High Court of Ireland Decisions

Flannery v. Houlihan & Anor [1987] IEHC 27 (16 December 1987)\

2760P 1985

IN THE CASE OF JOSEPH FLANNERY

AND

BY ORDER MARY FLANNERY

PLAINTIFF

AND

DESMOND HOULIHAN JAMES HOULIHAN PRACTISING AS DESMOND A. HOULIHAN & SONS SOLICITRS

DEFENDANTS

Judgment of Mr. Justice Johnson delivered the 16th day of December 1987.

This case is an assessment for damages which arises out of the following circumstances.

In 1980, the Plaintiffs who were a married couple, residing in the United States of America decided to return to Ireland and purchase a licensed premises known as the Banagher House Hotel in Banagher, Co. Offaly. The Defendants in this purchase acted as their Solicitors. The said premises were advertised as being sold with the benefit of a seven-day ordinary on-licence allowing for the sale of intoxicating liquor and it was quite clear from both the contract and the conveyance that the premises would be sold with that benefit.

The purchase price of the said premises was £54,000 and a deposit was paid of the sum of £13,500. For the purposes of the said purchase the Plaintiffs raised a loan from the Bank of some £6,000 by way of term loan. In addition they sold a house which they owned in the United States, sold another house which they owned in Ireland and returned to Ireland with their savings and their children. The second-named Plaintiff returned in August of 1980 and the first-named Plaintiff it came to light that in actual fact the premises were not entitled to any licence at all. The fact that the Plaintiffs had purchased the premises without the licence was attributed to the negligence of the Defendants which said negligence has been acknowledged.

My problem is now to assess compensation for the Plaintiffs which properly arises out of that negligence. A large number of claims under a number of different headings has been made by the Plaintiff. However, I feel that certain of these cannot survive, for example, it is clear that the sale of the said premises had been contemplated and was in process of being conducted by the Plaintiffs before they themselves were aware that the premises were not licensed. This is quite clear from the evidence of their Solicitor and the draft contract which was provided. It is further quite clear that the fact as to whether or not the premises could be ran called a hotel was quite distinct from and irrelevant to the fact as to whether or not there was a valid subsisting seven-day ordinary licence attached to the premises.

The price agreed for the sale of the said premises in 1983 was £60,000. Despite many endeavours by the Plaintiff to negotiate a subsequent sale no sale was negotiated.

There has been evidence to the fact that at the time of the purchase of the said premises all their working capital having been exhausted, the Plaintiffs obtained a term loan from the Bank for some £10,000 and a further sum of £5,000 by way of a float for a current account. By the time of the sale in 1983 their indebtedness to the Bank was some £30,000, £22,000 of which was directly attribable to the current account. No sale of the premises was negotiated and the first-named Plaintiff has continued to live in the said premises to date. The indebtedness to the Bank now amounts to some £54,000.

Mr. Finlay gave evidence that either in 1980 or 1983 the difference between the value of the premises with and without a licence would vary between £24,000 and £30,000. He also indicated that at the present moment the premises might not even be saleable.

I will award damages on the following heads.

1. The difference between the value of the premises as of the 30th of November 1983 with and without a licence £30,000, together with interest thereon of some £12,775.07 at 11%.

Interest on the term loan account which was utilized for the purchase of the said premises from the 1st of December 1983 to the 14th of October 1987, £4,388.46 being bank rate. I will make no allowance for interest in respect of the current account and the borrowings thereon. Neither will I make any award in respect of the loss of trading as it is quite clear that the trading had almost ceased prior to the discovery of the defect in the licence. The only other matter which comes to be dealt with then is the question of General Damages.

I have been referred to two cases, that of Roche and Peilow and Kelly and Crowley. Kelly and Crowley is Irish Reports 1985 at page 213 and Roche and Peilow is an unreported decision of Miss Justice Carroll delivered on the 8th of July 1986. I prefer the review of the law expressed by Miss Justice Carroll with regard to general damages in cases such as this.

This is a premises which was going to be utilized both as a domestic dwelling and as a business premises and whereas undoubtedly in embarking on a business venture certain risks are to be foreseen and to be encountered as part of the daily hazards which any such enterprise involves, one of the risks which ought not to be involved is that of discovering that a licensed premises is in actual fact not licensed.

The Plaintiffs have placed their life savings in this premises, uprooted themselves and their family from a secure situation in the United states of America and have lost a great deal of money, time and energy in this unfortunate enterprise. In addition though it may not be solely related to this case, the Plaintiffs marriage has broken down and they now live separately. One of the children has gone back to the States. And therefore through the past five to six years what started out by being a family enterprise involving the Plaintiffs returning to Ireland and sinking all their life savings in this enterprise has turned to dust. I do not think that a figure of £8,000 for general damages would be excessive under the circumstances of the case.

It has been suggested that the Plaintiff has failed to mitigate his losses and therefore allowance should be made in that regard. I am satisfied that having regard to the peculiar circumstances of the case, namely, that the Defendant was a Solicitor and having regard to the delay in discovering what was wrong with the title and then the further problems of arranging for a transfer to another Solicitor for the purpose of instituting proceedings against the Defendant that there has been no unreasonable delay on the part of the Plaintiff and therefore there has been no unreasonable failure to mitigate his loss.