The Court of Appeal has upheld an order requiring Promontoria (GEM) DAC to complete a €6 million settlement releasing loans and security over four development properties in Cork. It set aside a separate €20,000 award of exemplary damages to developer Declan O’Mahony.
In a judgment delivered on 19 February 2020, Ms Justice Máire Whelan said the High Court was entitled to find that the parties had made a binding agreement in June 2017. Promontoria had appealed the High Court’s 2018 orders, which granted specific performance, invalidated its notice terminating a 2014 settlement and dismissed a counterclaim against Diamond Developments Limited.
The dispute followed negotiations over the release of the remaining secured assets. O’Mahony offered €6 million in May 2017. The Court of Appeal upheld the trial judge’s conclusion that a 20 June email from Promontoria’s agent, Capita Asset Services, confirmed the deal’s essential terms. The terms included payment by 31 August and a deposit, initially set at 10 per cent and later varied to €60,000. The court said the later deposit negotiations and a change in the legal mechanism for completing the transaction did not undo the agreement.
Promontoria argued that the June email was a counter-offer, that the deposit and transaction structure were material terms, and that the respondents could not show they were ready, willing and able to complete. The Court of Appeal rejected those grounds. It said the relevant date for assessing readiness was when proceedings began, on 25 August 2017, and upheld the trial judge’s finding that funding arrangements were on track until Promontoria said it would not proceed. The court also upheld the conclusion that the 7 September termination notice was invalid.
The court found that the trial judge correctly applied the law on Promontoria’s decision not to call witnesses. Given the evidence and the circumstances of the cross-examination, the trial judge was entitled to infer that the absent witnesses could not support Promontoria’s case. The appeal court found no partiality in the trial judge’s approach.
However, it set aside the exemplary damages award. It held that punitive damages are not generally available for breach of a private contract alone, and that the cross-examination and conduct of the defence did not justify such an award. The court said the cross-examination was professional and within the appellant’s rights. It therefore affirmed the High Court orders apart from the €20,000 award.