CLARION INSURANCE COMPANY (PVT) LTD v BEAUMONT INVESTMENTS (PVT) LTD & ANOR 2016 (2) ZLR 559 (H)

Flynote

Contract: " construction contract " variation " authority to vary contract " who may authorise variation " engineer or owner " contractor varying contract without authorization " liability of

Headnote

The plaintiff sued for damages in respect of an alleged breach of contract. The plaintiff contracted the first defendant to reconstruct a building belonging to its insured. The building been destroyed by fire. The second defendant signed a performance bond in favour for the plaintiff, for the due performance of first defendant's obligations. The plaintiff alleged that the first defendant's work was substandard, resulting in it cancelling the contract for breach and calling up the performance bond. The defendants denied a breach by the first defendant. The court was called upon to determine whether the first defendant had breached the agreement.

Held, that a construction contract is sometime made up of written documents such as quotations, acceptance letter, bill of quantities, etc. which documents define the roles, responsibilities and the scope of work to be carried out. A court determining a dispute over a breach of a contract ought to consider the terms of the contract and read them in light of the nature of the contract and the surrounding circumstances when the contract was entered into. The onus of proof in a contract of construction, to prove work done, lies on the contractor. Whenever variations have to be made to the scope of works, they are required to be ordered by an engineer of the project who will, in turn, issue a variation order, on the authority of the employer. Where there is no engineer, authority to vary the scope of works is required to come from the employer. A contractor who effects a variation to the works without authority does so at his own risk. The first defendant contractor failed to meet the stipulations he was mandated to follow. Where a contract is silent on its variation, the contractor has a duty to carry out the construction in terms of the mandate given. In this case there was no variation clause and no engineer. In the absence of an engineer, the first defendant had a duty to notify the employer of a design deficiency or inadequacy. The first defendant varied or altered the works required to be done without the authority and consent of the employer. By varying the scope of works, it drastically changed the character of the work it was required to carry out. It ought to have warned the employer of the dangers of proceeding with the works as agreed before carrying out the renovations. It owed the plaintiff a duty of care and ought to have ensured correction of the proposed works before changing the scope of works.

Held, further, that variation to the scope of works was not authorized. The first defendant breached the terms of the contract. It was no defence that better quality work was produced. The defendant's excuse that the employer's design or instruction deficiencies rendered it infeasible to carry out the work did not find favour with the court. The work performed was not within the scope of the contract nor contemplated by the parties. A contractor who carries out alterations which he is not contracted to perform and does so without authority but on the basis of his own knowledge and without the knowledge and consent of the employer cannot bind the employer over such works. The first defendant's failure to perform the contract on the terms agreed upon was sufficiently serious to warrant its cancellation. The plaintiff was entitled to cancel the contract and call upon the bond.