Kang & Anor v Pattar

In a building contract dispute, an undisclosed principal may sue and be sued on an agent’s contract where the agent acted within actual authority and the contract or surrounding circumstances do not show that the agent was the true and only principal. The contractual scope is determined by the agreement actually made, including express oral instructions, rather than later drawings which were not incorporated. Later drawings do not retrospectively alter obligations concerning work already carried out consistently with the contract and applicable Building Regulations. A claimant cannot recover remedial costs for work for which no credit has been given, since that would constitute double recovery. Where work is suspended by agreement pending funding, a party’s failure to resume payments and invite completion may amount to repudiatory breach.

The claim arose from building works at a property owned by the claimants. The defendant contracted initially and later orally for substantially extended works. The claimants alleged defective and delayed work and sought damages. The defendant disputed that the claimants were contracting parties and counterclaimed for payment for work completed and lost profit following the alleged repudiation of the varied contract.

The court determined whether the claimants were undisclosed principals, the terms and scope of the varied contract, whether construction drawings were incorporated, whether either party repudiated the contract, the value of completed and remedial work, and the defendant’s entitlement to payment and lost profit.

1. Undisclosed principal. Applying Siu Yin Kwan v Eastern Insurance [1994] 2 AC 199, the claimants had actual authority to contract through Mr Singh and were undisclosed principals. The surrounding circumstances did not establish that Mr Singh was the true and only principal. The claimants could therefore sue and be sued on the varied contract.
2. Contractual scope. The varied contract was made shortly after planning permission was obtained and before the detailed construction drawings were supplied. Those drawings were not incorporated. The defendant was required to perform the work orally agreed with Mr Singh and to comply with applicable Building Regulations. Later drawings did not require alteration of work already completed in accordance with the agreement and Mr Singh’s express instructions.
3. Suspension and repudiation. The parties agreed to suspend the works because funds were unavailable, with completion to resume after notice that funding was available. The claimants’ failure to make further payments and invite the defendant to resume work was repudiatory breach. The defendant was not in repudiatory breach and the claimants could not recover delay or distress damages.
4. Misrepresentation arguments. The court considered the principles relied on from Archer v Stone (1898) 78 LT 34 and Smith v Wheatcroft (1878) 9 Ch D 223. Even assuming misrepresentation concerning the later written document, the evidence did not establish that the defendant would have refused to name the claimants as contracting parties had he known the alleged purpose of the document.
5. Damages and counterclaim. Remedial costs could not be recovered where the claimants had received no corresponding credit for the relevant work, as that would create double recovery. The claim was dismissed. Judgment was entered for the defendant on the counterclaim in the sum of £18,642, including £12,298 for the balance of completed work and £6,344 lost profit.