I see that Laina Chan and JW Carter[1] have joined the chorus of criticism of the highly unsatisfactory decision of the High Court of Australia in Mann v Paterson.

In Mann v Paterson Constructions Pty Ltd – New Law for Quantum Meruit Claims in Building Contracts (2020) 36 BCL 4, like many commentators, they have assumed that a quantum meruit in these circumstances has to be the restitutionary variety as though that were the only game in town.  But as the Supreme Court in the UK recently noted there are now two “fundamentally different” categories of quantum meruit: restitutionary quantum meruit (also referred to as unjust enrichment) on the one hand and contractual quantum meruit on the other:

it is important to bear in mind that although the term “quantum meruit” is used both in the context of contract and in the context of unjust enrichment, the basis on which a quantum meruit award is made differs according to which context is relevant.[2]

Contractual quantum meruit is often unjustifiably overlooked, and any quantum meruit ingredient of an innocent party’s entitlements following a owner’s repudiation of a construction contract[3] sits much more naturally as a contractual quantum meruit than a restitutionary quantum meruit. And it is worth bearing in mind that when the rule allowing the contractor a quantum meruit in these circumstances was established around a hundred years ago, the courts would certainly have been thinking in terms of that quantum meruit as a creature of contract (or at least quasi-contract), and not as an equitable intrusion.

It was, I think, a former Lord Chancellor who said, a while ago, that he would rather be mugged in the street outside the Royal Courts of Justice than be dragged into litigation as a party inside the Royal Courts of Justice. The High Court in Mann v Paterson has made such an unholy mess of the law relating to an innocent party’s entitlements following a repudiation that the innocent party will – all too often – not only be the victim of a commercial mugging by the other party but also the unwelcome incidents of complex litigation or arbitration.

It is not, I suspect, a case of the High Court deliberately wishing to punish the innocent party, but simply a case of them having no understanding of how construction litigation works in practice. The damage they have done is almost certainly unintentional.

From a practical point of view, a corrective decision by the High Court, or one clause piece of legislation restoring the innocent party’s right to a contractual quantum meruit, would not only make it much easier for an innocent party to recover reasonable amount for his work, but would also give him the opportunity to take his claim through the security of payment process.

Which would be much fairer.

[1] They are, inter alia, the authors of the excellent book Contract and the Australian Consumer Law, which I reviewed a while ago.

[2] Benedetti v Sawaris [2013] UKSC 50 at [147]. See also [9] and [85].

[3] Following Mann v Paterson, it seems that an innocent contractor still has some entitlement to a quantum meruit, albeit limited.