In the recent judgment of Mann v Paterson Constructions Pty Ltd  VSCA 231, the Victorian Court of Appeal considered the principles of recovery on a quantum meruit following repudiation of a construction contract by the principal. Quantum meruit claims are common in this context, and are viewed with dread by defendants.
The Court of Appeal reiterated the principles set out in the Kane v Sopov litigation, in respect of which the High Court refused special leave to appeal. Broadly, this recent judgment confirms principles of restitution can overcome contractual clauses in the repudiated contract, but the contract price may remain relevant. While the entitlement to recover is based on the “fair and reasonable value of the benefit conferred on the owner by the work that the builder performed", what is "fair and reasonable" will vary depending upon the circumstances, which can include the provisions of the construction contract
The Court of Appeal held that where the actual work performed is “radically different” from the scope of work in the contract, minimal weight may be accorded to the contract price, and that actual costs “are not determinative and do not impose a ceiling on the amount that can be recovered”.
The application of section 38(6) of the Domestic Building Contracts Act (Vic) (DBC Act) was also considered, which can preclude a builder from claiming for variations to the scope of works where the builder has not complied with the process set out in that section. However, it was held that the DBC Act does not preclude claims in quantum meruit, because it would have been inconsistent with the consumer protection purpose underpinning section 38(6), and the section was not sufficiently clear to deprive a party of a legal right.