The Malaysian Judiciary

The Federal Court of Malaysia is the highest judicial authority and the final court of appeal in Malaysia. The country, although federally constituted, has a single-structured judicial system consisting of two parts - the superior courts and the subordinate courts. The subordinate courts are the Magistrate Courts and the Sessions Courts whilst the superior courts are the two High Courts of co-ordinate jurisdiction and status, one for Peninsular Malaysia and the other for the States of Sabah and Sarawak, the Court of Appeal and the Federal Court. The Federal Court, earlier known as the Supreme Court and renamed the Federal Court vide Act A885 effective from June 24, 1994, stands at the apex of this pyramid.

Before January 1, 1985, the Federal Court was the highest court in the country but its decisions were further appealable to the Privy Council in London. However on January 1, 1978, Privy Council appeals in criminal and constitutional matters were abolished and on January 1, 1985, all other appeals i.e. civil appeals except those filed before that date were abolished.

The setting up of the Court of Appeal on June 24, 1994 after the Federal Constitution was amended vide Act A885 provides litigants one more opportunity to appeal. Alternatively it can be said that the right of appeal to the Privy Council is restored, albeit in the form of the Federal Court.

The Special Court was established on March 30, 1993 vide Act A848, now provided for in Article 182 of the Federal Constitution. All offences committed by the Rulers (the Rulers being the monarchical heads of the component states of the Federation of Malaysia) including His Majesty The Yang di-Pertuan Agong shall be heard by the Special Court. The Special Court shall also hear all civil cases by or against them. This Court shall be chaired by the Chief Justice of the Federal Court and he shall be assisted by four other members, namely the two Chief Judges of the respective High Courts and two other persons appointed by the Conference of Rulers who hold or have held office as a judge.


Constitution of and Appointment to the Court

The Federal Court consists of a president styled as the Chief Justice (formerly called the Lord President), the President of the Court of Appeal, the two Chief Judges of the High Courts in Malaya and Sabah and Sarawak (formerly called Chief Justices) and presently five Federal Court judges.

There are presently ten Court of Appeal Judges excluding the President of the Court of Appeal. There are 46 Judges (including Judicial Commissioners) for the High Court in Malaya and a further 7 Judges (including Judicial Commissioners) for the High Court in Sabah and Sarawak. At the Subordinate Court level, there are 60 Sessions Court Judges of which 52 are in Peninsular Malaysia and 4 each in Sabah and Sarawak. At the Magistrate Court level, 151 posts have been approved (122 posts in Peninsular Malaysia, 10 posts in Sabah, 1 post in Labuan and 18 posts in Sarawak) of which 138 posts have been filled and presently there are 118 magistrates in Peninsular Malaysia, 7 magistrates in Sabah, 1 magistrate in Labuan and 12 magistrates in Sarawak.

The Chief Justice is the head of the Malaysian Judiciary. His appointment, like those of the President of Court of Appeal, the two Chief Judges, judges of the Federal Court, the Court of Appeal and the High Court, are made by His Majesty The Yang di-Pertuan Agong on the advice of the Prime Minister after consulting the Conference of Rulers.

As to the appointment of a judge to the Federal Court, the Court of Appeal and the High Courts, the Federal Constitution provides that the Prime Minister before tendering his advice shall consult the Chief Justice, the President of the Court of Appeal and the two Chief Judges. On the advice of the Chief Justice, His Majesty The Yang di-Pertuan Agong may also appoint a person who has held high judicial office in Malaysia to be an additional judge of the Federal Court. The Chief Justice may also, if the interests of justice so require, nominate a Court of Appeal Judge to sit as a Judge of the Federal Court. All judges of the Superior Courts retire at the age of 65.

Administration of the Court

For the smooth administration of the Judiciary, the Chief Registrar's Office was established which is headed by the Chief Registrar to handle both judicial and administrative matters. The Chief Registrar is assisted by the Registrar of the Court of Appeal, the Registrar of the High Court in Malaya and the Registrar of the High Court in Sabah and Sarawak. Below them are a number of Deputy Registrars, Senior Assistant Registrars, Administrators, Librarian, Information Systems Officer and support staff.


Inauguration of the Court

The birth of the Supreme Court (as it was known then, now called Federal Court) on January 1, 1985 was commemorated with a ceremony held in its Courtroom No. 1 on January 7, 1985. The ceremony was also to bid farewell to the ending of an old era - that of Privy Council jurisdiction. Present at the ceremonial sitting to inaugurate the Supreme Court were the ten Supreme Court judges, Attorney General of Malaysia, Solicitor General, Chairman of the Bar Council and members of the legal profession. Speeches welcoming the setting up of the Court were made by the Lord President (as he was known then, now called the Chief Justice) the Right Honourable Tun Dato' Haji Mohamed Salleh bin Abas, Attorney General Tan Sri Abu Talib bin Othman and Mr. Ronald Khoo, Chairman of the Bar Council. The first sitting of the Supreme Court which was presided by the Lord President was also held on the same day at the same venue after the closing of the ceremony.

History of the Court

Before 1957 the name "Supreme Court" was used to refer to the highest court for Malaysia next below the Privy Council. With the abolition of appeal to the Privy Council from January 1, 1985, the Supreme Court was finally designated the highest court in Malaysia.

However, material distinction between the constitution of the former "Supreme Court" and that of the present should be noted. The Supreme Court was renamed the Federal Court of Malaysia effective from June 24, 1994, and is now the final court of appeal for Malaysia.

Operation of the Court

Normally cases before the Federal Court of Malaysia are heard and disposed of by a full Court comprising of three judges. However, in certain special cases, for example one which involves interpretation of the Constitution or a principle of law of major public importance, the Chief Justice may convene a bigger panel of five or even seven judges to deal with the matter. In fact the Federal Court sat as a seven-men Bench for the first time on February 5, 1996 to decide on the law governing the standard of proof required of the prosecution in criminal cases.

In the absence of the Chief Justice, the powers shall be had and may be exercised and the duties shall be performed :

1. by the President of the Court of Appeal; or
2. where the President is absent, by the Chief Judge of the High Court in Malaya; or
3. where the President and the Chief Judge of the High Court in Malaya are absent, by the Chief Judge of th High Court in Sabah and Sarawak; or
4. where the President, the Chief Judge of the High Court in Malaya and the High Court in Sabah and Sarawak are absent, by the Judge of the Federal Court nominated for that purpose by the Yang di-Pertuan Agong.

A single judge of the Court can also hear and determine certain matters. In a proceeding pending before the Court, the judge may make incidental directions or grant interim orders pending the hearing of the proceeding. The order of a single judge may, however, be discharged or varied by the full Court.

If the Court is not unanimous in its opinion, the view of the majority of the judges composing the Court prevails.

Hearing of Cases

Cases come to the Federal Court for final determination from the Court of Appeal.

Rules of the Federal Court, which are made by the Rules Committee, regulate and prescribe the procedure which legal practitioners must comply with in preparing a case for hearing, including the preparation of an Appeal Record. The Appeal Record, prepared by the appellant's solicitors, contains all material which is necessary for the Court to determine the issues raised by the appeal.

Seven days before the hearing, the appellant's solicitor has to submit an outline submission to the Federal Court Registry. During the hearing, counsel representing the parties present their arguments orally to the Court. In addition, written submissions in skeletal forms may sometimes be submitted.

Written reasons are always given in most cases. Copies of the written reasons commonly referred to as grounds of judgments are distributed by the Federal Court Registry to all judges, the Federal Court Library for indexing and recording purposes, law schools and law publishers. The decisions of the Federal Court are binding on all other courts (excluding Syariah Courts) throughout Malaysia.

The principal seat of the Federal Court is in Kuala Lumpur. Its principal registry is also located here. Although it sits regularly in Kuala Lumpur, the Federal Court also travels on circuit to the major state capitals of Penang, Ipoh, Kota Bharu, Johor Bahru, Alor Setar, Kuantan, Malacca, Kuching and Kota Kinabalu.

Role of the Court

Malaysia is a federation of thirteen states. The Constitution which is the supreme law of the Federation spells out, among others, the duties and powers of the Federal and State Governments and their relationship inter se. One of the main functions of the Federal Court in its original jurisdiction "to the exclusion of any other court" is to determine whether a law made by Parliament or a State Legislature is invalid on the ground that it makes provision to a matter with respect to which Parliament or, as the case may be, the State Legislature has no power to make the law. It also has exclusive jurisdiction to determine disputes between States or between the Federation and any State.

His Majesty the Yang di-Pertuan Agong may invoke the advisory jurisdiction of the Federal Court by referring for its opinion any question as to the effect of any provision of the Constitution which has arisen or appears to him likely to arise. In addition, the High Court may also refer to the Federal Court any constitutional question which arises in any proceedings before it and may stay the proceedings to await the decision of the Federal Court. The framers of the Constitution evidently saw in the Federal Court the absolute interpreter of the Constitution and the final aribiter of disputes arising from it.

The Federal Court also makes final judgments on legal matters which come before it on appeal from the Court of Appeal. It is the ultimate court in civil, criminal and constitutional matters.


Federal Court

Article 121(1) of the Federal Constitution provides that the Federal Court shall have appellate, original, consultative or advisory, and referral jurisdiction but it does not cover those matters under the jurisdiction of the Syariah Court.

Court of Appeal

Article 121(1B) of the Federal Constitution provides the Court of Appeal with appellate jurisdiction to hear both civil and criminal cases originating from the High Court or the Sessions Court (criminal cases only).

Criminal Appeals

Besides having the jurisdiction to hear and determine any appeal against any decision made by the High Court and in respect of any criminal matter decided by the Sessions Court, section 50 of the Courts of Judicature Act, 1964 also provides that an appeal shall lie to the Court of Appeal, with the leave of that Court, against any decision of the High Court in the exercise of its appellate or revisionary jurisdiction in respect of any criminal matter decided by a Magistrates' Court but such appeal shall be confined to only questions of law.

Civil Appeals

The Court of Appeal shall have jurisdiction to hear and determine appeals from any judgment or order of any High Court in any civil cause or matter, whether made in the exercise of its original or of its appellate jurisdiction.


High Court

a) Criminal Cases

Generally, the High Court has the jurisdiction to hear cases which carry the death penalty. Specifically, the jurisdiction of the High Court in criminal cases is provided in sections 22, 26, 31 and 35 of the Courts of Judicature Act, 1964.

b) Civil Cases

The High Court has the jurisdiction to hear civil cases in respect of :

1. divorce and matrimonial causes;
2. admiralty;
3. bankruptcy and company cases;
4. appointment and control of guardians of infants and their property;
5. appointment and control of guardians of disabled persons and their estate; and
6. grant of probates of wills and letters of administration.

Specifically, the jurisdiction of the High Court in civil cases is provided in sections 23, 24, 24A, 25 (including Schedule), 25A, 28, 30, 32, 33 and 35 of the Courts of Judicature Act, 1964 .


Sessions Court

a) Criminal Cases

The Sessions Court has the jurisdiction to try all offences other than offences punishable with death.

b) Civil Cases

The Sessions Court has unlimited jurisdiction to hear :

1. running down cases, landlord and tenant, and distress;
2. to try other suits where the amount in dispute does not exceed RM250,000.00; and
3. with the consent of the parties involved, to try cases exceeding RM250,000.00 but the award is limited to the statutory limit of RM250,000.00 only.

Magistrates' Court

a) Criminal Cases

A First Class Magistrate Court has the jurisdiction to try all offences where the maximum term of imprisonment provided by law does not exceed 10 years or which are punishable with fine only or cases involving robbery and housebreaking by night.

Generally, a First Class Magistrate may pass any sentence allowed by law not exceeding :

1. 5 years imprisonment;
2. a fine of RM10,000.00;
3. whipping up to 12 strokes; or
4. any sentence combining any of the sentence aforesaid.

However, in some cases e.g under the Dangerous Drugs Act 1952, Customs Act 1967 and Betting Act 1953 the Magistrate may impose a fine higher than RM10,000.00.

b) Civil Cases

A First Class Magistrate Court has the jurisdiction to try all actions and suits of a civil nature where the amount in dispute does not exceed RM25,000.00.

Location

The Federal Court is situated in the Sultan Abdul Samad building which is one of Malaysia's heritage buildings and a famous and historic landmark in the Federal Capital. It is situated right at the heart of Kuala Lumpur.

Directly opposite the building is the famous Royal Selangor Club and the Merdeka Square or Independence Square which acquired its name because it was at that very spot that the Union Jack flag was lowered down on August 31, 1957 and the new flag of the Federation of Malaya was hoisted. This marked the passing of an era and the birth of a newly independent nation, the Federation of Malaya.

The Sultan Abdul Samad building plays an important role during Malaysia's National Day celebrations where a parade of uniformed troops, government and semi-government bodies, private sector and school children march pass His Majesty the Yang di-Pertuan Agong, ministers and both foreign and local dignitaries. The building, as well as the Merdeka Square, is also the site for other major national events.

On one side of the Sultan Abdul Samad building, across the Gombak River, are the Subordinate Courts, the former High Court building and the Jamek Mosque. The Jamek Mosque is the oldest mosque in the city and is gazetted a historical site under the Antiquities Act 1976.

On the other side is the former General Post Office building which now houses the Court of Appeal Registry; next to it is the Malaysian Handicraft Centre and further down is the Dayabumi Building which is the first Malaysian "Turnkey System" building.

History Of the Building

The Sultan Abdul Samad building was constructed at the end of the last century and the site was chosen because of its central position. A.C. Norman, a British architect who worked for the Public Works Department in Kuala Lumpur, in designing the existing building took into consideration some of the features of buildings in several Islamic countries. The predominantly Moorish appearance of the building suitably reflects the cultural background of Malaysia.

The foundation-stone of the building was laid by the then Governor of the Straits Settlements, Sir Charles Mitchell, on October 6, 1894, and the building itself which was opened in 1896 was named Bangunan Sultan Abdul Samad after the name of the then Sultan of Selangor. The building now houses the Federal Court of Malaysia, the Court of Appeal and the Criminal Division of the High Court of Kuala lumpur. Prior to this it housed several Ministries and Departments of the Federal Government including the Central Bank and also the State Secretariat of Selangor and its Legislative Assembly.

The conversion work of the building began in 1978 and the renovation was completed in 1984 with an approximate cost of RM17.2 million. Besides this the Government of Australia had generously contributed RM200,000.00 towards making copper cladding to the three domes of the building which now gleam with majestic radiance, adding even greater lustre to an already unique and superb structure. Prior to this, the domes which were made of timber and bricks were covered with copper sheeting painted in black.

External Features

The Sultan Abdul Samad building is a two-storey building standing at 57 feet and covering an area of 10,200 sq.metres. It is of a horseshoe shape at the centre of which is a quadrangle plateau surrounded by flower-beds at its fringes. Beneath it is a basement car park meant for judges and officers of the court.

The prominent features of the building are its three domes, the clock tower and its extensive arcades and arches. The three domes originally made of timber and bricks and painted black have now been replaced with copper cladded domes. The central dome is placed on top of the clock tower flanked by two smaller domes with descending spiral staircases.

The arches found in the building are of the pointed horseshoe type with varying spans. They were made of bricks and white-painted plastered blocks. The clock tower on the axis appears to be well balanced by the two turrets. The spiral staircases in the turrets tend to point up to the tower accentuating therefore its importance.

The focal point of the building is its main porch which faces the Royal Selangor Club and the Merdeka Square. On entering this main entrance, one could see a semicircle staircase which leads to the Chambers of the Chief Justice, the President of the Court of Appeal and other Judges' Chambers, as well as to the Federal and Court of Appeal Courtrooms.

Federal and Court of Appeal Courtrooms

The Federal Court and the Court of Appeal have a Courtroom each. The long curved bench in the Federal Court which is equipped with microphones and sound system facilities is made from Langkawi marble, the finest local marble. The several rows of Bar tables similarly equipped with microphones are made from the finest quality local wood, the Meranti wood. Malaysia's national crest made of copper is seen appropriately hung on the wall behind the Bench in the Federal Courtroom. The Court of Appeal Courtroom is similarly equipped.

The windows of each Courtroom are double glazed to ensure minimum sound entry and the ceilings are adorned with decorative lights and unique chandeliers. Sittings of the full court are held in the courtrooms which are equipped with a sound reproduction system and facilities to provide closed circuit television coverage of court proceedings. A public gallery is also located at the back portion of each courtroom.

In the Federal Courtroom on each side of its walls are displayed portraits of former Lord Presidents/Chief Justice of the Supreme/Federal Court of Malaysia.

Parol Evidence Rule

The purpose of the parol evidence rule is to “give legal effect to whatever intention the parties may have had to make their [written contract] a final and perhaps also a complete expression of their agreement.”

If there is evidence in writing (such as a signed contract) the terms of the contract cannot be altered by evidence of oral (parol) agreements purporting to change, explain or contradict the written document.

Contracts and the parol evidence rule

by Timothy A. Vanderver III

As a roofing contractor, you face the possibility of being involved in a contract dispute. Numerous legal issues are involved in such disputes, and the following example should help you become aware of how to avoid certain problems.

The scenario

Imagine that you submit a proposal to install a roof system on a building. In your proposal, you include a clause stating, "This bid is expressly conditioned on the building owner providing storage for roofing materials and equipment at the building owner's cost."

During contract negotiations, you and the building owner discuss the storage issue. The owner says it will not be a problem for you to store materials and equipment on his property.

The next day, you record the conversation in writing and send a letter to the building owner. You write: "As we discussed yesterday, materials for the project will be stored on the owner's property adjacent to the job site at no cost to the roofing company."

As a result of the agreement, you are able to reduce your proposed price and are awarded the contract. However, when materials are delivered to the site, the building owner changes his mind. He tells you he has decided to keep the area reserved for material storage clear to provide access to the site. He suggests you lease off-site storage. You ask the building owner to pay for storage, but he refuses. When you remind the owner about your agreement, he says the contract states you have to pay your storage costs.

You decide to make a claim for the storage costs, and you and the building owner enter into arbitration. During arbitration, you try to explain the contract negotiations you had with the owner, but the arbitrator refuses to listen; he says your testimony is inadmissible. You also attempt to show the arbitrator the letter to the owner memorializing your conversation. Again, you are told this evidence is inadmissible. Finally, you show the proposal that states your offer was contingent on storage being at the owner's cost. Once again, you are told this is evidence the arbitrator cannot consider when rendering his decision.

When the owner presents his case, he points out a clause in the contract that states: "The building owner is not responsible for storage costs. All costs for storage of the contractor's equipment and materials shall be borne by the contractor. This contract and the plans, specifications and any other documents referenced in this contract shall constitute the entire integrated agreement between the parties."

When the arbitrator makes his decision, you are found to be liable for all storage costs for materials, as well the transportation costs from storage areas to the job site.

Why wouldn't you be allowed to explain that despite what the contract indicated, you and the building owner had agreed that materials and equipment could be stored on the owner's property at no cost? Why would an arbitrator refuse to consider the letter or proposal as evidence?

Parol evidence rule

There is a fundamental premise of contract law called the parol evidence rule. Parol evidence is any evidence other than contract documents. Anything outside of a written contract is parol evidence, whether it is testimony about what was said during contract negotiations, proposals or letters memorializing conversations.

The parol evidence rule states that parol evidence is not admissible to alter or explain a written contract's terms (i.e., a contract's terms speak for themselves without regard to any evidence beyond the contract documents). If parties want to form an agreement, a contract is considered to state all the agreement's terms. Parol evidence is not part of a contract. As a result, it is not admissible to explain the meaning of any contract terms or explain what the parties meant or intended to do under a contract.

This especially is true if a contract contains an integration clause. Usually, such a clause lists what is included in the contract documents (e.g., general terms and conditions, plans, specifications) and states that these are the only contract documents.

All the things you would have wanted to explain in the scenario—the proposal, letter and testimony about what the building owner said—would have been considered parol evidence. In addition, you would not have been able to explain that the written contract did not accurately express your agreement with the owner because this testimony also would have been considered parol evidence.

Getting it included

During contract negotiations, what is said is not as important as what ultimately is written in a contract. If you want a proposal's terms to be incorporated into a contract, you must be sure the contract reflects those terms or that the proposal is listed as a contract document.

Including such agreements in a contract can be accomplished in a number of ways. The most direct way is to write an agreement into the contract itself. During a negotiation, you can cross out a phrase (e.g., "material storage costs to be paid by roofing contractor") and write in another (e.g., "building owner will pay material storage costs"). Another way is to write a letter of understanding, being sure the letter is listed as one of the contract documents. In addition, you also may insert a sentence in the contract stating that in the event of conflicting terms, the proposal will govern.

Wrapping it up

In practice, the parol evidence rule can cause harsh consequences for the unwary. It allows building owners to say things to roofing contractors and not be bound by their statements. However, it is a fair rule that allows parties to know their rights and obligations with regard to a contract. You must be careful when negotiating contracts and be sure that favorable terms you negotiate are included in contracts.


Timothy A. Vanderver III is an attorney with the law firm Hendrick, Phillips, Schemm & Salzman, Atlanta.

Copyright © 2002 National Roofing Contractors Association

Pitfalls of Design & Build Contracts

SOURCE:
Rodney Martin
BSc, LLB(Hons), MSc, MRICs, MCIArb
Executive Director James R Knowles (Malaysia) Sdn Bhd
July 2000

Design and build or turnkey contracting has become a popular method of procuring building works in Malaysia. Contractors should familiarise themselves with the various problems which can arise when taking on the more onerous obligations usually associated with design and build contracting. It therefore follows that design and build contracts should not be undertaken by contractors unless they are fully prepared for the obligations which will be imposed upon them with this method of procurement.

Under design and build arrangements the employer or owner, for whom the works are to be carried out, deals directly with the contractor who provides a complete service of both design and construction of the works. There are different types of arrangements under the design and build ‘banner’ each of which have separate and accepted terminology to describe them within the industry and it is important to be clear and accurate with the use of such terminology. Where the project to be procured is confined to building or civil engineering works this is usually known as, ‘design and build’ or ‘package deal’ procurement. However, where the contractor is required to provide not only the building or road etc., but also any machinery or equipment and associated works then the project is usually known as ‘turnkey’ procurement. The inference being that the employer or owner merely has to unlock the door to his new building, or facility and he will immediately be able to put it to it’s intended use.

One good reason for the employer/owner to choose design and build or turnkey contracting is that by approaching a contractor who is a specialist, that contractor will have the necessary skill and knowledge to design and execute the works where their nature requires such specialist input. Another reason for choosing this method of procurement is that there may be savings in cost and/or time by adopting this method of procurement as opposed to a more traditional route.

However although there may be clear advantages for the employer, the contractor’s obligations tend to be extended somewhat under a design and build or turnkey contract.

In the traditional method of procuring building work designers are engaged by the employer to carry out the design and a contractor is engaged to carry out the construction of the work. There is therefore a clear divide between responsibility for design and responsibility for workmanship and materials. The design is clearly the responsibility of the designers and the construction work is clearly the responsibility of the contractor.

In a design and build or turnkey project the position is different since the contractor not only takes on the task of constructor but also of designer. This has the effect of radically changing the contractor’s obligations in respect of design.

It is important to examine the nature of this shift of responsibility for design. If one considers the architect or engineer’s obligations to the employer under a traditional procurement arrangement one will find that the architect or engineer owes the employer a duty to use the reasonable skill and care of a designer. This raises the question of what is considered to be ‘reasonable’ in the context of a professional architect or engineer. The English courts have defined the professional man’s obligations to his client as the ordinary skill of an ordinary competent man exercising that particular art. Therefore the designer must act in accordance with the usual practice of his profession. This means that in carrying out his duties the architect or engineer must use the reasonable skill that can expected of an architect or engineer. By contrast, a design and build contractor will usually be required to take on the express obligation of providing a building which is fit for it’s intended purpose. This is an absolute obligation and is a greater obligation than the use of reasonable skill and care in the design.

In view of the responsibility taken on by contractors who design and build the works for a particular project caution must be exercised from the outset.

Upon receiving design and build tender documentation the contractor should examine the content carefully. In view of the fact that the contractor is to be responsible for design in this situation only minimum design input ought to have been provided by the employer in compiling the tender documents. There is much skill required in drafting the project brief (often referred to as “Employer’s Requirements”).

Too often the employer carries out much design work prior to tender which often restricts the options available to the contractor to develop the design post award. Excessive design work carried out by the employer at pre-contract stage can also cause difficulties in determining design responsibility once the contract has been awarded. The project brief should define the site and the works which may require drawings to be included. All relevant criteria which are to govern the works including quality and performance requirements should be provided. Skill is required by the draftsman who prepares the project brief on behalf of the employer when specifying quality. The terminology used should not be too detailed in case it reduces the contractor’s design responsibility, which is not after all the intention.

Neither should the terminology be so vague to cause difficulty in enforcing the requirements during the execution of the works. Most importantly the terminology should not require reliance on subjective language which will cause problems both at tender stage when the contractor is pricing and also later when the contract is being administered. An example of subjective language in this context would be to use the phrase “best quality” to define a standard of quality. Disputes would no doubt arise because of the different interpretations given to such a phrase by the employer and the contractor.

Ideally the project brief should set down just enough information so as to convey the employer’s requirements with respect to the scope of work intended to be included within the contract. The contractor will take note of these requirements and during the tender period will develop a scheme in principle which will meet the employer’s needs. The extent to which the tenderer is required to develop the design within his proposals to form the basis of his tender submission should be defined in the instructions to tenderers. Although the employer may want to receive a fairly detailed design proposal from each tenderer and indeed may request for such details to be included in the contractor’s proposals, in reality a contractor will be reluctant to carry out an expensive design exercise as part of his tender if he only has one chance in four or five of being successful. If the contractor’s tender is accepted he will then develop the design and it is the intention that the employer will interfere with this process as little as possible.

However, more often than not the employer will want to retain an involvement in the design process and also order variations to the scope of work. This may lead to disputes and differences as to the valuation of the additional works ordered and time entitlement to carry out such variations. The intention of design and build is to leave the contractor alone to carry out design and construct the facility without hindrance. Continual interference during the design development stage by the employer will severely compromise the design and build philosophy and jeopardise the employer’s ability to receive the benefits that this type of procurement should render.

Since the contractor usually takes on an absolute obligation to provide a building, installation, or facility as the case may be, which is fit for it’s intended purpose, care must be taken to appoint designers with appropriate skills to execute the design required. Larger contracting organisations may have in-house design teams to provide this service. The adequacy and competence of such resources will therefore no doubt be reviewed and assessed periodically by the organisations’ management in the same way as would be the case for any other department. However, it is common practice for contractors undertaking design and build work to appoint independent designers to carry out design work for them. When doing so it is important that the contractor engages consultants who understand the subtle differences of working for a contractor as opposed to an employer/owner.

Traditionally a design will evolve from a designer’s drawing board and then a price will be put to that design. Under design and build practice the opposite is usually true whereby the design has to fit the price (assuming the price was reasonably calculated as part of the contractor’s tender in the first place). This requires perhaps an even greater commercial awareness on the part of the designer than might be exercised under traditional procurement arrangements. Another potential problem area to overcome is the fact that the designer’s ‘master’ is the contractor and not the employer which is the reverse of the traditional position. This becomes a potential problem in situations where the consultants have been novated from the employment of the employer to the employment of the contractor. A novation is a tripartite agreement by which an existing contract between A and B (for example designer and employer) is discharged and a fresh contract is made between A and C (for example designer and contractor) usually on the same terms as the first contract. Novation differs from assignment in that the consent of all parties is necessary although this may be inferred by conduct and need not be expressed. Novation of designers on the face of it seems a perfectly sensible proposition where a design concept has been initiated under the responsibility of the employer to describe his requirements and then later completed by the same designers once novated to the contractor. However, in practice consultants may find difficulty in turning their original design concept into a fully designed scheme while at the same time being constrained by the contractor’s commercial considerations defined by the tender price for the project.

A design and build project is usually awarded on a lump sum basis and is not subject to remeasurement. It is uncommon for detailed bills of quantites to be used due to the absence at tender stage of detailed drawings from which to measure such quantities. It is therefore essential from the contractor’s point of view to ensure that the contract sum is broken down into sufficient detail to permit the reasonably accurate valuation of the works for the purposes of interim payments.

The contractor should carefully scrutinise the payment provisions of the proposed conditions of contract at tender stage to identify in what manner and in what proportion he will be entitled to be paid during the execution of the works.

Occasionally contractors are faced with onerous terms which permit payment on an interim basis only upon overall completion of a part or section of the works. Under such circumstances a contractor might find himself being denied payment of considerable sums but for minor outstanding items which are of insignificant value. Contractors should therefore ensure that an adequate mechanism is in place under design and build contracts to permit interim payment as the work proceeds.
It is also important, in the absence of bills of quantities, to agree schedules of rates as far as possible for the evaluation of variations. These rates should also include for design work which would usually be recoverable in relation to any additional design resulting from such variations.

In summary, it is therefore important for the contractor to ensure, notwithstanding time and cost considerations, that his design and build tender proposal represents a fully considered scheme which meets the requirements of the employer with a price to match. It is quite usual for contract documents to be drafted in such a way as to place an obligation on the contractor to meet the employer’s requirements irrespective of any attempted qualifications set out in the contractor’s tender proposals. The employer’s requirements will have to be met for a lump sum without adjustment save for variations. The risks upon the contractor are therefore high and it is for this reason that any tender which is submitted on a design and build basis should have made provision as far as possible for the problems which may occur under this type of procurement.

Estoppel

Estoppel is an equitable doctrine. Usually as a defense, a party is prevented (or estopped) from successfully asserting what would or might otherwise be his legal rights.(e.g. of expression such as “you can’t now just turn round and say that”). For building contract purposes, it is appropriate to consider :

1. Estoppel by representation
2. Estoppel by convention, and
3. Promissory estoppel.

Estoppel by representation

If a party makes a representation with the intention and effect of inducing another party to alter his position to his detriment in reliance on the representation, the party making the representation may be estopped from relying on facts which are at variance with the representation. The representation must be factual or an existing state of mind or belief and not a future promise. It must be unambiguous and unequivocal.


Estoppel by convention

Where parties have acted upon a common assumption of fact or law on the basis of which they have regulated their subsequent dealings, they will be estopped from subsequent denying that the assumption is true if it would be unjust or unconscionable to permit them to resile from it.


Promissory estoppel

Where a party has made an unequivocal promise or representation to another party that he will not enforce his strict legal rights and the promise or representation is intended to be relied on and is in fact relied on, the first party may be estopped from successfully asserting his strict legal rights if it would be unconscionable or unjust to allow him to do so.

Breach of Contract & Damage Claims

Damages are awarded to put the plaintiff as nearly as possible “ in the same position as he would have been in if he had not sustained the wrong for which he is now getting compensation or reparation”. (Lord Blackburn in Livingstone vs Rawyards Coal company (1880) 5 App. Cas. 25 at 39 (H.L.).


Damages for breach of contract

“The governing purpose of damages is to put the party whose rights have been violated in the same position, so far as money can do, as if his rights have been observed.” (Asquith L.J. in Victoria Laundry Ltd. Vs Newman Ltd. (1949) 2 K.B. 528 at 539 (C.A.)

“The general principle for the assessment of damages is compensatory…” (Lord Wilberforce in Johnson vs Agnew (1980) A.C. 367 at 400 (H.L.);

But if this purpose were relentlessly pursued it would lead to the party in default having to pay “for all loss de facto resulting from a particular breach however improbable, however unpredictable”. ( ibid.) The courts therefore set a limit to the loss for which damages are recoverable, and loss beyond such limit is said to be too remote. The famous rule as stated in the case of Hadley vs baxendale is :

“ Where two parties have made a contract which one of them has broken the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either (1) arising naturally,i.e. according to the usual course of things from such breach of contract itself, or (2) such as reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it.” (Alderson B. at p. 354.)


Mitigation of loss


The award of damages as compensation is qualified by a principle, “ which impose on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps”. (Lord Haldane in British westinghouse vs Underground Railway Co. (1912) A.C. 673 at 689 (H.L.).

But “this does not impose on the plaintiff an obligation to take any step which is reasonable and prudent man would not ordinarily take in the course of his business”. (British Westinghouse vs Underground Railway Co. (1912) A.C. 673 at 689 H.L.).

Any gain resulting from the plaintiff’s reasonable steps in mitigation must be balanced against the loss caused by the breach. Any loss resulting from such reasonable steps is recoverable.The onus of proof is on the defendant to prove any failure to mitigate.


Causation and Concurrent Causes

“Causation is a mental concept, generally based on inference or induction from uniformity of sequence as between two events that there is a casual connection between them,” (Lord Wright in Monarch Steamship Co. vs Karlshamns Oljefabriker (1949) A.C. 196 at 228 H.L.)

For a plaintiff to succeed in a claim for damages, he has to establish on the balance of probabilities an effective causal connection between the defendant’s breach of contract or negligence and the plaintiff loss. An intervening act by a third party, or by the plaintiff may break the chain of causation. But an act by the plaintiff will not normally break the chain of causation if it was reasonable. (Emeh vs Kensington & Chelsea Health Authority (1985) Q.B. 1012 (C.A.)

Variations ordered by the employer after the contractor is already in culpable delay will not normally deprive the employer of his right to damages,subject, it is thought, to an appropriate adjustment for any additional time resulting from the variations. ( McAlpine Hemberoak vs McDermott International (1992) 58 B.L.R. 1 at 35 (C.A.)


CONTRACTOR’S BREACH OF CONTRACT


Cost of Completion

Where the contractor fails to complete, the measure of damages in the first instance is the difference between the contract price and the amount it would actually cost the employer to complete the contract work substantially as it was originally intended, and in a reasonable manner, and at the earliest reasonable opportunity. (Mertens vs Home Freehold Co. (1921) 2 K.B. 526 (C.A.); Radford vs De froberville (1977) 1 W.L.R.1262


Offer to Complete

Where a contractor who has repudiated his contract offers to complete under a new contract it is a question of fact in each case whether an employer who does not accept such offer is acting reasonably in mitigation of his loss. (Strutt vs Whitnell (1975) 1 W.L.R.870 C.A.) .

If it is unreasonable to refuse such an offer, damages are calculated as if the offer had been accepted. (Sotiros vs Sameiet Solholt (1983) 1 Lloyd’s Rep. 605 C.A.)

Each case will depend on its facts, but it is thought that conduct which amounts to repudiation by a contractor is likely to render reasonable an employer’s refusal to reengage him.

Defective Work

Where there has been substantial completion the measure of damages is the amount which the work is worth less by reason of the defects and omissions, and is normally calculated by the cost of making them good,i.e. the cost of reinstatement. (Denning L.J. in Hoenig vs Isaacs (1952) 2 All E.R. 176 at 181 C.A.); East ham Borough Council vs Bernard Sunley & Sons Ltd. (1966) A.C. 406 .)

“If there is no alternative course which will provide what he requires, or none which will cost less, he is entitled to the cost of repair or reinstatement even if it is very expensive.” ( Staughton L.J. in Ruxley Electronics Ltd. Vs Forsyth (1994) 1 W.L.R. 650 at 661 C.A.)

Sometimes, perhaps more often in tort than for breach of contract, the proper measure of damages is not the cost of reinstatement but the difference in value between the work as it is and as it ought to have been. (Dodd Properties vs Canterbury City Council (1980)1 W.L.R.433 at 465 C.A.).

This will be so if the plaintiff has no prospect or intention of rebuilding, or where it would otherwise to unreasonable as between the plaintiff and the defendant to award the cost of reinstatement. ( C.R. Taylor vs Hepworths (1977) 1 W.L.R. 659 at 667).

A claim for diminution in value will not normally exceed the relevant costs of reinstatement. If all the necessary remedial works have been successfully carried out, residual diminution in value is not additionally recoverable.(Murphy vs Brentwood D.C.(1991) 1 A.C. 398 at 430 and 436 C.A.)

Betterment

Where works of repair or reinstatement result in the plaintiff having a better building than would have had for the wrong for which damages are claimed, a deduction from the damages awarded will usually not be made for betterment if the plaintiff has no reasonable choice, unless perhaps this would be absurd.(Bacon vs Cooper (Metals) Ltd. (1982) 1 All E.R. 397 at 400).

If a plaintiff chooses to rebuild to a higher standard than is strictly necessary, he can recover the cost of the works less a credit for betterment, unless the new works are so different as to break the chain of causation. If the damages are executed as part of a larger programme of work, it may be appropriate to award damages based on the cheapest estimate of the cost of the remedial works by themselves. (Jones vs Stroud D.C. (1986) 1 W.L.R. 1141 at 1150 (C.A.)


Destruction of Premises

Where a breach results in the destruction of the premises or part of them and the innocent party has no option but to rebuild, the measure of damages is the cost of replacement. (Harbutt’s “Plasticine” Ltd. Vs Wayne Tank and Pump Co. Ltd. (1970) 1 Q.B. 447 (C.A.)

Delay

Damages for a contractor’s failure in breach of contract to complete on time are often the subject of a provision for liquidated damages. If to the contractor’s knowledge the contract works consist of an expansion of a factory or other profit-earning structure, he is liable for loss of business resulting from his breach. ( Victoria Laundry Ltd. Vs Newman Ltd. 91949) 2 K.B. 528 (C.A.).

Loss of profit should be expressly pleaded and is inconsistent with a claim for capital expenditure incurred to make that profit. (Perestrello Ltd. Vs United Paint Co.Ltd. (1969) 1 W.L.R. 570 (C.A.).

The period of time to be taken in calculating general damages for delay by a contractor will be the additional time, which his breach of contract is calculated or assessed to have caused.


Going Slow

Interim slowness not resulting in a failure to complete on time may not be a breach of contract at all (G.L.C. vs Cleveland Bridge and Engineering (1984) 34 B.L.R. 50 C.A.)


EMPLOYER’S BREACH OF CONTRACT


No work carried out

If there is a repudiation of the contract by the employer before any work is carried out the damages recoverable are, it seems, prima facie the amount of profit which the parties knew, or must be taken to have assumed, the contractor would have made if he had been permitted to complete in the ordinary way. (Ranger vs G.W. Railway (1854) %H.L.C. 72 H.L.)


Election to claim waste expenditure

The contractor may, it seems, elect to claim wasted expenditure instead of loss of profit, and can include pre-contract expenditure made in preparation for performance provided it was such as would have been reasonably in the contemplation of the employer at the time of entering into the contract. (Anglia Television Ltd. Vs Reed (1972) 1 Q.B. 60 (C.A.)

Work completed

Where the employer breach does not prevent completion the damages recoverable, if any, will vary according to the circumstances. Where the contract does not provide for an extension of time on account of the delay, delay cause by the employer may give rise to a claim for damages. Delay may for example turn a summer contract into a winter contract thus causing increase of working, or it may keep plant , machineries or men idle; there may be disruption which reduces productivity or cause other losses. All these head of loss require consideration .


Claim for delay or disruption

Contractor ‘s claim for delay and disruption are commonly brought under these heads :

1. increased preliminaries
2. overheads
3. loss of profit
4. loss of productivity or uneconomic working
5. increase cost from inflation
6. interest for non-payment of money
   

It is not the function of the courts where there is a breach of contract knowingly…to put the plaintiff in a better financial position than if the contract had been properly performed. (Ackner L.J. in C. & P Haulage vs middleton (1983) 1 W.L.R. 1461 at 1467 (C.A.)

Physical Damages & Economic Loss

Whereas , the existence of a duty of care not to cause economic loss requires special analysis, it may be that the criteria applicable to cases of physical damage and to cases of economic loss are the same,viz., that the damage should be reasonably foreseeable, that the relationship between the parties should be sufficiently proximate and that it should be fair, just and reasonable to impose a duty of care.( Marc Rich vs Bishop Rock Marine (1994) 1 W.L.R. 1071 (C.A.).

Liability for Physical Damages

In the absence of a contractual duty or a special relationship of proximity, a builder owes no duty of care in tort in respect of the quality of his work. (D. & F. Estates vs Church Commissioners (1989) A.C. 177 (H.L.); Murphy vs Brentwood District Council (1991) 1 A.C. 398 at 480 (H.L.). The principle does not extend to bring home liability towards an occupier who knows the full extend of the defect yet continues to occupy the building. A landlord who is responsible for the design and construction of a house let by him is under a duty to take reasonable care that the house is free from defects likely to cause injury to any person whom he ought reasonably to have in contemplation as likely to be affected by the defects. (Rimmer vs Liverpool City Council (1985) Q.B. 1 (C.A.).

“ Knowledge of the existence of a danger does not always enable a person to avoid the danger. In simple case it does. In other cases, especially where building are concerned, it would be absurdly unrealistic to suggest that a person can always take steps to avoid a danger once he knows of its existence, and that if he does not do so he is the author of his own misfortune…Knowledge, or opportunity for inspection, does not by itself always negative a duty of care or break the chain of causation. Whether it does depends on all the circumstances. It will only do so when it is reasonable to expect the plaintiff to remove or avoid the danger and unreasonable foe him to run the risk of being injured by the danger. (Sir Donald Nicolls V.-C. in Target vs Torfaen Borough Council (1992) 3 All E.R. 27 at 37 (C.A.).

Personal Injury

A contractor will be liable if a plaintiff suffers personal injury because of the contractor’s negligence. Where contractors carrying out reconstruction works obstructed the normal approach to a house so that it was impassable, they were held liable when a visitor was injured while using a dangerous alternative route suggested by the contractors’ workmen.(A.C. Billings Ltd. Vs Riden (1958) A.C. 240 (H.L.); George Hawkins vs Chrysler (U.K.) (1986) 38 B.L.R. 36 (C.A.).

Physical Damage to Property

“In most claims in respect pf physical damage to property the question of the existence of a duty of care does not give rise to any problem because it is self-evident that such a duty exist and the contrary view is unarguable. (Lord Brandon in Mobil Oil Hong Kong United Dockyards (1991) 1 Lloyd’s Rep. 309 at 328 (P.C.).

Negligent instructions

An architect or engineer who issues instructions which he knows or ought to know are likely to cause injury to person or property may be liable in negligence if injury results.(Clay vs A.J. Crump & Sons (1964) 1 Q.B. 533 (C.A.)

Economic Loss

Economic loss is monetary loss and pure economic loss is monetary loss unrelated to physical injury to person or “other” property.

‘ the affliction of physical injury to person or property of another universally requires to be justified. The causing of economic loss does not. If it is to be categorized as wrongful it is necessary to find some factor beyond the mere occurrence of the loss and the fact that its occurrence could be foreseen. (Lord Oliver in Murphy vs Brentwood District Council (1991) 1 A.C. 398 at 487 (H.L.).

Pure economic loss may be recoverable against a party who owes the loser a relevant contractual duty. “ But it is not recoverable in tort in the absence of a special relationship of proximity imposing on the tortfeasor a duty of care to safeguard the plaintiff from economic loss.”(Lord Bridge in Murphy vsBrentwood District Council (1991) 1 A.C. 398 at 475 (H.L.)

The loss sustained by a building owner from an ordinary building defect is the cost of rectifying the defect.

Consequential Economic Loss

Economic loss which is consequential upon actionable physical damage to person or property is sometimes recoverable. Consequential economic loss is habitually awarded in personal injury case ,e.g. for future loss of earnings. It has also been awarded in commercial cases , but there is no clear principle to determine when such losses are recoverable and when it is not.

Liability for negligence of sub-contractors

A main contractor is not generally liable, other than in contract, for the negligence of his sub-contractors. But, “ if in the course of supervision the main contractor in fact comes to know that the sub-contractor’s work is being done in a defective and foreseeably dangerous way and if he condones that negligence on the part of the sub-contractor, he will no doubt make himself potentially liable for the consequences as a joint tortfeasor.(Lambert vs Lewis (1982) A.C. 225 at 278 (H.L.).

Professional negligence

Breach of a professional person’s obligations to his client is habitually referred to as professional negligence. It has now been held that persons who perform services of a professional or quasi-professional nature possessing a special expertise may assume responsibility giving rise to a tortious liability irrespective of whether there is a contractual relationship between the parties, so that the plaintiff may choose between concurrent remedies in contract or tort. (Henderson vs Merrett Syndicates Ltd. (1994) 3 W.L.R. 761 (H.L.).

This understanding of the law has been applied by Official Referees to architects and engineers. (Wessex Regional Health Authority vs H.L.M. Design (1994) 10 Const.L.J. 165 at 186).

Everyone who enters into a contract assumes responsibilities and the essence of the law under discussion is that concurrent duties in tort are also co-existence with those in contract.

Repudiation of Contract

Repudiation generally

The word “Repudiation” is most conveniently term to describe circumstances where “ one party so acts or so express himself as to show that he does not mean to accept the obligation of a contract any further.

Every breach of contract entitles the other party to damages to compensate for the loss sustained in consequences of the breach. But with the exceptions and subject to express contractual rights of determination, breach of contract by one party does not discharge the other party from performance of his unperformed obligations. (Photo Production vs Securicor (1980) A.C. 827 at 849 (H.L.).

There are 2 circumstances in which breach of contract by one party entitles the other to elect to put an end to all remaining primary obligations of both parties. These are:

1. Where the contracting parties have agreed, whether by express words or implication of law that any breach of the contractual term in question shall entitle the other party to elect to put an end to all remaining primary obligations of both parties, i.e. where there is a breach of condition;
2. Where the event resulting from the breach of contract has the effect of depriving the other party of substantially the whole benefit, which it was the intention of the parties that should obtain from the contract, i.e. where there is a “fundamental breach”.

Operation of the election to put an end to all remaining primary obligations of both parties is variously referred to as the “determination” or “rescission” of the contract or as “treating the contract as repudiated” or “accepting the repudiation” of the contract breaker.


Acceptance of repudiation

Repudiation by one party standing alone does not terminate the contract. It takes two to end it, by repudiation on the one side, and acceptance of the repudiation on the other. The innocent party must make it plain that “ in view of the wrongful act of the party who has repudiated he claims to treat the contract as an end (i.e. rescind a contract). Acceptance of repudiation by the employer does not affect the contractor’s accrued rights to the payment of installments of the contract price unless the contract otherwise provides. (Hyundai Industries vs Papadopoulos (1980) 1 W.L.R. 1129 (H.L.)

“The contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired… the contract is discharged so far as it is executory only."”(Dixon J. in McDonald vs Dennys lascelles Ltd> (1933) 48 C.L.R. 457 at 476.

But advance payment may be recoverable if the contractor has provided no consideration in the nature of part performance. (Rover International vs Cannon Film (1989) W.L.R. 912 at 932 (C.A.)

A full arbitration clause will normally continue to apply to disputes arising upon the acceptance of repudiation.(Heyman vs Darwin (1942)A.C. 356 (H.L.)


Repudiation and contractual determination clause

A party who purports to operate a contractual determination clause when he is not entitled to do so either factually or legally is likely to repudiate the contract.(AchitecturaInstallation Services vs James Gibbons (1989) 16 L.R. 68 at 73. This is because a party who acts upon a contractual determination clause usually refuses or ceases to perform his own obligations. If this is not in accordance with the contract, he will usually himself be in fundamental breach.

Contractual determination clause do not exclude common law remedies available upon repudiation unless the agreement expressly provides that the contractual rights are to be exclusive remedy for the breach in question.(Modern Engineering(Bristol) vs Gilbert-Ash(1974 A.C. 689 (H.L.)


Repudiation by contractor

Refusal or abandonment. An absolute refusal to carry out the work or an abandonment of the work before it is substantially completed, without any lawful excuse, is a repudiation. (Mersey Steel & Iron Co. vs naylor (1884) 9 App. Cas. 434(H.L.); Marshall vs mackintosh (1898) 78 L.T. 750 ; Hoeing vs Isaacs (1952) 2 All E.R. 176 (C.A.).


Defects

A breach consisting of mere negligent omissions or bad workmanship where the work is substantially completed does not go to the root of the contract in the ordinary lump sum contract, and is therefore not a repudiation.(Hoeing vs Isaacs (1952) 2 All E.R. 176 (C.A.)

Omissions and bad work that occur during the course of the work cannot be considered as repudiation if they are not such as to prevent substantial completion. There is a repudiation where, having regard to the construction of the contract and all the facts and circumstances, the gravity of the breaches is such as to show that the contractor does not intend to or cannot substantially perform his obligation under the contract. (Swisse Atlantique vs N.V. Rotterdamsche Kolen Centrale (1967) 1 A.C. 361 at 422(H.L.)


Delay

Delay on the part of the contractor where time is not of the essence of the contract does not amount to a repudiation unless it is such as to show that he will not, or cannot, carry out the contract. In Hill vs London Borough of Camden, it was held on the facts that a contractor, who has reduce his workforce to such an extent that it might have been said that they were not proceeding “ regularly and dilligently” within the meaning of clause 25 of the JCT Form, had not by such conduct repudiated the contract.

In most cases it is desirable to give notice that continuance of the delay will be treated as repudiation before purporting to accept the repudiation by dismissing the contractor.

When time is the essence either by the terms of the contract, or as a result of a notice making it of the essence, and the contractor fails to complete to time the employer is entitled to treat the contract as at an end and to dismiss the contractor from the site.(Rickards vs Oppenheim (1950) 1 K.B. 616 at 628 (C.A.)


Repudiation by employer

Refusal. An absolute refusal by the employer to carry out his part of the contract, whether made before the works commenced or while they are being carried out is a repudiation of the contract.(Hochster vs de la tour(1853) 2 E & B 678; Steel & Iron Co. Ltd. Vs Naylor (1884) 9 App.Cas.434(H.L.)


Rendering completion impossible

It is, in general, a repudiation if the employer wrongfully by his own acts, and without lawful excuses, renders completion impossible. ( Stirling vs Maitland (1864) 5 B.& S. 840 and 852


Possession of site

The employer repudiates the contract if he fails to give possession of the site at all, or without lawful excuse ejects the contractor from the site before completion. (Felton vs Wharnie (1906) H.B.C. (4th edition), Vol 2, p.398(C.A.)


Order not to complete

A clear unjustified order not to complete the works is a repudiation.(Cort vs Ambergate Railway (1851) 17 Q.B. 127.


Under-certification

It has been settled that the architect is the employer’s agent when giving his certificate. (Sutcliffe vs Thackrah (1974) A.C. 727(H.L.). It has been held that an employer cannot stand by and take advantage of his architect applying a wrong principle in certifying.(Panamera,etc vs Frederick Leyland & Co. Ltd. (1947) A.C. 428 (H.L.)


No general right to suspend work

Although particular contracts may give the contractor express rights if certificates are not paid, there is no general right to suspend work if payment is wrongly withheld. (Lubenham vs South Pembrokeshire D.C. (1986) 33 B.L.R. 39 at 70 (C.A.). This is consistent with the principle that, except where there is a breach of condition or fundamental breach of contract, breach of contract by one party does not discharge the other party from performance of his unperformed obligation. (Wells vs Army & Navy Co-op Soceity (1902) 86 L.T. 764.)


Party cannot rely on own wrong

It applies to a party seeking to obtain a benefit under a continuing contract on account of his own breach as much as to a party who relies on his own breach to avoid a contract and thereby escape his obligation.

A similar principle is applied to the construction of contracts which provide that, upon the happening of certain events, either party may declare the contract void provided that he has himself in breach of a duty owed to the other party been the means of bringing about the event; for example, an insolvent contractor cannot rely on his own insolvency to escape from the contract. ( New Zealand Shipping Co. vs Ateliers,etc.,de France (1919) A.C. 1 at 13 (H.L.)