Learning in Cyberspace? Appendix A
 

Pages from Lancaster Law School Intranet

Page 1 - Facts

Negotiation Facts 2: Weeks 7-9

1. The development

Brownfield Enterprises plc. (Brownfield) obtained planning permission for a small "infill" development of twelve detached houses on vacant land in Grimeville, to be developed as "Manor Close". Brownfield engaged Caer Knott Ltd. (Caer Knott) to do the building work under the supervision of Desmond, an in-house architect employed by Brownfield. The contract, which was not on any JCT standard form, provided that Caer Knott would be paid per house an initial sum of 10,000 pounds on completion of the foundations, a further sum of 20,000 pounds on the roof going on the house, and a further 50,000 pounds on completion of the house to the satisfaction of Brownfield. Brownfield began marketing the properties using "show houses" at another similar development. Mr and Mrs Eager-Wright, having seen the show house, contracted to purchase the intended No. 2, Manor Close from Brownfield for 140,000 pounds, and paid a deposit of 14,000 pounds. The contract was not on any of the available standard conditions for the sale of land.

2. The excavations and the collapse

Mr Flatt, the owner of the existing house (not part of the development) adjoining the intended No. 2, decided to extend the basement garage of his own property by excavating up to the boundary of his own land. Mr Flatt took appropriate precautions to underpin his own house for this process, but did not think it necessary to make any enquiries of, or to notify, Brownfield or Caer Knott, possibly because he had not sought planning permission. On September 2nd, at a late stage of this excavation, the whole of No. 2, Manor Close collapsed, largely onto Mr Flatt's property (and onto Mr Flatt, who was working in the excavation at the time). Subsequent investigation revealed that unfortunately, Caer Knott had laid wholly inadequate foundations for all the twelve houses. These were accepted by Desmond and by the local authority's inspector; Desmond and the inspector, who were old friends, had met "for a few drinks" before the inspection and were not in a fit state to make accurate judgements. The collapse was caused by the combination of the disturbance of the subsoil by the excavation with the inadequacy of the foundations.

3. Consequences

Mr. Flatt, aged 41, who was previously employed as a senior manager on a salary of 75,000 pounds p.a., suffered a broken back and extensive other injuries which will involve permanent pain. He will be paraplegic and will not be able to work again. The falling building also wrote off his 1997 Range Rover and caused 15,000 pounds worth of damage to his house. The local authority has settled Mr Flatt?s claim against them for breach of statutory duty for 70,000 pounds.

At the time of the collapse Caer Knott had completed foundations for all the buildings, roofed nine and completed six. They had been paid foundations instalments, roofing instalments on six buildings and completion instalments on three. Extensive works will be required to deal with the problems of the foundations, costing a total of 300,000 pounds, while No. 2 will require site clearance and complete rebuilding at a cost of 90,000 pounds. Brownfield has refused to pay Caer Knott any of the outstanding instalments which have fallen due, has barred them from the site and engaged another builder, and is seeking compensation for their losses.

Since No. 2 had been completed, contracts had been exchanged and a completion date of September 5th had been set in the sale to Mr and Mrs Eager-Wright. The property was therefore insured in the Eager-Wrights? name by their mortgage lenders, the Mammoth Inequitable Building Society plc (Mammoth). However, Mr and Mrs Eager-Wright have lost all confidence in Brownfield, and are demanding the rescission of the contract and the return of their deposit; and they are supported in this by Mammoth. The value of the site of No 2 in its present state is 15,000 pounds. If cleared, the site will be worth 20,000 pounds.

Representing the Eager-Wrights and Mammoth: Team A
Representing Brownfield and their insurers: Team B
Representing Caer Knott and their insurers: Team C
Representing Mr Flatt: Team

Page 2 - Discussion

Page 3 - Start

Dear Mr and Mrs Eager-Wright

We are writing on behalf of Brownfield Enterprises plc regarding the completion of your new home.

We understand that there has been a slight delay with the completion of your property, however, our clients are doing their utmost to rectify this unfortunate situation. In the meantime if you have any queries please do not hesitate to contact either ourselves or Brownfield directly.

Yours sincerely

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