Leggett -v- Crowley, [2019] IEHC 182 (2019)

Docket Number:2014 5465 P
Party Name:Leggett, Crowley
 
FREE EXCERPT

THE HIGH COURT[2014 No. 5465 P.]

BETWEEN

BRIAN LEGGETT PLAINTIFFAND

GAVIN CROWLEY DEFENDANT

JUDGMENT of Mr. Justice Tony O’Connor delivered on the 27th day of March, 2019

Table of Contents

Introduction 2

Background History 2

Loan from Bank of Scotland Ireland 2

Release of Property as Security 4

Leading up to the Contract 4

The First Viewing 4

The Second Viewing 5

Initial sale price 5

Revised Sale Price 5

Defendant’s claims regarding the sale price 6

Boundary Dispute 7

Execution of the Contract 8

Discovery 9

Failure to Call the Father of the Defendant 10

Conclusion 12

Legal Submissions on the Claim 12

Illegal Contract 13

Conclusion 14

Impossibility 14

Conclusion 18

Hardship 19

Conclusion 22

Summary 23

Appendix 24

Introduction

  1. The defendant has been in possession of his home in Kilsallaghan, Co. Dublin since it was built in 2003 and more significantly, since the closing date of 4th March, 2014, for its sale to the plaintiff and the prosecution of these proceedings seeking specific performance which were commenced in June 2014.

    Background History

  2. According to the defendant, he has been involved in the construction industry from his early days. He bought land which is now comprised in Folio 49441F, Co. Dublin (“folio”) in 2002, when he was about 21 years of age. The defendant resides with his partner and his father in the home which was built on the lands comprised in the folio. The defendant also gave evidence that the total construction cost for his home was approximately €600,000 to which the defendant’s father contributed a significant sum.

  3. Notification of grant of approval issued in July 2003 to the defendant and a retention permission for a sunroom was granted in March 2004. An additional extension, referred to as “granny flat” during the course of the trial, has not been the subject of any specific permission.

    Loan from Bank of Scotland Ireland

  4. In May 2006, the defendant accepted an offer of an interest-only home loan of €725,000 with the “Basis of Interest Rate”: 1% “over ECB Main Refinancing operations rate” from Bank of Scotland Ireland Ltd (“BOS”). The loan was secured by:-

    (i) a first legal mortgage over his home, which was then valued at €1,500,000;

    (ii) an assignment of a mortgage protection life policy on the defendant; and

    (iii) an assignment of a life policy for the 40-year term of the loan with a note that BOS “does not in any way represent or warrant that the surrender or maturity value thereof will be sufficient to discharge the principal of the loan”.

  5. In March 2008, the defendant accepted an “offer of further advance loan” in the sum of €250,000 to be repaid over 38 years at “0.83% plus the ECB main refinancing operation rate.”

  6. The defendant testified that he did not repay the contribution made by his father to the building of the home because his father was content for the defendant to remain in the construction and property industry.

  7. The collapse of the Irish property market caused BOS to appoint receivers over all of the properties belonging to the defendant which he had acquired with other loans advanced by BOS.

  8. By letter dated 4th October, 2012, solicitors for BOS advised the defendant that he then owed BOS €997,482.02, pursuant to the loan facilities granted in May 2006 and March 2008, by reason of his failure to adhere to the repayment terms.

  9. A further letter from solicitors for BOS dated 11th December, 2012, requested possession of the house and lands comprised in the folio (“the property”) within seven days in order to avoid the commencement of proceedings.

  10. Eamonn Greene & Company (“Greenes”), then solicitors for the defendant, in a reply telefaxed on 20th December, 2012, referred to the property as the principal residence of the defendant when expressing an understanding that the defendant was paying €1,000 per month and that the property was for sale. The defendant had discussed with BOS that the defendant himself should sell the property.

  11. Up to this point, there is little controversy. Thereafter, the defendant recounts a story to the effect that he was prepared to enter into a contract for sale of the property with the plaintiff and release the proceeds of the sale to BOS in exchange for BOS releasing him from any further liability to BOS and for the defendant to obtain from the plaintiff a cash payment of €50,000 (later increased to €65,000). It is noted that not one professional adviser or any other witness called to give evidence testified that there was an intention for the defendant to obtain such a cash payment which lies at the heart of many allegations made by the defendant.

    Release of Property as Security

  12. The circumstances leading to the short letter from BOS to Greenes dated 18th February, 2014, and which reads as follows: “You must provide cleared funds in the sum of €445,887.20 to Bank of Scotland plc (‘the bank’) in order for the bank to release the secured property from its mortgage and charge”, are at the centre of the dispute to be resolved in the context of the claim for specific performance of the contract which is the subject of these proceedings.

    Leading up to the Contract

    The First Viewing

  13. The plaintiff gave evidence that he viewed the property with his partner and their young son on 22nd October, 2013, while the defendant and a Mr. O’Reilly (an auctioneer engaged by the defendant) were in attendance. The defendant alleged at trial that the plaintiff inquired about the mortgage on the property and that the defendant informed the plaintiff about his negative equity in the property. The defendant further alleged that he informed the plaintiff that he could not enter into a binding agreement until he had a binding agreement with BOS. The plaintiff denied these exchanges during the viewing and asserted his intention and commitment to negotiate with the auctioneer only.

    The Second Viewing

  14. On 23rd October, 2013, the plaintiff attended at the property again. He said that he had mentioned this intention to Mr. O’Reilly because they were unable to view the granny flat while the tenant was present on 22nd October. The defendant alleged that the plaintiff attended unannounced when the defendant and his father were at home. The plaintiff insisted that he never met the defendant’s father until these proceedings came on for trial originally in October 2017.

    Initial sale price

  15. The defendant’s auctioneer, by letter dated 24th October, 2013, confirmed to Greenes that he had accepted an offer for the sale of the property for €475,000 from the plaintiff who had furnished a booking deposit of €10,000. This supports the plaintiff’s evidence that he negotiated with Mr. O’Reilly exclusively and it is what one would expect when an auctioneer is involved. The asking price in the brochure produced by Mr. O’Reilly was €525,000. The defendant did not allege that Mr. O’Reilly was instructed not to negotiate with the plaintiff; rather the defendant alleged that the plaintiff was informed by the defendant about achieving a binding agreement with BOS.

    Revised Sale Price

  16. The plaintiff and Mr. O’Reilly testified that they renegotiated the sale price down to €460,000, which was confirmed by the standard typed letter sent by Mr. O’Reilly to Greenes dated 6th November, 2013. The plaintiff was looking at similar properties and it was apparent that the market at that stage was one which suited buyers as there were few then. The plaintiff remarked that his original offer was “a bit of a stretch” and that he had actually paid a booking deposit for another house. He preferred the property and that was his reason for pursuing a reduction in the price.

    Defendant’s claims regarding the sale price

  17. The defendant claimed during the trial that at the second viewing the plaintiff had come to the property with a proposal. The defendant said that he had explained to the plaintiff the situation with BOS: that the property was mortgaged for over €1 million and that a binding agreement with BOS was required. He surprised the plaintiff and the solicitors who gave evidence at trial with his allegations that he informed the plaintiff at the second viewing about a boundary dispute. The defendant also referred to his father’s interest in the house due to his financial contribution to the construction of the house.

  18. The defendant alleged under oath, which was denied vehemently by the plaintiff, that the plaintiff offered to pay the asking price of €525,000 of which €50,000 would be in cash. That would mean that BOS and the Revenue would be informed of a sale price of €475,000 whereas the true price was the asking price of €525,000. The defendant’s allegations about the plaintiff referring to having untaxed cash from his business and realised properties in Spain and Eastern Europe were denied calmly, but firmly by the plaintiff.

  19. There was not a shred of corroborating evidence to support these serious allegations. In fact, all of the solicitors who gave evidence said that any knowledge or suggestion of such an arrangement would have obliged them and the late Maurice Leahy, a solicitor by all accounts with impeccable professional standards, to cease their involvement with the parties.

  20. The defendant’s explanation for the sale price reduction to €460,000, further persuades this Court that the defendant will stop at nothing to hinder the plaintiff from completing his purchase of the property. The defendant alleged that he received a phone call from the plaintiff on 25th October, 2013, during which the plaintiff allegedly offered a further €15,000 in cash in exchange for a corresponding reduction in the price to be recorded in the contract. The Court accepts the plaintiff’s evidence that the only conversation which he had with the plaintiff, during which the defendant was loquacious, concerned the closing of the sale as quickly as possible.

  21. The plaintiff testified that he only discussed the closing of the sale with the defendant and he did not renegotiate the price with...

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