Mirimskaya v Evans & Anor

A binding construction contract may arise from informal documents and conduct where the parties, work and price are sufficiently certain. A signature and lengthy formal contract are not essential. Where no completion date is agreed, completion within a reasonable time may be implied.

An agreed advance-payment term may entitle a contractor to stop work when overdue payments are not made. A refusal to continue in those circumstances is not necessarily repudiatory. Unpaid instalments normally remain payable after repudiation, but a total failure of consideration may justify restitution instead. The contractor may then recover proven loss of profit as damages.

The claimant engaged the defendants in connection with the refurbishment and extension of a London property. She paid substantial sums to Dezigner Living Limited for Stage 1 and Phase 1 works. The defendants later demanded further advance payments, while the claimant sought accounting information, revised payment arrangements and a formal contract.

After correspondence in which the claimant treated the defendants’ position as repudiatory, she terminated the arrangements and excluded them from the property. She claimed repayment and an account. Dezigner Living Limited counterclaimed for unpaid instalments, professional services and party-wall surveyors’ fees. The judgment determined liability and principles of assessment, while quantification, interest and costs were reserved.

1. Contracts. The claimant entered into two binding agreements with Dezigner Living Limited for Stage 1 and Phase 1. The documents identified the parties, described the works in general terms and stated the price. Their brevity did not prevent contractual formation. The absence of a signature was not determinative. No contracts were made with Mr Evans personally. The documents and the parties’ dealings objectively established that Dezigner Living Limited was the contracting party.
2. Although no completion date for the works had been agreed, the law implied an obligation to complete within a reasonable time in all the circumstances. The agreements were fixed-price contracts, supplemented by an obligation to pay professional fees actually incurred in carrying out the project.
3. Repudiation. The claimant was obliged to make advance payments, including the second instalments. Her failure to pay was a breach. The defendants’ letter stating that they could not continue without further funds did not evince an intention not to be bound. It was a statement of their inability to proceed unless the claimant performed her payment obligations. The claimant therefore repudiated the agreements by failing to pay and by wrongly accepting the defendants’ position as repudiatory.
4. Instalments and consideration. Ordinarily, unpaid instalments due before an employer’s repudiation remain payable. Applying the principle stated in Hyundai Heavy Industries Co. Ltd v Papadopoulos (1980) 1 WLR 1129, an exception arises where there has been a total failure of consideration. On the special facts, the defendants had spent only about two-thirds of the sums received and no work was referable to the unpaid final instalments. The defendants could not recover those instalments. The claimant instead had an immediate restitutionary right in respect of them.
5. The defendants could nevertheless claim damages representing the loss of profit they would have made had the agreements been completed. The professional-services claim could include only the actual cost of services provided, without an undisclosed mark-up. Party-wall surveyors’ fees appeared recoverable if unpaid, although the point was not finally decided. Quantification, interest and costs were reserved for further directions.