Scottish Court of Session Decisions

Lord Low.—The main question to be disposed of under this appeal is that which is raised by the fact that the pursuer in building the walls of the house used milled lime instead of cement mortar as required by the specification.

In making that departure from the specification the pursuer was acting in accordance with the orders of the architect, but I am of opinion that nevertheless he must be regarded as being in breach of his contract in a question with the defender if the architect was not authorised by the latter to substitute the one material for the other.

Upon the question whether the architect received the defender's authority I agree with the Sheriff-substitute. I think that the verdict upon the evidence (assuming parole evidence to be competent) must be that the alleged authority has not been proved, although the architect may have believed that he had received the defender's authority. The pursuer therefore must be regarded as being in breach of his contract, and the question is, what effect has that fact upon his present claim, the action being laid upon the contract, and its object being to enforce payment for the sum which he alleges to be due to him under the contract.

The Sheriff-substitute has in his very careful note held that the case is ruled by the judgment in Ramsay & Son v. Brand . I agree that the rules of law laid down in that case in regard to building contracts are applicable here, but what I doubt is whether the remedy which was given in Ramsay is appropriate to the circumstances of this case.

The general rule is that a building contract, like any other contract, must be performed modo et forma, and if the builder departs from the contract he loses his right to sue for the contract price. If, however, the deviation from the contract is merely in a matter of detail, the Court will not throw out an action upon the contract, but will do justice between the parties by deducting from the contract price the sum required to complete the work in exact compliance with the contract.

If, on the other hand, the deviation from the contract is material and substantial, the rule of law is thus stated in Ramsay's case by the Lord President,—“The mere fact that the house is built would not prevent the proprietor of the ground from rejecting it and calling upon the contractor to remove it. … If, on the other hand, the proprietor makes the best of it, and lets the house stay, the only claim which the contractor could have would be a claim for recompense, and this, be it observed, would not be for quantum meruit the builder, but for quantum lucratus est the proprietor.”

In this case the total amount brought out by the final measurement as being due to the pursuer was £165, to account of which £80 had been paid, leaving a balance of £85, which the pursuer seeks to recover in this action. The Sheriff-substitute has treated the case upon the footing that the deviation from the contract was in regard to a mere matter of detail, and that therefore the proper course was to deduct from the contract price the amount required to complete the house in precise conformity with the contract.

Now, in order to make the house entirely conform to contract it would be necessary to take down both gables and the back wall of the house (in so far as they were built by the pursuer) and to rebuild them, and the Sheriff-substitute has found, and rightly found, that the operation would cost more than the balance (£85) of the contract price still unpaid. He has accordingly assoilzied the defender.

It seems to me that a deviation from the contract which can only be cured by the contractor taking down substantially the whole building work which he had contracted to do, and rebuilding it with a different kind of mortar, cannot be regarded as a mere matter of detail.

I see no reason to doubt that the pursuer believed that the defender had authorised the substitution of milled lime for cement (by which a saving of a few pounds was effected), and the evidence shews that, seeing the walls were rough cast, the fact that they are built with milled lime instead of cement did not materially, if at all, affect their value or sufficiency. The defender has therefore been very little, if at all, prejudiced by the deviation from the contract.

In these circumstances I cannot help thinking that to apply in this case what is an exception to the strict rule of law (that a person who has broken his contract cannot sue upon it), an exception which is allowed upon equitable considerations in the contractor's favour where the contract has been substantially executed, and has only been unfulfilled in some matter of detail, might result in grave injustice.

I can come to no other conclusion upon the evidence than that probably the sum of £85, which the Sheriff-substitute has allowed the defender to retain, is a great deal more than any damage which he has sustained by the breach of contract, and that consequently the amount which the pursuer has received is a great deal less than he would have been found entitled to if, instead of suing upon the contract, he had made a claim against the defender for the amount by which the latter was lucratus—a claim which, according to the Lord President in Ramsay's case, he would have been entitled to make.

I am therefore of opinion that this is a case in which the strict rule of law that a person who has broken a contract cannot sue upon it should be applied, and that the defender should be assoilzied, leaving the pursuer to adopt any other remedy which may be open to him.

The result is that, in my judgment, the interlocutor of the Sheriff-substitute of 5th December 1905 should be affirmed with this variation.

The Lord Justice-Clerk and Lord Stormonth-Darling concurred with Lord Low.

The Lord Justice-Clerk then read the following opinion of Lord Kyllachy, who was present at the hearing but not at the advising—I am of opinion that the Sheriff-substitute's judgment is right and should be affirmed. I am unable to hold it established that the substitution of milled lime for cement in the part of the building in question was authorised by the defender, and I think it clear, as matter of law, that the defender's architect was not entitled, without the defender's sanction, to authorise such a deviation from the express terms of the contract.

Further, I agree with the Sheriff-substitute that, having regard to the character and effect of the deviation, the pursuer—in the most favourable view for him—must, as a condition of being allowed to maintain his action, submit to such a deduction from the contract price as will cover the cost of altering the work so as to make it correspond with the specification. That is, I think, the just result both upon principle and upon the authorities, Scotch and English. The case of Ramsay v. Brand, to which the Sheriff-substitute refers, is, I consider, in point—as are also, if I read them aright, the English cases cited at the discussion—particularly the cases of Ellis v. Hamlen, Munro v. Butt, and Thornton v. Place .