2022

BUSINESS CONSTRUCTION ENVIRONMENT

CASE STUDY -01

BY MOIID MOHAMMED ABDUL
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Business construction Environment

Task
B & J Builders have contacted you; they have a number of ongoing issues with a site in a market
town. First the site is restricted, and the placing of a tower crane means that the jib swings across
a piece of land, belong C Rafty and Sons, who are demanding the sum of £1000 a week for the
trespass or a suspension of the use of the crane. They are also claiming that fumes from the crane
are causing a nuisance and affecting their enjoyment of the land. The crane driver is also
claiming that due to mud on the site he had a fall and twisted his back and this was due to
negligence of B&J Builders, although other operatives have told the builders that he disobeyed a
clear traffic plan and didn’t follow an approved route to the crane. The contract started with a
letter of intent, and the employers are now refusing to honour part of an agreement in that letter
of intent about the excavations. Finally, the company subcontracted some direct employ labour
to a rival builder in town to help that builder avoid a liquidated damages claim, and ascertained
damages claim, and the other builders promised to pay B & J builders a £1000 consultancy fee
for the loan of the workers which they are now refusing to pay claiming that the rules relating to
the law of contract have not been satisfied. Advise B & J builders about all of their legal
liabilities and rights in relation to these issues.

Issue-1: Site is restricted

Response:

Possession of land: In addition to the technicalities of the land (like location, area, extent of land,
neighbourhood etc.) it is vital to emphasize the date & time at which the land was handed over
into the possession of the builders.
If the handing of the site is not done at the specified date as agreed & as mentioned in the
contract, then it is a major breach of the contract and the contractor can request for extra time up
to a period of six weeks’ maximum or can be negotiated for longer period depending on the
project requirements.

Piecemeal possession: Extension of project completion time will also be ascertained based on the
extent of the land & its location which may have adverse effect on the project planning like
material flow or piecemeal position of the land like in the case of “Whittal Builders Co. Ltd v
Chester le street DC”. In this case piecemeal possession of site is not sufficient and the
contractor was entitled to extra additional time to complete the work and in case of “London
Borough of Hounslow v Twickenham Garden Development Ltd in this case though the squatters
occupied a small piece of land, but it is obstructed the project progress and the result was
entitlement of extra time & money to the contractor.
Since the site is restricted the B & J builders should request for extra time & money for
completion of the work.
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Issue no.-2: “The crane jib swing across the land belong to C Rafty & Sons & need to pay
£1000 per week for the trespass or suspension of the use of the crane”

Response:

A construction site will always be an additional source of noise, dust, increase in the traffic or
rerouting of traffic etc. and cause discomfort in the neighborhood. The magnitude of discomfort
may vary depending on the level of discomfort experienced by particular individual which may
lead to the involvement of authorities and followed by penalties etc. Therefore, in order to
achieve social balance volume of legislations had been drafted.
The Tort law: The word “TORT” means wrong. It’s a French word. The tort law is drafted to
protect the physical, financial, dignity & property rights. If the tort in the court is proved against
the defendant by claimant, then the court will order compensation to claimant. The claimant had
to prove that the defendant owes a duty and the breach of that duty resulted in damage to his
property and enjoyment of his land.
Tort is civil wrong but not a crime. There are more than 70 torts in law of England & Wales and
the “tort of negligence “is one of the most crucial one.
Tort of negligence in simplified form can be noted as “lack of duty to take reasonable care which
resulted in loss to neighbour’.
The judge Lord Atkins defined neighbour as “Who then in law is my neighbour? Person who
are closely and directly affected by my act that I ought reasonably to have them in contemplation
as being so affected when Iam directing my minds to the acts or omissions which are called in
question”
Trespass to the land is another type of tort which is the subcategory of the Property based tort.
The key aspect of this tort is there is no need to prove the damage of the property by the
claimant. The unjustifiable entry by a person or people into the land not owned by him/them
even too few inches of boundary is accountable. The ownership includes the land from topsoil to
center of the earth and the airspace above it. Therefore, the crane jib swinging over land
belonging to others will be considered as trespass. Once the trespass is established the claimant
may ask to remove the equipment or restrict its entry which may affect the project progress. This
can be avoided by entering into legal agreement with landowners by providing compensation &
insurances.
Such situations should be dealt at pre construction stage by the responsible party (contractor or
employee) as per the contract.
Negotiating for £1000 and proceeding for the agreement with the C Rafty & Sons is advisable.
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Issue no.-3: “The crane fumes are causing a nuisance and effecting the enjoyment of the
land”.

Response:

The property owners have a right to enjoyment & use of their land. Even if there is no physical
interference but a plaintiff still can sue a neighbour for the interference of substance from his
land under the theory of private nuisance.
According to the Salmond “the wrong of nuisance consists in causing or allowing without lawful
justification the escape of any deleterious thing from his land or from elsewhere into land in
possession of the plaintiff e.g. water, smoke, fumes, gas, noise, heat, vibration, electricity,
diseases, germs, animals”.
When the acts or omissions affect public at large it will be considered as public nuisance.
The law is drafted to establish a social balance between adjacent neighbour by maintaining right
of landowners to use their land in whatever way they wish but without affecting the rights of
adjacent landowner.
The claimant need to prove the interference is unreasonable to be successful against the
defendant and in determining so, the court will apply the standard of ordinary person. For
example, if land owner is particular sensitive to odors it will not be considered as standard in
determining the substantial interference. Under this heading court will look at the location and
orientation of the land of the claimant and also verify for particular sensitive.
Further, the private nuisance is divided as active nuisance & passive nuisance. If a defendant
actively carried out nuisance by themselves, it is active nuisance and if a nuisance is carried by
another on the defendant’s land and the defendant does not prevent it or stop it then it is a
passive nuisance.
As an example of active nuisance the case of “Hollywood Silver Fox Farm(claimant) v
Emmett(defendant)” can be studied, here both party lands are adjacent to each other. But the
defendant had huge objection of placing a notice board inscribed as ‘Hollywood Silver Fox
Farm’. According to the defendant such notice board will affect his own land development
strategy. During breading period of vixens, the defendant orders his son to shoot off a shotgun
with the intension to frighten vixens of Fox farm which resulted with many litters of foxes being
stillborn. The claimant sues this action for nuisance and the defense was the defendant had a
right to shoot as he likes in his owned land but the judge held that defendant had intentionally
interfering with his neighbor’s enjoyment of their land.
Further, the Ryland v Fletcher case outcome is notable. In this case, to build a water reservoir in
their land Ryland employed the contractor. During construction process the workers found old
coal shaft & decided not to close it. When the new reservoir was filled with the water for the first
time, water flooded into the neighboring mine run by Fletcher. This scenario leads to the birth of
The rule in Ryland v Fletcher. The rule in Ryland v Fletcher was that “the person who for his
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own purpose bring on his land and collects and keeps there anything likely to do mischief if it
escapes, must keep in it at his peril, and, if he does not do so, is prima facie answerable for all
the damage which is the natural consequence of its escape”.
The essence of the argument is to make sure all the precautionary measures had been taken as
much as possible to avoid any act or omissions that will lead to legal action.
In this case it is better to adopt an approach that will keep healthy relationship with the
neighbours, and implement builder’s considerate scheme to minimize these issues.

Issue no.-4a: “The crane driver’s claim against the builders for their negligence in
providing safety at work as main reason of his fall & twist in his back”.

Response:

Employers responsibility for the worker’s safety:

Construction site involves multiple activities like material transporting, lifting, storing, structure
demolition, ground excavation etc. these activities will contribute to the production dust, debris
at large extent effecting the normal passage and safety of the workers and visitors.

The UK Health & safety at Work Act 1974 had discusses in detail the general duties of employer
to their employees.

Construction (Design and Management) Regulation 2015 is devised to improve the construction
industry health & safety standards. The CDM requires t employees a principal designer who is
entitled to advice & assist the employer with their health & safety duties, identify details of the
project to the health & safety executives, generate & maintain health & safety plan and to
achieve coordination with others involved in the project. The appointment of the principal
designer is to assist employer in achieving health & safety standards but it does not relive the
employers from their duties.

The employers are responsible for providing:

1. Safe workplace to their employees
2. Safe equipment & plant
3. Approved & standard system of work
4. Workplace with competent & safe employees.
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The safe work place includes of providing defined & secured passages with proper
identifications and route guidance and frequent maintenance of this passages.

The claim of the crane driver can be viewed under act of negligence. Is there any breach of
duties by the employer in providing safe work place?

Breaching of health & safety standards will lead to criminal proceedings and heavy fines will be
imposed.

Therefore, the builders are advised to implement the health & safety standards.

Issue no.-5: “The contract started with letter of intent(LOI) and the employer are now
refusing to honour the part of an agreement in the letter of intent about the excavation”

Response:

Risk associated with LOI to contractors/builders:

The LOI is a letter that is given to the builders/contractors to begin the work in advance, prior to
the actual contract is prepared & signed.
The LOI will ensure that the particular contractor will be finalized and it will enable the
contractor to start mobilizing the construction site, make early planning schedules and placing
purchase orders for long lead items and it can be considered as a mini contract but it is very
necessary to analyze or evaluate LOI in order to understand whether LOI is non-binding type or
binding type.
Non-binding type LOI which is also called as comfort letter, it does not hold contractual
obligations between parties. Employer may not be obliged contractually to pay the remuneration
to the contractor or liquidate the damages. In such cases the remedy for the contractor is
“quantum meruit” which means “the amount he deserves” for the service & goods provided to
the defendant. In view of this non-binding type LOI is risky to the employer’s too. The amount
that the defendant was ordered to pay to the claimant may be bargained in the binding type LOI.
Though LOI is mini contract the scope of work should be written clearly. The structure of LOI
should be minimum as
1. Scope of work
2. Total sum of amount against the scope defined.
3. Payment terms
4. Contract conditions.
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5. Construction programme (Timeline & schedules).
6. Dispute resolution clause.
In this issue excavation was clearly mentioned in the letter of intent which is a mini contract and
the builder/contractor was executing the work as per the contract then the employer is
contractually obliged to honor the complete LOI scope, payment terms & conditions.
Issue no.6: “B & J builders subcontracted some direct employ labors to help the rival
builder to avoid liquidated and ascertained damages claim at £1000 consultancy fees for
the loan of the workers but now the builders are refusing to pay claiming that the rules
relating to the law of contract have not been satisfied”.
Response:
Liquidated damages & discharge of contract:
Liquidated damage are pre estimated damages to be paid in an amount sum to the injured party
in case of the breach and it will be mentioned in the construction contract. The clause mentioning
about the liquidated damages should be analyzed thoroughly during contract signing period.
This damages can be measured weekly and even hourly. The assessment of damages should be
done through proper method and the damages should be genuine estimate of losses.
The purpose of liquidated damages is to force the parties to ponder on the issues of late
deliveries. It is to be noted that any claim to liquidated damages will be lost if the delay is from
the employer side. Most of the forms of contract provide alternatives to liquidated damages like
giving contractor the right to extra time if the delay is caused due to controllable circumstance
like bad weather, civil unrest, fault from the employer agents etc.
Further, it should not be confused with penalty clause. Penalty clause is placed to force the
contractor performance and it is not genuine estimate of losses.
Discharge of contract means end of contract. The end of contract arises due to performance,
agreement, frustration and breach of an appropriate term of the contract.
Construction contract will be discharged by performance when the contractor completed all the
scope of the works as mentioned in the contract and the employer paid all the dues. If there are
unseen defects it means the contract is not completed. If the performance is incomplete but the
virtually exact then it is considered as substantial performance. Under substantial performance a
claim is made for the work completed followed by the counter claim for remaining work. For
example, in case of Bolton v Mahedeva, the central heating system installed performed very
poorly which need extra cost for rectification. Therefore, judge held there is no substantial
performance and there was no entitlement to the claimant.
Breach of an appropriate term of the contract give rise to an obligation to pay the damages to the
injured party by the defaulter but the obligation to complete the contract remains unchanged
unless the very bases of the contract is breach which is termed as repudiatory breach. Here the
injured party can have choice either to terminate the contract or to continue with the contract.
The appropriate test to determine if the breach is repudiatory or not is whether a reasonable
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person believe the other party did not intend to be bound by the contract. If the test result is
confirming the repudiatory breach, then the injured party may treat the contract is discharged and
is released from further performance of the contract. Unjustified cancellation of the contracts
does not always count as repudiation. The injured party may revoke the contract but must act
soon without delaying the matter.
When the contract is impossible to execute it is considered as frustrated. The impossible of the
contract will be either due to excessive cost than expected or its difficult to execute.
Discharge of contract can be done with an agreement. If a party is unable to comply with terms
of the contract can make another contract for something different with the injured party. This is
known as doctrine of accord & satisfaction. The previous contract represents the accord and new
obligation represents the satisfaction.
For the issue of B & J builders following points should be analyzed
1. Proper method is implemented in ascertaining the liquidated damages or not and should
be genuine estimate of loss.
2. If the delay is from the employer side than there is cannot be any claim for the liquidated
damages by the employer
3. Liquidated damages are counted weekly & hourly.
4. Verify whether delay is due to uncontrollable circumstance like bad weather or civil
unrest.
5. Check the possibility of extension of time clause in the contract.
6. Check for the substantial performance & contract frustration.
7. Adopt the doctrine of accord & satisfaction.
End of case study-1

Prepared by: Moiid Mohammed Abdul

Reference to the case study:
(1) CIOB academy Business Construction Environment Lecture-1.
(2) Construction Law: From Beginners to Practitioner (2016) by Mason J.
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