The High Court refused to order three sets of purchasers to complete apartment purchases at Fortunes Lawn, Citywest, after finding they had no realistic means to pay the sums due. The court held that developer Aranbel Limited was entitled to damages in lieu of specific performance, but left the manner in which the cases would proceed for a further hearing.
The three proceedings concerned separate apartments bought under contracts signed in September and October 2006. The purchasers were Stephen Darcy and Linda Crampton; Seamus McGivern and Audrey McGivern; and Richard Darcy and Mary Darcy. The contracts were due to complete in 2007, with some completion notices extending deadlines into the following spring. The court said it was undisputed that by March 2008 each set of defendants was legally obliged to complete, and that they had breached their contracts by failing to do so.
Aranbel sought specific performance, which would require the purchasers to complete the sales. The defendants accepted that binding contracts existed and that they were in breach. They argued they could no longer afford to complete and asked the court to award damages in lieu instead. They also argued that Aranbel’s delay in starting proceedings should count against specific performance.
In a judgment delivered on 9 July 2010, Mr Justice Clarke said specific performance should not be ordered where there was no realistic possibility that a party could comply. A purchaser claiming impossibility because of lack of funds had to show they had no realisable assets or borrowing capacity sufficient to pay the contract price. The onus was on the purchaser to provide reasonable evidence of their financial position.
For Darcy and Crampton, a financial statement put their net assets at just over €70,000. Their apartment had been bought for €360,000, with €36,300 paid as a deposit. The court estimated that the balance, interest included, would require a payment of about €400,000. Even if they sold their family home, the judge found they would need to borrow roughly €225,000 to €250,000 and had no realistic prospect of securing that finance.
The judge said the financial position of the other two sets of defendants was no better. In the McGivern case, the evidence indicated that an inheritance received after completion fell due had largely gone towards builders’ liabilities for an extension to the family home. The court said specific performance was assessed based on the defendants’ position when the order was being considered, even if a party had contributed to their inability to complete.
The court concluded that completion was impossible for all three sets of defendants because they lacked the assets or borrowing capacity to pay the contracted sums. It therefore declined to order specific performance and held that Aranbel was entitled to damages in lieu. The judge did not determine the amount or method of assessing damages, saying counsel would be heard on how the proceedings should now progress. The delay argument was not a bar: the judge said correspondence had continued until about six months before proceedings began, and nothing had reasonably led the defendants to believe Aranbel would abandon the claims.