Buyers to use impecuniosity defence in legal dispute

Thu 27 May 2010

Customers of Titanic Quarter Ltd may claim a defence of impecuniosity in an upcoming court dispute.

The company is seeking damages for breach of contract after a number of buyers who signed up for new apartments in Belfast pulled out because they could not find the money.

However, some of the defendants believe that claiming impecuniosity - a total lack of money - could serve as a defence in court.

The apartments were built in the Titanic Quarter of Belfast, but people who had agreed to purchase the properties were affected by the drop in house prices triggered by the credit crunch.

As a result, some were not able to obtain mortgages for sales agreed when the market was in a much healthier state.

Titanic Quarter Ltd, which is owned by Harcourt Developments, subsequently chose to issue writs against these customers.

Emma Chadwick, a partner at Winckworth Sherwood Solicitors, commented: "There are many buyers already facing similar difficulties due to the reduction in property values since they paid deposits and numbers are likely to increase as developments are completed but prices have not recovered to enable mortgage finance to be made available to complete purchases.

"It is not just the risk of losing a deposit, which for many buyers is substantial, but the threat of being sued by the developer and forced to complete the purchase.

"Traditionally, the Courts have not considered impecuniosity as a defence but they will be reluctant to penalise buyers in this position and it will be interesting to see if the Courts find another way to achieve this result."

This comes after Big Picture Developments won a case in the High Court, which saw it take legal action against those who did not complete sales at the Bakery development in Belfast.