A builder suffered a heart attack during a job and could not finish the work. When his client sued him, the case turned on the rarely seen defence of frustration

Mr Rochester was a local builder who traded on his own as Rochester Building Services. He had a small team of self-employed labourers who helped him out when needed. In July 2006, when he was about 63 years old, Mr Rochester agreed to carry out extensive works to Mr and Mrs Atwal’s house near Wolverhampton.

Mr Rochester was well known to the Atwals as he had done work for them and their family in the past. They liked and trusted him. But there was another reason the Atwals wanted Mr Rochester. His quotation was substantially cheaper than the estimates from other firms that had been asked to tender and well below the going market rate.

Mr Rochester started work in August 2006. From day one the scope of the project expanded and it soon became clear that the three-and-a-half-month estimate for completion was not going to be met, but nobody complained. The work progressed steadily and was of good quality.

On 5 April 2007, Mr Rochester suffered a massive heart attack and was taken to hospital. The project, by then only about 60% complete, came to a halt and, although Mr Rochester’s subcontractors were on site, they could not continue without instructions from him.

A few weeks after his illness, Mr Rochester was told it was unlikely he would be well enough to return to work. Mr and Mrs Atwal’s response was to demand damages for breach of contract - they wanted Mr Rochester to pay for a new builder to complete the works. They also wanted damages for their own distress and embarrassment. When Mr Rochester didn’t pay, they sued him.

A few weeks after his illness, Mr rochester was told it was unlikely he would be well enough to return to work. The Atwals’ response was to demand damages for breach of contract

The trial took place in July 2010 at Birmingham Technology and Construction Court. Mr Rochester’s defence was that the contract had been frustrated. Frustration occurs when something happens, without the fault of either party, for which the contract makes no provision. Frustration comes into play only when the unforeseen event so significantly changes the nature of the outstanding rights and obligations of the parties under the contract that it would be unfair to hold them to their agreement.

One test is to ask whether the foundation of the contract has disappeared. In Notcutt vs Universal Equipment (1986), an employee had a heart attack, and the contract was
said to be frustrated, as he was “totally incapacitated from performing the contract … the coronary which left him unable to work again was an unexpected occurrence that made his performance of his contractual obligation - to work - impossible …”

Her Honour Judge Frances Kirkham, relying on the decision in Notcutt, held that, as a sole trader, picked by the Atwals for his trustworthiness and because he was cheap, the contract was personal to Mr Rochester; there was nobody else who could continue to direct the building work on his behalf after he became ill. This meant the contract could no longer be performed as the parties had intended, therefore it was frustrated. The Atwals’ claim that Mr Rochester had been in repudiatory breach of contract because he had not returned to work and had not appointed an agent to complete the works was dismissed.

As Mr Rochester had not been paid the full value of the works at the date of becoming ill, he was, under section 1(3) of the Law Reform (Frustrated Contracts) Act 1943, entitled to be paid a “just sum”. The sum was calculated based on the conclusions of an expert. The court awarded Mr Rochester the value of the works done to date, including an amount for the variations, less the money he had already been paid. The Atwals’ claim that there was an oral agreement that they would only be liable for the cost of materials used for variations, and not for labour or profit and overheads, was rejected by the judge.

This was an unusual case. The Atwals’ claim hinged on the court accepting that Mr Rochester’s incapacity was a breach of contract. A breach of contract happens when a party demonstrates an intention not to be bound by the contract. That analysis did not fit comfortably with the facts of this case, and was rightly rejected by the judge.

This was a victory for common sense, and a happy end to a difficult few years for Mr Rochester and his family.

Frances Pigott is a construction barrister at St Philips Chambers. She represented the defendant, instructed by Ansons