England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Claim No: HT-02-206
		3 April 2003

1. This action relates to extensive refurbishment and alteration works carried out at Stortford Lodge, 25 Clarence Road, St Albans, Hertfordshire. The Claimant were and are builders with considerable experience. The Defendants, Mr and Mrs Noble, were the owners of Stortford Lodge which they had purchased several years before the Claimant was involved. The Claimant was engaged by the Defendants in late 2000 to carry out extensive works at Stortford Lodge. The Claimant carried out such work until about August 2001 at which time disputes surfaced between the parties. Although some further work was done thereafter, no further sums were paid to the Claimant. The Claimant effectively suspended work in October 2001 and, although the parties and their solicitors communicated thereafter, proceedings were commenced by the Claimant on 31^st January 2002.
2. The Defendants served their Defence and Counterclaim on the 4^th March 2002. His Honour Judge Toulmin CMG QC was the Judge allocated to the case. He ordered that a single joint expert be appointed; that expert was to be a Building Surveyor. A Mr Philip Ellis of Peter North & Partners was jointly instructed by the solicitors for both parties. He was and is a qualified Chartered Quantity Surveyor with over 20 years experience. He prepared a report in October 2002 in which he reviewed the Claimant's claim and the Defendant's counterclaims for defects and repudiation.
3. The principle disputes in this case revolve around the following three areas of issue:

(i) the value of work carried out (and completed) by the Claimant;

(ii) the presence and extent of any defective work;

(iii) the occurrence (or otherwise) of an accepted repudiation (if any) on the part of the Claimant.

Procedural Matters

4. There were hearings on the 9^th December 2002 and the 26^th February 2003. On the first day, the Claimant applied for leave to amend the Particulars of Claim; I gave leave to amend in the terms sought. The Claimant also applied for leave, belatedly, to serve a Reply and Defence to Counterclaim. Following argument, I gave leave to the Claimant to serve a Reply and Defence to Counterclaim in the terms sought, save for the deletion of the proposed Paragraph 3(b).
5. On the second day, following an adjournment of some 11 weeks, the Defendants applied for leave to serve an expert report relating to heating and ventilation matters. That application was opposed. In the exercise of my discretion, I refused leave to the Defendants to serve and/or rely upon such report. I gave my detailed reasons at the time but my view, in summary, was that the application was made much too late; it would have significantly disrupted the trial and would have led to a disproportionate increase in the cost of the hearing.
6. I heard evidence from Mr Elvin and Mr Wheeler for the Claimant and Mrs Noble for the Defendants and Mr Ellis, the joint expert. It was agreed that Mr Noble's witness statements should stand as evidence, although he was not called as a witness because, effectively, Mr Noble's evidence duplicated Mrs Noble's. A witness statement of Anthony Owen, a heating and plumbing engineer, had been submitted by the Defendants, although he was not called as a witness. His evidence was accepted but only upon the basis that he had visited and prepared a report relating to the heating and plumbing matters; it was expressly disavowed by the Defendants as expert evidence in any way. Accordingly, his witness statement, on that basis, added very little by way of assistance.

The factual background to the contractual relationship

7. Mr and Mrs Noble purchased Stortford Lodge in late 1999 or early 2000. By early 2000, they had retained a Mr Maradadi to design the colour schemes for the proposed interior decorations of the house and to design and advise on procurement in respect of the proposed alterations to the kitchen and the three bathrooms.
8. Stortford Lodge is a reasonably substantial detached house built probably in the early part of the Twentieth Century. The proposed works, apart from a substantial amount of internal refurbishment, also included for the renovation of the front elevation, construction of a new bathroom on the first floor, certain external works and the construction of a new porch. Certain of these works were the subject-matter of a planning application made by Mr and Mrs Noble which was initially turned down. However, by way of appeal, the Planning Inspector allowed the appeal by his document dated 18^th October 2000.
9. Apart from the involvement of the Claimant, Mr and Mrs Noble were to some extent unlucky. In about September 2000, Mr and Mrs Noble engaged a firm of builders called Classic Builders to carry out the substantial refurbishment works. These works did not progress well and there were numerous problems with the work. Initially, they engaged a surveyor to advise them about the work done by Classic Builders. They also called in the Claimant to advise on remedial work required to the work of Classic Builders. Mr Elvin of the Claimant company was critical of the work of Classic Builders. Thus it was that the Nobles terminated their arrangement with Classic Builders in November 2000.
10. From as early as 4^th October 2000, the Claimant was asked to provide estimates for the work remaining to be done. Those estimates were, or certainly include, estimates dated 4^th October 2000, 3^rd November 2000, 8^th November 2000, 15^th November 2000, 22^nd November 2000 (four in number), 20^th December 2000 and 13^th March 2001.
11. These estimates were accepted by the Nobles in whole or in part and there were, as appears hereafter, a substantial number of additional or altered works which were called for by the Nobles.

The Contract(s)

12. The Claimant and the Defendants both, in their pleadings, assert and accept that there was one contract. Although there is no doubt, as indeed accepted by both sides, that a contract came into being when the Defendants instructed the Claimant by a letter dated 16^th November 2000 to carry out works listed on an attached sheet (not produced to the Court), it is clear that further works were agreed to be done and paid for thereafter. Both Counsel accepted that the further agreement that work should be carried out effectively gave rise to a series of further agreements or, arguably, variations to the terms of the initial agreement between the parties. Nothing, however, turns particularly on whether there was one contract between the parties or a series of contracts.
13. Both parties accepted, properly, that there were no binding specific agreements on the price or prices to be paid for the work and materials to be provided. It was accepted by both sides, properly, that the Claimant was entitled to be paid, by implication, a reasonable price for all the work and materials carried out and provided by them. It was also agreed that the Claimant was entitled to reasonable instalments by way of stage payments which were to be paid within a reasonable time by the Defendants.
14. It was also accepted by both parties that the Claimant owed, contractually, to the Defendants, duties to carry out the required building works with reasonable skill care and diligence, supply good and proper materials, supply materials which were reasonably fit for the particular purpose for which they were being acquired and to carry out the works in a reasonable time.

The history of the works

15. The works proceeded from November 2000 onwards. It is clear, not least from Section 3.3 of Mr Ellis' Scott Schedule, that there were a very substantial number of additional works or alterations called for by the Defendants and executed by the Claimant.
16. It is clear that the Defendants were disappointed at the rate of progress. Their frustration surfaced, initially mildly, in about April 2001 but with increasing urgency by mid-August 2001.
17. On the evidence which I have seen and heard, I am not able to find on a balance of probabilities that the Claimant was contractually responsible for any delays which occurred. It is inconceivable that a substantial element, at least, of the delay was not caused or materially contributed to by the numerous additional and extra works which were called for by the Defendants. That there were other factors delaying the works which were not the Claimant's responsibility is evidenced by an undated five page fax from the Defendants to the Claimant (Bundle F/24-28) which indicated that the Defendants "(hopefully) [had] done all the things that were holding the work up". Although Mr and Mrs Noble in their witness statements identified times at which the Claimant's progress was said to be poor, there is no analysis or context given to these complaints.
18. It is unnecessary for me to make further findings with regard to the Defendants' complaints about delay. There is no or certainly no clear allegation in the Defendants' pleading that the Claimant was materially in breach of contract so far as progress was concerned, although there is an unparticularised allegation made (in Paragraph 10) that " the Claimant has consistently shown a lack of managerial resolve in pursuing the building works diligently and the delays caused by such an attitude led the Defendants to seek the state of their account in or around March 2001"; however this is not pleaded as a breach. No loss or damage is pleaded as being the consequence of a failure to maintain proper progress.
19. It was in the context, however, of their concerns about progress that the Defendants wrote to Mr Elvin of the Claimant on the 12^th August in the following terms:

"As you are aware, the progress on our property is extremely slow. It has now come to a point when we need to get this project finished. As such, we feel that a reasonable timescale with appropriate manpower allocated would be the end of September 2001 for everything to be totally completed, with the exception of decoration to the hall, stairs and landing…

In order to prevent any further deterioration and to achieve the finish date of end September, we would ask that you provide a statement of account showing payments received and balances outstanding…

We will prepare a snagging list in the next week which can then be timetabled into the works schedule."

20. Mr Elvin replied by his letter dated 16^th August 2001 explaining that the Claimant was not responsible for the current state of affairs and suggesting that "all works other than small snagging items are complete or are awaiting further instructions from you". He undertook to provide a "final account of works completed to date (subject to any further alterations)". Meanwhile, the Claimant's invoice of 2^nd August 2001 in the sum of £17,625 remained unpaid.
21. So far as I can ascertain, works continued to proceed to some extent in August and September 2001. However, the Defendants did not produce the "Snagging List" which they had indicated they would provide in their letter of 12^th August 2001 until late October 2001. The Claimant did provide further broken-down invoices dated the 25^th September 2001 under cover of its letter dated 28^th September 2001, although the invoices were said not to be complete as some works were still in progress. The Claimant provided Mr and Mrs Noble with a Statement of Account as at 8^th October 2001 which suggested that £54,221.80 was outstanding.
22. By a letter dated 11^th October 2001, Mr Elvin wrote to the Nobles stressing disappointment that no monies had been received to date and that the invoice of 2^nd August 2001 had now been outstanding for over 60 days. He asked for a substantial percentage of the account to be paid without delay.
23. Mr and Mrs Noble replied by letter dated 18^th October 2001 in the following terms:

"Unfortunately, Peter [Noble] was tied up all day in Wednesday and was therefore not able to call you. However, as he did advise on Tuesday, we are in the process of securing additional funds as our assets held on the Stock Market have plummeted due to the American crisis. As I am sure you will appreciate, this is not a situation would could have predicted, nor one which we welcome.

With regard to your comments on availability of funds prior to commencement of works, this is somewhat difficult to do when all the costs are not known in advance. Obviously we had a considerable amount at the ready which we could draw down immediately, but after this time, we were expecting to be using funds outlined above.

We do not see any point in instructing solicitors, but realise it is your prerogative to do so if you feel it would serve your interests better. Again, we state that we are not deliberately creating a delay based on the personal reason against you but are simply trying to sort out some financial matters in the wake of the economic change which has affected both our holdings and our business along with thousands of others.

I should have more information tomorrow as to when the funds will be available for me to draw down and will advise you accordingly. I will then be happy to pay a further amount on account, although I do not think that 95% is appropriate giving the outstanding level of work."

24. Mr Elvin replied by letter dated 19^th October 2001 in the following terms:

"Much as I appreciate that you are trying to raise money in the most cost-effective way to you, this does not relieve the difficult position you have put me in. You still have not indicated when the money will be available. I am sorry to labour the point, but I cannot plan if I do not know when we will have the money. As it is, I have had to increase my overdraft facility at my bank in order to fund other jobs…

I do want to settle this amicably – we have worked together for a while now and achieved a great deal in your house. The works we have invoiced you for are complete. You have not been invoiced for unfinished work.

We will now proceed as follows. We will give you a few days grace in order for you to raise the money before taking legal action. We would appreciate a definite date of payment. If all the invoices are not paid in full within fourteen days (excluding the 5% retention against snagging), we will issue a Statutory Demand to recover the debt.

I am sure you realise that we must protect ourselves and our business from further damage."

25. As is clear from Mrs Noble's Second Witness Statement, the financial embarrassment referred to in their letter of 18^th October 2001 was resolved on or shortly after the 24^th October 2001 because the Bank of Scotland increased their loan or overdraft facility by over £100,000. There is no evidence to suggest that this information specifically or generally was conveyed to the Claimant.
26. By letter dated 28^th October 2001, the Defendants sent to the Claimant what was said to be a Snagging List as at 29^th October 2001. This contains a list of work which was said either to be incomplete or to be defective. It seems that this letter was received by Mr Elvin on or shortly before the 5^th November 2001. In their letter, the Defendants wrote:

"Our proposal to complete this work is as follows. We will deposit the agreed outstanding balance with our solicitor who will pay it to you on total completion of the works. We propose that this should be done by no later than 30^th November 2001 with a penalty system in operation after that date at £250/day. We further propose that an independent surveyor should be appointed to confirm that all the work is completed and that the balance is payable."

So far further payments are concerned, they continue:

"With regard to agreeing the final balance, most of the items which we would dispute presently are simply not due as they are incomplete. Obviously once this situation is rectified, they will fall due for payment."

27. By letter dated 5^th November 2001, Mr Elvin replied to this Claimant's letter. He offered a further credit against invoice sums of £14,288.32 net of VAT. The sum of £43,744.28 net of VAT was identified as outstanding in an attached Revised Statement. He wrote in the following terms:

"Please note that we have been waiting for you to sort out your finances for some time now. We have been very patient despite the obvious cashflow implications for my company.

We asked several months ago for a snagging list, which you never produced.

We have already carried out numerous verbal snagging items as you mentioned them.

To use unfinished items as an excuse not to pay is unreasonable. We have only charged for works done to date as previously stated on numerous occasions. The majority of unfinished items are down to you with, either materials that you had to supply not being there, or other contractors' work not completed in order for us to do our work. Some delays have been due to lack of instructions, eg. en-suite bathroom.

You stated in your letter of 18^th October 2001 that the reason you had delayed paying us [was] because you had insufficient funds available. It now seems strange that you are pressurising us to complete the work when you have owed considerable amounts of money for several months.

I have taken legal advice and it is not possible for you to invoke a penalty clause at this late stage. We would be happy to complete the remaining work without delay given concrete instructions, the materials you need to supply and, of course, our invoices paid up to date.

You should have got your money organised by now. We will not accept anything less than 95% of the outstanding amount (retention of 5% as in any building work payable on satisfactory completion of snagging).

We will issue a Statutory Demand to you if we have not received a substantial cheque or suitable response from you by tomorrow morning.

We have been very patient with you only to find that you are using more excuses not to pay. This is not acceptable."

28. The Nobles' response was on the same day:

"Our letter of 28^th October 2001 we believe was reasonable. We are not making any excuses as you suggest, but would rather put the money with our solicitor, which will be payable on completion. We have further offered to pay for an independent surveyor to be appointed who will say when this is done to ensure fairness…

In view of this, we do not feel that 95% payment is appropriate. The work that remains outstanding is not merely "snagging" but incomplete. We want the contract finished to the standard that we agreed at commencement and we have suggested a fair method for the short timescale to achieve this. We do not know what a Statutory Demand is but cannot believe that this route is better placed to achieve what we all want – a finished job and a paid bill."

29. Mr Elvin replied on the 5^th November 2001:

"… money held to your account with your solicitor is not money paying for the materials and labour we have paid for on your behalf. You have made no offer to pay us any of the considerable sum due.

A surveyor will only tell you that you must pay for the work that has been done and the work that has been done is that which has been invoiced for…

We cannot agree to a completion date because we don't know what we are meant to be finishing as this changes every time we speak…

We have nothing further to discuss.

A Statutory Demand will be issued tomorrow…"

There was an "NB" at the end of this letter:

"NB You still have the option of contacting us with a sensible offer before 9.00am tomorrow morning and then we can sit down and sort this out reasonably."

No such offer was made.

Thereafter, solicitors were retained by both parties. No further payments were made by the Nobles. A Statutory Demand was made for £40,000.

30. The Claimant had effectively suspended work from a date in October 2001. It is clear that the Claimant was willing to proceed with the works but only if the account was settled or at least significantly reduced. The Claimant's Directors took the decision that no further expenditure could be justified on the project until such time as some monies were received. I accept Mr Elvin's evidence in this regard.

The state of the account as at the date of suspension (October 2001).

31. Before consider the repudiation issues, it is important that I identify my findings in respect of the state of the account as between the parties as at the date of suspension. The value of the works and the amount payable to the Claimant must take into account the extent to which work was complete or incomplete as the case may be and it should have taken into account the defects, if any, in the work and/or materials provided by the Claimant. Since no issues were raised as to repudiation on the part of the Claimant prior to suspension, the appropriate method of valuation of defective works is the amount which it is probable that it would have cost the Claimant to put right the defects.
32. My task of carrying out this evaluation has been immeasurably assisted by the work done by Mr Ellis, the agreed joint single expert. It is immediately clear from the extensive work which he has done that he, in consultation with the parties and their advisers, has identified all the matters in issue. It is also clear from that exercise that he has not paid a strict or slavish attention to the pleadings. It was, however, agreed by both Counsel on behalf of their clients that I should have regard to the Scott Schedule documentation produced by Mr Ellis as broadly identifying all the items of complete or incomplete work and defects. The large majority of items in those Scott Schedules are agreed or not challenged. Accordingly, in determining the proper value of the work an materials provided by the Claimant up to the time when the works were suspended, I will have regard to the Scott Schedules in preference to the pleadings. I found Mr Ellis to be a convincing, reliable and straightforward expert whose evidence I unhesitantly accept.
33. It became apparent when Mr Ellis gave evidence that he was using and referring to a later version of the Scott Schedules than were in Court Bundles available to both Counsel and to me. I directed that the final version of Mr Ellis' Scott Schedules should be served with either party making any further representations in writing which they wished to do so, and giving liberty to the parties to apply for a further hearing. Further Revised Scott Schedules were served. Neither party made further representations, although the Claimant's solicitors prepared a Schedule of Comparison showing the alterations between the Scott Schedules which were in the Court Bundles and the new Scott Schedules. Neither party applied for a further hearing. Accordingly, I am proceeding upon the basis of the final versions of those Scott Schedules.
34. Mr Ellis' first exercise in the Part of the Scott Schedule numbered Section 3.3, pages 1 to 6, has been to value all the work which the Claimant estimated for or, if not estimated for, was said to have been asked for and/or done by the Claimant as if it had been completed properly and to the requisite standard. That exercise, which was not challenged and which was accepted by the parties shows that the total notional cost of all such work if completed by the Claimant would have been £158,639.88. Against that a total of £95,987.50 has been paid by the Defendants, leaving a net sum of £62,652.38 which would have been payable if the Claimant had completed all the works to the requisite standard.
35. Against that gross figure there are, however, a substantial number of adjustments to be made to reflect work which was incomplete or which was defective. Mr Ellis dealt with these in the documents which were entitled Part A (pages 1 to 7 and pages 1 to 3) addressing incomplete works and Part B (pages 1 to 14 and page 1) which addressed defects and remedial works costs. Inevitably, there is some overlap and duplication between Parts A and B; Mr Ellis produced a reconciliation which needs to be taken into account.
36. I will now address each of the items in the Scott Schedules (Parts A and B) which were identified as being in dispute and give my judgment on each.

Item A/38

37. This relates to work which remained to be done in the downstairs bathroom, various fittings remaining to be cleaned. Mr Ellis identified that a deduction of £56.25 should be allowed; however he and both parties agreed an appropriate allowance was £30.00. Accordingly, only £30.00 will be allowed against this item; £26.25 is therefore to be deducted.

Item A/39

38. This item relates to the repainting of radiators in the conservatory which was required to be redone. Mr Ellis' comment was that radiators had defective paint spray which would be outside any 12 months warranty. He allowed costs for the Claimant to respray of £150.00 and for plumbers' cost of removing and refixing the radiators of £80.00; he split this by 50% because it was said to be due to delay. As I have found that there was no established culpable delay on the part of the Claimant, delay is immaterial. Mr Ellis accepted that if the Claimant was required to carry out this work effectively before suspension, an appropriate allowance would be £20.00. Accordingly, I accept that approach for the purpose of Part A and an allowance of £20.00 will be made. As will be seen hereafter, however, I allow a greater sum in Part B to reflect a fuller allowance.

Item A/43

39. Mr Ellis stated in evidence that there should be no deduction against this item. This was not work which had been included by him in his Section 3.3 analysis. I found Mr Ellis' and Mrs Noble's evidence about this item confusing; Mrs Noble's evidence was insufficiently clear to demonstrate that the Claimant acted in breach of contract. There was no other specific challenge to his evidence on this point from either party. Accordingly, I make no allowance against Item A/43.

Item A/50

40. This relates to folding doors provided and installed by the Claimant in the kitchen. There is no real dispute but, and I find, that the Claimant in breach of contract for providing doors which were somewhat too large and seals which were too tight; in consequence of this, one door had split and needed to be replaced. The other doors need to be eased and adjusted. Mr Ellis considered that a total sum of £1,120.00 was an appropriate allowance. I accept his views on this and will allow what he considers appropriate, namely £1,120.00. It was suggested by the Defendants that it would be impossible to match the replacement door with the remaining doors. I do not accept that. It is suggested by the Claimant that removal of this door would produce some betterment; I reject that; in any event any betterment would be unavoidable.

Item A/65

41. This was one of several examples of complaints which, on analysis, need not and should not be included in Part A. It related to a damp problem above a fire door in the Utility Room. Mr Ellis, in evidence, would not and could not attribute this problem to any fault on the part of the Claimant. It is, however, in Part A because it is also in his Section 3.3 Notional Costs of Works. Accordingly, if it were to come out of Part A, it would also have to come out of Section 3.3. For accounting purposes, I do not propose to take the item out of each of Part A and Section 3.3. It simply represents an accounting allowance which will make no difference to the overall net total.

Items A/81-83

42. Items A/81 and 82 fall into the similar category to that identified in Item A/65 above. So far as Item A/83 is concerned, this relates to making good a damp patch internally in the Back Bedroom. I am satisfied that this is work which would have been covered by work which the Claimant undertook to do and it was not done. Accordingly, the appropriate allowance to make is that identified by Mr Ellis, namely £65.00.

Item A/88

43. This relates to the wastepipe to the bath in the Top Bathroom. I accept Mrs Noble's evidence in this regard. The plumber employed by the Claimant positioned the waste in the wrong and in an appropriate position. Mr Elvin, although he accepted that the pipe was not in the best position, suggested in evidence that the plumber was told by Mrs Noble to position the waste in the position adopted by the plumber. The plumber, however, was not called; Mr Elvin's evidence was effectively unreliable hearsay and I accept what Mrs Noble said. I accordingly make here the allowance of £142.50 against this item adopted by Mr Ellis.

Item A/104

44. This relates to the standard of external decorations. Mr Ellis is of the view that the standard of external decoration work done by the Claimant is poor and would effectively have to be redone during the snagging stage of a project such as this. Accordingly, I allow the amounts which Mr Ellis allows. There is one sum, £525.00 relating to redecorations to rainwater goods which was probably not the responsibility of the Claimant. However, an identical sum of £525.00 has been allowed by Mr Ellis in his Section 3.3. Accordingly, for accounting reasons, this amount will remain in both Section 3.3 and Part A.

Item A/105

45. This item relates to defects to the rear external work. I am not satisfied that the Claimant carried out its work defectively. The problem is that following such work as the Claimant did, there has been a certain amount of flooding on the patio. The Defendants suggest that if there was no flooding before and there was flooding afterwards, there must be some fault on the part of the Claimant. However, Mr Ellis was unable to identify any defective work or materials on the part of the Claimant either at all or such as would have caused or contributed to the flooding. Accordingly, I am not satisfied that there was any culpably defective work on the part of the Claimant. That having been said, an allowance of £386.00 can properly be made against this item simply and solely because that figure has been included in Mr Ellis' Section 3.3. Accordingly, for accounting purposes I will allow that figure as opposed to the sum of £390.00, allowed by Mr Ellis.

Item A/113

46. This item relates to what are said to be serious deficiencies in the boiler and gas works and installation carried out by the Claimant and its sub-contractor. The problem here for the Defendants is that there is no admissible expert evidence to support their allegations of such defects, save that Mr Ellis has identified a number of obvious deficiencies. Mr Ellis, who does not have any relevant expertise in heating, plumbing and gas installation, design or work, frankly accepted that he could not generally offer any sensible opinion other than (in oral evidence) that he did not think that the Claimant's solution was obviously unsuitable. The Defendants had proffered the statement and report of Mr Owen but did not rely upon it for its contents or as an admissible opinion on the presence and causes of remedial works for alleged defects in the installation. Furthermore, they did not have leave from the Court at any stage to rely upon it. This is not surprising because the parties had agreed, and HHJ Toulmin CMG QC had ordered, a single building surveyor joint expert. As indicated earlier in this judgment, they applied belatedly on the adjourned second day to adduce evidence from a heating and plumbing expert. This was so late and would have been so disruptive to the trial that I felt constrained to refuse the application to adduce such evidence.
47. Mrs Noble in her second statement explained that when she and her husband purchased the house it had a dual and zone heating system. She continues in Paragraph 9:

"With regard to the heating system, the Claimant was to remove the existing two boilers from the Boiler Room off the Kitchen and disconnect the gas supply there, install a new boiler in the garage (Utility Room), provide gas supplies to the same, provide and install new radiators and heating supplies to the new bathroom."

48. It seems clear, and I so find, that the Claimant was asked to quote and effectively quoted to provide what it did actually provide. I accept Mr Elvin's evidence that the Claimant was never asked to provide a zoned system. The Defendants rely (in paragraph 6(c) of their Defence) on an implied term "that the materials supplied by the Claimant would be reasonably fit for the particular purpose for which they were being acquired". There is no suggestion and no reliable evidence that the materials supplied were, as such, not reasonably fit for the purpose for which they were being acquired. Accordingly, I generally reject the claim by the Defendants that the heating and plumbing installation was unfit for purpose in that context.
49. Whilst I have no misgivings about my refusal to give leave to the Defendants to introduce at a late stage a further expert report on this topic, the Defendants have been somewhat unfortunate in denying themselves the opportunity of adducing evidence to support their case. The proper time to have raised the question of whether they could adduce their own heating and plumbing expert was either at the initial Case Management Conference or at the very latest, several weeks before the commencement of the trial.
50. I do, however, allow the deductions made by Mr Ellis against Item A/113. Mr Ellis identifies an item "Shower tray leak", against which he allows a deduction of £170.00. However although he frankly accepted that he could find no evidence of a leak or of any bad workmanship on the part of the Claimant, I accept Mrs Noble's evidence that the shower tray did leak; since there is no obvious explanation for the leaking other than bad workmanship, this deduction should be maintained.

Item A/114

51. The parties and Mr Ellis accepted that a sum of £171.77 should be allowed against Item A/114; I accordingly allow such sum.

Item A/115

52. This relates to an allegation made by the Defendants that the Claimant in carrying out certain of the external work, primarily relating to the porch, did not comply with the planning permission secured by the Nobles on appeal. There is no suggestion that the quality of the work in the areas identified in the Scott Schedules Part A, Item 115 was defective.
53. It certainly seems clear from the correspondence and, indeed, the evidence, that Mr and Mrs Noble did not notice that there was or might have been any material breach on their planning consent until a very late stage. There is no complaint in any of the contemporaneous documents before the solicitors were involved in November 2001. This is surprising, if it was truly a matter of complaint, because it is clear that detailed inspections had been carried out by or on behalf of the Defendants prior thereto on the external part of the house. Indeed, the complaint about non-compliance with the planning approval was not (and certainly not obviously) mentioned even in the Defendants' pleading in this case. However, as Mrs Noble says in her second statement the alleged non-compliance with the planning consent did not come to light until recently before her second statement (dated 22^nd November 2002).
54. Mr Elvin, in giving evidence under cross-examination made it clear that he was never given by the Nobles copies of the drawings upon which the successful planning appeal was allowed. He had been given the drawings stamped "Refused", which had accompanied the initial planning application which had been turned down. However, he said that he constructed various works, which are now complained of as not complying with the planning permission as was eventually granted on appeal, in accordance with the instructions of the Defendants. I find that evidence convincing, particularly in circumstances where the Defendants complained about numerous aspects of the work carried out by the Claimant during the course of the project, including many defects on the exterior of the building but made no complaint about any aspect of it not complying with the planning permission which they had ultimately, albeit with difficulty, obtained. I do not consider that it can effectively, therefore, be argued that the Claimant was in breach of contract for not complying with the planning permission drawings. This is even more so when it is clear that there was no express contractual term specifically to comply with any particular drawings as such.
55. Mr Ellis, in any event, is of the view that the prospects of the Planning Authority not allowing the changes are very low. I find that in all probability the Planning Authority would allow such amendments to the planning permission, if and to the extent that the same has to be sought. The fact that the Planning Authority has not objected for some 18 months to 2 years following the execution of the offending work lends some support to this view. Since, however, there is no default on the part of the Claimant, the allowance of £150.00, which Mr Ellis makes to allow for a further planning application to be sought, is not an appropriate allowance to make. Even if I had found that there was a default on the part of the Contractor, I would not have allowed any part of the cost of the construction because, on the balance of probabilities (on the evidence presented), such a cost is unlikely to be incurred at all.

Summary of Part A

56. The total allowed by Mr Ellis by way of deduction from the Claimant's entitlement was £17,494.38. In the light of the findings which I have made above, that sum falls to be reduced by £468.21 made up as follows: the deductions to be made from Mr Ellis' figures in Part A as follows:

Item A/38 £26.25

Item A/39 £95.00

Item A/43 £195.00

Item A/105 £4.00

Item A/114 (£171.77)

Item A/115 £150.00

£398.48

Add VAT at 17.5% £468.21

This leaves a net sum of £17,026.17 to be deducted from Mr Ellis' Section 3.3 exercise.

Defects

57. I now turn to Part B of Mr Ellis' Scott Schedules. I do this in the context, at this stage of this judgment, of the need to determine what it would have cost the Claimant to put right established defects. This is, in my judgment, the appropriate way to value as at the date of suspension the Claimants' work to take into account defects. An accounting problem created by the way in which Mr Ellis has done his Parts A and B of the Scott Schedule is that there is a significant overlap and duplication between Parts A and B. This has mostly arisen because, generally (but not wholly), he has sought to identify in Part B the increased cost of completing and remedying incomplete and defective work, assuming that it was to be done by new contractors retained by Mr and Mrs Noble. Accordingly, in this part of the judgment, I will only deal with those defects which are not duplicated within Part A. Some items logically which area in Part B should be in Part A and vice versa; I will not attempt to reorganise Parts A and B. I will now turn to each individual matter in Part B subject to this reservation.

Item B/5

58. This item is not in issue, but since it allows for a premium of 25% for contractors other than the Claimant to carry out the work, I exclude that premium and allow, against the total sum identified of £59.38, the sum of £47.49.

Item B/7

59. Although this item is duplicated in Item A/88 (see above), Mr Ellis only allowed £142.50 on a "50-50 split due to unclear liability". As indicated in my comments on Item A/88, it is my view that this is the fault of the Claimant and a further sum of £142.50 should be allowed against this item in Part B. I, accordingly, allow the sum of £142.50 here.

Item B/23 and 24

60. Mr Ellis confirmed in evidence that this work was probably not properly included in Part B because the work was not defective as such. It should have been in Part A because it was work which was to have been carried out by the Claimant but in the result was not. Mr Ellis allowed, he said, a sum of £2,671.89 (see Section 3.3/Page 2 of his Scott Schedule). He confirmed that that was the sum to be allowed here out of the sum which it would have cost the Claimant to carry out the requisite work identified at Items 23 and 24 as not having been done. Accordingly, in the exercise which I am now doing, I will allow the sum of £2,671.89.

Items B/26 to 63

61. Subject to two aspects, these items were not in dispute: it was essentially accepted that there were a number of decoration defects as found by Mr Ellis. The first is that he has allowed here a premium of 25% for completing works by others, that is other than the Claimant. Accordingly, for the current exercise, I reduce the amount allowable to £4,535.00. There was, furthermore, much discussion about whether this sum should be reduced to reflect what may or may not have been wrongly referred to as "betterment". This contention arises because external paintwork, such as one is primarily concerned with in respect of these items, needs to be repainted usually every five years. Although Mr Ellis ideally considered that external paintwork should be repainted every three years, he accepted that it was more common for it to be done approximately every five years. The "betterment" arises because the Defendants would be carrying out the remedial painting part way into the life of the five year cycle. This argument, however, does not arise on the exercise which I am doing which is simply seeking overall to determine what the value of the Claimant's works were immediately prior to suspension. I find that the appropriate allowance to be made for the defective work is £4,535.00 as reflecting the value of the defective work on the assumption that it was to be remedied by the Claimant. However, since that amount has been already allowed under Part A (Items 102-104), I make no additional allowance here.

Item B/82

62. This is not in issue and is not duplicated in Part A. Accordingly, I allow the sum of £40.00.

Items B/96 and 97

63. Again, these items are not in issue and I will allow the sum Mr Ellis has identified, namely £40.00 against each item.

Item B/107-110

64. Since there is no issue about these items, I allow these sums in the amounts which Mr Ellis has identified as appropriate deductions, namely £80.00 against each. Item 110, I only allow, not because there is necessarily a defect which is the responsibility of the Claimant, but as an accounting allowance because it has been included by Mr Ellis in his Section 3.3.

Item B/120

65. This item relates to Airing Cupboard doors which have warped in time and do not meet. Mr Ellis identified that the problem is due to the fact that ironmongery had not been fitted to the doors to keep them in place at the time that the Claimant suspended work. Accordingly, the problem has arisen as a result of the ironmongery not having been fitted. This has allowed the airing cupboard doors in time to warp. This is not, in my judgment, bad workmanship but simply the consequence of the work not being completed by the Claimant. Accordingly, I will make no allowance in the exercise which I am doing against this item.

Item B/126A

66. As indicated in my remarks under Part A, I do not consider that there is any established default on the part of the Claimant. Accordingly, I will make no allowance against this item.

Item B/127A

67. This is not a defect (and should not be in Part B) and the sum of £468.00 has been included by Mr Ellis in his Section 3.3; although this decoration work to the Entrance Porch was not done by the Claimant, there must be a deduction somewhere from the overall account to reflect this fact. Accordingly, I allow the sum of £468.00 as an appropriate allowance to make here to reflect the fact that the work was not done.

Item B/128A

68. This item relates to the Conservatory Radiator painting which I have addressed above against Item A/39. I am satisfied that the radiators did have defective paint spray; indeed, there is no issue between the parties that that was the case. In dealing with Item A/39, I allowed a sum of £95.00. There is dispute between the parties as to what the cost of remedying the defective paintwork will be. Mr Elvin stated that it would cost fairly little because he would get a particular sub-contractor to do the requisite work. Mr Ellis disagreed. He considered that it would cost at least £150.00 per radiator, there being two radiators. I prefer Mr Ellis' views on this topic and, accordingly, will make a further allowance of £300.00 less £95.00 allowed against Item A/39, namely an additional £205.

Item B/129A

69. There is no issue about this item; this is not duplicated within Part A and, accordingly, I allow the sum identified by Mr Ellis of £40.00.

Item B/130A

70. There is no dispute that a deduction is due but since it is duplicated by Item A81/87, I make no additional allowance here.

Item B/131

71. This item is not duplicated but since it contains the 25% premium, I allow in this exercise only the sum of £37.50.

Items B/136, 137 and 138

72. For similar reasons to those identified against Item B/130A above, I allow respectively the sums of £67.50, £15.00 and £82.50.

Items B/140, 142 and 143

73. For similar reasons to those set out against Item B/130A above, I allow the sums of £21.24, £17.50 and £18.50 respectively.

Item B/149

74. This relates to an allegation that tile creases had not been repointed. Whilst it is clear, as Mr Ellis confirms, that tile creases have not been repointed, the question arises as to whether there is any defect or breach of contract on the part of the Claimant. I am not satisfied that there was ever any obligation on the part of the Claimant to repoint the tile creases; I accept Mr Elvin's evidence that the Claimants was never asked to provide tile creasing. Mr Ellis did not consider that failure to repoint the tile creases was necessarily a defect at all. Accordingly, I allow nothing against this item which has not been proved.

Items B/153 and 154

75. For reasons similar to those set out against Item B/129A, I allow respectively the sums of £60.00 and £28.75.

Item B/160

76. There are two costs deductions identified here, £50.00 and £400.00. So far as the £50.00 item is concerned, that item is duplicated within Item B/12 and again in Item A/61. It allows for a premium of 25% for work to be completed by others, with which I am not concerned in my current exercise. The remaining item £400.00 assumes that the Defendants, effectively, would have to introduce a new electrician to be brought in who would, obviously, be anxious to carry out a full test; the £400.00 figure relates to a full retest and check on the underfloor heating systems. It is, accordingly, not an appropriate allowance in determining what the value of the Claimant's work was at the date of suspension because it relates to the Defendants' increased cost of completing the work.

Item B/166

77. This relates to damage to a carpet caused by leaks from a radiator installed by the Claimant. Mr Ellis was of the view that this was the responsibility of the Claimant, a view which was not dissented from by the Claimant. The issue concerns what is an appropriate allowance to make for replacing or repairing the carpet. The Nobles' case was that the whole carpet should be replaced; the Claimant argued that a small repair could be done. I am satisfied, accepting Mr Ellis' evidence on this, that it is appropriate and reasonable to replace the whole carpet in this area and, accordingly, I allow the whole sum claimed and identified as appropriate by Mr Ellis, namely £330.83.

Item B/169

78. As indicated in my remarks against Item A/115, it is my judgment that there was no liability on the part of the Claimant for not constructing the porch in accordance with the final planning approval obtained by the Defendants on appeal. Accordingly, nothing will be allowed against this item.

Item B/170

79. This item relates to defective RSJ work which appears to be duplicated within Item A/118. As the sums identified in Part B relate to the Defendants' potential increased costs of having this work carried out by others, I do not allow anything in the current exercise for this.

Summary of Part B

80. In summary, the amounts, net, to be allowed to reflect defects in the Claimant's work as at the date of suspension are:

Item B/5 £47.49

Item B/7 £142.50

Item B/23-4 £2,671.89

Item B/82 £40.00

Item B/96 £40.00

Item B/97 £40.00

Item B/107 £80.00

Item B/108 £80.00

Item B/109 £80.00

Item B/110 £80.00

Item B/127A £468.00

Item B/128A £205.00

Item B/129A £40.00

Item B/131 £37.50

Item B/136 £67.50

Item B/137 £15.00

Item B/138 £82.50

Item B/140 £21.24

Item B/142 £17.50

Item B/143 £18.50

Item B/152 £60.00

Item B/153 £28.75

Item B/163 £80.00

Item B/166 £330.83

Total: £4,774.20

To this must be added VAT of 17.5%, which would total the figure to £5,609.69.

Summary of the above findings

81. Against Mr Ellis' Section 3.3 total £62,652.38, there falls to be deducted the sums of £17,026.17 and £5,609.69. The balance £40,016.52 represents, in my judgment and finding, the sum that was due to the Claimant immediately before works were suspended.

Repudiation

82. In considering the issue of repudiation, I bear in mind that it is only the Defendants who are alleging that the Claimant repudiated the contract (or contracts). It is not the Claimant which is alleging that the Defendants repudiated the contract.
83. I have set out, earlier in this judgment, the relevant history up to the suspension of works. To that history, there must be added my finding that by the end of October 2001, there was outstanding to the Claimant from the Defendants the sum of £40,016.52.
84. The first area of fact and law in this context to consider is whether or not the Defendants owed an obligation to pay all or any part of that outstanding sum as at the date of the suspension. Given the implied terms that the Claimant was entitled to be paid a reasonable sum and within a reasonable time, the finding about the reasonable sum is set out above. Payment within a reasonable time would, in practice, be initiated by an invoice from the Claimant. Certainly as between the parties to this dispute there had, historically, been established a course of dealing since November 2000 whereby the Claimant submitted regular invoices. However, the reasonable period following the invoice could take into account how long before the invoice was submitted the invoiced works or materials were done or provided; it could take into account the reasonable period for the Defendants to arrange for payment, although I do not consider that more than 2 weeks at the outside would normally be required for this; the period could take into account the degree of particularity on the invoice.
85. There was some dispute as to whether the Defendants were entitled to withhold payment in August 2001 because the Claimant's invoice dated 2^nd August 2001, which claimed £17,625.00 in total was wholly unparticularised. Much more detailed invoices were provided towards the end of September (four being provided on 24^th and 25^th September). The issue relating to the non-payment of the invoice of 2^nd August 2001 does not really matter in the result. By the time that the Claimant suspended work, it is clear in my judgment, that at least the sum of £40,000 (see above) was due and payable by the Defendants to the Claimant. That had been fully invoiced in detail in Invoices numbered 526, 564, 576, 582, 583 and a detailed breakdown dated 26^th June 2001, all of which were in the bundle put before the Court. It is clear that the latest of these invoices was dated 25^th September 2001. A reasonable period for payment would be no more than 3-4 weeks. That period had expired by the time that the Claimant suspended work.
86. In failing to pay that outstanding sum by late October 2001, the Defendants were in breach of the contract or contracts which they had with the Claimant. It was not a valid excuse for the Defendants to put forward, as they did, as an excuse not to pay, financial difficulties. Those financial difficulties were not in any way of the Claimant's making; they had arisen because the Defendants were unable to raise appropriate levels of cash in liquid form. This was attributed to the fact that following the events of September 2001 in the USA, their holdings in the Stock Market had "plummeted". Whilst one sympathises with the Defendants' predicament, the risk of reasonably prompt payment of interim invoices rests with the paying Employer. In any event, as Mrs Noble explains, that very short term financial embarrassment disappeared on or about 24^th October 2001 when the Nobles' Bank increased their loan or overdraft facility by over £100,000.00.
87. It became clear by the end of October 2001 that the Defendants were simply not prepared, whether sums were available or not, to make any further interim payment. By their letter of 28^th October 2001 to the Claimant, the Defendants proposed four significant alterations to the simple contractual arrangements which they had, namely:

(a) any sum outstanding to the Claimant would not be paid immediately, but would be paid on total completion of the works; in the meanwhile it was to be held by the Defendants' solicitors;

(b) completion should be no later than 30^th November 2001;

(c) there should be a penalty or liquidated damages for delay beyond that date at the rate of £250.00 per day; and

(d) an independent surveyor was to be appointed to value the work and confirm that the work was completed.

88. None of these proposals were acceptable to the Claimant who was, in my judgment, entitled to reject them. They all involved significant changes in the contractual relationship, the most important one being that the Claimant was not to be paid any further sums on account.
89. Given that the Defendants were in serious breach of contract for failing to pay a significant outstanding sum which was due, the next question which I must turn to is whether or not, in all the circumstances, the Claimant was entitled to suspend work. The undoubted reason why the Claimant did suspend work was that the Defendants were not paying sums which were due. The Claimant was not willing to continue with the work and complete it unless further sums due were paid.
90. Although it is not alleged by the Claimant that the Defendants repudiated the contract let alone that the Claimant accepted any such repudiation, it is my view that the Defendants were in repudiatory breach of the contract. They were in breach of what to the Claimant was a most important term of the contract, namely that reasonable sums due should be paid at reasonable intervals. Not only were the Defendants in breach of contract by late October 2001 for not paying, they were threatening (in breach of contract) not to pay any further sums until the works were completed. Although the Claimant was financially able to complete the works, it is undoubtedly the case that the Claimant's suspension was brought about directly as a result of the Defendants' breach of contract in failing to pay. In those circumstances, the Claimant was entitled to suspend the work. It certainly cannot be said that the suspension triggered as it was by the Defendants' own breach was itself repudiatory. The Defendants cannot rely upon its own breach to justify a contention that the Claimant was itself in repudiatory breach.
91. Reliance has been placed by the Defendants on an unreported case, D.R. Bradley (Cable Jointing) Ltd v. Jefco Mechanical Services Ltd (1998), referred to in the footnote in Chitty on Contracts, 28^th Edition, para. 37-199. I have been unable to find or obtain a copy of this case. I am not convinced that the learned editors' statement in the book ("non-payment by the employer is not generally a breach which will entitle the contractor to treat the contract as at an end") is correct or, at least, unconditionally correct. Failure or refusal to pay sums due under a building contract can amount and often does amount to repudiatory conduct on the part of the employer. This will obviously depend upon the terms of any construction contract. Many construction contracts have termination clauses which, invariably, permit the Contractor to terminate under the provisions of the contract on the grounds of non-payment by the Employer. The obligation to pay on the part of the construction contract employer is one of the most important obligations which the Employer has. A refusal to honour payment obligations, at least insofar as it relates to a relatively sizeable sum of money due or the threat not to pay further sums due in accordance with the contract must be capable of being repudiatory.
92. The Defendants argue, on the facts, that the Claimant was only prepared to proceed to complete the works provided that the Defendants paid 95% of all invoiced sums. 95% of all invoiced sums, net and outstanding, would have involved a further payment to the Claimant of some £51,000.
93. Reference to the correspondence which I have set out earlier in this judgment demonstrates, however, that the Claimant was not insisting upon 95% of all invoice sums. On the 11^th October 2001, Mr Elvin asked for "at least a substantial percentage" of the outstanding account. His letter of 19^th October threatened a Statutory Demand if 95% of the invoices were not paid within 14 days. In one letter dated the 5^th November 2001, Mr Elvin stated that his company would not "accept anything less than 95% of the outstanding amount (a retention of 5%…)". The use of the word outstanding probably meant payable. His other letter of 5^th November in the "NB" at the end of the letter made it clear that they would entertain any sensible offer. In the last of these letters, I do not consider that the Claimant was insisting upon 95% payment of all invoiced sums as a precondition to continuing with the work.
94. The Defendants purported in their Defence and Counterclaim to accept the Claimant's repudiation. Although it is and must be theoretically possible to accept a repudiation by service of a pleading, in my judgment, the Claimant had not committed any repudiatory breach of contract. Although not argued by either party, a reasonable inference to draw from all that had happened and had not happened between October 2001 and March 2002 is that the parties had mutually abandoned the contract. I do not, however, have to make any such finding.
95. My conclusion on this topic is that the Claimant did not repudiate the contract or contracts; accordingly, the Defendants fail on this issue.

Miscellaneous issues

96. The Defendants have raised, but not on their pleadings, an issue that the Claimant is not entitled to the costs of certain electrical work by a sub-contract, a Mr Wheeler, because they, the Defendants, instructed this work directly. From Mrs Noble's statement, it appears that she (or her husband more likely) asked Mr Wheeler, who was the Claimant's electrical contractor in or about September or early October to carry out some external or electrical work directly for the Defendants. Mr Wheeler in evidence accepted that the last item on his invoice dated 7^th November 2001 was instructed directly by Mr or Mrs Noble. That invoice, which in itself is not challenged, identified 8 hours of work on this particular item at the rate of £18.00 per hour, totalling £144.00 plus VAT at 17½ %, namely a total of £169.20. Unfortunately for the Claimant, it has paid Mr Wheeler for this work. I accept the evidence of the Nobles and Mr Wheeler in this regard. I find that there was a direct contractual arrangement between the Nobles and Mr Wheeler with regard to this limited amount of work which, accordingly, was not done by Mr Wheeler as the Claimant's sub-contractor. It is, however, not obvious whether Mr Ellis included this cost. On Section 3.3, page 3, he does refer to certain electrical works totalling £9,100.14 which was invoiced on 26^th June 2001. I infer that that does not include any of Mr Wheeler's work invoiced by him on 7^th November 2001, all of which is recorded as having been done after the 26^th June 2001. On page 5 of this Section 3.3, he refers to "sundry electrics in the sum of £889.71" but allows nothing against them in his assessed overall cost. I cannot find any obvious reference in any other part of Section 3.3 of his report which demonstrates that he included an allowance for this work in any event. This may be because all or some of it was work which was covered by estimates. I am not satisfied, accordingly, that there should be any reduction in the Claimant's entitlement in this regard. If the work was covered by the original estimates, then that is work which the Claimant was obliged and entitled to carry out, the fact that Mr Wheeler was instructed direct in addition would not be a bar to the Claimant's entitlement to be paid in those circumstances. If it is not covered by the original estimates, it does not appear to be included by Mr Ellis and, accordingly, there should be no deduction.
97. A number of points were raised by Mr Ellis in his report which did not find their way into any pleading. For instance, in Paragraph 2.6.3 of his first report he indicated that the provisions of the Housing Grants, Construction and Regeneration Act 1996 Part II should be applied. Neither party, eventually, relied upon that; the 1996 Act does not, in any event, apply to works such as these. I have ignored all observations made by Mr Ellis as to what he considered was the true legal or contractual position.
98. I now turn again to the alleged defects in the heating and plumbing installation. In the absence of any reliable evidence, other than that provided by Mr Ellis, I have had to limit my findings with regard to those alleged problems to findings made by Mr Ellis. I have generally adopted them (see above). It is, however, specifically argued that, irrespective of the presence of defects, the whole installation should be condemned because the Claimant retained a plumbing sub-contractor to carry out the installation who was at the time not CORGI registered. The requisite works were carried out by a Mr Stratford. He was not registered with CORGI at the time, although it is clear that he became registered thereafter. It is clear and I accept Mr Ellis' view that there is no loss flowing from this fault. As he says against Item 113:

"At the time of carrying out the works, the sub-contractor was not registered with CORGI. He now is which demonstrates that he is sufficiently competent to carry out gas works. As the issue of CORGI is one of competence, I do not consider there is a problem with the lack of registration some 9 months previously."

99. The only issue which remains is the question of illegality. The Gas Safety (Installation and Use) Regulations 1998 require a qualified person to carry out works to gas fittings and that, where works are carried out by a sub-contractor, it is the responsibility of his employer to ensure that he is registered. The Defendants argue that the Claimant's performance of that part of the contract is tainted with illegality and it cannot, therefore, recover that sum: in this case it appears to be the sum of £6,603 due for Mr Stratford's boiler and gasworks. Reliance is placed on the case of Ashmore Benson Pease and Co Ltd v. A.V. Dawson Ltd [1973] 1 WLR 828. I was referred to paragraphs 17-009 to 17-011 in the 28^th Edition of Chitty on Contracts.
100. The case relied upon by the Defendants is not directly relevant: it relates to a contract where both parties had knowingly participated in the illegal performance of the contract. There is no suggestion here that the Defendants participated in any illegality.
101. More relevant, however, is the Coral Leisure Group Ltd v. Barnett [1981] I.C.R 503 quoted at paragraph 17-010 in Chitty:

"However, that a party commits some illegality in the course of performance does not result in his being unable to enforce the contract.

"The fact that a party has in the course of performing a contract committed an unlawful or immoral act will not by itself prevent him from further enforcing that contract unless the contract was entered into with the purpose of doing that unlawful or immoral act or the contract itself as opposed to the mode of… (performance) is prohibited by law." [Coral Leisure – p.530]

Thus is St. John Shipping Corporation v Joseph Rank Ltd [1957 1 QB 267] the carrier was unable to enforce its claim for freight even though it had illegally overloaded its vessel. However, the plaintiff company would not have been entitled to recover for freight had it intended from the beginning to perform the contract in an illegal manner."

102. There is no question here and certainly there was no evidence proffered or even suggested that the Claimant entered into this contract intending or foreseeing that it would perform any part of it illegally. Accordingly, in my judgment, the Claimant is entitled to enforce the contract and be paid a reasonable price for the works in question. As there is no loss flowing from alleged illegality, this issue becomes immaterial.

Further comments on defects

103. It will follow from my findings above that it is unnecessary for me further to analyse Part B of Mr Ellis' Scott Schedules. Obviously, to the extent that Part B covers what is in Part A, my findings on Part A will have made appropriate allowances for work not done. I have made my findings with regard to Part B to the extent that there is no such overlap. Although, in a number of respects, I have found in effect in my findings under Part B that there were breaches of contract, with regard to quality, work or materials on the part of the Claimant, I have made adequate allowances against them. The Defendants should not be entitled to the increased costs of completing the incomplete or rectifying the defective work since it was their breaches in not paying for the works executed and in threatening not to pay in the future in accordance with the contract or contracts which led to the Claimant suspending the work. The only reason for the uplift (identified in Part B) is that the Defendants have not been prepared to pay what is due to the Claimants, thus securing the Claimant's further involvement in finishing the incomplete and remedying the defective work. The Defendants are the authors of their own misfortune in this regard.

Conclusion

104. It follows from the above that on the claim and counterclaim the net sum of £40,016.52 is due to the Claimant from the Defendants; there will be judgement on that sum for the Claimant. With interest agreed at £4,262.58, the total sum due is £44,279.10.