A FORMER manager with ACCBank and three other businessmen are required to perform contracts valued at about €6 million related to the purchase of 22 houses in a retirement village in Co Cavan, the Commercial Court has found.
Mr Justice Peter Kelly found against Brendan Hannan, former manager of the Cavan ACC branch, and Oliver Malone, Seán McGuigan and John Olwill, all customers of that bank, who had, with Mr Hannon, formed the Hammo Partnership which was involved in property purchase and development.
The judge yesterday upheld claims by Desmond Murtagh Construction Ltd (in receivership) and the estate of the late Desmond Murtagh, that they were entitled to orders for specific performance of contracts related to the Castlemanor retirement village, Billis, Drumalee, Cavan, built by Mr Murtagh and his company.
Mr Murtagh died in June 2009 just months after ACC appointed a receiver to his company. The plaintiffs claimed €1.804 million was payable to the estate of Mr Murtagh for the 22 units while €4.136 million was payable to his company on foot of building agreements.
The plaintiffs sought orders requiring the defendants to complete contracts of November 2007 for sale of 22 housing units at the Castlemanor village. Twenty-six other units were previously sold.
Mr Justice Kelly said the defendants formed the Hammo Partnership in 2002. They bought the Billis lands in 2005 for €1.7 million and spent another €1.3 million paying off a man who introduced them to the lands, and in obtaining planning permission. In 2007, they offered the lands for €9 million and Mr Murtagh bought them for €7 million.
“Not content with having doubled their money,” the judge said, the partnership sought further fiscal benefit by entering into arrangements “driven by tax-avoidance motives”. Under contracts of November 2007, they agreed to buy back 48 units in the Castlemanor development from Mr Murtagh.
By summer 2008, all 48 houses were substantially complete and 26 units were sold, the judge said. By July 2008, the plaintiffs believed the defendants had become reluctant to close the remaining sales.
In December 2008, a controversy relating to a €1.5 million bond the defendants were to provide as a deposit for the contract of sale and building agreement ultimately led to a receiver being appointed to the Murtagh company in February 2009.
A central issue was the defendants’ claim they were not obliged to perform the contract because of an alleged failure to implement a planning condition for works concerning a sewer pipeline from Billis Cross to Drumalee Cross.
Mr Murtagh and his company were willing and able to carry out those works but Cavan County Council did not want them to install the sewer pipe until it got finance from the Department of the Environment for water main works to be carried out in the same area, the judge found.
The council wanted both sets of works to be carried out at the same time as they would involve major traffic disruption.
The only reason the sewer was not installed was because of the council’s requirements, the judge found. The Murtagh side was constantly engaging with the council to enable the sewer works be carried out but the council was frustrated due to failure to get monies for the water works. In the circumstances, there was substantial compliance with that condition.
The judge also described as “unconvincing” their evidence they were unaware of the sewer not being built. He believed they had been searching for some time for “a legal excuse” to avoid their obligations under the contract.
That finding did not mean there were no unfulfilled obligations concerning the sewer works but he was satisfied to accept the receiver’s undertaking he would discharge those obligations when required and had the funds to do so, he added. There was little prospect of the sewer works being carried out until the Department of the Environment provided funds to install the water main, he noted.
In all the circumstances, the plaintiffs were entitled to specific performance of the contracts, Mr Justice Kelly ruled.
