Judge backs buyers in row over sale of apartments
Up to 20 property buyers could get out of deals for apartments in a new Belfast city centre development after a judge found the developer in breach of contract.
Mr Justice Deeny held there was a failure to give the joint purchasers of one flat adequate reasons for a delay in the planned completion date.
They are now entitled to a return of their deposit along with 5% interest.
His ruling, one of the first in favour of a buyer since Northern Ireland's property crash sparked a wave of litigation, will now be applied to others who joined in the group action.
The case centres on apartments in the James Clow Building at Princes Dock Street.
Sales in excess of £200,000 were agreed on the flats at the height of the market.
But buyers joined together to challenge enforcement of the contracts with developer Sarcon No. 177 Ltd due to slippage from the anticipated completion date of May 31, 2009.
A key issue involved Clause 8 of the Building Contract which allows the developer a reasonable period of extra time for delays outside its control.
At the time Sarcon claimed its contractor encountered a number of difficulties, including the foundations for two adjoining former licensed premises and adverse weather conditions.
Twenty purchasers funded the challenge brought on a preliminary legal point by the plaintiffs who signed up for one apartment, Bernard J Fitzpatrick and John McIlwaine.
Their lawyers argued that Clause 8 only entitles the developer to ask for an extension, rather than demand it.
Delivering judgment at the High Court in Belfast, Mr Justice Deeny held that the defendant was in breach of contract once the completion date passed.
Although the developer could still have been protected by asking for an extension and setting out the reasons, the judge ruled there was no such entitlement in this case.
He said: “They behaved inequitably by failing to inform the purchaser's solicitors of the reasons for the delay.”
The judge added that the plaintiffs were left “wholly in the dark” for months.
His decision will now be applied to all others who backed the action.
No final order was made in the case. It was made clear, however, that buyers could remain tied to the deals if they remained “silent” rather than formally seeking to rescind the contracts after May 31, 2009.
A further court hearing will determine whether the reasons for the delay were within the developer's control.
Outside the court Mr Fitzpatrick and Mr McIlwaine's solicitor, Christopher Duffy of Elliott Duffy Garrett, said: “It's a very significant judgment in terms of not only this individual case but also for the 20 cases that formed part of the joint group. The judgment and the reasoning has the potential to lead to the fair and just resolution of the remaining cases involving this particular development.” Barbara Creed of Tughans, who played a key role in bringing together the group, added: “This is the first time such a group funding agreement has been successfully litigated in Northern Ireland.”