A couple who agreed last October to buy a new house "off the plans" for £129,000 and were told last February the price had risen to £165,000 have failed in a High Court attempt to compel sale at the original price.
Mr Justice McCracken said he had "very considerable sympathy" for the position of Mr Wayne Lakes and his wife, Gemma, over their failed attempt to buy a new house at Ellensborough, Tallaght, Co Dublin.
"This is happening a great deal," the judge added.
There was no signed contract, only a receipt for a £2,000 booking deposit which made very clear the terms on which that deposit was paid, he said.
The receipt stipulated the deposit was received on behalf of the vendor "as intent only, without obligation on either party until such time as a formal contract is exchanged by both vendor and purchaser without any claim for interest whatsoever".
The judge refused the application by the Lakes, of Dunmore Grove, Kingswood Heights, Tallaght, for a declaration that a contract for the purchase of a house at Ellensborough, as described in a memorandum of agreement dated January 1st, 1998, was valid and binding.
Making the application, Mr Brendan Watchorn, for the Lakes, said they examined plans for the houses at Ellensborough last October and decided to purchase one. The houses were to be built by Durkan New Homes Ltd, Durkan House, Sandford Road, Ranelagh, on a site owned by Unipark Properties Ltd, Dame Court, Dublin.
Counsel said the selling agent, Douglas Newman Good, advised that the price was £129,000 and the house would not be completed until the end of February or early March 1998. The Lakes accepted those terms and paid a deposit of £2,000 to the agent.
Draft contracts were furnished by solicitors for the defendants on January 15th, 1998, and were signed and returned to the solicitors the following day.
Mr Watchorn said the Lakes received a letter on February 10th, 1998, from the defendants' solicitors, informing them the defendants were no longer interested in proceeding with the sale and enclosing a cheque for £2,000, dated February 11th, 1998.
Mr Lakes spoke to Durkan New Homes Ltd to inquire why it wished to withdraw from the agreement and was told the cost of materials had risen due to devaluation of the pound against sterling and that a further £36,000 would be required for the house.
In an affidavit, Mr Lakes said he had already obtained loan approval based on the original agreed price. Legal correspondence ensued and his solicitors returned the £2,000 cheque but the defendants again sent it back.
Mr Lakes said he and his wife did everything required of them and remained willing to complete the contract. At no stage had the defendants indicated they had any difficulty with the contract but had "unilaterally failed or refused to comply with their part of the bargain". He believed the defendants had adopted that position "because the price of new houses has risen sharply in recent times and the defendants believe that they can now get a better price".
Mr Watchorn said his clients were claiming the payment of the £2,000 deposit constituted part performance of a contract.
In an affidavit, Mr Neil Durkan, of Sandford Road, Ranelagh, a director of both defendant companies, said Mr Lakes's affidavit did not reveal the exact nature of the transactions involved.
He said the Lakes had not made it clear until December 12th that the house purchase was not conditional on the sale of their own home and that the Lakes did not receive loan approval until February 13th, which was three days after they were notified the defendants would not be proceeding with the sale.
He said his solicitors received contracts on January 16th last, signed by the Lakes. He said at that point it was noted the defendants were behind schedule in their building programme.
He said that, as a result of exchange rate changes, the costs of material and labour were increasing and that by the time the house was built it would "have to reflect the increase in property prices".
Taking all these factors into account, he decided on February 10th that it would not be in the Lakes' interests to proceed with the sale and instructed his solicitors to return the deposit, Mr Durkan said.
Mr Durkan said he met Mr Lakes on February 24th and he indicated he was still interested in the house. On February 26th, Mr Lakes was told the price would be £165,000.
He said all dealings between the defendants and the Lakes were subject to contract and the contracts in question were not signed by the defendants. The booking deposit was received as intent only, without obligation on either party until a formal contract was exchanged, he added.
