Scottish Court of Session Decisions

In the beginning of 1896 Robert Fitzroy Bell resolved to make additions and alterations to his mansion-house of Temple Hall. The architect for the work was James Jerdan, Edinburgh. Henry Steel, builder, Greenlaw, contracted to execute the mason-work in connection with the building. His original estimate was £2240, but owing to certain portions of the work not being definitely decided upon by Mr Bell at the time, though specified in the schedule, the amended estimate amounted to £1491, 5s. l0d. During the progress of the work alterations on and additions to the original plans were made and carried out, so that the gross amount admittedly due to the pursuer for work actually done was about £2500.

The general conditions and regulations signed by Mr Steel on 13th May 1896, as relative to the contract, contained the following clauses:—“5. No deviation shall be made from the drawings, specifications, and schedule of measurements signed with reference to the contract unless by instructions and drawings from the architect, but in case of such instructions or drawings being given, the contractor must immediately follow them, and such instructions shall in no degree vitiate or invalidate the contract.… (14) The work shall be commenced so soon as the contractor shall receive possession of the site or sites for same, and the contractor shall be allowed from the time of receiving possession, one week for the delivery and arrangement of his plant and materials, and at or upon the expiration of said period of one week the said works shall be commenced and carried on with all due diligence and in regular progression so that the following portions of the work may be completed at or before each of the following dates, viz., that the principal wing, namely that part of house fronting eastwards, have the walls made ready for the roof by the first of October next, and the remaining part of the building, viz. that part of the mansion facing northward, be made ready for the roof by the first January next, and the whole shall be entirely completed at or before the first day of May 1897, failing of which a penalty of 10s. per day that the mason-work remain unfinished beyond that date. Extra work, if any, shall form no ground for deviating from the dates above fixed for the completion of the respective portions of the work unless specially certified by the architect at the time. (15) The architect shall have power to delay or suspend the work during unsuitable weather, or for any other sufficient reason, but the works shall be recommenced after receiving due notice from the architect. The time lost by such delay shall be added to the time allowed for completion.… (21) The contractor must distinctly understand that in case any detail or other drawing, sketch, written or verbal instruction, be given for any part of the works whatever, and it be found that the proceeding with the works in accordance with such detail or other drawing, sketch, written or verbal instructions shall cause any additional expense, whether in the particular trade to which the said detail or other drawing more particularly relates, or cause extra work in other trades, then the contractor must immediately intimate the same to the architect and state what extra expense according to schedule rates is, in his opinion, involved by proceeding with such works. The contractor must not execute any extra work of any kind whatsoever unless upon the written authority of the architect, or any plan or drawing expressly given or signed by him as an extra. 22. The contractor shall, for any extra work which cannot from its character be properly measured and priced, render to the architect a weekly statement of such. No payment for day-work will be allowed unless supported by such vouchers.… 27. Power is reserved to make any alterations on, and to increase, lessen, or omit any portion of the works as may be thought fit, and the value of such alterations, additions, or deductions is to be calculated in strict accordance with the rates in the schedule of measurement signed as relative to the contract, and upon which the original tender is based. Any extras to which the schedule rates cannot be applied will be valued by the architect at current market prices for such work.”

From time to time during the progress of the work Mr Steel received payments to account, amounting in all to £2310. In November 1899 he raised an action in the Sheriff Court at Duns against Mr Bell for £348, 9s. 3d., the balance which he alleged to be due to him.

The defender admitted certain items in the pursuer's claim and denied liability for others. He averred that the pursuer had been very dilatory in carrying out his contract, that instead of. being finished with the work by 1st May 1897 it was between one and two years after that date before he had completed the work; that the pursuer was therefore liable in a penalty under the contract, and that although the defender was justly entitled to claim for a much longer period he was willing to restrict the penalty to £150, being as for a period of 300 days.

The defender pleaded, inter alia—“(5) The pursuer having failed to complete his contract within the specified time he is liable to the defender in the penalty provided therefor by the contract, and the sum claimed by the defender in respect thereof being well within the amount so due, the defender is entitled to take credit for the same in the settlement with the pursuer.”

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The pursuer explained that the delay in completing the work was caused by repeated alterations made on the plans by the defender, by inclemency of the weather, and by damage caused by storms.

Proof was led before the Sheriff-Substitute ( Dundas) and disclosed the following facts—(1) The mason-work was not completed till July 1898, fourteen months after 1st May 1897, the date fixed in the contract. (2) A large quantity of extra work, both in the way of alterations and additions, was ordered by the defender during the progress of the building, and some of this extra work was ordered after 1st May 1897. (3) Strong remonstrances, beginning ten days after the pursuer got possession of the ground, and continuing during the course of the work, had been made, both verbally and in writing, by the architect, for delay caused by the pursuer not putting a sufficient working staff on the job, and no reply was shown to have been made or excuse offered, even when after 1st May 1897 it was pointed out to him that the penalty days were running. (4) No application was made at any time by the pursuer to the architect for a certificate under clause 14 of the general conditions and regulations, signed as relative to the contract, to the effect that the extra work had caused delay. The proof did not show clearly what extent of the contract work was completed by 1st May 1897; what orders for alterations on or additions to the work as set forth in the specification were given after that date; how far alterations or additions ordered before 1st May 1897 hindered the pursuer from completing his contract work before that date, and how much time after 1st May 1897 was occupied with additions or alterations on the specified work.

On 16th March 1900 the Sheriff-Substitute pronounced an interlocutor disposing of the items of the pursuer's claim, partly in his favour and partly against him, and finding that from the sum due him there fell to be deducted, inter alia, “a sum of £150 in name of penalty for breach of contract.”

Note.—“This has been a most troublesome case, partly owing to its great bulk, but chiefly to the fact that the parties are not yet in a position to close their accounts. Their rights interse are defined by contract, and it is to the contract that we must go to ascertain what those rights are. The contract is in the form of an agreement appended to the specification, and signed by the pursuer on 13th May 1896. By it he bound himself to have different portions of the mason-work completed by different dates, which were not to be extended on the plea of any additions to or alterations of the plans, and to finish the whole by 1st May 1897, under penalty of ten shillings for each day that the work remained unfinished. The work was not completed till upwards of a year after the contract time, and the defender claims £150 of penalty. The pursuer maintains that the delay was caused by incessant alterations of the plans while the work was in progress, while the defender attributes it to the dilatoriness of the pursuer, and to his employing much too small a staff of workmen. The answer to the pursuer's contention is, that the contract gives to the architect unlimited and absolute power to determine any and every question that might arise in the course of the work, and to order any additions or alterations on the plans which he might think fit, without appeal to anyone. I have not sufficient practical knowledge of building contracts to say whether such a condition is usual. It is certainly very stringent, and I can easily see that it might bear hardly on the pursuer; but he signed the conditions with his eyes open, and he has no right to be relieved of his bargain merely because it turns out to be a bad one. On the other hand, it is, I think, clearly proved that the pursuer never made even an attempt to get his work finished within the contract time. That is shown both by the evidence and by the voluminous correspondence. I need not go into it in detail, but it appears from Mr Jerdan's evidence that within ten days of the signing of the contract he began a whole series of letters at short intervals, complaining of the pursuer's slowness in getting on with the work. Looking to the terms of the agreement, I do not think the pursuer's contention would have availed him in any case, still less will it do so when he never even tried to get the work done within the time which he had contracted for.” …

The pursuer appealed to the Sheriff ( Vary Campbell), who reversed the Sheriff Substitute's judgment as regards the pursuer's liability under the penalty clause, and pronounced the following finding—“Finds in law, and on a construction of the written contract for the mason-work at Temple Hall, that the defender is not entitled to enforce the penalty clause therein contained, by reason of his not having given his full orders for the work before 1st May 1897, being the date for completion of the whole work, and from which the penalty was intended to run.”

Note.—… “With regard to the penalty amounting to £150 claimed by the defender under the Temple Hall contract, I agree with the Sheriff-Substitute that, assuredly on the evidence, written and oral, the defender has much reason to complain. The pursuer got possession on signing his contract upon 13th May 1896. He contracted to finish his part of the work by 1st May 1897, and he did not finish for some fourteen months, or more than a year, after this date.

“The provisions of the Temple Hall contract bearing on the penalty clause are articles 1, 27, 5, and 21. The general effect of these clauses is to reserve to the employer full power to make alterations and order new work at any time under the contract, and without prejudice in any way to its validity. The penalty clause itself (article14) after fixing 1st May 1897 as the contract-date for finishing the whole mason-work, provides ‘a penalty of ten shillings per day that the mason-work remains unfinished after that

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date.’ It is also specially provided in the same clause that extra work is to form no excuse for delay ‘unless specially certified by the architect at the time.’ The architect has also power to make allowance for ‘unsuitable weather, or for any other sufficient reason.’

“The pursuer has no time certificates or allowances from the architect; and the defender, with the full approval of the architect as a witness, proposes, after making all reasonable allowances, to charge three hundred days at ten shillings per day, i.e., £150, under this penalty clause.

“The condition that the contractor shall pay a penalty (which I take here to mean liquidated damages) if he fails to finish by a given date, implies, as in all other contracts, that the employer shall have done nothing on his side to prevent fulfilment of the condition. In some building contracts, even where alterations or extras are allowed without prejudice to the contract, the mere ordering of such new work will prevent the exaction of the penalty— Holme v. Guppy, 3 M. & W. 387; Westwood v. Secretary for India, 7, L.T. 736; M'Elroy v. Tharsis Company, 5 R. 161; Robertson v. Driver's Trustees, 8 R. 555. This result is avoided in the present contract by the provision that extra work shall form no excuse unless certified by the architect for a time allowance. If, accordingly, the original plans, with all the alterations, had been in the pursuer's hands before 1st May 1897 I would have listened to no excuse of extra work or bad weather not verified by certificates— Jones v. St John's College (1870), L.R., 6 Q.B. 115. The pursuer having accepted the new orders must complete the whole work without fail by the date agreed on under penalty, unless relieved by the architect in due form. But, on the other hand, the employer, if he is to exact the penalty for non-completion by the appointed date, must have given out his orders for the whole work before that date. The contractor was entitled to know before that date the whole expected of him, so as to have the chance, by putting more men on the job, or otherwise, of finishing up to contract time. This was not the case here. The architect says—‘I admit that additions were made to the building after 1st May 1897. I cannot say that I knew at 1st May 1897 what was going to happen in regard to additions. I think that the alterations were made more or less by Mr Bell and myself as the building proceeded; they were not part of a definite, completed plan.’ No doubt the pursuer's delay to proceed did not deprive the defender of his contract right to order extras during progress of the work, and there is something to be said for the architect's view—‘If the pursuer had got on faster with the work, my additional extras would have been given much earlier;’ and again, ‘The delay in giving instructions was caused principally by delay of the pursuer in his work.’ It is difficult, if not impossible, for me to find out on the evidence how much new work was ordered after 1st May 1897. It is enough, however, as tc the penalty clause, that the pursuer had admittedly not received his full orders by 1st May 1897, and so could not by any possibility have completed the whole work by that date. I think, accordingly, that the defender cannot enforce the penalty clause; but I shall reserve to him any claim he may have for damages as for breach of contract by unreasonable delay— Russell v. Da Bandeira, 1862, 32 L.J., C.P. 68; Dodd v. Churton [1897], 1 Q.B. 562; Hudson on Building Contracts, pp. 240–1.” …

The defender appealed. By agreement between parties the only question raised was the defender's claim under the penalty clause, the Sheriff's interlocutor quoad the other matters dealt with by him being acquiesced in.

Argued for the defender—The penalty provided for under clause 14 was liquidate damages— Elphinstone v. Monkland Iron and Coal Company, Limited, June 29, 1886, 13 R. (H.L.) 98; Johnston v. Robertson, March 1, 1861, 23 D. 646; Law v. Local Board of Redditch [1892], 1 Q.B. 127. These damages had been incurred. The true cause of the delay was the failure of the pursuer to carry on the work with proper diligence and to keep a sufficient working staff at the job. No doubt additions and alterations had been ordered during the course of the work, but these would not have caused delay if the pursuer had used sufficient diligence in pressing forward with his operations. The fact that new orders were given after 1st May 1897 was occasioned through the fault of the pursuer in not having long before that date the work at such a stage as to enable these orders to be timeously issued. The contract laid it down explicitly that the pursuer must receive certificates from the architect that the delay was justifiable, in order to excuse himself for not finishing the work at the date specified, and not having obtained these certificates he had incurred the penalty— Innes v. St John's College, 1870, L.R., 6 Q.B. 115; Dodd v. Churton [1897], 1 Q.B. 562.

Argued for the pursuer—The defender had made no claim for common law damages, but had contended that he was entitled to set off liquidate damages alleged to have been incurred under the penalty clause of the contract. In order to be entitled to enforce the penalty clause the defender must show he had done nothing to prevent the building being completed by 1st May 1897. This onus the defender had not discharged. He had not shown that the alterations and additions which he had admittedly ordered during the progress of the work were such as to make it possible for the pursuer to finish the work within the specified time. Indeed, the proof showed that some of the orders had been given after 1st May 1897, so that to finish the work by that date was an impossibility. A condition must be read into the contract to this effect, that the work was only to be finished by 1st May 1897 provided that no orders for alterations or additions were given which would prevent the work being completed by that date. The pursuer might

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be liable in common law damages if it could be shown that he unduly delayed the work, but where there was proof as here that additional work was ordered at such a period as to make it impossible to carry out the contract by the time specified, a claim for liquidate damages under the penalty clause could not be enforced— Robertson v. Driver's Trustees, March 2, 1881, 8 R. 555; M'Elroy v. Tharsis Sulphur and Copper Company, November 17, 1877, 5 R. 161; Dodd, supra.

At advising—