Friday 13 February 2009

€400,000 deposit on land deal forfeited

THE HIGH Court has ordered the forfeiture of a €400,000 deposit paid over as part of a €4 million housing land purchase deal in Co Cavan.

Mr Justice Roderick Murphy yesterday ruled that Thomas Lynch, the seller of the lands, is entitled to forfeiture of the deposit and to resell the lands because of the failure of the proposed purchasers to expedite a planning application in accordance with the terms of the purchase contract.

The judge found that Desmond and Pauric Duffy had not complied with a strict term of the contract which they signed in April 2007 with Mr Lynch in relation to the sale of two lots of land at Lisnarsaran, Cootehill. The purchase price of €4 million was also to include a leasehold interest for part of a property formerly known as Cootehill Workhouse.

The sale was to be completed by October 31st, 2007, on condition that planning permission for houses on the land had issued. The contract provided the Duffys had to use “all reasonable endeavours” to secure planning permission by that date.

If planning permission had not issued by June 30th, 2007, the Duffys were liable to pay 5 per cent interest per annum on the balance (€3.6 million) of the purchase price up to October 31st, 2007. If there was no permission by then, the contract provided either party may thereafter terminate the contract and the Duffys could be refunded their deposit without deduction, interest, costs or compensation.

A valid planning application was lodged on October 24th – days before the deadline – and the Duffys’ lawyers wrote seeking the return of the deposit, saying it was not anticipated permission would be issued before October 31st.

The High Court was asked to decide whether the Duffys had breached the planning permission condition in the contract in relation to having used “all reasonable” endeavours to get permission as soon as possible.

It was also asked to determine whether Mr Lynch was entitled to rely on a condition in the contract that, if planning permission was not obtained, he could then resell the property and forfeit the €400,000 deposit.

In his judgment yesterday ruling in favour of Mr Lynch, Mr Justice Murphy said it was clear the Duffys were obliged to use all reasonable endeavours to ensure the planning was successful by the deadline set.

Mr Justice Murphy ruled the Duffys had not complied with their obligations under the contract.

Irish Times

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