Land deal falls through due to misrepresenation by estate agent

Brendan Burgess

Brendan Burgess

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There is an interesting article in today's Sunday Business Post where an estate agent had misled the purchaser on planning issues.

The purchaser discovered that that the representations were untrue and refused to close the sale. The High Court refused to enforce the purchase.

I don't know if this has any significance for auctioneers' brochures which carry declarations that they do not form part of the sale.

Auctioneer: Martin Swanton
Plaintiff: Vincent Kelly
Defendent: John Simpson

Sorry, I can't find a link to the story in the SBP.

Brendan
 
I've read the judgment in this case and am bewildered.

It seems that the auctioneer ( as agent for the vendor) and the purchaser were both willing to do whatever it took. It seems that the purchaser was well known to the vendor and a businessman, so not stupid. Both vendor and purchaser were legally represented. A contract was signed but the closing date was pushed back continuously.

I don't get the price thing - the price was what the purchaser was willing to pay and he was independently represented.

So, I come to the conclusion that Judge Charleton was not willing to use his power to force the purchaser to complete - on the grounds that he who comes to court seeking equity must come with clean hands.

I don't think it helps your average purchaser on a new build though.

mf
 
It states in the article that contracts were not signed so to me there is no contract. Which is why it is unenforceable. The high jinks going on in relation to planning permission was used by the judge to make a warning to professional people to be careful what they are at but maybe MF1 is correct the fact that the parties didn't come to court with clean hands means the contract cannot be enforced because to look for justice one should have acted honestly originally. I think that's what he means.
 
The judge said "Were it not for what follows, I would be satisfied that the plaintiff and the defendant had entered into an otherwise enforceable contract for the sale of this property" so contracts had been exchanged.

It's an unusual case but I note the judge reiterated "There may also be exceptional cases where hardship requires a court to override legal principles even though the contract was, at that time of its formation, fair and proper but where to enforce it would cause unusual and exceptional hardship"

I thing this will be jumped on by purchasers of new builds and I agree with mf1 in this the judge didn't want to grant specific performance and I think others might not wish to either and might use the hardship raeson not to do so.

In relation to the price I think the issue of misrepresentation regarding the planning was the key as arguably most properties in Ireland sold in the last couple of years were represented as more valuable than they were!
 
"1. Mr Simpson agreed to buy it, and signed a form registering his interest, but did not pay the €150,000 deposit

2. Contracts were exchanged, but not signed"

FKH despite what the judge said, and this is all based on an article so one must be careful. But the article makes those two points. So I think that even though a different reason was given for making the judgement that actually no deposit was paid and no contracts signed based on my reading of the article. But I defer to the learned judge. If this ruling is as the legal eagles outline then it will have to be appealed as if people can get out of contracts due to hardship then contract law would cease to exist as we know it.
 
In broad terms, a property contract is deemed to exist when contracts are signed, exchanged and a deposit paid. In tricky cases, ( and this would appear to be one of them) notwithstanding the above, a contract can be deemed to have come into existence, based on the behaviour of the parties.

So the Court found there was a contract but would not enforce it.

"If this ruling is as the legal eagles outline then it will have to be appealed as if people can get out of contracts due to hardship then contract law would cease to exist as we know it."

An appeal will cost a lot of money. And I don't understand the last bit. There was no hardship demonstrated in the case.

mf
 
Bronte, you need to read the actual judgment here, the article is incorrect.

http://www.courts.ie/Judgments.nsf/...1e8d8143235a747d8025751400541d27?OpenDocument

"After some negotiation, the contract was returned to the vendor by the purchaser with the closing date, as originally specified on 31st July 2007, crossed out and with the date of 18th September 2007 substituted by the defendant as purchaser.... In any event, on 29th August, 2007 the vendor returned to the purchaser a copy of the signed contract with the completion date of 18th September 2007 unchanged"

A written contract existed in this case and the misrepresentation by the auctioneer was why specific performance wasn't ordered.

Specific Performance is an equitable remedy which is at the discretion of the judge and hardship is a defence to it being ordered (admittedly in the past in exceptional cases). (http://en.wikipedia.org/wiki/Specific_performance for a brief introduction)

It is my own opinion that this defence will be raised in future actions for specific performance and may allow judges a reason not to order specific performance but not relevant to that case. Even though it was only applied in the past to extreme hardship. (Patel -v- Ali from 1984 is one of the main cases in the area)

 
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