Remedies in Construction Law

Roger ter Haar

• Publisher: Informa Law from Routledge
• Year: 2017
• ISBN:
  9781317194941
• Edition: 2
• Topic: Law
• Subtopic: Construction Law
• Index: Law

Remedies in Construction Law brings together various well-established strands of the law and considers practical remedies for breach of contract and tort in connection with construction projects.

Now in a fully updated second edition, it covers topics such as:

• 
  
  

• Damages

• 
  
  

• Termination

• 
  
  

• Quantum Meruit

• 
  
  

• Recovery

• 
  
  

• Injunctions

• 
  
  

• Limitation

• 
  
  

• ADR

This book continues to be a vital reference to lawyers and construction professionals seeking specialist insight into how remedies function in the construction sector.

Chapter 1

Introduction

1.1 The title of this book begs two questions: what is meant by the word “remedies” and what is meant by the expression “construction law”.

1.2 Taking the second question first: over the last 20 or 30 years the literature concerning the law as it applies to building, engineering and other technological projects has steadily grown. Some law is specific to those industries (the statutory regime relating to adjudication in construction contracts and the vast amount of case law that has built up about it being an example). In some cases the literature has grown up to discuss particular standard forms of contract. In other cases the literature relates to the application of the general law to particular problems prone to arise out of or in respect of construction projects. The expression “construction law” is used in that latter sense.

1.3 What, then, is meant by “remedies” in this book? The answer is unlikely to prove satisfactory to academics. In part this is because the term “remedies” is used differently by different lawyers. In Attorney-General v Blake¹ Lord Nicholls said that “remedies are the law’s response to a wrong (or, more precisely, to a cause of action)”. In his invaluable textbook, Remedies for Torts and Breach of Contract,² Professor Andrew Burrows said:

“The concept of a remedy has rarely been subjected to rigorous analysis. Views may differ as to precisely what one is talking about. In this book, a remedy is used to denote the relief that a person can seek from a court. The focus is therefore entirely on judicial remedies, and not on what are sometimes termed ‘self-help’ remedies which are available without coming to court, such as out of court settlements, termination of contract, and the ejection of trespassers.”

1.4 In a very interesting treatise, Dr Zakrzewski analysed with care and in great detail the classification of remedies, describing the concept as “unstable”,³ saying:⁴

“This chapter will demonstrate that the concept of a remedy is unstable. The most obvious symptom of the lack of a stable concept is ambiguity. ‘Remedy’ is a very ambiguous word. It has multiple meanings, some of which overlap. Such a state of affairs is not conducive to clear thought and communication. We are in danger of misunderstanding what a speaker or writer means, of erring in our thoughts, or leading our listeners or readers astray. Ambiguity leads to inconsistent usage. As will be shown, remedy is used in different senses by different users. To complicate matters further, remedy is used in more than one sense by the same user.”

1.5 It is therefore with a good deal of trepidation that this book enters into any exposition of this topic. Some parts of this book deal with what any lawyer would recognise as a remedy, the award of damages and the grant of specific performance or permanent injunctions being examples. However this book goes wider than Professor Burrows in including within its scope “self-help” remedies such as termination. On the other hand there is no attempt to deal with every type of remedy in the wider sense that might arise in respect of a construction project – thus in the list of “self-help” remedies referred to by Professor Burrows, ejection of trespassers could readily be seen to be relevant in that people trespass on building sites as they do on other property, but this book does not deal with the law on that subject.

1.6 There are other areas that this book does not attempt to tackle: there is no attempt to expound the law on damages for death and personal injuries even though both death (occasionally) and injury (frequently) occur in the course of construction projects – this is simply a pragmatic decision because the law in this area is extensive, so to set it out would greatly expand the length of this book and because it is well dealt with in a number of other textbooks.

1.7 Also, this book concentrates upon the problems that arise out of commercial construction projects, with the consequence that there is limited discussion of the increasing volume of law (mainly statutory) relating to consumer contracts. The reason for that is that it is perceived that the readers of the series of textbooks in which this book appears are principally practitioners (legal or otherwise) concerned with commercial projects.

1.8 Thus the topics discussed in this book are not included in an attempt to describe the law relating to the whole range of problems that may arise out of or in connection with construction projects. What has been attempted is to identify areas of the law of remedies (using that expression in a somewhat loose sense) that are likely to be of interest to practitioners concerned with commercial construction projects.

1.9 Finally, the focus of this book is the law of England, although some references are made to the law in other jurisdictions where this has seemed to us of relevance or interest; but the author acknowledges his lack of expertise in the law of those other jurisdictions. I have attempted to state the law as it is in January 2017.

1[2001] 1 AC 268 at 284.

23rd edition, Oxford University Press, 2004, page 1.

3Rafal Zakrzewski, Remedies Reclassified, Oxford University Press, 2005, chapter 2.

4Page 7.

Chapter 2

Rectification

2.1 Before any remedies in relation to a construction contract fall for consideration, it is first necessary to establish the terms of the contract and whether the terms of any written contract reflect the parties’ joint intentions. If they do not, then the court may be willing to rectify the terms of the contract as written.

Interpretation

2.2 Relatively recent developments in the approach of the courts to construction or interpretation of contracts have reduced not only the need but also parties’ desire to put forward claims for rectification.

2.3 If a party can persuade a court (or an arbitrator) that its view of what a contract means is right, then as a matter of legal logic that party has no need to resort to a claim for rectification.

2.4 As will be seen below, the remedy of rectification is concerned with putting right mistakes in contracts evidenced in writing. However it is to be noted that the courts have a number of tools at their disposal to remedy mistakes by interpretation of contracts without resort to rectification.

2.5 Whilst the starting point in construing any contract is that words must be given their ordinary and natural meaning,¹ that principle may well be departed from where its application would involve an absurdity. As Lord Hoffmann said in Investors Compensation Scheme Ltd v West Bromwich Building Society:²

“The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.”

2.6 The same approach is sometimes reflected in a refusal by the courts to apply the natural and ordinary meaning of words where to do so would lead to a very unreasonable result or to impose upon a party a responsibility that it could not reasonably be supposed that party meant to assume. Thus in Wickman Machine Tools Sales Ltd v LG Schuler AG,³ Lord Reid said:

“The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they make their intention abundantly clear.”

2.7 Lord Reid’s dictum was considered and applied by Lord Clarke of Stone-cum-Ebony JSC in Rainy Sky SA v Kookmin Bank:⁴

“The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.”

2.8 Moreover, the more infelicitous the drafting of the contract, the more ready the court will be to adopt a construction that is not based upon the natural and ordinary meaning of its words. In Mitsui Construction Co Ltd v A-G of Hong Kong,⁵ Lord Bridge said of a building contract that the fact that the contract was poorly drafted:⁶

“affords no reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language they have used interpreted in the light of the relevant factual situation in which the contract was made. But the poorer the quality of the drafting, the less willing any court should be to be driven by legal niceties to attribute to the parties an improbable and unbusinesslike intention, if the language used, whatever it ma...