Delay can reduce a Quantum Meruit

We have advised many times in the past that, as a matter of legal analysis, the value of a quantum meruit (at any rate, the more usual restitutionary sort of quantum meruit that arise where there is no contract) should take into account the question of delay, such that if the provider of work and materials is late, then the value of his work and materials may in some cases be less that the value that would have attached if there had been no delay. There are at least two ways of coming to this conclusion:

1. The Australian case of Pavey & Mathews v Paul [1987] 162 CLR 221 is clear that it is the value to the recipient, not the cost to the provider, that the modern law of quantum meruit is concerned with. Obviously, a newspaper delivered on its day of publication is worth more than a newspaper delivered the next day.  A loaf of bread delivered on the day it is baked is worth more than that same loaf delivered the next day, notwithstanding that the cost of its production is the same. So also, time is typically of great importance in construction contracts, such that the value of something provided when it is required is greater the value of that same thing provided late.
2. The line of cases leading from The Hadjitsakos [1975] I Lloyd’s Rep 356 takes a slightly different tack, asking the question of what reasonable men would have negotiated as reasonable remuneration for what was in fact provided.  Again, the negotiated price for something that is to be delivered when it is required is likely to be greater than the price for that same thing that the parties know will be late.

But until now, there has been somewhat sparse authority for the proposition that delay should be taken into account in assessing a quantum meruit. Crown House v Amec(1990) 142 Const LJ No 2 at page 152 suggested as much but in somewhat tentative terms.

Now the Supreme Court of South Australia has come out in rather stronger terms in Candetti Constructions v Samaras [2011] SASC 165 (Justice Blue). The court said:

Availability of delay on quantum meruit claim

Samaras’ fourth alternative contention is that delay by the supplier is not capable as a matter of law of giving rise to a reduction in the value of a quantum meruit claim. I reject this contention.

There is no reason in principle why the effect of delay by the supplier in the value of the services received by the principal can never, as a matter of law, be taken into account. Nor did Samaras cite authority to support that proposition.

Plainly, there are some cases where the delay does not affect the value, particularly where the provider’s delay had no impact on the recipient’s critical path. But in many other cases, a delay that is the provider’s fault can and will reduce the value of the quantum meruit.

It is worth noting that in these cases the impact of the delay is to reduce the amount of the quantum meruit itself, and not to set up a cross claim. In a quantum meruit claim, the provider is under no obligation to complete the work at all, let alone to complete the work within any particular time (see British Steel Corporation v Cleveland Bridge [1984] 1 All ER 504. But just as a quantum meruit provider’s interests will be served if his work free from defects (since defective work will reduce the amount of a quantum meruit; seeKane Constructions Pty Ltd v Sopov (No 2) at first instance [2005] VSC 492 at [37]-[43]) so also if his work is delivered without delay.

The full decision is here.

Fenwick Elliott Grace acted for the successful Appellant in Candetti Constructions v Samaras.