Yoram Amsalem (t/a MRE Building Contractors) v Raivid & Anor

Where building works are agreed without a fixed lump-sum price or an agreed cap, the contractor is ordinarily entitled to a reasonable price for the work and materials supplied. The same principle applies to substantial variations where no price is agreed. A client’s purchase of materials and fittings is not economic duress where it reflects the parties’ original agreement and the contractor has applied no illegitimate pressure. A party repudiates a construction contract by clearly refusing further payment and preventing the contractor from completing the works. The contractor’s valuation is assessed on a reasonable market-price basis, subject to deductions for incomplete or defective work.

The claimant builder carried out extensive conversion, extension and refurbishment works at the defendants’ house. The parties disputed the pricing basis of the initial works, several variations, payments made, alleged economic duress, repudiation, defects and delay.

The court found that no fixed lump-sum price or overall cap had been agreed. It also considered whether the defendants had agreed to substantial additional works, including a new roof and loft, and whether the claimant was entitled to payment on a reasonable-price basis. The central issues included the effect of the defendants’ refusal to make further payments and their exclusion of the claimant from the property.

Judgment was entered for the claimant in the sum of £193,679.54.

1. Pricing basis. The parties had not agreed a fixed lump-sum price for the initial works and had not agreed a cap of £150,000 or any other amount. The approximate figures discussed were indicative estimates. The claimant was therefore entitled to a reasonable price for the works within the agreed scope.
2. Variations. The demolition and replacement of the garage, the new porch and staircase, and the substantial loft and roof works were agreed variations. No fixed prices were agreed for those variations, and they were not subject to any cap. A reasonable sum was consequently payable for each.
3. Economic duress. Applying the factors identified in DSND Subsea Ltd v Petroleum Geo-Services ASA [2000] BLR 530, the defendants had not shown compulsion, lack of practical choice or illegitimate pressure. The supply of fittings and finishing materials by the defendants reflected the original agreement. There was no protest, no threatened breach, and the defendants continued with the contract. The economic-duress defence therefore failed.
4. Repudiation and delay. The defendants repudiated the contract by refusing further payment and preventing the claimant and his workmen from returning to the site. The claimant accepted that repudiation. The claimant was not in breach of the agreed completion period, which had been extended to about 12 months by the variations. General requests for payment were not repudiatory in the circumstances.
5. Valuation and counterclaim. The reasonable price was assessed by reference to market value, with deductions for incomplete or defective work and appropriate allowances for snagging. The defendants’ delay and completion claims failed. After valuing the works, allowing £4,670 for established defects or damage, and crediting payments of £156,400, the net balance was £193,679.54.