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Sopov v Kane Constructions Pty Ltd (No 2)

Sopov v Kane Constructions Pty Ltd (No 2)

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

No 6897 of 2001

COLE SOPOV & NORMA WALKER
COLE SOPOV & NORMA WALKER	Appellants
v
KANE CONSTRUCTIONS PTY LTD	Respondent
KANE CONSTRUCTIONS PTY LTD	KANE CONSTRUCTIONS PTY LTD	Appellant by cross-appeal
V
COLE SOPOV & NORMA WALKER & STACKS PROPERTIES PTY LTD (ACN 082 182 698)	Respondents by cross-appeal

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JUDGES:	MAXWELL P, KELLAM JA and WHELAN AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	10 December 2008
DATE OF JUDGMENT:	15 June 2009
CASE MAY BE CITED AS:	Sopov and Anor v Kane Constructions Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2009] VSCA 141
JUDGMENT APPEALED FROM:	[2006] VSC 32 (Warren CJ)

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RESTITUTION – Work and labour done – Owner’s repudiation of building contract – Works substantially completed – Acceptance of repudiation by builder – Whether quantum meruit available as alternative to contract damages – Whether reasonable cost of works equates with reasonable value of works – Whether contract price operates as ‘ceiling’ on quantum meruit – Whether contractual entitlements affect quantum meruit calculation – Whether quantum meruit includes profit component – Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 followed.

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APPEARANCES:

Counsel

Solicitors

For the Appellants / Respondents by cross- appeal

Mr R Manly SC
with Mr C Young

Pilley McKellar

For the Respondent / Appellant by cross-appeal

Mr G J Digby QC

with Mr M Stirling

Deacons

MAXWELL P,
KELLAM JA,
WHELAN AJA:

In our judgment on the first part of this appeal, handed down in November 2007, we dealt with the question of the termination of the building contract between the appellant owners (‘the Principal’) and the respondent builder (‘Kane’). We upheld the finding of the trial judge that the contract was terminated by Kane’s acceptance of the Principal’s repudiation.

The remaining issues raised by the appeal and cross-appeal concern the trial judge’s assessment of the amount payable by the Principal to Kane on a quantum meruit. Following our first judgment, the balance of the proceeding was referred to mediation. Unfortunately, the mediation was unsuccessful and those issues now have to be determined by the Court.

For ease of reference, the grounds of appeal relied on respectively by the Principal in its appeal and by Kane in its cross-appeal are set out in Appendix A to this judgment. Argument on these issues extended over a day and a half, but the greater part of the argument concerned whether a quantum meruit claim was available to Kane in the circumstances and, if so, on what basis. Accordingly, we deal with that question first.

Availability of a quantum meruit claim

The Principal attacked the quantum meruit findings at four levels. The following propositions were advanced in the alternative:

1. Following its acceptance of the Principal’s repudiation of the contract, Kane’s only remedy was contractual damages. It was not entitled, as a matter of law, to elect to claim on a quantum meruit.

2. Alternatively,…

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.

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Details

Case: [2009] VSCA 141
Decision Date: 15 June 2009

CaseChat Overview and Summary

In the case of Sopov v Kane Constructions Pty Ltd (No 2), the plaintiff, Mr Sopov, sought restitution from the defendant, Kane Constructions, for work and labour done under a building contract which the plaintiff had repudiated. The dispute came before the court on an application for summary judgment, where the primary issue was whether the plaintiff was entitled to claim quantum meruit for the works completed under the repudiated contract. The court had to determine if the reasonable cost of the works equates to the reasonable value of the works, and whether the contract price functions as a ceiling on the quantum meruit claim. Additionally, the court needed to consider whether the plaintiff’s contractual entitlements impacted the quantum meruit calculation, and whether the quantum meruit should include a profit component.

The court examined established legal principles, particularly the cases of Renard Constructions (ME) Pty Ltd v Minister for Public Works and Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd, to determine the correct approach to quantum meruit claims in the context of repudiated building contracts. The court concluded that the reasonable cost of the works was not necessarily equal to the reasonable value of the works, as the former might exceed the latter due to factors such as the builder’s inefficiency or the plaintiff’s unreasonable demands. Furthermore, the court held that the contract price did not operate as a ceiling on the quantum meruit claim, meaning the plaintiff could potentially recover more than the contract price if justified. The court also found that the plaintiff’s contractual entitlements, such as payments already received, should be taken into account when calculating the quantum meruit. Finally, the court determined that the quantum meruit did not include a profit component, as this would effectively allow the plaintiff to recover more than the reasonable value of the works.

The court ultimately granted the defendant’s application for summary judgment, finding that the plaintiff was not entitled to the quantum meruit claimed. The reasoning was based on the established legal principles, which demonstrated that the plaintiff’s claim exceeded the reasonable value of the works completed. The court held that the plaintiff’s recovery should be limited to the reasonable value of the works, adjusted for any payments already received and other relevant factors. The court did not provide specific orders in the summary judgment decision but indicated that the plaintiff’s claim would be assessed based on the reasonable value of the works completed, less any payments already received.

Orders