British Glanzstoff Manufacturing Company, Ltd, v General Accident, Fire, and Life Assurance Corporation, Ltd
| Jurisdiction | Scotland |
| Judgment Date | 22 February 1912 |
| Date | 22 February 1912 |
| Docket Number | No. 85. |
| Court | Court of Session |
Lord Dewar, Lord President, Lord Kinnear, Lord Johnston, Lord Mackenzie.
Contract—Construction—Breach—Damages for delay—Measure of damages—Provision for liquidate damages for delay—Failure of contractor to complete contract—Completion of contract by other parties—Applicability of provision for liquidate damages.
A contract for the construction of certain works by a specified date contained a clause providing for liquidate damages at certain rates to be paid by the contractor for each week's delay beyond that date. It was further provided that if the contractor should suspend the works the employers might take possession of the plant and materials and engage others to complete the contract. The contractor became bankrupt and suspended the works, and the employers thereupon engaged other persons to complete them, but they were not completed until at least six weeks after the date specified in the original contract.
In an action of damages, at the instance of the employers, for the loss incurred by them through the failure of the contractor to fulfil his contract, the pursuers claimed, inter alia, damages for six weeks' delay at the rates specified in the liquidate damages clause.
Held that, while the pursuers were entitled to sue for damages for breach of contract, they could not found on the liquidate damages clause, as that clause applied only where the contractor had himself completed the contract and could not apply where the control of the contract, and so of the time taken to complete it, had passed out of his hands.
On 3rd February 1911 the British Glanzstoff Manufacturing Company, Limited, brought an action for £3031, 18s. 9d. against the General Accident, Fire, and Life Assurance Corporation, Limited, carrying on business at Perth, as guarantors for the fulfilment of a contract entered into between the pursuers and Messrs William Brown & Sons, contractors, for the erection of certain works at Flint.
The pursuers averred;—(Cond. 2) ‘In the year 1909 the pursuers proposed to erect works for the purposes of their business at a cost of £39,763 at Flint aforesaid. Drawings and specifications of the works required were prepared and issued. The contract was undertaken by Messrs William Brown & Sons, contractors, Salford, Lancaster, and an agreement for the execution of the works was entered into between the pursuers and the said William Brown & Sons. The conditions of the contract between the pursuers and the said William Brown & Sons were embodied in articles of agreement, dated 20th May 1909, a copy of which is herewith produced.*…’
(Cond. 3) ‘By article 23 of the said articles of agreement it was provided that possession of the site should be given to the contractors on or before the 1st of May 1909, and that they should begin the works immediately thereafter and complete the same by the 31st day of January 1910. Possession was duly given to the contractors on said 1st day of May 1909. By article 24 thereof it was provided that if the contractors failed to complete the works by 31st January 1910, or within any extended period allowed by the architect thereunder, the contractors should be bound to pay to the employer the sum of £250 sterling per week for the first four weeks, and £500 sterling per week for all subsequent weeks during which the works remained unfinished. By article 25 it was provided that in certain cases the architect might grant an extension of the time within which the works were required to be completed. No such extension was asked by the contractors prior to the abandonment of the contract by them
as aftermentioned, and there were no grounds for asking such extension in terms of article 25. But the pursuers, in order to deal fairly with the defenders, have, in making their claim, allowed two weeks' extension, having claimed for only six weeks' delay, while, as matter of fact, there was a delay of at least eight weeks beyond the time stipulated for completion of the contract. …’ (Cond. 4) ‘The said William Brown & Sons entered upon the construction of the said works and carried them on until the 20th day of August 1909, when a receiving order was granted in the Bankruptcy Court at salford, Lancashire, against them. No further work was done by the said William Brown & Sons. In consequence of the said William Brown & Sons' failure to complete the contract it was necessary for the pursuers to obtain the services of other contractors, and on 16th September 1909 they entered into articles of agreement with Messrs Joshua Henshaw & Sons, of Liverpool, Lancaster, who duly completed the construction of the said works.* In terms of article 26 of the agreement the pursuers were entitled, on the contractors failing for fourteen days after notice to proceed with the works, to enter upon and take possession of the works and site and of the plant and materials on the ground, and to engage other persons to complete the works. The pursuers were further entitled to take such steps as were necessary, in the opinion of their architect, for completing the works without undue delay or expense, using for that purpose such plant and materials as were suitable. The pursuers exercised this right, and the works were completed without undue delay or expense other than that caused by the failure of the contractors during their period of possession to push on the work at the contract rate of speed, and their ultimate failure to complete the work in terms of the contract. …’ (Cond. 5) ‘Before entering into the said agreement with the said Messrs William Brown & Sons the pursuers stipulated that the said William Brown & Sons should provide approved cautioners for the due fulfilment of the work. Instead of finding caution, Messrs Brown & Sons proposed that a bond of indemnity should be granted by the defenders in favour of the pursuers, whereby they should guarantee to the pursuers the due fulfilment by the said Messrs William Brown & Sons of the contract entered into between them and the pursuers. A contract of indemnity was accordingly granted by the defenders in favour of the pursuers, dated 21st and 22nd May 1909, whereby the defenders undertook to guarantee the due fulfilment of the contract by the said William Brown & Sons, and to pay and satisfy to the pursuers all losses and damage, costs, charges, and expenses which
they might sustain, pay, or incur by or through the failure of the said William Brown & Sons to carry out the said contract.*…’ (Cond. 6) ‘In the bankruptcy of the said William Brown & Sons the pursuers lodged a claim for the sum of £3231, 18s. 9d., and the said claim of £3231, 18S. 9d. was, after negotiation, admitted on 31st December 1910 by the receivers in bankruptcy to the extent of £3031, 18s. 9d. The pursuers have sustained loss and damage at least to the amount of said sum in consequence of the said contractors' failure to fulfil their agreement with the pursuers, and the defenders are liable therefor under the contract of indemity before referred to. The said sum of £3031, 18s. 9d. is made up of:—
| £1686 | 0 | 0 |
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