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Suit No. 184 of 1967, decided on 9th October 1974.
‑‑ S. 73‑Breach of contract‑Damages‑Plaintiffs contractors claiming damages on account of loss suffered due to suspension of work for several months‑No evidence led showing defendant's liability for delay‑Third party filing suit and obtaining injunction restraining execution of work and defendants resisting suit and getting injunction vacated by High Court‑Defendants even opposing action of third party up to Supreme Court‑Defendants in circumstances, held, could not be responsible for delay caused due to wrongful action of a third party.
Porter v. Tottenham Urban District Council (1915) L R 1 K B D 776 ref.
S. 73‑Breach of contract‑Damages‑‑‑Plaintiffs' building contractors claiming compensation for loss caused due to remaining idle of equip ment, shuttering etc. and staff engaged for execution of construction work under contract with defendants allegedly due to suspension of work on defendants' account‑Equipment and shuttering etc., held, could be removed from one construction site to another and no damages could be claimed on such account‑No details regarding staff being paid for idle time furnished‑Plaintiffs, held, not entitled to com pensation for amount of salaries paid to staff either.
S. 73‑Breach of contract‑Damages‑Plaintiffs building contractors stopping work despite defendants insistence on completion of work‑ Defendants even suggesting to plaintiffs to undertake joint survey and refer matter to arbitration for settling dispute‑Plaintiffs not agreeable to suggestions and insisting on having their own way‑Plaintiffs admitting rise in costs of construction at time of abandonment of contract‑Plaintiffs, held, had no reason to repudiate contract, ought to have completed contract and then pressed for payment‑Breach, held, committed not by defendants but by plaintiff.
S. 73‑Breach of contract‑Damages‑Lump sum contract‑Build ing contractor undertaking to erect whole building in accordance with specification divided into different parts with a price affixed to each there being no stipulation for payment for each particular part as and when completed‑Contract entire‑No right to payment arises on completion of any one of different parts but only on completion of whole‑Plaintiffs contractors, held, could not submit final bill in middle of work and claim payment as condition precedent for resuming. work‑Plaintiffs contractors could not only not recover payment for incomplete work but could be liable in damages to employer for breach of contract.
Halsbury's Laws of England, Vol. III, 3rd Edn., p. 439 and Hoenig v. Issacs (1952) 2 All E L R 180 rel.
Muhammad Ali Sayeed for Plaintiff.
Ibadatyar Khan for Defendant.
Date of hearing : 26th September 1974.
The plaintiffs, a firm of building contractors, have brought this suit for recovery of Rs. 1,81,724.69 as damages for breach of contract in respect of construction of the defendants' factory at S.1. T. E., Karachi.
2. It is the case of the plaintiffs that in June 1966, the defendants invited tenders for the above work and ultimately after negotiations they awarded the contract for building their underground godown, workshop, stores and canteen for approximate value of Rs. 10,00,000. The plaintiffs shifted their equipment for construction to the site, and engaged staff as well as skilled and unskilled labour for this work. As the work progressed they submitted three bills for R. C. C. work, etc., which were passed and paid after due verifica tion by the architect engaged by the defendants. However, it so transpired that a dispute arose between the S. 1. T. E. authorites and the defendants with regard to allotment of the site of work and the S. 1. T. E. authorities obtained Court Injunction for stopping the construction work. That apart from this, some delay was caused by the defendants themselves on account of late supply of building material, drawings and specifications. This delay caused at intervals was of 45 days, 27 days, 41 days and 117 days, the total being 7 months and 23 days. This subjected the plaintiffs to loss and damages. On the top of it the plaintiffs were informed that they would have to work under supervision of another architect as the services of the previous architect were being dispensed with. Accordingly, the plaintiffs wound up the work and sent a final bill on 1‑7‑1967 for Rs. 35,123.69. Since the new architect was to supply fresh specifications and drawings, etc., new rates were to be agreed up3n for continuation of the work. Then there was exchange of correspondence and telegrams between the parties and the con struction work was stopped as the defendants refused to honour the com pletion bill of the plaintiffs dated 1‑7‑1967 nor did they agree to the fresh rates according to new specifications which were not supplied. The plaintiffs, have therefore claimed damages as under :‑
(i) Completion Bill for the work Rs, done, 35,123.69
(ii) Loss for the staff and labour remaining idle due to delay for 230 days. 17,641.00
(iii) Shuttering, etc. lying idle for 230 days. 45,960.00
(iv) Plant, equipment, etc., lying idle for 230 days. 23,000.00
(v) Anticipated loss of profit for the unfinished part of the contract. 60,000.00
Total 1,81,724.69
3. The defendants in their written statement denied the allegations contained in the Plaint. They explained that the work of the plaintiffs was defective and in the first three bills excessive payments were made much beyond the work done on account of collusion of the architect with the plaintiffs. That at no time delay was caused by the defendants and even during the period, the Civil Court Injunction was in force, the plaintiffs continued the work of cutting, binding and bending of steel, curing cast construction, making of blocks, carrying out of shuttering work, etc, That they appointed another architect for checking the work which scared the plaintiffs. The defendants offered full accommodation to the plaintiffs to complete the work to save themselves from losses which they would otherwise suffer due to abandonment of the work by plaintiffs by employment of new contractor. But the plaintiffs raised excuses to justify their abandonment of the work, to save themselves from the liability for the loss caused to the defendants. That the defendants had thus paid the plaintiffs in the first three bills an excess amount of Rs. 71,479.93. That the defendants are not liable for any loss or damages for unfinished work as the breach was on the part of the plaintiffs.
4. On the aforesaid pleadings of the parties the following consent issues were adopted :‑
(1) Was the construction work awarded to the plaintiffs on the rates as alleged in para. 5 of the plaint
(2) Was the construction work delayed and its progress hampered for 7 months and 20 days on account of the dispute of the defendants with the S. 1. T. E. resulting in Court Injunctions; and on account of various acts and omissions‑of the defendants as alleged'
(3) What is the loss and damage sustained by the plaintiffs on account of this delay
(4) Who has committed the breach of the contract in suit
(5) Whether the plaintiffs have received building material and cost to the extent of Rs. 149,308.17 on the strength of exaggerated and inflated claims contained in their Bills, if so what is the amount of excess payment
(6) Are the plaintiffs entitled to payment of their bills dated 1‑7‑1967 for Rs. 35,123.69 Annexure D' for the work actually done
(7) Are the plaintiffs entitled to the loss and damage as claimed
(8) What was the reason of the delay of 7 months and 20 days, and with what consequences against the defendants
(9) What would the decree be
My findings on these issues are as under :‑
Issue (1).‑This issue regarding the rates of work as alleged in para. 5 of the Plaint has not been disputed. According to the plaintiffs the approxi mate value of the work under the contract was of Rs. 10,00,000.00 and the rates and specifications were according to the Annexure A' of the Plaint and quotations of the plaintiffs.
Issues (2), (3) and (8).‑The plaintiffs have alleged that the work remained suspended for 7 months and 20 days resulting in loss and damage as claimed. In fact the plaintiffs have not been aide to show by any evidence oral or documentary that the defendants were in any way responsible for this delay of 7 months and 20 days or for any shorter period. The S. I. T. E. raised some frivolous dispute regarding non‑passing of the plea for the factory and by filing the suit in the civil Court obtained an injunction. The defendants, however. resisted this action and got the injunction vacated by the High Court. They even opposed the action of the S. I. T. E. up to the A Supreme Court. Under these circumstances the defendants cannot be held responsible for the short delay of about a month caused due to wrongful action of a third party. In Porter v. Tottenhan Urban District Council ((1915)LR1KBD776) the plaintiffs had undertaken the work of school building for the defendants. The owner of the adjoining land claimed that there was no public highway for access to the site through that land and threatened to bring an action for injunction. The plaintiffs in consequence had to cease work for more than two months until the defendants sued the owner of the soil and obtained decision that it was a public highway. The plaintiffs claimed damages for loss caused by the delay of work, alleging a breach of the defendants implied contract to give free and uninterrupted possession of an access to the site. It was held that there was no warranty to be implied from the contract to the effect that the plaintiffs should be at liberty to work upon the land without interruption and that the defendants were not liable to indemnify the plaintiffs against the loss caused by the wrongful interference of a third party with the means of access to the site. In appeal the decision was upheld that the owner of soil bad nothing to do with a wrongful act of the third party against the building‑owner as well as the builder. In the present case also the S. I. T. E., it appears, was not justified in interfering with the construction by bringing this action for an injunction. The injunction was subsequently vacated by the High Court. The defendants cannot be held liabe for any delay which may have been occasioned on account of this suit.
The learned counsel for the plaintiffs has then alleged that delay wars also on the part of the defendants due to subsequent change in the specifica tions and drawings. He has referred to a letter Exh. 9/2. This letter dated 22‑7‑1966 is addressed by the defendants' General Manager to their own architect Mr. M. K.. Malik to include certain specifications in the contract which was under preparation. There is no mention in this letter that: any original specifications in the contract should be altered. On the other hand these specifications are pointed out to the architect prior to the preparation of the contract for being included in it. It cannot, therefore, be said that this was an alteration in the specifications which resulted in delay of the construction undertaken in the contract.
The equipment, etc., and the shuttering could be removed from ones construction site to the other and no damages could be claimed for concrete mixer or shuttering remaining idle at the site of work. No have the plaintiffs furnished any details regarding the staff which was being g paid for this idle time. The defendants are accordingly not liable to com pensate the plaintiffs for the so‑called delay or for hire of shuttering o equipment lying idle or for salary of the staff. Issues Nos. (2), (3) and (8) are, therefore, found against the plaintiffs.
Issue (4).‑The question as to who committed the breach of contract can be determined by referring to the bulk of correspondence exchanged between the parties.
It is the case of the defendants that the plaintiffs, in collusion with the defendants architect Mr. Musharaf Khan Malik, had already got certified, exaggerated bills with the result that they had to make payments in excess for work which had not been carried out. When they thought of having another architect in place of Mr. Malik the plaintiffs changed their attitude. That meanwhile the costs of construction had also gone up and the plaintiffs had perhaps obtained snore profitable contract from P. I. D. C. for building Machine Tool Factory. They had, therefore, abandoned the work in spite of protests from the defendants. The plaintiffs made several excuses for stopping the work and wrote to the defendants that they had used extra steel in the construction to the extent of about 15 tons for which they were entitled to extra payment of Rs.24,000.00. That the defendants' agents were interfering with construction work and they would not be responsible for any damage caused by them in respect of the construction. The plaintiffs then sent their fourth and final Bill for Rs. 35,123.69 making additional claim for extra steel used etc. The defendants sent their reply dated 19th July 1967, that the steel was used less than the quantity shown in the specifications and drawings. They accordingly called upon the plaintiffs to resume the work in right, earnest and complete it failing which they would be compelled to go ahead with this construction at their risks and costs. The plaintiffs replied by their letter dated 24th July 1967, Exh. 5/6, para. 10 that they wished to make it clear that unless their fourth and final bill dated 1‑7‑1967 was passed and paid without prejudice to their rights to claim damages and new rates were fixed and amendend drawings and specifications were given to them they could not be expected to continue the work. The defendants then replied by their letter dated 31‑7‑1967‑Exh. 5/9‑suggesting that they were willing to have a joint survey of the work up to the existing stage‑carried out regarding the quantities of material used etc. They advised the plaintiffs to consider the proposal coolly and dispassionately and notify the date and time for the survey. The plaintiffs replied by their letter Gated 2‑8‑1967 Exh. 5/10 that they were prepared to refer the subject ‑of steel to arbitration as suggested provided their fourth and final bill was first paid up in full immediately. The defendants in their reply dated 7‑8‑1907 Exh. 5/11 again pointed out the fallacy that on the one band they were agreeable to arbitration but on the other hand they wanted the payment of the fourth and final bill regarding extra steel used etc., immediately. The plaintiffs then sent their reply dated 10‑8‑1967 Exh. 5/12‑that the question of joint survey did not arise and unless the amount of the bill was paid they would remove the material and equipment from the site and take action. Thus the plaintiffs stopped the work arid abandoned the contract although the defendants insisted that the work be completed and they even suggested joint survey and arbitration for settling the dispute in respect .of the alleged extra steel used. The defendants were thus ready and willing to perform their part of the contract but the plaintiffs were adamant and they insisted on having their own way. The plaintiff has himself admitted C in his evidence‑‑Exh. 6‑that, "it is correct that the costs of construction had risen at the time I abandoned the contract." The plaintiffs had thus no reason to repudiate the contract. They could have completed the contract and then pressed for payment in respect of the disputes items. The breach was, therefore, clearly on the part of the plaintiffs.
Issue (5).‑This issue has not been pressed by the learned counsel for the plaintiffs, though it has been admitted that the plaintiffs received Rs. 1,49,308.17 for the first three bills‑(Exh. 5/4). Though according to the defendants these first three bills were exaggerated and certified by their architect in collusion with the plaintiffs as stated by them in their letter of 19th July 1967 (Exh. 5/5).
Issue (6).‑The plaintiffs have claimed payment of Rs. 35,123.69 in respect of their fourth and final bill dated 1‑7‑1967, for the work actually .carried out by them apart from damages. In this bill the items of the first Three bills and the payment received have been shown and the balance of the amount still outstanding has been worked out. This bill has been prepared by the plaintiffs themselves without relying on any measurements and without the bill being certified by the architect as per Agreement between the parties. The main items of this bill are at serial Nos. 15‑16 for the alleged additional steel said to have used in the construction. Under items Nos 15, 16 tons of extra steel are said to have been used while under items Nos 16, 13 tons of extra steel are claimed to have been provided. The plaintiffs have, therefore, charged for cutting, bending and shaping of this extra steel at Rs. 7,100.00 apart from the costs of the steel itself. This dispute regarding the extra steel arose because steel was purchased and provided by the defendants and the plaintiffs had to make payment for the steel actually used by them. Admittedly, a total of 126 tons of steel was handed over to the plaintiffs. According to the first three bills the steel that must have been used as per drawings and specifications was calculated 93 tons. The plaintiffs had therefore, to return the balance of 27 tons. accounting for the 6 tons of steel that was lying at the site, cut, bent and shaped though not used. The quantity of steel lying uncut plus the 6 tons of steel lying cut and shaped was found to be 16 tons, there was, therefore, a shortage of 11 tons. The plaintiffs, therefore, claimed that these 10 or 11 tons of steel found short had actually been used up in the construction and they not only charged the price for this steel but also claimed extra payment, for cutting, bending and shaping. It was pointed out to the plaintiff that in fact the steel used by them was less than the quantity they had to use as per drawings and specifications. For instance they used 4 to 5 bars in the beams instead of 7 bars. Instead of using the bars at 9 inches centre to centre they used them at 12 inches centre to centre. That in fact the plain tiffs had not adhered to the specifications and they had used less steel. That in case they bad used more steel than they could do so only under revised specifications but no such revised specifications had been issued to them. The architect of the defendants Mr. Malik has stated in his evidence, that it is not correct that extra steel has been used by the plaintiffs as mentioned in Exh. 5/4. "That the defendants did not authorise him to allow use of this extra steel in the construction. The plaintiff has himself admitted in his evidence that he has no record to show how many iron bars were used in the roof, pillars and beams. 'that it is correct that for these changes in use of steel he had to receive written instructions from the defendants or the defendants' architect. The plaintiffs have not been able to produce any such written instructions for use of extra steel. Thus it has not been established that any extra steel had actually been used by the plaintiffs, this being subject‑matter of the fourth and final bill. For, other items the bill has not been certified by any architect nor had the plaintiffs agreed to the suggestion of a joint survey. In fact this suggestion was accepted by the Court even during the pendency of the suit but the‑, plaintiffs did not care to have the existing work resurveyed. Under these circumstances the plaintiffs could not insist on the payment of the fourth and final bill which appeared exaggerated and uncertified.
The plaintiffs deliberately abandoned the work without completing the entire contract with the result that the defendants had to employ another contractor presumably at higher rates to get the work done. It is not the case of the plaintiffs that the contract was for completion of each particular part at a price, and payment was being made for each part irrespective of' the entire contract being completed. The perusal of the plaint would show that according to the case of the plaintiffs, they were awarded the contr act of the construction of godown, workshop and stores for approximate value of Rs. 10,00,000.60. The plaintiffs have even claimed damages for the part of the contract which remained incomplete, calculating the same as anticipated loss of profit for the unfinished part of the contract at Rs. 60,000. Therefore, if according to the plaintiffs the contract was for completing the entire construction work though the payment was to be made according to the rates for each item of the work. On this point the commentary in pare,. 827, Halsbury's Laws of England, Third Edn., Vol. 3, page 439, may be reproduced as under:
"if a builder or contractor undertakes to erect the whole of a specified' building or work in accordance with a specification which is divided into different parts to each of which a price is affixed, the contract is entire, and no right to payment arises on the completion of any one of the different parts, but only on the completion of the whole, unless the contract is earlier discharged by impossibility of performance or frustration.
On the other hand, where, are It has been argued by the learned Advocate on behalf of the plaintiffs that this is not a 'lump‑sum' contract but the contractor was required to get the payment of each item separately. But had that been the case the plaintiffs would not have claimed damages for the items which were never undertaken. Nor would the value of the entire contract have been shown as Rs. 10,00,000.00. The contract thus remained incomplete, and neither in the law nor in equity could the plaintiffs submit a final bill in the middle of the work and claim payment as a condition precedent for resuming the work. Not only could the contractor not recover payment for the incomplete work, but he could also be held liable for any damages caused to the employer for the breach of his contract complete the work. In Hoenig v. Issacs ((1952) 2 All ELR 180), Denning, L. J. observed as under: "This case raises the familiar question: Was entire performance a condition precedent to payment That depends on the true construction of the contract. When a contract provides for a specific sum to be paid on completion of specified work, the Courts lean against a construction of the contract which would deprive the contractor of any payment at all simply because there are some defects or omissions; unless the breach goes to the root of the matter as when there is an abandonment of work when it is only half done . . . . ." The contractor can then only succeed in getting payment for what he has done if it was employer's fault that the work was incomplete, or there is something to justify the conclusion that the parties have entered into a fresh contract or' the failure of performance is due to impossibility or frustration. In the same case Semervell. L. J. also observed : "In a contract to erect building on the defendants' land for a lump sum, the builder can recover nothing on., the contract if he stops before the work is completed in the ordinary sense in other words, abandons the contract." So that if on the construction of the contract it would appear to be a contract to erect a building for Rs. 10,000.00 as in a lump sum contract, the plaintiffs would be entitled to, recover nothing since the work was abandoned in the middle and it had, been left incomplete. Issues (7) and (9).‑As a result of the above discussion the plaintiffs are, clearly not entitled to recover any damages for the alleged delay said to have been caused in the construction work and for the alleged amounts said to have been paid as wages or for shuttering, scaffolding, etc., or for plant, machinery and equipment said to have been lying idle. The plaintiffs also could not recover anything for the fourth and final bill nor for the anticipated loss of profit for the unfinished part of the contract. The result is, that the suit of the plaintiffs is dismissed with costs. S. A. H. Suit dismissed.
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