Wynn Clons Development Ltd v Cooke

Factual and Procedural Background

These proceedings concern a contract for the sale of an office unit (Unit 12) in a development known as Pugin Court by the plaintiff, as vendor, to the defendant, as purchaser. The plaintiff developed Pugin Court, comprising retail and office units, around 2006. Two auctioneer firms acted as joint agents for the plaintiff, but the defendant dealt solely with one agent. In August 2006, the defendant agreed, subject to contract, to purchase Unit 12 for €330,000 plus VAT, paying an initial deposit of €5,000 and agreeing to pay the balance deposit of €28,000 upon contract signing.

Two contractual documents were involved: a contract for sale and a building agreement, both dated 21 November 2006 but executed on 5 December 2006, when both parties became contractually bound. The purchase price was split between the contract for sale (€91,646) and the building agreement (€238,354 plus VAT). The contract envisaged a long lease for Unit 12 and provided conditions for the closing date linked to completion notices.

The contracts referred solely to Unit 12 and did not include any car parking space, despite representations that the defendant had booked a car park space for €12,000. The plaintiff’s solicitors clarified that no car parking space was included with Unit 12.

Throughout late 2006 and early 2007, the plaintiff’s solicitors pressured the defendant’s solicitors to complete the transaction. The defendant’s solicitors initially indicated that works were insufficiently advanced for inspection but later received confirmation from the plaintiff’s solicitors that Unit 12 was complete. The defendant provided a "snag list" outlining concerns including dampness, scratches, and fire hose location.

Concerns regarding the car park space persisted, with correspondence creating confusion, but the plaintiff’s solicitors ultimately confirmed no car parking space was included and warned that interest would be charged if completion did not occur promptly.

On 29 March 2007, the defendant’s solicitor detected a strong diesel odour in Unit 12 and advised the defendant to engage an engineer, who inspected the unit and reported a strong diesel smell with no identifiable source, alongside some scratching and dampness.

The defendant’s solicitors notified the plaintiff’s solicitors of the smell and indicated it had to be resolved before completion. The plaintiff’s solicitors denied receiving this letter. On 17 April 2007, the plaintiff issued a notice to complete, demanding payment and threatening forfeiture of the deposit and legal action.

The defendant’s solicitors responded on the same day, refusing to complete due to the diesel smell, asserting breaches of contract and repudiating the contract, also claiming it was discharged by frustration. They requested return of the €33,000 deposit.

The plaintiff initially sought to enforce completion and forfeiture of the deposit, later indicating intentions to seek specific performance or damages but also suggesting an independent review of Unit 12. Correspondence about the review continued, with the smell persisting according to the defendant’s solicitors.

Proceedings were issued on 5 March 2008. Subsequently, the plaintiff attempted to mitigate loss by agreeing a sale of Unit 12 to a third party, which fell through. Unit 12 remains owned by the plaintiff.

The plaintiff’s claim seeks specific performance or damages in lieu due to the defendant’s failure to complete. The defendant denies failure to complete and pleads breach by the plaintiff due to the alleged uninhabitability caused by the smell, seeking return of the deposit and damages.

Legal Issues Presented

1. Whether there was a noxious smell in Unit 12 sufficient to render it unfit for human habitation or use as an office.
2. Whether, if such a smell existed, the defendant was entitled to repudiate the contract or treat it as discharged by frustration.
3. The appropriate remedy for the plaintiff given the defendant’s alleged breach of contract by failing to complete the purchase.
4. Whether delay on the part of the plaintiff in initiating proceedings affects entitlement to specific performance.

Arguments of the Parties

Plaintiff's Arguments

• The plaintiff contends that the unit was delivered in the contracted condition without any noxious smell rendering it unfit for habitation or office use.
• The plaintiff asserts readiness, willingness, and ability to perform contractual obligations and seeks specific performance or damages in lieu.
• The plaintiff denies that the defendant was entitled to repudiate the contract or treat it as discharged by frustration.
• In closing submissions, the plaintiff alternatively seeks specific performance or damages, contingent on the defendant’s financial ability to complete.

Defendant's Arguments

• The defendant denies failure to complete and claims the plaintiff breached the contract by delivering a unit unfit for purpose due to a persistent noxious diesel smell.
• The defendant repudiated the contract and treated it as discharged by frustration based on breaches of specific conditions in the building agreement.
• The defendant seeks return of the deposit and damages, including for loss of potential rent.
• The defendant did not plead inability to complete on financial grounds but contended the breach excused performance.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully examined extensive evidence from multiple witnesses, including expert testimony on construction and environmental matters, as well as reports and inspections relating to the alleged diesel odour in Unit 12. The plaintiff’s experts testified that no noxious odour was detected and that the unit was fit for habitation and office use, with air quality assessments confirming no health risks. The defendant’s expert and solicitor reported a strong diesel smell; however, the source was never identified, and some evidence suggested the smell might have been external or transient.

Considering all evidence, the court found it impossible to conclude that the plaintiff was not in a position to deliver Unit 12 in the contracted condition or that a noxious smell rendered the unit unfit for use. Consequently, the defendant was not entitled to repudiate or treat the contract as discharged by frustration.

The court noted the defendant’s breach in failing to complete the purchase and considered the plaintiff’s remedy. Although the plaintiff was equivocal about pursuing specific performance or damages in lieu and had not provided evidence to measure damages, the defendant had not demonstrated financial inability to complete. Applying principles from the Aranbel case, the court held that specific performance was the appropriate remedy at this stage, reserving the possibility of a further hearing if the defendant sought to prove inability to complete or if damages in lieu became appropriate.

The court also addressed the issue of delay, finding that the plaintiff’s claim for specific performance was not defeated by delay or laches, given the circumstances and consistent pursuit of the remedy.

Finally, the court clarified that the deposit had not been forfeited as the plaintiff had treated the contract as continuing and enforceable.

Holding and Implications

The court’s final decision was to grant an order for specific performance requiring the defendant to complete the purchase of Unit 12 by 31 October 2012 in accordance with the contract for sale and the building agreement.

The defendant’s counterclaim seeking return of the deposit and damages was dismissed. The defendant remains liable for breach of contract for failing to complete.

No broader legal precedent was set beyond the application of established principles regarding specific performance, repudiation, and frustration. The decision primarily affects the parties by enforcing the contractual obligations and denying the defendant’s claim based on the alleged smell.