McAnarney v Hanrahan

• Jurisdiction: Ireland
• Judge: Mr. Justice Costello
• Judgment Date: 01 January 1994
• Neutral Citation: 1993 WJSC-HC 3967
• Court: High Court
• Docket Number: [1988 No. 5706P],No. 5706P./1998
• Date: 01 January 1994

1993 WJSC-HC 3967

THE HIGH COURT

No. 5706P./1998

MCANARNEY v. HANRAHAN

BETWEEN:

SEAN McANARNEY AND ANOTHER

Plaintiffs

.v.

JOHN HANRAHAN AND OTHERS

Defendants

Citations:

HADLEY BYRNE & CO LTD V HELLER & PARTNERS LTD 1964 AC 465

BANK OF IRELAND V SMITH 1966 IR 646

MCGREGOR ON DAMAGES 15ED PARAS 1718, 1724 & 1939

FORDE V WHITE & CO 1964 1 WLR 885

DOYLE V OLBY IRONMONGERS 1969 2 QB 158

Synopsis:

DAMAGES

Assessment

Land - Purchase - Inducement - Misrepresentation - Negligence - Difference between market value and price paid by plaintiff - (1988/5706 P - Costello J. - 16/7/93)1993 3 IR 492 1994 1 ILRM 210

|McAnarney v. Hanrahan|

NEGLIGENCE

Misrepresentation

Land - Sale - Inducement - Purchaser - Damages - Assessment - Method - Misrepresentation made by auctioneer - (1988/5706 P - Costello J. - 16/7/93) - [1993] 3 I.R. 492 - [1994] 1 ILRM 210

|McAnarney v. Hanrahan|

1 Judgment of Mr. Justice Costello Delivered the 16th day of July 1993

2 Auctioneer - Post-auction statements to prospective purchaser - Whether duty of care existed - Negligent misstatement - Measure of damages.

THE FACTS

3 Nearly nine years ago, on the 4 December 1984 and again on the 21 December 1984, conversations took place between the plaintiffs and Mr. Hanrahan (the first-named defendant). At that time Mr. Hanrahan was an auctioneer in the employment of the second-named defendant. The conversation related to the possibility that the plaintiffs might purchase a residential licensed premises in Athboy, Co. Meath. Not surprisingly recollections are infirm about what was said and a clash of evidence has resulted. Liability in this case depends entirely on which version of the evidence I accept and I should begin this judgment by giving my conclusions on this point.

4 I think that the recollections of the plaintiffs and their solicitor, Mr. Binchy, are more accurate than that of Mr. Hanrahan and Mr. Potterton (the principal in the defendant firm) and their version of events finds support in the contemporary correspondence. My conclusions on the evidence are therefore as follows:

5 1. In December 1984 the defendant firm held an auction for the sale of a licensed premises situated in Athboy, Co. Meath which was then known as "Farrells" or "The Central Bar". It was a small two-storey premises with living accommodation. The premises were held under a lease dated the 31st July 1959 for a term of 31 years from the 13 November 1958 at a yearly rent of £80. Thus there was a serious infirmity in the title - the lease would expire within about five years, but under the existing law the lessee would have been entitled to a renewal on expiration, but at the market (and therefore greatly increased) rent then prevailing.

6 2. The plaintiffs were most anxious to buy the premises, partly as a residence for their family, (for they were then living with Mrs. McAnarney's mother at the time with their four young children) and partly as a business venture. The premises were offered for sale without any accounts as to turnover or profitability. Before attending the auction the plaintiffs had obtained particulars of the premises and a promise of financial accommodation for £35,000 from a financial institution. They also had approximately £8,000 - £10,000 available to add from property in Northern Ireland.

7 3. The plaintiffs were late for the auction on the 4 December 1984, arriving with their solicitor, Mr. Binchy, at the offices of the defendant firm when the auction was over. They were brought into the offices by Mr. Hanrahan who told them that there had been a bid at the auction of £54,000 and that the property had then been withdrawn. In fact this information was not true - there had been no such bid at the auction. He asked them to bid £55,000. The plaintiffs said that they would be prepared to make an offer of £55,000 if they could get an increase in their loan facilities. In the course of conversation leading up to this offer Mr. Hanrahan referred to the short remaining term of the lease. He informed them that there had been negotiations with the ground landlords about the purchase of the freehold and he told the plaintiffs and Mr. Binchy not to worry as the freehold could be purchased for £3,000 or perhaps less. This was not true - there had been no negotiations about the purchase of the freehold and the landlords had not at that time or any time previously been asked to indicate the price at which the freehold could be purchased. Mr. Hanrahan was basing his statements on the fact that the principal of the firm, Mr. Potterton, had previously negotiated with the landlords in respect of other premises and had done so on terms he considered favourable.

8 4. The representations were made by Mr. Hanrahan, and not by Mr. Potterton. He made them for the purpose of inducing the plaintiffs to purchase the premises. Whilst the plaintiffs undoubtedly were anxious to purchase the premises I think that the information concerning the purchase of the freehold materially induced their final decision to purchase at a price higher than that they originally were prepared to bid.

9 5. The plaintiffs failed to obtain an increase in their financial accommodation. They could only make an offer of £50,000, which the defendant firm accepted. On the 21st December 1984 the plaintiffs again returned to Athboy and signed a proposal to purchase. The agreed price for the premises was £45,000 and £5,000 for the furniture and fittings. Prior to signing the proposal form Mr. Hanrahan again assured the plaintiffs that they could probably purchase the freehold for £3,000.

10 6. The contract for sale is dated the 8 January 1985. It contained no contractual obligation on the vendor in relation to the freehold.

11 7. The plaintiffs duly went into occupation. They paid the contract price of £45,000 but not the sum of £5,000 (which was left outstanding on a promissory note). They made no effort to purchase the freehold as they were not in a financial position to do so. They got into serious financial difficulties after about 18 months and in 1986 they then decided to attempt to sell the property. For this purpose they were advised to purchase the freehold. They then discovered that the landlords price for the freehold was £40,000. In 1988 they instructed their solicitors to write claiming damages against the defendants. Shortly afterwards these proceedings were instituted.

THE LAW

12 The plaintiffs do not maintain a claim for damages for deceit - their claim is for damages for negligence. It is claimed that Mr. Hanrahan owed a duty of care to them and that this duty was breached and in support they rely on the principle established in Hedley, Byrne and Co....