Three sets of lawyers failed to notice property sale had not gone through

A High Court judge has described as "extraordinary" the mutual oversight on the part of three sets of lawyers who each failed to notice that the sale of a Co Kildare property they were involved in some eight years ago did not go through.

In a judgment, Ms Justice Nuala Butler noted that errors and oversights occur in professional life, but it would be normal to expect that this mistake, which saw payment for the house sit in the account of the purchaser's solicitor for years, would have been picked up by the other lawyers involved in the transaction.

She said it was “extraordinary” that the mutual oversight in this case left all three legal teams believing the transaction had concluded some years ago when it had not.

The mistake came to light when Promontoria (Oyster) DAC issued its motion seeking to restore Allenton Properties Ltd to the register of companies so a receiver could be appointed and security enforced over the Naas property. The mortgage on the home secured, by way of first legal charge, a company loan taken out in 2000 for its indebtedness.

Allenton, which was dissolved in 2014 for failure to file annual returns, asserted that the property subject to the charge was sold, Ms Justice Butler said.

In May 2012 Ulster Bank wrote that it had agreed to accept an offer of €27,000 for the site. The judge noted that evidence as to what actually occurred around the sale was "hazy", but it seemed the buyer paid the money to her solicitor on the assumption the sale went through. She entered into possession of the property, and has since built a home on the site, the judge said.

However, at a legal level, “none of the expected formalities” were attended to, said Ms Justice Butler. The buyer’s solicitor did not forward the money to the seller’s solicitor, an oversight that “appears to have been entirely inadvertent”, the judge said.

Closed file

The seller’s solicitor did not notice the omission and closed the file without having received the money, sending the title deeds to the buyer’s solicitor, or remitting the proceeds to Ulster Bank, according to the judgment. The bank made no inquiry as to the whereabouts of the expected payment or return of the title deeds, despite having provided the deeds on the express condition that the company’s solicitor would be in a position to pay money secured by the charge, the judge said.

Meanwhile, the company’s indebtedness to Ulster Bank continued to accumulate, and this was acquired by Promontoria in 2016, the judge noted. When the case came before the High Court, correspondence ensued between solicitors of Promontoria and a former director of Allenton, a notice party, and the mistake was identified. The director’s solicitor subsequently indicated he had received the funds and was in a position to remit them once it has been confirmed whether Ulster Bank or Promontoria is owed the money, the judge said.

While Ms Justice Butler accepted that Promontoria had established a stateable case, she found that it would not be just and equitable to restore the company for the purposes of appointing a receiver as the buyer of the property had not been put on notice of the proceedings. If she were to make the orders sought by the applicant, the purchaser would be affected in a “profoundly prejudicial way”, the judge said.

The applicant’s case is “not without merit”, Ms Justice Butler continued. However, she said the current situation had arisen at least partly due to Ulster Bank’s failure to notice that it had neither purchase monies nor the deeds, and she noted that Promontoria’s “real grievance” is with the bank.