HIGH COURT OF AUSTRALIA
KIEFEL CJ,
BELL, GAGELER, KEANE, NETTLE, GORDON AND EDELMAN JJ
PETER MANN & ANOR APPELLANTS
AND
PATERSON CONSTRUCTIONS PTY LTD RESPONDENT
Mann v Paterson Constructions Pty Ltd
[2019] HCA 32
9 October 2019
M197/2018
ORDER
1.Appeal allowed with costs.
2.Set aside orders 1 to 3 of the Court of Appeal of the Supreme Court of Victoria made on 12 September 2018 and, in their place, order that:
(a)the application for leave to appeal be granted;
(b)the appeal to the Court of Appeal of the Supreme Court of Victoria be allowed with costs; and
(c)orders 2 to 5 of the order made by Justice Cavanough of the Supreme Court of Victoria on 21 March 2018 be set aside and, in their place, it be ordered that:
(i)the appeal to the Supreme Court of Victoria be allowed with costs;
(ii)the orders of the Victorian Civil and Administrative Tribunal made on 12 December 2016 be set aside; and
(iii)the matter be remitted to the Victorian Civil and Administrative Tribunal for further determination according to law.
On appeal from the Supreme Court of Victoria
Representation
T J Margetts QC with G F Hellyer and A C Roe for the appellants (instructed by Telford Story & Associates)
J P Moore QC with A J Laird and J A G McComish for the respondent (instructed by Kalus Kenny Intelex)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Mann v Paterson Constructions Pty Ltd
Restitution – Unjust enrichment – Work and labour done – Where land owners and builder entered into contract to which Domestic Building Contracts Act 1995 (Vic) applied – Where contract provided for progress payments at completion of stages – Where owners requested, and builder carried out, variations to plans and specifications in contract without giving written notice as required by s 38 of Act – Where owners repudiated contract after builder raised invoice claiming for variations – Where contract terminated by builder's acceptance of owners' repudiation – Whether s 38 of Act applied to limit amount recoverable by builder for variations – Whether builder entitled to recover in restitution as alternative to claim in damages for breach of contract – Whether contract price operated as ceiling on amount recoverable by way of restitution.
Words and phrases – "accrued rights", "alternative restitutionary remedy", "common counts", "completed stage", "contract price ceiling", "contractual incentives", "domestic building contract", "failure of basis", "failure of consideration", "limit on recovery", "measure of restitution", "notice", "primary and secondary obligations", "principle of legality", "protective provisions", "qualifying or vitiating factor", "quantum meruit", "quasi-contractual obligation", "repudiation", "restitution", "subjective devaluation", "unjust enrichment", "variations", "work and labour done".
Domestic Building Contracts Act 1995 (Vic), ss 1, 3, 4, 16, 27, 38, 39, 53, 132.
KIEFEL CJ, BELL AND KEANE JJ. The appellants entered into a contract with the respondent for the construction by the respondent of two townhouses on…
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- AGLC
- Mann v Paterson Constructions Pty Ltd [2019] HCA 32
- Case
- [2019] HCA 32
- Decision Date
CaseChat Overview and Summary
The central legal issues before the High Court were whether the builder was entitled to recover in restitution for the variations, despite the lack of formal notice under section 38 of the *Domestic Building Contracts Act 1995* (Vic), and whether the contract price operated as a ceiling on any restitutionary claim. The court also considered whether the builder's claim for quantum meruit was precluded by the availability of a contractual remedy in damages for breach of contract.
The High Court reasoned that the builder's obligations under the contract were severable, not entire, as the contract provided for staged payments. The landowners' repudiation did not prevent the builder from performing its obligations, and the builder's rights to progress payments for work completed prior to repudiation had accrued. Consequently, there was no total failure of consideration in respect of that accrued work. The court affirmed that restitutionary claims are generally not available where a remedy in contract, such as damages, adequately addresses the loss sustained, as allowing a restitutionary claim in such circumstances would undermine the compensatory principle of contract law. The court also expressed concern that permitting a party to escape a bad bargain through repudiation and claim a higher remuneration via restitution would not promote honesty or efficiency in commerce.
The High Court allowed the appeal, setting aside the orders of the Court of Appeal and remitting the matter to the Victorian Civil and Administrative Tribunal for further determination according to law. This outcome indicates that the builder was not entitled to recover on a quantum meruit basis for the variations in the circumstances presented.
Orders
Orders of the court
1. Appeal allowed with costs.
2. Set aside orders 1 to 3 of the Court of Appeal of the Supreme Court of Victoria made on 12 September 2018 and, in their place, order that:
(a) the application for leave to appeal be granted;
(b) the appeal to the Court of Appeal of the Supreme Court of Victoria be allowed with costs; and
(c) orders 2 to 5 of the order made by Justice Cavanough of the Supreme Court of Victoria on 21 March 2018 be set aside and, in their place, it be ordered that:
(i) the appeal to the Supreme Court of Victoria be allowed with costs;
(ii) the orders of the Victorian Civil and Administrative Tribunal made on 12 December 2016 be set aside; and
(iii) the matter be remitted to the Victorian Civil and Administrative Tribunal for further determination according to law.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Established by: KIEFEL CJ, BELL AND KEANE JJ, GAGELER J
In Roxborough, consistently with the view later taken in Lumbers, Gummow J explained that restitutionary claims, such as an action to recover moneys paid on the basis of a failure of consideration, "do not let matters lie where they would fall if the carriage of risk between the parties were left entirely within the limits of their contract"[50]. His Honour was at pains to explain that where a plaintiff already has "a remedy in damages ... governed by principles of compensation under which the plaintiff may recover no more than the loss sustained", allowing the plaintiff to claim "restitution in respect of any breach ... would cut across the compensatory principle" of the law of contract[51].[50]Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545 [75].[51]Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 557 [105].Total failure of consideration? The respondent argued that the appellants' repudiation prevented it from performing its obligations under the contract and from being remunerated accordingly. On that basis it was argued that there was a total failure of consideration which entitled the respondent to advance a restitutionary claim for quantum meruit. The respondent submitted that whether its obligation under the contract was entire or severable is immaterial, but argued that, if it mattered, the contract in question imposed an entire obligation on the respondent, so that its entitlement to progress payments was conditional upon the performance of the entire obligation. The respondent's argument, in the terms in which it was put, fails because its obligation under the contract was not an entire obligation. The contract between the parties did not impose one entire obligation on the respondent to complete the whole of the contract works in order to become entitled to the payment of an indivisible contract price. The contract provided for the making of staged payments as the work was performed. Nothing in the contract was apt to suggest that these payments were only provisional, and subject to a final taking of accounts. The respondent's obligations are properly construed as severable rather than entire. It is eloquent of the artificiality of the respondent's argument that it strains unreasonably to characterise the contract as one which would deny to the respondent any entitlement to unconditional payment unless and until the whole of the contract works were completed. The appellants' repudiation did not prevent the respondent from performing the totality of its obligations under the contract. The respondent's rights to be paid some instalments of the contract price had accrued before the contract was terminated. The respondent was entitled to be paid those instalments for that work; it was not entitled to claim greater payments by way of a restitutionary claim for quantum meruit. The respondent's rights to the bulk of progress payments had accrued at the date of the repudiation, and there could be no failure of consideration in respect of the work the subject of those accrued rights.