High Court decision limits scope for builders quantum meruit claims

Introduction The High Court of Australia, in its recent decision in Mann v Paterson Constructions Pty Ltd [2019] HCA 32, has substantially restricted the circumstances in which a builder can claim on a quantum meruit basis following acceptance of a principal's repudiation of a building contract.

The main implication of this decision is that builders must ensure that they comply with the specified contractual and applicable statutory regimes in respect of entitlements to payments in order to ensure payment.

Facts In 2014, Peter and Angela Mann (owners) engaged Paterson Constructions Pty Ltd (builder) to construct two residential units. The contract provided for staged payments.

By March 2015, the parties were in dispute as to amounts due in respect of variations. Ultimately, the owners contended that the builder had repudiated the contract and sought to terminate. The builder replied that the owners' purported termination of the contract was of itself repudiatory and the repudiation was accepted.

The builder commenced proceedings in the Victorian Civil and Administrative Tribunal (VCAT) seeking damages, including claims for variations and prime cost adjustments or, in the alternative, balance for moneys for work and...