Claims Ireland

The Independent Service that Assesses Compensation Claims

Developer Awarded €4m after Local Authority "Bungling"

A High Court judge has awarded €4 million damages to a developer over "bungling and ineptitude of a high order" by Meath County Council in granting an effectively unworkable contract in 2006 for a development at Ashbourne.

Mr Justice Peter Kelly today ruled the council, following an "extraordinary tale of error after error" by it, was guilty of negligent misrepresentation and breach of duty to care to Darlington Properties Ltd in relation to the contract of May 2006 for purchase and development of a council-owned site at Ashbourne.

He found the council negligently misrepresented to Darlington that a distributor road linking the site to Ashbourne town centre - and a road vital to Darlington's development - would be built when the council should have known construction of that road was impossible due to the nature of a permission granted by the council itself for an adjoining development.

The council's decision since then to "defend the indefensible" was "not impressive" and led to the €4 million judgment against it, plus costs of a three-day trial at the Commercial Court, which had "all to be borne by the public purse", the judge said.

When the council's errors must have become known, no-one from the council was prepared to admit them or even meet Darlington, he said. The council had maintained that "ostrich-like" approach and kept liability as an issue throughout the hearing without calling any witness to give evidence on liability.

If the council had dealt with the matter honourably, it "might not have resulted in litigation at all".

Mr Justice Kelly was giving his reserved judgment on proceedings by Darlington, a subsidiary of Woodgreen Builders Ltd, arising from the council's acceptance of the company's tender to buy a council-owned site at Ashbourne in 2006.

The judge said it was clear the council's local area development plan, pre-sale brochure and pre-contract correspondence all provided a distributor road was to be built on the site by the purchaser and was to connect to the main street of the Ashbourne town centre.

Darlington's was the highest tender, its offer of €4.5 million was accepted by the council, and a contract was completed in June 2006. Mr Justice Kelly accepted Darlington would not have bid for the site in the absence of the proposed distributor road and noted internal correspondence showed officials in the council's planning department were fully alive to the need for the road.

In May 2007, "alarm bells" began ringing for Darlington when, during a visit to its site, it noted construction work on the adjoining site where it expected the alignment of the distributor road would be.

Darlington obtained planning drawings and realised the council had granted permission for a development by Naus Development Ltd in such a way as to make the building of the distributor road impossible and dramatically altering the potential of the Darlington site.

Mr Justice Kelly said Darlington presumed the Naus permission was granted after its June 2006 contract and tried to do the best it could in the changed circumstances. However, zoning changes in a new development plan in 2007 created further problems and the council failed to respond to several communications from Darlington seeking to address those.

Darlington's planning applications were later refused, a draft local area plan of February 2009 dropped the objective of the distributor road, and by April 2009, Darlington realised there was no prospect of an economic development of the site.

Darlington learned for the first time in 2009 that the permission to Naus that had rendered the distributor road impossible was granted in June 2005, many months before the council had offered for sale the site bought by Darlington. It then issued legal proceedings.

Mr Justice Kelly ruled Darlington was induced to enter into purchase of the site on foot of negligent misrepresentations by the council as far as the distributor road was concerned. The council should have known at the time it had granted a permission for Phase 5 of the Ashbourne town centre which made it impossible to construct the distributor road, he said.

There was a "clear obligation" on the council to ensure what it was telling Darlington was accurate as, were it not for the distributor road, Darlington would have had no interest in the site and would not have bid for it, he ruled.

The council, as vendor of the lands, had a duty of care to Darlington as a prospective purchaser. The council was not just any vendor but, as the planning authority, had a particular status and particular means of knowledge.

Darlington had suffered loss as a result of the council's negligent misrepresentations and breach of duty of care and was entitled to damages on the basis of the monies spent by it less the current value of the lands, he ruled.

Having accepted evidence of Darlington that the lands, if they had the distributor road, were valued at €4.51 million in 2006 and are now valued about €450,000, he ruled Darlington was entitled to €4,060,000 damages.

He rejected claims by the council that Darlington was "opportunistic" in bringing its case. While it was true land values have collapsed throughout the country, Darlington was not responsible for that, he said. If the council had been more reasonable, the matter could have been dealt with much earlier when land values were less depressed.