The High Court has sent Irish Life Assurance plc’s claim for €152,161.56 in late-completion interest against Olema Consultants to a plenary hearing, after finding the company had a fair and reasonable prospect of arguing that the contract’s 10% interest clause was an unenforceable penalty.
Mr Justice Richard Humphreys made the order on 28 July 2020 while considering Irish Life’s motion for summary judgment. He did not decide whether the interest clause was penal or whether Olema owed the amount claimed. The case will proceed to a fuller hearing, where the defendant may raise any defences it wishes.
Irish Life agreed in August 2015 to sell Olema the property at 72-74 Harcourt Street, Dublin 2, now the Iveagh Garden Hotel, for €18.15 million less a €1.815 million deposit. The contract set a six-week closing date and provided for 10% interest in default. The transaction completed on 11 November 2015, after a completion notice was served on 14 October.
The dispute arose after the Property Registration Authority furnished an amended digital map shortly before the scheduled closing. Irish Life sent it to Olema on 2 October. Olema sought a declaration confirming the property’s identity against the amended plan. Irish Life relied on a contract condition that it said meant the purchaser had satisfied itself about the property’s identity and location from the title documents. Olema’s interpretation was that the condition referred to the plan available when the contract was signed.
Irish Life first demanded €121,729.32 in interest in November 2015, then made a further demand for the same amount in January 2016. It later said it had under-calculated the interest and demanded €152,161.56 in March 2016.
Olema advanced three proposed defences: that it was not in default because the map change came from the Property Registration Authority; that the 10% rate was penal; and that there was an issue with the interest calculation. The judge focused on the penalty argument. He held that the legal rule against penalty clauses could apply to interest payable following default under a land-sale contract.
The judge said an affidavit on Olema’s behalf provided enough, though only the minimum level of evidence, to support a fair and reasonable prospect of arguing that 10% was penal. He therefore did not need to decide the calculation issue or the proposed defence concerning the map change at the summary-judgment stage.
The court remitted the action to a plenary hearing and directed Irish Life to deliver a statement of claim within six weeks.