Donnelly & Ors v Weybridge Construction Ltd

Until 2002 the site at 135-137 Battersea High Street (“the Site”) was occupied by a two storey brick building which had formerly been used by the Royal Naval Association as a Members Club under a 99 year lease from the London Borough of Wandsworth.

Edgewest Properties Limited (“Edgewest”) applied for planning permission to demolish the existing buildings and erect a four/five storey building to provide 18 flats, incorporating roof terraces, with 16 parking places (14 at basement level). That application was based on plans drawn up by Axia Architects.

Planning permission was granted on 2 September 2002 subject to a number of conditions.

Weybridge Construction Limited (“Weybridge” or “the defendant”), the defendant and Part 20 Claimant (First Claim) in this action, agreed to acquire the Site. It acquired the interests of the Borough of Wandsworth and the interests of Edgewest in the Site by transfers dated 26 November 2002.

On about 28 October 2002 Weybridge entered into a joint venture agreement (“the JV Agreement”) for the development of the 18 flats at the site (“the Battersea Development”). There is a dispute as to the identity of the other party to the joint venture agreement but it involves one or both of two individuals resident in the Republic of Ireland who acted either personally or on behalf of a corporate entity.

The first individual is Mr. Joseph Brohoon. He lives in Dublin and has been in the business of property development, investment and estate agency for 17 years. He also has a financial services and insurance brokerage. From 1988 his estate agency business traded as Brohoon & Associates. In 2002 he formed Brohoon & Associates Limited to run this business.

The second individual is Mr. Damien Carley. He is a Solicitor practicing in Dublin in his own firm, Carley and Co. He has known Mr. Brohoon, both socially and as a client of Carley & Co, for a number of years.

In 1998 Mr Brohoon and Mr. Carley agreed to purchase a number of residential properties in the Dublin area and subsequently acquired a portfolio of properties. In 1999 Mr. Brohoon set up Heavenly Developments Ltd (“HDL”) as a UK Property company when he first purchased properties in the UK. In 2000 Mr Carley became a 50% shareholder with Mr. Brohoon in HDL.

Subsequently in April 2002 two further Irish companies were set up by Mr. Brohoon and Mr. Carley on a 50:50 basis:

Mr. Brohoon and Mr. Carley used the phrase “the Heavenly Group” to describe the companies through which they traded but there was no formal group structure between the companies.

The contenders for the joint venture partner with Weybridge under the JV Agreement are Mr. Brohoon as an individual; Mr. Carley as an individual; HPL; Brohoon & Associates; or Brohoon and Associates Limited. They form the parties whom I shall refer to as “the Part 20 Defendants” in this action.

In Autumn 2001 Mr. Brohoon had been introduced to Mr. Feeney of Weybridge by Field & Sons, a firm of Chartered Surveyors. They had met at a site in Earl’s Court.

This meeting had led to Mr Brohoon agreeing to purchase a number of flats at the Borough Development which Weybridge was carrying out with El Da Management Limited, a company within the Maya Group of Companies, a family property development business of which Mr. Yitshak Isaac Ella is the General Manager.

There is an issue between the parties as to whether the specification for or the standard of the fixtures at the Borough Development is relevant to the Battersea Development.

By autumn 2002 and against the background of their involvement in the Borough Development, discussions took place between Mr. Brohoon and Mr Feeney as to the possibility of collaboration on the Battersea Development, as well as other projects.

A meeting took place on 4 October 2002 at which Mr Brohoon and Mr Feeney discussed possible terms for collaboration on the Battersea Development. A few days later, some outline terms were sent by Mr. Feeney to Mr Brohoon. These “Heads of Terms” included:

“1.

Brohoon & Associates and Weybridge Construction jointly develop the above scheme.

At some stage Mr Carley produced “Heads of Agreement” which contained similar terms but were expressed to be an agreement between Berwick and Weybridge. It is not clear when these were produced or whether they were sent to Weybridge.

On 15 October 2002 Mr Carley spoke to Mr Busby of Thomas Eggar, Solicitors, and sent him a copy of the Heads of Terms produced by Weybridge.

On 22 October 2002 Mr. Feeney was in contact with his bank to arrange financing for the Battersea Development and he sent Mr. Mark Gidman at Natwest a copy of the Heads of Terms which he said were to be the “arrangement with Joe Brohoon.”

On 28 October 2002 Mr. Feeney, on behalf of Weybridge, signed a document referred to as a “Letter of Intent Undertaking and Acknowledgement” which was expressed to be between the Heavenly Group and Weybridge.

Mr. Carley wrote to Mr Busby on 31 October 2002 and stated as follows:

“I confirm that agreement has now been reached with regard to the letter of intent, undertaking and acknowledgement to be entered into between Weybridge Construction Limited and the Heavenly Group Limited and understand that David Feeney is at present attending to the execution of same in duplicate for onward transmission to us to enable us to also execute same.”

There is no dispute that the terms of the JV Agreement with Weybridge are set out in the document signed by Mr Feeney on 28 October 2002. There is an issue, as I have said, as to the identity of the other party, referred to as the Heavenly Group. There is also a question as to whether the JV Agreement gave rise to fiduciary duties on the part of the JV partner.

Whichever party acted as the JV partner, by late October 2002 arrangements were being made for a sales night in Dublin on 8 November 2002 (“the Sales Night”), the purpose of which was to obtain buyers for the 18 flats in the Battersea Development. An issue arises in these proceedings as to the specification for the flats, including the extent to which limestone flooring was included. In November 2002 the flats would necessarily be purchased off plan. The description of the flats on the Sales Night therefore depended on the documents produced at that time and what was said at that night.

In advance of the Sales Night and, as envisaged by the “Heads of Terms”, a brochure was to be produced for the Battersea Development. In addition Weybridge were developing another development “Temple Mews” in Clapham which was also to be sold at the sales night and a brochure was to be produced for that development, (“the Clapham Development”), too. Weybridge had previously used Mr Jerri Smith of Internet Direct to deal with publicity. A meeting was therefore arranged for 15 October 2002 at Weybridge’s Office to prepare the brochure for the Battersea Development. There is a dispute as to how much involvement Mr. Feeney had in that meeting and the production of the brochure. Similar issues arise as to the involvement of Mr Burgess and Mr. Leigh, also directors of Weybridge.

What is clear, however, is that the meeting was attended by Mr. Smith, Mr. Brohoon and his assistant, Sharon Treanor, and Mr. Martin Down, at the time a director of Weybridge. It is also evident that Mr. Feeney was present at the meeting for some of the time. There was also, it seems, a further meeting held on 17 October 2002 at the Borough Development during which there was a discussion of the brochure for the Battersea Development.

Following these meetings a draft brochure was drawn up on 25 October 2002. That document contained a “Specification” in these terms:

“Modern fully integrated kitchen with oven, hob, extractor, dishwasher, washer/dryer, microwave and fridge freezer.

Granite work surfaces

Limestone tiled flooring throughout

Underfloor heating

Oak veneer doors

High quality sanitaryware and fittings

Thermostatic power shower

High quality stainless steel/bushed chrome ironmongery

NHBC buildmark 10 year warranty

High specification

NACOSS approved intruder alarm

Video entry system”

That specification was formulated in discussions between the attendees at the meetings on 15 and 17 October 2002 and there are two manuscript documents which essentially contain that specification:

Both those documents and the draft brochure have “Limestone tiled flooring throughout” and “Underfloor heating”, two items which are of importance in this case.

The PDF proofs of the brochure were sent to Mr Brohoon and Mr. Feeney by Mr. Smith. After he was given the go-ahead, Mr Smith had the brochures printed and delivered to the airport to be flown to Dublin. The final version contained the same specification as the draft brochure. It referred to the Battersea Development as “The Icon”.

In advance of the Sales Night, Mr. Brohoon sent out invitations and made contact with people in Dublin, who he thought might be interested in purchasing flats in the Battersea Development. The Clapham Development was also to be launched at the sales night. Mr Feeney confirmed the terms for the sales agent fee to Brohoon Associates as

“Battersea High Street - £61,920 + VAT upon exchange of the 18 no. units”

Clapham Road - 2% + VAT of sales revenue upon completion of the 14 no. units.”

The invitations sent out by Brohoon Associates stated:

“We are delighted to invite you to the exclusive launch in our offices on Friday the 8^th of November at 6:30 p.m.

Please find enclosed a brochure on The Icon. Details of Temple Mews will be available on the night together with prices for both developments.

A reservation deposit of £5,000 will be taken on the night with a further £20,000 payable on exchange of contracts on or before 18^th November 2002 with completion due in the autumn of 2003.”

The Sales Night commenced at about 6:30 pm on Friday 8 November 2002. It took place at the offices of Brohoon & Associates at 10 Anglesea Street, Temple Bar, Dublin. There is a conflict of evidence as to the extent to which Mr Feeney and Ms Fitzgerald (the Weybridge financial director) were involved in discussions during the evening, and I shall refer to this below. However, following the Sales Night and after the efforts of Mr Brohoon and Mr Carley before and after the evening, all 18 units were reserved.

It was arranged that Thomas Eggar would act on behalf of Weybridge, as the vendor’s Solicitor. Mr Carley had arranged for Cripps Harries Hall (“CHH”) to provide details of a fixed fee arrangement for purchasers of the apartments and all the purchasers accepted this arrangement and instructed CHH.

In the draft letter of instruction to CHH prepared by Mr. Carley he included this:

“I confirm that you may issue all correspondence in the first instance to Damien Carley of Carley & Company, Solicitors, 10 Anglesea Street, Dublin 2 who shall act as liaison in this matter.

I note your fee confirmation and confirm my intention that the deposit payable under the Contract herein shall be paid directly to Brohoon & Associates of 10 Anglesea Street, Dublin 2 on or prior to exchange to be held as agent and not stakeholder and confirm that it is in order that the Contract reflects this point.”

Matters initially proceeded rapidly. Thomas Eggar had already sent documentation to CHH on 7 November 2002, before the Sales Night, with a draft form of lease and agreement following in mid-November. CHH responded with suggested amendments on 13 November 2002. These amendments were not included in the final version of the agreement and draft lease, which were substantially in the form of the Thomas Eggar draft.

On 20 November 2002 Thomas Eggar sent the agreements, with the leases and plans for eighteen apartments, to CHH. The letter stated:

“I have not coloured the car parking spaces on the relevant plans as I have not been informed which flat is to have which parking place. However I do not think there is any particular magic about it.”

On 21 November 2002 CHH sent Mr. Carley a report on the title and a draft authority, to be signed by the purchasers, to permit CHH to sign the necessary on their behalf. It stated as follows:

“…hereby authorise and request Cripps Harries Hall to sign on our behalf the contract for the purchase of the above property to be purchased and exchange the same upon receipt of the deposit. We also authorise Cripps Harries Hall to sign the reversion form, contract and rental agreement (if any) in respect of this property.”

On 22 November 2002 Brohoon & Associates transferred £450,000 to the Thomas Eggar client account, in accordance with the terms of the JV Agreement. On 25 November 2002 Brohoon & Associates also invoiced the defendant for the fees of £61,920 relating to the sale of the 18 flats at the Icon.

On 18 December 2002 Mr Carley sent CHH copies of the letters of instruction and authority from the purchasers for flats 1 and 3 to 18. Flat 2, at that stage, was being dealt with by Mr David Philips of Howard Kennedy.

Contracts were exchanged for flats 4, 5, 6, 7, 8, 11, 13, 15, 16, 17 and 18 (11 flats) on 19 December 2002 and for flats 1, 3, 9, 10, 12 and 14 (6 flats) on 23 December 2002. The Contract for flat 2 was successfully exchanged on 16 January 2003.

The Contracts were all in identical terms and the main issues in this case depend on the construction of these Contracts in the light of the events which have happened.

The existing site and property was transferred to Weybridge on 23 November 2002. In advance of that, Weybridge had instructed Rodgers Leask Limited to carry out a Ground Investigation Report. Boreholes were carried out in October 2002 and a report was produced on 19 November 2002.

Demolition of the existing buildings on the Site took place at the end of November/beginning of December 2002. At some stage (there is a conflict about the date), Weybridge decided to use a timber frame construction for the building instead of a steel frame/concrete floor construction. In addition, three balconies which had been shown on the plans for flats 4, 9, and 14 were not constructed. Changes were also made to the layout of the basement and this led to a reduction in the number of car parking spaces in the basement from 14 to 11.

These changes and their effect on the obligations under the Contracts are of central importance in this action. In particular, limestone flooring was omitted, the three balconies were omitted and, to provide 14 car parking spaces, three spaces had to be located on the ramp, the remaining 11 being in the basement.

In relation to the limestone flooring the chronology was as follows. On 28 March 2003 Mr. Down, on behalf of Weybridge, contacted Mr Brohoon (as Brohoon & Associates) to update him on various matters. In respect of the Battersea Development, he stated

“As you know I have been having problems incorporating the under floor heating and limestone floors due to the development being of timber frame construction.

We regret that after many weeks of trying to overcome the various problems we have encountered trying to incorporate the under floor heating and limestone that we need to change specifications to a timber floor of your choice and ceiling heating in lieu of under floor heating.”

In response Mr Carley (on behalf of HDL) replied on 31 March 2003, in the absence of Mr Brohoon. He stated that:

“This is a matter of some concern because as you are aware these properties were sold featuring both underfloor heating and limestone flooring. These features were emphasised in both the brochures and at the launch and certainly were a factor in the successful sale of the units. I am at a loss to understand how the difficulties now being encountered by you would not have been obvious at design stage as presumably requirements regarding fire proofing, movement, acoustic installation etc., would all have been well known at that time. While I am presuming that the change in specifications to timber flooring and ceiling heating is not a cost issue I believe that it may be necessary for you to offer disappointed purchasers some uplift on specification in another area/price reduction to take account of the change in specification and perhaps you would consider same and put forward your proposals in this regard.

I look forward to hearing from you further and believe that this matter should be addressed as quickly as possible to enable the purchasers to be advised of the difficulties at the earliest opportunity.”

Mr Feeney responded to Mr Carley (as Brohoon & Associates) on 23 April 2003 and said that, as he had mentioned during a conversation, he was disappointed with the “content and tone” of the letter of 31 March 2003 and said “certainly it is not the response I would expect of our partners”.

Mr Feeney then wrote to Mr Brohoon (as Brohoon & Associates) on 24 April 2003 in relation to the heating and floor finishes at the Battersea Development. He said that:

“As a result of site conditions following ground investigation works we were advised that the building structure should be kept as light as possible which was the reason for which a timber frame construction was selected.

At the time of agreeing the sales specification we were not aware as to the now known problems with regard to the provision of under-floor heating in the timber frame development which has been compounded by the technical problems in respect of provision of a fully tiled floor.

In association with our architects and engineers and by using our own endeavours with various heating and floor tiling specialists we have attempted to arrive at a technical solution which will allow us to install under-floor heating and have fully tiled floor areas however our advisors and ourselves have now concluded that there is in fact no satisfactory technical solution to these issues.

We apologise for the apparent delay in referring back to you on this matter however we have provided all efforts and spent considerable time to liaise with all relevant and appropriate parties in an attempt to seek a solution to these problems.

The main issue with regard to the timber frame is that in order to satisfy the ever increasing requirements of Building Regulations, most recently revised in April 2002 and now April 2003 with regard to fire protection, thermal insulation and more particularly sound transmission between individual apartments it is now not possible to provide a “floating timber floor structure” whilst having integral under-floor heating. In addition to this problem with regard to under-floor heating is exacerbated by the provision of limestone tile flooring throughout. …

With regard to the issue of the specified limestone floor tiling throughout the apartments on the basis that we cannot achieve a floating floor to satisfy building regulations and that there are substantial concerns regarding the method by which any tiling is laid to timber sub base we propose that the specification should be amended to allow for either laminate timber floor or carpeting. On either option the floor covering will be of high specification and quality compatible with the apartment designs and such that it will not, in our opinion, affect the value or quality of finish to these units.

I trust on the basis of the above and our earlier discussions you now accept the alteration of under-floor heating to ceiling and timber laminate flooring/carpeting as opposed to limestone floor tiles.”

There was then a meeting in Dublin on 30 April 2003. Following this, Mr. Brohoon started to explore the possibility of selling the Battersea Development to other purchasers who would not have the expectation of the existing specification, in particular limestone flooring. Mr Brohoon therefore approached the Irish Investment Bank (“IIB”) to see if any arrangements could be made through them.

On 13 August 2003 Mr Feeney wrote to Mr Brohoon (as Brohoon & Associates) saying that they needed to know whether the “exchanges” were to be transferred through the bank as Mr. Brohoon had stated. He said that he also needed to know whether the brochure was to be altered and reprinted. He added: “If this is not the case we must address without delay the issues raised in my letter of 24^th April.”

On 15 August 2003 Mr Brohoon (on behalf of HPL) wrote to Mr Feeney and stated:

“Battersea High Street - you originally provided details of the specification in the flats. On the basis of the specifications provided by you, same were provided to the purchasers. If you are now trying to change that specification, and if any claims arise as a result of these changes, we will be looking for a full indemnity from you. I trust that this will not arise, and that you will keep to your word, and construct the properties in accordance with the original specifications agreed.”

There was no written response and on 29 October 2003 Mr Brohoon (as Brohoon & Associates) wrote a letter to each of the purchasers offering an alternative to Completion. He said:

“As you are aware the above development is due for completion soon. Weybridge Construction has advised us that phased completions are expected to take place from the 15^th December 2003 to the end of January 2004. For this purpose, we have enclosed an estimated completion statement showing the balance of monies due to complete.

We have also secured an option for purchasers who wish to “turn” their contracts before completion. The net effect of this transaction is a return to you on the Assignment of your contract of your original £25,000.00 deposit together with a profit of £25,000.00 on completion of your apartment. We have negotiated that this is on a net basis and there are no selling fees payable to either ourselves or any other party.

If you wish to proceed with the “turning” option, please advise us in writing before Friday next the 5^th November. Alternatively please have the attached mortgage application form completed together with the relevant documentation and return to us at your earliest convenience.”

In the meantime, on 19 June 2003 Mr Down had contacted Thomas Eggar and obtained a copy of a Sales Specification for the Battersea Development from their files. Weybridge then provided Mr Brohoon (as Brohoon & Associates) with an amended Sales Specification for the Battersea Development on 6 November 2003. That Sales Specification provided for laminate flooring/carpet and tiles in place of the limestone flooring.

To make the change to the floor covering, Weybridge contacted Mr Mark Wingate on 7 November 2003 and sought an estimate from him for the provision of the alternative floor covering in the Battersea Development.

On 25 November 2003 Mr Down, on behalf of Weybridge, wrote to Mr Brohoon (as the Heavenly Group) and stated that:

“We have now picked the floor finishes for the [Battersea Development] (laminate and carpet) if you wish to inspect these please let me know by return as we need to order by the end of the week”

This was then responded to by Ms Joan Dillon (on behalf of HPL) on the same day, confirming that Mr Brohoon and Mr Carley would inspect samples and adding “Please do not order any finishes for these developments unless they have been pre-approved by us”.

Mr Down wrote to Mr Brohoon (as HPL) on 2 December 2003 about samples of the laminate flooring and carpet and noted that the latest date for selection was 5 December 2003.

In response, Mr Brohoon (as HPL) wrote to Mr Down on 3 December 2003 and stated:

“I can confirm that Ivan Thompson has attended the site and he has expressed concern about the quality of the finish in the bathrooms. He confirms that some are of poor quality and not commensurate with the envisaged finish for this development.

Similarly, the samples of flooring are poor quality laminate and bearing in mind are in lieu of limestone flooring, are wholly unsatisfactory.

Finally, the carpet samples which you state to be on site for selection were not there when Ivan Thompson called to the site.

The position with regard to the finalisation of specification needs to be reviewed as a matter of urgency and perhaps you would telephone me upon receipt of this letter to discuss matters further. It is unsatisfactory for you to suggest that the latest date for selection is Friday 5^th December when to date you have not been is a position to furnish us with samples of all relevant fittings as had previously been agreed.”

Mr Down replied to Mr Brohoon (as HPL) on 5 December 2003 and said:

“I would remind you that we had meetings scheduled on the 19^th and 26^th September to discuss finishes and that you failed to attend. We have subsequently attempted to re-arrange these meetings with you on a number of occasions without success. I understand that you are now coming to our office next Wednesday at which time we can discuss finishes that have yet to be ordered. However I would confirm that all materials ordered thus far are in compliance with the specification. The sanitaryware is Villeroy Boch - a manufacturer acknowledged as “top of the range”. We have, where possible, attempted to incorporate our interpretation of your suggestions

If you would let me know which materials you have particular interest in I will endeavour to have samples and brochures available at the office to co-incide with your visit on Wednesday.”

Mr Brohoon (as HPL) wrote on 8 December 2003 and confirmed that he would be in London. He added:

“I would suggest that all samples are available for my inspection at that time including samples of such items as you may have ordered without my prior approval to enable me to ascertain the success or otherwise of your attempts to incorporate your interpretation of my suggestions.”

On 22 December 2003 Mr Wingate wrote to Weybridge and said:

“Further to my meeting with Joe Brohoon and his associate Ivan Thompson, I can confirm the following carpets and floorings have been specified

1.

Common area carpets shall be Brintons Regina Hallmark colour Gem Flame.

2.

Bedroom carpets shall be Brintons Life Collection colour Maasai.

3.

Living room and lobby have not been confirmed though I will show more samples of Karndean flooring in a wood effect and also a slate tile finish.”

In the meantime on 18 November CHH wrote to purchasers in the following terms:

“I believe notice to complete will be served in December 2003. I would like to remind you that it is necessary to put in place your financial arrangements to enable you to complete your purchase. Once notice of completion is received you will have 10 working days in which to complete your purchase.

Please let me know by return if you are waiting for a loan facility and if so with whom and the up to date position of your application. I will let you have a financial statement showing the amount required to complete as soon as possible.”

These financial statements were provided by CHH to all purchaser on 3 December 2003 and they added

“I look forward to hearing from you with your contact details and confirmation that your financial arrangements are in place for your purchase of these apartments.”

By 7 January 2004 Mr. Wingate was writing to Weybridge to say:

“I have had another meeting with Joe Brohoon and have advised him that the carpet requested for the bedrooms is no longer available from stock and is being discontinued. I have shown him a number of other samples and he has kept and will inform you of his decision in due course.

He still has not made a decision on the flooring in the living room and halls, though he ruled out the use of slate tile finish shown to him as too dark for the properties. Something I would have to agree with.”

The final position is set out in Mr Wingate’s letter to Weybridge of 24 January 2004:

“I can now confirm the carpets and flooring for both the above sites as agreed with Ivan Thomson (who chose for Joe Brohoon), and Martin Down. The details are as follows.

1.

Carpet to common areas confirmed as Brintons Regina Hallmark colour Gem Flame.

2.

Carpet to bedrooms confirmed as Westex Prestige colour Magnolia

3.

Flooring to living rooms and halls confirmed as Karndean Van Gogh colour copper gum.

The flooring was seen in a restaurant by I believe all three of the above and the bedroom carpet was chosen from the Westex sample book in the penthouse house flat at Borough High Street. Here Martin, Ivan Thomson and myself agreed the carpet Joe Brohoon asked for to the common areas was unworkable and we agreed to use the Brintons carpet as all felt it would give a much cleaner and impressive look as you enter the building.

I will forward a revised figure for the above in the next few days subject to a price/delivery confirmation from the manufacturers involved.”

On 2 February 2004 Mr Feeney sent Mr. Brohoon and Mr. Carley (as Brohoon & Associates) a draft letter for comment or amendment. Mr. Carley (on behalf of HPL) said:

“Same would appear to be in order, save that the sentence regarding the bathroom floor specification should be excluded as I understand that this is not in fact the case. I also understand that the position with regard to the alteration to the balcony is only relevant to flats 4, 9, and 14 and therefore this paragraph should be excluded in the letter to the purchasers. I have asked Joan to e-mail you a schedule of the purchasers and no doubt she will attend to same today. You might let me know once the letters have issued, as no doubt we will field enquiries from the various purchasers once they receive same.

Turning now to the specification at Battersea, I understand from Joe that he met with yourself and Martin to discuss such issues relating to Specification and in particular with regard to the bathroom fittings. I further understand from Ivan Thompson that nothing arising from any of these discussions requires the moving of walls or any other structural alterations to the bathrooms and I trust that the revised fittings as discussed shall now be installed.”

A letter, similar in terms to the draft (which no longer exists), was then sent out by Mr. Feeney, on behalf of Weybridge, to each of the purchasers on 10 February 2004. It stated, as follows, that for all flats:

“We have been in discussions with your agent, Mr. J Brohoon over the last few weeks on issues of finishes in the above development.

These discussions were borne out of technical difficulties we have in complying to a few of the details in the original specification.

In particular, this type of flooring proved impossible to implement with the sandwich of the floor. We have agreed therefore to supply Amtico in the kitchen, living room and hall, with a high quality 80/20 wool carpet in the bedrooms.

We understand that it is your intention to sell on your investment and have agreed with Mr Brohoon, as a gesture of goodwill, to provide a show apartment to assist in this.

If you have any queries or wish to discuss these matters further please call me.”

In the case of flats 4, 9 and 14 which were to have had balconies, the letter added:

“… we have additionally had to alter the balcony style as a result of an anomaly in the planning. Accordingly these are now “Juliet” balconies”

Following receipt of that letter, it is evident that one or more of the purchasers contacted CHH who wrote to Thomas Eggar on 19 February 2004, enclosing a redacted version of the letter of 10 February 2004. They stated;

“The original flooring specification for the units provided tiled flooring throughout and underfloor heating. Your client is proposing an amendment to the original specification as a result of technical difficulties and an apparent incompatibility between the limestone flooring and the “sandwich of the floor”. The substitute proposed by your client is carpeting in bedroom and Amtico in the kitchen, living room and hall. There is no reference to the inclusion or not of underfloor heating nor any reference to the nature of the technical difficulties.”

They then asked questions and concluded by saying:

“Our clients’ right to reject the proposed change to the specification for their units is reserved.”

Mrs Janet Palmart of Thomas Eggar sent Mr Feeney a copy of CHH’s letter of 23 February 2004 and asked for replies to the questions. On 24 February 2004 Mr Feeney talked to Mrs Palmart and her attendance note reads:

“Joe Brohoon has no contractual involvement. Away for a week. No response from him. Aware of problems last August. Joe should have dealt with purchasers. Specs increased on understanding that this would appease. Mechanism for completion.”

On 4 March 2004 Mr. Feeney sent Mrs. Palmart a draft response which he said had been agreed by Brohoon & Associates. It was sent out by Thomas Eggar on 10 March 2004. After referring to the letter from CHH of 19 February 2004, it stated:

“Firstly, we are instructed that the original Contracts specification only specified limestone flooring in specified parts of each flat and while this [has] not proved possible to install the replacement floor is of a high specification and it is not believed that the variation in specification is material or places your client at any significant disadvantage.

We can confirm that under floor hearing (sic) has been installed throughout in accordance with the Contract specification.

We are further instructed that no issue arises in respect of NHBC inspections and as usual in a development of this nature, the appropriate certificate will be furnished. Similarly all planning conditions in respect of the development have been or will be compiled with prior to completion and the usual letter from the Local Authority confirming will be furnished in due course.

We will notify you of the proposed completion date as soon as we know this, and the usual notice will be served at the appropriate time.”

On receipt of that letter CCH sought a copy of the “original contract specification” referred to in that letter. Thomas Eggar responded on 7 April 2004 enclosing a copy of “the specifications”.

On 19 April 2004 Mr. Feeney sent an e-mail to Mrs. Palmart. He stated:

“We are now ready to start serving notices on some of the flats at Battersea (Joe has got “on purchasers” lined up for nine of them). Joe requested that I made sure that CHH had the revised sales pack with the drawings without balconies and the updated specification. If it hasn’t gone over to CHH could it please do so asap”

On 4 May 2004 Thomas Eggar sent Counterpart Leases to CHH for execution ready for completion.

On 5 May 2004 Thomas Eggar served notices on CHH in the following terms, the effect of which is an issue in this case:

“As solicitors for Weybridge Construction Limited we hereby give you notice under Clause 5.2 of the Contract dated […] made between our respective clients that legal completion of the purchase of the above apartment will be required 10 working days from today, that is 20^th May 2004.”

On 6 May 2004 CHH then contacted Mr. Carley (acting on behalf of Mr. O’Brien, the purchaser of flats 1, 9 and 14) and the other purchasers informing them of the Notice. They stated to the purchasers:

“We have had notice that the apartment is now complete and legal completion of the purchase must take place on 20 May 2004. The balance of the purchase price and all other costs associated with the purchase must be with us in cleared funds by 19 May 2004 to ensure prompt completion.”

On 7 May 2004 Brohoon & Associates wrote two letters to CHH. In the first they stated:

“We are instructing you on behalf of the purchasers in the above development to issue unilateral notices on the 18 flats.

Please confirm by close of today that these have been issued.”

Unilateral notices were subsequently entered on the charges register.

In the second letter Brohoon & Associates stated:

“We have been instructed by all the purchasers to refute the completion notices, which were received by you, as the flats are not completed with the limestone flooring as per the agreed contract and specification

We would also like to point out the NHBC have not yet signed off on the building and we understand that they are making the first visit on Monday 10^th May 2004. Surely this also invalidates the issuing of the completion notice.

Please confirm by close of business today that this has been done together with the issuing of the unilateral notices (caution) as our previous fax.”

On 7 May 2004 CHH wrote to Thomas Eggar, on behalf of all the purchasers. They stated:

“We acknowledge, without prejudice to our clients’ right, the notice to complete in respect of the above apartments.

As you are aware, several of our clients are dissatisfied with the finish of the apartments. We have advised our clients of the completion date and are awaiting instructions.”

and then asked a number of questions.

Thomas Eggar responded on 11 May 2004 replying to the questions and stating:

“Thank you for your letter of 7^th May. Our client is of the view that your clients are [not] entitled in any way to dispute the validity of any Notice served under the Contract.”

Also on 11 May 2004, CHH wrote in the following terms:

“On our clients instructions we reject the notice to complete dated 5 May 2004 fixing completion for 20 May 2004.

1)

Your client has not met the specification for the properties. We are instructed that the modifications to the specification do not fall within the scope of reasonable modifications contemplated in clause 2.2 of the sale contracts for the apartments, in particular (but not limited to) limestone flooring as not been fitted in the apartments as a whole and apartments 4,9,and 14 do not have balconies.…”

CHH also wrote on the same date a letter which originally was “without prejudice” but for which privilege has been waived:

“We refer to our letter of today’s date rejecting the completion notices on the above units.

Our clients are aggrieved by the fact that the modifications detrimentally affect the value of the apartments.

Please take instructions for your client as to whether it is willing to compensate our clients for the modifications to the specification.

We are awaiting confirmation as to which clients are seeking to rescind the contract and claim, at least, the refund of their deposits and which clients will be satisfied with an appropriate reduction to the purchase price/compensation.”

At this stage a new firm of solicitors, Wakefields, were instructed on behalf of the purchasers. In a letter dated 14 May 2004 they wrote to Thomas Eggar to say:

“We are retained to advise the purchasers of the properties at the development named The Icon at 135-137 Battersea High Street, Battersea, London (“the Development”). We expect to receive formal instructions by Monday 17^th May 2004

Our clients instruct us that your clients have not built the properties in accordance with the agreed specification. Amongst the unilateral changes made by your client to the specification are:-

1)

Properties 4, 9, and 14 at the Development do not have balconies.

2)

2 properties do not have ensuite bathroom facilities.

3)

Limestone flooring has not been fitted throughout the properties.”

On 18 May 2004 Mr Carley on behalf of HPL contacted each of the purchasers. This is an important letter and was in these terms:

“As you are aware from Cripps Harries Hall (“CHH”) the solicitors for the developer have served completion notices in respect of your properties at Battersea High Street, which Notices, if effective, would require completion to take place on Thursday next the 20^th May 2004. As you are also aware, significant difficulties have arisen in respect of specification at the apartments and while we were most hopeful that good sense would prevail and our good relationship with Weybridge Construction Limited would enable the difficulties to be circumvented, the actions of Weybridge Construction in instructing their solicitors to issue Completion Notices would indicate this is no longer possible

I am further concerned that CHH are not pro-active enough in protecting the interest of the various purchasers and accordingly have taken the step of retaining a more aggressive firm of Solicitors, namely Wakefields of 58 Southwark Bridge Road, London SE1 0AS to act on behalf of such of those purchasers as wish to challenge the entitlement of Weybridge Construction Limited to force through completion of the sale notwithstanding the blatant shortcomings in the specification. Of course for Wakefields to act in this matter, they need direct instructions from the actual purchasers being yourself and the remaining purchasers of Battersea High Street and preliminary indications are that a minimum of eight/ten individuals in respect of ten/twelve properties shall so instruct them. This does of course give rise to an economy of scale and presents a united front against Weybridge Construction Limited.

The alternative course of action is for you to continue to instruct CHH to act on your behalf in this matter, and that being the case, I believe that it will be necessary for you to complete the sale and [possibly] take an action for damages against Weybridge Construction Limited thereafter. While the Initial Completion Notices expires on the 20^th of May, in the event of you not completing on that date Weybridge are required to serve a further Special Notice, giving you a further 7 working days in which to complete the sale, which I calculate would expire (if served on the 20^th May) on the 1st day of [June] 2004. If you have not competed by that date Weybridge Construction Limited will be entitled to forfeit your deposit and sue you for damages which may be occasioned to them in the event of them being unable to dispose of your property for a price equal to or greater than the sale price agreed to be paid by you.

Therefore, it is utmost importance that you have a decision as to how you wish to proceed. In view of our special relationship and on the basis that you do instruct Wakefield Solicitors and authorise Heavenly Properties Limited to liaise and instruct Wakefield Solicitors Limited, Heavenly Properties Limited will be prepared to underwrite all costs associated with such action on the deposit forfeited. In the event of a successful outcome, Heavenly Properties Limited guarantee to you the return of your deposit together with the sum of […] exclusive of costs giving you a […] return on your original investment. In this regard it shall be necessary for you to sign a power of attorney in favour of Heavenly Properties Limited or its nominee in early course and I will revert to you in this regard in the coming days.

Unfortunately should you decide to pursue any other option, no such guarantee can be forthcoming and it will be necessary for you to liaise with CHH or such other solicitor as you may retain as to how your position can be best protected.

Should you wish to avail of the option of retaining Wakefield Solicitors, I enclose herewith a letter of instruction together with their standard client care letter and a letter of authority in favour of Heavenly Properties Limited and I would be obliged if you would sign each of the same where indicated and return them to me as a matter of urgency together with the copy of this letter by way of confirmation of your acceptance of the terms hereof.

Should you have any queries, regarding the foregoing, please do not hesitate to contact myself or Joseph Brohoon to discuss same further.”

Thomas Eggar responded to Wakefields on 19 May 2004 and stated that they had not heard from CHH that they were no longer acting. They stated:

“With regard to the agreed specification, our clients confirm as follows:-”

1.

The limestone floor covering was identified as an issue prior to 24 April 2003. This was discussed with your client’s representative. Mr Brohoon, by way of letter dated 24 April 2003, and following that letter, and extensive discussions between our clients and Brohoon & Associates on behalf of your clients, an alternative floor covering was selected. Your clients therefore agreed to the variation in specification

2.

The other variations to the specifications in respect of the balconies are not such as would entitle your clients not to complete

3.

We are instructed that there have been no changes to the specification in relation to the ensuite bathroom facilities referred to in point 2 of your letter.

Our Clients have arranged for an independent Building Surveyor to confirm physical completion of all the flats. You have seen the NHBC documents. In so far as your clients may have been inconvenienced by any change to the specification, our clients have already improved the specification of certain items of finishes, in particular sanitary ware, ironmongery, and in the kitchens and have also provided your clients with a fully fitted out show flat to assist their onward sales.”

On 20 May 2004 CHH wrote to Thomas Eggar stating that “the buyers of units 1-17 who are all represented by Mr Damian Carley, have elected to ask Wakefields… to act in the dispute with your client regarding the finishes at the property. The purchaser of flat 18, Mr Martin Keane, also instructed Wakefields as CHH confirmed in their letter to Thomas Eggar of 1 June 2004.”

On 21 May 2004 Thomas Eggar served notices on CHH for each flat in the following terms:

“This notice is being served upon you via your solicitors pursuant to the provisions of Standard Condition 1.3.2 incorporated in the sale Contract dated 23 December 2002 relating to the above property. It is given on behalf of Weybridge Construction Limited, the Seller under that Contract.

On behalf of Weybridge Construction Limited, which is ready, willing and able to complete the sale by way of grant of a lease to you on the above property, we give you notice requiring you to complete the Contract by no later than 12:30 pm on the tenth working day following service of this notice (excluding the day on which this notice is served). Under the terms of clause 6.8.4 of the Standard Conditions and clause 4.2 of the Conditions of Sale, you are required, if necessary, to pay immediately to us such funds as will be required (if any) to bring the deposit to a figure of 10%.”

Wakefields instructed Mr. Wayne Collins, a Chartered Surveyor, to carry out a survey of the property. He produced a document referred to in these proceedings as the “Collins Schedule”, comprising a 119 page schedule of defects for flats 1 to 18.

Wakefields also raised changes in specification in a letter dated 2 June 2004 and a failure to comply with planning conditions in their letter of 7 June 2004. These matters all arose as a result of advice from Mr. Collins.

On 8 June 2004 Thomas Eggar wrote in these terms:

“We refer to our letters of 21 May addressed to each of your clients, c/o yourselves giving notice requiring your clients to complete their respective purchases under the terms of clause 6.8.4 of the standard Conditions and Clause 4.2 of the Conditions of Sale.

Your clients have failed to comply with that notice, and thereby repudiated each of the 18 contracts.

On behalf of Weybridge Construction Limited we confirm that Weybridge accepts your clients’ repudiation of the contracts. The deposits paid by your clients are now forfeited. Weybridge will be remarketing all 18 flats, and reserves the right in respect of any additional claims that they may have in respect of each flat.

We have sent to the Land Registry today Weybridge’s application for the removal of all notices in connection with your clients contracts.”

In response on 9 June 2004 Wakefields wrote to Thomas Eggar and stated:

“You will be aware from previous correspondence that your client had no entitlement to treat our client’s failure to complete as a repudiation of the contracts given the issues that both Cripps Harries Hall and we have raised in numerous letters sent to your firm since both before and after the Notices to Complete were issued.

In the circumstances, your client’s forfeiture of our clients’ deposits itself amounts to a repudiation of our clients’ respective contracts and our clients are therefore [entitled] to reimbursement of their deposits and damages for breach.

We take it from your letter that your clients do not propose to reimburse our clients their deposits and therefore we will be advising our clients to issue proceedings without further notice.”

As a result it is common ground that the Contracts were either rescinded by Weybridge or were terminated by the purchasers by these letters.

There are some other projects, in addition to the Battersea Development which feature in this action or have been mentioned in evidence. The main ones are the Borough Development, Clapham Wood Wharf and Upper Richmond Road.

Borough High Street is another development which was being carried out by Weybridge. It was a seven-storey development at 116-126 Borough High Street, London SE1 and consisted of shop premises on the ground floor, three floors of offices and 14 flats on the top three floors. It was developed by El Da Management, a family property company who owned the site and was constructed by Weybridge.

It was in connection with this development that Mr Brohoon was introduced to Mr Feeney by an agent, Field & Sons. Originally Mr Brohoon had indicated that he would purchase all 14 flats but later he exchanged contracts on 12 flats and Jonathan and Isaac Ella of El Da Management retained the two remaining flats. When Mr Brohoon was discussing the purchase, he was concerned at the specification for the flats and it was agreed that they would be built to any reasonable standard which Mr Brohoon put forward. This led to Mr Brohoon providing a specification which was produced by a firm of engineers in Dublin, McCabe and Delaney.

That specification, as Mr Brohoon explained in evidence, was not a specification which was built at Borough High Street as there were changes but it was a top-end specification that gave him “lots of room to move”. That specification has been referred to as the “McCabe & Delaney Specification” or the “Borough Specification” and there is an issue as to whether it formed the specification for the Battersea Development or part of that specification. In addition, I conducted a site view at the Borough Development so that I was able to see a development which used limestone tile flooring.

The Clapham Development was a development which Weybridge was carrying out at the same time as the Battersea Development and was one which Brohoon & Associates were also marketing. It was being developed in parallel with the Battersea Development: the brochure was discussed at the same meetings as the Battersea Development brochure and it was also marketed at the Sales Night in Dublin in November 2002. Otherwise, matters relating to that development have only been referred to in passing.

Wood Wharf was another development in Greenwich which Mr Brohoon and Mr Carley became involved in. The site was purchased by an exchange of contracts in July 2003 and ultimately a joint venture involving an SPV company was entered into by HPL, Weybridge and an Irish developer, Castlethorn Construction. The relevance to this case is that Weybridge makes a counterclaim for £1m under a joint venture agreement or arrangement which it contends was entered into with Mr Brohoon, Mr Carley and/or HPL.

Upper Richmond Road was a building owned by Axa Insurance which Mr Brohoon was interested in purchasing and developing. There were some initial discussions between Mr Brohoon and Mr Feeney but it appears that nothing further occurred. There is an issue however, linked to the counterclaim for £1m on Wood Wharf, of whether there was a discussion or agreement in 2004 between Mr Brohoon and Mr Feeney to the effect that funding of £460,000 for the Upper Richmond Road Development would be made available by Weybridge from the £1m on Wood Wharf, with the balance of £540,000 being an agreed sum for the JV partner’s profit on Battersea Development.

Proceedings were commenced by Claim From dated 12 July 2004. Particulars of Claim were served then Amended and Re-Amended; a Defence and Part 20 Counterclaim was served and then Amended and a Reply and Defence to Part 20 Counterclaim was served by Weybridge and then Amended.

On 8 November 2005 Weybridge issued the First Part 20 Claim Form against the First Part 20 Defendants. Particulars of the First Part 20 Claim were served and then Amended and Re-Amended. There was a Defence to the First Part 20 Claim. A Second Part 20 Claim against Weybridge was served and then Amended and a Reply to the First Part 20 Claim and Defence to the Second Part 20 Claim was served.

The hearing of this action commenced on 7 June 2006 and concluded on 3 July 2006, with final oral submissions on 17 July 2006 followed by revised agreed issues being provided to the court on 2 August 2006.

Mr. T.C. Dutton appeared on behalf of the 13 Claimants; Mrs Helen Galley appeared on behalf of Weybridge Construction and Ms. Stephanie Tozer appeared on behalf of the Part 20 Defendants (including the additional Part 20 Claimant on the Second Part 20 Claim, HHL).

The parties have helpfully agreed issues in this action and this has greatly assisted in the organisation of the trial and this Judgment. A copy of the issues as amended by the parties on 2 August 2006 is attached as an Appendix.

In addition, although the Re-Amended Particulars of Claim contain voluminous Schedules of breaches of contract the matters now relied upon have been greatly reduced as follows:

In terms of the evidence in relation to each of the 13 Claimants the following facts were agreed during the course of the trial by all parties.

In addition, the Expert Valuers have been able to agree or limit the extent of disagreement; the Building Surveying Experts have been able to reduce their differences on the defects to reasonable limits and the parties have agreed the quantum of certain heads of damage, if they are awarded.

Before I turn to the issues, I shall deal with the evidence called by the parties. The claimants called Mr Mark Donnelly (9th Defendant: A pilot who purchased Flat 10) ; Mr Martin Keane (13th Defendant: A property developer who purchased Flat 18); Mr Colin McKenna (The person who supplied limestone flooring for the Borough Development. Mr Brohoon’s partner is Mr McKenna’s sister); Mr Dylan Pitt (11th Defendant: In the business of steel fabrication and formerly a structural engineer and partner at McCabe and Delaney: Flat 13); Mr John Lyons (6th Defendant: An insurance broker: Flat 6); Mr Brendan Pluck (5th Defendant: In the mechanical and electrical services business: Flat 5); Mr Paul Gallagher (7th Defendant: Director of a printing company: Flat 7); Mr Michael Rigney (3rd Defendant: A property developer: Flat 2); Mr Gerald Dooley (10th Defendant: A businessman: Flat 12); Mr Peter O’Brien (2nd Defendant: A golf course contractor: Flats 1, 9 and 14); Mr Joseph Lalor (12th Defendant: Department of Transport driving tester and formerly a business partner with Mr Brohoon: Flat 17); Mr John Gardner (A maintenance manager who worked for Weybridge but now works for Mr Brohoon); Mr Philip Donnelly (1st Defendant: In the property investment business: Flats 4, 11, 15 and 16); Mr Martin Down (Formerly the construction director of Weybridge but now works for Mr Brohoon).

At the end of the claimants’ evidence Mr Joseph Brohoon was called on behalf of the Part 20 Defendants. The defendant then called Mr Mark Burgess (the surveying director of Weybridge) and Mr David Feeney (the Managing Director of Weybridge). Mr Burgess also gave some further evidence which was interposed during Mr Feeney’s evidence. The claimants then interposed Mr Cathal Dervan (8th Defendant: A television sports commentator: Flat 8) who was otherwise engaged in a football competition in Germany at the time. Mr Feeney continued his evidence and the defendant then called Mr Peter Busby (a partner at Thomas Eggar, Weybridge’s Solicitors); Ms Sarah Fitzgerald (the Financial director of Weybridge); Mr Isaac Ella (a director of El Da Management, the owners of the Borough Development); Mr Kevin Mangan (who in 2004/2005 was involved in assisting Weybridge to sell the Battersea Development); Mr Nicholas O’Donoghue (a director of Weybridge); Mr Simon Leigh (the technical director of Weybridge); Mr Mark Wingate (the person who supplied and fitted floor coverings in the Battersea Development); Mrs Janet Palmart (a legal executive at Thomas Eggar); Mr Jerri Smith (who was involved in producing the brochure for the Battersea Development) and Mr Paul Marshall (a Contracts Manager with Weybridge).

The Part 20 Defendants then called Mr Ivan Thompson (who assisted Mr Brohoon with matters on the Battersea Development); Mr David Phillips (a partner at Howard Kennedy who acted for Mr Brohoon, Mr Carley or their companies at various times, in particular in relation to Wood Wharf); Mr James Armstrong (an agent at Foxtons who was involved in introducing Mr Brohoon as a potential purchaser of Wood Wharf) and Mr Damien Carley (a solicitor in Ireland and the business partner of Mr Brohoon). The evidence of Ms Sharon Treanor (an assistant of Mr Brohoon who was involved in the production of the brochure for the Battersea Development) was then interposed. She gave evidence by telephone conference call and then Mr Carley concluded his evidence.

Expert building surveying evidence was then called from Mr Michael Portis on behalf of the claimants and Mr Barry Milton on behalf of the defendants. This was followed by expert valuation evidence from Mr James Wyatt, called on behalf of the claimants; Mr Jonathan Harris, called on behalf of the defendant and Mr James Thompson called on behalf of the Part 20 defendants.

A witness statement was produced from the 4th Defendant, Mrs Bernadette Dowling who did not attend the hearing because, I understand, she had holiday commitments. I have read her statement but have taken into account that the defendant was not able to cross-examine her.

I consider that all of the claimants gave their honest recollection of what they recalled from the Sales Night and subsequent events. I have no doubt that, as many of them said, the plasma screens and the limestone flooring were two unusual features which attracted them to purchase these flats.

I regret that I found the evidence of Mr Down unsatisfactory. He clearly wished to assist Mr Brohoon and to cast his former employer, Weybridge, in a poor light. He therefore tried to explain that the change to a timber frame construction had been decided at an early stage and that cost, rather than technical difficulties, had caused the change from limestone flooring, despite what he had written at the time. I do not accept his evidence on these or other similar matters.

The two main witnesses were Mr Brohoon and Mr Feeney. Each of them gave evidence which was to some extent unsatisfactory. Mr Brohoon was expansive in his evidence and was not careful to ensure the accuracy of what he said. He tended to exaggerate or embellish his evidence with matters which supported his case. Mr Feeney, on the other hand, did not have a good detailed recollection of what had happened and very often tried to create a recollection by interpreting documents which had been written at the time. He evidence therefore was often evidence of what he thought would have happened rather than what he recalled. This obviously detracted from what he otherwise said that he recalled.

Otherwise, I found that all the witnesses tried to recall what happened and to provide the court with an honest account.

I now turn to consider the issues, set out in the Appendix.

Clause 2.2 of the Contracts provides:

“The outline drawings and specifications showing the design and fitting out details of the Property have been made available for the Tenant to inspect and the Landlord will use every endeavour to adhere to such drawings but reserves the right to make any reasonable modifications to the drawings or to substitute materials as near as possible of the same quality and value which do not lessen the value of the Property or materially alter the size of and accommodation in the Property and (subject as aforesaid) such modification or substitution shall not annul the sale nor entitle the Tenant to any damages or compensation.”

Clause 2.2 refers to “outline drawings and specifications” which have been made available for the Purchasers to inspect. There does not appear to be a dispute that the only drawings which were made available were those which were pinned up in Brohoon & Associates’ office in Dublin on the sales night, poor copies of which are to be found at bundle 10/7A/51 to 56. In addition, the brochure contained drawings.

However, the main dispute between the parties relates to the Sales Specification [10/4/31 to 34]. The Claimant submits that this document was not made available for inspection by the Purchasers and that the relevant specification is that contained in the brochure made available on the Sales Night [10/14/34J]. The Defendant does not challenge that the brochure was made available but contends that it is not something that could be described as a specification. Rather, the Defendant submits that the Sales Specification was the relevant document. It relies on the evidence of Mr Feeney who says that he sent it to Mr Brohoon and Mr Carley in October 2002. He also says that he sent it to Thomas Eggar when he completed the questionnaire sent by them on 16 October 2002 and stated “Attached Specification” under “Any other relevant information”. Although there is no record of what was attached, a copy of that Sales Specification was found in Thomas Eggar’s file [11/112-116].

I therefore first consider whether Mr Feeney prepared and sent the Sales Specification to Mr Brohoon and Mr Carley in October 2002. Mr Feeney says that he prepared the Sales Specification from an existing specification for a development at High Street, Hampton. The existence of that existing specification is established, in my judgment, by the screen prints [11/2 and 61] and the letter sending that specification in August 2001 [11/1]. It is that existing document which Mr Feeney says he amended on 25 October 2002 to form the Sales Specification for Battersea. The fact that the existing Hampton specification was modified on 25 October 2002 is supported by the screen print [11/61]. I accept Mr Feeny’s evidence, supported as it is by those documents, and I accept that he produced that Sales Specification in October 2002.

That however does not mean that the Sales Specification was made available to the Purchasers. There is no evidence that Thomas Eggar made a copy of the Sales Specification available to the Purchasers. The only other possible route for the Sales Specification to be made available would be through Mr Brohoon and Mr Carley. Mr Feeney accepts that he has no document showing that he sent the Sales Specification to them. He says he is certain that he would have faxed the specification to Mr Brohoon on the same day that he prepared it but he has no recollection of doing so. Both Mr Brohoon or Mr Carley say that they had not seen the Sales Specification by the time of the Sales Night. Mr Brohoon says that he only saw it in August 2003 and Mr Carley says that he was only told about it by Mr Brohoon at that date.

The evidence from the Purchasers on what they had or had not seen on the lively Sales Night was, perhaps not surprisingly, unclear. Most recalled the plans on the display boards but when various questions were asked about either the Sales Specification or the Borough Specification (which I will deal with below) some thought that they might have seen one or other but I am not persuaded that any evidence was sufficiently clear to establish that either of those specifications was properly made available on the night of 8 November 2002.

I have come to the conclusion that the Defendant has not established that the Sales Specification was sent to Mr Brohoon or Mr Carley or was made available to the Purchasers. Whilst I accept that Mr Feeney produced it on 25 October 2002, this might, for instance have been for the purpose of completing the form and sending to Thomas Eggar as solicitor, which seems to have been the purpose of the Hampton specification.

I also bear in mind that Mr Feeney had on 15 and 17 October 2002 been involved in the preparation of the brochure for the purpose of the Sales Night. That was the document which was of importance and the detail of the specification to go into that brochure was something which Mr Feeney had been closely involved in. Indeed, one draft version of the brochure specification is in his own handwriting. In my judgment the relevant specification was that in the sales brochure. I do not consider that the exclusion wording at the end of the brochure affects the position where the Contracts have, as I have held, expressly referred to the specification contained in the brochure.

I therefore conclude that the only “drawings and specifications” to which Clause 2.2 of the Contracts can refer are the drawings which were displayed at the Sales Night and the drawings and specification contained in the brochure. I do not consider that the Sales Specification prepared by Mr Feeney was made available.

This is an issue which also arises out of the Sales Night. The evidence of the claimants and of Mr Brohoon is that during the sales night Mr Brohoon informed the Purchasers that there would be “limestone flooring throughout” the flats. Mr Brohoon also says that he had copies made of a specification which had been prepared by McCabe & Delaney in Dublin for the purpose of the Borough Development (“the Borough Specification”). He says that he indicated that the Battersea Development would have additional features. These matters are referred to as the “representations”.

At paragraph 29 of his witness statement Mr Brohoon says: “David Feeney was present and fully aware of what I was saying about specification, and the fact that reference was being made to the Borough Specification. In fact, I heard him comment to some of the attendees that the specification would be better than the Borough.” He also says that Mr Feeney and Ms Fitzgerald spent a significant period of time with him and potential Purchasers. He says that he is confident that they were party to the conversations in which he explained the specification. Mr Carley supports the general position.

The evidence from Mr Feeney and Ms Fitzgerald about the Sales Night is different. They say that they spent most of the time in the board room where the drinks were located and that the potential purchasers were in the open plan area where the plans were. Apart from one occasion when Ms Fitzgerald went into the open plan area to see how sales were going they say they were in the board room and only dealt with pleasantries.

Having seen Mr Brohoon, I have no doubt that he extolled the virtue of the finishes to the potential purchasers on that evening. Mr Carley says merely that Mr Feeney and Ms Fitzgerald would have heard Mr Brohoon’s sales pitch, which was loud at times. I have come to the conclusion that Mr Brohoon has embellished his recollection of what occurred on that night. I accept that Mr Feeney and Ms Fitzgerald were participating and were talking to people but I do not accept that they were aware of the detail of what Mr Brohoon was saying or were themselves explaining the detail of the specification.

I therefore conclude that neither Mr Feeney nor Ms Fitzgerald were either personally involved or had knowledge that Mr Brohoon was making “representations” to the Purchasers.

The defendant contends that the departures from the specification were limited to the omission of balconies (in respect of 3 flats) and the substitution of an alternative to limestone flooring in the living rooms, kitchen and bedrooms. The claimants submit that the departures went further and included the substitution of an alternative to limestone flooring in the bath/shower rooms, and the reconfiguration of the parking area.

I therefore consider, first, the limestone flooring. It is common ground that limestone flooring has not been installed anywhere in the flats. At one stage the limestone flooring issue was wider. Having held that the Sales Specification was neither produced to Mr Brohoon and Mr Carley nor to the Purchasers, the fact that the Sales Specification refers to “Ceramic floor tiles” in the bathrooms is irrelevant. Rather, the question is now what is meant by “limestone tiled flooring throughout” in the brochure.

In the absence of any words such as “except in the bathrooms”, I consider that the natural meaning of the word “throughout” would be a reference to “throughout the flats”. Mr Feeney’s letter of 24 April 2003 provides compelling evidence that this is correct. He refers to the “specified limestone floor tiling throughout the apartments”. If, as is now accepted, it was to be everywhere else, I cannot see a reason why it would not include installation in the bathrooms.

In relation to the car parking spaces, there is no reference to the location of these in the brochure. Rather, one of the drawings available at the Sales Night [10/7/51] shows 14 car parking spaces in the basement. Not every flat had a car parking space.

In the Contract, for those flats which had a parking space, there was a definition of “Parking Bay” as being “The parking space shown edged in blue on Plan 2”. Unfortunately, on Plan 2 the particular parking bays were not shown but, again, 14 car parking spaces were shown in the basement.

In the event, the basement car park was re-configured and there were only 11 car parking spaces in the basement and three spaces were placed on the ramp down to the basement. I consider that this was a clear departure from the outline drawings.

I therefore conclude that the failure to install limestone tile flooring in the bathrooms and the change in the configuration of the car park were both departures from the “outline drawings and specifications”.

What was the defendant’s reason for making that departure from the specification and/or outline drawings;

Bearing in mind that reason, was the defendant contractually entitled so to depart from the specification and/or outline drawings;

If the defendant was entitled to depart from specification and/or plans, was it entitled to make the changes actually made?

It is convenient to deal with each of the departures in turn.

Mr Leigh, the technical director of the defendant was the person who dealt with this and Mr Feeney had little knowledge of the reason for the change. Mr Leigh said that there was a problem with the balconies because, if constructed as shown on the plans, the balconies would overhang the footpath on the side of the road by about 1 metre. Mr Leigh said that he asked someone at the Council’s highways department, whether it would be possible to get a licence to permit the overhang, and that he was told that it would not. It was on the basis of this oral enquiry and the response given that the decision was made, although Thomas Eggar might have been asked to advise on the matter at some later point. There was no document which contained or evidenced the conversation with the Council.

In order to be entitled to depart from the outline drawings, the defendant must bring itself within Clause 2.2 of the Contracts which provides that “…the Landlord will use every endeavour to adhere to such drawings but reserves the right to make any reasonable modifications to the drawings or to substitute materials as near as possible of the same quality and value which do not lessen the value of the Property or materially alter the size of and the accommodation in the Property….”

The claimants submit that it cannot be said that the defendant used every endeavour to construct the balconies. In addition, whilst the defendant had the right to make reasonable modifications, the claimant submits that the only modifications which could be made were ones whichdid not lessen the value of the Property or materially alter the size of and the accommodation in the Property. They rely on the expert valuers’ joint statement that “Balconies, in principal, make a capital difference to value of a property” although, as they point out, Mr Wyatt (the claimants’ expert) values the diminution at £12,000 for each of the flats whilst Mr Harris (the defendant’s expert) values it at £5,000.

In terms of diminution, I accept that, for a purchaser, the wish to have an outside space is of importance. Whilst the survey carried out by Mr Wyatt can only be indicative, it does show that sums of £4,000 to £35,000 may be put on a balcony. My Wyatt has properly taken into account that the view from the balconies would not have been particularly good and has reduced the average value to take account of this to reach his valuation. Mr Harris emphasises this point and the fact that the balconies are 3.3 square metres in size. He observes that the balconies did not seem to make any difference in value at the time of the Sales Night as the balconies were all in the lowest value flats on each floor. He does not consider that a figure of more than £5,000 would reflect the difference. I consider that Mr Harris underestimates the effect of the absence of a balcony. Although Mr Wyatt’s survey can be criticised, it provides some evidence of value. However, I am not persuaded that his reduction from £16,909 to £12,000 is sufficient to reflect a balcony with a less attractive view in this development in Battersea. I adopt a value of £10,000 as being the value to be attributed to the loss of a balcony.

The defendant submits that Clause 2.2 should be read as having two parts. First, a provision that “the Landlord… reserves the right to make any reasonable modifications to the drawings” and secondly that “the Landlord… reserves the right to substitute materials as near as possible of the same quality and value which do not lessen the value of the Property or materially alter the size of and the accommodation in the Property.” In this case, the defendant submits that, in relation to the balconies, the question is whether the modification to omit the balconies was reasonable and that the second part which only applies to substitution of materials is not relevant to balconies.

Further, the defendant submits that even if the second part applies, the clause is referring to the Property and not to something wider. It contends that the omission of the balconies does not materially alter the size of the accommodation in the Property as the balcony was never to be included in the Property. In addition, the defendant submits that the lessening of the value must be significant by reference to the purchase price of the flat and that a £5,000 diminution in value on a £300,000 flat is not significant.

In terms of the interpretation of Clause 2.2, I do not consider that it can be read in two parts as submitted by the defendant. It is difficult to see how substitute materials could “materially alter the size of and the accommodation in the Property” and equally, it is unlikely to have been the intention that the defendant could make any reasonable modifications even if they materially altered the size of and the accommodation in the Property. Rather, I consider that Clause 2.2 gives the defendantthe limited right“to make any reasonable modifications to the drawings which do not lessen the value of the Property or materially alter the size of and the accommodation in the Property.”

The issue of whether the balcony is included in the term “the Property” raises an issue which the parties have identified as Issue 7, in relation to the term “Property” in the context of clause 2.1 of the Contracts.

On this issue, the defendant refers to the definition of the term “Property” at Clause 1.2 of the Contracts as “the property the short details of which are given in the Particulars and more fully described in the draft lease as “the Premises” attached to this contract.” It refers to the Particulars in the contract which typically describe the “Property” as “Apartment Number 4 at the Estate” and refers to the definition of the “Estate” as “The development known as The Icon 135-137 Battersea High Street Battersea London SW11 registered at HM Land Registry under Title Number[tba]”. It also refers to the definition of "The Premises" in the Particulars to the draft lease as “The Flat on the… floor of the Building shown edged in red on Plan 1 and known as Plot… at the Estate as described in the First Schedule intended to be known as *”. The defendant submits that “the Property” and "the Premises" do not extend beyond the flat itself. They do not include the balcony over which rights to use are granted and are not the same as “the Estate” or even “the Building”.

The claimants accept that, at first blush, the Property appears to be limited to the space bounded by the walls of the relevant flat (including decorative finishes) but which excludes all other parts of the development including all structural parts. However, it refers to Clause 5 which deals with Completion. Under Clause 5.2 completion takes place by reference to physical completion of the Property. Clause 5.3.1 then provides that “The Tenant shall not be entitled to delay completion by reason of any minor defects or outstanding works of a minor nature which can be reasonably dealt with after completion including in particular any landscaping erection of fences or final surfacing of driveways.” The claimants submit that, unless those matters relate to physical completion of the Property, it is difficult to see why Clause 5.3.1 refers to such matters. The claimants therefore submit that the Property must be taken to include not merely the Flat but also those parts of the development whose state and condition has a material bearing upon the use and enjoyment of the Flat itself.

I agree with the claimants and do not consider that the Property can properly be construed as being limited to the space bounded by the walls of the relevant flat. Objectively and in the light of Clause 5.3.1, the Property must also include those parts of the Building over which rights are granted with the Flat, such as landscaping or fences. In particular, in relation to the balcony, whilst the designation of the balcony on Plan 1 for Flat 4 is not clear, in the Second Schedule, which defines Rights Granted, clause 10 refers to “The exclusive right to use the balcony coloured blue on the Plan.” I consider that the Property includes the balcony over which the Tenant of the Flat is granted such rights of use.

In this case, the evidence of the endeavours made by the defendant do not seem to me to have reached the level where the defendant used“every endeavour”to adhere to the drawings. Neither do I consider that the omission of the balconies can be said to be a reasonable modification where the modification appears to have been made without any proper attempt to investigate the position. Further, the value of the Property has, as I have found, been lessened by £10,000. Whilst there may be a de minimis level where it might be said that there was no lessening of value, I do not consider that a figure of £10,000 can be said to come within such exception. There has therefore been a lessening of the value of the Property. Further, on my view of the meaning of the Property, the omission of the balcony has materially altered the size of and the accommodation in the Property.

In those circumstances, in relation to flats 4, 9 and 14, I do not consider that the defendant was entitled to omit the balconies to those flats under the provisions of Clause 2.2 of the Contracts. In particular, the non-provision of balconies did materially alter the size of (and the accommodation in) “the Property”. Further, the non-provision of balconies did lessen the value of the relevant flat by £10,000 and that diminution is sufficient to be regarded as a lessening in value for the purposes of clause 2.2 of the contract.

As I have found, the specifications for the flats required limestone floor tiles to be installed throughout the flats, including the bathrooms. It is common ground that what was actually installed was vinyl floor coverings in the living rooms; carpets in the bedrooms and ceramic tiles in the bath rooms.

The defendant relies on the reason for the change in floor covering being the decision, taken on structural engineering grounds, to use a timber framed building rather than one with a steel frame/concrete floor. The circumstances in which the building came to be constructed with a timber frame were the subject of conflicting evidence. Mr Down who at the time was employed by the defendant but is now employed by Mr Brohoon said that the decision to use a timber frame had been made before the Sales Night and was not based on later site investigations but on being more cost effective because it was quicker to construct. He did, though, accept that at the time when the defendant acquired the Site the intention was to use a traditional construction and that this changed after the defendant acquired the Site. He said that the change had been discussed between himself and Mr Burgess.

Mr Burgess stated that the decision to change to a timber frame had been made in December 2002 by himself, Mr Down and Mr Leigh on the basis of the site investigation report of Rodgers Leask. Mr Leigh’s evidence was that the site investigation report was received in November and that the decision to use a timber frame was made in December 2002.

I do not accept Mr Down’s evidence on the reason for the change and as I have said I find his evidence unsatisfactory. I have seen the site investigation report of Rodgers Leask dated 19 November 2002 and I accept that the effect of the findings in that report led to the use of a timber frame and the alteration to the basement layout as shown on drawing R1, Pile and Pile Cap Layout dated December 2002.

The question which then arises is whether the change to a timber frame led to the change from limestone floor tiles. The claimants contend that the defendant’s reasons for not installing limestone are obscure. They rely on Mr McKenna’s evidence that limestone flooring could be satisfactorily installed in a timber-framed building and say that whilst Mr Milton’s view was that it was undesirable to lay a limestone floor on a flexible timber floor, he accepted that it was feasible to do so. The claimants also say that any difficulties with the timber floor would not explain why limestone was not installed on the concrete floors of the ground floor flats.

Mr Leigh’s evidence was that the decision to change from limestone floor tiles was the result of considerations of load, sound insulation and heating problems. Although Mr Down sought to suggest that what he had written at the time in letters sent on behalf of the defendant was not true, for the reasons already stated I found his evidence unconvincing and intended to support the case of his current employer, Mr Brohoon. Those letters of 28 March and 24 April 2003 support Mr Leigh’s evidence and I accept that the decision to change from limestone tile flooring was the result of the defendant’s conclusions on technical matters rather than on cost grounds. I do not accept that Mr Down was asked to or did carry out a costing exercise which led to the decision to change from limestone flooring.

The question of whether the defendant used every endeavour to adhere to the specifications is more difficult. However, I accept that the defendant carried out sufficient investigations into ways of overcoming the risks of putting limestone floor tiles onto a timber floor and that there are grounds for deciding that despite every endeavour, there is no satisfactory way of overcoming those risks. Thus, I consider that the requirement for the defendant to use every endeavour is satisfied in this case.

That, though, leaves the question of whether the defendant has come within the provision of Clause 2.2 of the Contracts which gave it the right to substitute materials“as near as possible of the same quality and value which do not lessen the value of the Property.” The expert valuers differ on their view of the effect of limestone flooring on the value of the Property. Mr Wyatt (instructed by the claimants) and Mr Thompson (instructed on behalf of the Part 20 Defendants) both consider that the absence of limestone flooring would cause a diminution in the value of the flats whilst Mr Harris (instructed on behalf of the defendant) does not. I have had the opportunity to see both the Battersea Development without limestone flooring and the Borough Development with limestone flooring. I do not consider that the reasons put forward by Mr Harris justify his view that there was no diminution caused by the absence of limestone floor tiles. His view is based on an appraisal of the cost of cleaning and resealing the floor and its unsuitability for use in properties which are used for investment. However, as he observes, limestone flooring is not generally used in apartments, particularly not at lower or mid-market levels. Limestone flooring is, I consider, a feature which is likely to add to the value of the property because of the impact or, as Mr Wyatt puts it, the “wow factor”. I accept his view, supported by Mr Thompson, that limestone flooring would make these flats stand out from the competition and that such a floor makes rooms feel lighter and brighter. I do not consider that practical consequences of cleaning and sealing are likely to have an overall effect on value.

I therefore accept that there was a diminution in value because the flats did not have limestone floor tiles. Mr Wyatt assesses the lost value at £10,000 and Mr Thompson at £5,000. Mr Thompson has also carried out a cross-check by considering the cost of limestone flooring. It seems to me that in flats which are valued at about £300,000 a 1.67% diminution in value of £5000 is on the low side. I consider that the absence of limestone flooring and the use of the vinyl flooring/carpeting instead represents an important loss of value. I am satisfied that Mr Wyatt’s valuation is closer to the correct figure and I therefore accept £10,000 as the correct measure of the diminution in value caused by the absence of limestone floor tiles.

In those circumstances, I do not consider that the change from limestone floor tiles to the installed floor finish was a change which the defendant was entitled to make under the provisions of Clause 2.2 of the Contracts. In particular, the vinyl/carpet laid (with the underlay used) was not “as near as possible of the same quality” as limestone, and it lessened the flat’s value sufficiently to be regarded as a lessening in value of the purposes of clause 2.2 of the contract.

The defendant also raises a further point. On the basis that the defendant was not entitled to make the change, did the claimants (by Mr Brohoon) agree to the change? This raises two issues:

As I have set out below, Mr Brohoon was a party to the JV Agreement. Under the terms of the JV Agreement, he was responsible for all sales of units in the development. As can be seen from the original Heads of Terms, the defendant and Mr Brohoon were to agree the finishes specification. They did, as set out above, agree the specification contained in the brochure for the Battersea Development.

The Sales Night was organised by Mr Brohoon and most of the purchasers were known to Mr Brohoon or Mr Carley or to mutual friends. Mr Carley was the person who the purchasers appointed to act “as liaison” on their behalf in receiving, in the first instance, all the documentation from CHH. Mr Brohoon also kept many of the purchasers informed on the progress of the Battersea Development. I accept that, whether through a mutual understanding or otherwise, Mr Brohoon and Mr Carley acted as the line of communication between the defendant and the claimants.

When the problem with the limestone floor tiles became apparent, the defendant made contact with and then wrote to Mr Brohoon on 28 March 2003. The purpose of the letter was to tell Mr Brohoon that there was a need to change the specification and Mr Brohoon was to make contact with Mr Down to discuss alternatives. The response from Mr Carley of 31 March 2003, in the absence of Mr Brohoon, was to express concern on the effect this would have on the purchasers and how this would be dealt with by the defendant. He was anxious that the matter should be addressed, as quickly as possible, to enable the purchasers to be advised of the difficulties at the earliest opportunity. In reply on 23 April 2003 the defendant stated that it was disappointed with Mr Carley’s letter and expressed the view that it was not a response expected of “our partners”. The defendant’s letter of 24 April 2003 set out more detail and sought acceptance from Mr Brohoon of the alteration to the specification to allow for either laminate timber floor or carpeting.

After some further discussions and a letter of 13 August 2003 from Mr Feeney, amended copies of the Sales Specification were provided by Mr Feeney to Mr Brohoon on 6 November 2003. That amended specification provided for “choice of carpet/laminate to floor”. As set out in the correspondence referred to above, the precise choice of floor covering was then agreed by Mr Brohoon, with the assistance of Mr Ivan Thompson. In this respect, I consider that Mr Thompson, albeit in an amusing manner, attempted to play down his role in considering and agreeing the choice of the floor coverings and other matters which he dealt with on behalf of Mr Brohoon.

On the basis of that evidence, I consider that Mr Brohoon did agree the amended specification with the defendant. In doing so he was, in my judgment, acting as one of the JV partners. This reflected a continuation of his role under the Heads of Terms and was done for the purpose of obtaining effective sales of the flats in the Battersea Development. However, importantly, it was not an agreement by the claimants to amend the specification for the purpose of the Contracts. Mr Brohoon acted as a conduit of communication between the defendant and the claimants but did not have authority, actual/implied or ostensible, to agree amendments to the specification on behalf of the claimants.

However, Mr Brohoon’s role became somewhat confused when he wrote to the claimants on 29 October 2003 and asked whether they wished to “turn” their contracts before completion. It seems to me that he then became involved in the organisation of an agreement by which the claimants were to assign the Contracts to the Irish Investment Bank (“IIB”). For those who decided to proceed, Mr Brohoon’s role was evidently to negotiate the terms of the assignment to reflect the terms set out in the letter of 29 October 2003. It seems that the intention of the revised specification was to use this in the context of arranging this “turn”. If the “turn” had been successful then the flats would have been sold on to new purchasers on the basis of the amended specification and the Contracts would have been completed on that basis.

In the event, Mr Brohoon was unable to arrange the “turn” which he had anticipated in his letter of 29 October 2003. By January 2004 Mr Brohoon had agreed the amended flooring specification with the defendant. In doing so Mr Brohoon was not acting on behalf of the claimants, he was choosing what he thought would be a suitable alternative floor covering. I have no doubt that this was done in the hope that the proposal to “turn” the Contracts would be successful and the new purchasers would accept the amended specification being unaware of the previous specification. Mr Brohoon had no authority, actual/implied or ostensible to agree the amended specification on behalf of the claimants. However, with the failure of the “turn”, the flats were now left with the amended floor coverings.

It is not clear when it became evident that Mr Brohoon could not arrange the “turn”. However, once the amended specification had been agreed, it was decided that the defendant should send out the letters dated 10 February 2004 to each of the claimants. Those letters were agreed by Mr Carley and Mr Feeney.

The defendant places heavy reliance on the opening paragraph which refers to discussions with “your agent, Mr J Brohoon…on issues of finishes.” Reliance is also placed on the fact that the letter was approved by Mr Carley, a solicitor, who had suggested some changes to the draft. Whilst these are powerful pieces of evidence, they cannot overcome the fact that Mr Brohoon did not have any authority to agree changes to the specification on behalf of the claimants. The original provenance of the draft letter is not clear but it seems that the author was seeking to cast Mr Brohoon in the role of agent to overcome the fact that Mr Brohoon had agreed changes to the specification which the author wanted to impose on the claimants.

I therefore conclude that Mr Brohoon did agree to the change in the flooring specification but he did so as a JV partner and not on behalf of the claimants. In that respect, he did not have the actual/implied or ostensible authority of the claimants so to agree.

The claimants accept that the variation to the layout of the basement was a reasonable one since, as can be seen from drawing R1, the basement was reconfigured on the advice of structural engineers. However, the claimant relies on Mr Leigh’s evidence and submits that the change was made before the Contracts were made and cannot therefore be justified under the Contracts.

Mr Leigh’s evidence of the timing of the change was, it seems to me, less certain than the claimants submit. He was shown drawing L1 and although his early answers would appear to indicate that the car parking changes were made in prior to 16 December 2002, his later answers indicated the difficulty of interpreting the dates on which the drawings were revised. Equally, Mr Leigh could not recall when he became aware of the changes whether in December 2002 or January 2003. I am therefore unable to conclude when the change was made and am not satisfied that they were made before the date of the Contracts.

It is agreed by the expert valuers that a change from parking spaces underground to a car parking space on the ramp would lead to a diminution in value of £5,000 to each flat so affected.

As set out above, I have found that the Property includes parts of the Building in which the claimants had rights. In respect of car parking spaces, clause 2 of the Second Schedule – Rights Granted, includes “The exclusive right to use the Parking Bay for the parking of a private motor vehicle subject to the Landlord’s right to vary the location of the same and to temporary interruption during periods of repair and maintenance”. The Property therefore included the relevant Parking Bay.

For those flats with a Parking Bay, I consider that the modified car parking arrangements lessened the value of the Property for those flats where the Parking Bay was moved onto the ramp. Because the plans attached to the draft lease did not identify the parking bays for particular flats, the question is: which flats suffered the diminution in value because the parking bays were allocated on the ramp and not in the basement?

The claimants submit that since it was open to the defendant to allocate the parking spaces, the three flats which suffered the diminution are those to whom the defendant allocated the less valuable spaces when the leases were prepared for execution. On the evidence the relevant flats were flats 12, 13 and 14. Although the defendant does not appear to contest this position, it is nonetheless an issue which the parties wish me to decide.

In circumstances where the draft lease did not identify a Parking Bay, the question is whether one party had the right to allocate or choose the relevant Parking Bay or whether there was some other mechanism to resolve the problem. I consider that clause 2 of the second schedule does cast light on this when it says that the Tenant’s right to use a Parking Bay is “subject to the Landlord’s right to vary the location of the same” in certain circumstances. This points strongly to it being the defendant, as Landlord, who had the right to allocate the original Parking Bay or any other Parking Bay. I therefore consider that, on a true construction of the Contracts, it was the defendant who was entitled to allocate a “Parking Bay”. That process of allocation meant that flats 12, 13 and 14 could not be allocated a space in the basement and so a space on the ramp leading down to the underground car park was allocated to them. As a result, it was those were the flats which were affected by the re-configuration of the car parking spaces.

At paragraph 1U of the Particulars of Claim it is pleaded that, in the light of the matters pleaded, the defendant “cannot now deny that the outline drawings and specification”were the layout drawings, the McCabe & Delaney specification and the sales brochure. I have found above that the outline drawings and specification were, in fact, the layout drawings and the sales brochure but not the McCabe & Delaney specification. Rather, I have found that no reference was made to the McCabe & Delaney specification sufficient to make it one of the relevant documents.

In response to that allegation, the defendant pleads that, in any event, the claimants cannot rely on oral or other representations made at the Sales Night because of Clause 16.1 of the Contracts which provides:

“The Tenant acknowledges that no representation either written or oral (except written answers to pre-contract enquiries supplied by the Landlord’s Solicitors) has been made to the Tenant prior to the date of this Contract by the Landlord or his employees or agents concerning the property which has influenced or persuaded the tenant to enter into this Contract.”

In my view, there are two particular matters. First, there is the question of what “outline drawings and specifications…were made available for the Tenant”. Secondly, there is a question of whether representations were made. In relation to the first question, it is relevant to consider what was said about particular documents and Clause 16.1 cannot, in my judgment, exclude such evidence on that issue. In relation to the second issue,insofar as any further representation may have been made, I consider that the effect of Clause 16.1 would be to exclude such representations. They would be oral representations which were alleged to have been made to the Tenant prior to the date of the Contract by the Landlord or his employees or agents concerning the property.

In paragraph 24A of the Reply the claimants rely on section 3 of the Misrepresentation Act 1967 which provides:

“If a contract contains a term which would exclude or restrict—

(a)

any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or

(b)

any remedy available to another party to the contract by reason of such a misrepresentation;

that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977; and it is for those claiming that the term satisfies the requirement to show that it does.”

The requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977 is:

“...that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.''

I consider that a term in an agreement for lease which generally excludes written or oral representations made to the Tenant prior to the date of this Contract by the Landlord or his employees or agents concerning the property is one which is fair and reasonable. There are many things that may be said in the course of the negotiations to purchase a property and it is important that some reasonable limit is placed upon such representations which are not incorporated in the contract or in some other formal document. In this case the provision expressly makes an exception for written answers to pre-contract enquiries supplied by the Landlord’s Solicitors so that a Tenant knows that important matters have to be dealt with in this way.

Clause 2.1 of the Contracts provides:

“The Landlord will construct the Property in a good and workmanlike manner with good quality materials and in accordance with the terms of the relevant planning permissions and the building regulation consents and the prescribed standards currently in force and laid down by the Guarantee provider as soon as practicable.”

There are three relevant breaches relied on by the claimants:

The relevant planning permission was granted on 2 September 2002. The development was described as being the “Demolition of existing buildings, erection of a part four/part five-storey building to provide 18 flats incorporating roof terraces, with 16 parking spaces (14 at basement level).”

The permission was also granted subject to a number of conditions, which included condition (6), as follows:

“The parking areas shown on the approved plans shall be provided before the occupation of any part of the development…”.

The claimants submit that the re-configured parking spaces constitute a breach of this condition. The defendant relies on correspondence from the local authority which was written when one of the claimants, Mr Rigney, raised the matter with them. This, the defendant says, led to the enforcement team leader at the local authority accepting that there had never been any breach of condition. In addition the defendant relies on the parking spaces not being part of the Property.

The claimants submit that the approved plans showed 14 spaces in the basement and that until they were provided, occupation of the flats would be in breach of the planning condition. They state that it is common ground that in May/June 2002 there were only 11 parking spaces at basement level, with the ramp down to the basement being marked so as to identify a further three spaces. That, the claimants contend, meant that a further three basement parking spaces needed to be found to comply with the condition.

The local authority in the letter of 18 October 2004 stated:

“The approved drawing shows that there would be fourteen car parking spaces in the basement car park. I understand that because of constructional difficulties it was not possible to provide these spaces as shown but fourteen spaces have been provided within the building partly by utilising space on the internal ramp from street level to the basement car park.

Condition 6 states that: “The parking areas shown on the approved plans shall be provided before the occupation of any part of the development…” The condition did not refer to a specific number of parking spaces having to be provided in the basement. Whilst positioning some of the parking spaces on the ramp is not the ideal solution I am satisfied that the requirements of condition 6 have been compiled with. There has not been a breach of planning control which can be enforced against in relation to this condition, and therefore this does not preclude the occupation of the building.”

It seems to me that the local authority’s letter properly draws a distinction between the provision of a parking area at basement level and the requirement that there must be 14 spaces at that level. So far as planning is concerned the issue is to have 14 spaces provided and I consider that, in practical terms, the parking area was provided at basement level and 14 spaces were provided, three on the ramp. I do not consider that this breaches condition (6).

Under the same planning permission, condition (12) provided that screening to the ground floor windows was to be approved and installed “before the development is occupied”.

The claimants submit that in respect of each flat, until approved screening to the ground floor windows had been installed, occupation of the flat would be in breach of the planning condition. They also say that it is common ground that in May/June 2002, no screening to the ground floor windows had been installed and therefore to comply with planning permission screening needed to be erected.

The defendant states that the areas to be screened fall outside the definition of the Property and, in any event, would fall within Clause 5.3.1 of the Contracts. The claimants submit that the areas are within the meaning of Property and cannot be categorised as “minor works” since it needed to be done before the flats could lawfully be occupied.

I consider that the areas in question fall within the definition of “Common Parts” and that as the claimants have rights in respect of those parts under clauses 1 and 11 of the Second Schedule, the relevant areas come within the definition of the Property.

The exception in Clause 5.3.1 relied on by the defendants refers to “minor defects or outstanding works of a minor nature which can be reasonably dealt with after completion including in particular any landscaping erection of fences or final surfacing of driveways.” In principle it seems that screening to the ground floor windows would come within the description of outstanding works of a minor nature of the sort which is identified. However, the requirement that it could “be reasonably dealt with after completion” raises the difficulty that condition (12) states that it has to be installed “before the development is occupied”. I do not consider that, in the light of that condition it can properly be said that the screening could be reasonably dealt with after completion so as to fall within the exception.

In his expert report, Mr Portis referred at paragraph 7.23 to four of the flats failing to comply with building regulations. At paragraph 14.3 he identifies these flats as flats 7, 8, 12 and 13 and says that they do not comply with Approved Document B Fire Safety of the Building Regulations as there is no secure means of escape out of the rear bedrooms to the respective flat exit doors and furthermore there is no smoke lobby within these flats to protect the communal stairs. A copy of extracts from the provisions of Approved Document B has now been provided to the court.

Whilst the defendant accepts that these matters were the subject of evidence and cross-examination, it maintains that they do not form part of the claimants’ pleaded case and should not therefore be relied upon. The claimants do not challenge that there is no pleaded allegation.

The defendant also states that it is common ground that the plans for the erection of the flats were submitted to the NHBC which was acting as approved building inspector for the purposes of building control matters. The defendant states that plans were approved, inspections took place and that the completed building was signed off for building control purposes. On this basis it states that, prima facie, the NHBC was satisfied that the Building Regulations had been complied with. In relation to the breach of the fire safety requirements set out in Mr Portis’ report, the defendant states that if there are acceptable alternative routes of escape then, as suggested in cross examination and accepted by Mr Portis, the building control officer could have decided that any fire risk was reasonable and so signed off the flats and the building.

I am not satisfied that the claimants have properly pleaded or established a breach of Approved Document B. Mr Portis accepted that he could only state the reason why he thought that the flats did not comply but accepted that the NHBC could have taken other matters into account in deciding whether the flats complied. As the matter was not pleaded, Mr Milton understandably did not deal with it in his report. If the matter were to be relied on then I consider that it should have been properly pleaded so as to give the defendant an opportunity to deal with it. On that basis and on the basis that, in any event, I found Mr Portis’s view less than convincing on this aspect, I find that the claimants cannot rely on a breach of Approved Document B.

In conclusion on this issue, I find that the claimants have established a breach of Clause 2.1 of the Contracts in respect of the failure to install the screening but not in other respects.

Mr Portis and Mr Milton have provided the court with a joint statement in which each has identified defects in a number of categories. The categorisation of some of the defects has been agreed but there are issues as to the seriousness of certain items. The categories are as follows, identified by a letter and a colour:

“(a)

Items which we could not find at the property (blue dot).

The issue in this case relates to a breach of Clause 2.1 of the Contracts which, as set out above, provides that “The Landlord will construct the Property in a good and workmanlike manner with good quality materials…”. However, again Clause 5.3.1 is relevant because it states that the Tenant shall not be entitled to delay completion by reason of any “minor defects or outstanding works of a minor nature which can be reasonably dealt with after completion including in particular any landscaping erection of fences or final surfacing of driveways.” Clause 5.3.2 then provides that “The Landlord undertakes to complete such outstanding works (if any) as soon as practicable after completion and the Tenant shall allow the Landlord all necessary access to carry out such work.”

Issue 9 raises the question as to the meaning and effect of clause 5.3.1 of the Contracts. What in the context of the Contracts can be considered as “minor defects or outstanding works of a minor nature which can be reasonably dealt with after completion”? I consider that the intention of Clause 5.3.1 is to prevent completion of the sale being held up whilst the Landlord satisfies the Tenant that every defect has been completed. There are a number of factors which, I consider, have to be taken into account. First, a defect will not be a minor defect and work will not be of a minor nature if it unreasonably interferes with the use of the flat. This is also reflected in the need for the defect or outstanding work to be able to be “reasonably dealt with after completion” and by the obligation under Clause 5.3.2 for the Tenant to allow access to the Landlord. Secondly, a related matter is the amount of remedial work or work which has to be carried out to remedy the defect or complete the outstanding work. If the work is likely to mean that a room cannot be occupied for, say, a day or more then it is unlikely to be minor. However, even a minor defect may mean that some work has to be carried over a period of days in terms of repair, preparing, painting and finishing the item. Thirdly, Clause 5.3.1 gives examples of quite substantial work which might fall within the category although it is all external to the flat.

I consider that the test under Clause 5.3.1 has to be applied to defects both individually and to the totality of the work. This is because Clause 5.3.1 is concerned with minor defects and outstanding works which is an overall concept and the test has to consider whether they can reasonably be dealt with after completion.

On that basis, it is now necessary for me to identify whether there were defects or outstanding works which could not be classified as minor so as to come within the Clause 5.3.1. Necessarily, where the schedule to the experts’ joint schedule runs to 26 pages, I set out in a more summary form my decision on the defects. I have however had the advantage of seeing samples of each of the defects in the flats at the Battersea Development and I have considered the views of Mr Portis and Mr Milton. In general Mr Portis identified defects which he thought were more serious than did Mr Milton. Both experts were experienced in dealing with building defects but it is evident that Mr Milton spent more time surveying the flats and considering the relevant “defects” in the Collins Schedule.

The experts are agreed on a number of defects which exist and should be corrected. These are set out in paragraph 1.1 of their joint statement. In relation to these:

In relation to three items, the experts set out different solutions in paragraph 1.2 of their joint statement. In relation to the first item, towel rails in the bathroom, they differ on whether the towel rails should be relocated to avoid a risk of burning (Mr Portis) or should have a thermostat fitted to lower to temperature to avoid that risk (Mr Milton). I consider that a thermostat could be fitted which would allow the temperature to be set at a safe level and yet still allow sufficient heat to dry towels and provide extra heat in the bathroom. I consider that this would be “outstanding works of a minor nature which can be reasonably dealt with after completion” under Clause 5.3.1

In relation to the second item, resiting of light switches, the doors on some bathrooms have been fitted so that the light switch is on the opposite wall from the side where the door opens. Mr Portis proposes that the switch should be relocated on the correct side and Mr Milton suggests that the doors should be re-hung so that the switch is on the correct side. I consider that Mr Milton’s solution is to be preferred but I accept, as Mr Portis says, that a new door would be needed, but not a new door frame. I consider that this would be “minor defects… which can be reasonably dealt with after completion” under Clause 5.3.1.

In relation to the third item, chipped window cills, Mr Portis considers that all cracked and chipped window cills should be replaced; Mr Milton considers that badly repaired chipped windows should be properly repaired and only cracked cills should be replaced. I consider that only cracked window cills need to be replaced and that a proper repair should be able to be carried out to chipped cills. I consider that the repairs to chipped cills would be “minor defects… which can be reasonably dealt with after completion” under Clause 5.3.1. In addition, I consider that the cracks were minor defects and replacement of cills would largely be carried out externally to the flat and so these were also “minor defects… which can be reasonably dealt with after completion” under Clause 5.3.1.

The experts are also disagreed on a number of other items at paragraph 1.3 of the joint statement which I now deal with:

I have therefore concluded that all the items complained of individually for each flat were “minor defects or outstanding defects which can be reasonably dealt with after completion” under Clause 5.3.1.

I now consider whether the work required to be carried out to remedy all the defects minor defects means that, whilst individually they are “minor defects or outstanding works of a minor nature which can be reasonably dealt with after completion”, the totality of the remedial works which needed to be done in order to remedy all defects subsisting at the date for completion meant that, overall, they were not to be considered as such “minor defects or outstanding works of a minor nature”.

In the experts’ joint statement, Mr Milton has summarised his view that the work in the flats would take 2 men between 1 and 2 days to complete, with 5-6 days for the common parts and 8-10 days for the external work. Mr Portis considers that the minimum would be 2 to 3 days, with some flats taking 3-4 or 4-5 days and flats 9 and 18 taking 5-6 days. He recently revised his views on the number of days for certain flats.

I consider that the times given by Mr Portis were longer than necessary and that Mr Milton’s figures were likely to represent the minimum time taken. I accept, that an allowance has to be made for the fact that continuity of work may not be achieved and time would be needed to prepare and clear up. However, even at 5-6 days, I consider that the underlying work would be repair of minor defects or completion of outstanding work of a minor nature compared to the totality of the work carried out and that both individually and overall, the work required came within Clause 5.3.1. In this respect, I accept that flats 9 and 18 would require most remedial work but even based on the overall position, I consider that the work comes within Clause 5.3.1.