Extra works must be paid for

The Court of Appeal ruled that a contractor must be paid for extra works carried out. This was held on 31 October, 2016 in Saviour Camilleri v Joseph Falzon et.

The appeal concerned an arbitration award dealing with two engagement agreements, one a design services agreement and another a quality surveying agreement entered in to by the parties. Camilleri asked the arbitrators to order the defendants to pay €29,109.03 for interior design and €17,295.44 for quality surveying and €10,577.52 for extra works, totalling to €56,981.99.

Falzon had pleaded that he had no commercial relationships with Camilleri and that the works did not take place or were carried out not according to Falzon’s instructions amongst others. The arbitrators ordered that the sum that had to be paid was €38,762.81.

Falzon appealed the award on the ground that Camilleri did not present certification of works of a number of contractors and therefore the arbitrators were incorrect to order him to pay for this work. Furthermore there was no agreement on extra works and therefore the arbitrators could not award a compensation for this. Another plea involved the taxed bill in that Falzon should not have been condemned to pay since he offered a settlement of €23,798.80.

Mr Justice Anthony Ellul considered the facts of the case in that the parties signed two agreements, one on 6 May, 2005 for design services and another on 24 June, 2005 for quality surveying. Camilleri made his claims, however the appellant, Falzon, contested them.

With regard to the quality surveying the appellant explained that Camilleri had accepted the fact that the work was not carried out and he did not follow the procedure laid out in the agreement. Falzon pointed out that the marble works were not measured and certified. Camilleri rebutted that the certificate was not given to the project manager since they complained about the quality of the marble. The financial controller of the appellant testified that the measurements were in fact taken, and there was a difference between the amount invoiced and the amount paid. The evidence showed that the appellant had contested the quality of the marble placed, but accepted the delivery.

As for the extra works, clause 4.3 of the agreement read “any changes, alterations or modifications of a substantial nature of an approved work may be requested by the Client, subject to the payment to the Designer of a remuneration agreed on an ad hoc basis”. 

The Financial Controller testified that according to his records there seemed to be no agreement on the extra works. The Arbitrators in their award confirmed that the evidence showed that extra works were carried out, since the appellant on a variety of occasions asked for changes in the design after the designs were concluded and presented.

This was confirmed by a number of witnesses. On this, the Court pointed out that in the Award where the changes to the design were not substantive no compensation was given. The fact that there was no agreement on rates, does not mean that compensation should not be given. In fact the arbitration contractors state that “the arbitrators may decide ex acquo et bono”. Once somebody does extra works that person should be compensated for those works. In a previous judgement Alfred Borg v Accountant General decided on 10 June, 2005 held that extra works should be paid if the procedure is followed as stipulated in the contract. In this case the clause in the contract was intended to protect the government from unjustified claims. In this particular case the clause was aimed for the appellant to have a right to ask for changes and amendments.

As for the taxed bill, the Arbitrators had decided that expenses of the arbitration should be paid by Falzon. The Court of Appeal decided that the claim was not fully awarded and therefore the appellant should pay 68% of the expenses and not 100%.

Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates