Bennett v Smith (t/a L. Smith & Associates)
| Jurisdiction | Jamaica |
| Judge | Simmons, J. |
| Judgment Date | 26 February 2016 |
| Court | Supreme Court (Jamaica) |
| Docket Number | C.L. 1999/B 006 |
| Date | 26 February 2016 |
Supreme Court
Simmons, J.
C.L. 1999/B 006
Mr. Ian G Wilkinson instructed by Ian G. Wilkinson & Company for the claimant.
Mr. Hadrian R. Christie instructed by Patterson Mair Hamilton for the defendant.
Damages - Measure of damages for breach of contract — Negligence — Construction contract — Building contract — Quantity surveyor — Causation — Remoteness — Duty to mitigate losses — Impecuniosity — Award of damages for mortgage interest payments — Award of damages for distress or discomfort — Award of interest on damages.
In this matter the claimant filed an action for damages for breach of contract and negligence arising from a contract made between the claimant and the defendant in November 1995.
The claimant who was desirous of constructing a house engaged the services of the defendant who is a Quantity Surveyor. By letter dated the 28th November 1995, Mr. Smith estimated that it would cost three million two hundred and fifteen thousand nine hundred and seventy six dollars ($3,215,976.00). On the claimant's instructions he negotiated a contract with Mr. Karl Stewart of Jankar Corporation Limited for its construction. The project was to be completed in six months.
The claimant obtained a mortgage loan of three million dollars ($3,000,000.00) from the Victoria Mutual Building Society (VMBS) for the construction. An additional sum of two hundred thousand dollars ($200,000.00) was also provided for increased costs.
The duties of Mr. Smith as stated in the above letter were as follows:-
“Pre-contract
Visiting site, taking particulars of work completed, measuring works to be completed, pricing same and agreeing amount with proposed contractor and preparation of contract document.
Post-contract
Sun/eying works in progress, taking particulars and providing interim valuations for payments on account to the contractor, including making up bills of Variations and adjusting fluctuations in the cost of labour and material.”
It is alleged that the defendant was negligent in the performance of his duties and also breached the contract by issuing interim valuations and certificates to VMBS. As a consequence, VMBS issued cheques to the contractor in circumstances where the work was not in accordance with the certificates that were issued by the defendant. This, it was alleged, resulted in the mortgage sums being almost exhausted in circumstances where the claimant's house had not been completed.
in September 1997, the defendant advised the claimant that it would cost an additional seven hundred and six thousand five hundred dollars ($706,500.00) to complete the construction. She did not respond to that suggestion.
The claimant subsequently engaged the services of Mr. Clifton George Logan of CGL Associates Ltd., Quantity Surveyors, who later indicated that it would cost eleven million three hundred and forty four thousand eight hundred and eighty eight dollars and seventy two cents ($11,344,888.72) to complete the construction.
At trial, the claimant's case was supported by her own evidence and that of an expert witness, Mr. Clifton George Logan, whose qualifications to speak to the issues were not challenged by the defendant.
The defendant made a submission that there was no case for him to answer, despite being “warned” more than once of the possible consequences. He was unsuccessful and consequently, judgment was awarded to the claimant. The defendant appealed but later withdrew his appeal. The issue of damages must now be resolved.
The claimant has claimed damages for:
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i. monies spent to complete the construction of her house;
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ii. monies spent to retain the services of another Quantity Surveyor;
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iii. misspent drawdowns from the Building Society along with interest; and
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iv. distress/discomfort
On the pleadings, negligence and breach of contract march side by side, the same omissions and actions constituting each cause of action. The compensatory aim of damages for tortious breaches is to put the claimant in as good a position as he would have been in as if no tort had been committed, insofar as this can be achieved by a monetary award. It has been reasoned that this would mean that when an action is brought for negligence in the context of a contractual relationship the claimant should be put into as good a position as if the defendant had performed his duties under the contract.
McGregor on Damages, 16th edition, at paragraph 247, offers the following guidance when assessing damages:-
“the starting point in resolving a problem as to the measure of damages for breach of contract is the rule that the plaintiff is entitled to be placed so far as money can do it, in the same position as he would have been in had the contract been performed. The rule is limited first, but not substantially, by the principles as to causation; the second and much more far reaching limit is that the scope of protection is marked out by what was in the contemplation of the parties. When damages is said to be too remote in contract it is generally this latter factor that is in issue”
The case of Mertens v. Home Freeholds Co. Ltd. and Others [1921] All E.R. Rep 372 is also instructive. In that case the claimant and the defendant entered into a contract to build a dwelling house at a particular price. The construction was to be completed within six (6) months. That was not done and due to certain events a license was now required to complete the construction. The license was refused and the work was not completed until three (3) years later and at a greater cost. It was held by the Court of Appeal that the measure of damages was what it would cost the claimant to complete the construction. The court rejected the submission that the measure of damages was to be determined by the cost of completion at the time of the breach.
The Court of Appeal referred to and approved the following passage in Hudson On Building Contracts (4th Edn) Vol. 1 at p 491. It was stated as follows:-
“…the right measure is properly stated in HUDSON ON BUILDING CONTRACTS (4th Edn) Vol. 1 at p 491, citing from the American case of Hirt v. Hahn (1):
“B agreed to erect a house for the plaintiff according to plane by a certain date. The defendant's were the sureties. After partly completing, B ceased work, and the plaintiff, after giving notice to the sureties entered and completed and sued the sureties. HELD, that the measure of damages was what it cost the plaintiff to complete the house substantially as it was originally intended and in a reasonable manner, less any amount that would have been due and payable to B by the plaintiff had B completed the house at the time agreed by the terms of his contract.”
It is important, before continuing, to point out that the defendant relied on cases where the measure of damages was held to be a diminution in value. ( Perry v. Sidney Phillips & Son (a firm) [1982] 1 W.L.R. 1297 and Philips v. Ward [1956] 1 All E.R. 874) The cases cited dealt with instances where surveyors negligently told plaintiffs that the properties being purchased were passable. This was later proved to be untrue. Consequently, the plaintiffs in those cases paid more for the properties than what they were actually worth. Though the cases are not entirely irrelevant, the measure of damages used in those cases cannot be used in this instance because the facts are different. The claimant's house was not overvalued but needed to be completed.
In order to determine whether the claimant is entitled to be compensated as claimed the issues of causation and remoteness are relevant.
Causation in contract, like tort, is governed by the sine qua non or ‘but for’ test. The claimant must establish that but for the breach of contract she would not have suffered the loss.
To understand whether or not it can be said that but for the actions of the defendant the claimant would not have suffered loss it is important to examine the role of a Quantity Surveyor.
The claimant's expert witness, Mr. Clifton Logan's uncontested evidence is that a Quantity Surveyor is expected to make a determination as to the cost associated with building and engineering contracts, from the first estimate to the final accounts for the project. He stated that a Quantity Surveyor is also responsible for making sure the construction costs and production are managed effectively.
Further, he stated, a Quantity Surveyor provides numerous services depending on the stage of the building project. At the construction stage of any project, a Quantity Surveyor is to carry out certain services such as the following:
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a. advise on the implementation of pre-purchasing or pre-ordering arrangements;
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b. prepare recommendations for interim payments to contractors, subcontractors and suppliers;
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c. advise on the cost implications of proposed variations and where applicable negotiate a reasonable price with the contractor for such works;
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d. assess the financial implications of fluctuation in the cost of labour and material or other matters directly relating to the project; and
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e. prepare interim cost reports indicating the financial implications of all matters that have affected or will affect the works including providing an indication of the projected completion cost.
The defendant's duties as outlined in the letter dated the 28th November 1995 are strikingly similar to the duties of a Quantity Surveyor as outlined by Mr. Logan. It is undisputed that in performing his duties, the defendant carried out several surveys of the construction and submitted reports/certificates to VMBS. VMBS, acting on the said reports/certificates and in reliance thereon caused cheques to be issued to the contractor...
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