Wyn Clons Development Ltd v Cooke

JurisdictionIreland
CourtCourt of Appeal (Ireland)
JudgeMr. Justice Hedigan
Judgment Date04 November 2016
Neutral Citation[2016] IECA 317
Date04 November 2016
Docket NumberNeutral Citation Number: [2016] IECA 317 Appeal No. 2014/719

[2016] IECA 317

THE COURT OF APPEAL

Hedigan J.

Peart J.

Hogan J.

Hedigan J.

Neutral Citation Number: [2016] IECA 317

Appeal No. 2014/719

BETWEEN
WYNN CLONS DEVELOPMENT LTD
PLAINTIFF / RESPONDENT
-AND-
KEITH COOKE
DEFENDANT/APPELLANT

Property & conveyancing – Contract for sale of commercial unit – Failure to complete alleging odour of diesel – Specific performance order

Facts: The appellant had been in negotiations to purchase a commercial unit from the respondent. Prior to completion he was alerted to a strong smell of diesel at the unit and, on that basis, he sought to repudiate the contract. The respondent sought an order of specific performance, which the High Court granted. The matter now came on appeal to the Court of Appeal.

Held by Mr Justice Hedigan, the other Justices concurring, that the appeal would be dismissed. The respondent could not be said to have abandoned its specific performance rights in the manner the appellant alleged. Whilst there was some evidence a smell was present, this did not support a finding that the premises were unfit for use. An argument as to costs was not raised at first instance, and therefore would not be entertained on appeal. McLachlan v. Taylor [1985] 2 NZLR 277 applied.

JUDGMENT of Mr. Justice Hedigan delivered on the 4th day of November 2016
Background
1

This is the defendant's appeal against an order made in the High Court on the 10th October, 2012, by Laffoy J. The order was for specific performance of a contract for the purchase of a commercial unit. Judgment was given on the 1st October, 2012. The appellant's counterclaim was dismissed.

2

The commercial unit in question formed part of an office and retail development. The agreed price was €330,000 plus VAT in 2006. Prior to the completion of the purchase in March 2007, the appellant was informed by his solicitor that there was a strong odour of diesel in the unit. An engineer was engaged to inspect and confirmed the existence of a strong smell of diesel. In April, 2007 the appellant attempted to repudiate the contract and have his deposit returned. A plenary summons issued on the 5th March, 2008. A defence and counterclaim were delivered on the 3rd September, 2009. The following helpful chronology of events was set out in the appellant's submissions.

Chronology of Events

August, 2006 The appellant agreed, subject to contract, to purchase the office unit (Unit 12) at the price of €330,000 plus VAT and paid a booking deposit.

5th December, 2006 A contract for sale and a building agreement were executed on behalf of the respondent, with a closing date of seven days after the completion date.

9th January, 2007 The respondent's solicitors notified the appellant's solicitors that they had the certificate of completion.

21st February, 2007 The appellant's solicitors sought confirmation that there were no workmen any longer on the premises, and stated that the appellant would then have the premises ‘snagged’.

22nd February, 2007 The respondent's solicitors informed the appellant's solicitors that Unit 12 had been completed.

End of February, 2007 Title matters and other contractual matters were attended to by the respondent's solicitors.

8th March, 2007 The appellant's solicitors furnished the appellant's snag list to the respondent's solicitors. Various correspondence occurred about whether a parking space was being acquired with the unit.

29th March, 2007 The principal of the appellant's solicitors visited Unit 12 and detected a ‘very strong odour' of diesel, and telephoned his client and suggested that the appellant engage an engineer.

29th March, 2007 The appellant's solicitors wrote to the respondent's solicitors reporting the smell, but it appears that the letter got lost in the DX system or otherwise went astray.

31st March, 2007 Mr. Lunn of Dunbar Lunn, Civil and Structural Consulting Engineers visited Unit 12 and reported that ‘[o]n entering the office we were struck by an odour which we concluded to be the same smell emanating from diesel fuel. No source for this odour could be found and inspections in adjacent offices found no odour present.’

17th April, 2007 The respondent's solicitors issued a notice under Condition 40 of the Law Society General Conditions requiring payment of the balance of the purchase monies. By letter on this day the appellant's solicitors informed the respondent's solicitors that, because of the ‘strong smell of diesel or kerosene in Unit 12’, the appellant did not wish to complete the transaction and informed the respondent that the appellant was repudiating the contract because of a breach of contract, inter alia, and sought return of the deposit of €33,000.

20th and 25th April, Mr. Mooney, of Mooney Estates Ltd., a firm of auctioneers and

2007 estate agents practising in Gorey, inspected Unit 12 to determine the projected rental income it would yield and the likely demand for it, but reported on 25th April, 2007, that after two visits on these dates the position was that it would be extremely difficult, if not impossible, to rent the unit, ‘as the aforementioned odour would be immediately apparent to any prospective tenant’. Mr. Mooney confined that the smell was ‘very strong’ on his second visit.

1st May, 2007 While rejecting the entitlement of the appellant to pull out of the transaction because of an alleged smell, the respondent wrote that it intended forfeiting the appellant's deposit if the sale was not completed and putting the property back on the market, and thereafter the respondent would seek redress from the appellant for any financial loss.

9th May, 2007 The respondent's solicitors informed the appellant's solicitors that they had been given instructions to issue proceedings seeking specific performance or damages in lieu of specific performance. However, they suggested an ‘independent review’ of Unit 12.

29th June, 2007 The respondent's solicitors nominated two professionals to conduct the independent review and inquired as to the appellant's preference.

3rd August, 2007 The appellant's solicitors indicated that they had no difficulty with either nominee ‘as the smell in the unit is still very pungent’.

28th September, 2007 The appellant's solicitors complained that they had not had a response to the letter of 3rd August, 2007, and stated that the smell ‘up to the last few days was extremely bad’. They sought return of the deposit and ‘a mutual rescission of the contract’.

8th October, 2007 The respondent's solicitors wrote to the effect that the deposit had been forfeited and they expected to serve proceedings for specific performance shortly.

5th March, 2008 The plenary summons issued.

Late 2008 The respondent put the property back on the market and Kinsella Estates, on behalf of the respondent, agreed the sale of Unit 12, subject to contract, to a third party at the price of €300,000 plus €10,000 for a car park space. However, that sale subsequently fell through. If it had proceeded, the respondent's loss would have been mitigated. Unit 12 remains in the ownership of the respondent.

3rd September, 2009 Defence and counterclaim delivered.

April, 2011 Dr. O'Callaghan for the respondent carried out tests and found no hydrocarbons present.

June, 2011 Mr. Mooney, estate agent, re-visits the property and confirms the smell had ‘paled into insignificance compared to what it was in 07’.

3

At the hearing of this appeal, counsel for the appellant outlined three grounds of appeal upon which the appellant relied.

(i) The trial judge's finding on the core issue of the existence of a smell was contrary to the weight of the evidence.

(ii) The respondent both in 2007 and at the opening of the trial on 6th October, 2011, abandoned their claim for specific performance and elected to sue for damages in lieu. Thus the trial judge had no jurisdiction to grant an order of specific performance.

(iii) The trial judge should not have awarded High Court costs to the respondent in the absence of evidence that the rateable valuation of the property in question was in excess of the jurisdiction of the Circuit Court.

Appellant's Submissions
4

On the first ground the appellant relies upon the principles set out by the Supreme Court in Hay v. O'Grady [1992] 1 I.R. 210. These principles were summarised by Ryan P. in Emerald Isle Assurances v. Dorgan [2016] IECA 12 at para. 31 as follows:-

‘(a) Were the findings of fact made by the trial judge supported by credible evidence? If so, the appellate court is bound by the findings, however voluminous and apparently weighty the testimony against them.

(b) Did the inferences of fact depend on oral evidence of recollection of fact? If so, the appeal court should be slow to substitute its own different inference.

(c) In regard to inferences from circumstantial evidence, an appellate court is in as good a position as the trial judge in that regard. Did the judge draw erroneous inferences?

(d) Was the conclusion of law drawn by the trial judge from a combination of primary fact and proper inference erroneous? If so, the appeal should be allowed.

(e) If, on the facts found and either on the inferences drawn by the trial judge or on the inferences drawn by the appellate court in accordance with the principles set out above, it is established to the satisfaction of the appellate court that the conclusion of the trial judge as to whether or not there was negligence on the part of the individual charged was erroneous, the order will be varied accordingly.’

5

On the second ground, the appellant argues that the respondent unequivocally waived its right to specific performance and opted for a suit in damages in its original correspondence when it forfeited the deposit and placed the property on the market. Moreover at the outset of the hearing the respondent informed the trial judge that it was seeking...

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