CASE NOTE: MANN V PATERSON CONSTRUCTIONS PTY LTD  HCA 32
ANDREW STEPHENSON, JEY NANDACUMARAN AND SOPHIE LAWES
Corrs Chambers Westgarth, Melbourne, Victoria
The High Court of Australia has provided its long-awaited decision on the question of what remedy or remedies are available to a builder who terminates a contract after accepting an owner’s repudiation.
By a narrow majority of 4:3, the High Court held that where work is performed for which there is no right to payment by the time the contract is repudiated, the builder may elect between damages for breach of contract and a claim for non-contractual quantum meruit for that portion of the work. However, this right is qualified in that, except in rare instances, the claim is limited by the value of the agreed contractual price/s.
The controversy surrounding whether or not quantum meruit should be available for a builder to elect in cases of accepted repudiation is twofold. On the one hand, as a matter of legal principle, is the right well founded in law, or is has it arisen as a fallacy? On the other hand, as a matter of practicality, does the availability of this alternative remedy have a tendency to produce an unjust outcome by enabling a builder to claim in excess of the agreed contract price? These were key features in all three judgments.
This case arises from the domestic building project of two townhouses in Melbourne, Australia. The contract stipulated that portions of the overall contract price were paid on completion of corresponding stages of work, with five stages (and therefore five payments) in total.
The contract was repudiated by the Owners at a point where the Builder had completed all but the final stage of the works, 1 but having performed some of the work in that final stage. The Builder accepted this repudiation and brought a claim for restitutionary quantum meruit for the value of all the work done (in the alternative to a claim for damages, which was significantly less).
1 It was unclear on the facts whether the final payment made in respect of one of the two units was on account of the progress made to date or on some other basis. This question was remitted to the original tribunal – see Mann v Paterson Constructions Pty Ltd  HCA 32, paragraph 178 (per Nettle, Gordon and Edelman JJ).
Pt 1] Case Note: Mann v Paterson Constructions
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