Australian Construction Law Newsletter

The view that the right to a quantum meruit is founded onan implied contract ... justified the conclusion, which theArbitratoradopted, that the measure ofthe entitlementofthe party doing the work and/or supplying the materials

was assessed by reference to the reasonable cOst to him

ofdoing that work or supplying those materials, but the

replacement of that view with the concept ofrestitution

or unjust enrichment as the basis of the entitlement to a

quantummeruit, leads to the differentconclusion that the

measureofthe entitlement is assessedby reference to the

value ofwhat the other party receives.

... the onus lies upon (the contractor) to prove that the

amount claimed is fair and reasonable, and the contractis evidence ofwhat rate is fair and reasonable.

An example might serve to show the conflict in the ap­

proaches to quantum meruit adopted in the Jennings case (19)

and the Renard case (20). Assume that a contractor agreed to

supply 1,000 tonnes ofrock to the Principal at $1 per tonne, but

the rock proved to be more difficult to obtain than the contractorcontemplated and, in fact, it costs the contractor $2 per tonne to

obtain. If half way through the contract, the Principal were to

refuse to accept more rock and thereby repudiated the contract,the contractorcould elect to terminate the contract. The contrac­

tor would have incurred costs of $1,000, but have been entitled

to only $500 under the contract. The Principal's wrongful

repudiation would have saved the contractor from a further $500

loss. The contractor could not recover damages for the Princi­

pal's breach. The breach saved the contractor $500. Itwould be

anomalous if the contractor could elect to sue for restitution and

recover an extra $500 (based on $2 per tonne for the 500 tonnes

delivered less the $500 already paid by the Principal).

The decision in Jennings (19) would suggest that the con­tractorcouldrecover an extra$500on aquantum meruit, whereasthe decision in Renard (20) suggests that on a quantum meruit,

the contractorwould recoverno more than the$500 already paid.Logic dictates that the second approach is correct. The fact that

the Principal repudiated tile contract does not mean that the

Principal is enriched. The rock delivered does not suddenly

double in value because the Principal refused to take more rock.

It is submitted that Brownie J. in the Renard case correctlyinterpreted the Pavey decision when he said:

... it is the value to the recipient of the work which is to

be measured, rather than the cost to the party doing thework.

A consequence of the Pavey decision may be a reduction inthe number of restitutionary claims, particularly when the Prin­

cipal had repudiated the contract, and a tendency to claim aquantum meruit based on an implied term, rather than a quantummeruit based on unjust enrichment. The former is a reasonable

price for the work done by the contractor, whereas the latter is areasonable price for the benefitreceived by the otherparty.·Often

the amounts willbe the same, butnot always. Inpleading aclaim,

itwill be important to make the distinctionbetween a claimunder

the contract for quantum meruit and a restitutionary claim forquantum meruit.

- Philip Davenport

Footnotes(1) Goff& Jones, The LawofRestitution,3rdEdition, Sweet

& Maxwell, London, 1986, p.29.(2) Pavey & Matthews Pty Ltd v Paul 162 CLR 221, (1987)

61 ALJR 151.

(3) Goff & Jones at p.16

(4) Goff & Jones at p.39(5) William Lacey (Hounslow) Ltd v Davis (1957) 1 WLR

932.(6) British Steel Corp v Cleveland Bridge and Engineering

(1984) 1 ALL ER 504.(7) Wegan Constructions v Wodonga Sewerage Authority

(1978) VR 67.(8) Codelfa Construction Pty Ltd v State Rail Authority of

New South Wales (1982) 149 CLR 337.

(9) Goff & Jones at p.42.

(10) Goff & Jones at p.44.(11) JenningsConstructionLtdvQH &MBirtPty Ltd (1986)

3 BCL 189.(12) Deane 1. at p.165 of Pavey & Matthews v Paul (2)

discusses the distinction.(13) Brooking on Building Contracts, 2nd Edition, Butter­

worths, Melbourne, 1980 at pp.76-77 distinguishes 5

classes of cases where a quantum meruit lies. The first

two are examples ofwhere the entitlement to a quantum

meruit is based on an implied term in the contract that a

reasonable price will be paid. In the other 3 classes, the

claim is based on unjust enrichment.(14) Per Deane 1. in Pavey & Matthews v Paul (2) at p.168.

(15) Lodder & Slowey (1904) A C 442, Keating, Building

Contracts, 4th Edition, Sweet & Maxwell, London,

1978.(16) Boomer v Muir, 24 P.2d 570 (1933), Goff & Jones at

pp.465-468.(17) Goff & Jones at pp.467.(18) Goff& Jones, the LawofRestitution, 2ndEdition, Sweet

& Maxwell, London, 1978 at p.380.(19) Jennings Construction Limited v Q H & M Birt Pty

Limited, unreported, Cole J. N.S.W. Supreme Court,

16.12.88 atp.16.(20) The Minister for Public Works v Renard Constructions

(M.E.) Pty Limited, Brownie 1., N.S.W. Supreme Court,

15.2.89.

6. THE BUILDING CODE OF AUSTRALIA- A simple uniform system of regulation.

The Building Code of Australia is the result of some eightyears work by the Australian Uniform Building RegulationsCo-ordinating Council. In formally announcing the publica­tion of the first edition of the Building Code of Australia,Barry Jones, the Minister for Science, Customs and SmallBusiness, said:

The code gently advances rationalisation ofbuildingregulations for aU States and Territories and pro­vides uniform, cost effective building regulationsaddressing safety, health and amenity.

The Code is presented in such a way that it may be called upin building regulations by the Statesand Territories, as in the

Austr:alian Construction Law Newsletter

case of Australian Standards, without the need to Incorpo­rate the actual detail in the building regulations. The Codecontains the core requirements that would be generallyapplicable to all regulations. Modffications or additions willbe included in a series ofappendices Issued from time to time.

It is expected that each State and Territory's building regu­lations would call up the core requirements and appendicesand then contain additional administrative and non-techni­cal provisions covering that State or Territory's require­ments. It Is expected that future amendments of the Codewould not Involve the lengthy procedures usually associatedwith the amendment of regulations.

The challenge now for the States and Territories Is to deter­minewhether the Building Code ofAustraliamay be adoptedIn Its entirety, or whether some of Its provisions requireamendment to deal with climatic, geographic or othercircumstances. It is to be hoped that uniformity prevails forthe sake of the efficiency of the Industry.

The article below on the Building Code of Australia wasprepared by Hugh Knox, Manager, Regulations, Accredita­tion and Standards with the National Building TechnologyCentre, CSIRO Division ofBuilding Construction and Engi­neering. The National Building Technology Centre Is Tech­nical Advisor to the Australian Uniform Building Regula­tions Co-ordlnatlng Council which, as stated above, pre­pared the Code. The authoritative tone of the article Is notsurprising given that Mr Knox Is part ofa team responsiblefor managing and coordinating the National Building Tech­nology Centre's Input Into the Building Code of Australia.

The present regulations system.Australia is a federation ofsovereign states, eachofwhich at

present has its own regulations to control building within itsjurisdiction. Legislation in each state authorizes each local cityor municipal council (Australia has 836) to administer the regu­lations and to accept innovations not explicitly covered by theregulations.

Some uniformity of regulation has already been achievedbecause nearly every state has adapted its present buildingregulations from a model code, the Australian Model UniformBuilding Code (AMUBC). The Australian Uniform BuildingRegulations Co-ordinating Council (AUBRCC) is now takingthis principle into a new phase by developing the code as a singlevolume oftechnical regulations - the Building Code ofAustralia(BCA) - to be adopted by each building control authority by asimple direct cross reference from legislation.

The requirements in the BCA are aimed at establishing andmaintaining safety, health and amenity at acceptable levels withits application leaning towards performancerather than prescrip­tion. The BCA excludes administrative regulations andAUBRCC is now putting togetherasetofuniform administrativerequirements to parallel the BCA.The emergence of uniformity.

The expansion in building activity in recent times demon­strated the need for uniform building regulations. (About$22,000 millionwas committed to building in Australia in 1987­88.) However, since this field is the prerogative of the states,political problems at first created a barrier. The InterstateStanding Committee on Uniform Building Regulations (lS-

9

CUBR) was established in 1964 to consider, amongst otherthings, a uniform approach to technical regulations. The secre­tariatofiSCUBRwas then Commonwealth Experimental Build­ing Station, nowcalled the National BuildingTechnology Centre(NBTC).

ISCUBR produced the Australian Model Uniform BuildingCode (AMUBC) early in the 1970s and it was adapted (ratherthan adopted) by six states and territories by 1976 as the basis oftheir regulations. Originally, the AMUBC was a confidentialdocument and could be seen by the general public only in theform ofregulations promulgatedby each state. Much uniformitywas achieved this way, but the states still insistedon making theirown variations to the original documents.

ISCUBRwas supersededin 1980by the AustralianUniformBuildingRegulationsCo-ordinatingCouncil (AUBRCC)which,like ISCUBR, is an association of building control authorities,local government and the building industry. It is supported by anumberoftechnical committees, eachresponsible for aparticularsectionoftheBCA. An Industry Liaison Committeeprovides anadditional communication link:.

AUBRCC decided subsequently to produce a single set oftechnical regulations - the Building CodeofAustralia. The BCAcan be adopted by direct cross reference from legislation ratherthan be adapted as the basis for the regulations ofeach state andterritory. It was issued for public review in October 1986.The benefits of the BCA.

The benefits ofhaving a single setoftechnical regulations inthe form of the BCA are that:

greater uniformity and consistency will beachieved;it will be easier to keep up to date;itwill provide the basis for a single national systemof accreditation ofnew products and practices.

AUBRCC stillhas away to go to achieve these benefits. Forexample, most of the building control authorities have an­nounced that they will still apply some variations and additionswithin theirjurisdictions. Thevariations will be published, stateby state, as asupplementto the BCA. They will thereforebecomeapparent and this in tum could lead to pressure to reduce oreliminate them.Support for the BCA.

The intention is to support the BCA with a number ofancillary documents and aids that must be coordinated closelywith the development of the BCA. However, the support func­tions are not meant to rectify problems inherent in the BCA.These must be solved first by proper attention to the BCA itself.

Support functions include:a commentary to explain the reasons for the regu­lations (but not to say what the BCA should havesaid in the first place);computer software to assist the Code user by lead­ing him quickly through the BCA clauses that arerelevant to a particular building, i.e. to speed updesign and checking (but not to untangle unneces­sary complexity);compendia of tested products and systems, thesummaries classified according to BCA require­ments;a single national accreditation system in which a

Australian Construction Law Newsletter

productorbuilding systemis appraised for suitabil­ity for purpose and given legal recognition ofcompliance with regulations by AUBRCC.

Future development ofBCA.The issue in 1986 of the public review draft of the BCA was

a most significant achievement. Much simplification had been

introduced by grouping the AMUBC requirements into seven

major sections. While this tended to bring related requirements

together, the size and complexity ofthe code's technical content

indicated that there was still much more to be done.

The code covers every major discipline applicable to build­

ing including structural, mechanical, hydraulic and electrical

engineering, fIre protection and architecture and will have acontrolling effect on the building industry. In such a document,

therefore, unnecessary complexity and restriction and require­

ments that are inconsistent, conflicting, incomprehensible, re­

dundant and out-of-date can be unnecessarily and prodigiously

costly and can have a harmful effect on the built environment.

The National Building Technology Centre (NBTC) is thetechnical adviser to AUBRCC and is committed by its charter to

ongoing support of AUBRCC.

As a part of this function, NBTC engaged a consulting

engineer to review the BCA, the review culminating in a series of

reports (now known as the Blackmore Reports) that range fromgeneralities to detailed analyses.

It became apparent that there was still much unnecessary

complexity and many anomalies in the BCA that were broughtaboutby a lack ofcoherence in the technical content. The reports

also recognized the fact that the development of the BCA is amulti-milliondollarproject thathas tobe managedand organizedlike any other major project. It was obvious that the BCA needa systematic structure based on design logic.

The important general conclusion from the review is that

support facilities such as commentaries and software mustnotbe

put in place in order to compensate for unnecessary complexity,

errors, obscurity, inconsistency, ambiguity or otherdefIcienciesin a code. The code must be corrected first and the reportsdescribe simple techniques andprocedures to do this quickly andeconomically.

The restructuringoftheBCAis aimed atpromotingsimplic­ity and performance as the basis ofregulation. Restructuring willtherefore assist in:

the process ofbuilding design and approval;

the developmentofperformance requirements andthe accreditation of new products;

the development ofa true plain-English code;

• the developmentofsimplecomputer software as anaid in working quickly through the Code.

The costofdevelopmentis reduced, ifa logical andcoherent

structure for the draft code under consideration is establishedbefore there is detailed consideration of technical content. The

structure then ensures that technical decisions are expedited

because issues are clarifIed. Errors, ambiguities, obscurities andinconsistencies become apparent quickly and 'lIe corrected

quickly, and confusion is avoided.

Other consequential benefits include the following:Increasing the probability to the point ofcertainty

that the basic intentions ofthe authority responsible

for the code will be achieved in every building and

10

will be achieved with maximum economy in de­sign, approval and construction.Eliminating the unprofessional attitude that com­

pliance with the letter of the law absolves thedesigner from his professional responsibilities.

The building must satisfy the objectives.

Removing barriers to evaluationandlegal approvalof innovations in that these can now be assessed as

satisfying the appropriate objectives if there are no

relevant detailed requirements or standards.Ease ofdevelopment ofcomputer software to help

the user work quickly through the code because

each requirement will be logically structured and

part of a logical sequence.

Ease oftranslation into a true plain-English code tohelp in quicker and more accurate understandingof

what the code requires, brought about by the

simple, logical structure.• Cost savings in construction as a result ofremoval

ofunnecessary stringency.Buildings functioning more satisfactorily as a re­

sult ofbetter technical content of the code.

Reduction of litigation that can result from misin­

terpretation of the code.

AvaIlabilityThe fIrst edition of the BCA was published 'in December

1988. It is available from NBTC, PO Box 30, Chatswood NSW

2067; phone (02) 888 8888, NBTC state branches, from some

state government bookshops and other selected outlets.

- Hugh Knox. ReprInted with permission from

Australian BuIlding News.

7. LEGIONNAIRE'S DISEASE-

NEW AUSTRALIAN STANDARD TO COMBAT

KILLER DISEASE

This article on the new SAA Standard AS3666-1989 Air­Handling And Water Systems Of Buildings - MicrobialControl by Dr Peter Christopher, Special Adviser, Commu­

nicable Diseases, DepartmentofHealth, NSW is tImely,giventhe recent out break of Legionnaire's disease in Tasmania.

As stated in the article, the Standard emphasises the impor­tance of design of air-conditioning and water systems inbuIldings, in recognition that some aspects ofpresent design

make efficient maintenance difficult and may contribute in

the multiplication oflegionella. The Standard also provides

for specified regular cleaning and maintenance of air-han­

dling and warm water systems.

The Importance ofthe new Standard cannot be over-empha­sised, given the seriousness of outbreaks of Legionnaire'sdisease in death and serious Illness and the significant poten­

tialliability which could attach.

It should be understood that, if there is a Standard in exIs­

tence, the courtswUl use the requirements ofthe Standard asa benchmark in examining conduct to make a determination

on negligence and liability. Ifa departure from the require­

ments of the Standard has occurred with respect to either