Victor Oladapo Taiwo V Princewill (1961)

LawGlobal-Hub Lead Judgment Report

UNSWORTH, F.J

This is an appeal from a decision of Bellamy, J., in which he awarded the respondent damages of £1,700 for failure to complete a building contract. For the purpose of convenience I will in this judgment describe the appellant and respondent respectively as the contractor and the employer.

The facts are fully set out in the judgment of the learned Trial Judge. These facts briefly are that in March 1953 the contractor undertook to build a house for the employer for a sum of £2,300, which was to be paid for in instalments as the work progressed. At a comparatively early stage of the work it was found that the plan was defective, and the employer agreed to pay the sum of £250 for the work thrown away.

The contractor then continued the work and accepted further instalments until a total of £1,700 had been paid. He then abandoned the work in 1954 on the ground that the £250 mentioned above had not been paid The plaintiff then instituted proceedings in the High Court but was apparently not in the country when the case was called on and it was struck out. The plaintiff later commenced the present proceedings. The building was never completed and the property on which it was situated was sold before the commencement of this suit. The learned Judge held that the contractor had lost his right to repudiate for failure to pay the £250 and awarded the employer the sum of £1,700 on the basis that the consideration had wholly failed. The contractor appealed, and there are two matters which arise for consideration, namely:-

(i) was the learned Trial Judge right in holding that the contractor had lost the right to repudiate on account of the failure of the employer to pay the extra £250?

(ii) was the learned Trial Judge correct in the assessment of damages?

The question of what a contractor should do on finding that the plans are defective was considered in the case of Thorn v. London Corporation (1876), 1 App. Cas. 120, where the Court said:-
Under those circumstances the appellant (the builder) must necessarily be in this dilemma, either the additional and varied work which was thus occasioned is the kind of additional and varied work contemplated by the contract, or it is not. If it is the kind of additional or varied work contemplated by the contract, he must be paid for it, and will be paid for it according to the prices regulated by the contract. If on the other hand, it was additional or varied work, so peculiar, so unexpected, and so different from what any person reckoned or calculated upon, that it is not within the contract at all; then, it appears to me, one of the two courses might have been open to him; he might have said: I entirely refuse to go on with the contract-Non hoec in foedera veni: I never intended to construct this work upon this new and unexpected footing; or he might have said: I will go on with this, but this is not the kind of extra work contemplated by the contract, and if I do it, I must be paid a quantum meruit for it.

I think that the principle stated above applies to the present case, except that the sum of £250 is recoverable on a claim for breach of contract and not merely on a quantum meruit, as the sum of £250 had been agreed as a liquidated sum. I am in agreement with the conclusion of the learned Trial Judge to the extent that the contractor lost any right that he may have had after he had continued with the building and accepted further instalments, though he retained the right to recover the sum of £250, by action if necessary.

I do not agree with the principles on which the learned Trial Judge assessed the damages, for the simple reason that I do not think that there was a total failure of consideration. The claim is one for breach of contract and the rules to be applied are those laid down in the old and well known case of Hadley v. Baxendale (1854), 9 Ex. 341, where the Court observed:-

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be, either such as may fairly and reasonably be considered arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it.

In applying the principles of Hadley v. Baxendale to building contracts, Hudson on Building Contracts (7th Edition, page 343) states the general rule as follows:-

The measure of the damages recoverable by the building owner for the breach of a building contract is, it is submitted, the difference between the contract price of the work or building contracted for, and the cost of making the work or building conform to the contract, with the addition, in most cases, of the amount of profits or earnings lost by the breach….. As regards profits and earnings, the loss on these heads is recoverable only if such a consequence was within the contemplation of both the contracting parties.

In addition the consequential damages set out at page 345 of Hudson are in appropriate cases recoverable, but such damages do not arise in the present case.

The law as stated above is in accordance with the decision in Mertens v. Home Freeholds Company (1921),2 K.B. 526, where the Court approved the law on this point as stated in an earlier edition of Hudson. In that case the contractor had undertaken to build to the roofing and the Court held:-

The proper measure of damages was what it cost the plaintiff to complete the house substantially as it was originally intended and in a reasonable manner at the earliest moment he was allowed to proceed with the work, less any amount which would have been due and payable by the defendant to the plaintiff, had the defendant completed the house to the roofing at the time agreed by the terms of the contract.

It is true that in the present case the employer did not complete the building, but it is clear from the comments of the Master of the Rolls at the foot of page 355 in the above-mentioned case that an employer cannot be heard to claim a larger sum at a later date if he did not mitigate his damages by completing the building within a reasonable time. In my view the damages in this case must be based on the loss that the employer would have sustained if he had completed the building in 1954, and it is clear from the evidence that this sum can be ascertained. It was pleaded in defence that in the event the employer suffered no loss because he later sold the uncompleted building for £2,400. The employer as plaintiff said in his evidence that he did not do this. What he sold was the property including the uncompleted buildings on that property, and I do not think that this later transaction ousted the normal rules for the assessment of damages or placed upon the plaintiff employer the burden of endeavouring to sever the buildings from the land so as to apportion a sum which must be deemed to have been paid by the purchaser in respect of these separate items.

Our attention was drawn to the cases of Wigsell v. School for Indigent Blind (1881, 8 Q.B. 357), and James v. Hutton and J. Cook & Son Ltd. (1950,1 K.B. 9), which relate to the measure of damages for failure by a lessee to comply with the provisions of a building covenant, but, in my view, there is no analogy between those cases and that of a contractor who abandons work under a building contract before completion.

In the circumstances mentioned above I would refer the case back to the learned Trial Judge for the assessment of damages in accordance with what I consider to be the correct rules. In doing so I would add that I think the learned Judge would be justified in taking into account the £250, as it is relevant for the purpose of ascertaining the total sum which would have been payable to the contractor if he had completed the work If this amount is taken into consideration it could not then, of course, form the subject of a separate action. The appellant is entitled to the costs of this appeal, which I would assess at 36 guineas. The costs in the High Court should be re-assessed by the learned Trial Judge at the further hearing.

Other Citation: (1961) LCN/0919(SC)