Disputes between homeowners and building contractors

As an Associate Solicitor specialising in dispute resolution and construction law, I am often instructed to advise on disputes between homeowners and building contractors. 

The tension between the parties usually escalates, resulting in either the building contractor refusing to attend the site or the homeowner refusing to provide access to the site. There are potential consequences for both parties who refuse to comply with their contractual obligations.

The first thing to do to resolve a construction dispute 

The first thing either party must do to resolve a dispute is to check what is written in the contract. However, what should a party do if the contract is poorly drafted or excludes key terms such as how to claim for an extension of time or the right to claim liquidated damages?

In the recent Technology and Construction Court (TCC) case of Cartwright Pond Ltd v Wild [2021] EWHC 1600 (TCC) a dispute had arisen between a claimant building company (“Cartwright”) and a homeowner in relation to building works carried out at a residential property in Cheshire. The homeowner purchased a 1970’s property that required modernisation. 

The homeowner, an IT professional, did not want to appoint her architect as a contract administrator for the project. This meant there was no independent professional to administer the contract between the parties.   

The contract

The court held the only tender documents which he considered as being the contractual documents were Cartwright’s tender, specification and the plans. The specification envisaged that any contract would be entered into on the RIBA form, however, no such contract was ever drafted. The specification did not specify all the particulars such as the start or completion date and who was the contract administrator.

A fundamental point to remember is that in the absence of incorporation of the RIBA form into the contract, there was no contractual mechanism for an extension of time. As there were several variations during the project and the building works were delayed, there was no mechanism to apply for an extension of time. 

This means Cartwright had an obligation to complete within a reasonable time only. A reasonable time is assessed by considering all of the circumstances of the case but excluding delays caused by the homeowner. The homeowner could have easily avoided this complication if she sought legal advice at the pre-contract stage to ensure an extension of time mechanism was incorporated into the contract. 

No entitlement to liquidated damages

The homeowner also included a provision in the contract for liquidated damages at £50 per day. However, as there was no contractual provision, such as in the RIBA form, to allow an extension of time to be granted for any delays, it was held that time becomes “at large” and the homeowner cannot impose liquidated damages. 

In the absence of any provision for an extension of time, it was held that time did become at large and the homeowner was only entitled to a claim for general damages for any delays that she may prove.

Repudiation

As in a typical dispute between building contractors and homeowners, both parties alleged that the other was in repudiatory breach which discharged further performance of the contract. Cartwright contended that they were “ready, willing and able to complete the works”, but the homeowner refused to provide access and such refusal was repudiatory. The homeowner contended that Cartwright was in repudiatory breach as they failed to complete the works within a reasonable time and had “effectively given up on the works”.

Repudiation is well explained in Keating on Construction Contracts (11th edition). In summary, repudiation is where “…one party so acts or so expresses himself as to show that he does not mean to accept the obligations of a contract any further…”

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.” 

(Lord Simon in Heyman v Darwins [1942] AC 356). Although Lord Steyn in Vitol SA v Norelf Ltd [1996] A.C. 800 HL stated an act of acceptance of a repudiation “does not have to be couched in the language of acceptance”, I suggest it is good practice to show to a repudiating party clearly and unequivocally (through communication or conduct) that the contract is at an end.   

The authors of Keating also state if the delay is on the part of the contractor, where time is not of the essence, this does not amount to a repudiation unless the contractor shows it will not, or cannot, carry out the works, or the delay is such as to deprive the innocent party of the whole benefit of the contract. With regards to the employer, it is usually a repudiation if the employer wrongfully acts and renders completion impossible.

Cartwright attempted to bring a claim for delay and disruption, which is a common feature in construction disputes. Delay and disruption claims are often difficult to present and assess in the absence of any expert evidence. 

The court held there was no independent contract administrator to undertake an analysis of the cause of the delay, neither party had undertaken a retrospective analysis of the cause of delay and the impact upon the critical path of the works. There was also no expert evidence. These are basic issues which both parties, including a contract administrator, must explore if they consider bringing a delay and disruption claim.

The court held Cartwright had not been in repudiatory breach of the contract. If an employer notifies the contractor that it wishes to vary the works then it has an obligation to provide the necessary details as to what it wishes to be done. Unless the contractor provides otherwise, the contractor is under no obligation to provide alternative details for consideration and is under no risk of being found to be in breach should the consequences of this delay lead to the overall delay of the works. 

If the contractor voluntarily agrees to provide alternative details, it is under an obligation to do so within a reasonable time. Although there had been some delay in the works, the court accepted Cartwright acted with reasonable diligence and there was not enough evidence to show that they cannot finish off the works or deprive the homeowner of the whole benefit of the contract. 

Cartwright asked the homeowner for access to complete further works and to confirm whether or not the homeowner wanted Cartwright to carry out any further work or whether she was ending the contract. Despite several requests made by Cartwright, the homeowner did not give a clear answer. 

The court accepted that the homeowner was completely unclear about whether or not she was communicating a final unequivocal decision that would permit Cartwright to undertake any further works on the site. She was not prepared to state in correspondence that she was terminating the contract. She did not want to be the one to make the decision to end the contract. The court suggests the homeowner may have feared the consequences of being the one to terminate the contract. 

The court held the homeowner’s failure to permit Cartwright to return to site to continue with the works or to confirm that she was willing to do so, was a repudiatory breach of her obligation as the employer, which was subsequently accepted by Cartwright. Cartwright was ultimately awarded £53,748.81. 

I am a construction lawyer specialising in dispute resolution and construction law and can be contacted on 01245 453 804 or alternatively you can email me at [email protected].