Background
The parties settled an earlier dispute in January 2023. Under the settlement, Greg Kavanagh was to make payments totalling €2.4 million, and his company was to acquire Winestay House after €2 million had been paid. The agreement included a default clause permitting judgment for €2.4 million less payments made. Kavanagh paid €200,000.
After litigation over implementation of the settlement, the parties agreed revised terms in July 2023. A dispute then arose over a VAT clause in the contract for sale supplied by the receiver. Kavanagh maintained that the agreed €2.4 million was the full settlement amount and did not make him liable for VAT on the property sale. O’Neill sought summary judgment for the unpaid €2.2 million under the default clause.
The Court’s Holding
Ms Justice Bolger refused O’Neill’s application for summary judgment against Mr Kavanagh. On the summary-judgment test, Kavanagh had shown a credible, bona fide defence requiring a plenary hearing.
The VAT dispute was material to whether Kavanagh was in default under the revised settlement. Its resolution could require findings on the parties’ agreement, the significance of the VAT term, and which party was responsible for failure to complete the property sale. The Court also held that O’Neill’s estoppel-by-convention argument raised mixed questions of law and fact, and declined to enter partial judgment of €1.93 million.
Key Takeaways
- A bona fide defence is sufficient to defeat summary judgment, particularly where material factual disputes require trial.
- A settlement default clause does not automatically justify judgment where the alleged default depends on unresolved issues about implementation of the settlement.
- Disputed VAT liability in a property-sale contract may be material to the parties’ respective obligations under a linked settlement agreement.
Why It Matters
The decision illustrates the High Court’s reluctance to resolve contested contractual construction and factual issues through summary judgment. Where a party says that non-payment resulted from the other side’s failure to implement an interconnected property transaction, the dispute may need to proceed to plenary trial.
The costs of the motion were indicated to be costs in the cause, for determination by the trial judge.