The High Court found that Mark Walsh and Gary Wedick breached an agreement with Marlan Homes Limited by failing to obtain Dublin City Council’s consent for security needed to finance a development at Kilmore Road, Dublin. The court proposed rescinding the agreement and directing repayment of the money Marlan had paid, while reserving the precise form of the order for further submissions from counsel.
The dispute concerned a November 2006 agreement under which Marlan paid €4.925 million for development rights over three parcels of land. Walsh and Wedick owned two parcels; the third belonged to Dublin City Council and was subject to a separate agreement for a 999-year lease to the defendants, conditional on development and other requirements.
In an earlier judgment, the High Court had ruled that the defendants were required to enable security over their interests in all the site, including their rights under the council agreement. In this judgment, the court concluded that the council’s consent was necessary to make a charge over those rights effective for a lender to Marlan. The defendants had agreed to provide security over the whole site, the court said, and had taken the risk that they might be unable to do so without the council’s consent.
Marlan’s proposed construction loan from Bank of Scotland (Ireland) Limited was for €1.4 million. The bank required consent from the council to an assignment of the council agreement. Consent was not obtained, and the loan was not available on the required terms. The court found that Marlan could and would have begun construction in early 2008 if the consent had been secured, and that the defendants’ failure to procure it was the reason the contract did not proceed then.
The defendants argued that Marlan’s direct contact with the council had prejudiced the consent process. The court rejected that argument. It was not satisfied that the contact had affected the council’s position, or that Marlan could reasonably have expected it to do so. The court also found that Marlan’s delay in seeking consent did not disqualify it from rescission, while noting that the delay before late 2007 was largely Marlan’s responsibility. The council was not a party to the case, and the court made no binding determination about whether its separate agreement with the defendants remained in force.
The court held that the breach went to the heart of the development agreement and that rescission was available. It was not satisfied that delay or an inability to restore the parties to their pre-contract positions barred that remedy. It proposed rescission and repayment; the final order had not yet been settled in the judgment.