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Scott Budd  
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Scott Budd  
Partner
T +61 7 3244 8054

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Mark Darian-Smith  
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Perum Building and Construction Pty Ltd v Tallenford Pty Ltd [2007] WASCA 245

The Court of Appeal division of the Supreme Court of Western Australia has held that a claimant is not entitled to compensation through restitution where the works the subject of the claim were carried out by the claimant under a valid and enforceable contract. The Court ruled that the contract will govern the claimant’s entitlement to payment and a Court should not grant relief for a claim founded in restitution which is inconsistent with that contract.

In this case, a construction company (“Perum”) entered into a partly oral and partly written contract with a drainage contractor (“Tallenford”) to construct a sewer line to service a development site where Perum was carrying out works. The oral part of the contract involved Perum handing to Tallenford a site plan for the works. Measurements on the site plan were incorrect and the installation was ineffective. Tallenford was required to undertake further work using the correct measurements and constructed an effective sewer line at a cost greater than that agreed to in the contract.

Tallenford argued that the works carried out in accordance with the correct measurements fell outside the contract, and that it was therefore entitled to payment of the costs incurred in undertaking the additional work, or alternatively on a quantum meruit basis. Perum denied that there was a separate contract for the work carried out in accordance with the correct measurements or that Tallendord was entitled to compensation on a quantum meruit basis.

The Court determined that Tallenford’s entitlement could not be determined by reference to notions of ‘equity and good conscience.’ Their Honours referred to the case of Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 where the Court stated that entitlement to remuneration depends on the ‘existence of a qualifying or vitiating factor falling into some particular category’. On that basis, no such factor existed in the present case and the only entitlement that was available to the claimant in this instance was pursuant to the agreed contact sum and not on the basis of unjust enrichment.