The Court of Appeal ruled that net proceeds from the sale of the last unit at Maynooth Business Campus must be remitted to the secured creditor, rather than used to repair the campus’s underground car park. The court allowed an appeal against High Court orders directing that the sale proceeds fund remedial works, and dismissed the management company’s cross-appeal.
The dispute concerned the 2001 Management Agreement between the landowners, developer Glenkerrin Homes and Maynooth Business Campus Management Limited. The underground car park was found by the High Court to have structural defects, but the full extent and cost of works could not be established without further investigation. The High Court had ordered an intrusive investigation and required the net proceeds from the sale of Block C and the Link Building, known as Unit C, to be held and spent on remedial works.
The Court of Appeal held that the management company’s claim for completion or repair works was a contractual claim against the insolvent developer, not a proprietary claim to Unit C sale proceeds. The proceeds were subject to the prior charge and debenture securing the debts owed to National Asset Loan Management (NALM). The court said the receivers were required to remit the net proceeds to NALM and were not required to use them first for the car park.
The court also rejected the High Court’s conclusion that the receivers had adopted the Management Agreement and thereby become responsible for Glenkerrin’s obligations. Continuing to sell units with easements and taking steps to improve sale value did not, by itself, make the receivers personally liable under the pre-appointment agreement. The receivers had expressly excluded personal liability in the Unit C sale contract and easement lease.
On the management company’s cross-appeal, the Court of Appeal upheld the implied term requiring it to execute easement leases to facilitate each unit sale. It ruled that the company was not entitled to refuse to sign the Unit C lease pending undertakings about car park repairs or an escrow arrangement. The court also set aside the High Court’s implied term requiring a 28-day completion notice for transfer of the common areas as soon as practicable after the last unit sale. Under the agreement, the developer could serve that notice within the perpetuity period.
The appeal court left intact the High Court’s assessment of the car park evidence, finding that the trial judge could consider its condition in resolving the dispute. It did set aside the finding that receivers or their solicitors had deliberately allocated some surface parking spaces to multiple purchasers, citing the absence of a pleaded allegation and the failure to give witnesses a chance to address that concern. The parties were invited to make written submissions on appeal and High Court costs; no costs ruling was made in this judgment.