Gageler J pointed out that the repudiation by Mann and the acceptance of that repudiation resulting in the termination of the contract had deprived Paterson of the opportunity to take the work to the next stage, thereby entitling it under the contract to the further payment. Gageler J said allowing a claim in quantum meruit for this aspect of the work was necessary to avoid the otherwise unjust outcome.
However, His Honour was firmly of the view that the contract price should act as a cap on the amount recovered under a quantum meruit.
The amount recoverable is a liquidated amount representing reasonable remuneration for the work. That amount cannot exceed the portion of the overall price set by the contract that is attributable to the work.
Conclusion
It seems clear now that the contract price will provide a ceiling to claims in quantum meruit except in unusual cases, for example, where the conduct of the principal has contributed to the cost of construction.
The omission from the Mann contract of the common term that payments are “on account” until completion may lead to this case being distinguishable from others.
What is not clear is how the quantum of an award for the uncompleted portion of the contract would be calculated. Would there be a need to enquire as to whether the staged progress payments that have been made represent a fair percentage of the contract price?
Questions also arise as to how to deal with contracts where the staged progress payments specified do not match the value of the work performed to that stage. Many standard form domestic building contracts set fixed percentages of the contract sum, regardless of individual variations of specification. Generally, the payments are “on account” and the true value of the work completed at any stage can vary significantly from the amount stated in the contract as due to be paid for that stage. It is only when the final stage is completed, and the full contract sum paid, that the parties’ agreement as to price is fulfilled. The decision in Mann v Paterson does not consider this difficulty.
ABOUT THE AUTHOR
Tom Grace
Partner
Construction & Engineering, Commercial Dispute Resolution, Environment and Planning, Administrative Law
BuildLaw | Apr 2020 202029
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