Problem: Architect drawings needed better construction detail before commencing
At the beginning of 2016, my construction company entered into a JCT Minor Works Building Contract 2011, to carry out a major refurbishment to a row of terrace houses.
Progress was quite slow as the client started to remove some large items of work from our contract and give it to specialist contractors who were cheaper, albeit slower to deliver. In addition, there were some major issues with the construction drawings and we were constantly requesting the architect to provide better details.
Back in August, the architect instructed us to construct porches to each of the houses, but his design was insufficient and we requested better details in order to make a start.
The architect stated that as far as he was concerned, we were just looking for an excuse not to do the additional work, and instead of issuing better construction details, issued us with a notice of default, stating that by virtue of our failure to progress the construction of the porches, we were failing to progress the works regularly and diligently and threatened us with termination.
A couple of weeks passed and we still were waiting for the details, then out of the blue, we received a recorded delivery letter from the client terminating our employment under the contract on the basis that we had not remedied the default as notified to us by the architect. We are now barred from entering the construction site and the client is about to employ another building contractor.
What can we do?
Response: Is construction contract termination valid?
It is very difficult to determine when a contractor is failing to proceed regularly and diligently. It is widely understood from case law that to proceed with the works regularly and diligently, the contractor is required to proceed: “…continuously, industriously and efficiently with appropriate physical resources so as to progress the works towards completion substantially in accordance with the contractual requirements as to time, sequence and quality of work.”
That said, from your outline of the matter, regardless of whether or not you were failing to proceed regularly and diligently, the ground that the architect has issued his default notice for is incorrect.
Failing to proceed with a variation is not a ground for the architect to have issued a notice of default that could lead to termination of the construction contract. The only remedy that the architect has is to issue a notice stating that you have refused to comply with an instruction, and if you continue ignoring the instruction within seven days of the issue of the notice, your client may then instruct the third party to carry out the additional work only.
It is highly likely, therefore, that your client is in repudiatory breach of contract by issuing the notice that purported to terminate your employment under the construction contract, as the default notice was invalid.
© Michael Gerard 2017
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.