Donnelly & Ors v Weybridge Construction Ltd

A contractual right to modify development plans or substitute materials is limited by the wording of the contract. The developer must use every endeavour to adhere to the agreed plans and specification. A modification is unavailable where it lessens the property’s value or materially alters its size or accommodation. A misdescription is substantial where, without it, the purchaser might reasonably never have entered the contract. In that event the purchaser may rescind. Where an agreed abatement remains unsettled, the vendor may also be unable validly to serve a notice to complete. Minor defects may be left until after completion only where they can reasonably be dealt with afterwards, assessed both individually and in their totality. A joint venture founded on trust and confidence may impose contractual and fiduciary duties of loyalty.

The claimants contracted to buy flats in a development undertaken by Weybridge Construction Ltd. The sales brochure specified limestone flooring throughout, and the plans showed balconies for three flats and 14 basement parking spaces. The completed development omitted the limestone flooring and balconies and placed three parking spaces on the access ramp. It also contained defects and lacked required screening to ground-floor windows.

The claimants challenged the contractual variations and the validity of completion notices. Weybridge alleged that the claimants had repudiated the contracts and brought Part 20 claims against the developer’s joint venture partners, alleging breaches of contractual and fiduciary duties and an entitlement arising from another development.

1. Contracts and specification. The relevant specification was the sales brochure and the drawings available at the sales event. The separate sales specification had not been made available to the purchasers. “Limestone tiled flooring throughout” naturally included the bathrooms.
2. Permitted modifications. Clause 2.2 gave a limited right to make reasonable modifications which did not lessen the value of the property or materially alter its size or accommodation. The omission of the balconies was not a reasonable modification: Weybridge had not used every endeavour to retain them, and their absence reduced value by £10,000 per flat. The alternative flooring was not as near as possible of the same quality as limestone and reduced value by £10,000 per flat. Neither change was contractually permitted. The parking changes were also departures from the drawings and reduced value by £5,000 for flats 12, 13 and 14.
3. Mr Brohoon agreed the alternative flooring as a joint venture partner, but had no actual, implied or ostensible authority to amend the purchasers’ contracts.
4. Planning and defects. The parking arrangement did not breach the planning condition requiring the parking areas to be provided. The failure to install screening before occupation breached clause 2.1. The alleged fire-regulation breach was not properly pleaded or established. The defects were minor, individually and in their totality, and could reasonably be dealt with after completion under clause 5.3.1.
5. Completion and rescission. The 5 May 2004 notices validly fixed 20 May 2004 as the completion date. However, the absence of limestone flooring, balconies and basement parking constituted substantial misdescriptions. The claimants could rescind because it might reasonably be supposed that they would not have contracted without those features. Alternatively, a valid notice to complete could not be served before compensation for the agreed abatements had been settled. Weybridge’s letter of 8 June 2004 was therefore repudiatory and was accepted by the claimants. The claimants were released from completion and entitled to repayment of their deposits. Damages were reserved.
6. Part 20 claims. Mr Brohoon and Mr Carley were the personal parties to the joint venture. Their contractual and fiduciary duty not to act in a manner known to be contrary to the joint venture’s interests continued until completion of all sales. Encouraging purchasers not to complete, guaranteeing repayment of deposits and funding their claims breached those duties and the obligation to procure completed sales. Those breaches were repudiatory and terminated the joint venture. No Wood Wharf equity or payment was established. Further issues concerning loss and certain consequences were reserved.

First-instance decision of the High Court (Technology and Construction Court). No appellate history was stated in the judgment.