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Lloyd's Maritime and Commercial Law Quarterly


Samuel Walpole* and Kit Barker


The past two years have been a period of significant development of the Australian law of restitution by the High Court, which has handed down two notable decisions. The first of these, Mann (§7), is easily one of the most important Australian restitution cases in decades and may well constitute a watershed moment in Australian conceptualisation of the subject after several years of limited growth in matters of principle. In Mann, a majority of the court upheld the long-standing availability of a restitutionary claim for work done pursuant to a contract terminated for breach, where there is no accrued contractual right to payment for work. This is to be welcomed, as the alternative outcome would have been contrary to authority, principle and the law in other jurisdictions. The plurality (Nettle, Gordon and Edelman JJ), again rightly we suggest, identified failure of consideration (basis) as the unjust factor underlying such an award of restitution. As to the amount of restitution, the plurality went on to hold that it would usually be capped by the contract price (or a relevant component thereof) but considered that there may be circumstances in which the facts of the case require departure from this principle. The other judge in the majority, Gageler J, considered that the relevant part of the contract price would always constitute an absolute ceiling. Both approaches were explained by reference to the presumptive importance of respecting the parties’ allocation of risk under the terminated arrangement. In the great majority of cases, the two approaches will yield the same result and practitioners will no doubt welcome the certainty that results from the application of a contractual ceiling in the great majority of cases. On the other hand, the boundaries of the exceptions recognised by the plurality are left so unclear (they refer only to Boomer v Muir (1933) 24 P 2d 570 by way of example) as arguably to undermine the assurance of the basic rule. The difference between the positions will only be of practical importance in cases in which there is a provable difference between the contract rate and the market rate for the work at the time it was provided. Gageler J’s pragmatic view is that imposing an absolute contract ceiling discourages innocent parties from terminating tactically in order to escape a bad bargain, whereas the plurality’s more flexible stance takes the line that there can sometimes be good reasons to release the innocent from the pricing of the contract where the defendant has breached it repeatedly and fundamentally. In practice, if parties wish to eliminate the uncertainty resulting from the plurality’s position, it is open to them to provide expressly for their secondary payment obligations to be limited by the


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