Possible Legal Claims-Re Bryandale District Council & Others - Math Problem Example

NOTES: POSSIBLE LEGAL CLAIMS-RE BRYANDALE DISTRICT Council & OTHERS [As per the assignment, these are notes covering the Bryandale District council scenario for examination preparation. The instructions specify that theses notes shall be 2 pages (double sided) of 4 paper] The possible causes of action (legal claims), claimants, defendants and legal issues upon which you may be examined are as follows: 1. Claim against McGregors: Bryandale District Council (“BDC”) would certainly have a significant claim against MacGregors who are the main building contractors. The claim will be for breach of contract. In November 2003 a construction firm named MacGregors was employed by BDC on the recommendation of Dougal Glendower a wealthy landowner and entrepreneur. Earth Life Trust, a charitable fund has donated £15m to the project, with the stipulation that the building materials used should be environment friendly. Unfortunately MacGregors was embroiled in some negative publicity due to which the Earth Life Trust has put a temporary injunction on the payments to be made for the construction till the time MacGregors is not exonerated. Although the building was constructed within time, it was discovered that the materials used were not the same as had been stipulated by the Earth Life Trust. A breach of contract occurs when the terms of a contract are not fulfilled by either of the parties to the contract. BDC shall be entitled to claim damages from MacGregors as the actions of MacGregors have lead to a financial loss for BDC. Watts & Co v Morrow in this case the question that arose for consideration was whether it can be claimed that that the surveyor of the grounds had negligently failed to report certain defects in the house. Here the court observed that where the contract had been entered into so that the plaintiff be able to derive certain pleasure from it. And the defendant had been negligent, due to which the plaintiff has suffered a loss, the defendant shall be held liable ([1991] 4 All ER 939; [1991] 1 WLR 1421) Hadley v. Baxendale the plaintiff who was a mill operator was forced to shut down his mill due to a broken piece of machinery. The plaintiff therefore contracted with the defendant to deliver the repaired piece of machinery by a specific date. The defendant failed to do so, and was sued by the plaintiff for breach of contract. The above case was a landmark in considering the remoteness of damages in a contract. It was observed that the damages should be such which may be considered fair and reasonable and arising either in the usual course of things, or may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach (9 Exch. 341, 156 Eng. Rep. 145 (1854)). Wilkinson v Downton here the defandant had deliberately set out to frighten the plaintiff by telling her that her husband had met with an accident. The courts in this case established a new rule which stated that is a person sets out to cause harm to another and does cause harm indirectly then he shall be liable to compensate that person( [1895-99] AER Rep 267). In the above situation even though MacGregors had not set out cause a loss to BDC their negligent actions had resulted in such circumstances. BDC may also be able to claim damages from Dougal Glendower, the wealthy landowner and entrepreneur, for applying undue influence and for unjust enrichment. It would seem that Dougal Glendower will benefit as he will get to use the facility free of cost in accordance with Clause 91 for most of the year for his conference business, Key Business Solutions. Given that Mr Glendower introduced the building contractor and that he also stands to benefit the most from the builder’s breaches of contact, BDC may well consider a claim against Glendower for inducing a breach of contract by unduly influencing MacGregors. A person is said to utilise undue influence when an agreement has been obtained by certain kinds of improper pressure, which do not amount to duress. In the case of Barclays Bank v O'Brien a man who was a shareholder in a company arranged an overdraft of a certain amount for the company. The liability to the bank was to be secured by a second charge over the matrimonial home, jointly owned by the man and his wife. The man persuaded his wife to sign the security documents by misrepresenting the situation, When the company's debts increased, the bank brought proceedings to enforce the guarantee. The courts held that the wife had been unduly influenced by her husband and that the bank could not enforce the charge against her ((1993) 4 All ER 417). Similarly in National Westminster Bank v Morgan a woman claimed that she had been unduly influenced by a bank manager who had assured her in good faith that she would not be liable for husband’s debts. When the bank extracted the liabilities of the husband from the wife the court held that the bank manager had indeed exercised undue influence over the wife there by preventing her from seeking independent legal council. Therefore the bank would not be able to extract the charge from the wife for incorrect actions taken by it ((1985) 1 All ER 821). BDC have also not taken out any insurance and would therefore look to claiming this shortfall from McGregors, who had represented to BDC that they were insured. 2. Claim by D’Arcy School of Ballet Although BDC may be entitled to claim that there has been a breach of contract should the School of Ballet seek to withdraw however the School would counterclaim that the centre was simply unfit for purpose i.e. as a venue for high quality arts events. The council had agreed upon that school of Ballet would move to the Canalside for an initial period of five year, and the school would put on three or four major productions, as well as a number of small-scale events. It is only on this basis that the D’Arcy School of ballet had agreed to release the sum of £200,000 towards the development and promotion of the opening season at the Canalside. Despite of this agreement BDC went ahead and employed some one else to stage the productions. Here the D’Arcy School of ballet may claim that they were entailed to withdraw the agreed amount because BDC had made a misrepresentation. A misrepresentation is a false statement of fact made by one party to another, which, whilst not being a term of the contract, induces the other party to enter the contract. According to section one of the Misrepresentation Act 1967 states that: Where a person has entered into a contract after a misrepresentation has been made to him, and— (a) the misrepresentation has become a term of the contract; or (b) the contract has been performed; or both, then, if otherwise he would be entitled to rescind the contract without alleging fraud. Section 2 of the Act awards damages for misrepresentation, it states that: (1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true. (2) Where a person has entered into a contract after a misrepresentation has been made to him otherwise than fraudulently, and he would be entitled, by reason of the misrepresentation, to rescind the contract, then, if it is claimed, in any proceedings arising out of the contract, that the contract ought to be or has been rescinded the court or arbitrator may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so, having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld, as well as to the loss that rescission would cause to the other party. In the case of Derry v Peek an Act provided that the carriages of trams may be moved by animal power, and if the Board of Trade consented then by steam power. Subsequently prospectus was issued containing a statement that by this special Act the company had the right to use steam instead of horses. The plaintiff bought shares on the strength of this statement. The Board of Trade refused to consent to the use of steam and the company was wound up. The plaintiff brought an action for deceit. It was held that in an action for deceit, it is not enough to establish misrepresentation alone. The court observed that there was an essential difference between the case where the defendant had honestly believed in the truth of the statement and where he was careless with no such honest belief. In order for fraud to be established it has to be proved that the false statement was either made knowingly or without any belief in its truth or recklessly. The defendants in this case had not acted fraudulently, they had made a careless statement in which they honestly believed. ((1889) 14 App Case 337, HL) Similarly in the case of Bisset v Wilkinson the plaintiff had purchased from the defendant land for the purpose of sheep farming. The defendant made a misrepresentation to the plaintiff that land would be able to hold around 2,000 sheep, the plaintiff bought the land under this belief. It was held that the statement made by the defendant would be regarded as a statement of fact and not a misrepresentation (Bisset v Wilkinson (1927) AC 177, HL). 3. Claim by Earth Life Trust: BDC would face a claim for the refund of £ 15m by Earth Life Trust, due to the breach of contract. Earth Life would be justified in seeking the refund as the investment was based on the building meeting environmental specifications. In the case of Earth Life Trust, a fundamental breach has occurred which enables Earth Life Trust to terminate the contract and also sue for damages. As stated above that the case of Hadley v. Baxendale tested the remoteness of damages. Here the plaintiff who was a mill operator was forced to shut down his mill due to a broken piece of machinery and therefore contracted with the defendant to deliver the repaired piece of machinery by a specific date. (9 Exch. 341, 156 Eng. Rep. 145 (1854)). Due to the said breach in contract by BDC the Earth Life Trust shall also be able to claim damages. Ruxley Electronics v Forsyth in this case damages were awarded to a house owner against a builder for building a swimming pool with the wrong depth ([1996] AC 344[1995] 3 WLR 118). Similarly damages would be awarded to the Earth Life Trust because environmentally safe materials were not used for construction purposes. 4. Tamasin Wicks: This wealthy investor has invested nearly £30 Million to be “devoted to the development of the performing arts at the Canalside centre”. Should she seek the return of her investment on the grounds of failure of consideration, as the contracting party has been unable to fulfil its obligation. BDC would be require to refund the monies and may well seek the shortfall from McGregors and/or Glendowe if collusion can be demonstrated. 5. Claim against ZBD Bank There would be a claim by BDC against the Bank for wrongfully transferring 15M to Health Life Fund.insted of to Earth Life Fund. The Bank would be under a duty to apply for an injunction to freeze the funds of Health Life Fund and to trace the payments made in order to recover the dissipated funds. Also a mistake has been made by ZBD bank which has resulted in unjust enrichment of the Health Life Fund. In the case of Bell v Lever Bros Ltd the plaintiff company contracted with the defendants to act as chairman and vice-chairman of a subsidiary company. It so happened that the defendants, without the knowledge of the plaintiffs, had engaged in private transactions resulting in a secret profit to them. It was held that the erroneous belief on the part of both parties to the agreements, that the service contracts were determinable except by agreement did not involve the actual subject matter of the agreements, therefore, the plaintiffs were not entitled to succeed in their action ([1931] All ER 1). Further in Solle v Butcher dwelling house had been converted into flats. The defendant took a long lease of the building, intending to repair bomb damage and do substantial alterations. The plaintiff and defendant discussed the rents to be charged after the work had been completed. Defendant contended that the flat had become a new and separate dwelling by reason of change of identity, and therefore not subject to the Rent Restriction Acts. The court held that the alteration did not destroy the identity of the flat and their mistake as to the identity of the flat was a mistake of fact. ([1950] 1 KB 671, CA) In McRae v Commonwealth Disposals Commission the defendants sold an oil tanker described as lying on Jourmand Reef off Papua. The plaintiffs incurred considerable expenditure in sending a salvage expedition to look for the tanker. It was later discovered that there was no such tanker or place for that matter. The court held that it was indeed a case of breach of contract, negligence and deceit and ruled in favour of the plaintiffs ((1950) 84 CLR 377). Read More