Mann & Anor v Paterson Constructions Pty Ltd - [2019] HCATrans 92

[2019] HCATrans 092

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M197 of 2018

B e t w e e n -
PETER MANN
First Appellant
ANGELA MANN
Second Appellant
and
PATERSON CONSTRUCTIONS PTY LTD
Respondent

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 14 MAY 2019, AT 10.00 AM

MR T.J. MARGETTS, QC: If the Court pleases, I appear with MR G.F. HELLYER and MR A.C. ROE on behalf of the appellants. (instructed by Telford Story & Associates)

MR J.P. MOORE, QC: If your Honours please, I appear with MR A.J. LAIRD and MR J.A.G. McCOMISH for the respondent. (instructed by Kalus Kenny Intelex)

KIEFEL CJ: Yes, Mr Margetts.

MR MARGETTS: Thank you, your Honour. If I can go directly to our outline of oral argument and take the Court to the first issue which is described under the heading the “Availability of Quantum Meruit”. The question raised by this ground of appeal is as follows. When a contract is repudiated and such repudiation is accepted as terminating the contract, should that party be entitled to be paid upon a quantum meruit as an alternative to contractual damages? In other words, does a wronged party have a right to concurrent remedies that are subject to an election? That is, damages for breach of contract or, alternatively, a claim for restitution. We say the starting point for the assessment of that question goes back to the observations of the Court of Appeal itself.

Can I just take the Court if I could to the core appeal book and the judgment of the Court of Appeal starts in the core appeal book at page 154. I would ask the Court to turn to page 184 where the Court of Appeal discusses the availability of the alternative remedies.

KIEFEL CJ: Sorry, what paragraph was that?

MR MARGETTS: 184, paragraph 92.

KIEFEL CJ: Thank you.

MR MARGETTS: There the Court of Appeal stated ‑ this is in the Mann appeal:

In Sopov, this Court stated the following about the availability of the remedy of quantum meruit to a builder who accepts an owner’s repudiation of a building contract:
Since 1994, there has been a growing chorus of criticism – judicial as well as academic – of the availability of quantum meruit as an alternative to contract damages where repudiation is accepted. The criticism rests on the following propositions:
1.When a contract is terminated at common law by the acceptance of a repudiation, both parties are discharged from the further performance of the contract, but rights which have already been unconditionally acquired are not divested or discharged unless the contract provides to the contrary.
2.If there is a valid and enforceable agreement governing the claimant’s right to payment, there is ‘neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Mann & Anor v Paterson Constructions Pty Ltd

Details

AGLC: Mann & Anor v Paterson Constructions Pty Ltd [2019] HCATrans 92
Case: [2019] HCATrans 92
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal from the Victorian Court of Appeal concerning a dispute between the owners of a residential property, Mr and Mrs Mann, and the builder, Paterson Constructions Pty Ltd. The dispute arose from a contract for the construction of a new home, where the owners alleged that the builder had breached the contract by failing to complete the work within the agreed timeframe and by performing defective work. The builder counterclaimed for the outstanding amount due under the contract.

The central legal issue before the High Court was whether the owners were entitled to terminate the building contract due to the builder's alleged breaches, and consequently, whether they were liable for the full contract price or only for the value of the work actually performed. Specifically, the Court had to determine the proper application of the rule in * সমতা * (1920) 28 CLR 498, which addresses the rights of a party to terminate a contract and claim damages for defective performance, as opposed to being liable for the full contract price.

The High Court, in a joint judgment, clarified the principles governing termination and claims for defective work in building contracts. The Court held that where a builder breaches a contract by performing defective work, the owner is entitled to terminate the contract and claim damages for the cost of rectifying those defects. However, the Court affirmed that if the owner accepts the defective work and does not terminate the contract, they remain liable to pay the contract price, subject to a set-off for the cost of rectifying the defects. The Court distinguished between a breach that goes to the root of the contract, justifying termination, and a breach that allows for damages but does not necessarily entitle the owner to refuse payment of the contract price.

The High Court allowed the appeal in part, finding that the owners had validly terminated the contract. However, the Court also held that the owners were liable to pay the builder for the work performed up to the point of termination, less the cost of rectifying the defects. The matter was remitted to the trial court for an assessment of the quantum of damages and the amount due to the builder.

Orders