High Court: Defences relied on by builder challenging application for specific performance of contract for sale rejected
A builder who challenged an application for specific performance of the sale of his home pursuant to a contract he signed in 2014, has had all defences relied on rejected in the High Court.
About this case:
- Citation: IEHC 182
- Court:High Court
- Judge:Mr Justice Tony O'Connor
Describing the man as “a poor and self-serving historian with little consideration for the effects on others as a result of his story telling”, Mr Justice Tony O’Connor said the wholly uncorroborated allegation that a now deceased solicitor knew of an alleged cash payment arrangement was evidence of the level to which the man would stoop.
Gavin Crowley built his home in Kilsallaghan, Co Dublin in 2003. The construction cost approximately €600,000 and the court heard that his father contributed around €50,000 towards the cost of building the house and additional “granny flat”. Mr Crowley lives in the house with his partner along with his father.
In 2006, the house was valued at €1.5 million and Mr Crowley accepted an interest-only home loan of €750,000 from Bank of Scotland. In 2008, Mr Crowley accepted a further advance loan of €250,000.
The collapse of the property market led to Bank of Scotland appointing receivers over Mr Crowley’s home and other properties. As of October 2012, Mr Crowley owed €997.482 to Bank of Scotland pursuant to the loans secured by his home.
It was agreed with Bank of Scotland that Mr Crowley would sell the house himself.
Brian Leggett viewed the house twice, and in October 2013, Mr Crowley’s auctioneer confirmed that he had accepted an offer of €475,000 from Mr Leggett. November 2013, the sale price was renegotiated down to €460,000.
In early 2014, contracts were signed by both Mr Crowley and Mr Leggett.
In February 2014, Bank of Ireland wrote to Mr Crowley stating: “You must provide cleared funds in the sum of €445,887.20 to Bank of Scotland plc in order for the bank to release the secured property from its mortgage and charge.”
In March 2014, Mr Crowley attempted to refund the deposit paid by Mr Leggett, and thereafter Mr Leggett’s solicitors registered a caution on the folio.
Mr Leggett commenced the present proceedings in 2014, seeking specific performance of the contract.
In the High Court, Mr Crowley relied on two separate defences:
- That there was never any agreement as he did not recollect signing the contract. The situation now is that no one disputes the existence of the written contract.
- That specific performance should not be granted because:
- it was an illegal contract;
- impossibility; and
Mr Crowley alleged that the contract for sale was unenforceable because it was an illegal contract due to the cash payment that was agreed between the parties with the intention of defrauding the Revenue.
Mr Leggett argued that the issue of illegality did not arise because he did not agree to make an additional cash payment to Mr Crowley.
Mr Crowley alleged that Mr Leggett had offered to pay the asking price of €525,000, and that the remainder would be paid in cash – however this was vehemently denied by Mr Leggett. Mr Justice O’Connor said there was “not a shred of corroborating evidence to support these serious allegations”.
Further, Mr Crowley alleged that the cash payment arrangement was known by a now deceased solicitor for Mr Leggett – but Mr Justice O’Connor said this was further evidence of the level to which Mr Crowley would stoop. Mr Justice O’Connor said it did Mr Crowley “little credit to impugn the professional reputation of a deceased professional in the way that he has done, whether to secure his home or whatever arrangement he wants to achieve with BOS”.
Mr Justice O’Connor said that in the context of these proceedings, he did not need to consider whether Mr Crowley “committed perjury, is delusional or suffers from a memory alteration due to strained circumstances”, and that the balance of probabilities was the relevant standard of proof.
Mr Justice O’Connor described Mr Crowley as “a poor and self-serving historian with little consideration for the effects on others as a result of his story telling”.
On the balance of probabilities, Mr Justice O’Connor found that Mr Crowley did not agree to cash payments in addition to the final contract price of €460,000. Therefore, Mr Crowley could not rely on illegality as a ground of defence.
Mr Crowley argued that specific performance should not be granted where Mr Crowley is unable to extinguish the interest of a third party in the land. Mr Crowley referred to an alleged ongoing trespass onto the lands of the adjoining owner. Mr Justice O’Connor was however satisfied that there was no evidence of a continuing dispute, that Mr Leggett was aware of the risk and accepted the disclosure for the closing of the sale.
Mr Crowley further referred to the “unascertained position” of Start Mortgages, the successor of BOS.
Mr Justice O’Connor explained that Mr Crowley effectively sought to rely “on a possibility that Smart Mortgages may not accept the net proceeds while not adducing any evidence that Smart Mortgages will do that”. It was noted that Smart Mortgages had a representative in court, and Mr Justice O’Connor said Mr Crowley could not rely on his own default with a third party without establishing on the balance of probabilities that Smart Mortgages would not release its security at the closing of the sale to Mr Leggett.
Mr Crowley sought to rely on Mr Justice Frank Clarke’s obiter comments In Aranbel Ltd v Darcy & Ors  3 IR 769;  IEHC 272, and argued that “if hardship is to be considered in the light of the loss of a family home it hardly matters if that home is lost by the Defendant acting as a vendor as opposed to a purchaser”.
Mr Justice O’Connor said this was a forced argument. He added that, noting Mr Crowley had entered into a contract for the sale of his family home and was now arguing that specific performance of that contract would cause him hardship due to the loss of his family home, the hardship alleged must be external to the contract to preclude performance of the contract. It was also unclear if Mr Crowley alleged that hardship existed at the time of the execution of the contract or whether the hardship arose subsequently.
In all the circumstances, Mr Justice O’Connor was satisfied that Mr Crowley willingly entered into the contract in an effort to deal with Bank of Scotland. He said that the law said the Court should look at matters at the time of the contract except in exceptional circumstances – and that none arose here.
Proposing an order for specific performance, Mr Justice O’Connor invited the parties to make further submissions and the owners of the charge to make representations before finalisation.
- by Seosamh Gráinséir for Irish Legal News