A businessman was ordered by the Commercial Court yesterday to honour a contract in which a 32-acre site was to be bought by others for €5.75 million and then to be sold on to him in a deal valued at €18 million.
Tom Ryan, who finds development sites that builders might be interested in buying, had agreed the deal for 32 acres at Ardmore Road, Mullingar, Co Westmeath.
However, he argued the downturn in the property and banking sectors meant he could not meet the terms of the contract.
Mr Justice Peter Kelly said the terms of the contract did not provide for any adjustment in the event of a downturn in property prices and he made an order for specific performance of the contract against Mr Ryan.
Mr Ryan, Herbert Street, Dublin, agreed to buy the land in Mullingar from Adrian Murphy, Rathdrisogue House, Castletowngeoghegan, Co Westmeath, and Seán Mackin, Morehampton Road, Donnybrook, Dublin.
This was to be done as part of a "sub-sale" arrangement whereby the two men first agreed to buy the land from the original owner for €5.75 million before it would then be sold on to Mr Ryan. This, according to sworn statements, was to avoid having to pay stamp duty twice on the sale.
Mr Murphy and Mr Mackin yesterday secured an order for specific performance of the contract involving payments to them of €1.3 million in interest and stamp duty that they had to finance as a result of Mr Ryan's failures. They had to fund the €5.75 million purchase price from the original vendor themselves, thus incurring these additional costs.
The plaintiffs said they entered into a contract with Mr Ryan, who undertook to buy the 32 acres in July 2006. Mr Ryan set about preparing planning applications for the land and canvassing various developers he believed would be interested in developing the land as partners.
It was agreed to close the sale on January 2007 but it did not happen because, Mr Ryan said, the property market was slowing and there was "not the same level of interest" in the site. He had already borrowed €900,000, which he used as the deposit.
The discovery that the local council had plans to build a school on part of the land, contrary to what had been represented to him, "radically affected" any scheme for the site, he said.
He suffered a further setback when a bank with which he was dealing was only prepared to provide a loan for €16.2 million, when the purchase price was €18 million.
Mr Ryan asked the court not to penalise him further than the loss of the €900,000 deposit. He said despite the fact that Mr Murphy and Mr Mackin had to complete the purchase directly with the original vendor, and despite the fall in value of the land, its value was still well above the price they paid.