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Most property transactions in Ireland use the Law Society General Conditions of Sale. Clause 36 requires that the property be built in compliance with planning permission. 

In the recent High Court case of Mackin v. Deane [2010] IEHC 192 the planning permission banned any attic space suitable for human habitation, but the contract included an en suite bedroom in the specification. The Vendor sought specific performance.  The Purchaser wanted rescission.  The dispute arose in the context of a dramatic downturn in the property market. 

The Purchaser contended that the contradiction meant that the Vendor could never be “ready, willing and able” to complete the sale when serving the completion notice and therefore the court should rescind the contract.

Finlay-Geoghegan J refused to grant specific performance as the contract included a breach of planning law. However, because the Purchaser was aware of this breach, she refused to set aside the contract.  The judge did accept that rescission may be available where a purchaser was not aware of the breach.

The result seems to be that the parties are in a legal limbo: the contract is incapable of enforcement, but the parties are still bound to it.  While the Vendor could seek damages for breach of contract, the Purchaser might raise a defence of illegality.  It is not only in CERN that collisions give rise to uncertain consequences!

Attribute to Kevin Hoy, Partner, Mason Hayes & Curran.

Kevin is head of Mason Hayes & Curran's real estate department.  For more information, please contact Kevin at khoy@mhc.ie or + 353 1 614 5000.  The content of this article is provided for information purposes only and does not constitute legal or other advice.  Mason Hayes & Curran (www.mhc.ie) is a leading business law firm with offices in Dublin, London and New York. 

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