Mann v Paterson Constructions Pty Ltd

The High Court of Australia considered an appeal by landowners (appellants) against a building company (respondent) concerning payment for building work. The dispute arose after the parties entered into a domestic building contract, which was subsequently varied. The landowners repudiated the contract after the builder issued an invoice for the variations, which had not been formally notified as required by the *Domestic Building Contracts Act 1995* (Vic). The builder sought to recover payment for the variations on a quantum meruit basis, arguing a total failure of consideration due to the repudiation.

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.