Zahedi v McCann

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 09 July 2008
• Neutral Citation: [2008] IEHC 233
• Docket Number: [No. 402SP/2007]
• Court: High Court
• Date: 09 July 2008

Zahedi v McCann

IN THE MATTER OF THE VENDOR AND PURCHASER ACT, 1874 AND

SECTION 9 THEREOF AND IN THE MATTER OF A CONTRACT FOR THE

SALE OF 12, AMIENS SQUARE, DUBLIN, 1, EXECUTED ON OR ABOUT

21 st FEBRUARY, 2007

BETWEEN

MAHMOUD ZAHEDI AND NOUJ S ZAHEDI

PLAINTIFFS

AND

EAMON McCANN AND PAULA McCANN

DEFENDANTS

[2008] IEHC 233

[No. 402SP/2007]

THE HIGH COURT

VENDOR & PURCHASER ACT 1874 S9

INCORPORATED LAW SOCIETY OF IRELAND GENERAL CONDITIONS OF SALE 2001

INCORPORATED LAW SOCIETY OF IRELAND STANDARD REQUISITIONS ON TITLE 2001 REQUISITION 37

COMPANIES (AMDT) ACT 1982 S12

FLYNN & NEWMAN'S CONTRACT, RE 1948 IR 104

Judgment of

Ms. Justice Laffoy

1 delivered on the 9th day of July, 2008 .

2 In these proceedings, which were initiated by special summons which issued on 21^st May, 2007, the plaintiffs have invoked s. 9 of the Vendor and Purchaser Act, 1874 (the Act of 1874) and seek the determination of certain questions which arise out of a contract, which, for present purposes, it can be accepted came into existence on 21^st February, 2007, whereby the defendants agreed to sell to the plaintiffs at the price of €317, 500.00 Apartment No. 12, Amiens Square, Amiens Street, in the City of Dublin (the Premises). The Premises were held by the defendants under a lease dated 19^th September, 1997 (the Lease) made between Cruson Developments Limited of the first part, Amiens Square Management Company Limited (the Management Company) of the second part, Irish Intercontinental Bank Limited of the third part and the defendants of the fourth part, which created a term of 500 years from 31^st May, 1997 at a nominal rent and subject to the covenants on the part of the lessee, including the covenant for payment of service charges, and conditions therein contained.

3 The history of the transaction, insofar as it is relevant for present purposes, is as follows:-

4 · On 7^th November, 2006, the defendants' solicitors furnished, on a "subject to contract" basis, the contracts to the plaintiffs' solicitors, together with copies of the title. The contracts were in the standard form General Conditions of Sale (2001 Revised Edition) published by the Law Society.

5 · On 13^th November, 2006, the plaintiffs' solicitors raised certain queries. What is relevant for present purposes is that the plaintiffs' solicitors furnished what I understand to be requisition 37 (but was described as requisition 36) of the Law Society's standard Requisitions on Title (2001 Edition) headed "Second hand flats/second hand managed properties" and requested replies.

6 · On 22^nd November, 2006, the defendants' solicitors informed the plaintiffs' solicitors that they had asked the "Managing Agents" to reply to requisition 37 and would revert as soon as they heard from the Management Company.

7 · On 29^th January, 2007, the plaintiffs' solicitors returned the executed contracts together with the balance of the deposit to the defendants' solicitors on a "subject to contract" basis.

8 · Although the defendants had not executed the contracts, on 1^stFebruary, 2007, the defendants' solicitors requested the plaintiffs' solicitors to furnish requisitions on title and a draft deed for approval. The plaintiffs' solicitors obliged. The defendants' solicitors returned one part of the contract duly executed by the defendants together with the replies to the requisitions on title with a letter dated 21^st February, 2007. The closing date which appeared in the contract predated the coming into existence of the contract. As I understand it, it is agreed that the closing date was 16^th March, 2007.

9 · By letter dated 22^nd February, 2007, the defendants' solicitors returned requisition 37 with replies, together with an invoice and copy documentation received from the Management Company, to the plaintiffs' solicitors. I will consider these documents in detail later. Of particular significance is that the accompanying documentation included a Companies Registration Office (CRO) print-out dated 16^th February, 2007, which showed the status of the Management Company as "normal". It is accepted for the purpose of these proceedings that prior to returning the contracts and the contractual relationship coming into existence, the plaintiffs' solicitors had done a Companies Office Search and had ascertained that the status of the Company was "normal".

10 · The plaintiffs contend that on or before the 16^th March, 2007 it was agreed between the solicitors for the parties that there would be a closing by post. In truth, it was more a closing by courier and fax, but, in any event, what happened is consistent with an arrangement that the plaintiffs' solicitor would not attend in person at the defendants' solicitor offices with the balance of the purchase money. The following steps were taken by the parties on 16^th March, 2007:

11 · The defendants' solicitors sent the original documents of title and the executed assignment in favour of the plaintiffs to the plaintiffs' solicitors and requested them to hold the same on trust "pending receipt of the balance of the funds".

12 · The plaintiffs' solicitors sent bank drafts which aggregated the balance of the purchase monies to the defendants' solicitors by courier on the basis that the monies would be held in trust and to the plaintiffs' solicitors order "pending our receipt and satisfaction with all closing documents and explanation of searches".

13 · The plaintiffs' solicitors submitted their searches by fax to the defendants' solicitors and sought explanations. The only issue which arose on the searches of relevance in these proceedings arose on the CRO search in relation to the Management Company. The designation of the Management Company was given as "Strike Off Listed" and the date of that designation was given as 18^th February, 2007.

14 · The defendants' solicitors' explanation of that designation which was furnished to the plaintiffs' solicitors was: "not our client".

15 · The plaintiffs' solicitors' immediate response was that that explanation would not suffice, that the defendants' solicitors' client was a member of the Management Company and was selling the premises with all easements and rights contained in the Lease, and that they would not accept the stated position of the Management Company "without satisfactory explanation and proposed resolution from the managing agent". They also requested the defendants' solicitors to confirm that they continued to hold the purchase money in trust and to their order. That letter was sent by fax.

16 A controversy arises on the affidavits as to whether the keys of the premises were furnished to the plaintiffs' solicitors, so as to enable the plaintiffs to get possession of the Premises. The Court can not resolve that controversy.

17 · On 20 March, 2007, the plaintiffs' solicitors served a notice to complete in accordance with General Condition 40 of the contract on the defendants' solicitors.

18 · The defendants' solicitors responded by letter of 22^nd March, 2007. The essence of the response was that the plaintiffs' solicitors should take the matter up with the Management Company; they did not act for the Management Company and had no knowledge of its affairs. It was their understanding that the Management Company had not yet been struck off and, in the circumstances, it was for the plaintiffs' solicitors to deal with the matter and to make enquiries in the CRO.

19 · The plaintiffs' solicitors were not happy with that response and, by letter dated 27^th March, 2007, sought an explanation as to why the Management Company was listed for strike off, an undertaking from the Management Company that a strike off would be avoided, and an indemnity from the Management Company that the plaintiffs would not be responsible for any levies which might be incurred in relation to reinstatement of the Management Company in the register. They sought return of the purchase monies if the defendants' solicitors were not in a position to comply because the plaintiffs were incurring interest on a daily basis on the purchase monies.

20 · The defendants' solicitors responded by letter dated 29^th March, 2007, in which they contended that the contract had been complied with in full by the defendants. They made the point that the Management Company had not been struck off. It was a matter for the plaintiffs to contact the CRO or the Management Company to ascertain the position and take such action as might be required. As far as the defendants were concerned the matter was completed and they would be releasing the purchase monies to the defendants forthwith.

21 · The correspondence between the solicitors continued in a similar vein. The parties accept that the Court can not resolve the issues as to the basis on which the purchase monies were paid and whether the plaintiffs got the keys of the Premises and possession. The final letter from the plaintiffs' solicitors which has been exhibited prior to the initiation of the proceedings, a letter dated 17^th April, 2007, made the point that the status of the Management Company was integral to title and ultimately to the certificate of title which they would be required to furnish to the plaintiffs' mortgagees. In the final letter from the defendants' solicitors, a letter dated 18^th April, 2007, the...