A legal contract of works shall have the force of law, with no room for interpretation when the terms of agreement are clear

The cardinal principle that governs a contract remains that the contractual obligation must be respected, and that it is the will of the contracting parties as expressed in the convention that should prevail and must be observed.

This was stated in a judgment delivered by the First Hall Civil Court in J&R Developments Limited vs Recube Construction & Project Management presided over by Honourable Madam Justice Audrey Demicoli and delivered on the 7 July 2023.

In this case, the plaintiff company, J&R Developments Limited, requested payment of €25,993.69 allegedly owed to it by the defendant company, Recube Construction & Project Management, for work that was allegedly not done according to the art and skill; costs of machinery and equipment; penalty for delay in work; and a fine imposed by the Authority for Health and Safety at Work as stipulated within the contract of works signed between the parties. On the other hand, the defendant company claims that it was not yet paid for all the works while rejecting all the other claims brought forward by the plaintiff.

The court analysed each of the four claims independently. The first claim investigated was whether the work was not done according to art and skill required. The plaintiff company contends that the remedial work had to correct bad work that was done in the ceiling and in the lift shaft of the building.

The Court noted that the defendant company at no point in the proceedings disputed the fact that corrective work had to be done. It resulted from the facts of the proceedings that the corrective work needed for the lift shaft was done by the defendant company. However, the corrective work for the ceiling was performed by a third party, because, at that point, the defendant company were refusing to complete the works, since they were not yet paid for works done so far.

The Court considered that the defendant company had a right to present its claim for payments. However, the Court also noted that the plaintiff company could not keep waiting for this issue to be resolved since there were third parties being affected. The contract between the parties had a clause that clearly stated that any remedies needed on works not done properly had to be done at the defendant’s cost. Hence, the Court concluded that the plaintiff company, J&R Developments Limited, had to be refunded for all costs accrued for the correctional work, including the new material needed, which the defendant company was also refuting.

The plaintiff company claimed for the cost of machinery and equipment, which had to be paid from their end, whilst as stipulated by the contract, this had to be the responsibility of the defendant company. On the other hand, the defendant company claimed that in the bill of quantities annexed to the contract, the costs of the materials were excluded and only labour costs were requested.

However, the Court noted that the defendant company was actually stating that materials and machinery were the same thing, when this was evidently not the case. In fact, the Court added that the Contract of Works stipulated two separate clauses; one on scaffolding and plant and another on materials and workmanship, affirming that one was clearly distinctive of the other. Thus, the Court concluded that the plaintiff company had to be refunded for the costs of machinery, equipment and tools from the defendant.

The contract of works included a penalty clause for failure to complete the work in the stipulated period in the agreement. From the facts of the case it emerged that the works were not completed in time and neither the plaintiff company nor the architect were notified by the defendant company for an extension as stipulated by the contract.

The Court further observed that the defendant company did not contest the fact that works were not concluded in time, but it was claimed the work was not done since the plaintiff company failed to pay in time. The Court stated that this was not a valid reason for the defendant company to be exempted.

The Court considered all the facts brought forward by the parties, stating that the defendant company did not perform all its obligations. The contract stipulated a clause that specified penalties for delays only. Making reference to Article 1122 of the Civil Code and quoting from jurisprudence on the matter, the Court stated that it is not in a position to reduce or mitigate the amount of the penalty, and that this amount has to be paid by the defendant company to the plaintiff company based on the agreed contract clause.

Furthermore, the Court also concluded that the fine imposed by the Authority for Health and Safety at Work should also be paid by the defendant company pursuant to the conrtact clause agreement stipulating that the contractor is solely responsible for the general safety and security at the site.

The Court upheld all the claims in favour of the plaintiff company, declaring the defendant company as debtor, liquidating the sum due of €25,993.69 and ordering the defendant company to pay the plaintiff company the amount due.