Clearlie Todman-brown Claimant v Melvin Rymer D/B/A Melvin Rymer Architect Inc. Defendant
| Jurisdiction | British Virgin Islands |
| Judge | HARIPRASHAD-CHARLES J,Indra Hariprashad-Charles |
| Judgment Date | 11 May 2011 |
| Judgment citation (vLex) | [2011] ECSC J0511-2 |
| Court | High Court (British Virgin Islands) |
| Docket Number | BVIHCV2009/0195 |
| Date | 11 May 2011 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
(CIVIL)
BVIHCV2009/0195
Dr. Joseph S. Archibald QC and Ms. Michelle I. Worrell of JS Archibald & Co. for the Claimant
Mr. John Carrington and Ms. Mishka Jacobs of McW. Todman & Co. for the Defendant
Building contract to construct a building for house / rental units / business office - Whether the contract was an entire contract - Variations by the owner - Contractor ran out of funds due to variations - Contractor did not request specific additional funds for variations
Breach of contract - Contractor abandoned site when works were incomplete -Failure to complete by estimated completion date - Whether repudiatory breach by owner's inability or refusal to pay - Whether repudiatory breach by contractor's abandonment of works - Whether breach by contractor's misrepresentation of the stages of work or monies expended on the project
Negligence - Whether contractor failed to carry out works in a good and workmanlike manner - Negligence causing financial loss
Measure of damages - assessment of damages - mitigation of damages
The claimant desired a building to serve as her house, an office for her business and residential apartment units. In May 2007, she entered into a written contract with the defendant contractor to construct the building as specified in the design approved by the planning authority for the sum of
$700,500. The claimant had obtained a loan from the bank which was paid in installments at various stages of the work. The contract provided for the retention of 5% of the contract sum until the final stage was complete. A total of $677,600 was drawn down by the contractor between June 2007 and November 2008. The estimated completion date was 31 March 2008.The claimant directly or indirectly authorized the variations to the plan. The building was not finished in December 2008 as the defendant abandoned it when the funds ran out on him due to major variations to the building.
There was an exchange of correspondence between the parties wherein the claimant demanded a new completion date from the defendant and pointed out the financial hardship caused by the failure to complete as planned. The defendant responded alleging that the failure to complete was the result of the claimant's numerous variations, inability to make up her mind and her deduction of sums from the draw down to make her mortgage payments.
The claimant brought these proceedings seeking damages for breach of contract for the defendant's abandonment of the works, alleging defective works, and breach of other contractual duties. The defendant denied being in breach stating that the breach was caused by the claimant's inability or refusal to pay for changes to the plan as stipulated by the contract. In the alternative, he argued that he had determined the contract in accordance with its terms. The defendant denied that the works were defective. They were merely incomplete.
HELD:
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(1) There was an entire contract to construct the house for the fixed price stated in the contract which provided for payment by installments. After the final draw down in November 2008, there was an obligation on the defendant to complete the house.
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(2) The effect of clause 9 " the costs of any changes to the Plan by the Owner, in a manner that will cause an increase in the Estimate will be borne by the Owner" is that the defendant was obligated to construct the house in accordance with the approved plan and any variations accepted under this clause for the contract sum. During or upon completion of the house, he would be entitled to recover an agreed sum; in default of agreement, a reasonable sum for increased costs above the contract price resulting from the changes to the approved plan: see Halsbury's Laws of England, 4 th ed. Vol. 4, paras. 1227 and 1178.
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(3) There was no breach occasioned by failure to complete by the estimated completion date because there was no provision in the building contract making time of the essence, nor did the claimant give notice to make time of the essence. In light of the variations, the claimant could not insist on completion by the estimated completion date, but only on completion within a reasonable time: Holme v Guppy (1838) 3 M & W 387; Charles Rickards Ltd v Oppenheim [1950] 1 K.B. 616.
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(4) The claimant did not repudiate the contract by her 'inability and/or refusal to pay. The claimant would have been liable to pay the additional costs upon the request of the defendant. However, the defendant never requested a specific sum of money therefore her obligation to pay never arose.
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(5) The defendant did not terminate the contract under clause 17. The words " I would welcome an amicable exit from the contract" are ambiguous.
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(6) The definition of "defective work" is "work which fails to comply with the express descriptions or requirements of the contract, including very importantly, any drawings or specifications, together with any implied terms as to quality, workmanship, performance or design": Hudson op cit para. 5-025. In light of the approval of the structure as built by the Building Authority, the absence of any actual structural testing, and the ability to remedy any existing concerns during the completion of the project, a finding of defective works at this stage would be premature: Kaye Ltd. Hosier & Dickinson [1972] 1 WLR 146, 165E-G followed.
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(7) The value of the works on site is not less than the sum paid to the defendant. The claimant is entitled to recover the costs of completion less the unpaid amount of the contract sum: Mertens v Home Freeholds Co. [1921] 2 KB 526, CA applied.
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(8) The defendant is liable from the date of the breach for consequential losses "naturally arising from the breach itself", and those losses that could reasonably be foreseen as a probable result of the breach where he had actual or imputed knowledge of special circumstances. Hadley v Baxendale (1854) 9 Ex 341, 354 applied.
This dispute arose out of a building contract. Mrs. Clearlie Todman-Brown ("the claimant") wanted to build her dream house. She needed someone to draw the plans for it. She turned to her good friend of many years, Melvin Rymer ("the defendant") who is an architect and a building contractor by profession. The defendant designed the plans of the house but he had no intention to build it. The claimant relied on him to find her a good building contractor. They both chose Mr. Arthur Corion. For reasons which will become evident later, the defendant re-entered the picture. He agreed to build the claimant's house. The project did not go as planned. The house is incomplete and uninhabitable. These former friends are now before the court.
Before I attempt to deal with the issues of law raised in this claim, it is important that I rehearse some background facts. Most of what I now outline reflects uncontradicted and unchallenged evidence of the parties. To the extent that there is a departure from any agreed facts, then what is expressed must be taken as positive findings of fact made by me.
On or about October 2005, the defendant designed the plans for the construction of a 3-storey house on the claimant's land. He submitted the plans for approval to the Development Control Authority. The plans were approved on 17 February 2006.
As the defendant did not have the time to build the claimant's house, he introduced her to Mr. Corion. After the claimant viewed one of Mr. Corion's projects, she and the defendant (collectively referred to as "the parties") agreed that Mr. Corion would be the main contractor.
On or about October 2006, the claimant received from Mr. Vaughn Williams, an estimator, designer and draughtsman, (who normally renders services to Mr. Corion's projects), a document of 23 pages together with a single sheet invoice, disclosing a grand total estimate of $743,542.35 for construction of the building by Mr. Corion. With those estimates, the claimant secured a loan from the National Bank of the Virgin Islands to finance the construction. In a commitment letter dated 4 April 2007, the bank confirmed its approval of a loan of $782,750 to assist her with the refinancing of a previous loan with Scotiabank and some other miscellaneous expenditure leaving a sum of $700,500 available for the construction of the house.
As the claimant knew the defendant to be a building contractor, she began discussions with him regarding to the construction of the house. She disclosed to him the written estimate of Mr. Williams, the approval of $743,542.25 by the bank and that she was seeking to have Mr. Corion build her house for that price.
However, after some discussions, the parties agreed that the defendant instead would build the house. On 31 May 2007, they entered into a written agreement called "Contract To Construct Building" ("the building contract") whereby the defendant agreed to construct a (3) storey-4 unit house for $700,500 within 10 months "in accordance with the design set out in the approved Architectural Plan No. D37/06" ('the approved plan"). The defendant drafted the building contract.
The defendant also prepared an estimate referred to as a Construction Drawdown Schedule dated 10 August 2007 2 ("the Drawdown Schedule"). The first draw down took place on 6 June 2007. Immediately after the first draw down, the defendant started the construction of the house. It is not disputed that the sum of $677,600 was drawn down from the loan sums between 2007 and 2008 with the last draw down taking place in November 2008. The Drawdown Schedule made provision for the draw downs to correlate with the stages of work.
Clause 8 of the building contract provides that "construction will...
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