High Court’s order for specific performance of 2006 contract for the purchase of property upheld by Court of Appeal

About this case:

• Judgment:
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The purchaser had argued that he was entitled to repudiate his contract with the vendor company due to the presence of a strong smell of diesel in the unit that would deter prospective tenants, however Mr Justice Hedigan agreed with the High Court finding that there was no scientific evidence of a smell, and could therefore not interfere with the order made.

Background

The commercial unit in question formed part of an office and retail development, and in 2006 Keith Cook entered into a contract to purchase it from Wyn Clons Development Ltd for €330,000 plus VAT.

Mr Cooke was buying the property in order to let it out, however prior to the completion of the purchase in March 2007, Mr Cooke was informed by his solicitor that there was a strong odour of diesel in the unit that “would be immediately apparent to any prospective tenant”. The “very strong” odour was confirmed by Mr Cooke’s estate agent, and by an engineer who was engaged to inspect the unit.

Due to the smell, Mr Cooke attempted to repudiate the contract and have his deposit returned – and in response to this, WCD instructed its solicitors to issue proceedings seeking “specific performance or damages in lieu of specific performance”.

Subsequent attempts to sell the unit fell through, and the property therefore remains in the ownership of WCD.

Court of Appeal

Counsel for Mr Cooke outlined three grounds of appeal:

(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) WCD both in 2007 and at the opening of the trial in 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 WCD in the absence of evidence that the rateable valuation of the property in question was in excess of the jurisdiction of the Circuit Court.

Decision

Justice Hedigan summarised the first ground of appeal to be a question of whether the findings of fact made by the trial judge were supported by credible evidence.

In the High Court, Justice Laffoy deemed it “impossible to find that there existed in Unit 12 a noxious smell which rendered Unit 12 unfit for human habitation or unsuitable on safety, health and welfare at work grounds for use as an office.”

According to Justice Hedigan, the key principle applicable to this case was set out in Hay v. O’Grady: “If the findings of fact made by the trial judge are supported by credible evidence, this court is bound by those findings, however voluminous and, apparently, weighty the testimony against them. The truth is not the monopoly of any majority.”

While it was clear there was a conflict of evidence, Justice Hedigan was satisfied that Justice Laffoy’s finding was based on credible evidence and therefore the Court of Appeal could not interfere with the learned judge’s finding of fact. Consequently, this ground of the appeal failed.

The specific performance case made by Mr Cooke was based upon two grounds:

Firstly, it was argued that in 2007, WCD’s solicitors wrote to Mr Cooke’s solicitors informing them that it was intending to put the property on the market after the completion notice had expired and the deposit had been forfeited. This, Mr Cooke argues was an unequivocal election for common law damages instead of pursuing specific performance.

Secondly, at the opening of WCD’s case before Justice Laffoy, counsel for WCD stated that his client was seeking damages in lieu of specific performance.

Justice Hedigan was not satisfied that WCD in 2007 unequivocally elected to abandon its specific performance rights. In his judgment, Justice Hedigan adopted the approach of the Court of Appeal in New Zealand in dealing with a similar situation; McLachlan v. Taylor 2 NZLR 277 states “It is elementary that an election at common law must be an unequivocal choice between inconsistent courses of action. We cannot read this letter as an unequivocal choice of damages rather than specific performance. If the efforts of the vendors had produced an unconditional contract by them to resell, the result might have been different. As it is, they did no more than intimate that that they were trying to resell. A mere attempt by a vendor to mitigate his position by reselling, if it proves to be fruitless, does not we think relieve the purchaser from his ordinary contractual duty or deprive the vendor of his primary remedy of specific performance.”

In finding this ground of the appeal to fail, Justice Hedigan stated that it was clear from the transcript that the the learned trial judge did not consider that the claim for specific performance had been abandoned.

In relation to the third and final ground of appeal relating to the award of costs on the High Court scale, Mr Cooke did not raise the issue of an incorrect choice of jurisdiction either in pleadings or in submissions made to the trial judge – thus the Court of Appeal could not address such an issue anew.

Mr Cooke’s appeal therefore failed on all three grounds, and the High Court’s order for specific performance was upheld.