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1921 Supreme(SC) 98
Privy Council
Carson, Wrenbury, Sumner, Atkinson, Justice Buckmaster, JJ.
Forbes -Appellant
Versus
Git and others -Resopndent
On Appeal from the Supreme Court of Canada
Decided On : 20-12-1921
Charles Russell and Co., Ridden, Blake, T. Mathew, Moss, Woods
A later clause in a deed is rejected as repugnant only if it destroys an earlier obligation; if it merely qualifies that obligation, both clauses must be read together to determine the parties' intentions.
Headnote:(A) Contract Law - Construction of Deeds - Repugnancy and Qualification - Where a later clause in a deed does not destroy but only qualifies an earlier obligation, the two are to be read together to give effect to the intention of the parties. If a later clause destroys the obligation created by an earlier clause, the later clause is rejected as repugnant and the earlier clause prevails.
(B) Contract Law - Fixed Price vs. Estimated Sum - A provision stating that work is to be performed "in consideration of" a certain sum does not necessarily establish a fixed-price contract, particularly when subsequent clauses provide for adjustments based on actual expenditure and the production of accounts.
Facts of the case:
A building contractor and building owners entered into an agreement for alterations and fitting up of a restaurant. The contract contained three key clauses: the first specified a sum of $3,000 to be paid in installments; the second provided for termination and reimbursement for labor if structural removals caused serious damage; and the third provided for reimbursement if actual costs exceeded $3,000 or a reduced payment if costs were lower, based on produced accounts. The work was substantially varied and departed from the original scheme. A dispute arose regarding the final amount payable, with the contractor claiming based on the third clause.
Findings of Court:
The court found that the third clause did not destroy the obligation created by the first clause but merely qualified it. The sum of $3,000 mentioned in the first clause was an estimated sum whose accuracy was to be tested and controlled by the accounts provided for in the third clause. The court determined that the first clause did not necessarily mean the work was for a fixed price, but rather that the sum was consideration for undertaking the obligation.
Issues: Whether the clause providing for payment based on actual costs plus a percentage was repugnant to the earlier clause specifying a sum of $3,000, and whether the first clause established a fixed-price contract.
Ratio Decidendi: In the construction of a deed, a later clause is rejected as repugnant only if it altogether destroys the obligation created by an earlier clause. If the later clause merely qualifies the earlier one, both must be given effect. The phrase "in consideration of" does not automatically imply a fixed price if the contract as a whole indicates the sum is an estimate or a payment for undertaking the obligation.
Result: Appeal allowed.
Legal Category Hierarchy
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contract law
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interpretation of contracts
- repugnancy and qualification of clauses
- contract pricing
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interpretation of contracts
Lord Wrenbury :-
The appellant is a building contractor. The respondents are restaurant keepers, who may be called the building owners. The question on the appeal is as to the construction of a contract between these parties for works of alteration, construction and fitting up in a restaurant and public dining room on the first floor over 119½, King Street East, in the City of Hamilton. The contract is dated 5th March, 1919, and is made between the building owners of the first part and the contractor of the second part. The relevant clauses are three in number, and for convenience will be referred to as the first, second and third clauses.
After a recital that the contractor has agreed to supply certain materials and perform certain services, the deed proceeds by the first clause as follows :
"Now this agreement witnesseth that in consideration of the sum of $ 3,000, to be paid as follows : $ 1,000 on the signing of this agreement further sum of $ 1,000 when it appears to the satisfaction of all the parties hereto that materials have been furnished and services performed to the extent of $. 2,500, and the balance or sum of $ 1,000, thirty days after the completion of this agreement, the party of the second part covenants, promises and agrees to with the parties of the first part that he will furnish the materials hereinafter mentioned and will perform services as hereinafter set forth. "
The deed then details the work to be done and the materials to be supplied. These leave such things as the size of a mirror, the size and location of a private sleeping room and the size and location of two public dining rooms " to be agreed upon between the parties. "
The deed then proceeds by the second clause as follows :
"The parties of the first part covenant with the party of the second part that if it is ascertained upon the removal or attempting to remove the partition or partitions that the construction of the building will not permit such removal without serious damage to same then this agreement is to be at an end and the parties of the first part will reimburse the party of the second part for labour expended up to such time and the party of the second part covenants that he will return so much of the $ 1,000 payment as remains afters satisfying his claim for labour performed. "
Next follows the third clause which runs as follows :
"The parties of the first part covenant with the party of the second part that in the event of the materials to be supplied and the labour performed amounting in value to more than $ 3.000 then the parties of the first part will reimburse the party of the second part for such excess. The party of the second part covenants that in the event of such labour and materials being less in value than $ 3,000 then the final payment will be the actual amount expended by the party of the second part over $ 2,000 plus 12½ per cent instead of $ 1,000 as above stated. In estimating the value of the materials to be supplied and the labour performed the party of the second part on the final settlement of the amount due under this agreement shall produce all accounts paid by him for labour and materials and shall be entitled to the amount ascertained as paid by him for labour and materials plus 12½ per cent."
The work to be done as described in the contract, was very largely varied, added to and departed from, not merely by the addition of extras, but by substantial and extensive alterations in the scheme.
A dispute arose between the parties as to the amount payable by the building owners. The contractor brought an action against the building owners in the Supreme Court of Ontario at Hamilton to recover $ 3830-36, being as he alleged the amount due to him on the footing that under the third clause he was entitled to the difference between a sum of $ 7,010-36 which he said was due to him under the third clause, and the sum of $ 3,180, which had been paid him on account. The judge of the County Court held that the third clause was
