High Court Rules on Residential Development Contract Gone Bad

Building projects inevitably go wrong sometimes and those involved in such cases are wise to seek legal advice to achieve a swift and low-cost resolution. In a case where that did not happen, the High Court found both the developer of a residential property and the owner of the land on which it was built in breach of contract.

The owner had engaged the developer to build the house but, by the time it was approaching completion, their relationship had broken down. The owner decided to complete the work himself, without any further input from the developer, and the property remained on the market five years after it should have been sold.

The owner had lived in the house himself for a while before renting it out. He claimed that the work carried out by the developer was seriously defective and that had rendered the property virtually unsaleable, particularly in a depressed market. The developer countered that the owner was in serious breach of the development agreement and argued that he should be compelled to sell the house.

The Court found that the owner had had no option but to take over the project due to the developer’s breaches of contract. He was entitled to be compensated for the cost of completing the works and remedying defects, a total of almost £57,000. After credit was given for those sums, the developer’s net entitlement for the work he had carried out was £145,528.

The owner had also breached the contract by failing to take sufficient steps to market and sell the property and by renting it out to unsuitable tenants. The developer was entitled to damages for those breaches, to include a share of profits based on an assessment of the property’s open market value. He was also entitled to a sum to reflect his share of the benefit obtained by the owner in occupying and letting the property. The amount of those awards has yet to be assessed.