A Gambler’s Play: Quantum Meruit

It is not uncommon, in claims seeking monies owed under services contracts, for plaintiffs to plead an alternative cause of action in quantum meruit (Latin for ‘what one has earned’).  In doing so, the litigant is essentially saying: ‘even if there is some defect in the contract on which I rely, I have nevertheless performed services at your request, and it is not fair that you benefit from my services without paying me for them.’ In principle, this is not an altogether unreasonable fall-back position. But what if it is your only position? What if youhave not taken steps to formalise your expectations for payment through a written contract? How are you going to prove what the value of your services amounts to? The recent ACT Supreme Court case of Beagle v ACT & Southern NSW Rugby Union Limited [2016] ACTSC 71, in which the ACT Brumbies successfully defended a quantum meruit claim, considered these issues.

The Facts

Mr Beagle – a retired gaming industry consultant – approached the ACT Brumbies in December 2014, at a time when the organisation was publically known to be without a major sponsor heading into the 2015 Super Rugby competition. In a meeting with the Brumbies’ then CEO on 4 December 2014, Mr Beagle asserted that he knew of a possible sponsor but, for confidentiality reasons, he could not disclose who. Whilst the Brumbies were interested in being introduced to the unidentified sponsor – at least, generally, given the uncertainty as who they were talking about, or to – no terms were agreed as to what, precisely, Mr Beagle would do, or how he would be paid (if at all). Rather, only vague comments were said, along the lines that Mr Beagle would expect a “finder’s fee” or that the Brumbies would “look after him” if Mr Beagle “pulled it off”.

It was not, however, discussed or agreed what was meant by a “finder’s fee”, or how Mr Beagle expected to be “looked after”.  More importantly, the meeting ended without any clear certainty as to what Mr Beagle was tasked to “pull off”.

On 15 December 2014, Mr Beagle met with a Hong Kong group (‘Aquis’), who had arrived in Canberra as part of their purchase of the Canberra Casino.  Prior to the meeting, Mr Beagle provided Aquis’ executive director with a Brumbies sponsorship proposal document. However, Aquis agreed to meet with Mr Beagle before receiving the sponsorship document, with a view to gaining insight into the workings of ACT Government. When it became apparent to Aquis that Mr Beagle was of no assistance to that end, the meeting was concluded. Aquis’s executive director gave evidence that she could not recall the extent – if any – that the Brumbies may have been discussed at that meeting.

In early 2015, with Aquis having completed its purchase of the Canberra Casino, it sought advice from its public relations advisors as to strategies to engage with the ACT community.  The advice was to sponsor the Brumbies. When a sponsorship deal was subsequently completed, Mr Beagle surfaced to claim his “finder’s fee” for his part in the transaction. The Brumbies, unaware of what approaches Mr Beagle made to Aquis (keeping in mind that Mr Beagle had declined to identify his contact for “confidentiality reasons”), and having identified and approached Aquis independently through their publicly reported purchase of the Canberra Casino, refused to pay any such fee.

In the absence of a contract setting out (a) what he was tasked with doing, or (b) how he would be remunerated, Mr Beagle commenced proceedings against the Brumbies exclusively through a claim in quantum meruit.  In doing so, Mr Beagle likened his services to that of a sports agent, and sought a reasonable compensation, comparable to a commission, in the sum of $587,000.

Applying the Quantum Meruit principles

Even in the absence of a contract, the law may impose an obligation to make restitution, or pay reasonable compensation, on a quantum meruit basis where a plaintiff can prove that:

  1. a request for services was made;
  2. requested services were performed;
  3. the defendant was aware that the plaintiff expected to be paid for the services;
  4. the defendant received a benefit as a consequence of the services; and
  5. it would be unjust for the defendant to retain the benefits without paying some reasonable remuneration.

In the Beagle case, it was accepted by the Brumbies that a ‘request’ was made for Mr Beagle to deliver their sponsorship proposal to an unidentified potential sponsor. Whilst not known to the Brumbies at the time, through the legal proceedings, it was evident that Mr Beagle did so – such that the elements (1) and (2) above were satisfied.

However, where Mr Beagle’s claim came unstuck was his failure to prove the Brumbies were aware of his expectation for payment.  To the extent that the Brumbies had acknowledged an entitlement, it was conditional upon Mr Beagle “pulling it off”, which imported a requirement that he have some causal influence over Aquis’ eventual decision to enter the sponsorship was required – Mr Beagle was unable to make this out on the evidence.

The court also did not accept any ‘benefit’ was conferred upon the Brumbies which would render their refusal to compensate Mr Beagle for the services carried out by him (largely outside of their knowledge or control) as being unjust. Accordingly, neither element (4) nor (5) above was satisfied.

Lessons Learnt

The simplest way to minimise disputes is to formalise your agreements in writing.  Where practicable and possible, legal advice should be obtained. Had Mr Beagle made it clear that he expected to be paid such a significant “finder’s fee”, notwithstanding the steps taken by him would be minimal, the Brumbies no doubt would have instructed him not to carry out any services and no dispute would have arisen.

Equally, if you do have a contract on foot, do not assume that pleading an alternative quantum meruit claim will solve any technical deficiencies in your contractual claim. As the High Court held in a leading quantum meruit authority, Pavey & Matthews Pty Ltd v Paul, ‘An inability to sue on a contract provides no ground for imposing a quasi-contractual obligation inconsistent with the contractual obligation to pay remuneration.’

For example, if your contract fails to clearly set out the remuneration payable, you may encounter the same difficulties as Mr Beagle in establishing your opponent’s knowledge of your expectation to payment. Alternatively, the compensation payable under quantum meruit may see your remuneration assessed in line with industry standards or conditions which you had not intended your contract to be limited by.

After all, and returning finally to the Beagle decision, in many respects it is easy to argue that there was an enforceable contract in place. That contract, however, would have required Mr Beagle to “pull it off” (that is, arrange the Aquis sponsorship), such that his entitlements under contract would have been ‘nil’. In sum, then, the Beagle case demonstrates that relying on quantum meruit, whether exclusively or as a fall-back position, is a risky bet. For Mr Beagle, his gamble failed to pay off in the ACT Supreme Court.

 

Written by Ian Meagher, Director, Employment & Workplace Relations and Litigation & Dispute Resolution.

Disclaimer: Bradley Allen Love acted for the Brumbies in their successful defence of Mr Beagle’s claim. Please note this case is currently subject to appeal. Further updates will be provided as they become available.