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MANN V PATERSON CONSTRUCTIONS PTY LTD [2018] VSCA 231

MANN V PATERSON CONSTRUCTIONS PTY LTD [2018] VSCA 231

Mann v Paterson Constructions Pty Ltd [2018] VSC 119

FACTS

The Manns (The Applicants) entered into a written domestic building contract with Paterson Constructions (the Respondent) for the Construction of two double storey townhouses on their property for the sum $971.000.00 including liquidated damages payable for delays of $500 per week.

One unit was completed approximately four (4) months after practical completion, and before unit two was completed, the applicants asserted that the Respondent had repudiated the contract and purported to terminate the contract by accepting the alleged repudiation. Shortly thereafter, the Respondent asserted that the applicants conduct constituted a repudiation of the contract and purported to accept their repudiation.

The Respondent made an application to VCAT seeking relief on a quantum meruit basis or, in the alternative, sums allegedly due under the contract. Both forms of relief included the amounts for variations made orally to the works.

VCAT found that the applicants had orally requested the variations claimed by the respondent, that they had repudiated the contract by their purported termination and that the Respondent had determined the contract when it accepted the repudiation.

VCAT made orders that the Applicants pay the Respondent the quantum meruit sum of $660,526.41, being the value of the work performed by the respondent (VCAT order). In reaching the decision, the VCAT order was less the sums already paid by the applicants and the cost of rectification of the defects

The Applicants appealed to the Supreme Court on the basis that VCAT had misunderstood or misapplied the principles relating to the valuation of the work on a quantum meruit basis and that VCAT had erred in allowing the respondent to recover for variations to the works on a quantum meruit basis.

The judge dismissed the appeal, however granted the Applicants leave to appeal for the limited purpose of correcting ‘a minor mathematical error’ in the VCAT order.

The Applicants seek leave to appeal against that decision on four proposed grounds.

ISSUES

i. Ground 1 – whether the judge erred in holding that VCAT had applied the correct legal principles in valuing the Respondents work on a quantum meruit basis by going outside the value purported within the contract.

ii. Ground 2 – contends that this proceeding affords a particularly good opportunity for this court to reconsider the correctness of the long-established principle that a builder who accepts an owner’s
repudiation and determines a building contract is entitled to sue the owner in quantum meruit.

iii. Ground 3 and 4 – whether the judge erred in finding that s.38 of the Domestic Building Contracts Act 1995 did not prevent the Respondent from recovering the value of the work covered by the variations on a quantum meruit basis.

FINDING

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