Another possible difference between Gageler J and Nettle, Gordon and Edelman JJ occurred to me as I walked my dog.

 

An example with some figures.

 

Builder agrees to construct a building on employer’s land for $200,000. This is well below the market rate for such work, which would be $500,000.

 

Builder does half the work, when the employer repudiates the deal and excludes him from land. Builder accepts repudiation.

 

Assuming (unrealistically) that the value of the work is a straight line, what is recoverable?

 

On the approach of Kiefel CJ, Bell and Keane JJ builder gets nothing. If the contract had been completed he would have been paid $200,000, but in order to earn that would have had to do work worth $250,000. Builder is better off following termination, assuming he could get other work. [I think this example illustrates what is wrong with their view.]

 

What is recoverable as a quantum meruit?

 

Nettle, Gordon and Edelman JJ would calculate the value of the work in accordance with the contract price ([215]). That gives the builder $100,000.

 

Is Gageler J differing from them when  he says “the measure of the value of the services rendered by the innocent party is capped by reference to the contractually agreed remuneration”? [91] In other words we use the market to assess the value of what has been done, but don’t allow the builder to recover more than the contract price, which operates as a limit. That gives the builder $200,000.

 

The problem with the Nettle et al view, is that where the building work is not complete, it is hard to understand how we calculate its value by reference to the contract price (save that it may provide some evidence of what the market price is). The parties just never bargained for half the work. We have no idea what value they would have put on that. Half the job may be worse than nothing (as with half a haircut), or conversely might have cost far more than half the price. It seems preferable to me to use the market value of the work done (as we usually do) and only depart from that where it would contradict the bargain made (the builder can hardly claim there has been a “failure of the basis on which I did this work” where he is paid the full contract price).

 

So, again, I tend to think Gageler J’s is the best judgment, which given it is a minority of one is unfortunate.

 

[In my previous email I of course meant Pavey & Matthews v Paul, not David Securities. I wrote before my first coffee.]

 

R