The High Court has ruled that Padraic Rowley has no proprietary claim to a €267,500 deposit paid during negotiations to buy premises owned by Protim Abrasives Limited, which is in liquidation. The money, held in the company’s former solicitors’ client account, must be transferred to the official liquidator for use in the winding up.
The judgment, delivered by Mr Justice Kevin Feeney on 19 February 2013, arose from an application by the liquidator for directions under section 231(3) of the Companies Act 1963. The parties accepted that no valid or binding contract for the sale of Protim’s fee simple interest in land at Tolka Industrial Park, Ballyboggan Road, existed. The judge determined that issue on that agreed basis.
The dispute was over who was entitled to the deposit. Rowley had sent the money with an amended draft contract in February 2008. His solicitors’ letter said no contract would exist until both copies were signed, exchanged and the deposit paid in full. After a meeting in May, a company representative signed the amended contract, but it was sent to the company’s auctioneers, not to Rowley or his solicitors. On 4 June 2008, Rowley’s solicitors said he would not proceed and asked for the deposit back. The money was not returned.
Rowley argued that the company’s solicitors had received the deposit as stakeholders, holding it for both sides, and that the Law Society’s 2001 General Conditions of Sale applied. The liquidator argued that, without a contract or an agreement to the contrary, the company’s solicitors received the money as the company’s agent.
The judge held that a vendor’s solicitor ordinarily receives a deposit as the vendor’s agent unless the parties expressly or implicitly agree otherwise. He found no such agreement here, and no agreement that the Law Society conditions would apply despite the absence of a concluded sale contract. The judgment also noted that Rowley’s own earlier court pleadings described the negotiations as subject to contract and said no binding contract would exist until signed contracts were exchanged.
The court concluded that the deposit was treated as having reached the company. Rowley had no lien, charge or other equitable or proprietary interest in it. He was an unsecured creditor, and the solicitors were directed to pay the money to the official liquidator for the winding up. The ruling addressed the competing entitlement to the deposit; it did not find that a sale contract had been completed.