arbitrator, the distinction between the
two may be considered largely academic.
 The same applies to expert referees, given an appropriately
broad scope of reference.
 Where it really matters is in adjudications.
 Adjudicators are constrained by the contract: O'Donnell
Griffin Pty Ltd v John Holland Pty Ltd [2008] WASC 58.
◦ See also Daniel Morris, “Constrained by the Contract: Brief, Vol. 41,
Issue 6, July 2014

13. In defence of RQM (continued…)
• This was the basis of the Supreme Court’s recent
criticisms of adjudicators’ awards in:
1. Laing O’Rourke Australia Construction Pty Ltd v
Samsung C & T Pty Ltd [2015] WASC 237 at [31];
2. Delmere Holdings Pty Ltd v Green [2015] WASC 148 at
[39].

14. Thank you