Balrich Construction Ltd v Webster

• Jurisdiction: Anguilla
• Court: High Court (Saint Christopher, Nevis And Anguilla)
• Judge: Joseph, Monica J.
• Judgment Date: 07 November 1983
• Neutral Citation: AI 1983 HC 3
• Docket Number: Civil Suit no. 15 of 1981
• Date: 07 November 1983

High Court

Joseph, J.

Civil Suit no. 15 of 1981

Balrich Construction Ltd.

and

Webster

Mr. Mitchell for plaintiff

Dr. Herbert for defendant

Contract - Breach — Damages

Fact: The plaintiff was a construction company registered in Anguilla and the defendant was a property developer. The plaintiff claimed that by a contract partly oral and partly written, the company agreed to build six housing units for the defendant

Held: The defendant was in breach of contract. Judgment given for the plaintiff in the sum of $29,946.20 representing breach of contract and other losses sustained by the plaintiff.

Joseph, Monica J.

1 The plaintiff (formerly known as A & C Constriction) is a construction company with registered offices in Anguilla and the defendant is a politician and property developer.

2 The plaintiff in a statement of claim filed on 11th January 1982 claims that by a contract partly oral, and partly in writing, it agreed to build six housing units at Sea Feather's Bay (hereafter called the project) for the defendant. The claim in the statement of claim is that:

• (1) It was agreed in writing that -

  • (a) the plaintiff would submit plans drawn by the plaintiff's architect for the defendant's approval;

  • (b) the plaintiff would furnish materials as agreed and submit all bills and charges to the defendant as requested.

• (2) It was agreed verbally that -

  • (a)the defendant would open jointly with the plaintiff a bank account at Caribbean Commercial Bank at The Valley;

  • (b)materials and labour for the project would be paid for by the defendant out of the bank account;

  • (c)the plaintiff would on behalf of the defendant purchase materials and pay for labour used on the project with sums drawn by the plaintiff from the bank account;

  • (d)the defendant would keep the bank account in sufficient funds for the plaintiff to make the necessary payments;

  • (e)the plaintiff would account to the defendant for all sums withdrawn from the bank account;

  • (f)the plaintiff would be paid by the defendant a fee or price of 5% of the cost of materials and labour used by the plaintiff on the project;

• (3) the plaintiff began work on the project on or about 18th April 1980: that the defendant made periodic deposits into the bank account and the plaintiff made withdrawals from the bank account and accounted to the defendant for a sum of E.C.$353,791.40 being the amount expended to purchase material and pay for labour;

• (4) the plaintiff, with the defendant's approval, ordered building materials and building equipment to be supplied to the project and for work to be done on the project of a total value of E.C. $121,410,63 which has not been paid for;

• (5) In April 1981 when the bank account was not in a credit position the plaintiff at the defendant's request paid out of its own funds a sum of E.C. $10,946.26 for materials and labour;

• (6) In April 1981 in breach of the contract, the defendant ceased to keep the bank account in sufficient funds to allow the plaintiff to continue work on the project;

• (7) failure to keep the account in sufficient funds constituted a breach of a fundamental term of the contract and a repudiation of the contract which tie plaintiff acknowledged as such in its letter to the defendant dated the 10th June 1981.

3 The plaintiff claims special damages -

5% of $364,737.20 being	$18,236.91
5% of $i21,410:63 being	6,070.53
Repayment of:	10,946.20
	$35,253.64

4 and damages for breach of contract.

5 The defendant in a defence filed on 30th March 1982 - denies that there was any oral contract and alleges that there was a written contract dated 1st June 1980, the terns of which were that the plaintiff would supply materials and labour, and that the total price of the contract would be $490,000, that is $80,000 for each two bedroom units: $70,000 for each one bedroom unit and $20,000 each for two cisterns.

• (2) claims that work began on the project on 15th June 1980: that he commissioned the bank to make periodic payment to the plaintiff on presentation of bills, and that the materials taken by the plaintiff was on its awe account.

• (3) claims that he never agreed to pay 5% of the cost of materials and labour to the plaintiff and that he refused to pay any further monies to the plaintiff until two units were completed.

6 The defendant counterclaims for damages for breach of contract for loss of rental from the project for eight months at $5,000 per month, that is, $40,000 and damages.

7 The facts I have found are: In March 1980 the defendant discussed with Collins Richardson, a director of the plaintiff company, the possibility of constricting six buildings for him. Around the end of April 1980 Collins Richardson accompanied by Alicia Ballin, (another director) showed plans to the defendant at his home at Sea Feathers Bay. It was agreed that the plaintiff would construct three - one bedroom units and three - two bedroom units.

8 In early June, there was a meeting of the defendant and his wife, Collins Richardson, Alicia Ballin and her husband Murray Ballin. Collins Richardson and Alicia Ballin told the defendant that: the plaintiff is usually remunerated on a costs plus 12% basis but as six buildings were to be constructed the plaintiff would accept remuneration on costs plus 5% basis.

9 The defendant replied that in costs plus arrangements, a contractor tends to prolong construction with a resultant increase in the price of construction. The directors assured the defendant that the plaintiff would finish the project in one year.

10 There is no evidence that the defendant made a reply and it would seem that the plaintiff interpreted this silence to be that of acceptance of the offer to be remunerated on a cost plus basis.

11 The defendant told the directors that he would arrange with a local merchant, Watkins Hodge, for the company to take materials on credit, and that he would make money available at Caribbean Commercial Bank to meet expenses of labour and materials. An account was opened for the project and a number of deposits were made by the defendant into this account. This was a chequing account and the plaintiff operated the account.

12 Alicia Ballin drew up an agreement which is dated 1st June 1980 and which was signed by the two directors: the defendant and Cleopatra Webster presumably the defendant's wife. The text of the agreement appears later in this judgment.

13 Collins Richardson testified that the plaintiff started work on the project immediately. I find that work commenced in June 1980.

14 In July 1980, the defendant gave to Collins Richardson a sheet of paper on which was written:

Memorandum 7-25-80

E. C.

• (1) 3 - bedroom houses at the rata of $70,000 = $210,000

• (2) 3 - bedroom houses at the rate of $80,000 = $240,000

• (3) 2 Cisterns with pumps etc. $20,000 = $020,000

$470,000

15 Completed with 1 refrigerator & one stove in each house. In January 1981 Mrs. Ballin presented to the defendant a bill for $9,914.48 being 5% of materials and labour. The defendant became angry and told her that there was no arrangement to pay the plaintiff costs plus 5%, and refused to pay. Mrs. Ballin sought legal advice and the plaintiff continued work on the project.

16 I accept the evidence of Mrs. Ballin that there were occasions when there were insufficient funds in the account to meet the expenses of the project and that on these occasions she drew on the plaintiff's company's funds and issued a number of cheques on the account, totaling $10,946.20.

17 One of these occasions was in April 1981 and, upon communicating with the defendant, Mrs. Ballin obtained E.C. $5,000 in cash. This sum met one week's payroll, but was insufficient to meet a second week's payroll. The two directors asked the defendant if they should stop the work on the project. The defendant told them to reduce the number of men employed on the project.

18 On 27th May 1981, the parties discussed the possibility of completing the project and the defendant told the plaintiff that he would communicate in writing with the plaintiff whether he wished to continue with the agreement.

19 He did not so communicate and the plaintiff ceased work on the project at the end of May. By letter of 10th June 1981 the plaintiff wrote the defendant referring to the discussion of 27th May 1981 and stating that as it had not heard from the defendant by month end as agreed during the discussion it accepted that the defendant did not wish to continue the agreement.

20 The parties gave different reasons for the cessation of work on the project. The plaintiff's version was that work ceased as there was no money in the account at the bank to meet the expenses of the project. The defendant's version was that he spoke to Mrs. Ballin about completion of some of the buildings as there was a demand for accommodation and that Mrs. Ballin told him that she would only complete the building “when she gets more money”.

21 Under cross examination, the defendant admitted that he deliberately did not arrange for money to be paid into the account upon seeing the tardiness of work on the project: so that it would seem that in the early part of May there was no money in the account at the bank.

22 By letter of 2nd September 1981, the solicitor for the defendant wrote the plaintiff the following letter:

“As solicitor for Mr. Ronald Webster of Sea Feather Bay, I have been instructed that you have stopped working on his buildings which you undertook to finish by 31st May, 1981.

Because of your conduct my client is being put to considerable loss as he cannot rent the units as he had...