When Tiny Mistakes Come Back to Bite: Mann v Paterson, a Case Study

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Note: All views expressed in this podcast are Former Mayor Penny Taylors and do not represent the views of Subiaco Council itself.


Subiaco is a city suburb centred on the hustle and bustle of small boutiques and high end shopping, stylish cafe’s, wine bars and gastropubs. But beneath the hustle and bustle and liveliness of Subiaco is a huge amount of debilitations threatening the city’s liveliness. 

In this episode, I’m continuing my chat with the Former Mayor of Subiaco Penny Taylor. In part one, Penny revealed a massive amount of dysfunction in Subiaco Council. If you are yet to listen to part one, make sure you go back to listen that episode first. In part two, we will be diving deeper into the dysfunction. We talk about the impacts on Penny herself, and also on the community as a whole in Subiaco along with the potential solutions to change things for the better going forwards. 


In the ep you’ll find out about:

  1. Local Governments lack of code of conduct 
  2. The changes being made for Subiaco’s future
  3. The false dichotomy in Subiaco
  4. Why Subiaco Counsellors don’t take the blame for the current dysfunction

And more…


Discussion Points:

00:00 Introduction 

02:04 The false dichotomy in Subiaco

02:30 Business becoming marginal in Subiaco

06:43 The motion of no confidence meeting

13:41 Post football plan

19:15 Obstacles to getting things done

20:14 The impact of dysfunction to Subiaco itself 

15:53 The impact to Penny the Mayor

28:06 The impact to Penny the person

32:47 The obstacle and impacts on the people of Subi

34:57 Advice to the people of Subiaco/incoming Mayor 


About The Guest

Penny Taylor is the former Mayor to The City of Subiaco. Penny completed her studies as geologist at Sydney University before moving to the Pilbara to work in the mining industry. Throughout Penny’s career in mining she worked across project management and following mining she, together with her husband started a family business servicing the resources industry. Following this, Penny then moved to Perth to start a family. 

Penny’s move to government started when she worked as a counsellor at the town of Port Hedland and ran for the seat of Nedlands in the 2017 State Election. It was this experience in Port Hedland that promoted Penny to run for Mayor of Subiaco in 2017, a role which she held until 2021. 

Aside from Government, Penny is also involved in a number of organisations including the Juvenile Diabetes Research Foundation, UWA Little Athletics and Rosalie Primary School to name a few. 


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Listen to the audio podcast here

In October last year, the High Court of Australia came to a landmark decision destined to change the way contractors think about claiming.

Ask anyone you know: having a new house built is the sort of project that often causes grey hairs, fine lines and anxious thinking at 3AM.  

But ‘stressful’ wouldn’t even begin to describe a once harmless-looking residential construction project that would eventually find itself in the High Court of Australia. 

It started innocently enough. Victorian couple Peter and Angela Mann hired Paterson Constructions Pty. Ltd. to build two townhouses on land they owned, for a fixed price. During the build, they orally requested for 42 different variations to be made to the original contract. The builder carried out these variations as requested.

The contract stipulated that the builder should receive “progress payments” when the company had reached various stages in the project. Once the first townhouse had been complete, the builder raised an invoice for an additional sum to cover the charges that had arisen from the variations. 

Presumably not happy with this, the Manns repudiated the contract. The builder accepted the repudiation, and just like that, the contract was terminated. 

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So … Where to From Here?

Under the current legislation, any contractor whose contract had been terminated as a result of repudiation would have a choice: claim for damages from breach of contract, or claim for payment on a quantum meruit basis. 

“Quantum meruit” is a Latin phrase that translates as “as much as he deserved”. This type of claim involves receiving payment at market value for work that has already been carried out – market value, of course, being key here. 

Why is this important?

Well, contracts don’t necessarily reflect the going rate. A payment received via quantum meruit could quite easily exceed what was ever payable through the contract. It could also very easily eclipse the equivalent claim for damages. 

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As Much as He Deserved

The builder took the matter to the Victorian Civil and Administrative Tribunal (VCAT) in 2016. The aim was to make a claim, either for damages, or for restitution for the work and materials that had already gone into the project. The tribunal agreed that a restitutionary measure was required.

The Manns countered with an appeal to the Supreme Court of Victoria. This was substantially dismissed. 

They then appealed to the Court of Appeal of the Supreme Court of Victoria. This was also dismissed. 

Running out of options, they filed a special leave application, pushing the case to the High Court, where in 2019 – this year – it would go on to make waves in the industry. 

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How Not to Handle a Variation

I feel like I’m saying this a lot these days. But I see it all the time in my line of work, so I’ll repeat myself here. A lack of due diligence can have catastrophic implications. 

These things can seem so harmless at the time. But there’s always the chance that something will come back to bite you. And let me tell you what – those teeth are sharp. 

Under Section 38 of the Domestic Building Contracts Act 1995 (Vic), the Manns were required to give written notice of their 42 variations. And under the same section, the builder was required to give notice of the variations and their implications.  

For Paterson Constructions, not doing this was a big mistake.

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The High Court Decision

Each individual variation requested by the Manns had not altered the contract by more than 2%, so the builder had accepted these without keeping a written record. 

Unfortunately for Paterson Constructions, the same section of the Act – Section 38 – also stipulates that a builder can’t claim on variations unless he/she has complied with the instructions in that section. Instructions that, of course, include giving written notice as discussed above.

An exception exists, but only applies if there are exceptional circumstances at play, or that complying with the section would have brought upon a significant or exceptional hardship.

For this reason, the High Court found that the builder was not able to claim on a quantum meruit basis for the variations after all. 

It also found that the builder was entitled to recover restitution for the remaining work and materials, but that this should be a fair price, based on the price in the contract. 

Suddenly, things were looking up for the Manns. 

The Wash-up

There are a few things we can take away from this decision. 

Firstly: the contract is king. 

We may see a drop in contractors claiming restitution, now that the contract price could potentially determine a ‘cap’ for these types of payments. 

But there’s another lesson in there, too. And from my perspective, it’s an important one. 

Contractors, please write everything down. Capture all changes. Dot the ‘i’s and cross the ‘t’s.

After all, the High Court is not a place you want to end up high and dry.

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