Question
Quashquell Construction Limited (QQ) is a well-known UK registered property developer in Manchester, which specialises in brownfield development. For the past ten years, it has successfully developed a
number of retail parks across a number of reclaimed lands in different cities in the United Kingdom. The company has seen a decline in business during the past year and a half due to fears associated with the impending BREXIT referendum and its potential implications. The Board of QQ decided in October 2015 to sell its three-storey office building situated in Salford and move to Hull, where several of its new projects are located. It purchased an old Victorian building in Hull to be used as its new business premises from 1 March 2016. The property needed major refurbishment; the rooms had to be converted into offices, the ceiling refitted and the staircase repaired. A central heating system also needed to be installed. QQ contracted a local construction firm, Retro Salvagers Ltd (RSL), to carry out
the refurbishment costing £50000. Under the agreement, all works were to be completed by 25 February 2016. This was to enable QQ to honour its contractual obligations to give vacant possession of the property in Salford to a buyer. It was further agreed that for each day that the completion is delayed, there will be a deduction of 4.5% from the contract price. QQ requested a quote from Dapar Heating Systems Ltd (DHS) for the purchase and installation of a central heating system. In response to
concerns by QQ regarding energy efficiency of the heating system proposed by DHS, the sale representative of DHS stated: ‘This system is tried and tested; none other beats it and it’s even better on energy efficiency. You should recover the installation cost in two years’. Impressed by this comment, QQ entered into an agreement with DHS for the system to be installed on or before 25 February 2016, failing which DHS is to pay a lump sum of £1200 for any delay in completion. There was no express provision regarding energy efficiency in the actual contract. RSL failed to complete the refurbishment by the due date. Thus, QQ was unable to move into the premises as expected. To make the Salford property available to the buyer, QQ had to move its operations to the conference hall of a nearby hotel in Hull for ten days pending completion of its new office building, incurring cost of £4700 in rent for the ten days and about £500 per day in profits. In the meantime, DHS had its experienced engineers tied up on another job until few days before the agreed deadline
for the installation of the central heating system and thus were unable to complete the job until a week after QQ’s workers had moved into the new office. QQ had to hire four mobile heaters at £100 per day as the new office building was cold and damp. The new heating system malfunctioned three weeks after it was installed. Once again, QQ had to rely on the mobile heaters for another working week. DHS officials assured QQ that the system will ‘stabilise after a while…’ QQ requested an independent expert to examine/assess the heating system due to its persistent malfunctioning. A day after physical inspection of the heating system was conducted by the independent expert, and before the assessment report could be issued, the heating system exploded causing severe injuries to Sally and Sean, employees of QQ. Amy, another employee in the room where the explosion occurred, attempted to escape through the new staircase but slipped and suffered a dislocated ankle due to the slippery surface of the stairs. The independent expert’s report on the central heating system reveals faults in its installation. Moreover, the system installed by DHS was found to be at the lower end of energy efficiency heating systems. An investigation into the explosion has disclosed that a gas leak is the likely source of the catastrophe.
Identify and address the various contractual and tort-related issues raised by the above scenario and advise QQ, Sally, Sean and Amy as to their potential legal claims.(NB: You are not expected to calculate the financial cost arising from these transactions – please focus only on the legal issues. Also remember to consider alternative arguments, where necessary, before drawing conclusions).