Business

Friday 30 September 2016

Law firm loses appeal in €10m city sale dispute

Published 15/06/2016 | 02:30

The High Court held that the negligence had caused substantial losses for Rosbeg.
The High Court held that the negligence had caused substantial losses for Rosbeg.

One of Ireland's biggest law firms, LK Shields, has lost an appeal against a High Court decision that it must pay a client €8.5m because a failure to register a property meant a €10m offer at the height of the boom for the property from truck importer Pino Harris could not be effected.

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The client, Rosbeg Partners, is owned by businessman Robert Stewart, and is now in Receivership.

The case was originally before the High Court in 2013.

Rosbeg had acquired a unit at the Western Industrial Estate on the Naas Road in Dublin in 1994. The property actually comprised five lots, made up of five separate titles. The relevant lot in the action was known as Lot 3.

The Land Registry had raised some questions regarding boundaries in relation to the property. LK Shields undertook the task of registering the transaction with the Land Registry. However, despite significant efforts made by a number of solicitors employed by LK Shields, the vendor's solicitor did not rectify the mapping issues. As a result, and because of human error, the issue was never successfully addressed.

The omission only came to light in September 2007 when Mr Harris made his €10m offer for the property.

The High Court held that the negligence had caused substantial losses for Rosbeg.

LK Shields had contended that Rosbeg never made a final decision to accept the €10m from Mr Harris. The legal firm had argued that Rosbeg's directors had been undecided as to whether or not they would accept the €10m, or hold out for a higher price.

The High Court Judge rejected that assertion, and ruled that the omission to register the land in question was a breach of duty which caused the loss of the sale to Mr Harris.

LK Shields appealed that ruling to the Court of Appeal.

It again argued that Rosbeg had not confirmed it was prepared to accept the €10m offered.

But the title difficulties meant the deal couldn't be consummated because of the title difficulties. At the end of October 2007, it was communicated to Rosbeg that Mr Harris saw no point in trying to pursue the transaction because of the issues with title.

However, in 2008 two further offers - one of €8m and then another for €6m - were made by Mr Harris for the property, with both rejected by Rosbeg.

By 2013, the site was valued by representatives of Mr Harris at €1m, while Rosbeg's valuer estimated it to be worth €1.5m.

Counsel for LK Shields argued that Rosbeg had not mitigated its loss, specifically in rejecting the offers of €8m and €6m, in circumstances where there was a declining market, and where Mr Harris was, effectively, "the only show in town", insofar as potential purchasers were concerned, the Court of Appeal noted.

It added that Rosbeg endeavoured to sell the site, and that the company had retained LK Shields to ensure it got good title. Rosbeg didn't, and suffered a loss, the court said, in dismissing LK Shields' appeal.

Irish Independent

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