Bovale Developments decided to pay the Murphy Group £1.45 million in November 1989 for 20 acres of land at Swords, Co Dublin, because the land was "ripe for development", Mr Michael Bailey told the tribunal.
He said the land had planning permission, but this was due to expire shortly after the purchase was completed. Consequently he had told Mr James Gogarty that an extension to the existing planning permission would be required and Mr Gogarty had replied: "We will be responsible for that."
Mr Bailey agreed with counsel for the tribunal, Mr Desmond O'Neill SC, that the existing planning permission granted for the land had increased its value.
However, he said that the company had been "gazumped" during negotiations and had had to increase its bid to £1.45 million from an original £1.25 million.
He said that his architect, Mr Allan S. Tompkins, had looked at the land initially in 1988. Based on the architect's report, he had formed the view that the price being quoted was too high.
Despite this, Mr Bailey said, serious discussions about the price of the land did begin in June 1988. He outlined an offer by Bovale which involved a series of phased payments. "I would be trying to get as long a closing and be borrowing as little as possible", Mr Bailey said. He pointed out that interest rates were high at the time.
Mr O'Neill asked Mr Bailey if he knew the planning status of the land when discussions about price were initiated.
"My architect would have done assessments, done potential layouts, done a whole synopsis on the particular piece of land. He would have done a planning search", Mr Bailey said. He agreed that, as part of the deal for buying the land, he reimbursed JMSE a sum of £122,460, which was paid by JMSE to the local authority for service charges on the land.
He said this was the way the transaction was negotiated by JMSE to him. There was no saving to him, and the only person who gained was the house-purchaser.
When asked about the planning permission which was due to expire and an arrangement to extend the benefit of the levy for two years at the 1983 rate, which would save another £220,000, Mr Bailey said he knew nothing about that.