The High Court has directed that Slaney Foods International Limited may set its taxed legal costs against the purchase price it must pay to complete a land sale to Bradshaw Foods Limited. The court left unresolved whether the remaining funds will be enough to secure the release of Bank of Ireland’s charge and complete the sale.
Mr Justice Brian J. McGovern made the order on 14 March 2017, after Bradshaw Foods applied to clarify the terms of an earlier order requiring specific performance of a contract arising from an option agreement dated 6 April 2004. The 2006 order declared that Slaney Foods had executed the contract and directed that it be carried out for €1,531,859, less the deposit. The Supreme Court dismissed Bradshaw Foods’ appeal in 2007 and affirmed that order.
The deposit was €97,699, leaving a stated balance of €1,434,160. Slaney Foods had been awarded costs in both courts. Those costs were later taxed at €332,372. By 24 November 2016, the amount due with interest had risen to €524,616. The earlier court orders did not provide for set-off.
The parties accepted that Bradshaw Foods was insolvent and unable to pay the costs award. In an affidavit for the company, Robert Bradshaw said its debt to Bank of Ireland was €1,319,277.45 as of 18 December 2015. The judgment said the company had not stated how much was needed to secure release of the bank’s charge over the lands.
The judge noted that the contract price was several times what the lands would then cost. Allowing the set-off could leave Bradshaw Foods without enough money to clear its bank debt, potentially preventing completion. But without a set-off, Slaney Foods would pay substantially more than the lands were then worth and have no prospect of recovering its costs from the insolvent company.
The court also directed that the sale be closed under the Law Society’s 2001 general conditions of sale, as provided for in the option agreement. It held that the costs set-off could be ordered after judgment, once the costs had been taxed.
The final order entitles Slaney Foods to set off the taxed costs against the purchase price due on completion. The judge did not rule on whether the bank would release its charge or whether the sale could ultimately be completed; he said those matters were for the parties and the bank.