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Cite as: [2013] IEHC 464
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Judgment Title: Park East South East Construction Limited & anor -v- Benesch & anor Neutral Citation: [2013] IEHC 464 High Court Record Number: 2009 5391 P Date of Delivery: 25/10/2013 Court: High Court Composition of Court: Judgment by: Laffoy J. Status of Judgment: Approved |
Neutral Citation: [2013] IEHC 464 THE HIGH COURT [2009 No. 5391 P] BETWEEN PARK EAST SOUTH EAST CONSTRUCTION LIMITED AND M.P.T.J. (WATERFORD) DEVELOPMENTS LIMITED PLAINTIFFS AND
ANTHONY BENESCH AND EIMEAR BENESCH DEFENDANTS Judgment of Ms. Justice Laffoy delivered on 25th day of October, 2013. The proceedings in outline 2. The first named defendant (Mr. Benesch), who is a carpenter by trade, had been successful in developing a kitchen unit manufacturing business. He conducted his business through a limited company, Anthony Benesch Fitted Kitchens Limited (the Benesch Company). The Benesch Company and Mr. Benesch were clients of the Fitzgerald Fleming partnership. The second named defendant (Mrs. Benesch) is the wife of Mr. Benesch. 3. The agreements which are the subject of these proceedings are the following:
(b) a building agreement, which was also dated 20th December, 2007 (the Building Agreement), expressed to be made between Mr. Benesch and Mrs. Benesch, as employer, and the Building Company, as contractor, for the building of Unit 1 and Unit 2 at a contract price of €303,300 together with VAT at 13.5%. 5. A fact which is of some relevance to the lines of defence advanced on behalf of Mr. Benesch is that by two Share Purchase Agreements dated 15th August, 2008, the Fitzgerald family shareholding in both the Vendor Company and the Building Company was sold to David Flynn Limited (the Flynn Company), which, in reality, was the construction company which built the units and the infrastructure on Park East, whereupon Mr. Fitzgerald’s control over Park East ceased. Park East and its development 7. Mr. Benesch committed to acquire 3,000 sq. ft. of accommodation within the development, which was to comprise two units. I am satisfied on the evidence that the planning application, when it was ultimately submitted, addressed his requirements and, despite his contention to the contrary, was suitable for his intended purposes. As will appear later, Mr. Benesch was committed contractually to the plaintiffs before the planning application was submitted to the planning authority. 8. That did not occur until 24th January, 2008. The application was successful. Following the issue of notice of intention to grant planning permission on 14th March, 2008, an appeal was lodged to An Bord Pleanála. However, the appeal was disposed of expeditiously. The grant of planning permission for the development of nine units was issued on 2nd May, 2008. A commencement notice was served on behalf of the Building Company and was received by South Tipperary Fire Service on 24th July, 2008. The development commenced in August 2008, contemporaneously with the acquisition of the Vendor Company and the Building Company by the Flynn Company. The period of construction continued until January 2009. Brian McCarthy & Associates, Consulting Engineers, issued a certificate of practical completion in relation to the nine industrial units and the associated site works to the Flynn Company on 11th January, 2009. 9. Unfortunately, as counsel for the plaintiffs characterised it in opening the plaintiffs’ case, the project became very much “a tale of boom and crash”. As I understand the evidence, none of the purchases of the nine units was completed and all of the nine units remain unoccupied. Mr. Benesch’s business has collapsed and he is now reliant on social welfare payments to support himself and his family. Documented interaction between solicitors for the plaintiffs and the solicitors for Mr. Benesch
11. Following receipt of the letter of 5th September, 2007, DS raised a query in relation to maps attached to the contract for sale and that was responded to by KHF and the response was implicitly accepted by DS. By letter dated 26th October, 2007, DS sent KHF the Contract for Sale in duplicate, the Building Agreement in duplicate and a cheque for €10,000 in respect of the agreed deposit. Both agreements were executed by Mr. Benesch, but not by Mrs. Benesch. Up to this point all correspondence between the solicitors was headed “Subject to Contract/Contract Denied”. The next letter was dated 20th December, 2007 and it was from KHF to DS and it merely stated:
12. As regards the Contract for Sale, the front page referred to the Law Society’s then General Conditions of Sale (2001 Edition). Apart from the front page, it consisted of five pages: the usual Memorandum of Agreement on the first page; Particulars and Tenure, Documents Schedule and Searches on the second page; Special Conditions on the third and fourth pages; and a Plan of the estate and the units on the fifth page. Although the General Conditions of Sale were not actually attached, it is clear beyond doubt that the Contract for Sale incorporated the General Conditions of Sale, because Clause 2 of the Special Conditions provided that they should apply insofar as they were not altered or varied by the Special Conditions. I would have reached that conclusion even if there was not evidence before the Court of a solicitor, Mr. Peter Cusack of KHF, to the effect that the prevailing practice among solicitors at the time was of not attaching prints of the General Conditions of Sale. A fact to which counsel for Mr. Benesch sought to attach some significance was that, while the part of the Contract for Sale sent to DS on 20th December, 2007 was executed by Sandra Gough, the wife of Mr. Fitzgerald and a director of the Vendor Company, whose signature was witnessed by Pamela Burke, on behalf of the Vendor Company, Sandra Gough had not actually signed the counterpart thereof retained by KHF. I consider that that omission is wholly irrelevant and that the Vendor Company was bound and the Contract for Sale came into existence when the letter of 20th December, 2007 and enclosures was sent by KHF to DS. The part of the Contract for Sale which was returned to DS with the letter of 20th December, 2007, unlike the counterpart which was retained by KHF, did not show the date thereof at its commencement as being 20th December, 2007. That omission, in my view, is also of no consequence. It is quite clear that the effective date of the Contract for Sale was intended by the Vendor Company and its solicitors to be the 20th December, 2007 and DS accepted that without demur. 13. As regards the Building Agreement, the part thereof returned by KHF to DS was not actually executed on behalf of the Building Company, whereas the counterpart which was retained by KHF was executed by Wayne Fitzgerald, a director of the Building Company, on behalf of the Building Company and his signature was witnessed. Once again, in my view, the omission in the execution of the part of the Building Agreement which was sent to DS is irrelevant. It is quite clear that the Building Company was bound by the Building Agreement when it was returned by its solicitors to DS with the letter of 20th December, 2007. The exchange referred to in the letter of 5th September, 2007 was effected by DS sending both parts of both contracts executed by Mr. Benesch together with the deposit with their letter of 26th October, 2007 and by KHF retaining the deposit and returning one part of each contract to DS with the letter of 20th December, 2007 and unequivocally, as solicitors for the Vendor Company and the Building Company, indicating that the contracts had been signed on behalf of the vendor and the contractor. No issue was ever raised by DS in relation to the omission of signatures on behalf of the Building Company on the executed document returned to it. It is clear from the subsequent correspondence that it was accepted by DS that the Contract for Sale and the Building Agreement had come into existence on 20th December, 2007. That, in my view, is what had happened. 14. In relation to the format and contents of the Building Agreement, it was described on the front page as Building Agreement (2001 Edition) issued jointly by the Law Society and the Construction Industry Federation. Apart from the front page it contained only two pages, which set out the principal terms of the agreement. There was not attached to it the General Conditions, but it was clearly intended that the General Conditions should apply. For instance, it was stated in Clause 1 that the building of the works would be carried out in accordance with conditions 1 – 17, with the only variation being that Condition 6(a), the price variation clause, was deemed to be deleted. That was an obvious reference to the General Conditions, notwithstanding the absence of the word “General”, because the 2001 Edition of the General Conditions contained seventeen clauses and Clause 6(a) dealt with price variation. Accordingly, I find that the General Conditions, subject to the variation agreed to, were incorporated by reference in the Building Agreement. 15. Neither the Contract for Sale nor the Building Agreement was expressed to be conditional on Mr. Benesch obtaining loan approval or being in a position to draw down finance to complete the acquisition. Although the evidence of the solicitor in DS at the time, who was dealing with the transaction and who testified, did not cover this point, I am satisfied that the evidence establishes that prior to the execution by Mr. Benesch of the two contracts he had received loan sanction from Bank of Ireland for two loans, one to be secured on a residential property which he already owned, and the other, a commercial loan, to be secured on Unit 1 and Unit 2. Mr. Fitzgerald acknowledged that he had organised the finance for purchasers of the units in Park East, including Mr. Benesch, all of whom were clients of Fitzgerald Fleming. Subsequently, by e-mail dated 11th April, 2008, an official of Bank of Ireland informed an accountant in Fitzgerald Fleming that certain named individuals had “been approved funding to help fund purchases of commercial units at Ballylynch” and Mr. Benesch and Mrs. Benesch were named as having been approved funding. The deposit of €10,000 which accompanied the letter of 26th October, 2007 from DS to KHF was drawn down from the finance sanctioned by Bank of Ireland. 16. Following the change of ownership of the shareholding in the Vendor Company and the Building Company, McMahon O’Brien Downes (MOD) wrote to DS on 17th September, 2008 advising that they now acted for the Vendor Company and the Building Company in connection with the sale to Mr. Benesch of Unit 1 and Unit 2. 17. The next item of correspondence was a letter of 17th December, 2008 from MOD to DS stating that construction of Unit 1 and Unit 2 would be completed in early January and that the properties would “be available for inspection and snag lists on the week commencing 12th January, 2009”. By a further letter dated 13th January, 2009, McMahon & O’Brien(MO), who succeeded MOD as solicitors for the Vendor Company and the Building Company, informed DS that Unit 1 and Unit 2 were then completed. DS was requested to furnish Mr. Benesch’s address and lending institution “for the purpose of the block insurance policy”. In response, by letter dated 19th January, 2009, DS informed MO that their clients (Mrs. Benesch being named as one of the purchasers at the time) were unable at the time to draw down the loan funds necessary to allow them to purchase Unit 1 and Unit 2 and had instructed DS to advise MO that they were no longer in a position to complete the purchase. As counsel for the plaintiffs emphasised, no other explanation for failure to complete was proffered on behalf of Mr. Benesch until the defence and counterclaim was delivered in these proceedings. The immediate response of MO, by letter of 22nd January, 2009, was that there were binding and unconditional contracts in place and that, unless they received confirmation that Mr. Benesch would proceed to complete in the normal manner, “an action for specific performance and/or damages” would be initiated. There was no response from DS. 18. Eventually, on 4th March, 2009, MO, as solicitors for the Vendor Company, served notice to complete under Condition 40 of the General Conditions of Sale in the Contract for Sale and notice pursuant to Condition 4(d) of the General Conditions in the Building Agreement on DS, as solicitors for Mr. Benesch. Those notices were effectively ignored by Mr. Benesch and his solicitors. Nothing happened prior to the initiation of these proceedings by plenary summons on 12th June, 2009 save that Treacy & Mullins, the solicitors on record for Mr. Benesch in these proceedings, commenced acting for him in early April 2009. The pleadings 20. A defence and counterclaim was delivered on behalf of the defendants on 26th November, 2009. In the defence, there was a general traverse of everything pleaded in the statement of claim and the following matters which are still of relevance were specifically pleaded:
(b) If planning permission had been obtained on 2nd May, 2008, it was denied that it was “in a form satisfactory to the vendor for the development of an industrial complex . . .” and the plaintiffs were put on strict proof that it was otherwise. (c) The completion notice “purportedly” served on 4th March, 2009 was bad for want of proper form and was invalid. (d) By reason of the matters aforesaid there had been a repudiation by the plaintiffs of the contracts, which were at an end. (e) The nature of the agreements had been fundamentally altered consequent upon unforeseen circumstances, namely, the global economic downturn, so that the agreement had been frustrated and/or performance rendered impossible. 21. There was a specific plea in the defence in the following terms:
23. The plaintiffs’ reply and defence to counterclaim was delivered on 2nd February, 2010 and contained a complete joinder of issue. In relation to the plea in the defence which I have quoted at para. 21 above, it was pleaded by the plaintiffs as follows:
Issue on liability
(b) the completion notice; (c) representations allegedly made and conditions allegedly agreed to by Mr. Fitzgerald; and (d) impossibility of performance by Mr. Benesch. 25. In his closing submissions, counsel for Mr. Benesch raised an issue as to the particulars in the Contract for Sale, in which the property in sale was described as follows:
(b) the title actually being sold appears to have been a long lease from South Tipperary County Council but this is not specifically mentioned in the particulars. 26. First, the map annexed to the Contract for Sale was described as “preliminary contract map” for proposed new industrial units at Ballylynch and it was a drawing of the proposed site layout. It was drawn to scale and indeed the area in square metres and in square feet of each of the nine units was given in a table on the map. Nobody could be under any misapprehension as to the extent or location of Unit 1 and Unit 2. As has been outlined earlier, DS implicitly accepted the response to a query which had been raised in relation to the map before the contracts were executed by Mr. Benesch. 27. Secondly, while the title has not been produced to the Court, it is reasonable to infer that the title of the Vendor Company was a freehold registered title of which the Vendor Company was the registered owner or entitled to be registered as owner, or, alternatively, a long leasehold title of which the Vendor Company was registered as owner or entitled to be registered as owner. In the Special Conditions it was provided that the Vendor Company would hand over “a Transfer substantially in the form of the specimen draft lease furnished herewith”. It is clear from the documentation put before the Court that the intention was that each purchaser of a unit in Park East would get a long lease, in fact a nine hundred and ninety nine year lease, of his unit, and that the common areas would become vested in a management company. A management company, Ballylynch Management Company Limited, a company limited by guarantee not having a share capital, was subsequently incorporated on 15th January, 2009, which I am satisfied was intended to take on, and could have, taken on the function of management company of Park East. There is no evidence that DS, on behalf of Mr. Benesch, ever complained in relation to the title on offer to Unit 1 and Unit 2, nor was the issue of title raised in the defence. The points made on behalf of Mr. Benesch in relation to the title and scheme of disposal, in my view, are totally devoid of substance. 28. In general, having carefully considered all of the documentation put before the Court and the evidence, I have come to the conclusion that in March 2009 and at present the plaintiffs are in a position to give Mr. Benesch what he bargained for as regards the construction of the units, the title thereto, the scheme of disposal in relation to Park East and compliance with planning permission. Put another way, I am satisfied that the plaintiffs were able to fulfil their end of the bargain and to complete the sale in March 2009 and that that remains the position. The completion notices 30. In relation to the completion notice served under the Contract for Sale, it was provided in Condition 9 of the Special Conditions that the closing date should be one month after the grant of final planning permission referred to in Special Condition 8. Special Condition 8 provided that the Contract for Sale was subject to –
31. In the recitals in the Building Agreement the expression “Completion Date” was defined as being the earlier of:
(b) the date upon which Mr. Benesch should receive from the Building Company a notice in writing that “the Works” had been completed. 32. It was also submitted by counsel for Mr. Benesch that the completion notices were not properly served because they were served “by DX”, that is to say, through the medium of the Document Exchange. To obviate the necessity to call a witness on this point, counsel for the plaintiffs confirmed that MO delivered the notices to complete to DS via the DX and counsel for the defendants accepted that that was what happened. Assuming, as I do, that they were so served, that has no bearing on the issue the Court has to decide. The Court has to decide whether to award damages in lieu of specific performance should be made to the plaintiffs, the plaintiffs having elected to forgo the primary reliefs sought by them, namely, orders for specific performance. Service of a completion notice under Condition 40 of the General Conditions of Sale in the Contract for Sale or a notice under Condition 4(d) of the General Conditions in the Building Agreement is not a prerequisite to pursuing a claim for specific performance or damages in lieu. All that is necessary is that the Court be satisfied that the Vendor Company was ready, willing and able to complete the Contract for Sale and that the Building Company had complied with its obligations under the Building Agreement when the proceedings were instituted. The evidence establishes compliance with the requirements of both contracts. It is worth recalling that, just short of six months before the proceedings were initiated, DS, as solicitors for Mr. Benesch, informed the plaintiffs’ solicitors that he was no longer in a position to complete the purchase. Despite the steps taken by the solicitors for the plaintiffs thereafter, Mr. Benesch did not indicate any willingness to complete the purchase. In those circumstances, it was appropriate for the plaintiffs to initiate the proceedings for specific performance when they did so. 33. The plea in the defence that there had been a repudiation by the plaintiffs of the contracts and that the contracts were at an end was elaborated on by counsel for Mr. Benesch in the written submissions. It was submitted that the notices to complete were bad for want of proper form and not served in the correct manner. It was further submitted that because the notices were defective there was a repudiation of the contracts by the plaintiffs and, as support for that proposition, Wylie’s Irish Convenancing Law, 3rd Ed., p. 379 was cited, although I have been unable to identify anything on that page which is of relevance to the argument advanced on behalf of Mr. Benesch. However, the issue of election as to the remedy being pursued where there has been a breach of a contract for sale of land (e.g. whether it is specific performance, or damages, or rescission) is addressed at para. 13.03 (p. 370), where the authors point out that at the very latest the claimant must elect at the hearing of the action, but they add that he may be held to have made his election at a much earlier stage, citing the decision of the Court of Appeal in Ireland in Maconchy v. Clayton [1898] 1 I.R. 291. 34. There is no doubt that a completion notice which does not reflect his intention may cause difficulty for a vendor. There is a helpful explanation of the risk involved in drafting a completion notice in Buckley, Conroy and O’Neill on Specific Performance in Ireland (at para. 6.27), where the authors state as follows:
36. The notice to complete served on behalf of the Building Company stated that it was made pursuant to General Condition 4(d) and that the failure to pay, at the election of the Building Company, would be deemed to be a repudiation of the Building Agreement and the Building Company would thereafter be free to deal with the property in accordance with the Building Agreement. In other words, the notice merely pointed to the entitlement of the Building Company under General Condition 4(d) to elect to treat Mr. Benesch as having repudiated the Building Agreement. 37. In general, I am satisfied that there was nothing in the interaction between the plaintiffs’ solicitors and the solicitors for Mr. Benesch at any time up to the commencement of these proceedings which could be construed as, or deemed to be, a repudiation of the Contract for Sale or the Building Agreement. The objective of these proceedings from the outset was to procure the specific enforcement of both contracts. Representations allegedly made and conditions allegedly agreed to by Mr. Fitzgerald 39. Although it was not specifically pleaded as a defence, Mr. Benesch repeatedly stated in his evidence that Mr. Fitzgerald had told him before the contracts were executed by him that, if he signed the contracts, he could “walk away” any time he liked. Mr. Benesch further testified that when, at the start of 2008, he told Mr. Fitzgerald that he was under financial pressure and there was no possibility that he could proceed with the contract, Mr. Fitzgerald told him not to worry about the contract and that he could walk away from it at any time. Mr. Benesch asserted that he signed the contracts under the pretence that at any time he was guaranteed that he could walk away from the contracts. He testified that he was duped by a cleverer man, and that he was “codded” by Mr. Fitzgerald. When the evidence of Mr. Benesch that he was told that he could walk away from the transaction at any time was put to Mr. Fitzgerald, he described it as “absolutely a load of rubbish” and “totally untrue”. 40. Mr. Fitzgerald emphasised that he advised Mr. Benesch that he should have independent legal advice in relation to the transaction. I am satisfied that Mr. Benesch was independently advised by DS. In fact, when the transaction for the acquisition by Mr. Benesch of Unit 1 and Unit 2 which was negotiated between Mr. Fitzgerald and Mr. Benesch came to be formalised, each side was represented by different solicitors. That Mr. Fitzgerald, whom I accept was the prime mover at the time, being in control of the Vendor Company and the Building Company, would have retained solicitors to act for the plaintiffs and to present the Contract for Sale and the Building Agreement to the solicitors acting for Mr. Benesch against the background of Mr. Fitzgerald having told Mr. Benesch that he could “walk away” at any time is wholly implausible. Therefore, I find as a fact that it was not represented by Mr. Fitzgerald, on behalf of the plaintiffs to Mr. Benesch that Mr. Benesch could withdraw from the transaction at any time. For completeness, it is appropriate to observe that this Court has no function in this case in assessing the propriety or otherwise of the involvement of Mr. Fitzgerald of Fitzgerald Fleming in the transaction between a client of the firm and companies controlled by Mr. Fitzgerald to the extent which he was involved in relation to taxation matters, raising finance and suchlike. 41. There was also an evidential conflict between Mr. Benesch and Mr. Fitzgerald as to what transpired between them in December 2008. The evidence of Mr. Benesch was that Mr. Fitzgerald telephoned him and told him that the units were complete and that Mr. Flynn would be looking for his money soon. His evidence was that it was on that occasion that he first heard that Mr. Fitzgerald had sold his interest in Park East to the Flynn Company. Mr. Benesch testified that Mr. Fitzgerald told him not to worry about it, that he could “sort all the finance” for Mr. Benesch. The background to that interchange from the perspective of Mr. Benesch was that the loan sanctions which Bank of Ireland had issued had expired sometime earlier and that Mr. Benesch was of the view that he would not be able to raise finance at that stage because of the financial state of his business. 42. Mr. Fitzgerald’s version of what happened at the end of 2008 was that Mr. Benesch approached him as he was leaving his office and told him that he wanted to “sell the units on” and he queried whether Mr. Fitzgerald could help him. Mr. Fitzgerald approached certain clients and a property developer, but he “had no luck”. He told Mr. Benesch that nobody was interested in the units and that he needed to proceed with the contract. Mr. Fitzgerald’s evidence was that Mr. Benesch’s response was that he was not going to proceed. 43. Obviously with a view to corroborating Mr. Benesch’s version of what happened, counsel for Mr. Benesch set out to prove that Mr. Fitzgerald had furnished falsified accounts in relation to the Benesch Company for the year ended 30th November, 2008 to Bank of Ireland, with the objective of persuading Bank of Ireland to advance a loan to Mr. Benesch to enable him to complete the purchase of Unit 1 and Unit 2. As a lot of Court time was taken up with this proposition, it is necessary to consider the four versions of the accounts for that period which were put before the Court in some detail. 44. First, there were bound Financial Accounts dated 8th January, 2009, which came to be referred to by the parties as the “Revenue Accounts”. These were sent out by letter dated 8th January, 2009 by Fitzgerald Fleming to Mr. Benesch. As was pointed out in the letter, those accounts showed a net loss of €16,167 for the year before bank interest and charges. Directors’ remuneration was shown at €19,181. Mr. Benesch was asked to review the accounts. He was told that an appointment had been pre-booked for him at the office of Fitzgerald Fleming for the following Tuesday, 13th January, 2009. It would appear that those accounts were returned by Mr. Benesch to the office of Fitzgerald Fleming on the following day, 9th January, 2009, on which occasion Mr. Benesch told the member of staff who dealt with him that he wanted to see Mr. Wayne Fitzgerald, not Mr. Fitzgerald on 13th January, 2009. Mr. Wayne Fitzgerald, a nephew of Mr. Fitzgerald who was in charge of the taxation department of the firm, testified that the meeting had taken place, although the evidence of Mr. Benesch was that there was no such meeting. Somehow these so-called Revenue Accounts were filed with the Revenue Commissioners, together with a corporation tax return, on 12th January, 2009 and the Revenue Commissioners issued an assessment on foot thereof on 22nd January, 2009. 45. Secondly, new accounts were prepared by a staff member of Fitzgerald Fleming following the meeting on 13th January, 2009 between Mr. Benesch and Mr. Wayne Fitzgerald, which I am satisfied did take place. Those accounts, which I will call the “Revised Accounts” were send to Mr. Benesch accompanied by a letter dated 13th January, 2009 which referred to the meeting and that amendments had been made arising from the meeting. The effect of the amendments, as regards the year ended 30th November, 2008, was to show an operating profit of €29,832, rather than a loss, and to show directors’ remuneration in the amount of €85,181. Mr. Benesch’s interpretation of this, as I understand it, is that the directors’ remuneration was deliberately inflated to assist Mr. Fitzgerald in looking for finance from Bank of Ireland to enable Mr. Benesch to complete the acquisition of the units in Park East. The evidence of Mr. Wayne Fitzgerald, which was based on notes he had taken at the meeting on 13th January, 2009 because he had no recollection of it, was that Mr. Benesch told him that the sales income as set out in the Revenue Accounts was incorrect and that debtors and work in progress were understated and also that cash drawings, which I understand to be the basis of the directors’ remuneration, were understated. Mr. Wayne Fitzgerald’s notes also envisaged a revised corporation tax computation. The notes also queried whether there should be disclosures to the Revenue Commissioners for previous years. Mr. Wayne Fitzgerald’s position was that the issue which had to be addressed was whether Mr. Benesch needed to make voluntary disclosure to the Revenue Commissioners in relation to the tax returns whch had been submitted for previous years. The covering letter of 13th January, 2009 requested Mr. Benesch to review the revised accounts. It is common case that he did not communicate with Fitzgerald Fleming at all after 13th January, 2009. 46. Thirdly, Mr. Benesch put in evidence a photocopy of accounts for the year ended 30th November, 2008, which were dated 13th January, 2009 which he received from Bank of Ireland with an undated compliments slip sometime later in 2009, which he asserted Bank of Ireland had received from Fitzgerald Fleming. Mr. Fitzgerald’s evidence was that the “correct” accounts for the year ended 30th November, 2008 were furnished by Fitzgerald Fleming to Bank of Ireland. There is no doubt that the accounts which Mr. Benesch testified he obtained from the Bank, which were referred to by the parties as the “Bank Accounts”, were not correct accounts. There were discrepancies between the Bank Accounts and the Revised Accounts of 13th January, 2009. One discrepancy was that directors’ remuneration for the previous year (the year ended 30th November, 2007) was increased from €44,355 to €85,000, which makes no sense. Apart from that, in some respects the figures in relation to both years did not, for want of a better expression, “add up”. The evidence of Mr. Benesch was that the Bank Accounts came out of the office of Fitzgerald Fleming and he had nothing to do with them and, in particular, that he did not sign them, although signatures purporting to be the signatures of Mr. Benesch and Mrs. Benesch appeared on them. At the end of the accountant’s report on page 5, a signature “Robert Fitzgerald” appears over the name Fitzgerald Fleming and the address of the firm. Mr. Fitzgerald, in his evidence, was adamant that the signature was not his signature. No official from Bank of Ireland was called and the only evidence as to the provenance of the so-called Bank Accounts was the evidence of Mr. Benesch. On the evidence, it is impossible to conclude that the Bank Accounts were furnished to Bank of Ireland by Fitzgerald Fleming and, indeed, it is impossible to form any view as to what was the source of the Bank Accounts. Accordingly, having considered the matter carefully, I find it impossible to make any finding as to whether the Bank Accounts were deliberately falsified and, if so, by whom, or for what purpose, or by whom they were furnished to Bank of Ireland. 47. Fourthly, Mr. Benesch ceased to be a client of Fitzgerald Fleming and changed to an alternative Bookkeeping and Accountancy Service run by Susan McCollum, who apparently in May 2009 filed accounts in the form of the Revenue Accounts, but omitting the last two pages, in the Companies Registration Office. Although the name of Fitzgerald Fleming and its address appeared at the end of the accountants’ report on page 5, the accounts were not signed on behalf of Fitzgerald Fleming. 48. While the existence of four different sets of accounts for the Benesch Company for the year ending on 30th November, 2008 which cannot be reconciled is a cause for concern, the Court’s only function in assessing the evidence in relation to the accounts in this case is to determine whether they corroborate in any way Mr. Benesch’s contention that it was a condition of the contracts he entered into with the plaintiffs that Mr. Fitzgerald would secure loan finance by way of mortgage in order to enable him to comply with his contractual obligations to the plaintiffs. In my view, they do not. I find that the Contract for Sale and the Building Agreement were ex facie unconditional and Mr. Benesch has adduced no affidavit evidence to establish that they were conditional on Mr. Fitzgerald arranging finance to enable him to complete and Mr. Benesch has adduced no sufficient evidence to establish that they were conditional on Mr. Fitzgerald arranging finance to enable him to complete. Impossibility of performance by Mr. Benesch 50. First, even if that circumstance was a consequence of “the global economic downturn”, as pleaded on behalf of Mr. Benesch, as counsel for the plaintiffs submitted in reliance on the decision of the Supreme Court in Neville & Sons v. Guardian Builders [1995] 1 ILRM 1, that circumstance was not a supervening event such as would frustrate the contract. In the Neville case, Blayney J., in determining whether frustration had occurred, posed the following questions in his judgment (at p. 8):
51. Secondly, the impossibility of performance by Mr. Benesch does, however, have a bearing on the remedy to which the plaintiffs are entitled. In the light of what transpired on the third day of the hearing, the Court was relieved from determining whether the appropriate remedy for the plaintiffs, if contractual liability is established on the part of Mr. Benesch, is damages in lieu of specific performance rather than orders for specific performance. Before the concession was made on behalf of the plaintiffs that the Court could award damages in lieu, counsel for the plaintiffs had argued that Mr. Benesch had not established “a true case of impossibility”, in the sense outlined by the High Court (Clarke J.) in Aranbel Limited v. Darcy [2010] 3 IR 769, but I am treating that argument as abandoned, having regard to the concession. Nonetheless, I think it is useful to quote the following passage from the judgment of Clarke J. in the Aranbel case, where he stated (at para. 11):
Conclusions on liability and appropriate remedy 53. Mr. Benesch has not established any entitlement to any relief on his counterclaim. Measure of damages 55. The only evidence adduced in relation to the current value of Unit 1 and Unit 2, Park East was the evidence of Desmond M. Purcell of the firm of Purcell Properties practising in Waterford. Mr. Purcell furnished a very comprehensive valuation report to the Court, which included comparisons of industrial units in Waterford City, County Waterford, East Cork and Tipperary. Mr. Purcell’s opinion was that the current market value of Unit 1 is €22,500, whereas the current market value of Unit 2 is €22,995, the current value of both units aggregating €45,495. That opinion was not contradicted and I accept it. 56. Rounding the current market value up to €50,000, that is to say, €25,000 in respect of each unit, I measure the damages in lieu of specific performance for which Mr. Benesch is liable at €270,000 (being the contract prices of €26,700 and €303,300, aggregating €330,000, less the deposit of €10,000, and less the current market value of €50,000). It will be a matter for the plaintiffs to apportion the sum of €270,000 between them. Orders |