In a refurbishment contract for 120 houses under SBC. The bills of quantities say that the contractor can take possession of 8 houses at a time, taking possession of another house every time a completed house is handed over. Is the contractor entitled to possession of all 120 houses at once?
The answer to this question proceeds from this: there is an implied term in every building contract that the employer will give possession of the site to the contractor within a reasonable time. This means that the contractor must have possession in sufficient time to enable the completion of the Works to be achieved by the contract date for completion. For example, under the terms of SBC, clause 2.4 stipulates that the contractor must be given possession on the date set out in the contract particulars.
If the employer fails to give possession on the date stated, it is a serious breach of contract. If, as sometimes happens, there is no express term dealing with the topic, a term would be implied and the failure would be a breach of such a term. Failure to give possession is a breach of such a crucial term that if the failure is continued for a substantial period, it may amount to repudiation on the part of the employer. If the contractor accepts such a breach, an action for damages may be started, which would enable the contractor to recover the loss of the profit that would otherwise have been earned. Generally contractors are not anxious to treat the breach as a repudiation, but simply as a breach of contract for which they can claim damages for any loss actually incurred.20 SBC contains provision in clause 4.23 that allows the contractor to recover such losses through the contract mechanism (clause 4.24.5) and hopefully avoids the difficulties resulting from accepted repudiation. However, it should be noted that the contract provisions do not displace the contractor’s right to use common-law remedies if so inclined.
The position envisaged in the question is still quite common, particularly in local authority housing contracts and it was well stated as follows:
Taken literally the provisions as to the giving of possession must I think mean that unless it is qualified by some other words the obligation of the employer is to give possession of all the houses on 15 October 1973. Having regard to the nature of what was to be done that would not make very good sense, but if that is the plain meaning to be given to the words I must so construe them.21
This was a case where the right to possession had been qualified in the appendix to the JCT 63 form of contract. In order to achieve possession in parts under SBC, it is necessary to complete the contract particulars accordingly. Possession as described cannot be achieved by anything in the bills of quantities, because clause 1.3 makes clear that nothing in the bills can override or modify what is in the printed contract. This is a clause peculiar to JCT contracts that still catches out the unwary.
Part of the judgment in London Borough of Hounslow v Twickenham Garden Developments Ltd22 has helped to give rise to the myth that a contractor can be given possession of the site in parts. The court referred to possession, occupation and use as necessary to allow the contractor to carry out the contract. Because this was not something that the court had to decide, the statement does not have binding force.
The idea that a contractor is entitled only to ‘sufficient possession’ and that, therefore, the employer need give only that degree of possession that is necessary to enable the contractor to carry out work is misconceived. In any event, the contractor is entitled to plan the carrying out of the whole of the Works in any way it pleases.
Although it is not binding authority, the commentary in one of the Building Law Reports sets out the position:
English standard forms of contract, such as the JCT Form, proceed apparently on the basis that the obligation to give possession of the site is fundamental in the sense that the contractor is to have exclusive possession of the site. It appears that this is the reason why specific provision is made in the JCT Form for the employer to be entitled to bring others on the site to work concurrently with the contractor for otherwise to do so would be a breach of the contract . . .
This is an eminently sensible view. Although an earlier JCT form of contract was under consideration, the view is equally valid in the context of SBC. Whether or not the contractor has been given sufficient possession is a matter of fact. In another case, under the JCT 63 form, although the employers were contractually obliged to give the contractor possession of the site, they could not do so. This was due to a man, a woman and their dog occupying the north-east corner of the site by squatting in an old motor car with various packing cases attached and the whole thing protected by a stockade occupying part of the site. Although the precise period was in dispute, it seems to have been about 19 days before the site was cleared and the contractor could actually get possession of the whole site. The court held that the employers were obviously in breach of the obligation to give possession on the contractual date. The contractor could enter on to the site, but it was unable to remove the rubbish and its occupants and, therefore, the breach was the cause of significant disruption to the contractor’s programme.
In another case, it was held that the phrase ‘possession of the site’ meant possession of the whole site and that, in giving possession in parts, the employer was in breach of contract and the contractor was entitled to damages.23
The item in the bills of quantities cannot override what is in the printed contract (clause 1.3) and the contractor is correct in requesting possession of all the houses on the date of possession, because that is what the possession clause (2.4) states.