Residential developer Banner (2000) Ltd has failed in its appeal court bid to overturn a uling that it must pay a further £185,000 under a contract to purchase development land at Amersham.
Banner bought the land at “Four Trees”, Mill Lane, Amersham, Buckinghamshire, for £200,000 in 1997, but the contract provided for a further payment of £185,000 if planning permission for three houses were obtained. That payment was subject to a soil survey to Banners satisfaction as to the suitability of the ground conditions for residential development.
Banner obtained a soil survey, which it alleged was unsatisfactory for the purposes of the contract, and it refused to make the additional payment to the vendor. It nevertheless went ahead and put up three residential units on the land.
When the vendor brought a claim for the extra sum, Judge Holden ruled in High Wycombe County Court that Banner was obliged to pay up.
On appeal, however, Mark Warwick argued for Banner that it was not liable, because the soil survey would only be satisfactory for the purposes of the contract if it showed that the land could be built upon in the manner originally proposed by Banner. It did not include situations where, as here, unusual and unexpected remedial work to the soil was required before construction could begin.
Nicholas Stallworthy, counsel for the vendor, argued that the suitability of the land for the purpose of the contract was demonstrated by the fact that Banner went ahead and built the houses on the site.
He said that if the development could not be made profitable after paying the extra money, Banner should have decided not to proceed. It could not unilaterally decide to keep back the extra money due to the vendor in order to make the development profitable.
Accepting that argument and dismissing Banners appeal, Evans-Lombe J held that it was unreasonable of Banner to serve a notice of dissatisfaction while plainly intending to proceed with the development.
Fountain v Banner (2000) Ltd Court of Appeal (Otton and Ward LJJ and Evans-Lombe J) 26 October 2000
Mark Warwick (instructed by Pitmans, of Reading) appeared for the appellant; Nicolas Stallworthy (instructed by Francis & How, of Amersham) appeared for the respondent.
PLS News 27/10/00
