When Quantity Surveyor Evidence Is at Risk: Canterbury Bankstown Council v Payce Communities Pty Ltd

Quantity surveyor evidence is often central to construction disputes, particularly where valuation of variations is contested.

However, courts do not treat QS opinions as inherently persuasive. In Canterbury Bankstown Council v Payce Communities Pty Ltd [2022] NSWCA 74, the New South Wales Court of Appeal accepted substantial QS evidence but only after confronting a number of criticisms that reveal the limits of such evidence and the circumstances in which it may be given little or no weight. 

The decision provides important judicial guidance on five recurring risk areas.

Reasoning must be exposed or the opinion risks carrying little or no weight 

The Court made clear that QS opinions are vulnerable if the reasoning process is not exposed. This issue arose in relation to criticism that a QS opinion expressed in a joint report lacked adequate reasoning. Although the Court ultimately rejected that criticism on the facts, White JA expressly acknowledged the principle that if an expert opinion does not disclose its reasoning, the consequence is serious.

His Honour stated that if it were correct that no reasons were given for the opinion, that would mean the opinion should have little or no weight at paragraph [74]. The evidence was accepted only because, when read as a whole, the Court was able to discern the reasoning process from other parts of the report and the supporting material at paragraphs [73] to [75]. 

“The lesson is clear. A QS report must do more than state conclusions or present tables of figures. The reasoning path must be visible on the face of the report so that the Court can understand how the opinion has been reached.”

— Paul McArd

---

Unclear or implicit assumptions create vulnerability 

The Court highlighted the vulnerability of QS evidence that proceeds on unclear or implicit assumptions, particularly about contractual scope.

A central issue in the case was whether certain works fell within the Base Build or within the agreed FOA Contract Price. The Court accepted that the scope of works was defined by the elemental trade items identified in the competing QS estimates at paragraphs [35] to [37]. However, the acceptance of the QS evidence depended heavily on the fact that the opposing party had not properly tested or challenged the assumptions underlying that analysis.

The Court noted that several attacks on the QS methodology failed because they were not put in cross examination or were raised too late at paragraphs [46] to [58]. 

The judgment implicitly recognises that QS evidence based on assumed scope rather than clearly demonstrated inclusions is fragile. Where assumptions are not clearly articulated and tied back to the contract documents, the evidence is exposed to attack. 

Reliance on material not in evidence places QS opinions at risk 

The Court addressed the risk of QS evidence relying on material that is not in evidence. An objection was raised that a QS had relied on matters outlined in an affidavit that was not read. Although the primary judge admitted the evidence and that ruling was not appealed, the Court accepted that reliance on unproved material would otherwise be problematic.

White JA recorded the objection and its context at paragraph [72], making clear that the evidence survived because of procedural history, not because the concern lacked substance. 

The lesson is that QS opinions must be grounded in admissible evidence. Background assumptions, informal project knowledge or third party opinions that are not before the Court place the expert evidence at risk of being discounted. 

Uncritical adoption of contractor pricing is treated with scepticism

The Court was openly sceptical of QS evidence that adopts contractor pricing uncritically. In dealing with an argument that builder pricing should be preferred to QS estimates, the Court rejected that approach and observed that it was not surprising that a builder, in discussions with a project manager, would price an earlier design highly.

That observation appears at paragraph [55]. The Court preferred independent QS estimates over contractor pricing that was unexplained, untested and potentially strategic at paragraphs [54] to [56]. 

The judicial message is clear. Contractor pricing is not a proxy for reasonable value. QSs are expected to independently interrogate contractor rates and explain why they do or do not reflect market value and contractual scope. 

QS valuation must follow the contract valuation machinery 

The Court repeatedly emphasised that QS valuation evidence is constrained by the contract’s valuation machinery. The Court anchored its analysis to the contractual hierarchy for pricing variations, including clause 36.4 of the Fit Out Agreement, which required agreed rates to be applied first and reasonable rates only where permitted. This contractual framework is set out at paragraph [26] and applied in the valuation reasoning at paragraph [56]. The Court accepted QS approaches that respected that framework and would have been unlikely to accept a methodology that departed from it. 

The lesson is that QS valuation is not free standing. It must follow the contract. Industry practice or professional preference cannot override the agreed valuation mechanism. 

Taken together, Canterbury Bankstown Council v Payce Communities reinforces a consistent judicial theme. Quantity surveyor evidence will only be persuasive where it is transparent in its reasoning, explicit in its assumptions, grounded in admissible evidence, independent of contractor advocacy and firmly anchored to the contract. QSs do not enjoy any special deference. Their evidence stands or falls on whether it assists the Court in performing the contractual task before it. 

---

At Accura Consulting, our team of experts work with clients to create a tailored solution to problems. If you have an issue and want expert support, get in touch.

---

Back to News and Insights

Related News and
Insights from Accura