Representing the City of Pärnu in a dispute over a property at Esplanaadi 10

02.08.2013 Representing the City of Pärnu in a dispute over a property at Esplanaadi 10

The firm, led by partners Paul Varul and Martin Tamme, represented the City of Pärnu against OÜ Herder in a dispute over the contract for sale of a property at Esplanaadi 10, which resulted in the biggest court victory in the city’s history.

Mayor Toomas Kivimägi expressed his appreciation to the attorneys-at-law representing the city, Paul Varul and Martin Tamme, in the Pärnu Postimees newspaper. According to Kivimägi, no one should doubt their high level of professionalism. “Well done indeed,” he said.

In its judgment rendered on the case, the Supreme Court expressed precedent-setting opinions on issues concerning construction and sales law, enforcement of legal remedies and bad faith behaviour. Among other things, the Supreme Court discussed a significant breach of the contract and the buyer’s right to withdraw from the contract in the event that a property is sold at public auction.

The courts dismissed the action brought against our client because the City of Pärnu as the seller had not violated the terms and conditions of the public auction or the buyer’s expectations of the success of development and construction activities on the property sold. The buyer of the property cannot have such expectations, as construction and planning issues are covered by public interest and the scope of construction and development activities is determined in the public planning process rather than during the public auction of the property. The court also found that contractual conditions and protected expectations concerning a property sold at auction can only include information that has been published through official channels during the auction proceedings.

The judgment has momentous implications for property construction and sales law, as it defines the extent to which the seller of a property is responsible for the success of the development and planning activities related to the property. According to the principle of shared risk, these activities constitute the risk of the buyer.

On the same topic

ERR: City of Pärnu defeats developer in court
Pärnu Postimees: City of Pärnu’s definitive victory in Esplanaadi 10 case
Pärnu Postimees: Editorial: Victory of the city on Esplanaadi Street
City24: Court upholds complaint of City of Pärnu in Esplanaadi property case
Äripäev: Action of real estate developer against Pärnu dismissed
Ärileht: Pärnu files report for verification of sale of property at Esplanaadi 10
Pärnu Postimees: City files report with police regarding sale of property at Esplanaadi 10