As many will be aware, Deacons has represented the contractor, Kane Constructions Pty Ltd, in the above proceedings. The long running litigation concluded last Friday 11 December when the High Court, for the second time, refused an application by the principal for special leave to appeal from the Court of Appeal of the Supreme Court of Victoria.
The refusal of the application by the High Court leaves the decision of the Court of Appeal of Victoria, delivered 15 June 2009, as the most recent authoritative confirmation of the law. It accordingly remains the position in Australia that upon a repudiation of a contract by a principal, a contractor is entitled to elect to be paid on a quantum meruit as an alternative to contract damages.
Several further points emerge from the decision of the Court of Appeal:
- the contract price cannot operate as a ceiling on the amount recoverable on a quantum meruit
- “Nor is the contract price ‘the best evidence’ of the value of the benefit conferred”
- the contract price may however provide a guide to the reasonableness of the remuneration claimed
- the calculation of the quantum meruit must necessarily include a reasonable margin representing overhead and profit
- the availability of the quantum meruit remedy can only be controlled by:
- expressly eliminating it, or
- by capping it, such as by limiting the amount recoverable to the contract price.