CONTRUCT----Estoppel by conduct — Payment of consideration estops plaintiff to claim for breach.

CONTRACT — Building contracts — Payment of full consideration to builder, including builder’s deposit, estops plaintiff to claim for breach.

CONTRACT — Damages — Building contracts — Failure to complete work.

Defendant, a building contractor, constructed some houses for plaintiff, but was unable to install water-supply pipes and showers as specified in the contract. Plaintiff took possession of the houses and paid defendant the full consideration. including refund of defendant deposit, which had been made for the purpose of deduction of any claims that might be made against the contractor. Later, at plaintiff’s request, defendant agreed to install the pipes and showers, for which he was to be paid in excess of the original contract amount. Defendant installed only the water-supply pipes, and plaintiff completed installation of the showers. Plain tiff hiought this action for breach of the original contract.

Held: Plaintiff’s acceptance of the work, implied by full payment to defendant, constituted an estoppel by conduct against its claim on the origiaal contract, but it may obtain damages for the breach of the subsequent agreement, measured by the cost to plaintiff for completion of the work agreed to be done.

Osman El Tayeb, P. November 18, 1956:— The defendant on November 7, 1951, entered into two building contracts with plaintiffs for the construction of 96 quarters (Harimat) in Atbara. They were lump sum contracts in accordance with written specifications and drawings The specifications included, inter alia, the installation of water-supply pipes with showers. The defendant completed th work in time, except the in stallation of the water-supply pipes. The pipes were not asailable at that time, and the plaintiffs were in urgent need of the Louses, and so they took deliser) of them as they were. Under the contract, the defendant had to pay at the Signing of it a deposit of 10% of its value, and it was agreed expressly or impliedly that this sum would be refunded six months after the completion of the work. f urther, paragraph 11 of the contract stipulated that payment to the con- tractor should be upon certificates, in arrears, and should be at the rate of 95%. That is to say, a deposit of 5% of the value of the contract should be kept by plaintiffs in suspense, and should be paid back to the contractor at the expiration of three months after completion of the work.

In the contract in this case it is admitted that plaintiff took delivery without the installation of the water-supply pipes, and that the deposit of 5% was refunded in time and also that the deposit of I0% was refunded in time. It appears that the last refund was made sometime in 1952.

Thereafter in the next year, plaintiffs started to make calls on defendant to complete the work. Defendant agreed to complete the work on a pro mise by plaintiffs’ representative that they would pay him £S. l.500m/ms for each house. After other requests defendant in 1955 started to do the work of the installation of water-supply pipes. He found plaintiffs had already done the work in 24 houses. He finished the work in the remaining 72 houses, but in a14 without showers. Plaintiffs fitted the showers by themselves. They are in this case claiming damages for breach of contract by failure to complete the whole work as contracted for in 1951.

The defence pleaded by defendant is that plaintiffs, by accepting the buildings incomplete and taking delivery of them and thereafter refunding to him his two deposits, considered the building contracts to have been fully performed, and that plaintiffs are estopped by conduct from denying that the contract was fully performed, and thereafter they are not entitled to claim any further performance, and so by his (defendant’s) refusal to complete, he is not in breach of his contract. Plaintiffs’ reply is that the deposits are intended to be for repair of any defective part of the work, and not for omissions in the contract which the contractor is under an obligation to perform at any time.

Defendant further contends that at that time he was asked to fill W.C. tanks with Water and also tomake sand filling instead of fitting the pipes Plaintiffs in reply stated that these were minor jobs and cannot be accepted instead of the pipes.

In my opinion estoppel by conduct is rightly pleaded by defendant, as I do not find any otner explanation of the facts. The rule has been atithoritatively stated as follows:. “Where one by his words or conduct wilfully causes another to believe the existence of a certain state of things and induces him to act on that belief so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as esisting it the same tim (Pickard v. Sears, (1837) 6 Ad. and LI. 469). And whatever a m:ln’s real intention may be, he is deemed to act wilfully, “if he so conducts hipaseif that a reasonable man would take the representaion  to be true and believe that it was meant that he should act upon it.?’ Freeman v. Cooke (1848)2 Ex. 654, 663, quoted in Phipson, Evidence  670 (8th ed. 1942). Applying this rule to this case I find that plaintiffs, by taking delivery of the buildings incomplete and further paying to defendant his deposits, by this conduct wilfully, caused defendant to believe that the contract was accepted as fully performed, and that he was induced to act on the belief that he was. discharged from any further performance. This wa a matter which certainly altered his position; a person having a certain liability and then being induced to believe that he has been absolved of that liability has changed his position. Plaintiffs would have averted the operation of the estoppel if they had been scrupulous and cautious enough to make their intention clear by express words that they reserved their right for completion of the building, or by their conduct in refusing to pay in full or in part the deposits of the defendant. Since they did not do this they cannot claim non-completion of a contract that they had accepted as complete and fully performed.

There is nothing mentioned about the purpose of the 10% deposit but as for the 5% deposit, it is mentioned in paragraph 11, above referred to, that it was intended to be for “deduction of all claims against the contractor for liquidated and ascertained costs and damages.” It is clear that plaintiffs were legally entitled to refuse the refund for the cost of the incompleted part of the work, when it is assessed and ascertained by them before it is actually done. The other point—that defendant was asked to do some extra work, i.e. filling W. C. tanks and making sand filling— though the cost was small as compared with the cost of the water-supply pipes, is furthers evidence to strengthen defendant’s belief that nothing more was required from him.

Plaintiffs’ representative might have contended that defendant had waived the estoppel by agreeing to complete the work and actually starting and doing part of it. This leads me to the discussion of the issues about whether there was a new agreement for the installation of the water-supply pipes. Defendant contends that there was a new agreement for the pay ment of £S.1.500m/ms. for each house. Plaintiffs contend that it was not a new agreement, but that it was the original agreement of the building con tract under which defendant had to finish the work, but that he was offered to be paid £S. l.500m/ms. for each house in view of the increase in prices of the pipes between the date of the original contract and the present day. In any case it was a new agreement with a fresh consideration and the fact: that part of the consideration was drawn from the original contract is immaterial.

I conclude by saying that there is here no waiver of estoppel. Had defendant just flatly refused to complete the work, and had he not started to complete it, the estoppel by conduct on the part of plaintiffs w have operated in his favour, and he would not be liable to complete, and plain tiffs would have failed in this ease. But by agreeing to complete, defen dant clearly entered into a new agreement for a fresh consideration, under which he had to perform what he contracted to do. His failure to perform it is a breach of contract for which he is liable in damages.

The measure of damages for breach of contract is the loss directly and naturally arising from the breach. In this case it should be the cost of completion of the work contracted to be done. Though the defendant contracted to do the work for a specific sum of money, he should be liable for the amount of expense incurred by plaintiffs in completion of the work even if it be more than the money contracted for. I accept the sums put by plaintiffs as correctly and accurately representing their losses: 24 houses at £S. 4.759 m/ms. and 72 showers at £S. 0.914 m/ms., amounting to £S. 180.024 m/ms. Plaintiffs offer to deduct from this the sum of  £S.  31.140 m/ms calculated by them as the difference in prices of pipes between the time of the original contract and the time of completion of the work. As I have accepted that the new agreement was for the consideration of £S. l.5 for each house and not only for the difference, I allow this deduction to be made, without prejudice to any claim by defendant for the recovery of the whole amount agreed upon. Defendant has preserved his right to do so and lately filed his petition.

Decree to plaintiffs for £S.148.884m/ms. with costs pro rata.