Completion
Cases
Latham v Travers
Court of Appeal.
7 May 1912
[1912] 46 I.L.T.R 98
Barry L.C., Holmes, Cherry L.JJ.
The Lord Chancellor, in giving judgment, said:—I concur with the opinion of the the Master of the Rolls that no contract was arrived at in the matter until the order of May 18th, 1908, made by the late Lord Chancellor accepting a proposal by the Estates Commissioners, dated April 7th, 1908, to purchase the lands for the sum of £5,136 under s. 6 of the Irish Land Act, 1903. [His Lordship read the order of May 18th, 1908.] It is plain to my mind that the order of the Lord Chancellor was a distinct intimation by him that he was directing a sale of the whole interest in the lands belonging to the lunatic, not merely his interest as grantee under the fee-farm grant, but as well his moiety of the fee-farm rent. I agree with the Master of the Rolls that there is nothing in the Land Purchase Acts to prohibit such a sale to the Estates Commissioners by a person who is in relation to the estate being sold at once the grantee of the lands and as well the owner of a moiety of the rent. The sale, no doubt, would have to be a sale of the lands in fee-simple, and accordingly the outstanding moiety of the rent, not the property of the vendor, would, in the course of the proceedings, have to be redeemed. That circumstance in no way appears to prevent a qualified vendor in such a case from selling his whole property in the lands, leaving it to the Estates Commissioners by the statutory procedure to redeem out of the purchase-money of the lands the moiety of the rent. In such a view one sees at once the purpose obviously underlying the Lord Chancellor’s order of May 18th, 1908, when he spoke of “the net amount available in respect of the purchase-money.” I do not accept the first contention of the appellant’s, that the Lord Chancellor had no authority to sell the lunatic’s share of the head rent under s. 26 of the Irish Land Act, 1903. It is the land in fee-simple that is sold and bought under the Irish Land Purchae Acts, and it is, in my opinion, the necessary course to interpret the word “land” in s. 26 as comprising every interest and estate constituting the fee-simple. Lands comprise every interest and estate therein, whether corporeal or incorporeal, and the construction I have placed upon s. 26 of the Act of 1903 would be, in my opinion, the proper one, even if there was no reference in it to s. 63 of the Lunacy Regulation (Ir.) Act, 1871. The express meaning, however, of s. 26 of the Act of 1903 is that the sale, in the conditions mentioned in it, may be ordered by the Lord Chancellor, as if the sale was required for one of the purposes mentioned in s. 63 of the Act of 1871. That being so, I cannot but consider that the whole power of the Lord Chancellor under s. 63 of the Lunacy Act, 1871, was at once capable of being brought into operation for what is to be considered a newly added purpose under that section—the purpose being to carry out a sale of an estate under the Land Purchase Acts. Wherever, accordingly, there is a lunatic under the care of the Lord Chancellor, possessing an estate or interest in the lands enabling him, if sane, to sell the lands under the Irish Land Purchase Acts, it is placed within the power of the Lord Chancellor to sell the lands or any estate or interest of the lunatic therein for that purpose, in the same way as he could for any of the purposes previously indicated in s. 63 of the Act of 1871. S. 67 must necessarily apply to sales of lands for the new purpose introduced into s. 63 as well as to sales for the previously existing purposes. The unexpended moneys representing the estate and interest in the lands sold must stand in the place of the respective estates or interests sold, and the heirs, next-of-kin, devisees, legatees, executors, administrators and assigns, shall have such and the like interest in the said moneys as he or they would have had in the estate or interest sold. Such moneys are to be under the section of the same character as the estate sold. It was in exercise of that jurisdiction that the Lord Chancellor, in his order of July 18th, 1908, directed that the net balance of the purchase-money should be *101 credited in the lunacy matter and to the separaté credit of the sale of the lands. He was anxious by a very specific order to carry out what is a fundamental duty of the Lord Chancellor in exercising his lunacy jurisdiction as stated by Lord Macnaghten in his judgment in Attorney-General v. Marquis of Ailesbury. The learned lord stated it as a settled principle that, while in the ordinary course of managing a lunatic’s estate, the Court pays no regard to the interests or expectations of those who may come after, it is equally well settled that in matters, outside the ordinary course of management, it is the duty of the Court, as far as may be possible, not to alter the character of the lunatic’s property or to interfere with any rights of succession. [His Lordship referred also to In re Ryder and the judgment in that case of Jessel, M.R.] No one judging properly the real meaning of the Lord Chancellor’s orders in the present lunacy matter can doubt that it was the intention of the Lord Chancellor in no way to alter the character of the lunatic’s property or to qualify the devolution of its proceeds. He treated them in the sense of s. 67 of the Act of 1871, and on that basis he directed the lodgment of the whole moneys payable to Colonel Nugent to be made to the separate credit of the sale of the lands. Apart altogether, however, from s. 67, the case of The Attorney-General v. Marquis of Ailesbury, if fully examined, is, in my opinion, an authority in favour of the Lord Chancellor’s jurisdiction and power in that respect; and inasmuch as the Lord Chancellor’s intention was unequivocally what I have said, I think it would be impossible to hold that there was an ademption of any part of the devise made by Colonel Nugent’s will to the plaintiff in this case. I accordingly think that the appeal should be dismissed with costs.
Holmes, L.J., in giving a concurring judgment affirming the decision of the Master of the Rolls, said:—I think that one observation made by him may possibly be misunderstood. He says that he cannot see any valid reason why the Lord Chancellor could not have in respect of a lunatic’s estate the right every owner of a head rent has—the right by voluntary agreement to sell such superior interest. If by this is meant that the Lord Chancellor can sell to the Land Commission under s. 6 a lunatic’s superior interest in lands as a separate and distinct subject of sale, I am unable to agree with the proposition, inasmuch as under that section the Land Commission is only given authority to purchase the whole estate for a sum to be estimated by that body as the price of every interest therein.
Cherry, L.J., concurred in dismissing the appeal, and said he entertained no doubt that the judgment of the Master of the Rolls was correct, and that there had been no ademption of the devise of the lands to Mrs. Latham by the will of Colonel Nugent.
Jackson & Anor -v- Stokes
[2008] IEHC 276
McCarthy J.
Status of Judgment: Approved
25th day of July, 2008.
1. This action was commenced by originating Summary Summons of the 9th July, 2007. By it the plaintiffs seek to recover the sum of €38,465.96 together with interest pursuant to statute. It is alleged that sum is money due for interest accrued on foot of a contract for sale made between the parties and in particular so due because the closing date in respect of such contract was the 2nd April, 2007 whereas closing occurred on the 24th May, 2007, interest being payable thereunder at a daily rate of €739.73 from such agreed date. Ultimately, when the matter came before the Master on a motion for summary judgment dated 5th November, 2007 it was put into the Judges List for hearing. The defendant sought to have the matter remitted for plenary hearing. In as much as it was agreed between the parties that no evidence beyond that which appeared on the affidavits sworn for the purpose of the motion was relevant and the matter could be disposed of on that evidence the hearing was, by consent, treated as the trial (on affidavit).
2. I think that the first issue which arises is to determine the agreed closing date. This was the 29th October, 2006 but it is not in dispute that this was initially changed to the 2nd April, 2007, on perusal of Mr. Jackson’s affidavit and that of Mr. Stokes. It would appear from a letter sent by Messrs. Denis McSweeney (solicitors for the defendant purchaser) on the 9th October, 2006 that this change was agreed consequent upon a letter of 6th October, 2006 from Messrs. Collins on behalf of the plaintiffs. In his replying affidavit sworn on the 15th January, 2008, Mr. Stokes, at para. 5 therein, says that his solicitors requested a changed closing date of the 16th April, 2007; it is not clear whether or not it is suggested that this change was sought in writing but, in any event, there is nothing before me to indicate that it was. However, Mr. Stokes contends that a letter of 21st March from Messrs. Collins is to be read as confirming his assertion in as much as it refers to the closing “which is due to take place on 16th April next”. In a later letter, of 26th March 2006, to Messrs. McSweeney from Messrs. Collins reference is made to “your conversation with David Ensor of our offices suggesting a closing date of 16th April next”. Further, by that letter certain difficulties on the part of the plaintiffs in the event that the closing date was as late as the 16th April were mooted and it was stated “we would appreciate if you could get your clients instructions in this matter and facilitate our clients by completing on the morning of the 11th April”: thus a further change was sought but there is no suggestion it was agreed.
3. It is accordingly clear that the closing date was the 16th April, 2007.
4. The contract was, to put the matter shortly, in accordance with the general conditions of sale published by the Law Society with, as is usual, of course, certain special conditions. Such general conditions at Clause 40 contemplate what are commonly known as “completion notices” and Clause 40(a) is to the effect that:-
“If the sale be not completed on or before the closing date, either party may on or after that date (unless the sale shall first have been rescinded or become void) give to the other party notice to complete the sale in accordance with this condition, but such notice shall be effective only if the party giving it shall then either be able, ready and willing to complete the sale or is not so able ready or willing by reason of the default or misconduct of the party.”
And Clause 40(b)
“Upon service of such notice the party upon whom it shall have been served shall complete the sale within a period of 28 days after the date of such service… and in respect of such period time shall be of the essence of the contract without prejudice to any intermediate right of rescission by either party.”
5. It seems clear in the present case that there was no obligation on the part of the defendant purchaser to close the sale before the 16th April, 2007 and, of course, time was not of the essence in respect of that date. The notice was accordingly served prior to the time agreed for closure and demanded closure 28 days thereafter i.e. 28 days from the 3rd April 2007, (excluding the day of service). Prima facie, accordingly, there was no breach of contract on the part of the defendant purchaser merely because the sale was not closed until 25th May following if that date was within a “reasonable time” of the 16th April. The notice was bad and is accordingly not relevant.
6. Interest is payable from the original or any subsequently agreed closing date, whether or not time is of the essence in respect of such date. Interest is not, of course, payable if closing does not take place on the ultimately agreed date because of the vendor if the purchaser is not himself in default or incapacity to close is not the due purchasers default. The benefit, of course, of a vendors completion notice in the event that a closing date has passed without closure and without default by the vendor is that finality is brought into the date for closing thereby disposing of any difficulties pertaining to any issue of closure only within a reasonable time of the agreed closing date (e.g. difficulties as to whether or not there is a breach giving rise to the remedies which flow therefrom, including forfeiture of a deposit and a claim for damages or for specific performance) but the vendor here does not have the benefit of such notice.
7. In any event, even if there was no obligation to complete the contract on a date agreed where time is not of the essence (i.e. here on 16th April, 2007) one of the consequences which that entails is a liability for interest subject to the qualifications referred to above and as I have said. It seems to me that it must be axiomatic that a party could not be liable for interest if a contract is not closed unless the vendor is able, ready and willing to so close on the date agreed. In this case it is contended on the part of the purchaser that the vendors, through no fault of his, were not so able, ready and willing to close on 16th April or prior thereto. I think whether or not such party was in a position to close is evidenced by the fact that, ultimately, on the 24th May, they were not in position t do so, and, in any event, at no time prior thereto.
8. In particular, it is contended on behalf of the purchaser that there were extant several encumbrances upon the plaintiff’s title to the lands in sale. It appears that a negative search was available which disclosed these encumbrances. These consisted of four mortgages respectively dated the 24th April, 1992, the 14th August, 1981, the 14th March, 1982 and the 17th May, 1991. It appears that the amounts due thereunder had been discharged prior to the contract of sale as evidenced by the fact that Messrs. Collins in reply to requisitions on title said that there were no encumbrances. The plaintiffs say that in truth there were no encumbrances, which was why they replied as they did and that they had no duty to furnish any vacate, release or other document to the purchasers on closing. That necessarily means the plaintiffs are contending that a good title can be furnished even though encumbrances still exist on the title, provided that the amounts secured thereunder are discharged, that it is a matter for any purchaser, if he so wishes, to ice the cake, so to speak, (quite unnecessarily from his point of view) and seek such vacate, release or other documents sufficient to remove them. I cannot believe that this is the law. Presumably as a minimum proof of the fact of payment would have been required even on the plaintiff’s contention. As a minimum one would need to look at the mortgages to decide whether, say, they secured not merely a fixed capital sum with interest or, say, they secured not merely a fixed capital sum with interest or, say, indebtness to any of the financial institutions concerned in order to satisfy oneself that there were no liabilities. Much has been made of conveyancing practice to accept a title as good which was subject, prima facie, to encumbrances, on the basis of an assertion that the money secured thereby had been discharged. Of course the acceptance of an undertaking to furnish any relevant document or to produce evidence of discharge, by a vendor’s solicitor, equally in accordance with common conveyancing practice, by the purchaser’s solicitor would be proper but that is not the end of the matter, here.
9. One is accordingly thrown back on principle and as a matter of principle it seems to me that a party entitled to a good marketable title is entitled to just that and that the fact of the existence of encumbrances (whether or not any amount secured thereby has been paid) means that the title is not such. I should say, in the context of the present case, that undertakings were accepted, ultimately, in respect of the encumbrances. It is suggested that the sale might have been closed at an earlier stage if the defendants had been willing to accept such undertakings but I see no evidence to that effect and, even it were to be so, a party who waives its strict legal rights as in the present case does not thereby, in my view, acknowledge the proposition that its contentions are ill founded in law. This must be particularly the case here given the fact that as of the 31st August, the plaintiffs knew what was required of them. An undertaking is simply not the same thing as, say, a deed.
10. Undertakings pertaining to discharge of encumbrances are, of course, a commonplace since a three way closing will rarely occur. In the present case there was no reference to undertakings, it appears, at any time before the date of attempted closure on 24th May, 2007. It seems that the only reference to the encumbrances arose in correspondence between the solicitors, with special reference to a letter of 31st August, 2006. By that letter Messrs. Denis McSweeney indicate that they had apparently received the negative search from which the fact of the existence of the mortgages appeared. I do not have a copy of that search but the purchaser’s solicitor thereby sought confirmation “that the originals of all mortgages will be handed over on closing with vacate/receipt endorsed thereon or alternatively a deed of release in respect of same duly registered”. The vendor was accordingly on notice from that day as to the purchaser’s requirements in respect of the encumbrances and prima facie, one would have thought that their requirements might reasonably have been capable of being met since it appears that on the relevant date the amounts due had, as a fact, been discharged and they were legitimate demands.
11. The purchasers contend that whatever may be conveyancing practice in terms of the acceptance of undertakings pertaining to encumbrances they have a free standing right to a perfected title and are not to be placed in a position of having to accept undertakings which do not, of themselves, give them title, merely the assurance that they will obtain title in the future or one which they must take steps themselves to achieve. This bald, freestanding position is unexceptional and unassailable whatever grace might be extended by purchasers to vendors. Presumably a mortgagee would in some circumstances be willing to take an undertaking from the vendor’s solicitors to pay any amount due out of the proceeds of sale and, even prior to closure, to, say, deliver original mortgage deeds or execute deeds of release or otherwise act as might be necessary to divest themselves of the interest which they might have by virtue of the encumbrances. There might be other cases where what one might call a three way closing would be necessary.
12. Dublin Laundry Company Limited (in liquidation) v. Malachy Clarke, [1998] I.L.R.M. 29, strongly relied upon by the plaintiffs, was a case where the issues were decided in the context of the service of a completion notice and it is of some assistance in the present context. In it the liquidator (selling on behalf of the company) did not, at the time service of the completion notice, have releases in respect of certain equitable mortgages, but could have had them at any time up to and including the date of expiration: this did not render the notice bad. Certainly, of course, whether there is a completion or not the vendor should be in a position to produce good marketable title on the closing date (i.e. whether that date is agreed or fixed by completion notice or, time not being of the essence, any later relevant date).
13. Of potential relevance also in the present case is the position pertaining to the provision of a certificate under the Family Home Protection Act, which, apparently, had not been executed on the date the completion notice was served: Costello J. held inter alia that this document could have been obtained without any difficulty if the sale had been completed – the fact that it had fallen through (giving rise to the action) forestalling the need to produce it. The relevance of the certificate was in the context of the defendant’s submission that it was not in existence at the time of service of the completion notice. In any event, it is clear from the report that the property was not a dwelling house and the vendors were a company; presumably, accordingly such certificate was merely a document certifying to the former effect and was not such consent as is required from a spouse pursuant to s. 3 of the Family Home Protection Act, to which I will turn below. It is thus no authority for the proposition, for example, that a party is ready willing and able to close if he does not have an appropriate consent, where that is required.
14. It is not in dispute is that there was at the time at which closing was sought to be made no separate free standing prior consent on the part of the second named plaintiff wife as contemplated by s. 3 of the Family Home Protection Act to the grant or assurance in respect of a portion of the lands in sale (the remainder being in the joint names of the plaintiffs). It is suggested that the absence of a prior written consent would be a de minimus error but I do not think that if a consent was required it could fall into that category since any disposition without a consent, where that was requisite (as here) would be void.
15. It is contended, however, that the execution of the contract itself constitutes a consent to the ultimate grant. I am told by counsel that there is no authority upon this point and presumably this is because whether or not a document is a consent for the purpose of the Act is purely a matter of interpretation of such documents in the ordinary course. The face is the first page of the contract contains a standard form provision, capable of being signed by a spouse, consenting to the sale of the property described in the particulars, pertaining to the contract. This was not executed. No such consent is of course necessary where property is jointly held by a husband and wife and even though the property was held under separate titles it is one lot. Consent was required only in respect of the disposition of part of it. Notwithstanding the fact that the separate portion directed to the Family Home Protection Act (pertaining to parts of the property in sale) was not executed the operative part of the contract is described as being between the plaintiffs and the defendant:-
“Whereby it is agreed that the vendor shall sell and the purchaser shall purchase in accordance with the annexed special and general conditions of sale the property described in the within particulars at the purchase price mentioned below”.
16. It seems that while conveyancing practice contemplates a separate consent to the assurance (whether endorsed on it or otherwise) directed towards the Family Home Protection Act be executed it is hard to conceive how there would be a want of consent to the disposition of part of the property in sale in the current, or perhaps, in any, case where the document is explicitly described as a memorandum of agreement pertaining to the sale of specified property and where both spouses are party thereto. The alternative proposition is that where two persons are parties to a contract, even in a case where part of the lands in sale (as one lot) are held solely by one of them (they being spouses) participation in the contract expressed be in respect of the entirety of the lands, does not be betoken consent for all purposes. I cannot believe that this is the case. I therefore am of the view that there was a prior consent to the deed produced as executed by the vendors on 24th May. Whilst the point is irrelevant having regard to my conclusion it seems to me that it would be hard to conceive how an undertaking to produce the consent, unless it existed, could fulfil the duty of the vendor to complete the sale having regard to its fundamental nature. Thus, even if I am wrong in my conclusions in respect of the question of encumbrances, and in particular, the insufficiency of undertakings, an undertaking to afterwards produce a consent unexecuted prior to the sale would never be sufficient. I do not think that the decision of Costello J. in The Dublin Laundry Company Limited case is authority to the contrary since what was contemplated there were a statutory declaration and a certificate under the Family Home Protection Act to prove that the property was not a family home rather than a prior written consent by a spouse.
17. A number of other decisions were brought to my attention. In Quadrangle Development and Construction Company Limited v. Genor, [1974] 1 WLR 68 the plaintiff failed to complete in accordance with a completion notice of a type which appears to be analogous to that here and the defendant sought to rescind the contract and forfeit the deposit; it is authority only for the proposition that when a completion notice is served both parties are bound thereby. In Re The Post-Master General and Colgan’s Contract, [1906] 1 I.R. 287 the vendor was held not to be entitled to close a sale with the Post-Master General because he was not in a position to give vacant possession of the property on completion in as much as there was in existence a tenancy originally conceived to be quarterly (at the time of the contract) but ultimately held to be yearly whereby an attempt to secure possession, for the purpose of giving vacant possession to the purchaser, by serving three months notice to quit was ineffective. The questions of “default” and “wilful” were addressed but it seems hard to conceive, on any view of the matter, that the purchaser had an obligation to close the contract whilst the tenancy was outstanding. In Allied Irish Banks v. Finnegan, (Unreported, Supreme Court, Blayney J., 16th February, 1996) the issue concerned the efficacy of a consent of a spouse to the creation of an encumbrance: on its face it was valid but it was asserted that it was no true consent: obviously this has no relevance here. In Tyndarius Limited v. O’ Malley and Others (Unreported, High Court, T.C. Smyth J., 11th January, 2002), a completion notice was served by the vendor but it was contended that it was invalid because the vendor was not ready and willing at the time of its service to fulfil his own outstanding obligations and this was indeed held to be so.
18. In so far as reference was made to conveyancing practice in Patel v. Daybells (a firm) [2001] All E.R. 398 (July) an issue arose as to whether or not a purchaser’s solicitor was negligent by accepting an undertaking from the vendor’s solicitor to redeem the vendor’s mortgage out of the proceeds of sale and it was held that there was no negligence in doing so having regard to the fact that the approach in question complied with normal conveyancing practice, in circumstances where the practice did not expose a client to a “foreseeable and avoidable risk” or could not be defended on rational grounds (i.e. there were circumstances where the application of the practice would not exclude liability). It is mentioned here for the purpose of stressing the nature of an undertaking described inter alia as:-
“…between the solicitor who gives the undertaking and the purchaser, the undertaking is unconditional and unqualified. Moreover it is backed by the summary procedure available for its enforcement, and by the Solicitors Indemnity Fund (or the equivalent arrangements which have now replaced it) and the Compensation Fund.”
In Domb and Another v. Isoz, [1980] 1 All E.R. 942 an issue arose as to whether or not a contract for sale was binding on the defendant vendor and while the issue of undertakings was not germaine to the judgment, a portion of the judgment of Templeman L.J. made reference to the nature of conveyancing transactions and in this connection inter alia he stated that:-
“Binding and enforceable undertakings between professional men play an essential part at different stages.”
No one doubts these principles.
19. I was also referred to Glenkerrin Homes v. Dunlaoghaire Rathdown County Council, (Unreported, High Court, Clarke J., 26th April, 2007). There is no suggestion in this however, or any other authority opened to me, that there is an obligation to accept undertakings in substitution for ones strict rights, desirable though this is in many circumstances and in the present case might be. In Glenkerrin reference was made inter alia to the provision of letters from a local authority confirming compliance with financial contribution conditions of planning permissions. These, he held, have achieved a status “which might be described as a quasi document of title” and that there was an entitlement to their provision in the context of legitimate expectation. I cannot see how this bears on the nature of an undertaking or that it establishes any general principle that undertakings are, and there is a degree of repetition here on my part, a substitute for fulfilment of substantive obligations. I do not think there could, by the way, be any question of legitimate expectation that an undertaking would be accepted or, even if it be normal conveyancing practice, one could assume that undertakings would be accepted and to purport to complete or offer to complete on the basis of them. In this case by letter of 31st August, 2006 the purchasers made their position abundantly clear as to there requirements, requirements which were never disputed and which, I have held, in any event, were perfectly proper.
20. In summary I am accordingly satisfied, that the plaintiffs were not able, ready and willing to close, on the 16th April or, indeed, on the 24th May by reason of the absence of appropriate vacates or releases of the encumbrances, that there is no obligation to accept undertakings in lieu of one’s strict rights and that their failure to close, was not due to any fault on the part of the purchaser and that interest is not payable. No demand was made by the purchaser for anything to which he was not, in strictness, entitled. The completion notice is irrelevant. The vendor seems at all times, and ultimately at closing to have been unwilling to close on the basis required by law, even if he was able or ready because he possessed the capacity to perfect the title but did not and of course he must not only be able and ready but also willing. I dismiss this action.
Courtney v McCarthy
Supreme Court, December 4, 2007; [2007] I.E.S.C. 58
JUDGMENT of Mr. Justice Geoghegan delivered the 4th day of December 2007
Although this litigation, on its face, relates simply to a contract for the sale of land, unusual issues of both fact and law arose. The plaintiff/respondent was the vendor and the defendant/appellant was the purchaser. For convenience I will refer to them as “the vendor” and “the purchaser” respectively. The vendor’s proceedings were with a view to establishing that she had lawfully rescinded the agreement. The appellant in her defence denied rescission and sought specific performance. In reality, however, the denial was artificial as undoubtedly the agreement had become rescinded at the suit of the vendor but the purchaser’s claim for specific performance was based on an alleged estoppel which allegedly arose from a set of circumstances which took place after the date of the purported rescission. The learned trial judge in the High Court granted the vendor her relief sought and dismissed the purchaser’s counterclaim. The purchaser has appealed that decision.
The sale related to lands with a development potential situate at Rocky Road and Ballybeg Road, Ennis in County Clare. The purchaser’s father owned adjacent property and was a developer of some substance. The sale had been a sale by public auction. The signed memorandum incorporated the then standard Law Society contract with some special conditions included in it. Some matters relating to planning and development and some matters relating to access which were partly covered by the special conditions were of considerable interest to the purchaser and although she signed the contract, as it stood, she attempted afterwards with the help of her solicitor to have certain aspects of these matters agreed. For reasons which I will explain, I do not find it necessary to give details. They are, at any rate, more fully dealt with in the judgment of Finnegan J.
The agreed closing date was the 8th April, 2005 and it is pleaded in the statement of claim that pursuant to general condition 40 of the contract by a notice dated the 22nd April, 2005 twenty eight days were given for completion and that period elapsed without the sale being closed. The statement of claim goes on to plead that the vendor thereupon forfeited the purchaser’s deposit on the 30th May, 2005 and effectively rescinded the agreement.
There were then further attempts made at the suit of the purchaser but partly also with the connivance of the vendor to revive the agreement on a without prejudice basis and with some side agreements about the matters of special concern to the purchaser.
It seems absolutely clear that the rescission by the vendor was lawful and it seems equally clear that until the events which I am about to describe and which form the factual background of these proceedings took place, all other attempts to revive the agreement on a without prejudice basis or otherwise had become redundant. I do not, therefore, find it necessary to elaborate further on them.
Events took a sudden turn however on the 4th July, 2005. On that date the auctioneer, Mr. Fitzpatrick, received a telephone call from the daughter of the vendor. The daughter is the same name as the mother i.e. Anne Courtney. It appears that the vendor is frail and elderly and everything to do with the sale was being managed on her behalf by her said daughter who in turn was married to her solicitor, Mr. Michael Hickey. Mr. Fitzpatrick in evidence gave an account of this call from contemporaneous notes which he took. According to the transcript, Mr. Fitzpatrick, referring to these notes, said the following:
“She prefaced it by saying that her mother was somewhat frustrated by the whole affair and the effect .. and was concerned about the effect it was having on her mother’s health. That was the general background. And she said in an effort to bring the matter to conclusion, she asked me to contact Therese McCarthy with a view to closing the sale on Monday 11th July. She specifically said to me she didn’t want to prejudice what was going on between the respective solicitors and she didn’t want any correspondence, she didn’t want me to enter into any correspondence in the matter.”
Mr. Fitzpatrick then confirmed that he was to contact the purchaser. His instructions from Ms. Courtney were to ask or to make arrangements to contact her solicitor so as to close the sale at 2.00 p.m. on Monday, 11th July at the office of John Shiel and Company. They were the solicitors for the vendor of which Mr. Michael Hickey was partner. Mr. Fitzpatrick succeeded in making contact virtually immediately with the vendor and he told her of the request and although she did not commit herself at that stage, Mr. Fitzpatrick was under the impression that she was happy to bring matters to a conclusion. The evidence of Mr. Fitzpatrick makes it clear also that the purchaser was made to understand that what was to be completed was the original contract unaltered but that any such revised arrangements were to be without prejudice to the previous rescission. Under cross-examination, Mr. Fitzpatrick further confirmed that while he did not foresee any practical difficulty in relation to the side matters originally concerning the purchaser, the business for the 11th July would be the completion of the one and only contract he knew about that is to say, the contract made at the auction. He was also questioned on the matter of interest. There is no doubt that on behalf of his client, the purchaser, her solicitor, Mr. Gavin of Galway did his best to negotiate his client’s way out of paying interest. One of the problems was that the bank loan for which she had sought sanction would not have covered a liability for interest which was in the event quite considerable having regard to the delay in closing. As far as Mr. Fitzpatrick was concerned he made it clear that there was no discussion on interest either way. There was a clause in the contract providing for interest and that was the end of the matter. In upholding the rescission and refusing specific performance, the learned High Court judge attached significance to the interest question. Having regard in particular to the evidence of Mr. Gavin to which I will be referring and at any rate having regard to a premature reneging on the promise, I am of opinion that she was not correct in so doing. It is clear beyond doubt, in my view, that even if there had been no “give” whatsoever on the part of the vendor in relation to interest, interest in accordance with the contract would in fact have been paid had the closing originally suggested for the 11th July taken place.
Interest was never a matter which concerned Mr. Fitzpatrick because of course it could only arise in the event of delay. The following dialogue, however, between Mr. Fitzpatrick and counsel for the purchaser took place towards the end of his cross-examination:
“Q. Was it your understanding that if this went ahead on the 11th, that was a matter to be dealt with by Mr. Fowler?
A. Yes, at closing, yes.
Q. With Mr. Fowler?
A. Yes. Sorry, I should say that when Anne Courtney rang me first on the 4th I was aware that she was on a family holiday in Kerry and that Michael Hickey was with her. I specifically asked who would deal with the closing .. (interjection).
Q. On the 11th?
A. In the office of John Shiel, yes I specifically … (interjection)
Q. Who was going to deal with her and you were told Mr. Fowler … (interjection)?
A. David Fowler, that’s according to my notes.
Q. Did you tell Ms. McCarthy that’s going to be dealt with by Mr. Fowler?
A. I did specifically … (interjection)
Q. You told her that?
A. Because I knew the first thing she would have to do would be get in touch with Colm Gavin’s office in Galway.
Q. Her own solicitor?
A. Yes.
Q. But mentioned it would be Mr. Fowler dealing with it?
A. Absolutely, I did.”
Those arrangements as described so clearly by Mr. Fitzpatrick correspond with the evidence of the purchaser and correspond with the evidence of Mr. Gavin as to his instructions. More importantly, it is entirely borne out by the evidence of Mr. Gavin as to his subsequent conversations with Mr. Fowler, a matter which I will be dealing with in some detail later on in this judgment.
Having regard to the comprehensive review of the evidence given by Finnegan J. in his judgment and for which I am grateful, I intend to confine myself to the aspects of that evidence which are most relevant to this appeal. I think it of some importance, however, to list the witnesses who did in fact give evidence if only for the purpose of highlighting a major omission. The witnesses were:
Mr. Michael Hickey, solicitor for the vendor.
Ms. Anne Courtney junior, daughter of the vendor.
Mr. Michael Fitzpatrick the auctioneer.
Ms. Therese McCarthy the purchaser.
Mrs. Anne Courtney the vendor.
Mr. Michael Earley the relevant bank manager.
Mr. Colm Gavin, solicitor for the purchaser.
When I describe what happened on the 11th July, 2005, it will emerge that Mr. David Fowler a partner of Mr. Hickey was a key figure. Yet, although it appears from the transcript that he was present in court, he was not called as a witness.
I turn now to the key evidence of Mr. Gavin. Mr. Gavin explained that he received the instructions from his client, the purchaser, relating to the offer conveyed to her by Mr. Fitzpatrick in early July, 2005. He had been out of the office until Thursday, 7th July and therefore received them on that date. Early the following morning he contacted the office of the vendor’s solicitors which was a Dublin firm. He was told that Mr. Hickey was on holidays and he then asked for Mr. Fowler but he was told that Mr. Fowler would not be there that day. He told the telephonist that he would ring back on the Monday but that the matter was extremely urgent. When asked what did he understand was going to happen on Monday, 11th July, he said that he understood that the sale was to be completed. These were the instructions given to him by the purchaser. He interpreted his instructions as meaning that the sale was to be completed in accordance with the terms of the original contract. That, of course, was a correct interpretation if Mr. Fitzpatrick’s evidence was to be accepted and there was no reason to dispute it. When asked about the side problems such as access on to the lands etc., he answered as follows:
“Well, my understanding with regard to it; the site seemed to be fraught with problems as far as I could see. The original contract was a little loose with regard to how the access and things were to be. But whatever I was being offered on the day, on Monday, I would have to accept. That was as far as I was .. and that is what I informed my client. Whatever we were getting we had to take, that was it.”
He confirmed that those were in fact his instructions. He was then asked about interest. Having explained what often happened as between solicitors in relation to interest and how interest was often wholly or partly waived, matters which I can safely skip over because Mr. Gavin fully accepted that the full contractual interest had to be paid if necessary and his evidence was that if his client on the day could not pay it he would have had no trouble in obtaining it from the Allied Irish Bank. He would have debited his own office account with the amount of the interest and would have paid it over to the vendor. His evidence was that he was absolutely satisfied that if it came to the worst he would be able to recover the interest from his client’s father, the developer, Mr. McCarthy. He added “I know them well enough, trust them enough for that.”
There appears never to have been any dispute as to how interest was to be calculated which might have been a different matter. The problem was a financial one and the purchaser was hoping to escape interest or at least escape part of it. But I think it is perfectly clear that she was well aware that under the contract, the liability to pay interest existed and she was equally well aware that what had to be performed was the contract as originally entered into.
As far as the side issues were concerned the evidence would seem to clearly establish that for the purpose of any closing that might occur on the 11th July they were not regarded as part of the contract except in so far as there were special conditions relating to them. Some of the obligations in the special conditions were, at any rate, post completion obligations.
The narrative as to what exactly happened as and from Monday, 11th July, 2005 is crucial to the outcome of the case. I will now explain it in detail.
I will do so primarily by reference to the evidence of Mr. Gavin and I will refer briefly to any relevant conflicting evidence from Mr. Hickey. First of all I should mention that there was evidence from Mr. Gavin that he sent a fax to the firm of John Shiel, solicitors, on Friday, 7th July very shortly after he had telephoned the office. It would, therefore, have been some time between 9.00 o’clock and 10.30 on the Friday morning. The fax read as follows:
“Dear Mr. Fowler,
I rang you on my return from a few days leave this morning but unfortunately you were not available. My client has instructed us that apparently this sale is now back on track and is to complete immediately. To this end, I have arranged with AIB to draw down the monies on Monday morning and it can be forwarded to you by draft of (sic) by electronic transfer.
You might ring me in order to bring this protracted matter to a conclusion.
Yours sincerely
Colm Gavin”
There was enclosed with a separate fax of the same date from Mr. Gavin some maps relating to the side issues. The hope was expressed that there would be agreement in relation to these matters but it was made clear that it would not hold up the closing of the sale. That fax was sent also directly to Mr. Fowler. Mr. Gavin then described what happened on the Monday morning i.e. Monday, 11th July. He rang the office of the solicitors for the vendor and asked for Mr. Hickey but he was told that Mr. Hickey was on holidays. He then asked for Mr. Fowler and he was told that Mr. Fowler was in court and would be there all day. Mr. Gavin then explained to the receptionist the urgency of the matter as he had been told that there was a 2.00 o’clock deadline and that he was arranging for monies to be put through to the account of the solicitors for the vendor and he asked the receptionist could she arrange that Mr. Fowler would telephone him. That phone call from Mr. Gavin was at approximately 9.00 o’clock in the morning. Mr. Gavin then went on to explain how he had arranged the monies with the bank and that it would be essential that they would be available by 2.00 o’clock. Mr. Gavin had already approved the draft deed at an earlier stage. All the usual documentation relating to Family Home Protection etc were in order. It had been stipulated to the purchaser that the sale was to be completed in Dublin in the offices of John Shiel. It is not entirely clear from the evidence whether if everything had moved smoothly, Mr. Gavin would personally have attended in Dublin at the firm of John Shiel though the more probable inference is that he would have done so. At any rate he explained that any problem about that could be got over in one of two ways. Either he could have been at the other end of a telephone line which is very common nowadays or his sister who is a Dublin solicitor could have attended on his behalf, something she had done on behalf of his firm before.
At about 11.30 on the morning of the 11th July, Mr. Gavin received a telephone call from Mr. Fowler. He explained to Mr. Fowler the urgency of the matter that he was putting the monies through anyway but Mr. Fowler told him that he was “caught in court” and that he could not deal with the matter at that time but that he could complete it the following day. Mr. Gavin agreed to this suggestion as he had no problem with it. As far as Mr. Gavin was concerned there was simply an extension and nothing more until the following day. He so informed his client. He did not then travel to Dublin. Despite the postponement, Mr. Gavin made it clear that he was still “putting the money through”. At that stage as far as Mr. Gavin was concerned and indeed as far as his client was concerned everything was on course for a closing of the sale in accordance with the contract on the following day, Tuesday, 12th July, 2005 until Mr. Gavin received a telephone call from Mr. Hickey at about 12.30 in the morning of the 11th. Mr. Hickey immediately said to him over the telephone “Why aren’t you here in my office to complete this transaction”? According to Mr. Gavin’s evidence, Mr. Hickey told him that he, his wife and his mother-in-law, that is to say, the vendor had travelled up from Kerry to complete the transaction on that day. Mr. Gavin then apologised but explained the position as he saw it but he was told by Mr. Hickey “it is too late now”. According to Mr. Gavin (though this was denied by Mr. Hickey) Mr. Hickey said that he wanted the money to go back with his mother-in-law to Kerry and indeed that that was the exact words he used. It emerged in the evidence that the vendor was not in Dublin at all. Mr. Gavin told Mr. Hickey that he was quite happy to release the money because he knew the documents he was going to receive. However, Mr. Hickey told him “It is too late, the sale is off”. That was the end of the conversation. On the same day, Mr. Gavin wrote the following to Mr. Hickey:
“Dear Mr. Hickey
Our telephone conversation refers. It is in order to release monies today, you may send on the documents to me. With regard to the right of way, the map has to be agreed between the parties. When same has been agreed, I should be grateful if you would have the grant of right of way executed.
Yours sincerely
Colm Gavin”
That elicited a reply from John Shiel, solicitors in the following terms:
“Dear Sirs
We refer to the above mentioned matter and your facsimiles of the 8th July and 11th July.
As previously advised the contract for sale was rescinded and the contract deposit forfeited. Accordingly, this matter is at an end.
Any monies forwarded to us will be immediately returned to you.
Yours faithfully
John Shiel, solicitors”
There was some subsequent correspondence which I do not find it necessary to set out.
I wish to refer briefly now to the evidence of Mr. Hickey. In relation to the actual issues which are relevant to this case none of Mr. Hickey’s evidence is material except in so far as it relates to what was to happen on the 11th July, 2005. The arrangements for that date, of course, were made between Mr. Fitzpatrick and the purchaser. It is clear beyond doubt from the evidence of those two witnesses that what was contemplated was a closing of the sale on the 11th July. Mr. Hickey, on the other hand, in his evidence seemed to suggest that all that was intended to be involved was some kind of round table meeting to see whether there was any basis on which a sale could go through notwithstanding the rescission. In giving this evidence, Mr. Hickey was either mistaken or disingenuous. Mr. Hickey was in Kerry on his holidays at the time that the arrangements were made. Mr. Hickey explained that the 11th July had been chosen because he would have been coming up to Dublin on that date with a child who had an appointment in Crumlin hospital. That would have been in the morning and, therefore, any matters relating to the sale would have had to be dealt with in the afternoon. It appears from Mr. Hickey’s evidence that after Mr. Gavin had had the conversation with Mr. Fowler on the 11th July, Mr. Fowler telephoned Mr. Hickey. Mr. Hickey then contacted Mr. Gavin on his mobile and on essential matters his evidence is not significantly different from that of Mr. Gavin. Despite the arrangements already made according to Mr. Gavin with Mr. Fowler whereby a closing would take place on the 12th July, as far as Mr. Hickey was concerned there was to be no closing and his client was standing by the rescission. Curiously enough this volte-face seemed to be largely based on Mr. Gavin not being in Dublin in circumstances where Mr. Hickey alleged that the so called meeting at 2.00 p.m. was to be held in Dublin. The telephone conversation took place, according to the evidence of Mr. Hickey which was not disputed by Mr. Gavin, about 12.30 or 12.45. It is clear that Mr. Hickey in no uncertain terms informed Mr. Gavin that any question of reviving the sale was off. Quite apart from the evidence of Mr. Gavin that, if necessary, the full interest would have been paid on closing, the issue of interest never really arose because it could not have come into play until the intended closing. Significantly, although Mr. Hickey both in direct examination and cross-examination was trying to suggest that all that was arranged for the 11th July was a mere meeting, he nevertheless was not able to give an accurate account of what Mr. Fowler actually told him following Mr. Fowler’s conversation with Mr. Gavin on the 11th. When it was put to him that Mr. Fowler must have told him he had had a conversation with Mr. Gavin concerning a proposed closing for the 11th he said “I don’t know whether he said it was to do with the proposed closing or anything”. Furthermore, Mr. Hickey admitted that Mr. Fowler in that conversation did say to him that he had told Mr. Gavin he was going to be in court all day and could not deal with the matter on the 11th. The obvious point was then put to Mr. Hickey in cross-examination as to how he could expect Mr. Gavin to be in Dublin on the 11th in these circumstances. Having regard in particular to the inconsistencies and hesitations in Mr. Hickey’s evidence the only credible account of what transpired in the discussion on the 11th July between Mr. Gavin and Mr. Fowler is that of Mr. Gavin. At any rate, Mr. Hickey’s evidence in this respect would be mere hearsay and significantly, as I have already mentioned, Mr. Fowler despite being in court was not called as a witness.
I have carefully considered the views of the learned trial judge but I cannot agree that the evidence is open to any conclusion other than that on the 11th July, 2005 as extended to the 12th July, 2005 the purchaser was ready and willing to close the sale in the manner and at the time stipulated. There is no doubt that the purchaser was hoping to escape interest but there is nothing in the evidence to suggest that if the vendor insisted on full interest, the purchaser would not have gone ahead with the purchase, indeed quite the contrary. The evidence also clearly establishes that the purchaser understood that it was the original contract as drawn up which had to be performed and that she was willing to do so notwithstanding some loose ends in relation to the side issues.
There remains, however, the important question of law, is the court entitled to grant an order for specific performance based on estoppel notwithstanding that the contract had been rescinded? The following clearly emerges from the evidence.
1. There was a promise that the sale would be closed on Monday, 11th July if the completion was done strictly in accordance with the original contract entered into at the auction.
2. The arrangements for the 11th July were by agreement postponed to Tuesday, 12th July.
3. On the 11th July and after that agreed postponement the promise was unequivocally reneged upon by Mr. Hickey on behalf of the vendor and thereafter the vendor insisted on the original rescission.
I should have mentioned of course that these new arrangements for the 11th July subsequently postponed to the 12th July were all without prejudice to that rescission in the event of the sale not being in fact closed by default of the purchaser.
It is I think common case that the purchaser, if entitled to specific performance at all, can only be entitled to it by virtue of an estoppel arising from the promise made by the vendor and communicated by Mr. Fitzpatrick as slightly modified in terms of date by Mr. Fowler of the solicitors for the vendor with some consequent detriment. Was there such an estoppel? I am quite satisfied that there was. There appears to have been a great deal of argument and submission in the High Court to the effect that counsel for the purchaser had not made it clear whether at the end of the day he was relying on an alleged estoppel by representation or an alleged promissory or equitable estoppel. Even if there was some validity in that criticism it seems to me that it is irrelevant. The two forms of estoppel can frequently overlap, that is to say the common law estoppel by representation on the one hand and an equitable estoppel arising out of a promise on the other. It is clear from some of the modern English case law presented to the court and which I accept, that estoppel by representation need not necessarily be confined to a representation that a particular fact is true. It can be, what has been described as an estoppel by convention, that is to say, the parties agree between themselves artificially to act as though a particular fact was true. Put simply in this case there was a clear promise by the vendor to permit completion of the original contract but without prejudice to the original rescission if the purchaser defaulted. If the purchaser could demonstrate that she suffered detriment as a consequence she could in equity bind the vendor to that promise. The transfer of the monies and consequent liability for interest to the bank constituted such detriment. However, the other form of estoppel to which I referred would also have been operative in this case and would have had the same effect. That can be expressed as being an agreed understanding that provided the closing took place in accordance with the conditions as stipulated as to date and time, the contract would be taken as being alive and not rescinded. I do not think it matters which of these routes one follows. The trial judge herself at one point during the hearing suggested that the true nature of the representation which might give rise to the estoppel could be regarded as being that the agreement would be treated as not rescinded.
A major argument on behalf of the vendor which featured particularly in the High Court was based on the old adage that estoppel was a shield and not a sword. Again, some of the modern English case law placed before this court convincingly demonstrates that while there may be a technical truth in that adage it is largely irrelevant as far as having any operative effect. It certainly does not mean any longer, if it ever did mean it, that estoppel can only be a matter of defence and can never ground a cause of action. Estoppel is regularly raised as a matter of reply to a defence. Thus, in the example of this particular case, in so far as the vendor purports to set up the rescission as a defence to the counterclaim for specific performance, the reply to that defence on the part of the purchaser is that, in all the circumstances, the vendor is estopped or precluded from asserting the rescission. For all practical purposes, therefore, the counterclaim is grounded on estoppel.
In expressing what I believe to be the relevant law of estoppel for the purposes of this case, I am placing considerable reliance on the judgment of Robert Goff J. in the English High Court in the case of Amalgamated Property Company v. Texas Bank [1982] Q.B. 84 and the judgments in the Court of Appeal in the same case with particular reference to the judgment of Brandon LJ. He explained what was meant by the expression “estoppel by convention”. The case related to a bank guarantee given by a company the validity of which was being disputed by the liquidator of that company. A question arose as to whether even if the guarantee was not valid an estoppel had arisen by virtue of the conduct of the company which precluded denial of the guarantee. Brandon L.J. though forming the view that the guarantee was in fact effective went on to consider the estoppel question in the event that he was wrong. Two main arguments against the existence of the estoppel had been put forward in the High Court and the Court of Appeal. The first was that since the bank held its mistaken belief as a result of its own error alone and that the company had at most innocently acquiesced in that belief which it also held, there was no representation which could found an estoppel. The second argument was that the bank was seeking to use the estoppel not as a shield but as a sword and that that was not permitted by the law of estoppel. Brandon L.J. rejected both arguments. He expressed the view that the particular estoppel relied on was of the kind described in Spencer Bower and Turner, Estoppel by Representation, 3rd ed. (1977) at pp. 157-160 as “estoppel by convention”. He cited the relevant passage of that work as follows:
“This kind of estoppel is founded not on a representation of fact made by a representor and believed by a representee, but on an agreed statement of facts the truth of which has been assumed, by the convention of the parties, as the basis of a transaction into which they are about to enter. When the parties have acted in their transaction upon the agreed assumption that a given state of facts has to be accepted between them as true, then as regards that transaction each will be estopped as against the other from questioning the truth of the statement of facts so assumed.”
In this particular case, both parties knew that the contract was lawfully rescinded and both parties accepted that that was to remain the position subject only to the proviso that both would act on the artificial assumption that the contract was still alive and enforceable if the sale was completed on a particular date and time.
Brandon L.J. then dealt with the second argument which, as I have already pointed out, was an argument which featured heavily in this case and particularly in the High Court. Mr. Barron, counsel for the plaintiff, argued strongly that estoppel here was being used as a sword and not a shield. But this is what Brandon L.J. had to say in relation to this alleged principle at p. 131 of the report:
“In my view much of the language used in connection with these concepts is no more than a matter of semantics. Let me consider the present case, suppose that the bank had brought an action against the plaintiffs before they went into liquidation to recover monies owed by A.N.P.P. to Portsoken. In the statement of claim in such an action, the bank would have pleaded the contract of loan incorporating the guarantee, and averred that, on the true construction of the guarantee, the plaintiffs were bound to discharge the debt owed by A.N.P.P. to Portsoken. By their defence the plaintiffs would have pleaded that, on the true construction of the guarantee, the plaintiffs were only bound to discharge debts owed by A.N.P.P. to the bank, and not debts owed by A.N.P.P. to Portsoken. Then in their reply the bank would have pleaded that by reason of an estoppel arising from the matters discussed above, the plaintiffs were precluded from questioning the interpretation of the guarantee which both parties had, for the purpose of the transaction between them, assumed to be true.
In this way the bank, while still in form using the estoppel as a shield, would in substance be founding a cause of action on it. This illustrates what I would regard as the true proposition of law, that, while a party cannot in terms found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel succeed on a cause of action without being able to rely on that estoppel, he would necessarily have failed. That, in my view, is, in substance, the situation of the bank in the present case.”
As I have illustrated earlier in this judgment that is exactly the position which pertains in this case.
The judgment of Robert Goff J. and the judgments of the other two members of the Court of Appeal, Lord Denning and Eveleigh L.J. were in similar vein and I do not find it necessary to expand further.
There is no difference between Irish and English law on estoppel. There is, of course, Irish case law on the subject but I think that the principles enunciated in that English case of Amalgamated Property Company v. Texas Bank which is included in the book of authorities put before this court are particularly relevant to the circumstances of this case.
In short, I am satisfied that the vendor was bound by the promise made to permit the sale to be closed in accordance with the original contract on the 11th July and equally bound by the agreed extension of time to the 12th July. This obligation does not arise on foot of a new contract but rather on the principle of estoppel which can be applied to the facts of this case in different ways but in my view, the simplest approach is to hold that the vendor was precluded from asserting the rescission as against the purchaser if the purchaser was ready and willing to perform the original contract on the date agreed. That promise was reneged upon in advance of the agreed closing time. Having regard to the detriment suffered by the purchaser to which I have referred the vendor is estopped from raising the rescission by way of defence to the counterclaim for specific performance. I would, therefore, allow the appeal and would dismiss the vendor’s action. I would grant the relief sought by way of specific performance in the purchaser’s counterclaim. The unfortunate problems which arose in connection with the completion of this sale were contributed to by negligent behaviour on the part of the purchaser and indeed at one point a certain element of male fides in that there was more or less an admission that an assertion on behalf of the purchaser that a particular clause in the contract was void was made purely as a tactic. Again, put simply there was fault on both sides. I would, therefore, disallow any claim for either interest or damages by either of the parties against the other in respect of the period commencing on the 12th July, 2005 and terminating on whatever reasonable date may now be fixed for completion pursuant to the specific performance
order. The purchaser, of course, must pay full contractual interest payable on the contract up to the 11th July 2005 inclusive.
Judgment of Mr Justice Finnegan delivered on the 4th day of December 2007
The Facts
Anne B. Courtney the plaintiff/respondent (hereinafter the “vendor”) is the registered owner of the lands comprised in Folio 11394F in the Register of Freeholders, Co. Clare. She offered part of the lands containing 6.6 acres for sale by public auction on the 4th March 2005 and the defendant/appellant (hereinafter called “the purchaser”) was the successful bidder and signed a contract in respect of the same. The matter did not proceed smoothly due to default on the part of the purchaser. There was delay in paying the deposit. In correspondence the purchaser sought to vary the conditions of the contract and she was in delay throughout. On the 22nd April 2005 a completion notice in accordance with condition 40 of the general conditions of sale was served and interest was claimed in accordance with condition 25 of the general conditions of sale. The notice to complete expired on the 20th May 2005 and after such expiry without prejudice to the notice to complete the vendor indicated a willingness to complete. However the sale did not complete and by letter dated 30th May 2005 the vendor’s solicitors informed the purchaser’s solicitors that the plaintiff was rescinding the contract, that the deposit was forfeited and that the lands would be re-sold. On this appeal it is accepted by the purchaser that the contract had been rescinded and the deposit forfeited.
By letter dated the 2nd June 2005 the vendor’s solicitors wrote to the purchaser’s solicitors as follows:
“Strictly without prejudice to our letter of the 30th May 2005 and the notices therein, we would advise that our client is prepared to complete with your client strictly subject to the following:-
1. Completion must take place on or before Friday next 3rd June 2005.
2. Interest will be payable in accordance with the contract for sale.
3. The open space area may be revised as per the map as furnished by John Neilan and Associates under cover of the 6th May 2005 which was previously agreed by our client. Your client’s architect will now have to mark up this map as our client had agreed previously to have her architect mark up the map only to be told that your clients had changed their minds as to the revision of the map.
4. The contract for sale provides for the access to Ballybeg Road being granted when required and our client is prepared to grant same now provided that this does not hold up completion. Please furnish draft grant of right of way together with copy map showing the route for same for approval. We would point out that the very reason that the contract for sale provided that this right of way would be granted in due course if required, is that the local authority are likely to specify the route of such access roadway and where it comes out unto Ballybeg Road. We are pointing this out to you and would suggest that you advise your client accordingly.
5. No wayleave will be considered to Jack McCarthy’s land until completion has taken place. We have indicated on a number of occasions that our client is agreeable to consider same subject to sight of the proposed route of same, however, same does not form part of the contract for sale and will be considered once completion has taken place. In this regard, we have asked on a number of occasions for a map showing the route of same, but have received nothing. This can be looked into further post-completion.
6. Your client’s arrangements with Jack McCarthy and Mr Fitzgibbon are of no concern or interest to our client and no monies will be paid by our client for rights to which he is entitled under the contract for sale. Special condition 12 of the contract for sale will stand.
7. A postal completion is no longer appropriate and completion must take place at this office.
We note from your letters of 26th May 2005 and 1st June 2005 that your client is prepared to complete the contract for sale which, strictly without prejudice, is also what our client wants, however, this letter and the proposals therein are strictly without prejudice to the forfeiture and rescission notice which has already been served on you.
We should be obliged if would take your client’s instructions to the above, strictly without prejudice, proposal and revert by return failing which we confirm that we have authority to accept service of proceedings in this matter.”
It is sufficient to say that the matters dealt with in paragraphs 3, 4, 5 and 6 represented an attempt to deal with variations to the contract sought by the purchaser. The sale did not complete by the deadline set. The vendor by letter dated 16th June 2005 indicated a willingness to complete on the 17th June 2005 but again completion did not take place.
Before describing what next happened it is necessary to identify the persons involved and their relationship to the transaction. Mr Fitzpatrick is the vendor’s auctioneer. Mr Hickey is a partner in the firm of solicitors having carriage of the sale on behalf of the vendor but is also married to the vendor’s daughter Anne Courtney junior who is a tax consultant by profession. Mr Fowler is a partner with Mr Hickey in the vendor’s solicitors. Mr Gavin is the purchaser’s solicitor. Of significance is the circumstance that Mr Hickey and Ms Courtney were on holiday in Kerry from the 28th or 29th June and returned to Dublin on the 11th July to attend an appointment in Crumlin Hospital with their daughter’s consultant at 10.30 a.m. Mr Gavin was abroad until the 7th July and returned to his office on the morning of 8th July.
Mr Fitzpatrick, the auctioneer, gave evidence that throughout the course of the transaction the purchaser and Ms Courtney were in contact with him. On the 4th July 2005 he received a telephone call from Ms Courtney. She instructed him to contact the vendor with a view to closing the sale on Monday the 11th July without prejudice to “what was going on between the respective solicitors” and instructed him not to enter into correspondence. He made contact with the purchaser immediately and conveyed to her Ms Courtney’s instructions to him. Ms Courtney gave evidence of the phone conversation with Mr Fitzpatrick but on her account she had asked him to arrange for a meeting for roughly 2 o’clock on the 11th July so that the parties could talk. She heard nothing back from Mr Fitzpatrick and on returning to Dublin on the 11th July she did not know whether or not anything was to happen that day.
There was thus a conflict on the evidence as to whether the meeting was to close the sale or to talk and see if the sale could be progressed. Mr Fitzpatrick kept a note of his telephone conversation with Ms Courtney in the following terms:
“Phone call from A.C. Tell purchaser to arrange to close sale Monday next 2 p.m. in accord with contract. No correspondence. Informed Therese McCarthy.”
The learned trial judge’s finding on the evidence is set out by her as follows:
“There is a conflict as to what was the purpose of the meeting which was to take place at 2 p.m. on 11th July 2005. Ms Courtney’s evidence was that she did not say it was to “close” the sale; it was to talk, to see if the matter could be progressed. Mr Hickey’s evidence was that the meeting was to be a face to face meeting in his office to see if something could be done. Mr Fitzpatrick’s evidence was that Ms Courtney asked him to contact the defendant with a view to closing the sale on Monday 11th July 2005. I am satisfied that Mr Fitzpatrick’s note properly reflects what he was instructed to do, save that it does not record that he was told that the meeting was to be in the offices of the plaintiff’s solicitors in Dublin. The purpose of the meeting was to close the sale. Of course, there was always a possibility that at the meeting it would not be possible to achieve consensus on some matter and that the sale would not be completed. However that possibility, in my view, does not justify the nuanced account of the offer to be conveyed by Mr Fitzpatrick given by Ms Courtney and Mr Hickey. Mr Fitzpatrick was instructed not to do anything to prejudice the position which had been adopted by the plaintiff, that the contract had been rescinded and the defendant’s deposit forfeited and, in that context, he was told not to issue any correspondence.
I am satisfied that Mr Fitzpatrick complied with the instructions he had been given.”
Mr Gavin returned from holiday abroad on the evening of 7th July and attended at his office on the morning of Friday 8th July. He was contacted by the purchaser and some time after 9 o’clock on the 11th July he rang the vendor’s solicitors’ office and asked for Mr Hickey. He was told that he was on holidays and he then asked for Mr Fowler to be told that Mr Fowler would not be there that day. Mr Gavin said that he would ring back on Monday. By fax he then forwarded maps to be attached to the wayleave agreement and made it clear that he would be satisfied with an undertaking from the vendor’s solicitor to furnish a deed granting the same with the original maps attached.
First thing on Monday 11th July Mr Gavin again telephoned the vendor’s solicitors office. He was told that Mr Hickey was on holidays. He asked for Mr Fowler and was told that he was in court and would be there all day. He explained the urgency of the phone call in that there was a 2 o’clock deadline and asked that Mr Fowler ring him. He had arranged for the balance of the purchase money to be transferred to the account of the vendor’s solicitor and his bank confirmed to him before lunch that the monies were then going through. At 11.30 a.m. Mr Fowler telephoned Mr Gavin. Mr Gavin informed Mr Fowler that the balance of the purchase monies were being transferred that day. Mr Fowler told him that he was in court and could not complete that day but would so the following day. Mr Gavin did not make arrangements to travel to Dublin on the 11th July as his expectation was that the matter could be completed by post. However if closing at the vendor’s solicitor’s office was required he could have arranged for some one from his office or his sister, a solicitor practising in Dublin, to attend on his behalf and this would not have presented a problem. At 12.30 p.m. Mr Gavin received a phone call from Mr Hickey who enquired as to why he was not in Mr Hickey’s office to complete the transaction. This was the first he had heard that it was to be a closing at the vendor’s solicitors office and explained that to Mr Hickey. He told Mr Hickey that the balance of the purchase money was being transferred at that moment. Mr Hickey said “it is too late now”. Mr Gavin offered to release the money there and then and Mr Hickey replied “it is too late, the sale is off”. Following that telephone conversation Mr Gavin, by fax, authorised the vendor’s solicitor to release the balance of the purchase monies to the vendor. In reply to this Mr Hickey sent a fax confirming that the sale was rescinded and the deposit forfeited and that the matter was at an end.
The Agreement for Sale
The agreement for sale is in the Law Society of Ireland Form 2001 edition. General Conditions 24, 25 and 26 deal with completion and interest in the following terms:
“24 (a) The Sale shall be completed and the balance of the Purchase Price paid by the Purchaser on or before the Closing Date.
(b) Completion shall take place at the Office of the Vendor’s Solicitor.
25. (a) If by reason of any default on the part of the Purchaser, the purchase shall not have been completed on or before the later of (a) the Closing Date or (b) such subsequent date whereafter delay in completing shall not be attributable to default on the part of the Vendor
(i) the Purchaser shall pay interest to the Vendor on the balance of the Purchase Price remaining unpaid at the Stipulated Interest Rate for the period between the Closing Date (or as the case may be such subsequent date as aforesaid) and the date of actual completion of the Sale. Such interest shall accrue from day to day and shall be payable before and after any judgment and
(ii) the Vendor shall in addition to being entitled to receive such interest, have the right to take the rents and profits less the outgoings of the Subject Property up to the date of the actual completion of the Sale
(b) If the Vendor by reason of his default shall not be able, ready and willing to complete the Sale on the Closing Date he shall thereafter give to the Purchaser at least five Working Days prior notice of a date upon which he shall be so able ready and willing and the Purchaser shall not be before the expiration of that notice be deemed to be in default for the purpose of this Condition provided that no such notice shall be required if the vendor is prevented from being able and ready to complete or to give said notice by reason of the act or default of the Purchaser.
(c) The Vendor shall not be entitled to delay completion solely because of a dispute between the parties with regard to liability for such interest or as to the amount of interest payable PROVIDED ALWAYS that such completion and the delivery of any Assurance on foot of these Conditions shall be had strictly without prejudice to the right of the Vendor to pursue his claim for interest.
26. The submission of an Apportionment Account made up to a particular date or other corresponding step taken in anticipation of completing the Sale shall not per se preclude the Vendor from exercising his rights under the provisions of Condition 25 and in the event of such exercise the said Apportionment Account or the said other corresponding step shall (if appropriate) be deemed not to have been furnished or taken, and the Vendor shall be entitled to furnish a further Apportionment Account.”
Relevant to the appeal are two special conditions – special conditions 11 and 12 which provide as follows:-
“11. In the event that Clare County Council or An Bord Pleanala, as the case may be, in granting planning permission for development of the Sold Lands require that access to the Sold Lands be routed to Ballybeg Road in lieu of the Rocky Road then the Vendor shall grant to the Purchasers for the benefit of the Sold Lands the non-exclusive right in common with the the Vendor and all others have like rights from time to time for the benefit of the Sold Lands and every part thereof to go pass and repass at all times and for all purposes with or without animals, carts or vehicles over that part of the Retained Lands as shall be made available by the Vendor to the Purchaser to enable the Purchaser to construct a road footpath grass margins and kerbs upon the Retained Lands together with services thereunder for the purpose of enabling the Purchaser to have access to the Sold Lands from the Ballybeg Road so that the purchaser may develop the Sold Lands. It is agreed that the ownership of the roads footpaths grass margins and kerbs together with services thereunder will remain with the Vendor until such time as they are taken in charge by the local authority. The Purchaser shall enter into an indemnity in relation to the repair, maintenance and insurance of all such roads footpaths grass margins kerbs and services, etc. as are constructed upon the Retained Lands until taken in charge by the local authority and shall indemnify the vendor her successors and assigns from and against all actions costs damages claims or expenses which may be incurred or borne by the Vendor as a result of the failure of the Purchaser to comply with such indemnity in that regard given.
12. The Purchasers shall within the Perpetuity Period at their own cost and expense construct on the Sold Lands roads, footpaths, grass margins, kerbs and services for the purposes of the development of the Sold Lands and shall bring such roads, footpaths, grass margins, kerbs and services to a point two metres inside the boundary of the Retained Lands such that the Retained Lands are connected by such roads, footpaths, grass margins, kerbs and services to the public roadway and services to enable the Vendor to connect into such roads, footpaths, grass margins, kerbs and services for the benefit of the Retained Lands and every part thereof. The Purchaser shall enter into an indemnity in relation to the repair, maintenance and insurance of all such roads, footpaths, grass margins, kerbs and services, etc. as are constructed upon the Sold Lands until taken in charge by the local authority and shall indemnify the Vendor her successors and assigns from and against all actions costs damages claims or expenses which may be incurred or borne by the Vendor as a result of the failure of the Purchaser to comply with such indemnity in that regard given.”
The Pleadings and The Issues before the High Court
The proceedings were instituted by the purchasers seeking a declaration that the agreement for sale of 4th March 2005 had been validly determined, that the deposit had been validly forfeited and that the purchaser holds no contractual or other right, title or interest in the lands agreed to be sold. The defence and counterclaim delivered by the purchaser consists of denials and pleads that the course of conduct between the vendor and the purchaser had the effect that there was a further concluded oral agreement for completion of the sale on the 11th July 2005. By her counterclaim the defendant sought specific performance of the agreement for sale dated 4th March 2005 or in the alternative of the agreement complete on 11th July 2005. The purchaser delivered an amended defence and counterclaim in which she claimed the following additional relief:-
“If necessary a declaration that the plaintiff is estopped from relying on the purported rescission of the contract of 4th March 2005 or forfeiture of the defendant’s deposit in respect of same by reason of the defendant’s reliance on the plaintiff’s conduct of negotiations leading to a revival of the said agreement and waiving the purported rescission of same by agreeing to closure of the sale on 11th July 2005 by which date the defendant had acted to her detriment by paying the full amount of consideration under contract to the plaintiff.”
On the issues before the High Court the learned High Court judge held that the agreement for sale had been validly determined by the vendor and the deposit validly forfeited and indeed this was accepted at the hearing before this court by the purchaser. The correspondence of 2nd June 2005 and 27th June 2005 were characterised by the purchaser in her pleadings as “negotiations … for the purpose of reinstating the sale to the defendant … on certain terms.” The learned trial judge held that the purchaser never intimated a willingness to complete the contract in accordance with those terms and accordingly the original contract remained determined and the vendor was no longer obliged to complete it. The events which occurred between 4th and 11th July, the learned trial judge held, did not create a new contractual relationship between the vendor and the purchaser and any question of compliance with the Statute of Frauds (Ireland) Act 1695 or part performance did not arise. She so found on the basis that the purchaser did not meet the vendor’s requirements by closing on the 11th July. The purchaser’s solicitor failed to turn up to complete, the purchaser did not tender or evince an intention to pay interest, in relation to special condition 11 the right of way remained at large although the vendor had conceded the purchaser’s request for a grant of the same at closing and that there was no commitment by the vendor to comply with special condition 12.
The learned trial judge then considered the events between 4th and 11th July 2005 in terms of estoppel. The test for estoppel as set down by the Supreme Court in Doran v. Thompson Ltd [1978] I.R. 223 at 230 by Griffin J. is as follows:-
“Where one party has, by his words or conduct, made to the other a clear and unambiguous promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, and the other party has acted on it by altering his position to his detriment it is well settled that the one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if no promise or assurance had been made by him, and that he may be restrained in equity by acting inconsistently with such promise or assurance.”
See also Ryan v. Connolly [2001] 1 IR 627 at 632 per Keane C.J.
The learned trial judge found that Mr. Fitzpatrick informed the purchaser that the vendor would close the contract in accordance with the contract at her solicitors’ office at 2 p.m. on 11th July 2005. The learned trial judge held that the purchaser did not meet this requirement in two particulars in the following terms:-
1. As to interest –
“If completion took place in accordance with the contract, the defendant would have been liable for interest. She never evinced any willingness to pay interest and therefore as I have found she was not willing or prepared to complete on 11th July 2005 in accordance with the terms of the contract.”
2. As to the requirement for a face to face closing –
“The plaintiff’s case is that the requirement for a face to face closing in the plaintiff’s solicitors offices in Dublin was imposed to obviate the difficulties which had been encountered in the transaction previously, for example, the issue of the location of the access to Ballybeg Road. The defendant’s solicitor was not in Dublin at 12.30 p.m. on 11th July 2005 and it is reasonable to assume that he could not have been in Dublin by 2 p.m. Given what had transpired previously and what was still outstanding between the parties I doubt if that would have been a practical solution. In dealing with the contractual situation I sidestep the issue of the failure of the defendant and her solicitor to appear at the plaintiff’s solicitors offices at the appointed hour. However, in the context of the application of the principles of equitable estoppel, if all other things were equal, in other words, if before the appointed hour the defendant had indicated a willingness to complete in accordance with the terms of the contract including the payment of interest, given the breakdown of communication within the plaintiff’s solicitors office and the failure to give Mr. Gavin any response either on 8th July or on the following Monday morning I think the equity of the situation would have been in favour of the defendant. However that is entirely hypothetical”.
The learned trial judge’s findings on the issue of estoppel are as follows:-
“(a) the plaintiff, through her agent Mr. Fitzpatrick, expressly represented to the defendant in a clear and ambiguous manner that, if the defendant was able and willing to complete the purchase in accordance with the terms of the contract in her solicitors offices at 2 p.m. on 11th July she would complete.
(b) That representation was intended to affect the legal relations between the plaintiff and the defendant and to be acted on by the defendant, although, as I have concluded, it did not create a new contractual relationship. In my view, equity would not have permitted the plaintiff to resile from that representation between 4th and 11th July 2005. While not conceding that an estoppel could not arise at all, counsel for the plaintiff submitted that at most there was merely a suspension of the plaintiff’s legal rights. In my view, the effect of the representation was the plaintiff’s legal rights were suspended in the period in question.
(c) While, following the representation, the defendant acted and she suffered a detriment in the sense that she drew down the sum of €1,620,000 from AIB and became liable on that sum for a period of approximately one week, in my view, it would not be correct to say that she acted and suffered that detriment on foot of the representation. The representation was that the plaintiff would close on terms of the contract, which included the payment of interest. Indeed in advancing her claim the defendant recognised that if she was successful she would be liable to pay interest, at any rate for the period 8th April 2005 to 11th July 2005. The position adopted by the defendant and acted upon was that she was closing on her own terms and, in particular that she was not liable for interest under the contract and could leave the precise definition of the access to Ballybeg Road at large until after completion.
(d) Given the failure of the defendant to indicate an ability and willingness to complete in accordance with the terms of the contract by 2 p.m. on 11th July 2005 the plaintiff’s representation was spent and she was entitled to revert to reliance on her legal rights arising out of the termination of the contract”.
For these reasons the issue of estoppel was determined in favour of the vendor.
The Appeal
Before this court the purchaser’s case was exclusively based on estoppel and in this regard it is necessary to examine in some detail the evidence given in the High Court:-
(i) The evidence of Mr. Hickey
He was on holidays in Kerry from 28th or 29th June. He left his partner Mr. Fowler to deal with the file and memoed to him that while he was away he was to contact the witness if anything occurred on the file. Prior to 11th July he had no communication from Mr. Fowler. To his knowledge his wife, Anne Courtney, made contact with Mr. Fitzpatrick the auctioneer. As far as he was aware the purchaser had been in contact with Mr. Fitzpatrick looking for a last chance to close. There were a number of conversations between his wife and Mr. Fitzpatrick: Anne Courtney conveyed to Mr. Fitzpatrick that one last effort to complete might be made without prejudice to the vendor’s position. This would require a face to face meeting in his office and 2 o’clock on the11th July was stipulated. This was to fit in with an appointment for his daughter with a consultant in Dublin on that morning. On 11th July between 11.30 a.m. and 12.15 p.m. he received a telephone call from Mr. Fowler. He was told that Mr. Gavin, the purchaser’s solicitor, was looking for him. Mr. Fowler had returned Mr Gavin’s call and told him that he knew nothing about the matter and that Mr. Hickey would be dealing with it. As a result he telephoned Mr. Gavin at about 12.30 or 12.45 p.m. His evidence of that phone conversation appears from the transcript as follows-
‘I started off with really, Colm, where are you, I expected to see you in my office. He said I am tied up or I am out of the office but the money is going to be electronically transferred. I said Colm – it was made clear that the only way this could happen is a meeting in the office and you are not there, you know, we have had enough and, you know, that’s the end of the manner there is nothing that we can do from here’.
Mr. Gavin asked what would it take to deal with the matter that day and Mr. Hickey replied that he would have to take instructions and that the monies would have to be released. There was no discussion on interest. He obtained instructions from the client. He went to his office and then saw the correspondence from Mr. Gavin of the 11th July. He then wrote his letter of 11th July to Mr.Gavin indicating that the matter was at an end.
In cross examination Mr. Hickey said that he was in a position to complete on 11th July. His understanding of the conversation between Anne Courtney and Mr. Fitzpatrick was that Mr. Gavin and his client would appear at his office to progress the matter and see if it could be completed. He wanted Mr. Gavin at the completion personally. The witness believed that Mr. Fowler had told him that Mr. Gavin was going to be in court and could not deal with the matter on the 11th. He had made it clear in his letter of 2nd June that a postal closing was out of the question. Subsequent to the 11th July a contract was entered into with a member of the vendor’s family for the sale of these lands together with other lands for €2,600,000. Mr. Hickey was asked what was blocking progress on 11th July and replied “Colm Gavin’s absence”. As of the 11th July it was far from clear to Mr. Hickey whether the purchaser had any intention of complying with condition 12 of the contract.
(ii) Anne Courtney
The witness is the plaintiff’s daughter and the wife of Mr. Hickey. She is a tax consultant specialising in property investment. She was in regular contact with Mr. Fitzpatrick. He telephoned her to know if there was any way in which the vendor would consider one last chance and having spoken to the vendor it was decided that one last chance would be given to the purchaser. She contacted Mr. Fitzpatrick in early July. She told them that without prejudice to the original contract the vendor would complete and that the purchaser should arrange a meeting for roughly 2 o’clock with her solicitor and that the parties could talk. She heard nothing back from Mr. Hickey. She did not know if the matter would close on 11th July but hoped that it would. She did not agree with Mr. Hickey’s manuscript note in that she would not have said the word close but rather that they should meet to see if the matter could be progressed.
(iii) Mr. Fitzpatrick
He received a telephone call from Anne Courtney on 4th July 2005. She asked him to contact the purchaser with a view to closing the sale on Monday 11th July without prejudice to what was going on between the respective solicitors and that she did not want any correspondence. He was to ask the purchaser to contact her solicitor to make arrangements to close the sale at 2 p.m. on Monday 11th July at the office of the vendor’s solicitor. He spoke to the purchaser immediately. He told her that there was an opportunity to close the sale in accordance with the terms of the contract and that this was without prejudice. On a later day but before 11th July the purchaser asked what was the position with regard to the open space and what was the position with regard to the wayleave for the sewerage and he informed her that that as far as he was concerned they were agreed in principle, there was not a problem with them provided the mapping was agreed in both places and he did not expect a problem. He had discussed these matters with Mr. Hickey on an ongoing basis.
In cross examination he agreed that the wayleaves were not a sticking point between the parties. He did not know what was going on in relation to interest and it was not raised with him. It was an issue which was bound to raise its head many months later. He was aware that Mr. Hickey was on holidays and he asked Ms. Courtney who would deal with the closing and was told that Mr. Fowler would do so. He told the purchaser that Mr. Fowler would be dealing with the closing.
(iv) Ms. McCarthy
The purchaser gave evidence. She is a management consultant. Her father is a building contractor and property developer and own lands adjoining the lands agreed to be sold. She was buying the property on her own behalf and not on behalf of her father. At the time she was working in Clare in premises called ‘The Kings’, five bars and a restaurant, owned by her father. After the contract had been terminated she was in constant touch with Mr. Fitzpatrick. On 4th July 2005 Mr. Fitzpatrick told her the deal is back on again and that it was to close on 11th July at 2 p.m. as per the original contract, no conditions. The wayleaves and open space were not a sticking point. After the conversation with Mr. Fitzpatrick she spoke with her father who in turn spoke to Mr. Hickey and she understood that no interest would be payable. If interest was payable it would have been paid. She would have asked her father to help. She contacted Mr. Gavin on 5th July and instructed him to work towards a closing. She contacted the bank and arranged the balance of the purchase money. It was quite clear in her discussion with Mr. Fitzpatrick on 4th July that what was to take place on 11th July was a closing. On 11th July Mr .Gavin told her of his conversation with Mr. Fowler and of his conversation with Mr. Hickey. So far as she was concerned there were no outstanding issues on 11th July. While it was her understanding that no interest would be payable, if it was, it would be paid.
In cross examination the witness agreed that the vendor was insisting on the contract but being co-operative on the matters arising under special conditions 11 and 12. However the arrangements for the 4th July were on the terms of the contract. With regard to interest on 4th July Mr. Fitzpatrick told her that completion was as per the contract and from this she understood that what was payable was €1,800,000. She could not write to clarify because of the terms stipulated – no correspondence. This was also her understanding of conversations which she had with Mr. Fitzpatrick after 4th July. Mr. Fitzpatrick did tell her that the completion had to be in Dublin. Issues surrounding special condition 12 would not have delayed the completion.
(v) Mrs. Anne Courtney (the vendor)
Her evidence essentially was that she did not get personally involved in the transaction but left everything to her solicitor Mr. Hickey. On 11th July she told Mr. Hickey to do whatever he thought fit. She believed that the purchaser was to attend the closing and the reason the sale did not complete was that the purchaser did not turn up on time.
(vi) Michael Early
The witness is the manager of the AIB Bank, Bank Place, Ennis, Co. Clare. The balance of the purchase money was transferred to the account of John Shields and Company, the vendor’s solicitor, at 1.12 p.m. on 11th July. The transaction was instantaneous in that funds leave the account of the transferor and are posted to the accountant of the transferee at the same time.
(vii) Mr. Gavin
Mr. Gavin is a solicitor and acted for the purchaser. He was away from his office and returned on 7th July. After 9 a.m. on 8th July he telephoned the vendor’s solicitors and asked for Mr. Hickey to be told that he was on holidays. He then asked for Mr. Fowler and was told that he would not be there that day. He said he would ring back on the Monday but that the matter was extremely urgent. His understanding at that time was that the sale was to be completed on 11th July and in accordance with the terms of the original contact. With regard to special condition 11 he would accept whatever access was being offered. With regard to interest his client had told him that no interest was payable. He was hoping to speak to Mr. Fowler regarding interest. He felt interest would probably be payable and he would have advised his client to pay it. On Monday 11th July first thing he again telephoned the vendor’s solicitors. He asked for Mr. Hickey and was told that he was on holidays. He asked for Mr. Fowler and was told that he was in court and would be there all day. He explained the urgency to the receptionist as he had been told that there was a 2 o’clock deadline, that he was arranging for monies to be put through and he asked her to have Mr. Fowler ring him. This was shortly after 9 o’clock. He arranged with the bank for the monies to be transferred. As far as he was concerned there was no difficulty about deeds or other documents. Normally such transactions are closed by post. At 11.30 a.m. he received a phone call from Mr. Fowler and he told him that he was putting the monies through. Mr. Fowler told him that he was caught in court and could not complete at that time but that he would do it the following day and the witness agreed with this. He did not travel to Dublin on 11th July because normally he would complete such a sale by post. If a face to face closing was required he would either have travelled himself or someone from his office would have travelled but this was not done because there was nobody available in the vendor’s solicitors’ office to confirm what was to happen. He could have had his sister who is a solicitor in Dublin complete on his behalf as she had done in previous cases. At about 12.30 p.m. he received a telephone call from Mr. Hickey who asked him why he was not in the office to complete the transaction. He replied that this was the first time he understood that it was to be a face to face completion but that he had been trying to get through to the vendor’s solicitors and could not communicate with anybody. Mr. Hickey told him that it was too late as he wanted the money to go back with his mother-in-law to Kerry. Mr. Gavin told him that he was quite happy to release the money. Mr. Hickey replied that it was too late and that the sale was off. The witness had been in practice as a solicitor for some 38 years. If the client had not got the interest he would have arranged it with AIB, his own bank, and debited his office account with the amount of the same and paid it over. He would have got it back from the purchaser’s father whom he knew and trusted. He would have asked his own bank to do an immediate credit transfer from his office account. Had the meeting taken place at 2 p.m. on 11th July the transaction would have completed. In cross examination the witness said that he would not have made any issue about special condition 12 of the contract but would have been delighted to complete. With regard to the right of way all he was entitled to was what was clearly set out in the contract and that is what he expected to get on 11th July. He agreed that in earlier correspondence he had disputed the vendor’s entitlement to interest. His instructions from his client were that the matter was to be completed by 2 o’clock on 11th July. In practice interest is regularly sought and not paid or the sale is closed without prejudice to interest being charged. A lot of solicitors never charge interest. In this case if it was sought it would have been paid and he had advised his client that it would have to be paid. He had been unable to speak with either Mr. Hickey or Mr. Fowler concerning interest. The witness was unclear as to whether his client had told him that the sale was to be closed in Dublin. He had failed to communicate with either Mr. Hickey or Mr. Fowler and if they had told him that he would have to be there at 2 o’clock he would have been there to complete. He received a telephone call from the purchaser while in England concerning the appointment to complete on 11th July. The position then bore very little relationship to what had gone before. As of 2nd June there were matters outstanding but they were not outstanding as at the 7th July. As a result of his conversation with Mr. Fowler on 11th July he understood that time had been extended until the following day to deal with the matter. He may well have told the purchaser that he did not need her at the closing and he never brought a client to a closing. The availability of the monies was all that mattered. He did not need his client at the closing as there were no issues or problems and he had instructions to complete on terms of the original contract. He had made no arrangements on the morning of 11th July to travel to Dublin but could have been in Dublin or could have had some one deal with the matter on his behalf and that was not a problem. The reason he did not make arrangements to be in Dublin at 2 o’clock was because of the telephone conversations on 7th July and the 11th July with the office of the vendor’s solicitor when neither Mr Hickey nor Mr Fowler were available He could not get any communication from anybody who was dealing with the transaction. On 11th July he did not get an opportunity to say that he would travel to Dublin. Had he the opportunity to speak to someone he would not have required an undertaking in relation to the grant of rights of way as he was aware that all he was getting was what was in special condition 11 of the contract. He did not expect interest to be waived at the completion but he would probably have requested. He had not been sent a closing statement for the 11th July. Special condition 12 was of no consequence to him and all he wished was to complete. He did not have an opportunity to tell Mr. Hickey this in the phone conversation.
Mr. Fowler did not give evidence.
Conclusions
The learned trial judge made the following primary findings of fact:
1. As of the 4th July 2005 the original contract remained rescinded.
2. On the 4th July 2005 the plaintiff indicated her willingness to complete the contract in accordance with its terms provided that there was a closing at the offices of the plaintiff’s solicitors at 2 p.m. on 11th July 2005.
3. This amounted to a clear and unambiguous representation, promise or assurance sufficient to found an estoppel. The defendant acted upon the same by altering her position to her detriment in drawing down the finance to complete and accordingly it was not open to the plaintiff to revert to the previous legal relations between the parties.
4. On the 8th July 2005 Mr Gavin was unable, through no fault of his, to contact either Mr Hickey or Mr Fowler.
5. On the 11th July 2005 at 11.30 a.m. Mr Gavin received a telephone call from Mr Fowler and was told that the transaction could not complete on that day but would complete on the following day.
6. On the 11th July at 12.30 p.m. Mr Gavin received a call from Mr Hickey in which he was told that the sale was off. This was confirmed by letter sent by fax later that day.
The effect of the telephone conversation between Mr Gavin and Mr Fowler on the 11th July 2005 at 11.30 a.m. is that the promise or assurance given by the vendor was for her convenience (albeit the convenience was that of her solicitors) altered by substituting for the 11th July 2005 the 12th July 2005 for completion. In the circumstances of this case it is immaterial whether the effect was that the sale should be completed at 2 p.m. on the 12th July or at a time to be agreed or at a time to be stipulated by the vendor’s solicitors.
The learned trial judge held that the plaintiff’s legal rights were suspended in the period in question which she took as being until 2 p.m. on the 11th July 2005 and that after that date and time it was not unconscionable for the plaintiff to rely on her legal rights. I differ from the learned trial judge in that I am satisfied that the vendor’s entitlement to resile arose only on the 12th July 2005 and whether at 2 p.m. on that date or at a time to be agreed or at a time to be stipulated by the vendor is immaterial. However the vendor did not await 2 p.m. on the 11th July but purported to resile at 12.30 a.m. on the 12th July 2005. It is quite clear on the evidence that the reason this occurred was a lack of communication between Mr Fowler and Mr Hickey, the former not having informed Mr Hickey that he had told Mr Gavin that the sale could not be completed on the 11th July but would have to be completed the following day.
A number of matters weighed with the learned trial judge. Mr Gavin did not attend at the appointed hour to complete the sale. His intention had been to close the sale by post until his conversation with Mr Hickey at 12.30 p.m. He had not been informed of this requirement by the purchaser. Had he been aware of the requirement on the 11th July his evidence was that he would have attended. If the time available to him was insufficient to travel to Dublin he could have arranged for a solicitor in Dublin to attend the closing on his behalf. The balance of the purchase price had already been transferred electronically. I am satisfied that under the original concession by the vendor the purchaser was entitled to attend to complete until 2 p.m. on the 11th July and there was no entitlement in the purchaser to bring this time forward and withdraw the concession at 12.30 p.m. on that day. A fortiori the date for completion having been extended by Mr Fowler to the 12th July, there was no entitlement in the vendor to withdraw her concession at 12.30 p.m. on the 11th July.
The learned trial judge held that the vendor did not tender or otherwise evince a willingness to discharge the interest due under the contract. However it was not a term stipulated by the vendor that she should do so. I am satisfied that there was no obligation on her to do so. Her obligation was to complete in accordance with the terms of the contract. It was conceded before this court that there was no bona fide dispute as to interest and it may be in these circumstances that general condition 25(c) has no application. In these circumstances the purchaser’s entitlement was to present at the closing and to complete paying interest or to suffer the consequence of the vendor resiling. However the purchaser was not afforded this opportunity by virtue of the conduct of the vendor in purporting to resile at 12.30 p.m. on the 11th July in advance of the time stipulated 2 p.m. and indeed in advance of the altered date the 12th July 2005.
I am satisfied that the vendor was not entitled so to resile from the promise or assurance given as varied in the telephone conversation between Mr Gavin and Mr Fowler. Mr Gavin’s evidence as to the contents of that phone conversation was uncontroverted: Mr Fowler did not give evidence.
As to the other matters which were in issue between the parties at earlier stages of their dealings, namely a commitment to comply with special condition 12 of the contract for sale and whether a grant of right of way to Ballybeg Road pursuant to special condition 11 of the contract for sale should be furnished at completion or left over till later, these were not nor could they be in issue at completion as a term of the concession made by the vendor was that there should be completion in accordance with the contract.
Having regard to the foregoing I would grant the defendant the order for specific performance which he seeks. Further the purchaser having made the concession in this court that interest was payable from the closing date up to the 11th July 2005 there is no dispute as to the liability to pay interest. It will not be open to the purchaser to rely on general condition 25(c) and to seek to close without paying interest and a condition of the order for specific performance accordingly will be that interest will be paid for that period at completion.
Birmingham & Anor v. Coughlan & Anor
[2004] IEHC 211
MR. JUSTICE SMYTH:
The Plaintiffs are farmers who reside at Dublin Road, Mullingar, in the County of Westmeath. The Defendants are businessmen who reside in Mullingar. The Plaintiffs contracted to sell to the Defendants certain lands in Folio 14915F of the register of Freeholders, County of Westmeath, on 16th June 2000, for the sum of £4.5 million. The contract provided that the Defendants would pay the sum of £3,375,000 within six months from the date of the contract and the balance of £1,125,000 six months thereafter. The Defendants were to take possession of the lands, which have been referred to in the documents as “Stage I”, on payment of £3,375,000, and on the final payment of £1,125,000 were to be given possession of Stage II of the transaction. The closing date provided for Stage I was six months from the date of the contract, ie, 16th December 2001, and the closing date for Stage II, being six months thereafter, was to be 16th June 2001. The contract also provided that if the sale was closed in total within twelve months or earlier the Defendants would be refunded by way of “luck penny” the sum of £20,000, provided that if there was a delay that the “luck penny” would still be paid if the delay was the default of the Vendors.It was appreciated by both parties that the lands were being bought for development purposes and that the purchase price reflected that clear common understanding.
Difficulties arose subsequent to the execution of the contract and ultimately a Completion Notice pursuant to General Condition 40 of the Conditions of Sale (1995 Edition) of the Law Society of Ireland (as incorporated in the said contract) was served on the Defendants on 12th July 2001.
These proceedings were formulated originally as specific performance proceedings, and the pleadings having been closed a compromise was arrived at in January 2003. The arrangement then made was that the Purchasers agreed to complete the purchase of the property not later than 31st January 2003, on payment of the full balance of the purchase money, on the basis that the ongoing litigation will continue excluding only the claim in respect of the purchase money. It was further agreed that the figure in respect of “luck penny” as specified in the contract would be held on joint deposit receipt pending finality in regard to the litigation and dependent on any specific court order or agreement as between the parties in regard to the “luck penny” pursuant to the terms of the contract. The proceedings gave rise to Discovery, that being sought and made in February 2003, and upon receipt and inspection of same the
Defendants sought, by Notice of Motion dated 19th March 2003, the following reliefs as against the Plaintiffs:-
1. An order dismissing the remainder of the Plaintiffs’ claim herein, the contract the subject of the litigation having been completed on 31st January 2003. The Plaintiffs’ further action for interests for delay cannot succeed.
2. An Order striking out the Plaintiffs’ claim herein, in that the Plaintiffs’ further prosecution of their claim following completion of the contract is actuated by malice and improper purpose.
3. An Order pursuant to Order 19, Rule 28 of the Rules of the Superior Courts and pursuant to the inherent jurisdiction of the court
striking out the Plaintiffs’ claim as having no reasonable prospect or no prospect of success.
The Plaintiffs also brought a motion, dated 25th February 2003, seeking further and better discovery from the Defendants arising from the Discovery furnished by the Defendants on 24th January 2003, which was furnished pursuant to a court order dated 20th November 2002.
The motion to dismiss the proceedings was in order of hearing, first heard by the court and essentially it was directed to the claim being made by the Vendors for interest in the sum of £1.4 million. The case made for and on behalf of the Defendants was that, at the date of the completion, there were at least four major difficulties regarding title furnished by the Plaintiffs/Vendors to the Defendants/Purchasers. These concerned the following:-
(a) Non-disclosure to the Purchasers that a cluster of five Wavin pipes constituting a ducting or piping system were installed by the Electricity Supply Board on the subject property. In this regard, reference was made to a map of the ducting pipe line and photographs of same were exhibited to the court. A protracted correspondence from the Vendors’ solicitors to the ESB was referred to in court and it emerged that prior to serving any Completion Notice proceedings had been brought by the Plaintiffs/ Vendors against the Electricity Supply Board in respect of a pipeline. These proceedings are still in being and are awaiting trial as at the date of the hearing of these motions.
(b) The nature and extent of way leaves and pipelines granted to Westmeath County Council by the Vendors and the extent to which the County Council unilaterally placed the pipeline as shown on the map attached to the way leaves furnished in response to requisitions on title was unclear. This had the effect or influence on the reserved open space and development potential of the lands to a significant extent and further it influenced to a great extent the necessary construction costs such as the shoring up of foundations as were near the extended pipeline area. The exact nature and extent of the way leaves and pipelines in favour of the County Council was not ascertained or provided for by way of grant of way leave until the week prior to the closing of the sale on 31st January 2003, and accordingly it is the case of the Purchasers that the Vendors at the date of the service of the Completion Notice were not in the position of being able, ready and willing to complete the sale in accordance with the contract. Indeed, in paragraph 31 of an affidavit sworn on 16th December 2003 by
Mr. Denis Shaw for the Plaintiffs/Vendors he avers as follows:
“It is the contention of the Plaintiffs/ Vendors that all issues, other than the alleged issue with regard to the way leaves with Westmeath County Council, which became a protracted issue as between the Plaintiffs/Vendors and the Defendants/ Purchasers, were resolved prior to the issue of the Completion Notice on the 12th day of July 2001.”
The Defendants contended that the consequences of the non-disclosure of the existence of the pipeline and the extent of the disclosed pipeline by the Plaintiffs had caused undue delay, uncertainty and ongoing investigation by the Defendants, and had caused a significant loss of bargain. Furthermore, they claimed that the extent of a claim of another party, to wit Waterways (otherwise successor to CIE) to an area of land along the canal adjoining the premises in sale was the subject of very serious doubt on the title. This dispute also led to litigation a between the Vendors and Waterways.
(c) Difficulties were also caused as a result of what was stated to be an undisclosed claim to an easement of necessity from neighbouring lands for development. Those neighbouring lands apparently included lands of the father and perhaps the brother of the Plaintiffs (it is referred to as the Kelly claim). In summary, therefore, the claim of the Defendants was that the Plaintiffs were not, as of the date of the service of the Completion Notice, able, ready and willing to complete the contract in accordance with its terms and their obligations arising therefrom. Most, if not all, of the matters that gave rise to the litigation and were agitated before the court in the course of the hearing of the motions could be said to have arisen from the formulation of an application of planning permission by the Defendants. While the contract was not subject to the obtaining of planning permission, it was agreed by the Vendors that the Purchasers could proceed to formulate and apply for planning permission and the Plaintiffs/Vendors were disposed to being of as much assistance as they could be to the Defendants in that regard.
The difficulties, however, that arose could be categorised as falling under four headings:
(1) The claim of the ESB
(2) The way leaves of the County Council
(3) The way leaves of Waterways/OPW/CIE
(4) the Kelly claim.
THE CLAIM OF ESB
I am satisfied and find as a fact on the evidence placed before me that the claim for interest as against the Defendants in the period December 2000, and thereafter, attributable to the claim of the Electricity Supply Board are unsustainable. It was appreciated by the Vendors some considerable time before the closing of the sale that there was at least ducting in the property underneath the lands in sale and the ducting had been placed on the lands by the ESB. There was correspondence which appears to have been at cross purposes as to whether a 38KV cable, the property of ESB, ran through the lands in sale, and this confused an already contentious issue. Suffice it to say that the Vendors were sufficiently concerned about “clearing the ESB off the title” to issue proceedings against the Board on 25th January 2001. On 17th May 2001, the position of the Board became clear when that body wrote to the solicitors for the Vendors in the following terms:
“Dear Sirs,
With reference to your letter of 11th May, ESB does not accept that it has any liability for the failure of the Purchasers to fulfil their contractual obligations to your clients.
In the first instance, there is no electricity cable on your clients’ lands at present. Permission to lay a cable was received orally from your clients prior to the carrying out of any works by ESB, but the only works carried out to date on your clients’ lands are the laying of a conduit for a proposed electricity cable. On 11th January this year a letter was issued by ESB to Westmeath County Council requesting them to disregard the presence of a cable in considering the planning application of C&F Developments as ESB was prepared to alter, reposition or relocate the underground cable if there was a conflict between any permitted development and the cable. The Purchasers were informed of this on the same date and copies of both letters were sent to you.
However, up to last week C&F Developments had failed to furnish Westmeath County Council with any response for additional information. Westmeath County Council requested information some time in March/April 2001, on a long list of disparate issues (eg, density of housing, traffic, height and scale, overlooking, conflict with the Development Plan, footbridge, harbour, sewage, etc). Until this information is received by Westmeath County Council, processing of C&F Developments’ application cannot proceed. C&F Developments are well aware of this fact.
In addition, an inspection of the planning file in the offices of the County Council will show that the substantial reason for the delay in determining the planning application by C&F Developments is a number of objections received to the proposed development.
ESB, therefore, fails to see how it is being held up as the sole reason for C&F Developments’ planning permission not advancing when it is quite clear there are other more pressing issues affecting its progress.
However, we have now informed the County Council that we are not proceeding with the proposed cable along this route. ESB agreed to abandon the conduit crossing your clients’ lands and are actively selecting a new route. The existing conduit can be demolished during the earthworks stage of the development when it takes place.”
Between December 2000 and 17th May 2001, there can be no liability on the part of the Purchasers to pay the Vendors any interest. Even if there is a claim for interest for this period, and it is by no means certain that there is, it may not be the liability of the ESB and it is not the responsibility of the Purchasers. Because, even as of 12th July 2001 the question of the way leave(s) of Westmeath County Council had not been resolved. In my judgment, the Purchasers were reasonable in refusing (as they could be said to have done so) to close the sale in respect of the objection referable to ESB before 17th May 2001. As of 12th July 2001, (notwithstanding proceedings 2001/2295P), such problem(s) as existed (if ever and any) as the result of any act or default of the ESB did not and was not a cause of the non-completion of the sale of the parties to these proceedings.
THE WAY LEAVES OF THE COUNTY COUNCIL
The difficulties arising from way leaves granted in favour of Westmeath County council were compounded by the fact that when the copy documents were being made available to the Purchasers as part of the contract a way leave of 1987 which did have a map was attached to a way leave of 1999 which did not have a map attached to it. Furthermore, the pipeline as indicated in the map attached to the way leave did not accurately reflect the actual location of the pipe in the ground. Because of the necessity of providing certain areas for work and maintenance on either side of the pipeline, which had the pipeline been set or put down in or on the line provided for in the map of 1987, perhaps no difficulties may have arisen. It appears the pipes and/or ducts may have been laid in accordance with the map attached to the 1999 way leave agreement, but such map was not furnished by the Plaintiffs/Vendors to the Defendants/Purchasers at the time of entering into the contract and therefore did not form part of the signed contract.
However, that was not the case and accordingly a considerable bulk of correspondence was exchanged not only between the solicitors of the parties but between the County Council and their solicitors and particularly with the solicitors for the Vendors. Both parties engaged surveyors; Messrs Malachi Cullen & Partners were engaged by the Vendors and Messrs Coughlan & Associates, architects, were engaged for the Defendants. I am satisfied and find as a fact that as of the date of the service of the Completion
Notice on 12th July 2001 that the matters of the way leaves had not been cleared up either to the satisfaction of the Vendors or Purchasers, and while the Vendors may not necessarily have been concerned about this (in the same way as the Purchasers), it is clear from correspondence from that time, and Malachi Cullen & Partners, from September 2001 onwards, that the matter was unresolved. I am satisfied and find as a fact that as of the date of the issue of the plenary summons in these proceedings (September 2001) the Plaintiffs/Vendors, through their solicitors, had been advised by their own engineers that certain steps still required to be taken to resolve the mapping, measurement and boundaries of the way leaves. (The Defendants/Purchasers only became aware of these facts after Discovery was made by the Plaintiffs/Vendors.) I am satisfied that the ultimate true position claimed to be as set out in a letter of 21st November 2001, from Messrs Coughlan & Associates, architects, to the Purchasers’ solicitors is correct.
Without making any concession to the Purchasers, the Vendors’ solicitors, in a letter of 28th November 2001, addressed to the Secretary of Westmeath County Council, dealt at length with the problem of the respective way leaves and the points raised by Messrs Coughlan & Associates. It concludes as follows:-
“There are very substantial issues arising by virtue of the delay in completion of the sale in monetary terms. The pipeline/way leave is the only outstanding issue. Interest on the unpaid purchase money accrues at £1,497 per day. We have had a consultation with counsel on Friday evening last and it has been confirmed by senior counsel that the failure of the County Council to reply to recent correspondence is not at all helpful to the issues in the High Court proceedings.
In the light of the issues raised in correspondence, it would appear that there would be advantage to marking the boundaries of a way leave clearly with marker posts and also separately marking the line of the sewer pipe through the way leave so that it can be apparent on the surface of the ground as to the exact demarcation of the boundaries of the way leave and also the line of the pipe through the specified way leave. We presume that this would not cause much difficulty and you might revert to us. Delay in dealing with the issues as set out above and dealing with the correspondence generally will leave the Vendors with no alternative but to join Westmeath County Council in the existing proceedings or in such separate proceedings as counsel may direct.”
Correspondence between the County Council and their advisors and between the parties hereto and their advisors continued over a period until the matter of the nature and extent and mapping and measurement of the way leaves was finally resolved in January 2003. The problem of the Purchasers was that they purchased a parcel of land and when documentation was received the conditions on site varied from those shown on such map or maps as were furnished to them. They could not be expected to buy into a law suit or close a sale when the Vendors were not in a position to give good marketable title and clearly explain whatever discrepancies had been highlighted in the correspondence. Appreciating the argument that was made in the course of the hearing that any developer would be anxious to have as clean a site as possible so as to maximise such development as might be possible on the site, I am nonetheless satisfied that notwithstanding that the number of linear metres by which the pipeline might be said to be out of “alignment” per the maps furnished with the way leave, does not mean that the Purchasers were obliged to conclude a sale which had certainly to adopt the Plaintiffs/Vendors’ euphemism, “paper difficulties”. In my judgment, this was not a case of mere paper difficulties — the difficulties were real and not imaginary.
The position taken by the County Council as to their amenability to meet such requirements as had been raised in the correspondence is particularly set out in their letter of 12th December 2001, some six months after the Completion Notice. The deviation from the line of the pipe was “approximately three linear metres at the southern end of the Birminghams’ way leave”, and by letter of Westmeath County Council, dated 12th December 2001, or expressed in a memorandum prepared by the Vendors’ solicitor, was in the following terms:-
“This way leave would meet with the amended requirements of Mr. Coughlan, it would correct the error in the existing way leave where the map on the June 1999 reference number 16 way leave agreement is short by a number of metres.”
This is not the issue. The real issue was that the Purchasers could not be expected or should not have been expected in buying development land to have been obliged to accept a title which was problematic in this regard. This was not a matter of trifling materiality, it was not de minimis in the context of land clearly and known by both parties to be development land.
Even if it were argued that this memo might not be available to a Defendant in evidence in the trial, there is no dearth of evidence of the like character which would be available. While it is true, as submitted by Mr. Allen for the Plaintiffs/Vendors, that their solicitor did not accept that the Defendants/Purchasers were entitled to all they were looking for in good, clear, marketable title in accordance with the contract, I do not accept that the steps taken by the Plaintiffs/Vendors were carried out merely to accommodate the Defendants/ Purchasers so as to bring the sale to a conclusion. The kernel of this case is the efficacy of the Completion Notice. I am satisfied and find as a fact and as a matter of law that as of the date of the Completion Notice and at the extended date accorded to the Purchasers to comply therewith the Plaintiffs/ Vendors were not able, ready and willing to complete the sale in accordance with the contract.
THE WAY LEAVES OF WATERWAYS/CIE
Another difficulty that arose in connection with this sale was referable to a small, narrow piece of land adjoining the Royal Canal which was adjacent to the lands in sale, the property of the Vendors. It is clear from the documentation presented to me that there was, before any contract of sale was entered into, correspondence between the Vendors’ solicitor and the Office of Public Works (OPW), the original owners of the Royal Canal and whose interests had passed to them from CIE and eventually through the OPW to Waterways. Subsequent to the signing of the contract, in a letter dated 25th September 2000, the Purchasers’ solicitors referred to two agreements with Westmeath County Council, attached to the back of one of which was a licence between Francis Birmingham and CIE, with an attached map which included part of the lands which the Vendors had purported to sell to the Purchasers. This was the first of many letters arising out of the replies to requisitions, in respect of requisition 3, the queries and responses to which were as follows:-
“Easements and Rights
1(a) Are there any pipes, drains, sewers, wires, cables or septic tank on, under or over other property which serve the property on sale?
Reply: None other than those disclosed from muniments of title or would be apparent from inspection.
(b) If there are, furnish now evidence of the easement grant or way leave authorising same.
Reply: Copy agreement and consent of Frank Birmingham with Westmeath County Council dated January and March 1987. Copy, agreement and consents of Robert Birmingham and George Birmingham with Westmeath county Council dated 1st November 1999.
(c) What are the Vendors’ rights and obligations in respect of same?
2(a) Is the property subject to any right of way, water, light, air or drainage, or any other easement, reservation, covenant, condition or restriction, or to any right of any kind, or
(b) is the property subject to any liability to repair any road, sewer, drain or sea wall, or any other similar liability?
(c) if so, furnish now details of same.
Reply: See reply to requisition 3.1. The Vendors believe the OPW/Waterways Ireland have a right to access the property in order to maintain and clean the canal.”
The document disclosed was an agreement made on 3rd February 1969, between Francis Birmingham and CIE. It was effectively a form of licence permitting Mr. Birmingham to graze part of the lands of the Royal Canal in the Townland of Petitswood and Ballinderry, as shown coloured red on Plan 1707/6, which is attached to the agreement, which claimed an annual licence fee of one pound five shillings. The obligation arising thereunder provided as follows: “During the continuance of the said licence I shall herd, tend and keep from straying all
animals thereon, and shall maintain and keep the drains, water courses, fences, ditches, hedges and gates in and upon the said land in good order, repair and condition, and shall keep the said land free from noxious weeds as by law required and indemnify the Board for and against any omission so to do.”
It was further agreed that the Board may determine the licence at any time on one month’s notice in writing in the event of the Board requiring the land for their own purposes or in the event of any breach of the licensee of any of the conditions attached to the licence. There was a prohibition on “assigning, sub-letting or parting with possession of the lands or any portion thereof under any pretence whatsoever, this licence being solely for temporary convenience”. Proceedings were issued by the Vendors’ solicitors to assuage the concerns of the Purchasers’ solicitors, particularly in a letter of 8th November 2000, but nonetheless not only were proceedings initiated against Waterways Ireland Limited on 15th January 2001, they were not discontinued until 12th June 2001, so clearly the Vendors had a concern vis-a-vis the sale, that there was something that required resolution such as warranted the institution of litigation. That was referred to again by the Vendors’ solicitor in a letter of 5th July 2001, which on dealing with this topic to the Defendants/ Purchasers’ solicitors, under paragraph (5), concluded as follows:
“Waterways, through their solicitors, have acknowledged the absolute title of the Vendors to the entirety of the property of which the Vendors are registered owners. Inherent in that acknowledgement is the fact that they could not therefore presume to grant any rights in favour of a third party over the lands and not a shred of written evidence has been produced by your clients to support such allegations. It would appear that in advising the Purchasers on this issue you are choosing to ignore the fundamental legal criterion to create an enforcement of way leave.”
The problem, however, with Waterways was not simply that Waterways had expressly granted a way leave to Mr. Francis Birmingham, father of the Plaintiffs (before he transferred the lands in sale to the Vendors herein), but there had been apparently some informal arrangement between Westmeath County Council and Waterways Limited concerning the laying of a pipe in lands which the Vendors had an interest. This is compounded and confirmed in a letter dated 10th July 2001, by the Vendors’ solicitors to the Secretary of Westmeath County Council, which, inter alia, states as follows:-
“We will require confirmation pursuant to the terms of your letter that the County Council acknowledged that they have no claim in respect of any way leave over the area alleged to have been repudiated by Waterways on the basis that they have withdrawn any claim in title over the particular area of the lands comprised in the registered holding of Robert and George Birmingham. This will finalise matters to the satisfaction of the Vendors and this letter is required by return.
The effect of the last paragraph of the letter of July 9th does not effectively confirm that the County Council acknowledged the repudiation of Waterways to cancel out any such alleged way leave agreement as exists.”
This was followed by a further letter of 13th July 2001 (the day after the Completion Notice) from the Vendors’ solicitors, again to the County Council, in which it is stated, inter alia, as follows:-
“We require by return an acknowledgement by Westmeath County Council that they fully acknowledge their repudiation of Waterways of any claim to a way leave in favour of Westmeath County Council over the area between the way leave granted by Robert and George Birmingham and the canal bank on the basis of the acknowledgement of Waterways of the title of the Vendors to this area.
Unless we receive this letter, the County Council remain in the frame as liable for damages for delay in completion of sale in the event that this continues as an issue between the Vendor and the Purchaser. This letter and previous correspondence by the Council will be used in support of this claim.”
Correspondence goes on to reveal a situation that in a letter of 1st August 2001 the Vendors’ solicitors, in writing to Messrs Arthur Cox & Co (solicitors for Waterways Limited), they acknowledged that “we have had an exchange of correspondence from the Council and their solicitors and indeed are more than surprised that copies of maps prepared by the Westmeath County Council have now come to light in respect of the temporary and permanent way leave referred to”.
It was not until 28th August 2001 that the Purchasers’ solicitors were in a position to write to the Vendors’ solicitors concerning the way leave of Waterways Ireland problem that had arisen in the following terms:-
“Subject to the letter from Arthur Cox & Co re waterways being dealt with on an open basis, they are satisfied with the recent letter from Arthur Cox & Co confirming no rights of access over the property. We have dealt with this matter in ours of 27th inst.”
It is clear to me, having considered the correspondence and the submissions of counsel, that for approximately a month or more after the issue of the Completion Notice the Purchasers were within their rights questioning the closing of the sale until matters were put beyond yea or nay. I am satisfied and find as a fact that, as in the case of the ESB, there had been activity on the land or premises of the Vendors, in discussion at least, less than a year prior to the making of a contract in 2000, and whatever documentation may have been absent as between the Westmeath County Council and Waterways Ireland Limited, the Vendors, it seems to me, quite clearly were aware that some pipes or pipes had been laid in the ground and there was no express provision in this regard in the contract of these facts.
THE KELLY CLAIM
This problem arose concerning the title of the property prior to any Completion Notice being served and arose as a result of certain lands adjacent to that of the Vendors but owned, it would appear, by a Mr. Tom Birmingham (and perhaps Mr. Frank Birmingham,
father of the Plaintiffs) being sold to a Mr. Kelly. This apparently arose in or about February 2001, so far as the Purchasers and the Defendants in this case are concerned, and they took the matter up with the Vendors’ solicitors in correspondence at that time. It would appear that Mr. Kelly was given either a way leave or an indication that such was available to him over the lands in sale in these proceedings. Mr. Kelly was also a man who apparently bought land for the purpose of building and while the lands in sale in the instant case were serviced, it was clear that Mr. Kelly had hoped to tap into or connect into the services on the land the subject of the sale to the Defendants. No such provision was made for this in the contract at the time of negotiation or at its being concluded. It is not necessary for present purposes to go into the details of the to-ing and fro-ing between the respective solicitors and the attempts made by Mr. Kelly to seek or to avail himself of the services that were in the land in sale in these proceedings. Suffice it to say that in a letter dated 27th February 2001 the Purchasers’ solicitors clearly articulated the concern of their clients to the Vendors’ solicitors in the following terms:
“Of concern is, the fact that Mr. Kelly is clearly making a case that he has a legitimate way leave agreement through our clients’ lands. The suggestion from Mr. Kelly’s solicitor is that our clients are now on notice of, as they put it, of Mr. Kelly’s rights which they point out predates our clients’ contract. They expect a court to ‘favour Mr. Kelly in any disputes with our clients’.”
The matter remained one of concern to the Purchasers and, in my view, reasonably so, until approximately 11th June 2001. In the light of the correspondence of the claim being made by Mr. Kelly, I do not think that the Purchasers were unreasonable in being concerned to ensure that if they concluded the sale they would not be buying a law suit involving Mr. Kelly. However, this matter was concluded to the satisfaction of the Purchasers before the Completion Notice and it does not concern the validity of the Notice, but in my view does satisfactorily explain the alleged delay referable to this. The fact that other matters were outstanding and that the sale could not otherwise be concluded is quite a separate issue.
An issue was raised by the Defendants/Purchasers concerning the obtaining of a Capital Gains Tax Clearance Certificate, but this matter was very properly not pursued by Mr. Hussey on their behalf. This matter was resolved and its non availability on 12th July 2001, the date of the Completion Notice, of itself, would not have invalidated the Notice.
SUMMARY
At the date of the Notice to Complete there was no problem inhibiting the vendor closing the sale with the Purchaser arising from the claim of the ESB, Waterways or the Kelly claim. There were various problems concerning and regarding the way leaves of the County Council and these continued to within an hour of the closing of the sale on 31st January 2003. Neither at the date six months from the date of the contract or on the date of the Completion Notice or its expiry or at the extension of the time accorded by the Plaintiffs/Vendors to the Defendants/ Purchasers were the Plaintiffs/Vendors able, willing and ready to complete the sale in accordance with the contract.
THE PROCEEDINGS
The matter came before the court on different dates separated by approximately six months. occasion, the Defendants’ motion, under Order 19, Rule 28, and the inherent jurisdiction of the Court was advocated by the Defendants, but the Plaintiffs submitted they ought not to be obliged to respond thereto until their motion for further and better Discovery was considered and ruled upon. The dispute concerning Discovery centred on a claim of privilege in the Defendants’ affidavit, which was questioned by the Plaintiffs. It was agreed that I should assume the burden of examining such documents and that an order be made to discover such documents in respect of which I considered privilege had been improperly claimed and that the Plaintiffs/Vendors be entitled to file an additional affidavit in the proceedings confined to such recently discovered documents. This limitation was imposed so as to preserve the integrity of the proceedings as they stood on the adjournment arising from the Plaintiffs’ motion.
Notwithstanding the Defendants having made Discovery in early 2003, the Plaintiffs, up to and including the date of the final hearing of the applications on 20th May 2004, had not troubled to inspect the same.
COMPLETION NOTICE
It is an undisputed fact that Condition 40 of the General Conditions provides for Completion Notices: to the extent relevant to the present proceedings, it provides as follows:
“40. Save where time is of the essence in respect of the closing date, the following provisions shall apply:
(a) if the sale be not completed on or before the closing date, either party may on or after that date (unless the sale shall first have been rescinded or become void) give to the other party notice to complete the sale in accordance with this condition, but such notice shall be effective only if the party giving it shall then be able, ready and willing to complete the sale or is not so able, ready or willing y reason of the default or misconduct of the other party.” (emphasis added)
The penal and draconian nature of a Completion Notice has been recognised by the courts (Viscount Securities Ltd -v- Kennedy, unreported Supreme 6th May 1986). The importance for the person themselves serving such a notice to be able, ready and willing to complete the sale has long been the subject of several decided cases, the most recent perhaps being Tyndarious Ltd -v- O’Mahony & Ors (unreported Supreme Court 3rd March 2003). In that case, the Plaintiff/Purchaser sought declaratory relief that the Defendants were not, at the date they served the Completion Notice, able to complete the sale and that their failure or inability to make good title to the lands in question rendered the notice invalid. Keane CJ, delivering the judgment court, dismissed the Defendants’ appeal, holding that the Defendants were not in a position to complete the contract and make title to the property in accordance with the contract. The Completion Notice being invalid gave rise to an entitlement of the Plaintiff to rescind the contract in accordance with its terms.
THE LAW AND LEGAL SUBMISSIONS
There is a clear distinction between a case that may be dismissed under Order 19, Rule 28, where the court can only make an order when a pleading discloses no reasonable cause of action on its face and a case that may be dismissed by invoking the inherent jurisdiction of the court, where the court is not limited to the pleadings of the parties but is free to consider evidence on affidavit. The underlying principles on which the court exercises this jurisdiction (and it is one to be used sparingly and only in clear cases) are well established in the decided cases and their purpose is to ensure that there is no abuse of process of the court; thus, proceedings that are vexatious or frivolous will be stayed.
In the instant case, there is no dispute as to the contract document or the correspondence. In this context, the judgment of Costello J in Barry -v Buckley [1981] IR 306 at 308 is in point:-
“If, having considered the documents, the court is satisfied that the Plaintiff’s case must fail, then it would be a proper exercise of its discretion to strike out proceedings whose continued existence cannot be justified and is manifestly causing irrevocable damage to a Defendant.”
In his submissions on behalf of the Plaintiffs/ Vendors, Mr. Allen laid considerable stress on that part of the judgment of the Supreme Court (delivered by McCarthy J) in Sun Fat Chan -v- Osseous Ltd [1992] 425 at p.428/9, under the heading “Jurisdiction”. The instant case is clearly distinguishable from Sun Fat Chan not only in its facts but also, and crucially, as to the state of the pleadings. In Sun Fat Chan matters had only reached the Statement of Claim when the Defendant brought a motion to dismiss the action. In the instant case, not only were pleadings closed and the main substantive issues settled between the parties, leaving only the issue of interest outstanding, but full Discovery had been made. In my judgment, there is no disputed facts put before the court, but argument was advanced as to how the facts could or should be interpreted. Commentary in affidavits that may be disputed is not the same as undisputed facts. If they were treated as interchangeable or one the equivalent to the other, applications under Order 19, Rule 28 and/or under the inherent jurisdiction of the court could be circumvented by what, in effect, would be a devise in defeasance of a jurisdiction.
In this case, there were three problems known to exist during the first six months of the contract; thereafter, a fourth arose (viz the Kelly claim). The Plaintiffs/Vendors sued both the ESB and Waterways Limited. Both these problems, and the Kelly claim, ceased to exist at the date of the Completion Notice; but notification and acceptance was not coincident with the date of Notice to Complete. Throughout the entire period, from 6th December 2000 to 31st January 2003, the problems arising from the way leaves of Westmeath County Council existed. In my judgment, the Defendants/ Purchasers were not responsible for the delays encountered in bringing the sale to a conclusion on 31st January 2003.
In my judgment, this is a clear case and it can certainly be said that there is no prospect that the action, if allowed to proceed to trial, will succeed. Likewise, as considerable injustice could result if the matter is not disposed of now, to permit the case to proceed to trial would be to permit an abuse of the court’s process and an unfair vexation of the Defendants.
END OF JUDGMENT
Birmingham v Coughlan,
unreported, High Court, Smyth J., June 9, 2004
The Plaintiffs are farmers who reside at Dublin Road, Mullingar, in the County of Westmeath. The Defendants are businessmen who reside in Mullingar. The Plaintiffs contracted to sell to the Defendants certain lands in Folio 14915F of the register of Freeholders, County of Westmeath, on 16th June 2000, for the sum of £4.5 million. The contract provided that the Defendants would pay the sum of £3,375,000 within six months from the date of the contract and the balance of £1,125,000 six months thereafter. The Defendants were to take possession of the lands, which have been referred to in the documents as “Stage I”, on payment of £3,375,000, and on the final payment of £1,125,000 were to be given possession of Stage II of the transaction. The closing date provided for Stage I was six months from the date of the contract, ie, 16th December 2001, and the closing date for Stage II, being six months thereafter, was to be 16th June 2001. The contract also provided that if the sale was closed in total within twelve months or earlier the Defendants would be refunded by way of “luck penny” the sum of £20,000, provided that if there was a delay that the “luck penny” would still be paid if the delay was the default of the Vendors.It was appreciated by both parties that the lands were being bought for development purposes and that the purchase price reflected that clear common understanding.
Difficulties arose subsequent to the execution of the contract and ultimately a Completion Notice pursuant to General Condition 40 of the Conditions of Sale (1995 Edition) of the Law Society of Ireland (as incorporated in the said contract) was served on the Defendants on 12th July 2001.
These proceedings were formulated originally as specific performance proceedings, and the pleadings having been closed a compromise was arrived at in January 2003. The arrangement then made was that the Purchasers agreed to complete the purchase of the property not later than 31st January 2003, on payment of the full balance of the purchase money, on the basis that the ongoing litigation will continue excluding only the claim in respect of the purchase money. It was further agreed that the figure in respect of “luck penny” as specified in the contract would be held on joint deposit receipt pending finality in regard to the litigation and dependent on any specific court order or agreement as between the parties in regard to the “luck penny” pursuant to the terms of the contract. The proceedings gave rise to Discovery, that being sought and made in February 2003, and upon receipt and inspection of same the
Defendants sought, by Notice of Motion dated 19th March 2003, the following reliefs as against the Plaintiffs:-
1. An order dismissing the remainder of the Plaintiffs’ claim herein, the contract the subject of the litigation having been completed on 31st January 2003. The Plaintiffs’ further action for interests for delay cannot succeed.
2. An Order striking out the Plaintiffs’ claim herein, in that the Plaintiffs’ further prosecution of their claim following completion of the contract is actuated by malice and improper purpose.
3. An Order pursuant to Order 19, Rule 28 of the Rules of the Superior Courts and pursuant to the inherent jurisdiction of the court
striking out the Plaintiffs’ claim as having no reasonable prospect or no prospect of success.
The Plaintiffs also brought a motion, dated 25th February 2003, seeking further and better discovery from the Defendants arising from the Discovery furnished by the Defendants on 24th January 2003, which was furnished pursuant to a court order dated 20th November 2002.
The motion to dismiss the proceedings was in order of hearing, first heard by the court and essentially it was directed to the claim being made by the Vendors for interest in the sum of £1.4 million. The case made for and on behalf of the Defendants was that, at the date of the completion, there were at least four major difficulties regarding title furnished by the Plaintiffs/Vendors to the Defendants/Purchasers. These concerned the following:-
(a) Non-disclosure to the Purchasers that a cluster of five Wavin pipes constituting a ducting or piping system were installed by the Electricity Supply Board on the subject property. In this regard, reference was made to a map of the ducting pipe line and photographs of same were exhibited to the court. A protracted correspondence from the Vendors’ solicitors to the ESB was referred to in court and it emerged that prior to serving any Completion Notice proceedings had been brought by the Plaintiffs/ Vendors against the Electricity Supply Board in respect of a pipeline. These proceedings are still in being and are awaiting trial as at the date of the hearing of these motions.
(b) The nature and extent of way leaves and pipelines granted to Westmeath County Council by the Vendors and the extent to which the County Council unilaterally placed the pipeline as shown on the map attached to the way leaves furnished in response to requisitions on title was unclear. This had the effect or influence on the reserved open space and development potential of the lands to a significant extent and further it influenced to a great extent the necessary construction costs such as the shoring up of foundations as were near the extended pipeline area. The exact nature and extent of the way leaves and pipelines in favour of the County Council was not ascertained or provided for by way of grant of way leave until the week prior to the closing of the sale on 31st January 2003, and accordingly it is the case of the Purchasers that the Vendors at the date of the service of the Completion Notice were not in the position of being able, ready and willing to complete the sale in accordance with the contract. Indeed, in paragraph 31 of an affidavit sworn on 16th December 2003 by
Mr. Denis Shaw for the Plaintiffs/Vendors he avers as follows:
“It is the contention of the Plaintiffs/ Vendors that all issues, other than the alleged issue with regard to the way leaves with Westmeath County Council, which became a protracted issue as between the Plaintiffs/Vendors and the Defendants/ Purchasers, were resolved prior to the issue of the Completion Notice on the 12th day of July 2001.”
The Defendants contended that the consequences of the non-disclosure of the existence of the pipeline and the extent of the disclosed pipeline by the Plaintiffs had caused undue delay, uncertainty and ongoing investigation by the Defendants, and had caused a significant loss of bargain. Furthermore, they claimed that the extent of a claim of another party, to wit Waterways (otherwise successor to CIE) to an area of land along the canal adjoining the premises in sale was the subject of very serious doubt on the title. This dispute also led to litigation a between the Vendors and Waterways.
(c) Difficulties were also caused as a result of what was stated to be an undisclosed claim to an easement of necessity from neighbouring lands for development. Those neighbouring lands apparently included lands of the father and perhaps the brother of the Plaintiffs (it is referred to as the Kelly claim). In summary, therefore, the claim of the Defendants was that the Plaintiffs were not, as of the date of the service of the Completion Notice, able, ready and willing to complete the contract in accordance with its terms and their obligations arising therefrom. Most, if not all, of the matters that gave rise to the litigation and were agitated before the court in the course of the hearing of the motions could be said to have arisen from the formulation of an application of planning permission by the Defendants. While the contract was not subject to the obtaining of planning permission, it was agreed by the Vendors that the Purchasers could proceed to formulate and apply for planning permission and the Plaintiffs/Vendors were disposed to being of as much assistance as they could be to the Defendants in that regard.
The difficulties, however, that arose could be categorised as falling under four headings:
(1) The claim of the ESB
(2) The way leaves of the County Council
(3) The way leaves of Waterways/OPW/CIE
(4) the Kelly claim.
THE CLAIM OF ESB
I am satisfied and find as a fact on the evidence placed before me that the claim for interest as against the Defendants in the period December 2000, and thereafter, attributable to the claim of the Electricity Supply Board are unsustainable. It was appreciated by the Vendors some considerable time before the closing of the sale that there was at least ducting in the property underneath the lands in sale and the ducting had been placed on the lands by the ESB. There was correspondence which appears to have been at cross purposes as to whether a 38KV cable, the property of ESB, ran through the lands in sale, and this confused an already contentious issue. Suffice it to say that the Vendors were sufficiently concerned about “clearing the ESB off the title” to issue proceedings against the Board on 25th January 2001. On 17th May 2001, the position of the Board became clear when that body wrote to the solicitors for the Vendors in the following terms:
“Dear Sirs,
With reference to your letter of 11th May, ESB does not accept that it has any liability for the failure of the Purchasers to fulfil their contractual obligations to your clients.
In the first instance, there is no electricity cable on your clients’ lands at present. Permission to lay a cable was received orally from your clients prior to the carrying out of any works by ESB, but the only works carried out to date on your clients’ lands are the laying of a conduit for a proposed electricity cable. On 11th January this year a letter was issued by ESB to Westmeath County Council requesting them to disregard the presence of a cable in considering the planning application of C&F Developments as ESB was prepared to alter, reposition or relocate the underground cable if there was a conflict between any permitted development and the cable. The Purchasers were informed of this on the same date and copies of both letters were sent to you.
However, up to last week C&F Developments had failed to furnish Westmeath County Council with any response for additional information. Westmeath County Council requested information some time in March/April 2001, on a long list of disparate issues (eg, density of housing, traffic, height and scale, overlooking, conflict with the Development Plan, footbridge, harbour, sewage, etc). Until this information is received by Westmeath County Council, processing of C&F Developments’ application cannot proceed. C&F Developments are well aware of this fact.
In addition, an inspection of the planning file in the offices of the County Council will show that the substantial reason for the delay in determining the planning application by C&F Developments is a number of objections received to the proposed development.
ESB, therefore, fails to see how it is being held up as the sole reason for C&F Developments’ planning permission not advancing when it is quite clear there are other more pressing issues affecting its progress.
However, we have now informed the County Council that we are not proceeding with the proposed cable along this route. ESB agreed to abandon the conduit crossing your clients’ lands and are actively selecting a new route. The existing conduit can be demolished during the earthworks stage of the development when it takes place.”
Between December 2000 and 17th May 2001, there can be no liability on the part of the Purchasers to pay the Vendors any interest. Even if there is a claim for interest for this period, and it is by no means certain that there is, it may not be the liability of the ESB and it is not the responsibility of the Purchasers. Because, even as of 12th July 2001 the question of the way leave(s) of Westmeath County Council had not been resolved. In my judgment, the Purchasers were reasonable in refusing (as they could be said to have done so) to close the sale in respect of the objection referable to ESB before 17th May 2001. As of 12th July 2001, (notwithstanding proceedings 2001/2295P), such problem(s) as existed (if ever and any) as the result of any act or default of the ESB did not and was not a cause of the non-completion of the sale of the parties to these proceedings.
THE WAY LEAVES OF THE COUNTY COUNCIL
The difficulties arising from way leaves granted in favour of Westmeath County council were compounded by the fact that when the copy documents were being made available to the Purchasers as part of the contract a way leave of 1987 which did have a map was attached to a way leave of 1999 which did not have a map attached to it. Furthermore, the pipeline as indicated in the map attached to the way leave did not accurately reflect the actual location of the pipe in the ground. Because of the necessity of providing certain areas for work and maintenance on either side of the pipeline, which had the pipeline been set or put down in or on the line provided for in the map of 1987, perhaps no difficulties may have arisen. It appears the pipes and/or ducts may have been laid in accordance with the map attached to the 1999 way leave agreement, but such map was not furnished by the Plaintiffs/Vendors to the Defendants/Purchasers at the time of entering into the contract and therefore did not form part of the signed contract.
However, that was not the case and accordingly a considerable bulk of correspondence was exchanged not only between the solicitors of the parties but between the County Council and their solicitors and particularly with the solicitors for the Vendors. Both parties engaged surveyors; Messrs Malachi Cullen & Partners were engaged by the Vendors and Messrs Coughlan & Associates, architects, were engaged for the Defendants. I am satisfied and find as a fact that as of the date of the service of the Completion
Notice on 12th July 2001 that the matters of the way leaves had not been cleared up either to the satisfaction of the Vendors or Purchasers, and while the Vendors may not necessarily have been concerned about this (in the same way as the Purchasers), it is clear from correspondence from that time, and Malachi Cullen & Partners, from September 2001 onwards, that the matter was unresolved. I am satisfied and find as a fact that as of the date of the issue of the plenary summons in these proceedings (September 2001) the Plaintiffs/Vendors, through their solicitors, had been advised by their own engineers that certain steps still required to be taken to resolve the mapping, measurement and boundaries of the way leaves. (The Defendants/Purchasers only became aware of these facts after Discovery was made by the Plaintiffs/Vendors.) I am satisfied that the ultimate true position claimed to be as set out in a letter of 21st November 2001, from Messrs Coughlan & Associates, architects, to the Purchasers’ solicitors is correct.
Without making any concession to the Purchasers, the Vendors’ solicitors, in a letter of 28th November 2001, addressed to the Secretary of Westmeath County Council, dealt at length with the problem of the respective way leaves and the points raised by Messrs Coughlan & Associates. It concludes as follows:-
“There are very substantial issues arising by virtue of the delay in completion of the sale in monetary terms. The pipeline/way leave is the only outstanding issue. Interest on the unpaid purchase money accrues at £1,497 per day. We have had a consultation with counsel on Friday evening last and it has been confirmed by senior counsel that the failure of the County Council to reply to recent correspondence is not at all helpful to the issues in the High Court proceedings.
In the light of the issues raised in correspondence, it would appear that there would be advantage to marking the boundaries of a way leave clearly with marker posts and also separately marking the line of the sewer pipe through the way leave so that it can be apparent on the surface of the ground as to the exact demarcation of the boundaries of the way leave and also the line of the pipe through the specified way leave. We presume that this would not cause much difficulty and you might revert to us. Delay in dealing with the issues as set out above and dealing with the correspondence generally will leave the Vendors with no alternative but to join Westmeath County Council in the existing proceedings or in such separate proceedings as counsel may direct.”
Correspondence between the County Council and their advisors and between the parties hereto and their advisors continued over a period until the matter of the nature and extent and mapping and measurement of the way leaves was finally resolved in January 2003. The problem of the Purchasers was that they purchased a parcel of land and when documentation was received the conditions on site varied from those shown on such map or maps as were furnished to them. They could not be expected to buy into a law suit or close a sale when the Vendors were not in a position to give good marketable title and clearly explain whatever discrepancies had been highlighted in the correspondence. Appreciating the argument that was made in the course of the hearing that any developer would be anxious to have as clean a site as possible so as to maximise such development as might be possible on the site, I am nonetheless satisfied that notwithstanding that the number of linear metres by which the pipeline might be said to be out of “alignment” per the maps furnished with the way leave, does not mean that the Purchasers were obliged to conclude a sale which had certainly to adopt the Plaintiffs/Vendors’ euphemism, “paper difficulties”. In my judgment, this was not a case of mere paper difficulties — the difficulties were real and not imaginary.
The position taken by the County Council as to their amenability to meet such requirements as had been raised in the correspondence is particularly set out in their letter of 12th December 2001, some six months after the Completion Notice. The deviation from the line of the pipe was “approximately three linear metres at the southern end of the Birminghams’ way leave”, and by letter of Westmeath County Council, dated 12th December 2001, or expressed in a memorandum prepared by the Vendors’ solicitor, was in the following terms:-
“This way leave would meet with the amended requirements of Mr. Coughlan, it would correct the error in the existing way leave where the map on the June 1999 reference number 16 way leave agreement is short by a number of metres.”
This is not the issue. The real issue was that the Purchasers could not be expected or should not have been expected in buying development land to have been obliged to accept a title which was problematic in this regard. This was not a matter of trifling materiality, it was not de minimis in the context of land clearly and known by both parties to be development land.
Even if it were argued that this memo might not be available to a Defendant in evidence in the trial, there is no dearth of evidence of the like character which would be available. While it is true, as submitted by Mr. Allen for the Plaintiffs/Vendors, that their solicitor did not accept that the Defendants/Purchasers were entitled to all they were looking for in good, clear, marketable title in accordance with the contract, I do not accept that the steps taken by the Plaintiffs/Vendors were carried out merely to accommodate the Defendants/ Purchasers so as to bring the sale to a conclusion. The kernel of this case is the efficacy of the Completion Notice. I am satisfied and find as a fact and as a matter of law that as of the date of the Completion Notice and at the extended date accorded to the Purchasers to comply therewith the Plaintiffs/ Vendors were not able, ready and willing to complete the sale in accordance with the contract.
THE WAY LEAVES OF WATERWAYS/CIE
Another difficulty that arose in connection with this sale was referable to a small, narrow piece of land adjoining the Royal Canal which was adjacent to the lands in sale, the property of the Vendors. It is clear from the documentation presented to me that there was, before any contract of sale was entered into, correspondence between the Vendors’ solicitor and the Office of Public Works (OPW), the original owners of the Royal Canal and whose interests had passed to them from CIE and eventually through the OPW to Waterways. Subsequent to the signing of the contract, in a letter dated 25th September 2000, the Purchasers’ solicitors referred to two agreements with Westmeath County Council, attached to the back of one of which was a licence between Francis Birmingham and CIE, with an attached map which included part of the lands which the Vendors had purported to sell to the Purchasers. This was the first of many letters arising out of the replies to requisitions, in respect of requisition 3, the queries and responses to which were as follows:-
“Easements and Rights
1(a) Are there any pipes, drains, sewers, wires, cables or septic tank on, under or over other property which serve the property on sale?
Reply: None other than those disclosed from muniments of title or would be apparent from inspection.
(b) If there are, furnish now evidence of the easement grant or way leave authorising same.
Reply: Copy agreement and consent of Frank Birmingham with Westmeath County Council dated January and March 1987. Copy, agreement and consents of Robert Birmingham and George Birmingham with Westmeath county Council dated 1st November 1999.
(c) What are the Vendors’ rights and obligations in respect of same?
2(a) Is the property subject to any right of way, water, light, air or drainage, or any other easement, reservation, covenant, condition or restriction, or to any right of any kind, or
(b) is the property subject to any liability to repair any road, sewer, drain or sea wall, or any other similar liability?
(c) if so, furnish now details of same.
Reply: See reply to requisition 3.1. The Vendors believe the OPW/Waterways Ireland have a right to access the property in order to maintain and clean the canal.”
The document disclosed was an agreement made on 3rd February 1969, between Francis Birmingham and CIE. It was effectively a form of licence permitting Mr. Birmingham to graze part of the lands of the Royal Canal in the Townland of Petitswood and Ballinderry, as shown coloured red on Plan 1707/6, which is attached to the agreement, which claimed an annual licence fee of one pound five shillings. The obligation arising thereunder provided as follows: “During the continuance of the said licence I shall herd, tend and keep from straying all
animals thereon, and shall maintain and keep the drains, water courses, fences, ditches, hedges and gates in and upon the said land in good order, repair and condition, and shall keep the said land free from noxious weeds as by law required and indemnify the Board for and against any omission so to do.”
It was further agreed that the Board may determine the licence at any time on one month’s notice in writing in the event of the Board requiring the land for their own purposes or in the event of any breach of the licensee of any of the conditions attached to the licence. There was a prohibition on “assigning, sub-letting or parting with possession of the lands or any portion thereof under any pretence whatsoever, this licence being solely for temporary convenience”. Proceedings were issued by the Vendors’ solicitors to assuage the concerns of the Purchasers’ solicitors, particularly in a letter of 8th November 2000, but nonetheless not only were proceedings initiated against Waterways Ireland Limited on 15th January 2001, they were not discontinued until 12th June 2001, so clearly the Vendors had a concern vis-a-vis the sale, that there was something that required resolution such as warranted the institution of litigation. That was referred to again by the Vendors’ solicitor in a letter of 5th July 2001, which on dealing with this topic to the Defendants/ Purchasers’ solicitors, under paragraph (5), concluded as follows:
“Waterways, through their solicitors, have acknowledged the absolute title of the Vendors to the entirety of the property of which the Vendors are registered owners. Inherent in that acknowledgement is the fact that they could not therefore presume to grant any rights in favour of a third party over the lands and not a shred of written evidence has been produced by your clients to support such allegations. It would appear that in advising the Purchasers on this issue you are choosing to ignore the fundamental legal criterion to create an enforcement of way leave.”
The problem, however, with Waterways was not simply that Waterways had expressly granted a way leave to Mr. Francis Birmingham, father of the Plaintiffs (before he transferred the lands in sale to the Vendors herein), but there had been apparently some informal arrangement between Westmeath County Council and Waterways Limited concerning the laying of a pipe in lands which the Vendors had an interest. This is compounded and confirmed in a letter dated 10th July 2001, by the Vendors’ solicitors to the Secretary of Westmeath County Council, which, inter alia, states as follows:-
“We will require confirmation pursuant to the terms of your letter that the County Council acknowledged that they have no claim in respect of any way leave over the area alleged to have been repudiated by Waterways on the basis that they have withdrawn any claim in title over the particular area of the lands comprised in the registered holding of Robert and George Birmingham. This will finalise matters to the satisfaction of the Vendors and this letter is required by return.
The effect of the last paragraph of the letter of July 9th does not effectively confirm that the County Council acknowledged the repudiation of Waterways to cancel out any such alleged way leave agreement as exists.”
This was followed by a further letter of 13th July 2001 (the day after the Completion Notice) from the Vendors’ solicitors, again to the County Council, in which it is stated, inter alia, as follows:-
“We require by return an acknowledgement by Westmeath County Council that they fully acknowledge their repudiation of Waterways of any claim to a way leave in favour of Westmeath County Council over the area between the way leave granted by Robert and George Birmingham and the canal bank on the basis of the acknowledgement of Waterways of the title of the Vendors to this area.
Unless we receive this letter, the County Council remain in the frame as liable for damages for delay in completion of sale in the event that this continues as an issue between the Vendor and the Purchaser. This letter and previous correspondence by the Council will be used in support of this claim.”
Correspondence goes on to reveal a situation that in a letter of 1st August 2001 the Vendors’ solicitors, in writing to Messrs Arthur Cox & Co (solicitors for Waterways Limited), they acknowledged that “we have had an exchange of correspondence from the Council and their solicitors and indeed are more than surprised that copies of maps prepared by the Westmeath County Council have now come to light in respect of the temporary and permanent way leave referred to”.
It was not until 28th August 2001 that the Purchasers’ solicitors were in a position to write to the Vendors’ solicitors concerning the way leave of Waterways Ireland problem that had arisen in the following terms:-
“Subject to the letter from Arthur Cox & Co re waterways being dealt with on an open basis, they are satisfied with the recent letter from Arthur Cox & Co confirming no rights of access over the property. We have dealt with this matter in ours of 27th inst.”
It is clear to me, having considered the correspondence and the submissions of counsel, that for approximately a month or more after the issue of the Completion Notice the Purchasers were within their rights questioning the closing of the sale until matters were put beyond yea or nay. I am satisfied and find as a fact that, as in the case of the ESB, there had been activity on the land or premises of the Vendors, in discussion at least, less than a year prior to the making of a contract in 2000, and whatever documentation may have been absent as between the Westmeath County Council and Waterways Ireland Limited, the Vendors, it seems to me, quite clearly were aware that some pipes or pipes had been laid in the ground and there was no express provision in this regard in the contract of these facts.
THE KELLY CLAIM
This problem arose concerning the title of the property prior to any Completion Notice being served and arose as a result of certain lands adjacent to that of the Vendors but owned, it would appear, by a Mr. Tom Birmingham (and perhaps Mr. Frank Birmingham,
father of the Plaintiffs) being sold to a Mr. Kelly. This apparently arose in or about February 2001, so far as the Purchasers and the Defendants in this case are concerned, and they took the matter up with the Vendors’ solicitors in correspondence at that time. It would appear that Mr. Kelly was given either a way leave or an indication that such was available to him over the lands in sale in these proceedings. Mr. Kelly was also a man who apparently bought land for the purpose of building and while the lands in sale in the instant case were serviced, it was clear that Mr. Kelly had hoped to tap into or connect into the services on the land the subject of the sale to the Defendants. No such provision was made for this in the contract at the time of negotiation or at its being concluded. It is not necessary for present purposes to go into the details of the to-ing and fro-ing between the respective solicitors and the attempts made by Mr. Kelly to seek or to avail himself of the services that were in the land in sale in these proceedings. Suffice it to say that in a letter dated 27th February 2001 the Purchasers’ solicitors clearly articulated the concern of their clients to the Vendors’ solicitors in the following terms:
“Of concern is, the fact that Mr. Kelly is clearly making a case that he has a legitimate way leave agreement through our clients’ lands. The suggestion from Mr. Kelly’s solicitor is that our clients are now on notice of, as they put it, of Mr. Kelly’s rights which they point out predates our clients’ contract. They expect a court to ‘favour Mr. Kelly in any disputes with our clients’.”
The matter remained one of concern to the Purchasers and, in my view, reasonably so, until approximately 11th June 2001. In the light of the correspondence of the claim being made by Mr. Kelly, I do not think that the Purchasers were unreasonable in being concerned to ensure that if they concluded the sale they would not be buying a law suit involving Mr. Kelly. However, this matter was concluded to the satisfaction of the Purchasers before the Completion Notice and it does not concern the validity of the Notice, but in my view does satisfactorily explain the alleged delay referable to this. The fact that other matters were outstanding and that the sale could not otherwise be concluded is quite a separate issue.
An issue was raised by the Defendants/Purchasers concerning the obtaining of a Capital Gains Tax Clearance Certificate, but this matter was very properly not pursued by Mr. Hussey on their behalf. This matter was resolved and its non availability on 12th July 2001, the date of the Completion Notice, of itself, would not have invalidated the Notice.
SUMMARY
At the date of the Notice to Complete there was no problem inhibiting the vendor closing the sale with the Purchaser arising from the claim of the ESB, Waterways or the Kelly claim. There were various problems concerning and regarding the way leaves of the County Council and these continued to within an hour of the closing of the sale on 31st January 2003. Neither at the date six months from the date of the contract or on the date of the Completion Notice or its expiry or at the extension of the time accorded by the Plaintiffs/Vendors to the Defendants/ Purchasers were the Plaintiffs/Vendors able, willing and ready to complete the sale in accordance with the contract.
THE PROCEEDINGS
The matter came before the court on different dates separated by approximately six months. occasion, the Defendants’ motion, under Order 19, Rule 28, and the inherent jurisdiction of the Court was advocated by the Defendants, but the Plaintiffs submitted they ought not to be obliged to respond thereto until their motion for further and better Discovery was considered and ruled upon. The dispute concerning Discovery centred on a claim of privilege in the Defendants’ affidavit, which was questioned by the Plaintiffs. It was agreed that I should assume the burden of examining such documents and that an order be made to discover such documents in respect of which I considered privilege had been improperly claimed and that the Plaintiffs/Vendors be entitled to file an additional affidavit in the proceedings confined to such recently discovered documents. This limitation was imposed so as to preserve the integrity of the proceedings as they stood on the adjournment arising from the Plaintiffs’ motion.
Notwithstanding the Defendants having made Discovery in early 2003, the Plaintiffs, up to and including the date of the final hearing of the applications on 20th May 2004, had not troubled to inspect the same.
COMPLETION NOTICE
It is an undisputed fact that Condition 40 of the General Conditions provides for Completion Notices: to the extent relevant to the present proceedings, it provides as follows:
“40. Save where time is of the essence in respect of the closing date, the following provisions shall apply:
(a) if the sale be not completed on or before the closing date, either party may on or after that date (unless the sale shall first have been rescinded or become void) give to the other party notice to complete the sale in accordance with this condition, but such notice shall be effective only if the party giving it shall then be able, ready and willing to complete the sale or is not so able, ready or willing y reason of the default or misconduct of the other party.” (emphasis added)
The penal and draconian nature of a Completion Notice has been recognised by the courts (Viscount Securities Ltd -v- Kennedy, unreported Supreme 6th May 1986). The importance for the person themselves serving such a notice to be able, ready and willing to complete the sale has long been the subject of several decided cases, the most recent perhaps being Tyndarious Ltd -v- O’Mahony & Ors (unreported Supreme Court 3rd March 2003). In that case, the Plaintiff/Purchaser sought declaratory relief that the Defendants were not, at the date they served the Completion Notice, able to complete the sale and that their failure or inability to make good title to the lands in question rendered the notice invalid. Keane CJ, delivering the judgment court, dismissed the Defendants’ appeal, holding that the Defendants were not in a position to complete the contract and make title to the property in accordance with the contract. The Completion Notice being invalid gave rise to an entitlement of the Plaintiff to rescind the contract in accordance with its terms.
THE LAW AND LEGAL SUBMISSIONS
There is a clear distinction between a case that may be dismissed under Order 19, Rule 28, where the court can only make an order when a pleading discloses no reasonable cause of action on its face and a case that may be dismissed by invoking the inherent jurisdiction of the court, where the court is not limited to the pleadings of the parties but is free to consider evidence on affidavit. The underlying principles on which the court exercises this jurisdiction (and it is one to be used sparingly and only in clear cases) are well established in the decided cases and their purpose is to ensure that there is no abuse of process of the court; thus, proceedings that are vexatious or frivolous will be stayed.
In the instant case, there is no dispute as to the contract document or the correspondence. In this context, the judgment of Costello J in Barry -v Buckley [1981] IR 306 at 308 is in point:-
“If, having considered the documents, the court is satisfied that the Plaintiff’s case must fail, then it would be a proper exercise of its discretion to strike out proceedings whose continued existence cannot be justified and is manifestly causing irrevocable damage to a Defendant.”
In his submissions on behalf of the Plaintiffs/ Vendors, Mr. Allen laid considerable stress on that part of the judgment of the Supreme Court (delivered by McCarthy J) in Sun Fat Chan -v- Osseous Ltd [1992] 425 at p.428/9, under the heading “Jurisdiction”. The instant case is clearly distinguishable from Sun Fat Chan not only in its facts but also, and crucially, as to the state of the pleadings. In Sun Fat Chan matters had only reached the Statement of Claim when the Defendant brought a motion to dismiss the action. In the instant case, not only were pleadings closed and the main substantive issues settled between the parties, leaving only the issue of interest outstanding, but full Discovery had been made. In my judgment, there is no disputed facts put before the court, but argument was advanced as to how the facts could or should be interpreted. Commentary in affidavits that may be disputed is not the same as undisputed facts. If they were treated as interchangeable or one the equivalent to the other, applications under Order 19, Rule 28 and/or under the inherent jurisdiction of the court could be circumvented by what, in effect, would be a devise in defeasance of a jurisdiction.
In this case, there were three problems known to exist during the first six months of the contract; thereafter, a fourth arose (viz the Kelly claim). The Plaintiffs/Vendors sued both the ESB and Waterways Limited. Both these problems, and the Kelly claim, ceased to exist at the date of the Completion Notice; but notification and acceptance was not coincident with the date of Notice to Complete. Throughout the entire period, from 6th December 2000 to 31st January 2003, the problems arising from the way leaves of Westmeath County Council existed. In my judgment, the Defendants/ Purchasers were not responsible for the delays encountered in bringing the sale to a conclusion on 31st January 2003.
In my judgment, this is a clear case and it can certainly be said that there is no prospect that the action, if allowed to proceed to trial, will succeed. Likewise, as considerable injustice could result if the matter is not disposed of now, to permit the case to proceed to trial would be to permit an abuse of the court’s process and an unfair vexation of the Defendants.
The Dublin Laundry Company Ltd (In Liquidation) v Malachy Clarke
[1989] I.L.R.M. 29
(Costello J)
22 October 1987
COSTELLO J
delivered his judgment on 22 October 1987 saying: The contract which has given rise to these proceedings relates to lands at Clonbeg, Milltown, Co. Dublin. These lands are not far off the Dundrum Road from Milltown Bridge and are in the County Council area.
The agreement between the parties was for the payment of a purchase price of £130,000 with a deposit of £5,000. Draft contracts relating to the lands were sent by the plaintiff company’s solicitors to the defendant’s solicitors on 14 December 1982. Prior to this date, however, the parties had been in negotiation concerning the lands, that is to say Malachy Clarke, the defendant in these proceedings, and the plaintiff company, in the early part of 1982. At that time agreement had virtually been reached but for reasons to be explained later the negotiations fell through.
Later in 1982 discussions took place between the auctioneer dealing with the lands and Mr Malachy Clarke, as a result of which an agreement was reached which was then passed on the the parties’ solicitors for formalising.
The draft contracts were not returned by the defendant’s solicitors until 11 February 1983 notwithstanding certain reminders in the meantime. On that date, however, the draft contracts were returned with the deposit and requisitions on title. The contracts were then executed by the plaintiff company and one of them was returned in the ordinary way to the defendant’s solicitors on 3 March 1983.
I should now refer briefly to certain requisitions that were raised. In the requisitions sent by the defendant’s solicitors and replied to on 20 April 1983, requisition 18 referred to judgments against the lands. Requisition 62.4 referred to a problem concerning a certificate under the Family Home Protection Act, and requisition 62.17 referred to a statutory *32 declaration by Mr Denis R. Peart, solicitor, concerning the property and its title. These matters were dealt with by the plaintiff company’s solicitors and a rejoinder was made on 3 May 1983 in which the defendant’s solicitors repeated the point raised in requisition 62.4, stating that they would accept a certificate concerning the Family Home Protection Act. They also raised in requisition 18 the question in relation to judgments on the lands and stated that any judgments affecting the property would have to be discharged prior to closing. In relation to requisition 62.17 they stated that they were considering the matter and would come back at a later date.
The plaintiff company’s solicitors replied to the rejoinders on 2 September 1983 and stated that the judgments would be discharged on an undertaking to do so out of the proceeds of the sale.
These requisitions are referred to now because the points that are raised in them arise later in the defendant’s defence to which I will refer in a moment. Before doing so, however, I must refer to another aspect of the conveyance which had given rise to further points of defence, that is to say, the incumbrances on the lands.
At the time of the sale the plaintiff company owned three parcels of lands: (a) lands at Clonbeg, Milltown; (b) a site at Milltown on which the laundry owned by the plaintiff company had stood; (c) a private house in Greystones known as ‘Beaconsfield’.
The evidence of Mr Guilfoyle, the liquidator of the company, established that when the company went into liquidation on 13 May 1983 the statement of affairs valued the three properties at £360,000, and it appears that this valuation was not an unreasonable one in the events that have happened.
There were two incumbrances on the company’s lands including the Clonbeg lands. Allied Irish Banks has an equitable mortgage on all these three properties. Its total debt at the time of liquidation was £84,000. It also had a debenture over the company’s assets including its lands dated 12 July 1968. There was a second incumbrancer, however, the Revenue. By virtue of a judgment mortgage for £86,523.83p, which was registered early in 1983, and which was valid notwithstanding the liquidation, the Revenue were second incumbrancers on the lands of Clonbeg.
I can record what happened as follows: The Milltown site and the Greystones site have since been sold. The Greystones dwellinghouse was sold in 1984 for £55,000 and the Milltown site was sold later, not in January 1985 when the completion notice was served, but later that year, for £110,000.
It is clear, therefore, and was clear to the liquidator at the time of the completion notice that the properties owned by the plaintiff company were sufficient to discharge the two incumbrances. I am also satisfied from the liquidator’s evidence that the two incumbrancers themselves were satisfied that the plaintiff company’s properties would discharge their incumbrances in the priority to which they were entitled.
I must now deal with an aspect of the sale which has given rise to the problems in this case, in particular to the delay which occurred in closing. It was part of the conditions under which planning permission was obtained for the development of the lands that an arrangement would be made with the county council for the exchange of what I will call the ‘green’ lands, shown on the map annexed to the agreement, for what I will call the ‘blue’ lands. The blue lands were then owned by the county council but the council wished to obtain the green lands for the purpose of widening the Dundrum Road. I am quite satisfied that the plaintiff company’s solicitors were diligent in trying to get the council to effect this exchange and that the delay which occurred in relation to it was not the fault of the plaintiff company’s solicitors. Firstly, the council was not registered, and under the provisions of s. 23 of the 1964 Act the council was required to be registered but registration occurred on 22 April 1983.
Thereafter further delay occurred but on 13 December 1983 the council indicated to the plaintiff company’s solicitors that the Deed of Exchange had been executed. But it was not, however, yet ready for passing on to the plaintiff company’s solicitors, and this did not occur until 14 June 1984. On that date the plaintiff company’s solicitors wrote to the defendant’s solicitors stating that the Deed of Exchange had been completed and calling on the defendant to close the sale within five days. I can say in parenthesis that the five-day notice was, it is now accepted, given in error, as it had originally been included in the special conditions but had been by consent excluded. It is also accepted that the plaintiff company was not then in a position to give a completion notice because, in fact, a further problem arose. The plaintiff company obtained the blue lands from the council by the exchange but was not then registered as owner of the blue lands, and by letter of 2 August 1984 the defendant’s solicitors objected to the title on the grounds that the plaintiff company was not then registered as owners and so the plaintiff company had to set about obtaining registration.
It is also of relevance that the defendant sought at that time to obtain renegotiation of the price. The plaintiff company’s solicitors took immediate steps to get the blue lands registered and this occurred, and on 23 January 1985 they wrote to the defendant’s solicitors stating that they were now registered as owners and requesting the closing on 18 February 1985. This completion notice was not strictly in accordance with the conditions of the contract but no point is taken on it, and it is not now suggested that the notice was defective because the full 28 days required by the condition were not given.
The second problem to which this exchange of land had given rise was that, the green lands having been exchanged for the blue lands, the site was technically landlocked and so it was obvious that an agreement with the council would have to be obtained to allow access to the site from the Dundrum Road until such time as it was widened. The plaintiff company’s solicitors thought that this should be done by a deed, either in the *34 Deed of Exchange or by a separate deed, and the point was raised in the requisitions.
What is of significance is this: the plaintiff company’s solicitors wrote to the council about this matter and by letter of 12 July 1983 from the Development Section of the council to the Law Section of the council it was stated that access would be given to the vendor’s property until the road widening works had been completed but that a formal deed was unnecessary. This letter was sent to the defendant’s solicitors on 31 August 1983. No objection was taken to this manner of carrying out the contractual obligations undertaken in the contract and no objection was taken to the fact that the right-of-way and the ancillary rights necessary to obtain access for services was given by letter and not by deed until these proceedings were instituted.
I come to consider the defence to the plaintiff company’s claim for specific performance. It was pleaded and urged by Mr McCann on behalf of the defendant, until finally and correctly abandoned by him, that the claim failed because of the delays and laches on the plaintiff company’s part. As I have said, this is no longer relied on and I need not delay in considering it, but it is of some significance to point out that the defendant himself was not ready to close this sale on the completion date in the contract, that is to say, April 1983.
Through an associated company the defendant, Mr Malachy Clarke, had sought planning permission for a new development rather than the existing development. This planning permission had been obtained but an appeal to An Bord Pleanála had been taken and this was not determined until the Summer of 1984 and determined in favour of Mr Clarke and his associated company. At this stage, however, the defendant, Mr Clarke, wished to renegotiate the contract price, and it is quite clear from the evidence that by the Summer of 1984 the defendant wished to get out of the contract if a renegotiated price could not be brought about.
During all this long delay there was not one letter of complaint from the defendant’s solicitors about the delay and at no time did the defendant make time the essence of the contract. This meant that the defendant could not rely on the plaintiff company’s delay as a defence, time not having been of the essence of the contract without the provision of a notice, nor could the defendant rely on the doctrine of laches because the plaintiff company had no right to claim specific performance until January 1985, a claim on which the plaintiff company moved immediately.
I turn now to what I think is the principal defence to this claim for specific performance, which is a title point. It is said that at the date of the completion notice, that is to say January 1985, the plaintiff company had not got good marketable title and that, accordingly, the completion notice was invalid. Four points are raised in relation to this matter: (1) It is said that no arrangements had been made for the release of the charges in favour of AIB and the Revenue. (2) It is said that the plaintiff company failed to comply with its contractual obligation to have the right-of-way *35 over the green land obtained from the council. (3) It is said that there was failure on the plaintiff company’s part to have the statutory declaration referred to in the requisitions completed by Mr Peart. (4) It is said that there was failure to have the certificate completed by Mr Peart in relation to the Family Home Protection Act.
My conclusions are as follows: Firstly, I accept Mr Guilfoyle’s evidence. It satisfies me that he had been in touch with the incumbrancers, actively in touch with them, about the dicharge and release of their incumbrances. Mr Guilfoyle is a very experienced accountant and liquidator. The situation in which he found himself and in which the incumbrancers found themselves was by no means an abnormal one. The realisation of the assets of the plaintiff company was in the interests of the incumbrancers, and I am quite convinced and satisfied that Mr Guilfoyle had arranged with them that they would release their charges to enable the assets of the plaintiff company to be realised. I am quite satisfied that Mr Guilfoyle could have obtained these releases on the date fixed for closing. It was in the interests of the two incumbrancers to release the properties, and I am quite satisfied that they knew, just as Mr Guilfoyle knew, that the properties were more than sufficient to discharge the two incumbrances.
A point was taken in the course of the case but was not urged in closing by Mr McCann and I need not deal with it in any detail. There was correspondence from the Bank relating to a claim by architects for fees but it is quite clear that this was a claim not against the Bank but against the plaintiff company and that the claim did not affect in any way the charge of the Bank. The correspondence to which I have referred should not to my mind be interpreted as meaning that there was any bar on the release of the Bank’s security over the Clonbeg lands in January 1985.
The defendant, however, relies on a decision of the Supreme Court delivered on 6 May 1986 in the case of Viscount Securities Ltd v Kennedy Supreme Court 1985 No. 1689, 6 May 1986. The judgments of the Supreme Court were to the effect that because the plaintiff could not give vacant possession of the lands on the date on which the completion notice was served, a considerable amount of spoil being on the lands, the notice was invalid under condition 28, the same condition as in issue in the present case, even though vacant possession could have been given on the expiration of the completion notice.
I do not think that the Supreme Court’s decision is to be construed as meaning that if a vendor has not got releases of incumbrances available on the date of the service of the completion notice but could have had them on the date of its expiration that the completion notice is invalid.
In my view the plaintiff company in this case was able, ready and willing to complete the sale on the date of the completion notice. Assuming the defendant was required to produce an engrossed assurance of the property and fix a date for closing, and had he done so, I am satisfied that the releases of the securities or letters which would enable *36 undertakings to be given to discharge the incumbrances out of the sale price would have been obtained.
Accordingly, I am satisfied that the point in relation to the charges was not a valid one and did not affect the title which the plaintiff company was in a position to give at the date of the completion notice.
It was then suggested on the defendant’s behalf that the title was defective because the matter of the right-of-way had not been satisfactorily concluded. I reiterate the point which I made earlier. No objection was taken by the defendant’s solicitor to the letter of 12 July 1983 which was sent on to the defendant’s solicitor. In my view the defendant must be taken as having acquiesced in this particular method of giving the defendant rights over the green portion of the lands, either under condition 9 of the contract or under the general principles of contract law.
A further point was taken by counsel on behalf of the defendant. It was pointed out that by virtue of s. 23 of the Registration of Title Act 1964 the council should have registered the green lands they obtained by the deed of exchange; that they had failed to do so in the six-month period provided for so they had not got any estate in the green lands and so it is suggested that the right-of-way obtained by the letter of 12 July 1983 is invalid. Had this point been raised, for example, by vendor and purchaser summons, I do not think it would be answered in the way suggested by Mr McCann on behalf of the defendant. In my view the council cannot prohibit the defendant from acting on the letter of 12 July 1983 merely because they had failed to obtain registration as required by the statute. If they were not registered they could not claim any estate which would entitle them to stop the defendant entering upon the land. If they had obtained registration subsequently, the registration dates back and they are bound by the terms of their letter.
In my view the events that happened in relation to the right-of-way do not constitute a defect in the plaintiff company’s title or suggest that it is not a good marketable title.
The third and fourth points I can deal with briefly. Mr Peart’s statutory declaration and the certificate under the Family Home Protection Act had not been executed on the date the completion notice was served. This is true; indeed, they were not completed until some time after the sale had fallen through. But I am quite satisfied as a matter of probability that these documents could have been obtained without any difficulty if the contract for sale had been completed on the defendant’s part and had the defendant’s solicitor submitted a Deed of Exchange and fixed a date for closing. The form of certificate and form of declaration had been agreed and it was only a matter of having these documents signed by Mr Peart, and the plaintiff company would be able to produce these documents at the time at which closing would take place so the failure to have these documents on the actual date of the notice does not invalidate it.
I turn now to the final submission made on the defendant’s behalf by *37 Mr McCann. It is now pleaded and urged that the plaintiff company has no cause of action against the defendant because the defendant entered into the contract in a representative capacity and I can briefly indicate the facts which I find in relation to this matter.
The defendant, Mr Malachy Clarke, and an associate, Mr Anglin, had been engaged together for a number of years in the development of building lands, particularly in relation to the building of apartments. Loosely, they can be referred to as having been in partnership.
Technically they engaged in their joint venture through limited liability companies. At the date of the contract they were shareholders in and directors of a company known as Arven Homes Limited. In addition Mr Anglin was a shareholder in and a director of a company called Elmland Builders Ltd and also of a company called Devonwood Development Ltd which had been incorporated on 28 May 1981. Mr Clarke was not then a member of or a director of Devonwood Developments Ltd. When the contract was signed it was Mr Clarke’s intention that he would undertake the venture of the development of the lands the subject matter of the sale in partnership with Mr Anglin through the medium of a company. When the contract was signed, however, he did not know whether there would be a new company formed or whether an existing company would be utilised.
It is of some relevance to note that after the contract was signed an application for a new planning permission was made by Arven Homes Ltd, and under the 1977 regulations, Article 18, an applicant is required to give particulars of his interest in the lands to which the application relates and presumably Arven Homes indicated an interest in the Clonbeg lands. However, at the same time an application was made in April to Lombard and Ulster for finance for the development in another company’s name — Devonwood Developments Ltd.
The first issue which I have to consider is whether, in fact, the defendant entered into the contract in a representative capacity, that is to say, as the agent for a principal. The defendant’s evidence, as I have pointed out, is that he intended that a company would carry out the development, that is, obtain finance, take a conveyance of the lands and build. When Mr Clarke, the defendant, signed the contract he did not know what company would carry out the development. Mr Clarke indicated that he would take his accountant’s advice; that it might be a new company. It was necessary, he stated in evidence, to obtain what he called a ‘clean’ company, one which had not already traded. Arven Homes Ltd was a possibility but his brother was a director of this company and that might not do. Devonwood Developments Ltd was another possibility but Mr Anglin was a shareholder and director of that company and Mr Clarke was neither.
It seems to me that this is not a case of a person entering into a contract on behalf of a principal whose name has not been disclosed. The defendant had no principal at the time of the contract and he did not *38 enter into it in a representative capacity. It is the case of a person with the intention that the obligations and benefits would be taken over by a third party, a limited company, which might not yet be in existence. In these circumstances condition 5 of the conditions of contract have no application to the facts of this case and it seems to me that even if the defendant had signed as agent he could not now claim to avoid a personal liability on the contract if he was not an agent, as I have found. Therefore, I think the pleas in the defence have not been established.
Para. 1 of the defence states:
The defendant, entering into the said Agreement as agent for and on behalf of Devonwood Developments Ltd of 36 Waterloo Road in the City of Dublin, and such Agency being known to the Plaintiff and the identity of the said Devonwood Developments Ltd having been disclosed to the Plaintiff all (if any) liability of the Defendant (which is denied) on foot of the said Agreement thereupon terminated in accordance with the provisions thereof.
The defendant did not enter into the agreement as agent of Devonwood Developments Ltd and the agency was not known to the plaintiffs at the time the contract was entered into.
Para. 2 reads:
The Defendant entered into the alleged Agreement for Sale as Agent and later disclosed to the Plaintiff that his Principal was Devonwood Developments Ltd as a result whereof his personal liability on foot of the said Agreement for Sale terminated.
The defendant did not enter into the agreement as an agent and he did not disclose that his principal was Devonwood Developments Ltd until well after the institution of the proceedings.
I should, perhaps, express my view on the alternative situation which might exist if, in fact, I am wrong in the view that I have come to: that the defendant was not acting in a representative capacity. If a view could be taken on the facts of this case contrary to the view which I have taken, that Mr Clarke, the defendant, signed the contract as agent, I do not think the contract could be construed as meaning that Mr Clarke was signing in a representative capacity. The principles that arise in situations such as this have been stated by Budd J. in Lavan v Walsh [1964] IR 87 at 96, where he stated:
The question as to whether an agent is to be deemed to have contracted personally in the case of a contract in writing depends on the intention of the parties as appearing from the terms of the written agreement as a whole. The construction of the document is a matter of law for the Court.
In this case an extremely confusing situation had occurred. In my view, and on the authority of the judgment to which I have referred, the onus is on a person in Mr Clarke’s position to establish his representative capacity and I do not think he has discharged the onus assuming that he was an agent. The contract document is, at best, ambiguous. Mr Clarke *39 is named personally in the title of the contract as purchaser and no reference to agency occurred in it. Two persons signed the document as the purchaser — Mr Anglin, whose name did not appear as purchaser in the title, and Mr Clarke. In one of the two documents sent by the plaintiff company’s solicitors to the defendant’s solicitors the words ‘as agents’ were entered in but not on the other document and not in the title of the contract.
In my view, whatever the intention of Mr Clarke may have been, the court’s task is to construe the document as a whole. Even if Mr Clarke was an agent, I cannot hold that the intention of the parties as appears from the document could be that Mr Clarke was executing the document in a representative capacity. For these reasons I think the defence fails and the plaintiff company is entitled to the relief claimed, either by way of specific performance or otherwise.
I will hear counsel later as to the form of order I should make.
Birmingham & Anor v. Coughlan & Anor
[2004] IEHC 211 (9 June 2004)
MR. JUSTICE SMYTH:
The Plaintiffs are farmers who reside at Dublin Road, Mullingar, in the County of Westmeath. The Defendants are businessmen who reside in Mullingar. The Plaintiffs contracted to sell to the Defendants certain lands in Folio 14915F of the register of Freeholders, County of Westmeath, on 16th June 2000, for the sum of £4.5 million. The contract provided that the Defendants would pay the sum of £3,375,000 within six months from the date of the contract and the balance of £1,125,000 six months thereafter. The Defendants were to take possession of the lands, which have been referred to in the documents as “Stage I”, on payment of £3,375,000, and on the final payment of £1,125,000 were to be given possession of Stage II of the transaction. The closing date provided for Stage I was six months from the date of the contract, ie, 16th December 2001, and the closing date for Stage II, being six months thereafter, was to be 16th June 2001. The contract also provided that if the sale was closed in total within twelve months or earlier the Defendants would be refunded by way of “luck penny” the sum of £20,000, provided that if there was a delay that the “luck penny” would still be paid if the delay was the default of the Vendors.It was appreciated by both parties that the lands were being bought for development purposes and that the purchase price reflected that clear common understanding.
Difficulties arose subsequent to the execution of the contract and ultimately a Completion Notice pursuant to General Condition 40 of the Conditions of Sale (1995 Edition) of the Law Society of Ireland (as incorporated in the said contract) was served on the Defendants on 12th July 2001.
These proceedings were formulated originally as specific performance proceedings, and the pleadings having been closed a compromise was arrived at in January 2003. The arrangement then made was that the Purchasers agreed to complete the purchase of the property not later than 31st January 2003, on payment of the full balance of the purchase money, on the basis that the ongoing litigation will continue excluding only the claim in respect of the purchase money. It was further agreed that the figure in respect of “luck penny” as specified in the contract would be held on joint deposit receipt pending finality in regard to the litigation and dependent on any specific court order or agreement as between the parties in regard to the “luck penny” pursuant to the terms of the contract. The proceedings gave rise to Discovery, that being sought and made in February 2003, and upon receipt and inspection of same the
Defendants sought, by Notice of Motion dated 19th March 2003, the following reliefs as against the Plaintiffs:-
1. An order dismissing the remainder of the Plaintiffs’ claim herein, the contract the subject of the litigation having been completed on 31st January 2003. The Plaintiffs’ further action for interests for delay cannot succeed.
2. An Order striking out the Plaintiffs’ claim herein, in that the Plaintiffs’ further prosecution of their claim following completion of the contract is actuated by malice and improper purpose.
3. An Order pursuant to Order 19, Rule 28 of the Rules of the Superior Courts and pursuant to the inherent jurisdiction of the court
striking out the Plaintiffs’ claim as having no reasonable prospect or no prospect of success.
The Plaintiffs also brought a motion, dated 25th February 2003, seeking further and better discovery from the Defendants arising from the Discovery furnished by the Defendants on 24th January 2003, which was furnished pursuant to a court order dated 20th November 2002.
The motion to dismiss the proceedings was in order of hearing, first heard by the court and essentially it was directed to the claim being made by the Vendors for interest in the sum of £1.4 million. The case made for and on behalf of the Defendants was that, at the date of the completion, there were at least four major difficulties regarding title furnished by the Plaintiffs/Vendors to the Defendants/Purchasers. These concerned the following:-
(a) Non-disclosure to the Purchasers that a cluster of five Wavin pipes constituting a ducting or piping system were installed by the Electricity Supply Board on the subject property. In this regard, reference was made to a map of the ducting pipe line and photographs of same were exhibited to the court. A protracted correspondence from the Vendors’ solicitors to the ESB was referred to in court and it emerged that prior to serving any Completion Notice proceedings had been brought by the Plaintiffs/ Vendors against the Electricity Supply Board in respect of a pipeline. These proceedings are still in being and are awaiting trial as at the date of the hearing of these motions.
(b) The nature and extent of way leaves and pipelines granted to Westmeath County Council by the Vendors and the extent to which the County Council unilaterally placed the pipeline as shown on the map attached to the way leaves furnished in response to requisitions on title was unclear. This had the effect or influence on the reserved open space and development potential of the lands to a significant extent and further it influenced to a great extent the necessary construction costs such as the shoring up of foundations as were near the extended pipeline area. The exact nature and extent of the way leaves and pipelines in favour of the County Council was not ascertained or provided for by way of grant of way leave until the week prior to the closing of the sale on 31st January 2003, and accordingly it is the case of the Purchasers that the Vendors at the date of the service of the Completion Notice were not in the position of being able, ready and willing to complete the sale in accordance with the contract. Indeed, in paragraph 31 of an affidavit sworn on 16th December 2003 by
Mr. Denis Shaw for the Plaintiffs/Vendors he avers as follows:
“It is the contention of the Plaintiffs/ Vendors that all issues, other than the alleged issue with regard to the way leaves with Westmeath County Council, which became a protracted issue as between the Plaintiffs/Vendors and the Defendants/ Purchasers, were resolved prior to the issue of the Completion Notice on the 12th day of July 2001.”
The Defendants contended that the consequences of the non-disclosure of the existence of the pipeline and the extent of the disclosed pipeline by the Plaintiffs had caused undue delay, uncertainty and ongoing investigation by the Defendants, and had caused a significant loss of bargain. Furthermore, they claimed that the extent of a claim of another party, to wit Waterways (otherwise successor to CIE) to an area of land along the canal adjoining the premises in sale was the subject of very serious doubt on the title. This dispute also led to litigation a between the Vendors and Waterways.
(c) Difficulties were also caused as a result of what was stated to be an undisclosed claim to an easement of necessity from neighbouring lands for development. Those neighbouring lands apparently included lands of the father and perhaps the brother of the Plaintiffs (it is referred to as the Kelly claim). In summary, therefore, the claim of the Defendants was that the Plaintiffs were not, as of the date of the service of the Completion Notice, able, ready and willing to complete the contract in accordance with its terms and their obligations arising therefrom. Most, if not all, of the matters that gave rise to the litigation and were agitated before the court in the course of the hearing of the motions could be said to have arisen from the formulation of an application of planning permission by the Defendants. While the contract was not subject to the obtaining of planning permission, it was agreed by the Vendors that the Purchasers could proceed to formulate and apply for planning permission and the Plaintiffs/Vendors were disposed to being of as much assistance as they could be to the Defendants in that regard.
The difficulties, however, that arose could be categorised as falling under four headings:
(1) The claim of the ESB
(2) The way leaves of the County Council
(3) The way leaves of Waterways/OPW/CIE
(4) the Kelly claim.
THE CLAIM OF ESB
I am satisfied and find as a fact on the evidence placed before me that the claim for interest as against the Defendants in the period December 2000, and thereafter, attributable to the claim of the Electricity Supply Board are unsustainable. It was appreciated by the Vendors some considerable time before the closing of the sale that there was at least ducting in the property underneath the lands in sale and the ducting had been placed on the lands by the ESB. There was correspondence which appears to have been at cross purposes as to whether a 38KV cable, the property of ESB, ran through the lands in sale, and this confused an already contentious issue. Suffice it to say that the Vendors were sufficiently concerned about “clearing the ESB off the title” to issue proceedings against the Board on 25th January 2001. On 17th May 2001, the position of the Board became clear when that body wrote to the solicitors for the Vendors in the following terms:
“Dear Sirs,
With reference to your letter of 11th May, ESB does not accept that it has any liability for the failure of the Purchasers to fulfil their contractual obligations to your clients.
In the first instance, there is no electricity cable on your clients’ lands at present. Permission to lay a cable was received orally from your clients prior to the carrying out of any works by ESB, but the only works carried out to date on your clients’ lands are the laying of a conduit for a proposed electricity cable. On 11th January this year a letter was issued by ESB to Westmeath County Council requesting them to disregard the presence of a cable in considering the planning application of C&F Developments as ESB was prepared to alter, reposition or relocate the underground cable if there was a conflict between any permitted development and the cable. The Purchasers were informed of this on the same date and copies of both letters were sent to you.
However, up to last week C&F Developments had failed to furnish Westmeath County Council with any response for additional information. Westmeath County Council requested information some time in March/April 2001, on a long list of disparate issues (eg, density of housing, traffic, height and scale, overlooking, conflict with the Development Plan, footbridge, harbour, sewage, etc). Until this information is received by Westmeath County Council, processing of C&F Developments’ application cannot proceed. C&F Developments are well aware of this fact.
In addition, an inspection of the planning file in the offices of the County Council will show that the substantial reason for the delay in determining the planning application by C&F Developments is a number of objections received to the proposed development.
ESB, therefore, fails to see how it is being held up as the sole reason for C&F Developments’ planning permission not advancing when it is quite clear there are other more pressing issues affecting its progress.
However, we have now informed the County Council that we are not proceeding with the proposed cable along this route. ESB agreed to abandon the conduit crossing your clients’ lands and are actively selecting a new route. The existing conduit can be demolished during the earthworks stage of the development when it takes place.”
Between December 2000 and 17th May 2001, there can be no liability on the part of the Purchasers to pay the Vendors any interest. Even if there is a claim for interest for this period, and it is by no means certain that there is, it may not be the liability of the ESB and it is not the responsibility of the Purchasers. Because, even as of 12th July 2001 the question of the way leave(s) of Westmeath County Council had not been resolved. In my judgment, the Purchasers were reasonable in refusing (as they could be said to have done so) to close the sale in respect of the objection referable to ESB before 17th May 2001. As of 12th July 2001, (notwithstanding proceedings 2001/2295P), such problem(s) as existed (if ever and any) as the result of any act or default of the ESB did not and was not a cause of the non-completion of the sale of the parties to these proceedings.
THE WAY LEAVES OF THE COUNTY COUNCIL
The difficulties arising from way leaves granted in favour of Westmeath County council were compounded by the fact that when the copy documents were being made available to the Purchasers as part of the contract a way leave of 1987 which did have a map was attached to a way leave of 1999 which did not have a map attached to it. Furthermore, the pipeline as indicated in the map attached to the way leave did not accurately reflect the actual location of the pipe in the ground. Because of the necessity of providing certain areas for work and maintenance on either side of the pipeline, which had the pipeline been set or put down in or on the line provided for in the map of 1987, perhaps no difficulties may have arisen. It appears the pipes and/or ducts may have been laid in accordance with the map attached to the 1999 way leave agreement, but such map was not furnished by the Plaintiffs/Vendors to the Defendants/Purchasers at the time of entering into the contract and therefore did not form part of the signed contract.
However, that was not the case and accordingly a considerable bulk of correspondence was exchanged not only between the solicitors of the parties but between the County Council and their solicitors and particularly with the solicitors for the Vendors. Both parties engaged surveyors; Messrs Malachi Cullen & Partners were engaged by the Vendors and Messrs Coughlan & Associates, architects, were engaged for the Defendants. I am satisfied and find as a fact that as of the date of the service of the Completion
Notice on 12th July 2001 that the matters of the way leaves had not been cleared up either to the satisfaction of the Vendors or Purchasers, and while the Vendors may not necessarily have been concerned about this (in the same way as the Purchasers), it is clear from correspondence from that time, and Malachi Cullen & Partners, from September 2001 onwards, that the matter was unresolved. I am satisfied and find as a fact that as of the date of the issue of the plenary summons in these proceedings (September 2001) the Plaintiffs/Vendors, through their solicitors, had been advised by their own engineers that certain steps still required to be taken to resolve the mapping, measurement and boundaries of the way leaves. (The Defendants/Purchasers only became aware of these facts after Discovery was made by the Plaintiffs/Vendors.) I am satisfied that the ultimate true position claimed to be as set out in a letter of 21st November 2001, from Messrs Coughlan & Associates, architects, to the Purchasers’ solicitors is correct.
Without making any concession to the Purchasers, the Vendors’ solicitors, in a letter of 28th November 2001, addressed to the Secretary of Westmeath County Council, dealt at length with the problem of the respective way leaves and the points raised by Messrs Coughlan & Associates. It concludes as follows:-
“There are very substantial issues arising by virtue of the delay in completion of the sale in monetary terms. The pipeline/way leave is the only outstanding issue. Interest on the unpaid purchase money accrues at £1,497 per day. We have had a consultation with counsel on Friday evening last and it has been confirmed by senior counsel that the failure of the County Council to reply to recent correspondence is not at all helpful to the issues in the High Court proceedings.
In the light of the issues raised in correspondence, it would appear that there would be advantage to marking the boundaries of a way leave clearly with marker posts and also separately marking the line of the sewer pipe through the way leave so that it can be apparent on the surface of the ground as to the exact demarcation of the boundaries of the way leave and also the line of the pipe through the specified way leave. We presume that this would not cause much difficulty and you might revert to us. Delay in dealing with the issues as set out above and dealing with the correspondence generally will leave the Vendors with no alternative but to join Westmeath County Council in the existing proceedings or in such separate proceedings as counsel may direct.”
Correspondence between the County Council and their advisors and between the parties hereto and their advisors continued over a period until the matter of the nature and extent and mapping and measurement of the way leaves was finally resolved in January 2003. The problem of the Purchasers was that they purchased a parcel of land and when documentation was received the conditions on site varied from those shown on such map or maps as were furnished to them. They could not be expected to buy into a law suit or close a sale when the Vendors were not in a position to give good marketable title and clearly explain whatever discrepancies had been highlighted in the correspondence. Appreciating the argument that was made in the course of the hearing that any developer would be anxious to have as clean a site as possible so as to maximise such development as might be possible on the site, I am nonetheless satisfied that notwithstanding that the number of linear metres by which the pipeline might be said to be out of “alignment” per the maps furnished with the way leave, does not mean that the Purchasers were obliged to conclude a sale which had certainly to adopt the Plaintiffs/Vendors’ euphemism, “paper difficulties”. In my judgment, this was not a case of mere paper difficulties — the difficulties were real and not imaginary.
The position taken by the County Council as to their amenability to meet such requirements as had been raised in the correspondence is particularly set out in their letter of 12th December 2001, some six months after the Completion Notice. The deviation from the line of the pipe was “approximately three linear metres at the southern end of the Birminghams’ way leave”, and by letter of Westmeath County Council, dated 12th December 2001, or expressed in a memorandum prepared by the Vendors’ solicitor, was in the following terms:-
“This way leave would meet with the amended requirements of Mr. Coughlan, it would correct the error in the existing way leave where the map on the June 1999 reference number 16 way leave agreement is short by a number of metres.”
This is not the issue. The real issue was that the Purchasers could not be expected or should not have been expected in buying development land to have been obliged to accept a title which was problematic in this regard. This was not a matter of trifling materiality, it was not de minimis in the context of land clearly and known by both parties to be development land.
Even if it were argued that this memo might not be available to a Defendant in evidence in the trial, there is no dearth of evidence of the like character which would be available. While it is true, as submitted by Mr. Allen for the Plaintiffs/Vendors, that their solicitor did not accept that the Defendants/Purchasers were entitled to all they were looking for in good, clear, marketable title in accordance with the contract, I do not accept that the steps taken by the Plaintiffs/Vendors were carried out merely to accommodate the Defendants/ Purchasers so as to bring the sale to a conclusion. The kernel of this case is the efficacy of the Completion Notice. I am satisfied and find as a fact and as a matter of law that as of the date of the Completion Notice and at the extended date accorded to the Purchasers to comply therewith the Plaintiffs/ Vendors were not able, ready and willing to complete the sale in accordance with the contract.
THE WAY LEAVES OF WATERWAYS/CIE
Another difficulty that arose in connection with this sale was referable to a small, narrow piece of land adjoining the Royal Canal which was adjacent to the lands in sale, the property of the Vendors. It is clear from the documentation presented to me that there was, before any contract of sale was entered into, correspondence between the Vendors’ solicitor and the Office of Public Works (OPW), the original owners of the Royal Canal and whose interests had passed to them from CIE and eventually through the OPW to Waterways. Subsequent to the signing of the contract, in a letter dated 25th September 2000, the Purchasers’ solicitors referred to two agreements with Westmeath County Council, attached to the back of one of which was a licence between Francis Birmingham and CIE, with an attached map which included part of the lands which the Vendors had purported to sell to the Purchasers. This was the first of many letters arising out of the replies to requisitions, in respect of requisition 3, the queries and responses to which were as follows:-
“Easements and Rights
1(a) Are there any pipes, drains, sewers, wires, cables or septic tank on, under or over other property which serve the property on sale?
Reply: None other than those disclosed from muniments of title or would be apparent from inspection.
(b) If there are, furnish now evidence of the easement grant or way leave authorising same.
Reply: Copy agreement and consent of Frank Birmingham with Westmeath County Council dated January and March 1987. Copy, agreement and consents of Robert Birmingham and George Birmingham with Westmeath county Council dated 1st November 1999.
(c) What are the Vendors’ rights and obligations in respect of same?
2(a) Is the property subject to any right of way, water, light, air or drainage, or any other easement, reservation, covenant, condition or restriction, or to any right of any kind, or
(b) is the property subject to any liability to repair any road, sewer, drain or sea wall, or any other similar liability?
(c) if so, furnish now details of same.
Reply: See reply to requisition 3.1. The Vendors believe the OPW/Waterways Ireland have a right to access the property in order to maintain and clean the canal.”
The document disclosed was an agreement made on 3rd February 1969, between Francis Birmingham and CIE. It was effectively a form of licence permitting Mr. Birmingham to graze part of the lands of the Royal Canal in the Townland of Petitswood and Ballinderry, as shown coloured red on Plan 1707/6, which is attached to the agreement, which claimed an annual licence fee of one pound five shillings. The obligation arising thereunder provided as follows: “During the continuance of the said licence I shall herd, tend and keep from straying all
animals thereon, and shall maintain and keep the drains, water courses, fences, ditches, hedges and gates in and upon the said land in good order, repair and condition, and shall keep the said land free from noxious weeds as by law required and indemnify the Board for and against any omission so to do.”
It was further agreed that the Board may determine the licence at any time on one month’s notice in writing in the event of the Board requiring the land for their own purposes or in the event of any breach of the licensee of any of the conditions attached to the licence. There was a prohibition on “assigning, sub-letting or parting with possession of the lands or any portion thereof under any pretence whatsoever, this licence being solely for temporary convenience”. Proceedings were issued by the Vendors’ solicitors to assuage the concerns of the Purchasers’ solicitors, particularly in a letter of 8th November 2000, but nonetheless not only were proceedings initiated against Waterways Ireland Limited on 15th January 2001, they were not discontinued until 12th June 2001, so clearly the Vendors had a concern vis-a-vis the sale, that there was something that required resolution such as warranted the institution of litigation. That was referred to again by the Vendors’ solicitor in a letter of 5th July 2001, which on dealing with this topic to the Defendants/ Purchasers’ solicitors, under paragraph (5), concluded as follows:
“Waterways, through their solicitors, have acknowledged the absolute title of the Vendors to the entirety of the property of which the Vendors are registered owners. Inherent in that acknowledgement is the fact that they could not therefore presume to grant any rights in favour of a third party over the lands and not a shred of written evidence has been produced by your clients to support such allegations. It would appear that in advising the Purchasers on this issue you are choosing to ignore the fundamental legal criterion to create an enforcement of way leave.”
The problem, however, with Waterways was not simply that Waterways had expressly granted a way leave to Mr. Francis Birmingham, father of the Plaintiffs (before he transferred the lands in sale to the Vendors herein), but there had been apparently some informal arrangement between Westmeath County Council and Waterways Limited concerning the laying of a pipe in lands which the Vendors had an interest. This is compounded and confirmed in a letter dated 10th July 2001, by the Vendors’ solicitors to the Secretary of Westmeath County Council, which, inter alia, states as follows:-
“We will require confirmation pursuant to the terms of your letter that the County Council acknowledged that they have no claim in respect of any way leave over the area alleged to have been repudiated by Waterways on the basis that they have withdrawn any claim in title over the particular area of the lands comprised in the registered holding of Robert and George Birmingham. This will finalise matters to the satisfaction of the Vendors and this letter is required by return.
The effect of the last paragraph of the letter of July 9th does not effectively confirm that the County Council acknowledged the repudiation of Waterways to cancel out any such alleged way leave agreement as exists.”
This was followed by a further letter of 13th July 2001 (the day after the Completion Notice) from the Vendors’ solicitors, again to the County Council, in which it is stated, inter alia, as follows:-
“We require by return an acknowledgement by Westmeath County Council that they fully acknowledge their repudiation of Waterways of any claim to a way leave in favour of Westmeath County Council over the area between the way leave granted by Robert and George Birmingham and the canal bank on the basis of the acknowledgement of Waterways of the title of the Vendors to this area.
Unless we receive this letter, the County Council remain in the frame as liable for damages for delay in completion of sale in the event that this continues as an issue between the Vendor and the Purchaser. This letter and previous correspondence by the Council will be used in support of this claim.”
Correspondence goes on to reveal a situation that in a letter of 1st August 2001 the Vendors’ solicitors, in writing to Messrs Arthur Cox & Co (solicitors for Waterways Limited), they acknowledged that “we have had an exchange of correspondence from the Council and their solicitors and indeed are more than surprised that copies of maps prepared by the Westmeath County Council have now come to light in respect of the temporary and permanent way leave referred to”.
It was not until 28th August 2001 that the Purchasers’ solicitors were in a position to write to the Vendors’ solicitors concerning the way leave of Waterways Ireland problem that had arisen in the following terms:-
“Subject to the letter from Arthur Cox & Co re waterways being dealt with on an open basis, they are satisfied with the recent letter from Arthur Cox & Co confirming no rights of access over the property. We have dealt with this matter in ours of 27th inst.”
It is clear to me, having considered the correspondence and the submissions of counsel, that for approximately a month or more after the issue of the Completion Notice the Purchasers were within their rights questioning the closing of the sale until matters were put beyond yea or nay. I am satisfied and find as a fact that, as in the case of the ESB, there had been activity on the land or premises of the Vendors, in discussion at least, less than a year prior to the making of a contract in 2000, and whatever documentation may have been absent as between the Westmeath County Council and Waterways Ireland Limited, the Vendors, it seems to me, quite clearly were aware that some pipes or pipes had been laid in the ground and there was no express provision in this regard in the contract of these facts.
THE KELLY CLAIM
This problem arose concerning the title of the property prior to any Completion Notice being served and arose as a result of certain lands adjacent to that of the Vendors but owned, it would appear, by a Mr. Tom Birmingham (and perhaps Mr. Frank Birmingham,
father of the Plaintiffs) being sold to a Mr. Kelly. This apparently arose in or about February 2001, so far as the Purchasers and the Defendants in this case are concerned, and they took the matter up with the Vendors’ solicitors in correspondence at that time. It would appear that Mr. Kelly was given either a way leave or an indication that such was available to him over the lands in sale in these proceedings. Mr. Kelly was also a man who apparently bought land for the purpose of building and while the lands in sale in the instant case were serviced, it was clear that Mr. Kelly had hoped to tap into or connect into the services on the land the subject of the sale to the Defendants. No such provision was made for this in the contract at the time of negotiation or at its being concluded. It is not necessary for present purposes to go into the details of the to-ing and fro-ing between the respective solicitors and the attempts made by Mr. Kelly to seek or to avail himself of the services that were in the land in sale in these proceedings. Suffice it to say that in a letter dated 27th February 2001 the Purchasers’ solicitors clearly articulated the concern of their clients to the Vendors’ solicitors in the following terms:
“Of concern is, the fact that Mr. Kelly is clearly making a case that he has a legitimate way leave agreement through our clients’ lands. The suggestion from Mr. Kelly’s solicitor is that our clients are now on notice of, as they put it, of Mr. Kelly’s rights which they point out predates our clients’ contract. They expect a court to ‘favour Mr. Kelly in any disputes with our clients’.”
The matter remained one of concern to the Purchasers and, in my view, reasonably so, until approximately 11th June 2001. In the light of the correspondence of the claim being made by Mr. Kelly, I do not think that the Purchasers were unreasonable in being concerned to ensure that if they concluded the sale they would not be buying a law suit involving Mr. Kelly. However, this matter was concluded to the satisfaction of the Purchasers before the Completion Notice and it does not concern the validity of the Notice, but in my view does satisfactorily explain the alleged delay referable to this. The fact that other matters were outstanding and that the sale could not otherwise be concluded is quite a separate issue.
An issue was raised by the Defendants/Purchasers concerning the obtaining of a Capital Gains Tax Clearance Certificate, but this matter was very properly not pursued by Mr. Hussey on their behalf. This matter was resolved and its non availability on 12th July 2001, the date of the Completion Notice, of itself, would not have invalidated the Notice.
SUMMARY
At the date of the Notice to Complete there was no problem inhibiting the vendor closing the sale with the Purchaser arising from the claim of the ESB, Waterways or the Kelly claim. There were various problems concerning and regarding the way leaves of the County Council and these continued to within an hour of the closing of the sale on 31st January 2003. Neither at the date six months from the date of the contract or on the date of the Completion Notice or its expiry or at the extension of the time accorded by the Plaintiffs/Vendors to the Defendants/ Purchasers were the Plaintiffs/Vendors able, willing and ready to complete the sale in accordance with the contract.
THE PROCEEDINGS
The matter came before the court on different dates separated by approximately six months. occasion, the Defendants’ motion, under Order 19, Rule 28, and the inherent jurisdiction of the Court was advocated by the Defendants, but the Plaintiffs submitted they ought not to be obliged to respond thereto until their motion for further and better Discovery was considered and ruled upon. The dispute concerning Discovery centred on a claim of privilege in the Defendants’ affidavit, which was questioned by the Plaintiffs. It was agreed that I should assume the burden of examining such documents and that an order be made to discover such documents in respect of which I considered privilege had been improperly claimed and that the Plaintiffs/Vendors be entitled to file an additional affidavit in the proceedings confined to such recently discovered documents. This limitation was imposed so as to preserve the integrity of the proceedings as they stood on the adjournment arising from the Plaintiffs’ motion.
Notwithstanding the Defendants having made Discovery in early 2003, the Plaintiffs, up to and including the date of the final hearing of the applications on 20th May 2004, had not troubled to inspect the same.
COMPLETION NOTICE
It is an undisputed fact that Condition 40 of the General Conditions provides for Completion Notices: to the extent relevant to the present proceedings, it provides as follows:
“40. Save where time is of the essence in respect of the closing date, the following provisions shall apply:
(a) if the sale be not completed on or before the closing date, either party may on or after that date (unless the sale shall first have been rescinded or become void) give to the other party notice to complete the sale in accordance with this condition, but such notice shall be effective only if the party giving it shall then be able, ready and willing to complete the sale or is not so able, ready or willing y reason of the default or misconduct of the other party.” (emphasis added)
The penal and draconian nature of a Completion Notice has been recognised by the courts (Viscount Securities Ltd -v- Kennedy, unreported Supreme 6th May 1986). The importance for the person themselves serving such a notice to be able, ready and willing to complete the sale has long been the subject of several decided cases, the most recent perhaps being Tyndarious Ltd -v- O’Mahony & Ors (unreported Supreme Court 3rd March 2003). In that case, the Plaintiff/Purchaser sought declaratory relief that the Defendants were not, at the date they served the Completion Notice, able to complete the sale and that their failure or inability to make good title to the lands in question rendered the notice invalid. Keane CJ, delivering the judgment court, dismissed the Defendants’ appeal, holding that the Defendants were not in a position to complete the contract and make title to the property in accordance with the contract. The Completion Notice being invalid gave rise to an entitlement of the Plaintiff to rescind the contract in accordance with its terms.
THE LAW AND LEGAL SUBMISSIONS
There is a clear distinction between a case that may be dismissed under Order 19, Rule 28, where the court can only make an order when a pleading discloses no reasonable cause of action on its face and a case that may be dismissed by invoking the inherent jurisdiction of the court, where the court is not limited to the pleadings of the parties but is free to consider evidence on affidavit. The underlying principles on which the court exercises this jurisdiction (and it is one to be used sparingly and only in clear cases) are well established in the decided cases and their purpose is to ensure that there is no abuse of process of the court; thus, proceedings that are vexatious or frivolous will be stayed.
In the instant case, there is no dispute as to the contract document or the correspondence. In this context, the judgment of Costello J in Barry -v Buckley [1981] IR 306 at 308 is in point:-
“If, having considered the documents, the court is satisfied that the Plaintiff’s case must fail, then it would be a proper exercise of its discretion to strike out proceedings whose continued existence cannot be justified and is manifestly causing irrevocable damage to a Defendant.”
In his submissions on behalf of the Plaintiffs/ Vendors, Mr. Allen laid considerable stress on that part of the judgment of the Supreme Court (delivered by McCarthy J) in Sun Fat Chan -v- Osseous Ltd [1992] 425 at p.428/9, under the heading “Jurisdiction”. The instant case is clearly distinguishable from Sun Fat Chan not only in its facts but also, and crucially, as to the state of the pleadings. In Sun Fat Chan matters had only reached the Statement of Claim when the Defendant brought a motion to dismiss the action. In the instant case, not only were pleadings closed and the main substantive issues settled between the parties, leaving only the issue of interest outstanding, but full Discovery had been made. In my judgment, there is no disputed facts put before the court, but argument was advanced as to how the facts could or should be interpreted. Commentary in affidavits that may be disputed is not the same as undisputed facts. If they were treated as interchangeable or one the equivalent to the other, applications under Order 19, Rule 28 and/or under the inherent jurisdiction of the court could be circumvented by what, in effect, would be a devise in defeasance of a jurisdiction.
In this case, there were three problems known to exist during the first six months of the contract; thereafter, a fourth arose (viz the Kelly claim). The Plaintiffs/Vendors sued both the ESB and Waterways Limited. Both these problems, and the Kelly claim, ceased to exist at the date of the Completion Notice; but notification and acceptance was not coincident with the date of Notice to Complete. Throughout the entire period, from 6th December 2000 to 31st January 2003, the problems arising from the way leaves of Westmeath County Council existed. In my judgment, the Defendants/ Purchasers were not responsible for the delays encountered in bringing the sale to a conclusion on 31st January 2003.
In my judgment, this is a clear case and it can certainly be said that there is no prospect that the action, if allowed to proceed to trial, will succeed. Likewise, as considerable injustice could result if the matter is not disposed of now, to permit the case to proceed to trial would be to permit an abuse of the court’s process and an unfair vexation of the Defendants.
END OF JUDGMENT
Forbes v Tobin
unreported, Supreme Court, July 17, 2002,
JUDGMENT OF MR JUSTICE FRANCIS D MURPHY DELIVERED THE 17th DAY OF July, 2002 [Nem Diss.]
1. By an undated agreement made in or about the month of March, 1998, the above named defendants/respondents, John Tobin and Jeanette Tobin, (the vendors) agreed with the above named plaintiff/appellant, Cyril Forbes, (the purchaser) for the sale to him, for the sum of £180,000, of the premises therein described as:-
“ALL THAT AND THOSE the lands and hereditaments being the garage premises at Inistioge situate in the Barony of Gowran and County of Kilkenny and more particularly delineated in the map attached hereto and thereon outlined in red.”
2. By plenary summons issued on the 21st May, 1999, the purchaser instituted proceedings claiming specific performance of the contract. By order dated the 29th March, 2001, McCracken J. refused the order for specific performance: declared the agreement for sale aforesaid rescinded but ordered the vendors and each of them to repay to the purchaser the deposit of £18,000 together with interest thereon. That order was made pursuant to the judgment of the learned trial judge delivered on the 8th March, 2001. This is an appeal by the purchaser from the said order and judgment.
3. The contract for sale contained two material special conditions. First, a provision (at special condition number 5) that the vendors would make application for the first registration of title in fee simple free from incumbrances of the property for sale in the Land Registry and that the sale would be subject to and conditional upon the same being affected and further that the closing date for the sale would be fourteen days after such registration. The second relevant special provision related to Value Added Tax and was in the following terms:-
“7 In addition to the purchase price, the purchaser shall pay to the vendor an amount equivalent to such Value Added Tax as shall be exigible in relation to the sale, same to be calculated in accordance with the provisions of the Value Added Tax Act 1972 and to be paid on completion of the sale forthwith upon receipt by the purchaser of an appropriate invoice (whichever be the later).”
4. Apparently the vendors were registered as full owners of the property for sale being the property now comprised in Folio 1791F of the Register of Freeholders (County Kilkenny) on the 11th December, 1998, the completion date of the property was therefore the 25th December of that year.
5. Difficulties with the title of the vendors to the property had delayed the production of the contract for sale and, understandably, further time elapsed before the registration of the title as aforesaid. Whether it was this passage of time or a difference of opinion which had emerged between the solicitors for the vendors, James P. Coughlan & Co. (C & Co.) and the solicitors for the purchaser, Boe Kiely Hogan (PKH) as to the construction and application of special condition aforesaid which caused it is not clear but the correspondence between the respective solicitors became more acerbic and certainly less focussed on the material issues. From the outset – and indeed before the execution of the contract – a difference of opinion had arisen in relation to the clause relating to V.A.T. In a letter of the 30th March, 1998, PKH said:-
“We understood that there was no question of VAT being charged on the purchase price. Please advise us as to the amount of the VAT element and the VAT charge.”
6. By letter dated the 28th April, 1998 C. & Co. explained the position in the following terms:-
“Our clients’ accountant Mr. Richard McElwee is in consultation with the Revenue Commissioners regarding the VAT situation on the within property transaction.
The vendors have carried out two vatable activities from the property.
1. Shop and petrol pumps.
2. Garage business.
The Revenue Commissioners have requested confirmation from the vendors confirming whether or not the purchasers will be carrying on a vatable activity from the property.
Please note this will determine if a charge to VAT arises on the within transaction.
Accordingly we require written confirmation of the following:-
1. Is the purchaser registered for VAT
2. Does the purchaser intend carrying on a vatable activity from the property
3. Confirm the exact nature of the vatable activity.
Once we receive the above requested information we have been informed by Mr. Richard McElwee that the Revenue Commissioners shall make a ruling on the VAT situation herein.”
7. Throughout the remainder of 1998, while the title of the vendors was being registered, and into 1999, C. & Co. maintained that V.A.T. was payable on the transaction because it involved the sale of a business.
8. In letters dated the 15th and 17th December C & Co. pressed for completion on the 22nd December, 1998, that is to say, some days before the actual date for completion.
9. By letter dated the 26th January, 1999, C & Co. forwarded to PKH replies to the requisitions raised together with the documents relating thereto and a “completion notice”
10. In relation to V.A.T. the solicitors for the vendors stated as follows:-
“We would be obliged to receive balance purchase monies in the sum of £162,000 together with:-
(A) Written confirmation from the Revenue Commissioners confirming that your client is registered for VAT or,
(B) Cheque in the sum of £22,500 being VAT payable herein.”
11. The contention that VAT was payable was supported by a further reference to Mr McElwee’s letter dated the 30th November, 1998 which supported the case that the transaction involved was the sale of a business and as such would give rise to a liability to V.A.T. unless the purchaser was registered for that tax.
12. In their letter dated the 8th February, 1999, PKH drew attention in the clearest terms to the error into which the vendors’ solicitor had fallen when they pointed out:-
“The regulations your clients’ accountants quote refer to the position on the sale of a business. This transaction is not the sale of a business, it is a simple sale of a site with a building. No VAT is payable on the sale of the site and building unless your client has developed the building. Depending on the extent of this development and whether or not VAT was paid there may be a VAT liability on this sale. In this regard a distinction must be made between any monies expended by your client as distinct from any monies expended by any oil company.
Please confirm by return:-
1. Whether or not your client expends any money on the development of the building.
2. If so furnish copies of the invoices showing the VAT liability paid.
Please note that our client is not taking over any liability on foot of the lease agreements and supply agreement. The property covered by these agreements remains the property of the owner. Your client should arrange for the removal of such property.
Our client is willing able and ready to complete this purchase.”
13. It was in this letter that the point was taken – and then by the purchaser’s solicitor – that V.A.T. might be payable because of development work carried out by the vendor. In a flurry of communications between the 8th February, 1999 and the 2nd March, 1999, C & Co. continued to assert vehemently that the sale was the sale of garage premises and business and that accordingly the regulations quoted by Mr. Richard McElwee correctly set out the basis on which V.A.T. must be paid by the purchaser on closing or alternatively that he, the purchaser, must prove that he was registered for that tax. PKH were equally clear that the sale was “a straightforward sale and purchase of portion of a fee simple property” and that there was no question of any business being acquired. C & Co. did not take up the suggestion that development work might have been carried out by the vendor.
14. With the time fixed for completion approaching C & Co. wrote once again on the 9th March, 1999, insisting that the sale extended to the business carried on by the vendor. By that stage the vendors’ solicitors apparently recognised that the written contract contained no provisions to that effect but contended instead that:-
“… your client agreed to this verbally at the same time as he purchased the premises and that this verbal agreement is enforceable if not having to come within the ambit of the Statute of Frauds”.
15. On the 30th March 1999 – the date fixed for completion by the second completion notice – C & Co. wrote to PKH in terms which included the following:-
“…. our client has instructed us that he shall invoke his rights under the contract for sale, seize the deposit and deal with third parties in respect of the sale of this property.
With regard to your point regarding VAT liability on this matter per your letter of 22nd March 1999 please note that we have at length stated that we are no longer stating that VAT is chargeable by virtue of the fact that it is the sale of a business as we have accepted that this is not the sale of a business and accordingly the Revenue Commissioners were informed of the sale of real property only and furnished us with a letter confirming that VAT is still chargeable on the sale of the real property.
With regard to the Burmah agreements and the property belonging to Burmah please note that this is a matter for our client and as per the terms of the contract you are obliged to complete the purchase of the property in its entirety and once again we would advise that on the close of business of this evening the statutory period of notice of the 28 day completion notice will have expired and our client instructs us that he will seize the deposit and “walk away” from the within contract for sale as you have failed to complete the purchase of the real property within the prescribed period allowed under the valid completion notice dated the 2nd March 1999.”
16. What appears from the contents of the correspondence was that the solicitors on behalf of the vendor did belatedly recognise that the contract for sale was not a contract for a sale of business and that accordingly the basis in which they had approached the potential liability to V.A.T. was entirely erroneous. The correspondence does not make it clear that C & Co. ever appreciated the alternative basis on which V.A.T. might become exigible. The statement in the letter of the 30th March, 1999, to the effect that the Revenue had been informed that a contract for sale was “of real property only” was unhelpful and, perhaps, irrelevant. What the purchaser sought to ascertain, and was unquestionably entitled to know, were the facts which gave rise to the contract for sale becoming a vatable transaction. The material facts would have consisted of any development having been carried out on the property by the vendors or their predecessors in title after the year 1972. There could be no doubt but that the purchaser was entitled to particulars of the work done, the expenditure involved and proof by way of statutory declaration or otherwise that this expenditure had been incurred and did constitute development within the meaning of the relevant legislation. Insofar as C & Co. purported to provide information prior to the expiration of the period fixed by the second completion notice this was done on the basis of advices given by their accountants or opinions expressed by the Revenue authorities. C & Co. never came to grips with the fact that such advices and opinions were no better than the facts on which they were based: the crucial issue was the development of which the vendors should have been aware: not the advices or rulings which presupposed this information.
17. It is true that in a letter dated the 2nd March, 1999, from R. McElwee & Co to the Inspector of Taxes dated the 2nd March, 1999, which had been included – perhaps in error – in the letter dated the 9th March, 1999, from C & Co. to PKH it was stated that:-
“Within the period from the 1/4/93 to date of cessation of trading from the premises an amount of £3,000 was spent by Mr Tobin on capital expenditure, however some minor improvements were carried out by Burmah Castrol to the forecourt canopy and petrol pumping equipment at their expense. Mr Tobin has a ten years sale contract with Burmah Castrol. The £3,000 capital expenditure incurred by Mr Tobin was in respect of the concreting of an existing adjoining side yard.”
18. This was indeed information of the utmost importance but C & Co. appeared to have placed little reliance on it or perhaps failed to appreciate its importance. Certainly the solicitors for the vendors never appeared to have made any explicit reference to it – less still did they provide verification of the monies spent in developing the property.
19. As the vendors relied on the completion notice served by them and the failure of the purchaser to complete within the time thereby stipulated to give them the right to forfeit the deposit and terminate the agreement the purchaser instituted these proceedings.
20. In the statement of claim delivered on the 31st May, 1999, the purchaser pleaded the contract for sale and in particular special condition 7 aforesaid and then went on to allege as follows:-
“6 The defendants have stated Value Added Tax is exigible in respect of the salebut have changed the basis on which they alleged Value Added Tax is exigible in the course of the sale:-
(a) The defendants originally alleged that Value Added Tax was exigible by virtue of the fact that the property in sale was being sold as a going concern as a business, but have accepted that this is not in fact the case and that the purchaser is purchasing the property only and not the business that may have been carried on by the vendors thereon.
(b) The defendants now allege that Value Added Tax is exigible by reason of a development of the property since the year 1972, such as would give rise to a charge to Value Added Tax, but the vendors have not furnished the purchaser with evidence of such development, which would be a condition precedent to liability for Value Added Tax.
(c) The defendants have failed, refused or neglected to demonstrate to the plaintiff how Value Added Tax is exigible in respect of the said sale.”
21. As to that allegation the vendors in their defence said:-
“(2) Paragraph 6 of the Statement of Claim herein is denied. At all material times the defendants have demonstrated adequately and explicitly the basis upon which VAT is exigible through extensive inter parties correspondence and in particular by letters from the plaintiff’s solicitors to the defendants dated April 3rd 1998, January 26th 1999, February 8th 1999, March 19th 1999 and most recently March 30th 1999. By the said letter of March 30th it was clearly stated that the defendants accepted that VAT was not exigible by reason that it was a sale of business and further it was accepted by the defendants that the sale did not involve the business. The defendants however inserted their claim in reliance upon advices from the Revenue Commissioners who confirmed to them that VAT was chargeable on the sale of real property.”
22. In the proceedings before Mr. Justice McCracken the correspondence between the solicitors and in particular the letters referred to by the vendors in their defence was explored in detail.
23. In his judgment delivered on the 8th March, 2001, the learned judge commented upon the correspondence in the following terms at p. 7:-
“Unfortunately this rather lengthy correspondence which took place over several months could probably be described as a comedy of errors. The contract for sale on its face is clearly only a contract for the sale of property, and does not include any of the standard clauses which one would expect on the sale of a business as a going concern. This was pointed out to the defendant’ s solicitors on a number of occasions, but they refused to accept it. On the other hand the plaintiff’s solicitors appeared to have been operated under a totally mistaken apprehension as to liability for value added tax on the sale of property. Liability for value added tax does arise in the sale of a business as a going concern where the purchaser is not himself registered for value added tax but it is also payable under certain circumstances where property has been developed in whole or in part after the 31st October 1972, and this appears to have been ignored by the purchaser’s solicitor until after the service of completion notice. This may be understandable, because of the basis on which the vendor’s solicitors were claiming value added tax, but the fact remains, and it now seems to be conceded that value added tax is payable on the transfer of an interest in property where there has been a development of that property by or on behalf of the vendor subsequent to the 31st October 1972 in circumstances where the vendor was entitled to recover any part of the value added tax chargeable to him or the purchaser or redevelopment of the property.”
24. Later in his judgment the learned judge said:-
“The above facts give rise to a number of issues. Clearly the first of these is whether, when the plaintiff issued the proceedings, he himself was ready, willing and able to complete in accordance with the terms of the contract. He was refusing to pay the value added tax, and it now transpires the transaction is subject to value added tax, although not on the basis on which it was originally claimed by the defendants…… There is, therefore, the very odd situation that the defendants appear to have been correct all along in requiring value added tax, but for all the wrong reasons. In my view, therefore, and with some reluctance I must find that the plaintiff is not entitled to an order for specific performance, because his refusal to pay value added tax meant that he was not willing to close in accordance with the contract.”
25. I believe that it would have been correct to say that the plaintiff was not, at the date of the issue of the plenary summons, in a position to complete the sale because the queries or requisitions in relation to V.A.T. had not been dealt with by the vendors in accordance with their contractual obligations in that behalf. The statement that the plaintiff was disentitled to a specific performance because of his “refusal to pay value added tax meant that he was unwilling to close in accordance with the contract” was, in my view, erroneous. PKH stated repeatedly that their client was prepared to complete the sale and indeed to pay V.A.T., if exigible, in accordance with the provisions thereof. The issue between the parties was whether or not such tax was exigible. PKH had pointed out repeatedly and correctly, as events confirmed, that the sale was not the sale of a business and that accordingly V.A.T. could not be payable on that basis. It was, as I have noted, PKH who drew attention to the fact that there might be a V.A.T. liability on the sale of the land if a development had taken place thereon and called upon C & Co to furnish particulars of monies expended on any such development and invoices related thereto. That request was not addressed by the vendors’ solicitors in correspondence. It does, however, appear from the evidence given by Mr. McElwee that he had been informed that Mr. Hogan had asked for vouchers for the expenditure of £3,000 and that he, Mr. McElwee, had not been able to trace any invoices nor could Mrs. Tobin manage to obtain them from the contractors who carried out the works. Unfortunately no reference was ever made in the correspondence to these investigations nor any alternative evidence offered in proof of the expenditure. Indeed, as the correspondence demonstrates, the solicitors for the vendors continued at that stage to maintain that V.A.T. was payable because the transaction involved the sale of a business.
26. The statement contained in the letter from PKH of the 11th March, 1999, stating that the purchaser was unwilling to pay V.A.T. should be read in the context of paragraph 4 (b) of that letter which made the purchaser’s position abundantly clear, namely:-
“(b) The contract contains the usual standard VAT clause in the Special Conditions. Under that clause our client is liable to pay VAT “as shall be exigible” under the VAT Act 1972. No such exigibility arises on the information furnished to us to date. You will see from previous correspondence that we have requested information as to why your client says VAT is exigible. The only reason you have given us is that set out in paragraph (a) above, which reason we do not accept.”
27. The vendors did not furnish particulars of the monies obliged to have been expended or any evidence in support of the belated claim that it was so expended. The purchaser was being merely furnished with conclusions or opinions expressed by others on information which the vendors consistently refused to provide notwithstanding the repeated and well founded requests for it.
28. In my view the learned trial judge erred in concluding that the purchaser refused to pay value added tax. His only refusal was to pay value added tax, first, on the erroneous basis that the contract was one for the sale of a business and, secondly, on the basis that the property had been developed by the vendors or their predecessors in title without being given adequate evidence to support that contention. The purchaser expressed and demonstrated his willingness to pay the value added tax if the same was payable and for that purpose sought evidence – as opposed to opinions or rulings – to enable a conclusion to be reached by the purchaser in that regard.
29. The learned trial judge having held that the two completion notices served by the vendors were defective – against which there is no cross-appeal – I believe the learned trial judge was mistaken in declining to make an order that the contract ought to be specifically performed. Accordingly I would allow the appeal and refer the matter back to the High Court to make such further order or direct such inquiries as may be necessary to give effect to that decision.
In re O’Malley, a Bankrupt
[1943 IR 332
Overend J.
OVEREND J.:
The question raised in this case is one of some interest, and I am indebted to counsel for the assistance which they have given me in the matter.
Put shortly, the question is whether, when the sale of a rateable hereditament takes place during the currency of the first half of a financial year for which a particular poor rate has been struck, a provision in the Conditions of Sale that the vendor shall indemnify the purchaser against so much of the rate as shall be “due and payable”in respect of the premises at the date of the sale, relieves the purchaser of the amount of the rate struck for the entire year, or only of the amount of the moiety payable in respect of that first half year, leaving the burden of the second moiety of the rate to be borne by the purchaser.
It is quite clear that formerly, by virtue of s. 51, sub-ss. 5 and 6, of the Local Government (Ireland) Act, 1898, two distinct rates were necessarily struck in every year. By sub-s. 5 it was provided that the county council should raise the amounts apportioned under the Act to any part of the county, which was not an urban district, by means of the poor rate, and should make such poor rate twice a year.
Sub-s. 6 of s. 51 required that “such poor rate shall be made either immediately prior to, or at the beginning of, the first six months of the local financial year and the second six months of that year, and shall be made in respect of the service of such first six months or second six months, as the case may be.”
But this provision was amended by s. 2 of the Local Government (Ireland) Act, 1900, which declares that:”Notwithstanding anything contained in section fifty-one of the principal Act [i.e., the Act of 1898], the council of any county or of any urban district may, if they think fit, either immediately prior to or at the beginning of each local financial year, make one poor rate for the whole financial year and collect the same in equal moieties, one moiety for each half year.”
It would appear that the power of striking one single rate for the whole year conferred by the Act of 1900 has been generally adopted by the local authorities, and that in practice they strike one rate for the service of the year, although they still have the power, if they so wish, to strike two distinct half yearly rates under s. 51 of the Act of 1898.
It is important, however, to observe that, even if the rate be struck yearly instead of half yearly, payment must be demanded in two equal half yearly moieties so that the burden on the ratepayers is in no way increased.
Turning to the facts of the present case it will be seen that the question raised is primarily a matter of the construction of condition No. 5 of the Conditions of Sale. By this condition it is declared that “the vendors shall pay or otherwise indemnify the purchaser against the payment of all rents due out of the premises up to the last gale day preceding this sale, but not further, and all taxes due and payable prior to the sale in respect of the premises.”The parties are agreed that the word “taxes” includes poor rate. No question of apportionment arises, and we are concerned solely with the effect of the words “due and payable” in the Conditions.
At the date of the sale, which took place on the 19th May, 1942, the rate had been struck, and the whole of this rate for the entire year was technically “due,” but in my opinion only the first moiety was “payable,” and this is admitted to have been paid by the Official Assignee. In the result the purchaser acquired the premises discharged from rates down to the 30th September, 1942.
No doubt the actual conveyance to him is dated the 3rd day of November, 1942, but he entered into possession on the 6th day of August, 1942, and the balance of the purchase money had been paid into Court on the 29th day of August, 1942, which date, according to condition No. 3 of the Conditions of Sale, marked the completion of the purchase.
In my view the construction of condition No. 5 is quite clear, and provides that the Official Assignee shall indemnify the purchaser against the payment of the outgoings to which it relates which shall be due and payable at the time of the sale. It does not, however, extend to outgoings which, though strictly speaking due, are not legally payable or recoverable at that date.
of his sisters, and his failure to obtain their goodwill had put the defendant in such a position that it would be a hardship to hold him bound by the contract: Falcke v. Gray (1); In re Highett and Bird’s Contract (2); Royal Bristol Permanent Building Society v. Bomash (3). Time was of the essence of the contract in this case, and, if negotiations were continued after the time fixed for completion, this did not amount to a waiver of the condition that time was of the essence of the contract: Dyas v.Rooney (4).
Overend , in reply:Even if time is of the essence of the contract the purchaser, by continuing negotiations after the date fixed for completion, waives it: Webb v. Hughes (5).
KENNEDY C.J. :
This was a vendor’s action for the specific performance of a contract for the sale of land. The lands, which comprised a holding in the County Tipperary, bought out under the Land Purchase Acts, and duly registered, were offered by the plaintiff for sale by public auction on the 18th March, 1922, subject to Conditions of Sale, which, amongst other things, appointed the 8th April, 1922, as the date for completion.
The highest bid at the auction did not reach the reserve price, and the properly was withdrawn. Later, however, on the same day, the defendant, who had been one of the bidders, as a result of private negotiations, made an enhanced offer which was accepted on the part of the plaintiff. The defendant signed the contract at foot of the Conditions of Sale agreeing to purchase the holding for the sum of £3,350, and to pay the auctioneer’s commission of £167 10s., and the sum of £837 10s. by way of deposit and in part payment of the purchase-money. The contract was also signed by Mr. Patrick J. Maher, the auctioneer, confirming the sale on behalf of the vendor.
The Conditions of Sale provided that the vendor should, within four days from the date of sale, deliver to the purchaser, or his solicitor, an abstract of title consisting of two documents, viz.: a certain deed of family settlement dated the 4th July, 1904, and a copy of the Land Certificate. The time for making requisitions on the title was limited to four days from the delivery of the said abstract. It was further provided that the purchaser should leave a draft of the assurance of the property to him at the office of the vendor’s solicitor, Mr. Nicholas E. Maher, for approval, not less than six days before the 8th April, 1922.
The Conditions of Sale also contained the following provision: “The lands are sold subject to a right-of-way of said Lizzie Guerin for all purposes in connection with the adjoining holding of said Lizzie Guerin (otherwise Eliza Guerin) and due provisions reserving this right-of-way to the said Lizzie Guerin (otherwise Eliza Guerin) will have to be embodied in the Deed of Transfer to the purchaser. The nature and extent of this right-of-way will be pointed out to the purchaser and explained to him at any time previous to the sale, and, whether the purchaser avails of such opportunity, or otherwise, he shall be deemed to have purchased with a full knowledge of its nature and extent, and shall not afterwards be free to make any objection or requisition in respect thereof.” It is important to observe that the Particulars of Sale did not disclose that the sale was to be subject to any such right-of-way, nor did they refer proposing purchasers to the Conditions of Sale.
The plaintiff claimed specific performance of this contract and payment of the purchase-money, or, alternatively, damages for non-completion. He relies in his Statement of Claim on a letter of the defendant dated the 22nd March, 1922, as a renunciation of and refusal to perform the said contract, and on a letter of the 19th April, 1922, stated to be from the defendant’s then solicitor, as repeating such renunciation and refusal. The plaintiff expressly pleads that he has always been ready and willing to perform the said contract on his part, and to do all necessary acts and deeds for vesting the lands in the defendant.
Upon the pleadings, the principal defence appears to be that the defendant was induced to enter into the contract on the faith of representations and assurances by the plaintiff “that he, the defendant, would be allowed to enter peaceably upon the said lands and enjoy the same without claims, molestations, or threats by members of the plaintiff’s family or other persons.”But it is alleged that “immediately after and upon several occasions since the making of the said contract, the defendant has been subjected to violence and threats by the sisters of the plaintiff and other persons,” and it is submitted therefore that the enforcement of the said contract would be inequitable and would impose undue hardship upon the defendant. It is also pleaded that the plaintiff has never been ready, willing, or able to deliver clear possession of the lands to the defendant.
The defendant counterclaims for rescission of the contract and a return of his deposit. The amount of the deposit is stated in the counterclaim to be £10.
The plaintiff delivered a reply in which he deals specially with the deposit. He alleges that the deposit paid by the defendant amounted altogether to the sum of £837 10s., and that it was made up of two promissory notes, one for £800, the other £27 10s., and a cash payment of £10. This statement was proved in evidence, and is not denied. The pleading continues: “After the repudiation by the defendant of the saidcontract . . . . a number or armed men broke and entered the residence of the said auctioneers in whose possession and custody, pending the completion of the contract, the said notes had remained, and took and carried away the said notes.”The taking away of the notes in the circumstances alleged was proved in evidence, but there was no evidence as to the person by whom, or the motive with which, they were taken. The plaintiff’s suggestion was that it was done by friends of the defendant in his supposed interest. The defendant’s suggestion, on the other hand, was that it was done in furtherance of t he alleged desire of the plaintiff’s sisters to break the sale. We have not sufficient materials upon which to form an opinion one way or the other on the matter, and therefore this foolish outrage cannot affect our decision in the case.
Such was the position of the case on the pleadings when the action came to trial before Pim J., sitting as Chancery Judge, on the 23rd May, in the present year. The pleadings and the issues knit upon them appear to have been overlooked in the conduct of the trial. All sorts of evidence were offered and received without reference to them; and, without amendment, every possible issue which could be raised by evidence, untrammelled by pleadings, was treated as open to the parties on the hearing of the action, and so admitted on both sides here. The result is that we are confronted with a very large transcript of disorderly testimony which does not lend itself to systematic review in relation to any clear issues to be determined.
The principal matter which, as I read the evidence, undoubtedly affected the defendant’s mind all through was his anxiety to buy the farm with the assent of the plaintiff’s family. A man who buys what may be called a “family holding” in this country almost invariably has to consider the attitude of the vendor’s family towards the sale. Few will venture the hostility of a vendor’s brothers and sisters who think they have moral claims, even when they have no legal rights. Hence, one so often hears of a purchaser of a family holding having got, or not having got, “the goodwill” of the holding. It is not uncommon to hear that a purchaser has, in addition to the price paid to a vendor, paid something more to members of his family for “the goodwill.” It is a reality of our social life, though it may not have legal recognition, and it cannot be ignored as a factor in these transactions.
The defendant is a farmer whose land is scattered, but he resides on land immediately adjoining the land in question. His motive in buying appears to have been to concentrate his farming round his residence and give up his outlying lands. But he knew the plaintiff and his sisters, and he knew that there had been some disagreement among them, especially upon the marriage of the plaintiff, an elderly man. I am satisfied that the defendant had some uneasiness on this score, and, after the auction had fallen through, when he was being urged to advance his offer, he decided to assure himself that, if he bought, he would buy with “the goodwill.” That was the real object of his inquiries of Mr. Maher. He was informed that a deed had been executed settling the sisters’ claimsand that was the casebut a legal settlement will not always dispose of the non-legal matter of goodwill. He signed the contract. Almost immediately after the contract was signed he began to experience hostility on the part of the plaintiff’s sisters. The details of the manner in which that hostility was displayed are the subject of conflicting evidence, but are really immaterial. It is sufficient that there were, as I am satisfied, demonstrations of ill-will towards him by these ladies, one of whom could not conceal her hostile sentiments in the witness-box.
On the 21st March the vendor’s solicitor, Mr. Maher, wrote to the defendant asking him what solicitor he wished to act for him, so that he, Mr. Maher, might furnish an Abstract of Title. Under the Conditions of Sale the abstract was to be delivered within four days from the sale, but it might have been delivered to the purchaser personally, and should have been so delivered, failing the nomination of a solicitor to receive it.
On the 22nd March the defendant wrote to Mr. Maher saying:”I have withdrawn from the purchase . . . I do not wish to be interfering in family affairs. His sisters threatened me several times since, and they wish that anybody would have it besides me, so I am not going to have hand, act, or part in it.” This is the letter relied on in the Statement of Claim as a renunciation of the contract by the defendant. It was originally relied on here in the same way, but the plaintiff’s counsel subsequently admitted he could not, having regard to what occurred afterwards, continue to rely upon it as a repudiation of the contract.
On the 23rd March Mr. Maher wrote to the defendant assuring him that the plaintiff’s sisters had no conflicting interest, and requiring him to complete. On the 25th March the defendant visited Mr. Maher, and gave him particulars of his two outlying farms so that he might arrange for their sale on the 8th April, the day fixed for completing the purchase from the plaintiff. The two farms were, in fact, put up for sale. The sale of one was abortive, the reserve not being reached, while a purchaser was found for the other.
On the 27th March the defendant again visited Mr. Maher to complain of attacks by the plaintiff’s sisters, made both on himself personally and at the house on the plaintiff’s holding. Mr. Maher thereupon wrote to the late Mr. John O’Dwyer, who had been acting as solicitor for the plaintiff’s sisters, complaining of the ladies’ conduct towards the defendantto whom Mr. Maher referred as “my client.”
On the 8th April the defendant again saw Mr. Maher and complained of the attitude of the Misses Guerin. Mr. Maher says he appeared to be very nervous, so he (Mr. Maher) gave him an old revolver he happened to have in the office, and this Mr. Maher describes as one of the steps he took for reconciling the defendant to his bargain.
In the meantime, when the defendant was in Mr. Maher’s office on the 25th March, Maher’s clerk asked him had he a solicitor, and he said he had Mr. D’Arcy. The clerk thereupon advised him to go down to Mr. John O’Dwyer, as, he said,”he is the only man that can quieten these women, and he will make it all right.” The defendant then went with Maher’s clerk to Mr. O’Dwyer, and, presumably, instructed him to act for him in the purchase from the plaintiff.
On the 10th April Mr. Maher, solicitor, wrote to Mr. O’Dwyer, solicitor: “Will you please let me have engrossment of deed in this case for signature by my client, and let me know when you will be prepared to close the sale,” to which Mr. O’Dwyer replied on the 19th April, “My client called on me some days ago and informed me that owing to a threatening notice, which he said he had showed you, he could not complete. This was in addition to several verbal threats.” This is the repudiation of the contract now relied upon.
Here it is important to observe that Mr. O’Dwyer was the solicitor for the plaintiff’s sisters. He had acted for them in drawing up the deed of 1904 and an agreement of 14th March, 1922, which purported to solve the outstanding disputes between them and the plaintiff. Under these instruments they had charges to be released on a sale of the land. Yet no attempt seems to have been made to prepare draft releases of the charges for approval. Further, a right-of-way was agreed to be given to Lizzie Guerin over the lands sold, which was the right-of-way mentioned in the Conditions of Sale, and which was to be defined, both under the agreement of 14th March, 1922, and under the Conditions of Sale. Yet no attempt was made to define it. It was the plaintiff’s duty to procure releases of the charges and to define the right-of-way to the satisfaction of Lizzie Guerin. His solicitor, Mr. Maher, should have taken the initiative in both these matters; and when Mr. Maher, without having taken these steps, called for an engrossment of the assurance to the purchaser, it was for Mr. Dwyer, whether as solicitor for the purchaser or as solicitor for the plaintiff’s sisters, to have pointed out to him that these were necessary preliminaries to carrying out the sale.
Moreover, there were cattle all this time on the lands, some of which were the property of the plaintiff and some belonged to Lizzie Guerin. The defendant complained of this stock remaining on the lands, but owing to the failure of the plaintiff to agree with his sister as to which cattle were their respective properties, the lands were not cleared. Indeed, an attempt was made to induce the defendant to take the risk of clearing the lands himself, which he properly refused to do.
The defendant was persuaded to transfer his business in relation to the sale to Mr. O’Dwyer on the ground that Mr. O’Dwyer alone could quieten these women. It is a remarkable fact that there is no trace of Mr. O’Dwyer ever having been able to reassure the defendant that he had nothing to fear from them, neither does it appear that Mr. O’Dwyer ever informed Mr. Maher, either before or after he acquired the defendant as a client, that he was in a position to concur in carrying the matter through on behalf of his female clients.
Finally, it does not appear that Mr. Maher ever furnished Mr. O’Dwyer with the abstract of title according to the Conditions of Sale, without which he could neither make requisitions nor draft the assurance to the defendant.
I am of opinion, in the first place, that the defence of representations, inducing the defendant to enter into the contract, is a real defence. I think the defendant did make it clear that he must get the goodwill of the family, in the sense I have mentioned, and that the plaintiff never was in a position to give him the lands with such goodwill.
In the second place, I cannot find that the plaintiff, or his solicitor, did anything towards carrying out the contract, and, in my opinion, the plaintiff’s solicitor was not entitled to write the letter of 10th April, 1922, calling for an engrossment of the deed of conveyance, to which the letter of 19th April, relied on by the plaintiff, was a reply.
In these circumstances I would hold that specific performance should be refused.
But then we have the further facts of lapse of time and acquiescence in the repudiation of the contract.
Not until the 13th June, 1923, was the writ in this action issued, and, in the meantime, we have acts showing that both parties believed the whole transaction to be at an end. The plaintiff attempted to auction the meadow on the land. The defendant, who had agreed to sell one of his farms preparatory to completing this purchase, released the purchaser and was released by him. It would, in my opinion, be a hardship, and it would be inequitable for the Court now to say that this is still a living contract which the defendant must perform.
There is one matter on which I wish to add a word. It is my opinion that the defendant has suffered from acting upon the advice given him to leave his independent solicitor. We find him as client, first of one and then of another solicitor representing clients with interests adverse to his. If he had been quite independently advised, this case would have probably reached an earlier solution, and he would have been saved much trouble.
In my opinion the appeal should be dismissed with costs.
Guerin v. Heffernan.
[1925] IR 67
Kennedy C.J.
O’CONNOR J. :
On the pleadings in this action, apart from formal traverses, the only issue raised is that the contract for sale of the lands was induced by a misrepresentation made by the plaintiff to the defendant that the latter would be allowed to enter peaceably upon the lands without claims, molestations, or threats by the plaintiff’s family or other persons.
The trial of the action lasted three days, and the transcript of the very voluminous evidence shows that every conceivable topic was dealt withso much so, that it is difficult to gather from the evidence what were the issues to which it was directed. It certainly was not confined to the only issue which was raised by the pleadings. An explanation is to be found in the way in which the trial, with the assent of both parties, was conducted. The pleadings were disregarded, and plaintiff and defendant were left at large without being called upon to formulate the issues by amended pleadings. The result seems to have been that no one at the trial seems to have had a clear conception of the material issues, and much time was wasted and the whole case obscured by evidence of the most rambling and confusing character. I consider this case to be a glaring example of the inconvenience resulting from the absence of proper pleadings raising the real issues to be tried. I do not wish to be taken as an advocate of rigid adherence to pleadings on which an action is brought to trial. Very frequently it appears at the trial that material issues have not been raised by the pleadings, and that it would be unjust to shut out the parties from raising them, but I do maintain that, when the proper issues become manifest, the parties should be called upon to formulate them by proper amendments. This is by no means a matter of merely formal compliance with rules. I know nothing which is more conducive to clear thinking, whether on the Bench or at the Bar, than the proper formulation of a legal claim or a legal defence, while there is nothing more calculated to lead to confusion and waste of time with consequent expense than to allow a case to drag along without exact knowledge of the issues which are raised.
Reading the evidence I am able to extract from it three grounds of defence which may easily be brought under well-defined heads:1, Delay and laches on the plaintiff’s part in bringing his action; 2, repudiation by the defendant and acquiesence by the plaintiff in such repudiation; 3, a change of position to the prejudice of the defendant caused by the plaintiff ‘s conducta defence closely associated with defence No. 1. These do not exhaust the issues to be extracted from the evidence, but I will confine myself to them, as sufficient for the purpose of my judgment.
A contract for the sale of a farm is one which ought to be expeditiously carried out. A farm is a property which requires immediate attention and treatment. The times for doing things on a farm wait not for the farmer. He must always be up and doing. When he buys his farm he ought to get immediate possession. If he is delayed he may miss a sowing, or a reaping, or a market. Consequently, if there is a dispute between a vendor and purchaser of a farm, the purchaser should know at once whether he is to be on or off with his contract. He ought not to be kept in suspense.
In this case the contract was made on the 18th March, 1922. The date fixed for completion was the 8th April, 1922. Everyone knows that this is the time of year at which it is important for a farmer to get immediate possession. Immediately after the making of the contract the defendant had reasons for regretting it. It is not necessary to go into particulars. He repudiated it. He may at one time have withdrawn his repudiation, but it is certain that he finally, and in the clearest manner, repudiated it on the 19th April, 1922. This repudiation was met by a notice from the plaintiff that he would at once institute legal proceedings. I will assume that the plaintiff had then a good cause of action for damages for breach of contract or for specific performance. He might have rested on his claim for damages until it was barred by the Statute of Limitations; but, if he intended to seek the equitable relief of specific performance he was bound to proceed without delay. A man who sleeps on his rights does not find favour in a Court of equity.
The plaintiff, instead of proceeding as he had threatened the defendant that he would, did nothing to assert his rights until the 13th June, 1923, when he issued his writ. During the intervening period the defendant might very well have assumed that the plaintiff had abandoned his rights under the contract and had accepted the defendant’s repudiation. It would certainly be a hardship on the defendant to have his fear of liability lulled, while in the meantime the plaintiff would have the option of selling the farm to advantage and, that failing, of enforcing the contract. On the ground of delay alone I think that the plaintiff is not entitled to equitable relief. There is ample authority to support this view: see Fry on Specific Performance, 6th edit., pars. 1071, 1072, and 1073. The length of the delay depends on the circumstances of each case, and, having regard to the nature of the property now in question, I am of opinion that the delay was altogether unreasonable. But the plaintiff’s delay was accompanied by acts which are only consistent with his acquiescence in the repudiation and his election to treat the contract as at an end. A considerable time after the day fixed for completion of the contract the plaintiff advertised the meadows on the lands. That was wholly inconsistent with the defendant’s rights under the contract if it were to be enforced against him. The letting of the meadows would have incapacitated the plaintiff from giving up clear possession.
Further, I am satisfied on the evidence that the defendant, acting under the belief that the contract was abandoned by the plaintiff, released a purchaser of one of his own farms, which he had agreed to sell, in consequence of the purchase of the plaintiff’s farmwhether the defendant has suffered actual loss from this I do not knowbut it was a change in position, which, with the other elements in the case, should be taken into consideration.
On these grounds alone I am of opinion that the plaintiff lost the right which may have been vested in him originally of getting a decree for specific performance, and I do not consider it necessary to give any decision on the defence of misrepresentation.
In my judgment the appeal should be dismissed with costs.
FITZGIBBON J. :
I concur in the judgment just delivered by my brother O’Connor.
Greene and Another v Quinn
Circuit Court.
19 December 1940
[1941] 75 I.L.T.R 107
Judge Davitt
Judge Davitt:
I have in this case already given my decision against the plaintiffs on their claim as set forth in their Civil Bill, but I have allowed them to amend their process by claiming as follows:—
The facts are not in dispute. By agreement dated the 14th May, 1940, the defendant agreed to purchase from the plaintiffs the dwellinghouse and premises known as “Greenarms,” Stillorgan. The price was £1,000 and £200 was paid as deposit. In fact agreement had been reached between the parties, the defendant’s solicitor had had inspection of the documents of title and had in fact raised 34 requisitions, and the deposit had been paid before the agreement to purchase had actually been signed. These facts explain why though signed only on the 14th May, 1940, the agreement provided that the sale should be completed a few days later, on the 17th May, 1940. It was not completed until the 29th August, 1940. This I have found to be due to the wilful default of the vendors.
Although according to the terms of the agreement the defendant was not entitled to possession until the completion of the sale and the payment of the balance of the purchase money, he in fact was allowed into possession on the date originally fixed for completion, viz. 17th May, 1940. This was due to the circumstance that he was selling his previous dwellinghouse. He was raising the balance of his purchase money by way of loan from his bank.
The parties came to no express agreement with regard to the payment of interest, in the events that have happened, upon the unpaid balance of the purchase money and their respective rights and liabilities in regard to the matter have to be implied from the circumstances.
I have read the cases cited to me by Counsel on behalf of the plaintiffs (appellants), and by Mr. Lysaght on behalf of the defendant. Those cited by Mr. Lysaght are relevant mainly to the plaintiffs’ claim as originally framed and have served to persuade me to decide against the plaintiffs on that claim.
From the cases cited by Counsel for the appellants it appears to me to be abundantly clear that in the circumstances of this case, the law, or to be strictly accurate, equity will imply an agreement by the purchaser to pay interest on the balance of the purchase money. The general rule appears to be that where a purchaser is allowed into possession before completion equity will imply such an agreement unless there is something in the express agreement between the parties, or otherwise in the circumstances, to negative such an implication. In this case there is nothing in the express agreement between the parties to negative such an implication.
Mr. Lysaght was able to suggest only two circumstances as tending to negative the implication. The subject matter of the purchase was a dwellinghouse and there were no actual rents and profits into receipt of which the purchaser could enter, and from the date he took possession he discharged all outgoings.
I am quite satisfied that these circumstances do not negative the implication of an agreement to pay interest.
If the sale had in fact been completed on the 17th May, 1940, the defendant as from that date would have been entitled to possession, been liable to discharge all outgoings, and would have had to pay the balance of his purchase money. On one side of the account there was possession without, it is true, any actual rents and profits, but with what amounted to as much, viz. the right to the beneficial occupation of the premises as a dwellinghouse. On the other side was the liability to outgoings and the obligation to part with £800, the balance of the pur *109 chase money and the loss of the actual or notional interest thereon.
By the case he makes the defendant seeks to be put in a better position than he would have occupied had the sale been completed as agreed on the 17th May, 1940. Since that date he has enjoyed the benefits of ownership, viz. the beneficial occupation of the dwellinghouse, together with its liabilities, the obligation to discharge the outgoings. He has had in addition the use of the £800 for the 103 days from 17th May, 1940, to the 29th August, 1940. If he is not liable to pay interest then, regarded equitably, the position is this:—Either he is not paying the agreed purchase price, £1,000, but only £1,000 less the interest on £800 for 103 days, or else he has enjoyed free occupation of the dwellinghouse for 103 days.
If the defendant had had to maintain the £800 at call so as to be ready to pay it to the vendors whenever they were in a position to make title, he could have lodged the money in his bank and notified the plaintiffs to the effect that as he had so to maintain the money earning a small amount of interest he would be liable to them for no greater amount of interest. In those circumstances no Court of Equity would imply an agreement by him to pay any greater amount of interest to the plaintiffs. This, however, he did not do. So far from lodging any sum in the bank he was borrowing the balance of the purchase money from the bank. If completion had taken place on the 17th May, 1940, he would have had to pay interest on the amount borrowed as from that date. In fact he has had to pay interest only from the 29th August, 1940.
In my opinion, so far from there being anything in the circumstances negativing the implication of an agreement by the purchaser to pay interest every circumstance of the case favours such an implication. In my opinion, it would be manifestly unfair and inequitable not to hold that the defendant should pay interest.
In all the circumstances of the case it appears to me that the plaintiffs are entitled to interest on the £800 for 103 days at the usual 4% rate This by my arithmetic works out at £9 0s. 7d.
Tyndarius Ltd. v O’Mahony & Ors
[2002] IEHC 167
JUDGMENT OF MR. JUSTICE T.C. SMYTH DELIVERED ON FRIDAY, 11TH JANUARY 2002
The Plaintiff entered into a written contract to purchase 51/52 Thomas Street, Dublin 8, under the terms of a written Tender document incorporating the Law Society’s “General Conditions of Sale” (1995 edition). The sale price was IR£1,211,200, and the deposit paid to the solicitors to the vendors as stakeholders, totalled IR£121,000. After some dispute as to whether the initial contract did or did not disclose the identity of the vendors, the subsequent correspondence in any event indicated that the first two Defendants, being solicitors acting on behalf of the vendors, were acting or selling “as trustees”. A statutory declaration of the first-named Defendant, dated 23rd March 2000, suggested that the third-named Defendant might be a principal along with the first and second Defendants.
The Title offered to the property was a freehold title together with the benefit of a Lessees interest in Number 51 Thomas Street under lease dated 28th October 1985, between George Frederick Thompson and Ors to Nicholls (Thomas Street) Ltd. Other documentation did not disclose that the first-named Defendant had lost the deeds by which the vendors claimed to hold the property. These deeds were not stamped and according to the first- named Defendant, Statutory Declaration of 23rd March 2000, they were being held to the order of the Ulster Bank Ltd. on foot of a solicitor’s undertaking. I think it may be reasonably assumed that the bank lent money on the security of these deeds and had an entitlement to have them. Not central the matters in issue in this case, it appears to me reasonable to assume that at the time of the contract the Defendants, and in particular the first Defendant, could not have been but aware that the deeds were not stamped and that the first- named Defendant knew or ought to have known that the relevant deed(s) were missing. There is a dispute concerning this latter matter in that deeds appear to have been mislaid rather than lost.
The intermediate title to the property was not furnished in accordance with General Condition 7; in response to the objections and requisitions on title sent under cover of a letter of 18th October 1999, and replied to by the vendor on 3rd March 2000, the reply to the requisition and the capacity of the vendor to sell the property was stated to be “to follow”. The fact that the deed was missing was not advised to the solicitors to the Plaintiff until apparently in or around 20th March 2000.
On or about 22nd March 2000, an extract from a contract dated 8th February 1994, whereby Mavis O’Toole and Earaonn O’Brien agreed to sell 51/52 Thomas Street to the first and second Defendants for IR£250,000, was furnished, together with two draft statutory declarations. No copy of the missing deed was furnished and no mention was made of the fact that there was an assignment to Lornall Ltd. By Nicholls (Thomas Street) Ltd. of the leasehold interest to number 51 Thomas Street.
A dispute arose as to how much effort was made at that or at any other stage to obtain a copy of the “lost deed” or adequately vouch by statutory declaration its execution, terms or effect. The statutory declarations furnished did not deal with the stamping of the document nor was an arrangement made to have any copy of the deeds stamped with unpaid duty or particulars delivered stamp impressed. A statutory declaration of a Mavis O’Toole of 30th March 2000 was, so far as the
Plaintiff was concerned, from a purchaser’s point of view, inadequate and inaccurate. This did not deal with the separate assignment of the leasehold interest to Lornall Ltd. Matters took a more focused shape in or about 31st March 2000, when the solicitors for the Plaintiff indicated that the Plaintiff was considering putting an end to the contract. This letter was apparently written without prejudice but was referred to freely during the course of the hearing. The Plaintiff’s solicitors expressed themselves in this way:-
“You might advise as to what your clients’ proposals are in respect of our clients’ losses and damages incurred up to this date in respect of this property, together with estate agency fees and legal fees incurred in the event that our client wishes to bring this call of contract to an end.”
The protracted correspondence in which the Defendants as vendor apparently had really failed to address or otherwise provide satisfactory answers to the problems were clearly exercising the mind of the Plaintiff in terms of obtaining a good title. The response of the vendor was quite unequivocal and by a notice dated 4th April 2000, the vendor called upon the Plaintiff to complete the sale within 28 days. The notice invoked the terms of the provisions of a contract for sale. Typically, the Completion Notice stated that:-
“(2) The vendors are ready, willing and able to complete the sale of all that and those, the hereditaments and premises known as 51 and 52 Thomas Street in the City of Dublin, both in respect of the freehold interest and the leasehold interest referred to in the Contract for Sale.”
The intended effect of the notice was to make time of the essence of the contract. The response to this notice was set out in a letter of 17th April 2000, it rejected the purported Completion Notice and asserted that it was invalid on a number of grounds which are enumerated in the course of a long and detailed letter. It expressly stated at paragraph (d):-
“Our client shall continue to reserve its right to rescind the Contract for Sale due to your clients’ failure to satisfy our client in this regard.”
The regard in which it was referred to was in respect of the adjoinment of a certain fire escape at the rear of the premises. The letter concludes in this way:-
“Please further note that our client has instructed us to issue such proceedings as are necessary to protect its rights on foot of the contract entered between our clients and furthermore any attempts by your client to forfeit our clients’ deposit will be counteracted by such appropriate injunctive proceedings against your client and we further put you on notice that we hold and continue to hold your clients responsible for all such losses, damages, costs and expenses incurred by our client as a result of or arising from the various issues raised above.”
The letter was followed up two days later by a further letter of 19th April, in which the purchasers sought once again the proposals of the vendor for “resolving the various issues as set out in our correspondence”. There followed a series of letters in which proposals were shuttled to and forth with a view to resolving the impasse that had arisen. No resolution was arrived at and by letter dated 25th April 2000, the vendor’s solicitors wrote to say:-
“As far as we are concerned, we have adduced little [sic] in accordance with the contract and are ready, willing and able to complete. We have already served a Completion Notice herein which is due to expire on Tuesday next, 2nd May, and interest continues to accrue against your client in the sum of £3,461.53 per week. Upon expiration of the Completion Notice, it is our client’s intention to lease the property from month to month as they are entitled to the rents and profits from the property in addition to the interest claim against your client per condition 25 (a) (2) of the Agreement for Sale herein.”
Whatever may have been the status of the correspondence or the meetings that were taking place at this time, a letter was written on 26th April 2000, by the purchaser’s solicitor, which (inter alia) stated:-
“We further note that at our meeting you confirmed that you have no intention of forfeiting our clients’ deposit and that the purpose of the Completion Notice served by your client, dated 4th April 2000, the validity of which we dispute, was solely for the purpose of taking an action against our client, if needs be, to specifically perform the Contract for Sale. ”
The letter went on to note:-
“… we have not received a formal reply to our letter of 17th April 2000, which raises a number of very pertinent and important issues as to the title of the property and to the various contractual issues involved. We would ask you to now respond to what would seem quite a number of letters that we have sent to you, as your only response to date would seem to have been the service of an invalid Completion Notice.”
On 9th May 2000, the vendor’s solicitors wrote to the purchaser’s solicitors enquiring as to whether they had the authority to accept service of specific performance proceedings or whether the clients should be served personally. This met with an unequivocal and important letter of 5th July 2000, from the purchaser’s solicitors, and is pivotal to the case in its entirety and it reads as follows:-
“We refer to previous correspondence in respect of this matter. We wish to advise that we have obtained senior counsel’s opinion and confirm that your client is in breach of contract in this matter. As a result of this breach, our client is entitled to an immediate return of its deposit, together with interest and costs.
We are hereby requesting your client to return the deposit, together with interest, and provide written confirmation that it will discharge our client’s costs for investigating title in this matter within seven days.”
It is the contention of the Plaintiffs that this letter reaffirms a decision on its part to regard the failure to provide proper title, the service of the Completion Notice as a repudiation by the Defendant and the purchaser’s solicitor’s letter is an effective notice of rescission.
The matter is concluded by a latter of 11th July 2000, from the vendor’s solicitors, in the terms as following:-
“We acknowledge receipt of yours of 5th inst. We can advise that we have now located the deeds of assurance to our clients, which were previously missing. We enclose herewith copies of said deeds. We are presently attending to the stamping and registration of said deeds which should be completed by this week.
These documents are sent to you without prejudice or contention that we have already made title to the property
pursuant to the contract herein.”[emphasis added]
The case of the defendant/vendor is that it was at all times ready, willing and able to furnish title in accordance with the terms of its contract and that the objections or requisitions raised by the purchaser were unreasonable and were in fact properly met, that the Completion Notice was a valid notice and at its date the vendor was ready, willing and able to complete the sale in accordance with its obligations. The case of the plaintiff/purchaser was that the Completion was (a) invalid, and (b) by its letter dated 5th July 2000, it had validly and properly rescinded the contract and that the contract was at and end and, accordingly, that it was entitled to have its deposit returned, together with the costs of investigating title and the costs of the proceedings.
I am satisfied as a matter of law that the giver of a notice to complete a sale by which term time is made of the essence was brought into existence is as equally bound thereby as the recipient of the notice (see Quadrangle Development and Construction Co. Ltd. -v- Jenner [1974] 1 WLR 68). I am satisfied that under the language of the clause, the party giving the notice must be ready and willing at the time of the giving of the notice to fulfill his own outstanding obligations under the contract (per Russel LJ in Quadrangle aforesaid at p.71 of the report). Argument was advanced on behalf of the vendor that whatever defects or deficiencies existed in the documentation prior to the service of the Completion Notice were (a) matters of conveyancing only and did not go to title, and (b) that the purchaser could be obligated to accept evidence of a secondary character concerning title, in all the circumstances of the case set out in the documentation.
In this case, I do not believe that to be so. There were too many inconsistences and frailties in the documentation proffered by the Defendant/Vendor to obligate a purchaser to accept the title in the fashion in which it was being piecemeal advanced and with a number of inaccuracies which only heightened the sense of apprehension of the Plaintiff. I find these to be matters of fact. The fact that the Plaintiff queries the validity of the Completion Notice does not detract from the fact that the vendor held themselves out as ready, willing and able to complete the sale as of the date of the notice, and that any time thereafter up to and including the 28 days of its intended effectiveness. It was never withdrawn and the fact that the matters proceeded at a leisurely pace before or thereafter does not detract from that basic fact. As stated by Russel J in Jennez aforesaid, completion of contract is an activity in which parties co-operate and each party agrees to do all that is necessary to be done to carry out the task. A term of which time becomes of the essence binds both parties and the Plaintiff was entitled to terminate the contract on 5th July 2000, both because of the failure by the Defendant to make good title and the Defendant’s inability to complete the contract in accordance with the Completion Notice. In this regard, there was no waiver by the Plaintiff of its entitleme4nt to treat the inability of the Defendants to close the sale as a repudiation of the contract. Protests about the validity of the Completion Notice do not amount to such a waiver. It is true that there is law to the effect that the right to rescind a contract which has been repudiated may be lost unless it is exercised promptly. I am satisfied that it was exercised promptly in the instant case. Subsequent events and occurrences may readily cause a loss of that right; ie, the vendor may be enabled to mend his hand and restore and revert to his original position, but so long as the vendor maintains the position that gives the right to election, then he preserves and keeps open the purchaser’s right.
In this, as in many other cases of vendor and purchaser, when difficulties arise, there is a good deal of posturing taken up in the correspondence and this was conceded in the submissions made to the court. I am satisfied and find as a matter of fact and of law that this case, that as of the date of the service of the Completion Notice the vendor was not in a position of being ready, willing and able to comply with its obligations. The purchase unequivocally and promptly exercised his right of election to rescind. Consequently, the Plaintiffs are entitled to recover the amount of the deposit, together with interest thereon.
Barclay’s Bank v Breen
Supreme Court
24 April 1956
[1962] 96 I.L.T.R. 179
Maguire C.J., Lavery, Kingsmill Moore, O’Daly, Maguire JJ.
Budd J.
This case has been very well argued and I have received considerable assistance from counsel on both sides. Unfortunately I have to decide which of two innocent parties is to suffer, the widow whose interests are represented by the Bank, or Mr. Breen, the defendant in this case.
On the 12th September, 1950, the defendant agreed to purchase from the Bank who are the executors of the late Lourdes Sinnott Murphy certain lands at Garrynew which are the subject-matter of this action. He was aware that Mr. Godfrey was the solicitor having carriage of the sale of the property and that such sale was to be completed in Mr. Godfrey’s office. This sale has never been completed and each party to this action is seeking specific performance of the purchase agreement from the other. The plaintiffs are now registered as full owners, and therefore in a position to complete the sale; the defendant has been in possession of the lands from a date prior to Christmas of 1950. The deposit of £265 was paid by Mr. Breen to the auctioneers pursuant to the Conditions of Sale, and they, for some reason, paid that amount to Mr. Godfrey on the 29th September, 1950, which left £1,060—the balance of the total purchase price of £1,325—due to the Bank by the defendant.
With his letter of the 11th December, 1950, to Mr. Godfrey, Mr. Breen enclosed a cheque for that balance of £1,060, the cheque being payable to Mr. Godfrey. Mr. Godfrey then made certain payments on account to the *179 plaintiffs; £100 on the 17th November, 1951, £500 on the 31st January, 1952, and a further £100 on the 10th May, 1952, making a total of £700 in all. That left a balance of £360 unpaid by the defendant so far as the plaintiffs were concerned Mr. Godfrey said that he could not pay the balance and the whole cause of this action is that, while this sum of £360 has never reached the Bank, Mr. Breen alleges that he has paid the Bank by means of this cheque made payable to Mr. Godfrey.
On the authority of Re Bellamy and Metropolitan Board of Works (1883) 24 Ch. D. 387 and of Viney v. Chaplin (1858) 2 De G. & J 468, it would appear clear that a solicitor as such, and by virtue merely of his employment in completing a purchase, has no authority to receive purchase money from a purchaser on behalf of his client, but requires a special authority to do so. By virtue of s. 56 of the Conveyancing Act, 1881, a purchaser can, however, get a good discharge for a payment made by him to the vendor’s solicitor in the circumstances set out in the section:—“Where a solicitor produces a deed, having in the body thereof or indorsed thereon a receipt for consideration money or other consideration, the deed being executed, or the indorsed receipt being signed, by the person entitled to give a receipt for that consideration, the deed shall be sufficient authority to the person liable to pay or give the same for his paying or giving the same to the solicitor, without the solicitor producing any separate or other direction or authority in that behalf from the person who executed or signed the deed or receipt”. Trustees were held in Re Bellamy and Metropolitan Board of Works not to come within the section, unless they were expressly empowered by the terms of the trust to give a good discharge to a purchaser in such circumstances. By s. 7 of the Trustee Act, 1893, a trustee vendor is placed in the same position as an ordinary vendor. Accordingly, the possession of an executed deed or of a deed indorsed with a receipt for the consideration, signed by the vendor, is equivalent to a special authority to a solicitor for a vendor to receive the purchase-money. If a solicitor has such a deed, duly executed, in his possession he is authorised to receive the purchase-money.
In this case no deed had been executed, and no receipt had been indorsed by the Bank, when Mr. Godfrey received the sum of £1,060 from the defendant. Undoubtedly this £360 which Mr. Godfrey received from Mr. Breen never reached the plaintiffs. Mr. Godfrey had no authority to receive this money and, if there were nothing more to it, the plaintiff would be entitled to recover the £360 as part of their relief in their action for specific performance.
The defendant says however that Mr. Godfrey purported to receive the sum of £1,060 as the plaintiffs’ agent and that the plaintiffs, with knowledge of all the material circumstances surrounding the transaction, by their conduct between 5th October, 1951, and 12th August, 1953, ratified the action of Mr. Godfrey, who, the defendant says, was then acting or purporting to act as agent for the plaintiffs. The defendant further says that the plaintiffs are not entitled to succeed, first, because of their laches and delay in notifying the defendant that the purchase-money paid to the plaintiffs’ solicitor had not been received by them, and secondly, because of their laches and delay in bringing these proceedings.
To deal first with the question of ratification it is essential for the defendant, in order to succeed on that ground, to be able to show that Mr. Godfrey, in collecting the sum of £1,060 from the defendant, purported to act as the plaintiffs’ agent. I understand that the correctness of this proposition of law is not questioned; it is found in Banque Jacques-Cartier v. Banque d’Epargne de Montreal (1887) 13 App. Cas. 111, and also in the case mentioned by Mr. Pringle this afternoon Imperial Bank of Canada v. Begley [1936] 2 All. E.R. 367.
Did Mr. Godfrey at the material time purport to act as the plaintiffs’ agent? The onus of proving this matter rests on the defendant. In considering Mr. Godfrey’s actions, I should have regard to the surrounding circumstances and approach the consideration of what he wrote or did at that time in the light thereof. On one hand, he was the solicitor having carriage of the sale, and in whose office the sale was to be completed. On the other hand, he was the solicitor for the purchaser as well as for the plaintiffs, and as such would require to collect the money from his client, the purchaser, to pay the plaintiffs or to arrange for its payment direct to the plaintiffs. He had not yet at that time got into his hands the document which was essential to enable him to complete the sale, namely, a conveyance to the defendant executed by the plaintiffs.
It is in the light of these circumstances, I repeat, that I must consider Mr. Godfrey’s actions at that time. The cardinal factor is the letter written by Mr. Godfrey to the defendant on the 4th December, 1950. It was in reply to that letter that the money was sent to Mr. Godfrey and I have to determine whether that letter viewed in the light *180 of all the surrounding circumstances indicates that Mr. Godfrey purported to act as the plaintiffs’ agent. That letter, which is headed with the address of Mr. Godfrey’s office in Gorey and expressed to be addressed to the defendant subsequently reads as follows:—
“Dear Mr. Breen,
Re Murphy to You
I would be glad to receive your cheque for £1,060 balance of the Purchase Money herein, as I want to send the Deed of Transfer to Barclay’s Bank for execution and it will take some time to have it stamped and registered. Will you also please confirm that this holding is to go into your name.
It has just been reported to me that John Whelan of Ballylusk is trespassing on Garrynew, that he has levelled the bounds fence on the premises and cut some trees on the lands purchased by you and taken them away. I believe he told the herdman your Mother gave him permission to do this but I thought you’d better know.
Yours very truly, William E. Godfrey.”
To analyse that letter more clearly; the second sentence and the whole of the second paragraph thereof were plamly written by Mr. Godfrey as solicitor for Mr. Breen. It is as regards the first sentence that I have to ask myself whether, there is any indication there that Mr. Godfrey purported to act for the plaintiffs and to collect the money on their behalf. The letter was written a week before the closing date, when the Bank could have no conceivable right to demand the purchase-money. It is more significant to point out that Mr. Godfrey never expressly states therein that he is collecting on behalf of the plaintiffs—he merely refers to “sending the deed to Barclay’s Bank for execution”. That amounted to saying in so many words that he was not yet in a position to close and that the time had not yet arrived when the Bank were entitled to receive the purchase-money, as they had not yet taken the requisite steps to entitle them to receive it. I can only construe that letter as a demand for the purchase-money by a solicitor from his own client. To apply a simple test, if Mr. Breen had demanded the return of his money within the week, would Mr. Godfrey have had any option but to pay it back? He would not, because during that period Mr. Godfrey could only be regarded in law as holding the money as trustee for the defendant. That state of affairs is inconsistent with the allegation that he received the money as agent or as purporting to act as agent for the plaintiffs, in which circumstances he would have been obliged to pay it over to them on demand and he certainly could not return it without his principal’s authority.
The result of my findings is that Mr. Godfrey, in seeking and obtaining payment of the sum of £1,060, never purported to act as agent for the plaintiffs. Apart from the defence of delay, that in itself is sufficient to conclude the case, but there are other matters, which have been raised on behalf of the defence, with which I feel that I should deal, in deference to the arguments of counsel for the defendant, namely the plea of ratification. For the purpose of dealing with it I must proceed on the false assumption that Mr. Godfrey had, contrary of course, to my findings, purported to act as the plaintiffs’ agent in seeking and receiving payment of the sum of £1,060.
In order that the defendant could succeed on the plea of ratification it would be necessary that the defendant should be able to show that the plaintiffs had full knowledge, at the time of the alleged act of ratification, of the material circumstances existing at the time of the purported act of agency. This proposition was not controverted but authority for it will be found in the judgment of Lord Fitzgerald in Banque Jacques-Cartier v. Banque d’Epargne de Montreal already referred to. The plaintiffs are alleged by the defendant to have ratified the acts of Mr. Godfrey, purporting to act as their agent in seeking and in obtaining the balance of the purchase-money by their conduct and statements between the 5th October, 1951, and the 18th August, 1953. The acts from which I am asked to imply ratification are that during the major part of that period they were seeking and accepting payments on account of the balance of the purchase-money from Mr. Godfrey: that they permitted the defendant to remain in possession of the lands at a time when no conveyance had been executed and when the major portion of the purchase-money had not been received by them, and that they failed to inform the defendant of any complaint against Mr. Godfrey in regard to the purchase-money.
The following, to my mind, are the facts which it would have been material for the plaintiffs to know at the time of the alleged ratification in order to form a proper judgment on the matter:—
(a) that Mr. Godfrey had acted or purported to act as their agent, and that he had received or purported to receive the purchase-money as such agent,
(b) that Mr. Godfrey was also acting for the defendant, which, I believe, the plaintiffs did not know until April, 1953; *181
(c) that Mr. Godfrey had obtained the deposit from the auctioneers;
(d) that Mr. Godfrey had let the defendant into possession of the lands and the terms on which the defendant had been let into possession;
(e) that Mr. Godfrey had written the letter of the 4th December, 1950, requiring payment of the balance of the purchase-money for a manifestly untrue reason.
I believe that the plaintiffs did not, up to the 30th April, 1953, know of these material facts and they could not therefore ratify up to that date.
Did they ratify after that date? Mr. Pringle had made the point that it has not been pleaded that any specific act of ratification took place after that date. It is pleaded, however, that ratification took place between the 5th October, 1951, and the 12th August, 1953, and I propose to deal with the case on the basis that the ratification suggested by the defendant may have taken place before the 12th August, 1953, and after the 30th April, 1953. The only suggested act of ratification taking place after that latter date is the plaintiffs’ letter of the 18th June, 1953, which, it is submitted, in its terms shows a ratification of Mr. Godfrey’s acts. To my mind that letter is merely one in which the Bank very properly ask for information before they decide what precise course they will pursue. On reading what Mr. Godfrey would have to say in reply, they might decide either to accept the situation as it stood and sue Mr. Godfrey for the balance of the purchase-money or not to accept the situation and to sue Mr. Breen for specific performance. We know now that their decision was to call on Mr. Breen to complete the purchase.
In all the circumstances, I hold that the plaintiffs were not in a position to assess the circumstances surrounding Mr. Godfrey’s receipt of the purchase-money at any time prior to the 30th April, 1953, and that, after that date, they did not purport to ratify his acts. Any acts of the plaintiffs prior to the 30th April, 1953, which might have seemed to amount to a ratification of Mr. Godfrey’s acts, had not in law the result of ratifying such acts.
I have still to deal with the plea of laches. With regard to the alleged failure of the plaintiffs to notify the defendant that portion of the purchase-money paid by the defendant to the solicitor and agent of the plaintiffs (as it is pleaded) had never been received by them. I doubt whether the allegations, if sustained, would amount to laches in the legal sense but, for such a plea to be maintainable in this particular case, the plaintiffs would have had to be shown to know that Mr. Godfrey had received the money as agent for them before they could have conveyed such information to the defendant, and, on my findings, they did not know and could not have known such a fact. With regard to the plaintiffs’ alleged delay in bringing this action, this is a plea which was never seriously relied on by counsel for the defendant. The purchaser has been in possession of the lands and enjoyed the rents and profits thereof since December, 1950 but he did not furnish the plaintiffs with a draft transfer until August, 1954. To my mind it is the defendant who is in delay in performing his part of the contract.
The proper order for me to make is to give a decree for specific performance to the plaintiffs with costs, together with the usual accounts and inquiries unless the defendant agrees now to accept the title which appears clear, and the claim for damages is waived. I sincerely hope that these inquiries will not have to be held and that Mr. Breen, the sufferer by my decision, will be saved their expense. I will dismiss the counterclaim without costs and in the particular circumstances of the case my view is that I should not order an inquiry concerning the rents and profits of the lands. If the title is accepted and the plaintiffs do not press their claim for damages the inquiries as to title and damages will be unnecessary.
From the above judgment the defendant appealed to the Supreme Court.
Maguire C.J.
Mr. Justice Lavery will read the judgment of the Court.
Lavery J.:
This is an action for specific performance claiming performance of a contract for the sale of a farm of land known as Garrynew near Gorey in the County of Wexford sold by the plaintiffs as executors of one, Lourdes Sinnott Murphy, deceased, to the defendant at a public auction held on the lands on the 12th September, 1950. The contract is not in dispute and the defendant on his part counter-claims for specific performance of it.
The plaintiffs say that part of the purchase money, £360, remains unpaid and claim payment of this sum with interest thereon till payment.
The defendant claims that the purchase money has been paid by him in full and that he is entitled to a transfer forthwith without further payment.
The defendant in fact has paid the full purchase money; £265, part thereof to the auctioneers as a deposit for which sum it is admitted he is entitled to credit and the balance of the purchase price £1,060 to Mr. Godfrey the solicitor having carriage of the sale who, he claims, was the authorised agent of the plaintiffs to receive the purchase money and give a discharge for it.
Mr. Godfrey, as I will explain, in fact paid to the plaintiffs sums amounting to £700, part of the purchase price, and made certain other payments on behalf of the plaintiffs.
The plaintiffs deny the authority of Mr. Godfrey to receive any part of the purchase money but they are willing to give credit for the £700 actually received by them.
The plaintiffs, as I have stated, are the executors of L. S. Murphy, deceased, whom I shall hereafter refer to as “the testator.” He was the owner of the lands sold.
The plaintiffs, having been referred in some way which does not appear, to Mr. Godfrey wrote him a letter which is undated but appears to have been written in the last days of March 1950, making enquiries about the lands and giving certain particulars of the estate of their testator.
Mr. Godfrey replied by letter dated 1st April, 1950, and was able to inform the plaintiffs that he and his predecessors in practice had acted for the family of the testator for many years and he gave short but complete particulars of the title to the lands.
The lands were registered in the Land Registry but the testator had not obtained registration and his father, William George Murphy, still appeared as the registered owner subject to equities.
The testator, by virtue of a marriage settlement and a deed of appointment which were in Mr. Godfrey’s possession, would have been entitled to be registered as full owner and there was no apparent difficulty—and the event proved that there was none—in having the note as to equities discharged and the plaintiffs registered as full owners in their character as executors.
Thereupon the plaintiffs instructed Mr. Godfrey to sell the lands and the subsequent course of events fully appears from a very voluminous correspondence which I shall attempt to summarise and set out so far only as is material to determine the issues. *183
By letter dated 3rd April, 1950, the plaintiffs instructed Mr. Godfrey in these terms:
“We should be grateful if you would kindly now act on our behalf in dealing with any legal formalities in connection with proof of our title and the ultimate disposal of the property”.
By letter dated 6th April, 1950, Mr. Godfrey accepted these instructions and wrote—“I shall be happy to act for you in putting the title in this matter in order and disposing of the lands”.
There was a project to attempt a sale by private treaty but eventually it was determined to put the lands up for sale by auction and Conditions of Sale were settled by Mr. Godfrey and Messrs. Warren & Co., auctioneers, Gorey, were instructed by him to sell by public auction.
The auction was held on the lands on the 12th September, 1950, and the defendant, Mr. James Joseph Breen having bid £1,325 was declared the purchaser and signed the memorandum on the Conditions of Sale and paid the deposit of 20% of the purchase price, i.e., £265 and the auction fees to the auctioneers as provided for by the Conditions.
Incidentally this price exceeded by a considerable amount the price expected.
Immediately after the auction the defendant instructed Mr. Godfrey to act as his solicitor in the transaction.
The Conditions of Sale provided:
“4. The purchaser shall pay the remainder of the purchase money on the 12th day of December, 1950, at the office of William E. Godfrey, vendor’s solicitor at which time and place the purchase is to be completed, and if from any cause whatever the purchase shall not be completed on that day the purchaser shall pay to the vendor interest at the rate of £6 per cent, per annum on the remainder of the purchase money from that day until the completion of the purchase but without prejudice to the vendor’s right of re-sale.
“5. The purchaser shall be entitled to the possession and the receipt of the rents and profits of the property from the said 12th day of December, 1950. The vendor will pay all rates and taxes up to that date, and other outgoings up to the last gale day and from those days the outgoings shall be discharged by the purchaser, and such outgoings shall if necessary be apportioned to said dates whether apportionable by law or not.”
On the 4th day of December, 1950, Mr. Godfrey wrote the defendant a letter which the trial judge, Budd J. regarded as a critical letter requiring interpretation to determine the first issue in the action.
The first paragraph of this letter reads:
“I would be glad to receive your cheque for £1,060 balance of the purchase-money herein as I want to send the Deed of Transfer to Barclay’s Bank for execution and it will take some time to have it stamped and registered”.
By letter dated 11th December, 1950, the defendant wrote Mr. Godfrey.
“I am in receipt of yours of the 4th instant and enclose herewith cheque for £1,060.”
This letter, with the cheque made payable to Mr. Godfrey, was received by him on the 12th December, 1950 the date fixed for completion and on the 13th December, 1950,
Mr. Godfrey issued a receipt therefor in these terms:
“Reps Murphy to Breen.
Received from Mr. Breen, Raheenduff, the sum of £1,060 balance purchase money herein”.
This receipt was duly stamped.
The issues in this action as argued are, first, whether this sum was paid to Mr. Godfrey as the agent of the vendors authorised to receive it and give a discharge therefor and second, whether, if Mr. Godfrey had no actual authority to receive and give a discharge on behalf of the vendors he purported so to do and, if so, whether the authority which he asserted was subsequently ratified by the plaintiffs so as to discharge the defendant.
There is no real dispute as to the law applicable and the issues really are no more than the interpretation and legal effect of the correspondence and the other actions of the parties.
It is clear that a solicitor has no implied authority as such to receive the purchase-money for property sold except on production of a deed duly executed and containing a receipt for the consideration by the person entitled to give a receipt therefor (section 56 Conveyancing Act, 1881). No deed was executed or produced and therefore this section does not require to be considered.
On the first issue therefore whether the payment on the 12th December, 1950, was effective to discharge the purchase-money depends not on any authority to be implied from Mr. Godfrey’s position, as solicitor for the vendors, but on whether an express authority is to be found in the terms of the plaintiffs’ letters and their conduct. *184
The extent of an agent’s authority is to be determined first by the express instructions given him and second on such implications as may arise from the conduct or situation of the parties or from necessity.
The express instruction is to be found mainly in the letter of the 3rd April, 1950, which I have already quoted. It is argued that the instruction to deal with “the ultimate disposal of a property” and the reply thereto of the 6th April—“I shall be happy to act for you … in disposing of the lands” gave Mr. Godfrey a wider authority than would arise from his mere appointment as solicitor with carriage of the sale and in particular would authorise him to receive and give a discharge for the purchase-money.
It is said further that the relations between the plaintiffs and Mr. Godfrey, both prior to the date of the instruction to sell, and subsequent thereto, authorised him to act on behalf of the plaintiffs as executors in the winding up of the testator’s Irish estate and again in particular to receive the purchase money and to make thereout such payments as might be necessary in the administration of the estate and in the completion of the title with the obligation of course when this had been done to remit the balance to the plaintiffs. The correspondence establishes that Mr. Godfrey was directed to arrange the sale of certain furniture in the dwellinghouse on the lands and certain other articles namely galvanised iron and to collect the proceeds of such sales and to collect certain rents.
Mr. Godfrey carried out these instructions and collected from Messrs. Warren the auctioneers, the rents of the property payable in a previous year and the proceeds of these sales and remitted them to the plaintiffs.
I do not consider it necessary to extend this judgment by referring to the correspondence on these matters in detail.
It is further said and the fact undoubtedly is so that the preparation of the Conditions of Sale and its provisions were committed entirely to the discretion of Mr. Godfrey and that the plaintiffs did not at the time nor at any time thereafter make any enquiry about these Conditions or whether, as the fact was, the purchaser had on payment of the purchase money been put into possession of the lands.
The defendant was given this possession by Mr. Godfrey within a few days of the 12th December, 1950, and thereafter occupied the lands on his own, discharging all outgoings.
It is the view of the Court that the letter of the 3rd April and these surrounding circumstances establish that Mr. Godfrey was more than the solicitor for the vendors having carriage of the sale and that he was, in fact, authorised to act as the plaintiffs’ agent in all respects in relation to the testator’s Irish affairs and in particular to receive the purchase-money and give a discharge therefor.
The subsequent course of events which I shall have to examine in relation to the second issue go far to support this conclusion.
It is agreed by Mr. McGonigal and Mr. Pringle that these subsequent matters may be looked to to determine the nature and extent of Mr. Godfrey’s actual authority.
This conclusion would be sufficient to determine the action in favour of the defendant and to entitle him to an order for specific performance on his counterclaim.
Nevertheless as the other issue raised, in the opinion of the Court, so clearly leads to the same conclusion it is considered well to deal with it.
If, contrary to the view expressed, Mr. Godfrey had no actual authority on the 12th December, 1950, to receive the purchase-money and give a discharge therefor it has to be considered whether on that date he purported so to do and if he did whether his action was subsequently ratified by the plaintiffs so as to bind the plaintiffs and effectively to discharge the defendant from payment of any part of the purchase price.
If these matters are established then the maxim “ omnis ratihabitio retrotrahitur et mandato priori aequiparatur” should be applied. The issue, as well as the one already dealt with, should be determined contrary to the view taken by the learned trial judge. A Court of appeal naturally gives great weight to the conclusions of fact and inferences of fact reached by a trial judge but in the present case where the transactions were entirely carried out by correspondence and no real question of credibility of witnesses arises the appeal court is equally well able to examine the evidence and reach its own conclusions. It is true that Mr. T. E. Sone, the Manager of the Trustee Department of the plaintiffs, gave important evidence but, while the Court acquits him of any desire to misrepresent the position, we are bound to say that his evidence as to his state of mind at particular points is difficult to reconcile with the letters written by him and other officers of his Department and where a conflict might seem to appear the contemporary record should be preferred.
The correspondence is extremely lengthy and the members of the Court have read and considered it carefully. I shall have to refer to some of the more important letters but *185 generally we consider the conclusion inescapable that up to the month of August, 1953, the plaintiffs continued to regard Mr. Godfrey as their general agent to make such payments as might be necessary in the winding up of their testator’s estate and that at no time did they question his authority to have received the purchase money on their behalf and to apply it.
On the second issue the first matters to be determined are whether in receiving this payment Mr. Godfrey, on the assumption that he had no actual authority, did represent to the defendant that he was claiming the balance of the purchase money as agent for the vendors, whether it was so paid, and whether he purported to give a discharge as agent for the vendors.
The defendant positively testified that he understood the letter of 4th December, 1950, to be a demand by the plaintiffs as vendors, for the money and that he paid it to Mr. Godfrey as solicitor and agent for the vendors on the date fixed for closing which in his opinion was the date on which he was bound to pay it. We accept this evidence fully. He gave his reasons for making a payment which was said to be unusual because he was not obtaining an executed deed of transfer and these reasons satisfy the Court. This of course would not be in itself sufficient as the critical question is in what character was the payment called for and in what character was it received. I read the letter of the 4th December, 1950, which I have quoted as a demand on behalf of the plaintiffs and I certainly read the form of receipt as a receipt given by Mr. Godfrey for the balance of the purchase-money as agent for the vendors. An important feature of the case is that from the 12th December, 1950, till August, 1953, neither Mr. Godfrey nor the plaintiffs demanded any release of the whole or any part of the money from the defendant but treated it in the hands of Mr. Godfrey as the proper moneys of the vendors. I have mentioned that certain small payments were made by Mr. Godfrey on behalf of the vendors out of this balance of purchase money or at least were made without any other funds being available for their payment.
We conclude, therefore, that Mr. Godfrey did claim to act as agent for the vendors in receiving the money and in giving the receipt therefor.
The conditions necessary for ratification were fully discussed in argument but there is no doubt as to the principles applicable. The first is that at the time the act is done it should be done in purported exercise of an authority from the principal. As I have explained in the opinion of the Court this condition is satisfied.
It is further necessary that in order that a person may be deemed to ratify an act done without his authority that, at the time of the ratification, he should have full knowledge of all the material circumstances in which the act was done unless he intended to ratify the act and take the risk whatever the circumstances may have been. But it is not necessary that he should have knowledge of the legal effect of the act or of collateral circumstances affecting the nature thereof. I quote this statement of the principle from Bowstead on “The Law of Agency” (10th Edition), page 39. It was accepted as an adequate and correct statement.
The act done in this case was simply the receipt of the entire purchase-money of the lands sold and it seems to us that the only material circumstance was the payment. I cannot think that any other circumstance save perhaps the solvency and continued solvency of the agent need be considered. The solvency of a person who is allowed to receive money for a principal or whose receipt of money in purported exercise of an authority which is said to have been afterwards ratified is no doubt an important consideration but can it be regarded as a material circumstance if the intention to ratify is established? Every person who allows another to receive moneys on his behalf and to retain them must be deemed to have satisfied himself of the solvency of such person or to have taken the risk, if risk there be, that the agent either by original appointment or by subsequent ratification may misappropriate the money or, when its payment is demanded, prove insolvent.
Passing over a number of letters between the plaintiffs and Mr. Godfrey, on the 5th October, 1951, the plaintiffs wrote:
“We should be obliged if you could now let us have a portion, say half of the proceeds of the sale of the land at Garrynew, assuming that this money has been paid into your hands.”
This would appear to the Court to be a recognition of Mr. Godfrey’s original authority to receive the money but at least it is a ratification of his having received it on the plaintiffs’ behalf if, in fact, he had done so.
On the 17th November, 1951, Mr. Godfrey wrote to the plaintiffs—“I am still awaiting a clearance from the Estate Duty Office in this case but for the present I enclose you cheque for £100 on account which will help the widow”. *186
In answer to an enquiry Mr. Godfrey wrote again on the 22nd November, 1951,—“The payment I sent you is on account of the purchase of the lands”. It is to be noted that Mr. Godfrey had no funds belonging to the estate other than the purchase-money of the lands and that the plaintiffs asked for and obtained this payment in order to apply it for the benefit of the beneficiary of the estate.
On the 29th January, 1952, the plaintiffs wrote Mr. Godfrey—“We should be glad if you would now advise us whether the proceeds of sale of the property are in your possession and, if so, we should be glad if you would let us have a payment of say £500 on account of the final total”.
On the 31st January, 1952, Mr. Godfrey replied—“I have the balance purchase-money but it is on deposit. However I enclose you cheque for £500 on account as requested”. This seems to me to be an explicit statement that he has collected the balance purchase-money for the plaintiffs and I cannot accept the suggestion that the reference to it being on deposit could convey that he held it in some way in suspense for the vendor and purchaser pending completion. If he did so hold it he could not make the payment of £500 and as I have already pointed out there was no reference therein either by the plaintiffs or Mr. Godfrey to any right or interest of the defendant as purchaser to resist the application for the purposes of the estate of the money he had paid.
Passing over several other letters which evidence the same state of mind, the plaintiffs wrote on the 27th March, 1952,—“It would greatly facilitate matters if you could let us have the balance of the moneys due together with a full statement and a statement of rents pending the issue of this certificate” (i.e., a certificate of discharge from the Inland Revenue). I forbear dealing with the subsequent correspondence save to note that a further payment of £100 was made by Mr. Godfrey to the plaintiffs on the 10th May, 1952, again without reference to any rights of the defendant as purchaser to resist such payment being made.
The Court cannot understand the course of events in any sense other than that if the plaintiffs had not in fact authorised Mr. Godfrey to receive the balance of the purchase-money that they afterwards became aware that he had so received it and that with knowledge of this fact they ratified his action. In fact, they have received not only £700 directly paid to them but also credit for other payments due by them out of the balance of the purchase-money.
The conclusion, therefore, is that the defendant has established that he paid the balance of the purchase-money to the agent of plaintiffs’ the vendors, that he was given a discharge therefor and that either, because of an actual authority existing at the time or by subsequent ratification, he is entitled to claim that the purchase-money has been paid in full. Accordingly, the title being in order and the plaintiffs being the registered owners discharged from equities the defendant is entitled to an order for specific performance. The plaintiffs’ claim should therefore be dismissed and an order made on the defendant’s counterclaim.
Gibson v Butler
Circuit Court
16 June 1964
[1965] 99 I.L.T.R 116
Judge Durcan
Galway, June 16, 1964
In March 1962 the Plaintiff, who lived in Co. Kildare, made an agreement with the defendant to buy from him a small plot of land in Connemara, Co. Galway, as a building site, for £200. There was evidence that there had been a written memorandum of the agreement, made at the time, which was lost, but the terms of the agreement could be gathered from the subsequent correspondence between the parties and their solicitors. The parties became on friendly terms, and the plaintiff employed the defendant to arrange and supervise certain works on the site during the following months.
The parties’ solicitors commenced a correspondence, and on the 17th April the plaintiff was sent a copy Folio, with Land Registry Map, and the necessary form of application to the Land Commission for then consent to the sub-division, completed and signed by the defendant. The map was returned on the 16th July, but the plaintiff retained the application to the Land Commission, although it was needed to complete the sale. Between July and September there was no correspondence between the parties, and it appeared that the plaintiff’s solicitor was having difficulty in getting in touch with his client. There was a further gap in the correspondence between the 2nd January, 1963, and the 5th July, 1963, and on the latter date the defendant’s solicitors served a notice to complete the sale by August 1st, offering to return the £20 deposit if so requested within six days. There was evidence that shortly before this the defendant had received an offer for the purchase of a larger holding, including the one in dispute, from a large concern for development as a tourist site. On the 22nd July, the plaintiff’s solicitor indicated his client’s willingness to complete, and on the 31st July, he posted a Bank Draft for £180 (the amount of the purchase money outstanding), together with completed application for the Land Commission’s consent to the sub-division, to the defendant’s solicitors in Galway. This reached their office on the 1st August, but on that date all offices in Galway were closed to the public for the Galway Races. The Bank Draft and papers were returned to the plaintiff’s solicitor on the 2nd August with a letter refusing to proceed with the sale, the defendant purporting to forfeit the deposit of £20. The Civil Bill was served in April, 1964.
Judge Durcan giving judgment said that this was an action for specific performance of an agreement made in March, 1962, for the sale for £200 of a plot of land of about three acres in Connemara. He said that at that time the parties were personal friends, and each fully trusted the other. Neither suspected that the other would be guilty of any default in completing the agreement, nor did they feel it necessary that it should comply with all the legal formalities. The purchaser paid the vendor £20 as a deposit. If all had gone according to plan the agreement would have been completed within a few weeks. However, nothing was done by the parties, except for an occasional exchange of letters between the solicitors, and between January and July, 1963, not even one letter passed. In July, 1963, there was a sudden re-awakening of interest on the part of the defendant, and on that date his solicitors served on the plaintiff a notice of intention to forfeit the deposit and terminate the agree *116 ment if it were not completed by the 1st August, 1963.
The question that now arose was whether or not this notice was effective to terminate the agreement. On the date specified in the notice the purchaser’s solicitor had delivered to the vendor’s solicitors the documents necessary to complete the sale, togther with a Bank Draft for £180, the unpaid balance of the purchase price. If the purchaser had himself attended at the vendor’s solicitors’ office in Galway on the 1st August, 1963, to complete the sale he would not have been able to do so as in accordance with local custom all offices in Galway were closed on that day, one of the days of the Galway Races.
Having regard to that fact, and to the fact that the notice was served only after a period of eighteen months almost complete inactivity, his Lordship took the view that the notice was not effective to terminate the agreement, and that the vendor was not now entitled to treat it as terminated.
But the purchaser had been guilty of considerable delay, and the defence of laches had been raised. Under these circumstances, was the plaintiff entitled to specific performance, or should he be left to his remedy at common law? His Lordship considered that neither party deserved much sympathy, as nothing had been done for so long, but he did not think that in a Court of Equity the defendant should be relieved from the obligation to perform his agreement specifically; and accordingly he granted a decree for specific performance to the plaintiff, but (on account of the plaintiff’s delay) without costs.
Healy Ltd. v. Alliance Ltd.
[1974] IR 443
Kenny J. 443
By a written contract made on the 20th April, 1972, the plaintiffs agreed to sell three lots of land at Sandymount, Dublin, to the defendants. The form of contract used was that which has been issued by the Incorporated Law Society of Ireland as being appropriate for a private sale and it contained general conditions and special conditions in the second schedule. The purchase price of lot 1 was £50,000 and a deposit of £10,000 was paid. The purchase price of lot 2 was £40,000, and the purchase price of lot 3 was £60,000. The three lots were held by the plaintiffs under a lease dated 31st July, 1970, for 10,000 years at a yearly rent of £1.
Clause 3 of the general conditions reads: “The purchase of the property shall be completed and the balance of the purchase money paid by the purchaser on the date for completion specified in the said memorandum hereto (hereinafter called ‘the closing date’) at the office of the vendor’s solicitor: and if for any cause whatever, other than the wilful default of the vendor, the purchase shall not be completed on that day the purchaser shall pay to the vendor interest at the rate specified in the said memorandum on the balance of his purchase money remaining unpaid from the closing date up to the date of actual completion. Provided always that in respect of any period during which interest at the rate aforesaid shall be payable the vendor shall have the option of taking, instead of the said interest, the rents and profits of the property less the outgoings (or in either case an apportioned part thereof if the case so requires) and provided always this condition is without prejudice to the rights of the vendor to rescind contract (sic) under clause 4 of the special conditions contained in the second schedule.” There is no closing date specified in the memorandum but clause 3 of the special conditions provides that the purchase of lot 1 was to be completed on the 30th June, 1972, when the purchaser was to pay to the vendor the sum of £40,000 the balance of the purchase money of lot 1 and that the purchase of lot 2 should be closed on the 30th June, 1973, and that of lot 3 on the 30th June, 1974. The memorandum stipulates that the rate of interest payable is to be 12% per annum.
Clause 5 of the general conditions reads:”The title to be shown to the property described in the foregoing particulars shall be as set out in the special conditions contained in the second schedule hereto and in case of any conflict between such special conditions and any general condition the special conditions shall prevail.”Clause 6 provides that, within ten days from the date of signing of the memorandum, the vendor was to send to the purchaser copies of the documents necessary to vouch the title to be shown in accordance with and subject to the conditions; and clause 7 provides that the purchaser, within 21 days after the delivery of the documents, shall send a written statement of all his objections to, and requisitions on, the title.
The relevant special conditions read:
“1. The title to lots 1, 2 and 3 shall commence with the said lease dated 31st July, 1970. As conclusive and final evidence of the lessors title to grant such lease the purchaser shall accept certified copies of the documents numbered 2-7 in the first schedule hereto.”
“3. The purchase of lot 1 shall be completed on the 30th June, 1972, when the purchaser shall pay to the vendor the sum of £40,000 the balance of the purchase moneys of lot 1.
4. (a) If for any reason the purchase of lot 1 is not completed on the 30th June, 1972, the vendor shall be entitled to rescind the contract for the sale of lots 1, 2 and 3 forthwith, in which event the deposit paid shall be forfeited to the vendor and no claim for costs or expenses incurred by the purchaser shall arise.
(b) Notice of rescission may be served by the vendor by leaving same at the office of the purchasers solicitors, Messrs. T. G. McVeagh and Company.”
“7. For the purposes of the various dates for closing the sales of lots 1, 2 and 3, time shall be deemed of the essence of this contract.
8. A house situate on lot 1 is in the occupation of one Robert Jameson who has no estate or interest therein. The vendor is about to issue ejectment proceedings against the said Robert Jameson.”
“12. The vendors shall procure the standard declaration of William J. Walsh that the premises were part of the Pembroke Estate and that the same are indemnified against all duties and charges referred to in the freehold title.”
The time for delivering requisitions was extended by the plaintiff’s and the requisitions arrived on the 22nd June and were answered on the 4th July. Requisition 7 reads: “Please confirm that vacant possession of the entire of the property sold will be given on completion”to which the answer was:”Possession of lot 1 only”.Requisition 10 reads:”Is there any litigation pending or threatened in respect of the property”, and the answer was:”Ejectment proceedings have been taken against R. W. Jameson.”
Years ago a most complicated mortgage suit was instituted in connection with this property. The sale of the property in that suit was completed with Mr. Jameson remaining in possession, and no application to eject him was made in the mortgage suit. When the contract was signed on the 20th April, 1972, the plaintiffs and the defendants knew that Mr. Jameson was in possession of a house on the property, that he was an elderly, difficult man and that he had no intention of giving up possession. I accept the evidence of Mr. Kiely that, when preparing the answer to requisition 7, he did not intend to convey that vacant possession of the entire property would be given. The defendants and he knew that Mr. Jameson was in possession and that he did not intend to leave. Neither the defendants nor their solicitors ever believedthat they were getting vacant possession of the entire of the property when the sale was closed.
By agreement between the solicitors at the end of June, the date of closing the sale was postponed until the week beginning the 10th July; on the 7th July the engrossment of the deed of conveyance was sent to the plaintiffs. The statutory declaration by Mr. Walsh, mentioned in the special conditions, had not been furnished on the 30th June or on the 10th July; the draft of it was not sent by the plaintiffs until the 31st July. The plaintiffs waived their right to have the sale closed on the 30th June by consenting to a later completion and they could not insist on completion on either of these dates because the statutory declaration was not available. The result of this was that time ceased to be of the essence of the contract.
When the defendants made a search in the companies registration office they discovered that a number of mortgages had been registered, and correspondence about the release of these took place. The defendants had requested that the conveyance be made to a company called Woodland Homes (Booterstown) Ltd.
On the 8th August a query was raised by the defendants’ solicitors as to the title of the access to the property from Willfield Road; on the 10th August the plaintiffs stated that they could not make title to the piece of land which provided this access. On the 11th August the plaintiffs wrote a letter in which they gave notice that unless the sale was closed within 21 days on the terms of their letter of the 10th August the plaintiffs would hold the defendants to be in breach of contract and would forfeit the deposit. On the 15th August the defendants agreed to close the sale on the basis of the property to which title could be shown, and so agreed to take the risk about the access from Willfield Road. Mr. Walsh’s declaration was not sent to the defendants’ solicitors until the 22nd August, and on the 4th September, 1972, the plaintiffs purported to rescind the contract because the sale had not been completed. The plaintiffs have now brought this action in which they claim a declaration that the contract of the 20th April, 1972, has been validly rescinded and that the deposit has been forfeited.
The defendants maintain that the plaintiffs were not entitled to rescind the contract and have counterclaimed for specific performance of it.
When the plaintiffs agreed at the end of June to postpone the closing of the sale from the 30th June to the week beginning the 10th July, they waived their right to insist on a completion on that date, and time then ceased to be the essence of the contract. Moreover the plaintiffs could not show a title in accordance with the contract on the 30th June, on the 10th July or, indeed, on the 11th August, because the declaration by Mr. Walsh was not supplied until the 22nd August. The letter of the 11th August which was not received until the 16th August by which the plaintiffs sought to limit a time for completion was in my view ineffective to do this.
When giving judgment in Holohan v. Ardmayle Estates (1964 No. 449 P) on the 7th March, 1966, I said:”I protest against the commonly-held view that one party to a contract in which time is not of the essence can make it of the essence by serving a notice. The judgments of Fitzgibbon J. in Mills v. Healy 8, of Fry J. (as he then was) in Green v. Sevin 9 and the remark of Harman J. in Smith v. Hamilton 10 (‘If time be not of the essence of the contract initially, it follows, in my judgment, that one party cannot, of his own motion, make it so; to say that by writing a letter one party can make time of the essence when it was not so before, may be a convenient but is an inaccurate way of putting it.’) refute this view. The true position is that when time is not of the essence and the vendor or the purchaser has been guilty of unreasonable delay, the other party may by notice limit a reasonable time within which the contract must be completed if the party on whom the notice is served is not to lose the remedy of specific performance and have the contract terminated against him. There has been some difference in the adjectives which have been applied to the delay which will justify the service of such a notice. In an Indian appeal, Jamshed Khodaram Irani v.Burjorji Dhunjibhai 11, in which the relevant provision in the Indian code was regarded as an expression of English law in relation to the sale of land, Lord Haldane used the adjective ‘undue’ while in Fry On Specific Performance of Contracts (6th ed.para. 1092) the statement appears that where time was not originally of the essence of the contract, but one party has been guilty of gross, vexatious, unreasonable or unnecessary delay or default in relation to it, the other party becomes entitled to limit a reasonable time within which the contract should be perfected by the other. The author then adds that it is only when such default or delay has happened that this right occurs and that there is no general right to either party to limit a time. Mr. Justice Harman in Smith v. Hamilton 12 spoke of ‘such impropriety on the part of the purchaser as entitles him [the vendor], as it were, to engraft time on the contract’.” This part of the judgment was subsequently approved13 by the Supreme Court on the 1st May, 1967.
The notice given on the 11th August, 1972, was therefore invalid because the defendants had not been guilty of unreasonable delay. It was invalid also because on the date of the notice (11th August) and on the date when it was received (16th August) the plaintiffs had not shown title in accordance with the contract. The statutory declaration by Mr. Walsh was not given to the defendants until the 22nd August. Moreover, the plaintiffs had stated on the 10th August that they could not make title to the finger of land shown on the map which gives access to Willfield Road. On the 15th August the defendants agreed to close the sale on the basis they would accept a conveyance of the property to which title had been shown and which did not include this finger. If the defendants had been guilty of unreasonable delay, the plaintiffs could serve a notice limiting time only if they had shown title in accordance with the contract before the day when they served the notice. They did not do this.
It follows that the attempt to rescind the contract which was made on the 4th September was ineffective and that the plaintiffs’ claim fails. The defendants are prepared to close the sale on the terms of the contract and have accepted the title offered. There will therefore be an order on the counterclaim that the contract of the 20th April, 1972, ought to be specifically performed. The plaintiffs’ claim will be dismissed with costs but there will be no costs of the counterclaim. In order to end this dispute I suggest that the defendants should pay interest from the 30th June, 1972, up to the date of completion and that the outgoings should be apportioned as of that date.
O’Connor v Hanvey
Court of Appeal.
4 November 1910
[1910] 44 I.L.T.R 242
Sir Samuel Walker, Bart., L.C.
We must construe this contract taken by itself. The apportionment mentioned in the statute, to which we have been referred, applies only where there is no contract. There is nothing to prevent the parties from regulating their rights. The fact that the rate was struck on March 24, 1910, does not make it a thing to be paid at once; it is not to be paid until a later period, and the purchaser was in possession during the whole of the period within which the rates might be recovered. We declare that the purchaser is, on the terms of the contract, liable for the whole of the poor rate for the financial year beginning April 1, 1910, and ending March 31, 1911.
Holmes, L.J.
The only question is whether “outgoings” include poor rate, and that is not now controverted. The Master of the Rolls in a former case, in express language, decided that it covered poor rate.
Cherry, L.J., concurred.
Dunville & Co., Ltd. v Quinn
Supreme Court of Judicature.
Court of Appeal.
28 October 1907
[1908] 42 I.L.T.R 49
In re The Postmaster-General and Colgan’s Contract.
High Court of Justice.
Chancery Division.
14 February 1906
[1906] 40 I.L.T.R 112
Barton J.
Barton, J.
[His Lordship stated the facts, and continued.]—The words “default” and “wilful” are relative terms. Each case must depend upon its own circumstances. A concise summary of their meaning is given by Stirling, L.J., in Bennett v. Stone, [1903] 1 Ch. 509.— “According to the rule laid down in Young and Harston’s Contract, 31 Ch. D. 168, a vendor commits a default if he fails to do something which he ought reasonably to do, regard being had to the terms of the contract which he has entered into with the purchaser, and is guilty of wilful default if he so fails when he is a free agent and knows what he is doing and intends to do what he does.” To this may be added an obvious corollary than an honest mistake, the result of oversight or inadvertance, is not wilful unless persisted in after the attention of the vendor has been called to it. Mere oversight or inadvertance cannot amount to wilful default. The vendor must have his attention drawn to the matter in question, and exercise his judgment or will on it before his act or default can be considered wilful. In the present case it will be found, I think, that the difficulty is not so much upon the word “wilful” as upon the word “default.” The vendor had his attention called to this very point—namely, whether the tenancies, or any of them, were yearly. But it has been argued that the vendor was right in assuming that the premises, concerning which the difficulty has arisen, were held under a quarterly tenancy, that the decision of the Recorder—that it was a yearly tenancy—was wrong, or, at all events, that the vendor did not fail to do anything he ought reasonably to have done in assuming that this tenancy was quarterly and not yearly. Although it was not known what were the terms of the tenancy agreed upon at the commencement, the vendor must be taken to have known that it appeared from the rent-book and accounts that the tenancy commenced on May 1, 1871, and that the tenant paid a yearly rent, payable quarterly. From these facts I think it was rash to assume that any Court would hold the tenancy to be a quarterly one. [His Lordship referred to Richardson v. Langridge, 4 Taunt. 128, and Doe d. Hull v. Wood, 14 M. & W. 682.] In my opinion the case stands in principle upon the same basis as Hetling & Merton’s Contract, [1893] 3 Ch. 269. [His Lordship stated the facts of that case.] I quote from the judgment of Lindley, L.J.— “If a vendor knows the material facts—knows that there are difficulties which it is his duty to overcome—knows that he may not be able to overcome them by the time fixed for completion, and he fails to overcome them by that time, although no fresh unforeseen occurrence prevents him from doing so, the delay caused by such failure on his part is attributable to his wilful default in the sense in which that expression is used in contracts of this description; and his right to interest during such delay is excluded. The vendors here knew all the facts, but they hoped that the power of attorney could enable them to remove the difficulty occasioned by the facts with which they were fully acquainted.” It was suggested that the difficulty in this case ought to be regarded as a mistake or oversight within the meaning of the decision in Mayor of London and Tubb’s Contract, [1894] 2 Ch. 524. But Lindley, L.J., in that case did not intend to depart from the judgment in Hetling and Merton’s Contract. On the contrary, he referred to it as a binding authority. In Mayor of London and Tubb’s Contract the vendor’s attention was never brought to the difficulty which arose. The point never occurred to him. Such a mistake is not wilful. It is quite otherwise where, as here, the point was directly present to the vendor’s mind, and his attention drawn both to the difficulty to be overcome and the proper way of overcoming it. [His Lordship referred to the judgments in Bennett v. Stone, [1902] 1 Ch. 226, [1903] 1 Ch. 509.] The reason of these clauses obliging the purchaser to pay interest if he does not complete on a particular day was explained by Lindley, L.J., in Woods and Lewis’s Contract, [1898] 2 Ch. 211— namely, to protect the vendor from dilatoriness on the part of the purchaser. Lindley, L.J., proceeded to explain the reason of inserting in such clauses words such as we have here—“from any cause other than the wilful default of the vendor.” What he said bears directly on the present case. The “vendor knows whether he is fixing a day for completion which is a reasonable time having regard to the difficulties which he knows he will have to deal with, and if there were not some limit put upon these clauses, either by construction or the wording of them, *113 to prevent vendors taking advantage of their own wrong, these clauses would be very oppressive.” That passage seems to me to fit this case very well. It was left to the vendor to fix the date for completion. He knew the difficulties he had to deal with. He knew the material facts. He knew the point which should guide him in fixing the day. His attention was directed to all these matters, and he looked into and considered them. He fixed a day which was an impossible one unless a tenant of valuable licensed premises, held under a yearly tenancy, consented to go out without a protest upon a notice applicable only to a quarterly tenancy. Was the vendor entitled to assume that the tenancy was quarterly, or that the tenant would relinquish her valuable interest without relying on her legal rights? I think any such assumption was rash and hazardous, and that to charge the vendor with interest for the consequential delay would be to defeat the object of this exception as to wilful default.
Lyons v Thomas
[1986] IR 666
Judge: Mr. Justice Murphy
The Law
Before considering further the conduct of the parties it may be convenient at this stage to examine the legal principles applicable to the matters in issue.
There is general agreement among the text book writers as to the nature of the obligations imposed on a vendor subsequent to the execution of a contract and before the completion of the sale. Such problems as exist in this regard relate not so much to the nature of the duty but as to its basis in law and its extent in practice.
A convenient statement as to the nature of the vendors duties under an open contract is to be found in Clarke and Ramuz 1891 2 Q.B.D. 456 at 459 by Lord Coleridge, C.J. in the following terms:-
“It appears to be well established in equity that, in the case of a contract for the sale and purchase of land, although the legal property does not pass until the execution of the conveyance, during the interval prior to completion the vendor in possession is a trustee for the purchaser, and as such has duties to perform towards him, not exactly the same as in the case of other trustees, but certain duties, one of which is to use reasonable care to preserve the property in a reasonable state of preservation, and, as far as may be, as it was when the contract was made.”
Counsel for the vendor properly drew attention to the decision of the Supreme Court in Tempany and Hynes 1976 I.R. 101 and to the fact that the majority decision in that case may cast some doubt upon the correctness of the assumption made by Lord Coleridge to the effect that a purchaser is entitled to the equitable estate in the property pending completion. In fact Kenny J. (delivering the majority judgment) said at page 114:-
“He (the vendor) is not a trustee of the beneficial interest merely because he signs a contract.”
It must be said at once (as Counsel fully recognised) that the very sentence quoted follows immediately a statement by that learned Judge in which he recognises and reiterates the duties of the vendor in the following terms:-
“A vendor who signs a contract with a purchaser for the sale of land becomes a trustee in the sense that he is bound to take reasonable care of the property until the sale is completed, but he becomes a trustee of the beneficial interest to the extent only to which the purchase price is paid.”
In his Judgment (the minority Judgment) Henchy J. at page 109 affirms the duty of the vendor in the following terms:-
“When a binding contract for the sale of land has been made, whether the purchase money has been paid or not, the law (at least in cases where their parties proceed to the stage of conveyance) treats the beneficial ownership as having passed to the purchaser from the time the contract was made; Gordon Hill Trust Limited and Segall 1941 2 A.E.R. 379. From then until the time of completion regardless of whether the purchase money has been paid or not the vendor, in whom the legal estate is vested, is treated for certain purposes (such as the preservation of the property from damage by trespassers) as a trustee for the purchaser”.
It would seem, therefore, that there is superficially, at any rate, a conflict between the authorities as to whether the duty to preserve imposed upon the vendor derives from the fact that he is a trustee for the purchaser or whether indeed the status of the vendor as trustee arises from the fact that such a duty is imposed upon him by law.
It seems to me that this conflict – which in any event is not of fundamental importance – is more apparent than real. In the Tempany case the Supreme Court was considering the nature of the interest retained by a vendor subsequent to the execution of a contract and in particular whether such interest could be captured, in the circumstances of that case, by a mortgage created under the provisions of the Judgment Mortgage Act 1850. What Kenny J. concluded in his sentence at the end of the penultimate paragraph on page 114 of the Judgment was that:-
“Until the whole of the purchase money is paid, the vendor has in my opinion a beneficial interest in the land which may be charged by a Judgment Mortgage”.
In reaching that conclusion the learned Judge was in fact recognising as had Judges in many earlier cases that the trusteeship, if that is how it should be described, of a vendor is unorthodox in as much as he clearly has a significant beneficial interest perhaps with regard to occupation or interest as well as the potential right to have the property restored to him in the event of the contract being rescinded for one reason or another. In the circumstances it seems to me to be sufficient that subsequent to the execution of a contract, and whether or not all or part of the purchase price is paid, that the vendor has (subject to any particular bargain negotiated between the parties) the duty to use reasonable care to maintain the property in a reasonable state of preservation and that this duty, which is well established in law, derives from the fact that the purchaser has a significant interest in the property and is (I am assuming) precluded from the occupation and control of the property until actual completion.
The provisions of the contract in the present case and in particular the terms of what I have described as “the insurance clause” expressly provide that the property should be at the sole risk of the purchaser as to any damage from whatever cause arising after the date of the sale and that no claim should be made against the vendor for any deterioration or damage. Excepted from that exclusion is damage caused to the property occasioned by the “wilful neglect or default” of the vendor.
Whilst the words “wilful neglect or default” were traditionally used in contractual provisions dealing with the payment of interest and it is in that context that the expression has been subject to judicial scrutiny, I see no reason to conclude that the words should be interpreted differently merely because the action or inaction comprised therein would give rise to a different consequence when used in another context. Accordingly it seems to me that the comments of Bowen, L.J. in Young and Harston’s Contract L.R. 31 Ch. D. 168at 174 are equally applicable to the present case:-
“What does wilful default mean in a contract like this? The term “wilful default” – though onein common use in such contracts – is not a term of art, and to pursue authorities with a view to defining for all time what is its meaning in a contract like this appears to me to press citation far beyond the point at which it ceases to be useful. Default is a purely relative term, just like negligence. It means nothing more, nothing less, than not doing what is reasonable under the circumstances – not doing something which you ought to do, having regard to the relations which you occupy towards the other persons interested in the transaction. “The other word which it is sought to define is “willful”. That is a word of familiar use in every branch of law, and although in some branches of the law it may have a special meaning, it generally, as used in courts of law, implies nothing blameable, but merely that the person of whose action or default the expression is used, is a free agent, and that what has been done arises from the spontaneous action of his will. It amounts to nothing more than this, that he knows what he is doing, and intends to do what he is doing, and is a free agent”
In other words it seems to me that wilful default is no more and no less that a formula by which the Courts of Chancery describe an intentional (as opposed to an unconscious or accidental) negligent act or omission.
The other important question of law involved in these proceedings relates to the right of the vendor to rescind the contract. There is no doubt but that the rescission clause is expressed in wide terms and purports to confer extensive powers on the vendor. On the other hand it is settled law – and rightly accepted as such by Counsel on behalf of the vendor – that there are restraints imposed on a vendor seeking to invoke a clause of this nature.
The most recent decision to which reference was made with regard to the construction and application of a clause of this nature was the judgment of Privy Council in Selkirk and Romar 1963 I.W.L.R. 1415. In that case, which arose by way of an appeal from the Supreme Court of the Bahama Islands, a purchaser sought evidence of the devolution of the ownership from one person who appeared to be the owner of the property in question to another. That matter was raised by way of requisition on title and it is sufficient to say that the Privy Council was satisfied that the requisition was entirely proper. The issue in the case was whether the vendor for his part was entitled to invoke the contractual right of rescission which was included in the contract for the sale of the premises in question. The way the Court posed the question was whether “there was anything in the situation of the conduct of the parties to preclude the vendor from taking advantage of a contractual right which, ex facie, the contract had undoubtedly secured to him”. Viscount Radcliffe delivering the judgments of their Lordships explained the position (at page 1422) as follows:-
“Now, on what can the appellant rest his claim to set aside the respondent’s notice of rescision? It is plain enough that, so far as the terms of the contract go, the respondent is within its rights. Clause 3 (3) [the rescission clause] is as much a part of the various undertakings and stipulations that make up the total nexus of the parties’ agreement as any other of its clauses, and it is in fact a stipulation that was included in the draft put forward by the purchaser. If a vendor, having stipulated for or been conceded such a right, is to be precluded from asserting it in any particular context, it must be by virtue of some equitable principle which enures for the protection of the purchaser; and it is not in dispute that courts of equity have on numerous occasions intervened to restrain or control the exercise of such a right of rescission in contract for the sale of land, despite what, on the face of the contract, its terms seem to secure for the vendor. It does not appear to their Lordships, any more than it did to the Judge who tried the action, that there is any room for uncertainty as to the nature of the equitable principle that is invoked in these cases. It has frequently been analysed, and frequently applied, by Chancery judges, and, although the epithets that described the vendor’s offending action have shown some variety of expression, they are all related to the same underlying idea, and the variety is only due to the fact that, as each case is decided according to the whole context of its circumstances and the course of conduct of the vendor, one may illustrate more vividly than another some particular aspect of that idea. Thus, it has been said that a vendor, in seeking to rescind must not act arbitrarily, or capriciously, or unreasonably. Much less can he act in bad faith. He may not use the power of rescission to get out of a sale “brevi manu” since by doing so he makes a nullity of the whole elaborate and protracted transaction”
A similar view had previously been expressed by the Court of Appeal in England in Baines and Tweddle 1959 Ch. D. 679 in which the conclusion was expressed by Lord Evershed M.R. (at page 688) in the following terms:-
“On the face of this condition [the rescission clause] the right appears to be unqualified; if a purchaser takes or makes any objection which the vendor is unable, or on the grounds of unreasonable expense, unwilling to remove, etc., then the vendor may rescind the contract. Naturally enought it has been the main burden of Mr. Sparrow’s argument for the vendor that this was the bargain which the purchaser made. It gave the vendor this apparently unqualified right of rescission and the purchaser must, “accordingly, accept the consequences. I only venture, by way of comment on that, to remind the vendor that he on his part contracted to sell an unincumbered fee simple and nearly three weeks after doing so allowed the purchase money to tie paid into the joint account. But this condition, which is one of considerable ancestry, though quite unqualified in terms, nevertheless has had a qualification undoubtedly imposed upon it by the decision of the Court”
Lord Evershed then went on to quote Henn Collins M.R. In re Jackson and Haden’s Contract 1906 1 Ch. 412 as follows:-
“As I have already said, numerous cases have been most carefully set before us, which I have had the opportunity of examining as they were read, and it seems to me that, in every case where the vendor was allowed to avail himself of a stipulation like this, there was always absent that element of shortcoming on his part which, though falling short of fraud or dishonesty, might be described as “recklessness””.
Lord Evershed then went to quote (indirectly) from the decision of Rigby L.J. In re Deighton and Harris’s contract 1898 1 Ch. 458 at 464 as follows:-
“It would not, in my opinion, be right here to enable a vendor to ride off upon a condition to rescind which was obviously not framed with reference to any such case as that which has arisen”.
Again in Baines and Tweddle Romer L.J. in his judgment also cited with approval from the judgment of Henn Collins M.R. in Jackson and Haden’s Contract (above) the following passage at 421:-
“Now what is the element that the Vice Chancellor is seeking for there which determines the case? It seems to me to be an element of something on the part of the vendor less “than the law requires of him in such cases. It may stop short of fraud, it may be consistent with honesty; but, at the same time, there must be a falling short on his part – he must have done less than an ordinary prudent man, having regard to his relations to another person, when dealing with him, is bound to do”.
As I say Counsel on behalf of the vendor properly recognises that a vendor does not have an absolute right to invoke the terms of a rescission clause. Instead it is argued on behalf of the vendor in the present case that his purported rescission was reasonable and that it was not arbitrary, capricious or based on any reckless conduct of the vendor or his legal advisers. In addition the vendor is entitled to distinguish the rescission clause in the present case from some of the earlier versions of that clause which did not afford a purchaser a locus poenitantiae. The clause in the present case coupled with the notice given by the vendor afforded the purchaser an opportunity to recant by withdrawing his insistance on a claim for damages.
The vendor relied on (among others) the decision in Duddell and Simpson Law Reports L.R. 2 Ch. App. 102 in which Turnle L.J. commented upon a rescission clause in the following terms:-
“I think that in a case where the vendor annuls the contract on the ground of unwillingness, he must show some reasonable ground for unwillingness; thus, for instance, he may show that if he proceeds to comply with a requisition, he will be involved in expenses far beyond what he ever contemplated, or be involved in litigation and expense which he never contemplated, and for avoiding which he reserves to himself the power of annulling the contract”.
Again reference was made to Glenton and Saunders to Haden 53 Law Times page 434 from which it may be convenient to cite in full the brief judgment of Bower L.J. as follows :-
“It seems to me that there are in this case two questions to be answered: (1) Did the purchaser insist on his requisitions? (2) Had the vendors a reason for refusing to comply? With regard to the insistence it is plain to me that there was, on the part of the purchaser, an unequivocal adhesion to a demand which had been refused as, for instance, in the case of the plans. Then what kind of reason must lie at the bottom of non compliance? It is a question which often arises, but not in every case. The authorities, ending with re Dames Wood show that something is to be read into a contract of this kind. But here it is a matter of construction of the contract. Here the contract expressly states the reasons to be expense or any other reason. The question is not whether the purchaser was entitled to make these demands; but whether the vendor had honest and bona fide reasons for non compliance. Mere caprice is not sufficient. But if there is a reason it need not be communicated by the vendor to the purchaser; that would be putting a new term into the contract. I agree therefore with the decision of the other Lords Justices, and I think that one good reason would to sufficient”.
In the present case the point, taken by the purchaser was not – in form at any rate – either an objection or a requisition whether as to title or as to assurance. Nor did it relate to any matter or thing existing at the date of the contract of sale. It was a complaint by the purchaser that the vendor had failed in the duty which she owed to him to maintain the property pending the completion of the sale. To that extent it may be said to be a complaint which was incidental to the sale. Nonetheless I would find it very hard to accept that a complaint relating to such a wrongdoing was within the contemplation of the parties when the rescission clause was framed and that conclusion of itself would be (on the basis of the decision of Hall V.C. in Bowman and Hyland 8 Ch. D 588) justify rejecting the vendor’s contention herein.
However, as the case was fairly argued before me on behalf of the vendor that she had acted reasonably in her response to the conduct of the purchaser which was – in the circumstances as they developed – unreasonable and that the purchaser effectively argued for the converse that I would prefer to decide the case by resolving that dispute.
It could hardly be suggested that a purchaser who insists upon a right to be compensated for damage to property in which he is interested is acting unreasonably. What is said on behalf of the vendor is that the purchaser acted unreasonably in failing (in all of the circumstances of the case) first to specify or quantify the damages to the premises of which he complained and secondly to co-operate in the solution ultimately proposed on behalf of the vendor, namely, that the contract would be completed without delay and the issue as to damages decided at a later date but on the basis that a substantial part of the purchase price would be set aside to meet any claim under that heading.
Whilst the proposal aforesaid made on behalf of the vendor was an eminently reasonable and practicable one there was no obligation on the purchaser to adopt it. There is no doubt but that the vendor and her legal advisers by the time the offer was made not merely suspected but had become convinced that the purchaser was not acting and had not acted in a bona fide manner and that his refusal to co-operate merely represented the culmination of an unhelpful approach to the problems facing the parties. The vendor suspected that the purchaser never had adequate finance with which to complete the purchase. Investigations by the solicitors on behalf of the vendor suggested that the purchaser did not intend to occupy the premises but sought to have the same demolished and the site cleared so that it could be developed as flats. There was a period during which an appeal was pending to the planning board and the vendor inferred that the purchaser was seeking to delay the transactic pending the decision of that body. It appears that the suspicions of the vendor with regard to the finances of the purchaser were unfounded. Convincing evidence was tendered at the trial as to the financial facilities available to the purchaser to enable him to complete the sale. On the other hand there is no doubt but that the purchaser sought permission to demolish the premises and applied for planning permission for their subsequent development and moreover caused these applications to be made under a name other than his own. However sinister such transactions might appear I cannot see that in any way they affected the rights of the vendor or in fact impinged upon the transaction between the parties. Moreover it must be recognised that if the vendor had become suspicious of the approach being taken by the purchaser that the purchaser for his part had every right to be concerned about the delay on the part of the vendor which had in fact occurred and it would not be surprising that the purchaser and his legal advisers would approach the proposals ultimately made on behalf of the vendor with some hesitation having regard to the context in which the same arose.
At the end of the day the position is this: under the terms of the contract for sale and in accordance with established legal principles the purchaser is entitled to be paid a substantial sum by the vendor by way of compensation for the vendor’s wrongdoing. Whilst in my view it is entirely understandable that the vendor should wish to escape this liability I could not accept that it would be reasonable for a vendor to invoke a rescission clause so as to enable him to escape a liability which was caused by and indeed consisted of his or her wilful default.
In these circumstances I am satisfied that the recission clause was not validly or effectively invoked.
Dublin Laundry Company Ltd v Clarke
[1989] ILRM 29
MR. JUSTICE DECLAN COSTELLO
Jurisdiction: Ireland
Court: High Court (Ireland)
In my view the Plaintiff Company in this case was able ready and willing to complete the sale on the date of the completion notice. Assuming the Defendant was required to produce an engrossed assurance of the property and fix a date for closing, and had he done so, I am satisfied that the releases of the securities or letters which would enable undertakings to be given to discharge the incumbrances out of the sale price would have been obtained.
Accordingly, I am satisfied that the point in relation to the charges was not a valid one and did not affect the title which the Plaintiff Company was in a position to give at the date of the completion notice.
It was then suggested on the Defendant’s behalf that the title was defective because the matter of the right-of-way had not been satisfactorily concluded. I reiterate the point which I made earlier. No objection was taken by the Defendant’s solicitor to the letter of 12 July 1983 which was sent on to the Defendant’s solicitor. In my view the Defendant must be taken as having acquiesced in this particular method of giving the Defendant rights over the green portion of the lands, either under condition 9 of the contract or under the general principles of contract law.
A further point was taken by Counsel on behalf of the Defendant. It was pointed out that by virtue of section 23 of the Registration of Title Act 1964the Council should have registered the green lands they obtained by the Deed of Exchange: that they had failed to do so in the six-month period provided for so they had not got any estate in the green lands and so it is suggested further that the right-of-way obtained by the letter of 12 July 1983 is invalid. Had this point been raised, for example, by vendor and purchased summons, I do not think it would be answered in the way suggested by Mr McCann on behalf of the Defendant. In my view the Council cannot prohibit the Defendant from acting on the letter of 12 July 1983 merely because they had failed to obtain registration as required by the Statute. If they were not registered they could not claim any estate which would entitle them to stop the Defendant entering upon the land. If they had obtained registration subsequently, the registration dates back and they are bound by the terms of their letter.
In my view the events that happened in relation to the right-of-way do not constitute a defect in the Plaintiff Company’s title or suggest that it is not a good marketable title.
The third and fourth points I can deal with briefly. Mr Peart’s Statutory Declaration and the Certificate under the Family Home Protection Act had not been executed on the date the completion notice was served. This is true: indeed, they were not completed until some time after the sale had fallen through. But I am quite satisfied as a matter of probability that these documents could have been obtained without any difficulty if the contract for sale had been completed on the Defendant’s part and had the Defendant’s solicitor submitted a Deed of Exchange and fixed a date for closing. The form of certificate and form of declaration had been agreed and it was only a matter of having these documents signed by Mr Peart, and the Plaintiff Company would be able to produce these documents at the time at which closing would take place so the failure to have these documents on the actual date of the notice does not invalidate it.
I turn now to the final submission made on the Defendant’s behalf by Mr McCann. It is now pleaded and urged that the Plaintiff Company has no cause of action against the Defendant because the Defendant entered into the contract in a representative capacity and I can briefly indicate the facts which I find in relation to this matter.
The Defendant, Mr Malachy Clarke, and an associate, Mr Anglin, had been engaged together for a number of years in the development of building lands, particularly in relation to the building of apartments. Loosely, they can be referred to as having been in partnership.
Technically they engaged in their joint venture through limited liability companies. At the date of the contract they were shareholders in and directors of a company known as Arven Homes Limited. In addition Mr Anglen was a shareholder in and a director of a company called Elmland Builders Limited and also of a company called Devorwood Development Limited which had been incorporated on 28 May 1981, Mr Clarke was not then a member of or a director of Devonwood Developments Limited. When the contract was signed it was Mr Clarke’s intention that he would undertake the venture of the development of the lands the subject matter of the sale in partnership with Mr Anglin through the medium of a company. When the contract was signed, however, he did not know whether there would be a new company formed or whether an existing company would be utilised.
It is of some relevance to note that after the contract was signed an application for a new planning permission was made by Arven Homes Limited, and under the 1977 regulations, Article 18, an applicant is required to give particulars of his interest in the lands to which the application relates and presumably Arven Homes indicated an interest in the Clonbeg lands. However, at the same time an application was made in April to Lombard and Ulster for finance for the development in another company’s name – Devonwood Developments Limited.
The first issue which I have to consider is whether, in fact, the Defendant entered into the contract in a representative capacity, that is to say, as the agent for a principal. The Defendant’s evidence, as I have pointed out, is that he intended that a company would carry out the development, that is, obtain finance, take a conveyance of the lands and build. When Mr Clarke, the Defendant, signed the contract he did not know what company would carry out the development. Mr Clarke indicated that he would take his accountant’s advice; that it might be a new company. It was necessary, he stated in evidence, to obtain what he called a “clean” company, one which had not already traded. Arven Homes Limited was a possibility but his brother was a director of this company and that might not do. Devonwood Developments Limited was another possibility but Mr Anglin was a shareholder and director of that company and Mr Clarke was neither.
It seems to me that this is not a case of a person entering into a contract on behalf of a principal whose name has not been disclosed. The Defendant had no principal at the time of the contract and he did not enter into it in a representative capacity. It is the case of a person with the intention that the obligations and benefits would be taken over by a third party, a limited company, which might not yet be in existence. In these circumstances condition 5 of the conditions of contract have no application to the facts of this case and it seems to me that even if the Defendant had signed as agent he could not now claim to avoid a personal liability on the contract if he was not an agent, as I have found. Therefore, I think the pleas in the defence have not been established.
Paragraph 1 of the defence states: “The Defendant, entering into the said Agreement as agent for and on behalf of Devonwood Developments Limited of 36 Waterloo Road in the City of Dublin, and such Agency being known to the Plaintiff and the identity of the said Devonwood Developments Limited having been disclosed to the Plaintiff all (if any) liability of the Defendant (which is denied) on foot of the said Agreement thereupon terminated in accordance with the provisions thereof.”
The Defendant did not enter into the agreement as agent of Devonwood Developments Limited and the agency was not known to the Plaintiffs at the time the contract was entered into.
Paragraph 2 reads: “The Defendant entered into the alleged Agreement for Sale as Agent and later disclosed to the Plaintiff that his Principal was Devonwood Developments Limited as a result where of his personal liability on foot of the said Agreement for Sale terminated.”
The Defendant did not enter into the agreement as an agent and he did not disclose that his principal was Devonwood Development Limited until well after the institution of the proceedings.
I should, perhaps, express my view on the alternative situation which might exist if, in fact, I am wrong in the view that I come to:that the Defendant was not acting in a representative capacity. If a view could be taken on the facts of this case contrary to the view which I have taken, that Mr Clarke, the Defendant, signed the contract as agent, I do not think the contract could be construed as meaning that Mr Clarke was signing in a representative capacity. The principles that arise in situations such as this have been stated by Budd J. in Lavan v Walsh 1964 I.R. p 96, where he stated:
“The question as to whether an agent is to be deemed to have contracted personally in the case of a contract in writing depends on the intention of the parties as appearing from the terms of the written agreement as a whole. The construction of the document is a matter of law for the Court.”
In this case an extremely confusing situation had occurred. In my view, and on the authority of the judgment to which I have referred, the onus is on a person in Mr Clarke’s position to establish his representative capacity and I do not think he has discharged the onus assuming that he was an agent. The contract document is, at best, ambiguous. Mr Clarke is named personally in the title of the contract as purchases and no reference to agency occurred in it. Two persons signed the document as the purchaser – Mr Anglin, whose name did not appear as purchaser in the title, and Mr Clarke. In one of the two documents sent by the Plaintiff Company’s solicitors to the Defendant’s solicitors the words “as agents” were entered in but not on the other document and not in the title of the contract.
In my view, whatever the intention of Mr Clarke may have been, the Court’s task is to construe the document as a whole. Even if Mr Clarke was an agent. I cannot hold that the intention of the parties as appears from the document could be that Mr Clarke was executing the document in a representative capacity. For these reasons I think the defence fails and the Plaintiff Company is entitled to the relief claimed, either by way of specific performance or otherwise.
I will hear Counsel later as to the form of order I should make.
Mac A Bhaird v Commissioner of Public Works in Ireland
[2016] IEHC 223
Docket Number: [2013 No. 1182 P]
Ms. Justice BakerJ
5th day of April, 2016.
1
The plaintiff seeks specific performance of an agreement made on the 4th November, 2011, for the sale to the defendant of lands at Glanmire, County Cork. This judgement primarily concerns the counter claim of the purchaser for a declaration that the contract has been rescinded, and its claim for a return of the contract deposit.
The contract
2
By agreement for sale made in writing on or about the 4th November, 2011, and which incorporated the Law Society General Conditions of Sale, between the plaintiff as vendor on the one part, and the defendant as purchaser on the other part, the defendant agreed to purchase and the plaintiff agreed to sell all of the premises known as Unit 4A, Glanmire Industrial Estate, Glanmire, in the County of Cork for the total purchase price of €862,000. The contract was made subject to a number of general and special conditions, and closing was to be within seven weeks of the grant of planning permission for change of use of the premises. Planning permission issued on the 25th January, 2012, and the sale fell to be completed on the 14th March, 2012, in accordance with this special condition.
3
The vendor served a notice in accordance with General Condition 40 of the Law Society General Conditions of Sale on the 23rd November, 2012, and the purchaser, by letter of the 9th January, 2013, purported to rescind the contract, by reason of what is said to be the inability of the vendor to close the sale on the expiration of the period of 28 days fixed for closing by the completion notice.
4
The 28-day period provided in the completion notice expired during the Christmas holiday, and the parties have agreed that, taking into account an agreed period during which time did not run, the closing date in accordance with the notice was the 2nd January, 2013.
5
Much of the evidence revolved around events that occurred since the service of the completion notice on the 23rd November, 2012, and on whether the vendor, and/or the purchaser, was in a position to comply with certain title requirements, and certain general and special conditions relating to the mode and place of closing.
6
Both parties agree that the contract for sale is valid, and the central issue is whether the vendor has validly rescinded the contract.
Invalid notice?
7
Either party to a contract for sale made under the Law Society General Conditions may serve a completion notice, under General Condition 40, and condition 40(a) provides that a completion notice is effective only if the party giving it ‘shall then either be able, ready and willing to complete the sale or is not so able, ready or willing by reason of the default or misconduct of the other party’.
8
Three matters were required to be dealt with by the vendor to be ready, able and willing to perform his obligations as vendor under the contract as follows:
• The lands, the subject matter of the contract for sale, were subject to a charge registered in favour of Bank of Ireland. The charge created a security over other lands not relevant to the sale, but the vendor required a deed of partial discharge from the Bank in respect of the subject lands in order to give an unencumbered title.
• The lands in sale were also subject to a charge in favour of Danske Bank, and it is common case that this charge came to light only on the 21st December, 2012, and when the purchaser made its closing searches. That charge also affected other lands not the subject matter of the sale, and again, a partial discharge was required to clear the title to the subject lands.
• The contract was subject to the vendor producing at closing a valid tax clearance certificate. At the time the completion notice was served, the vendor’s tax clearance certificate had expired, and, although the evidence is that he was tax compliant, he did not have a valid tax clearance certificate until one issued from Revenue on the 4th January, 2013.
While the matter arose initially in argument, counsel have now agreed that the completion notice was valid at the date of service, and that the matters still to be done by the vendor were administrative matters wholly within his control, or did not contractually require to be in place at the date of the service of the notice.
9
I do not therefore propose to deal with the question raised but not answered by Clarke J. in Windham v. Maguire & Anor [2009] IEHC 359, and mentioned by Finlay Geoghegan J. in Mackin v. Deane [2010] IEHC 192, as to the consequence of a party becoming unable to close in the currency of a notice which was valid at the date of service.
The correspondence
10
After the service of the completion notice on the 23rd November, 2012, nothing was heard from the solicitor for the purchaser until a phone call on the 18th December, 2012, followed up by an e-mail on 19th December, 2012, in which she sought details of the redemption figures on the Bank of Ireland mortgage up to Friday 21st December, 2012. This was because of Special Condition 9 of the contract, which required a separate cheque to be made payable to Bank of Ireland in respect of the balance of the purchase price after taking off the costs of sale and VAT on the transaction.
11
By an e-mail sent at 14.58 on the 19th December, 2012, the solicitor for the purchaser, after repeating her request for details of the redemption figures, suggested that in lieu of the furnishing of separate bank drafts, as was required by the Special Condition, that the balance of the purchase price could be transferred into the account of the vendor’s solicitor. It was said that confirmation of this proposal was required as a matter of urgency as ‘in order for the monies to be in your account by Monday next, I need details of your firm’s account today.’ The Monday referred to was Christmas Eve, the 24th December, 2012.
12
In an e-mail some 20 minutes later, at 15.19, the purchaser proposed a closing in the office of the vendor’s solicitor on either Friday the 21st December or Monday the 24th December, 2012. The email mentioned again the fact that in order for the option of an electronic transfer to be available, details of the relevant bank account were required on that day, 19th December, 2012.
13
On the following day, the 20th December, 2012, by fax, and letter hand-delivered by courier, the solicitor for the vendor furnished details of the relevant bank account, but gave no reply as to a proposed date and time for closing. The exact time that this faxed letter was sent is unclear, but from the attendance note on the file of the purchaser’s solicitor of a phone call from the office of the solicitor for the vendor at 14.35 requesting confirmation that a fax had been received, I conclude that the letter was faxed at or near that time.
14
At 15.46, the solicitor for the purchaser sent a letter marked ‘urgent’ in which it was pointed out that the option of the electronic transfer was no longer available as there had been a limited, and now expired, window within which such transfer could happen.
15
Some time was given over in the course of evidence to the reasons for this, and to an arguable lack of clarity in the letters from the purchaser’s solicitor, in that they had not expressly identified the fact that the option could not be availed of after the 19th December, 2012. I consider that correspondence is sufficiently clear. The offer of an electronic transfer was by variation on Special Condition 9, which provided for a three-way physical closing and the furnishing of three bank drafts in the relevant amounts. The variation was not accepted in accordance with the terms of the letter, and accordingly that option never became a variation on the conditions relating to closing.
16
The solicitor for the vendor on Friday the 21st December, 2012, by fax sent at 11.51, indicated that the sale could complete either that afternoon, or on Monday the 24th and asked for confirmation that the purchase monies had been transferred to her client account. That letter also contained details of the redemption figures. I consider that, as the option of an electronic transfer of funds was no longer available, the solicitor for the vendor misunderstood the correspondence. The solicitor for the purchaser pointed this out in an email at 12.58, by proposing closing on Monday the 24th December, 2012, and then sent her closing searches in anticipation of that closing. These showed a charge registered by Danske Bank on 29th January, 2010, ranking second in priority to the Bank of Ireland charge. I have heard evidence, and accept, that this charge affected a small portion on the south east of the subject lands only, but as a matter of law the charge was an encumbrance and had to be cleared off the title in accordance with the contractual obligation to provide an unencumbered title. From the correspondence and the oral evidence, I consider that the solicitor for the vendor was unaware of this charge, as it was registered after the long negotiations for the sale had resulted in a concluded agreement in November 2011.
17
The solicitor for the vendor suggested by a fax sent at 16.06 that she would hold the bank drafts on trust until the completion documents and searches had been explained and certified. I consider that this was not at all consistent with the agreed mode of closing, namely by three way closing involving the physical presence of the solicitors for the purchaser, the vendor and Bank of Ireland. No agreement was reached on the 21st December, 2012, that the sale would close on the 24th December but the solicitor for the purchaser had indicated that she could close on that day.
18
On the 24th December, 2012, by email and fax sent at 10.19, the solicitor for the purchaser asked that a time for completion be nominated as a matter of urgency. She received no reply to this letter nor to an email sent at 11.14. She later attempted to contact the solicitor for the vendor by phone, but the evidence is that the office of the solicitor for the vendor was by then closed for the Christmas vacation.
19
The parties were contractually required to close by way of a physical three-way closing, and the purchaser was required to have three bank drafts. On the 21st December, 2012, AIB Bank was requested to furnish the three relevant bank drafts, but was not in a position to do this by the 24th December, 2012, and the purchaser was therefore not able to close on that day. It is not at all clear to me in those circumstances why the solicitor for the purchaser remained in her office until 16.00 on Christmas Eve in anticipation of closing.
20
Three bank drafts were made available on the 28th December, 2012, and for that reason I conclude that the purchaser was not in a position to close until that date.
21
In contractual terms the proposal by the purchaser for completion on the 21st December or the 24th December, 2012 was permissible, but I find that the purchaser was not in a position to complete on either of those days, and was not so in a position until the 28th December.
22
I turn now to consider when the vendor was in a position to close. The effect of the completion notice was that he was required as a matter essential to the contract to be in a position to close on the 2nd January, 2013, at the latest.
Was the vendor able to complete on the 2nd January, 2013?
23
I consider that the vendor was not in a position to complete this sale on the 2nd January, 2013, the date that the completion notice expired. This is for a number of reasons: the solicitor for the vendor was quite clear that she was not aware of the Danske Bank charge registered on title until, as she put it, she ‘got a fright’ when she received the closing searches from the purchaser’s solicitor on that day, albeit they had been sent on the 21st December, 2012, when her office was closed. She did reach an agreement with Danske Bank that it would furnish a deed of partial release but not until some days later, possibly the 7th January, 2013. Equally, the vendor could not have closed on the 2nd January, 2013, because he did not have a current tax clearance certificate until the 4th January, 2013. Furthermore the solicitor for the vendor did not have an agreement with the solicitor for Bank of Ireland that it would furnish on or before the 2nd January, 2013, the deed of partial discharge for the purpose of clearing the first charge on title.
24
Thus, while each of the three matters in respect of which complaint is made were matters within the control of the vendor these were not in place or capable of being put in place by the 2nd January, 2013.
25
It is a matter of some concern that the solicitor for the vendor did not inform the solicitors for the purchaser that this was so, and indeed there was complete silence from her until her letter of the 9th January, 2013, wherein she inexplicably failed to explain or deal in any way with the gap, at a time when matters were clearly at a critical point. It is regrettable that the solicitor for the vendor considers that the approach being taking by the solicitor for the purchaser was a form of what she described as ‘posturing’ and that she did not genuinely believe that the purchaser would rescind, or that she was at any risk that this could occur.
26
I also consider that the solicitor for the vendor was not in a position to offer to close on the 24th December as she had no agreement with the solicitors for Bank of Ireland to close on that day and, in her evidence, she explained her reference to her offer to ‘close’ on that day as meaning that she was in a position to receive the monies, hold them on trust, agree an arrangement for the holding of the title deeds on trust, and deal with the balance of the conveyancing issues when the office of Judge and Co., the solicitors nominated to act for the Bank opened in January. Thus, the offer to close on the 24th December, 2012, was not well made, and was not one, had it been accepted, that could have been performed by the vendor.
27
It was unfortunate that the solicitor for the vendor made certain assumptions that a degree of informality would be acceptable to the purchaser, and that she did not explain to them when she offered to close on the 24th December, 2012, that she did not mean that the full transaction would be completed and all conveyance requirements met on that day. She could not achieve this, and she ought not to have offered to do so, albeit I accept that she believed she would have ‘substantially closed’, as she put it, on that day.
28
The key date was the 2nd January, 2013. The solicitor for the purchaser did wait until 17.14 to ascertain the position and send an email. The vendor’s solicitor did nothing at all to communicate with the purchaser on that day. It was the vendor’s solicitor who had served the completion notice, she by then was aware, or ought to have been aware, that the Danske Bank charge remained on title and needed to be dealt with as a matter of urgency. It was she who had to make the arrangement for the solicitor for the Bank to attend at the place and time agreed, and it was she who had to meet the other title and conveyancing requirements including the production of a tax clearance certificate for her client. I consider that she was not in a position to deal with the matter on the 2nd January, 2013, she could not have brought together various elements to close on that day and accordingly she was not in a position to close the sale within the 28 day period in respect of which time was of the essence following service of the completion notice.
29
I find on the facts that the vendor was in a position to provide a discharge in respect of the Danske Bank charge on the 7th January, 2013, and not before. The draft deed was sent to the solicitor for that bank on the 3rd January, 2013, and a soft copy was provided to him on the following day. I accept the evidence of Mr. Keogh that he was not asked as a matter of urgency to make himself available to facilitate closing on the 4th January or at any time before that.
30
As regards the tax clearance certificate, the plaintiff himself said that he obtained this certificate on the 4th January, 2013, in Cork and that he posted it to his solicitor. His solicitor says that she had always anticipated that her client would travel to Dublin to physically hand over the tax clearance certificate and any other documents that were required for closing. I am satisfied however, that the plaintiff was not asked to attend at any closing on the 4th January, 2013, and, as his evidence was that it would have taken him less than three hours to travel from Cork to Dublin, I consider that he was in a position to produce the certificate on the 4thJanuary, 2013. The difficulty arose from the fact that his solicitor had not asked him to travel to Dublin on that day.
Conclusion on ability to close?
31
The option of closing on Friday the 21st December, 2012, had no reality from either point of view, and at best it seems to me there was a degree of optimism, and at worst a lack of appreciation of the degree of urgency involved, on both sides. However, I accept that at that time at least the purchaser was willing to close. Indeed some suggestion was made in the course of cross examination that the purchaser had ‘gone cold’ on the transaction and was happy to avoid the contract by December, 2012, and I accept the bona fides of both parties, both of them wished to complete this sale, and both solicitors were under instructions to so do.
32
The purchaser was in possession of three drafts each dated 28th December 2012, on the 2nd January, 2013, when they were collected from the bank in anticipation closing on that day. Thus the purchaser was in funds and was able to close within the period of the completion notice.
33
Furthermore, I accept the evidence of Ms. Crombie solicitor for the purchaser that she had ordered a taxi and had available to her the drafts and all other necessary documents in order to close on the 4th January, 2013, in accordance with what she believed was an agreement reached with Ms. O’Driscoll, solicitor for the vendor.
34
I reject the suggestion of counsel for the vendor that the solicitor for the purchaser was setting a trap by waiting until late on the 2nd January, 2013, to send an email. The ball was quite clearly in the court of the vendor’s solicitor at that time and it is remarkable that the she did not pick up the phone and attempt to reach an agreement other than through fax and hand delivered documents which were insufficient to meet the requirements of exigency then apparent. I also reject the suggestion that the letter from the vendor’s solicitor where she used the expression ‘we propose to close’ is anything other than an invitation to close on the 4th January, and I take that view because there was nothing unclear or incomplete about the time, place and date in respect of which the closing was to happen.
35
Thus, for the reasons outlined, I find that the purchaser was in a position to close within the period provided by the completion notice, but the vendor was not.
Events on 2nd January, 2013
36
Nothing happened between the 24th December, 2012, and late on the 2nd January, 2013, the date the completion notice expired, when the purchaser’s solicitor sent an email at 17.14, marked ‘urgent’, confirming that she was in a position to close.
37
She suggested that closing would take place on the following day the 3rd January, 2013, i.e. outside the 28-day period, and enclosed a long schedule of closing requirements, which included a number of matters not already raised in pre-contract or post-contract requisitions, and which were either unnecessary or not contractually mandated, such as a request for an indemnity under seal in respect of the footpaths, roads and sewers from the original developer, and a letter from Cork County Council confirming that the roads and services were in charge.
38
I consider that the solicitor for the purchaser in her email sent at 17.14 on the day the completion notice expired, accepted that the sale would not close on that day and expressly proposed a closing outside the 28-day period fixed by the notice. Further, she raised matters not contractually required of the vendor, and in the course of cross-examination she accepted this, and that she had been prepared to close even without each of them being satisfied. However her correspondence did not make this clear, and the matters raised would have required a detailed consideration by the solicitor for the vendor. I consider that the vendor’s solicitor was entitled to treat the new requisitions as matters in respect to which she needed to reach agreement with the solicitor for the purchaser that she would not insist on the matters raised by way of new requisitions. A parallel series of letters were exchanged between the solicitors dealing with this question, and I find that the solicitor for the purchaser did not withdraw the additional requisitions until her evidence at trial.
39
On the 4th January at 9.55 the solicitors for the vendor separately replied to the letter raising the additional requisitions, and, correctly in my view, said that no further or new closing requirements would be entertained by her.
40
On the 3rd January, 2013, by fax at 14.56 the solicitors for the vendor proposed closing at a time and place on the following day, Friday the 4th January, 2013. That letter was headed ‘strictly without prejudice to the contract for sale,’ and was not an acceptance of the offer of the 2nd January, 2013, to close on the 3rd January, 2013, but a counter offer to close the following day. Thus, I find that no agreement had been reached that the sale would close on the 3rd January, 2013.
41
By email sent on the 4th January, 2013, at 10.23, the solicitor for the purchaser replied to the letter of 3rd January, apologised for the delay in replying, and required a ‘written explanation’ in respect of the use of the phrase ‘strictly without prejudice to the contract for sale’. She proposed closing at 15.00 that day, but ‘subject to receiving a satisfactory written response’ to this query by noon that day. The solicitor for the vendor sensibly responded to requests for ‘an explanation’ at 12.18 by fax. She headed her letter ‘strictly without prejudice’ but her response was fulsome. Whether it was ‘satisfactory’ as required by the solicitor for the purchaser is not clear, save that by a response, sent at 13.24, the solicitors for the purchaser did accept the offer to close at the time, place and date proposed.
42
I consider this is an acceptance of the offer or a waiver of the objection with regard to the use of the rubric ‘without prejudice’. Therefore, I find that at 13.24 on the 4th January, 2013, an agreement was reached for the closing of the sale later that day, and the solicitor for the purchaser at 14.08 sent further closing searches for explanation, the same searches which had been sent on the 21st December, 2012.
43
The solicitor for the vendor clearly did not think that an agreement to close was in place, and as late as 14.16 she faxed a letter, inexplicably headed ‘strictly without prejudice’, indicating that she was awaiting confirmation from the solicitor for Bank of Ireland that he was available to attend a three-way closing that afternoon. The solicitor for the purchaser by email at 15.27 called for closing before close of business, but the sale did not close and no further communication was sent by the solicitor for the vendor until 14.28 on the 9th January, five days later, by which it was proposed that the sale would close on the 10th January. The solicitor for the purchaser responded at 17.29 and rescinded the contract, in stated reliance on the completion notice as the new proposed date was outside the term provided by that notice, or the ‘one final opportunity’ to complete, namely the 4th January, 2013. While this is not spelt out, it is implicit in the letter that the solicitor for the purchaser regarded the period provided in the completion notice as having being extended to the 4th January, 2013.
44
The purchaser is correct in my view that no satisfactory explanation was provided by the solicitor for the vendor as to the reasons for the delay between early afternoon on the 4th January, 2013, and the 9th January, 2013, when, without explanation or apology, the vendor’s solicitors sought closing on the following day.
45
I turn now to consider the argument that the vendor was entitled to rescind in reliance on General Condition 40.
The effect of service of a completion notice
46
Time is in general not regarded as of the essence in a contract for the sale of land. This proposition arises primarily from the fact that an action for specific performance of a contract for the sale of land sounds in equity, and the courts of equity will not imply into such contract a term that time is of the essence, and will relieve against a failure of one or other party to comply with strict time conditions if to do so is in the interests of justice.
47
A party to a contract for sale may however seek to fix a time for closing if it is considered that a reasonable time has passed, and that the other party is in default of the obligation to close. General Condition 40 of the Law Society General Conditions of Sale provides a convenient way in a contract made under its terms to fix a time for completion. This provides in the relevant parts as follows:
‘COMPLETION NOTICES
Save where time is of the essence in respect of the Closing Date, the following provisions shall apply:
(a) if the sale be not completed on or before the Closing Date either party may either on or after that date (unless the Sale shall first have been rescinded or become void) give to the other party notice to complete the Sale in accordance with this condition, but such notice shall be effective only if the party giving it shall then either be able, ready and willing to complete the Sale or is not so able, ready or willing by reason of the default or misconduct of the other party
(b) upon service of such notice the party upon whom it shall have been served shall complete the Sale within a period of twenty eight days after the date of such service (as defined in Condition 49 and excluding the date of service), and in respect of such period time shall be of the essence of the contract but without prejudice to any intermediate right of rescission by either party (c) the recipient of any such notice shall give to the party serving the same reasonable advice of his readiness to complete.’
48
Certain propositions of law are not contested, and are well established in the authorities. The service of a completion notice under General Condition 40 makes time of the essence in the contract in respect of the period of 28 days therein provided. The notice binds both parties, such that both the giver of the notice and the recipient are bound to comply with all contractual obligations within the 28 day period fixed.
49
While it is sometimes said that the service of a completion notice pursuant to General Condition 40 makes time of the essence of a contract, that description may not be useful if it is taken to mean that the contract is to be characterised as one in which time was of the essence ab initio, or for all purposes. The service of a completion notice does not change the essential character of the contract, and if time was not of the essence at its inception, the service of the completion notice does not make time of the essence save in respect of the time fixed by reference to the condition. This is clear from the express terms of General Condition 40 from which it is clear that the effect of a valid notice is that time is of the essence only of the period of 28 days thereby fixed.
50
Time was not of the essence in respect of the agreed closing date in the agreement for sale in the present case, thus the service of the completion notice under General Condition 40 had the effect that the purchaser was obliged as a matter essential to the contract to complete the sale within a period of 28 days after the date of service. After making allowance for the Christmas period the relevant closing date so designated was the 2nd January, 2013.
51
It is accepted by both parties that the service of the completion notice creates mutual obligations, and that the notice binds both giver and recipient. Thus, if a vendor serves a completion notice the purchaser is bound to close within the time stipulated, but equally the vendor is obliged to perform the obligations on his part within the time limited by the notice.
52
The authority for the proposition that mutual obligations arise is the judgment of the Court of Appeal for England and Wales in Quadrangle Development and Construction Company Ltd. v. Jenner [1974] 1 All E.R. 729 where Russell L.J. stated the proposition in general terms as follows:
‘It seems to be that if by the notice the giver of the notice brings into existence a term in respect of which time should be of the essence that the recipient of the notice should complete, it is implicit in that the term equally binds the giver of the notice because completion.…is in my judgment an activity in which two parties necessarily co-operate. Completion by one cannot be effected without co-operation of the other’
53
Similarly, in the same judgment, Buckley L.J. explained the matter thus:
‘I am of the opinion that when notice is given to complete in this form it has the effect of making time of the essence of the contract as a whole and in respect of both parties to the contract…’
54
Both of these quotes have been referred to with approval by the Supreme Court in Tyndarius Ltd. v. O’Mahony & Ors. (Unreported, Supreme Court, 3rd March, 2003) and by the Supreme Court in United Yeast Co. v. Cameo Investments [1977] 111 I.L.T.R. 13, and are accepted as stating the general proposition that time becomes of the essence in respect of the performance by both parties to the contract of the obligation to complete. For this reason the service of a completion notice has often been described as a ‘two-edged sword’.
55
As was memorably put by Farrand at p. 184 of the 4th edition of his seminal text, “Contract and Conveyance”:
‘…the party serving a notice to complete must himself be ready both at the time of service and at the time of expiry, or else it may be a case of the biter bites.’
56
The failure of one party to meet the obligations made essential by virtue of the service of a valid notice means that the innocent party may rescind the contract for breach by the other of that essential term.
The effect of the extension of time
57
A completion notice may be waived, or extended by agreement. Express provision is made for an extension of time by agreement under General Condition 40 (f) as follows:
‘the party serving the notice under this Condition may, at the request of or with the consent of the other party, by written communication to the other party extend the term of such notice for one or more specified periods of time, and, in that case, the term of the notice shall be deemed to expire on the last day of such extended period or periods, and the notice shall operate as though such extended period or periods had been specified in this Condition in lieu of the said period of twenty-eight days, and time shall be of the essence in relation to such extended period.’
58
Wiley & Woods, at para. 13.25 of their authoritative text “Irish Conveyancing Law” express the view that when time is extended for a fixed and defined period, time becomes of the essence in respect of the extended or new period. The authority for this position is stated to be the case of Lock v. Bell [1931] 1 Ch 35. I do not consider that general proposition to be correct for reasons I now elaborate.
59
Lock v. Bell arose in the context of the proposition, accepted as being correct by the court that, as the contract was for the sale as a going concern of a public house and its stock, time was prima facie of the essence, and that the authorities bore this out. Thus it is not authority for the broad statement of principle stated by Wylie and Woods.
60
The judgment of Maugham J. in Lock v. Bell was also relied on by Farrand at p.178 of his text, although in a different context. Referring to contracts where time was originally of the essence, he said that where delay to a particular date is allowed, ‘that later date automatically becomes of the essence instead.’ The distinction he drew was between contracts where time was originally of the essence, and the contrasting case where time was made of the essence by service of a notice to complete. I consider that Farrand has correctly identified the proposition found in Lock v Bell.
61
This is clear too from the judgment of Jessel M.R. in Barclay v. Messenger (1874) 43 LJ Ch 449. That case involved an action for specific performance where it was held that time was of the essence of the contract, and the question for the court was whether the purchaser had waived this essential term of the contract by extending the time. The Master of the Rolls considered the differences in the authorities and expressed his authoritative judgment at p. 455 of the judgment as follows:
‘It appears to me plain that a mere extension of time, and nothing more, is only a waiver to the extent of substituting the extended time for the original time, and not an utter destruction of the essential character of the time.’
62
The court came to that conclusion inter alia on the grounds that it could not be the case that if time was of the essence the extension of time could put a party in a better position than had originally been agreed.
63
Farrell expresses the proposition that if time is extended to a substitute date, time remains of the essence with regard to that substitute date. He quotes Barclay v. Messenger as authority for this proposition, but as I have noted that case is not authority for a broad proposition that the new time becomes of the essence, as that case involved a contract where time was originally of the essence.
64
Farrand also refers to Buckland v. Farmar & Moody [1979] 1 WLR 221, in which the Court of Appeal for England and Wales held that time was of the essence, when delay had been allowed after a notice to complete had expired and two fixed date extensions were allowed. That judgment is also not authority for the proposition that time remains of the essence if an extension is allowed after the time fixed by a completion notice has expired, as it was predicated on a concession by both sides that to quote Buckley L.J. ‘if a vendor has once made time of the essence of the contract and then allows a further extension to a fixed date, the time remains essential’. The Court of Appeal for England and Wales found on the facts that there was no waiver of the essential time condition. That case is more usefully considered as authority with regard to waiver of the essential nature of the term with regard to time.
65
This approach is consistent with the comment by Farrand that Denning L.J. in Rickards (Charles) Ltd. v. Oppenheim [1951] K.B. 616 at 620 considered the matter to be an application of the High Trees principle. The same proposition is stated with characteristic succinct style by the late John Farrell in his “Irish Law of Specific Performance”, under the heading ‘waiver of a time limit’ at para. 8.39 where he says the following:
‘When time is of the essence the relevant time limit may be waived. This may be done by conduct. The vendor when faced with the time limit for sending an abstract title of a title document agreed to be sent is likely to lose the right to insist on the purchaser raising his objections or requisitions within the time limited for that purpose. If the delay is serious it may even amount to waiver of a clause in the contract making time of the essence for completion of a sale.’
66
No argument of waiver was made in the present case, and accordingly, I must look to the general law with regard to the effect of an agreement to extend the time for closing.
67
The general proposition seems to be, rather, that an extension of time will, without more, destroy the essential element of a time provision. Farrand quotes the dicta of Malins V-C in Webb v. Hughes [1870] L.R 10 Eq 281 at 286 where he said: –
‘If the time is once allowed to pass and the parties go on negotiating for the completion of the purchase, then time is no longer of the essence of the contract.’
68
Farrand in his discussion makes the following wry observation:
‘This means that the consequence of courtesy would be as if time had never been of the essence, involve either waiting for an unreasonable delay or else taking steps to make a later time of the essence.’
69
I consider that the approach canvassed by Farrand points me to a difference between the extension of a time limit where time is originally of the essence, and in a contract where time is not of the essence, but is made of the essence of the period fixed by a completion notice.
70
I find useful the decision of Goulding J. in Luck v. White (1973) 26 P. & C.R. 89. That case involved a contract for the sale of land where time was not originally of the essence, and a notice to complete was served by the vendor who then allowed the time to pass and continued to press the purchaser’s solicitor to close. The dicta at pp. 95 and 96 of the judgment were quoted with approval by Buckley L.J. in Buckland v. Farmar & Moody as follows:
‘…if the party who was in the right allowed the defaulting party to try to remedy his default after an essential date had passed, he could not then call the bargain off without first warning the defaulting party by fixing a fresh limit, reasonable in the circumstances.’
71
Buckley J. in Buckland v. Farmar & Moody while accepting that general statement of law, found on the facts that it was clear on the evidence that the vendor ‘had no intention of releasing the plaintiffs form their liability resulting from their default in complying with the completion notice’ (at p. 230 F).
72
In summary, I consider that the correct proposition of law is that if time is originally of the essence of a contract, an agreed or permitted extension of time will not destroy that essential element, but that if time is not of the essence the continuation of negotiations toward agreeing a new date following expiration of the time fixed by a completion notice will not at common law have the effect that time is of the essence of the extended period, unless that is made clear by the innocent party.
The effect of General Condition 40(f)
73
The express terms of General condition 40(f) modify somewhat that common law rule. It is clear that its provision with regard to the extension of time may be availed of by either party, i.e. either the purchaser or the vendor may seek an extension of time, and if agreement is reached time remains of the essence of the extended and specified time or times.
74
What is not clear however is whether the agreement to extend must be made in the currency of the notice, as is argued by the plaintiff. Counsel points to the term of General condition 40 itself, which refers to the extension of ‘such notice’. He argues that if the period of the notice has expired, the notice can no longer be said to subsist and accordingly, may not form a framework within which the extended period operates. Condition 40 (f) refers throughout to ‘the notice’‘the term of the notice’ or ‘such notice’.
75
The Condition is silent as to when an agreement to extend must be made, and the question is devoid of authority. I consider that there must at the time of the agreement to extend the notice be an extant notice, the period of which can be extended. If, whether with or without a failure on the part of either or both parties, the service of a completion notice does not result in either the closing of a sale or the rescission of the contract, time has ceased to be of the essence. The General Condition does not envisage circumstances where a party can serve a completion notice and then seek, after the expiration of that notice, to make a further period of time of the essence in reliance on that notice, and without serving a fresh notice. This is because service of the notice does not make time of the essence of the contract as a whole, it does not change the essential nature of the contract, but time is thereby made of the essence only of the 28 days so specified. Outside the period of the notice, if a new closing date is agreed, the parties are setting a new time and not extending an essential time condition, which has ceased to operate on the expiration of the time fixed. The new time is agreed in the context of the general contractual principle that time is not of the essence of a contract for the sale of land. Making time of the essence is the exception to the general contractual position. If the parties agree a closing date, time is not thereby agreed to be of the essence. If the time fixed by the completion notice has expired, they are not operating under its rubric, and therefore an agreement with regard to a date for closing is not an essential term, unless agreed or nominated to be such.
76
Thus, it seems to me that counsel for the plaintiff is correct that if an agreement was reached between the parties for the extension of the period provided for in the completion notice, that agreement is an effective addition to the 28 day period in respect to which time is of the essence, only if the agreement was reached while that notice was still extant. The alternative proposition cannot be correct as it envisages the extension of a period provided by an already expired notice.
77
I conclude then, that on a true construction of General Condition 40(f) that an agreement to extend a completion notice must be made in the currency of the notice. That proposition is consistent with the general law that time is not of the essence of a contract for the sale of land, and with the authorities analysed above with regard to the effect of service of a completion notice and of continuation of negotiations outside the notice period.
78
I conclude accordingly, that as the agreement to extend the closing date was made after the expiration of the completion notice on 2nd January, 2013, that time was not of the essence of the extended period.
79
However, the authorities show that the innocent party may reserve his or her rights under a notice, and I turn now to consider that proposition on which the defendant relies.
The reservation of rights
80
The defendant argues that it reserved its entitlement to rescind while at the same time agreeing to the two-day extension of 28-day period.
81
The correspondence from the solicitor for the purchaser after the 20th December, 2012, was expressly sent either without prejudice, without prejudice to the contract or by way of reserving rights under the contract. The first time this formula was used was in a letter of the 20th December, 2012, by which she ‘reserved our client’s right’ in the context of her assertion that the vendor was not ready to complete the sale after reasonable notice had been given of the readiness of the purchaser.
82
That rights may be effectively reserved in these circumstances is clear from the dicta of Goulding J. in Luck v. White, where he noted that the vendors had continued to negotiate without reserving in express terms their right to rescind, and made the following observation with regard to what might have been the situation had that occurred:
‘Indeed, the mere extension of the period to a new fixed date would on the authorities have preserved the position that time was of the essence, without fresh stipulation to that effect. The vendors, however, did nothing of the kind. They encouraged the purchaser to try to complete notwithstanding the expiry of the notice, and there was nothing to tell him at what moment the axe would fall.’
83
I turn now to consider the rights the purchaser asserts it had reserved.
84
It is argued that as a result of the proposal from the purchaser that it would close on the 21st December, 2012, or the 24th December, 2012, that the purchaser could have rescinded as the vendor was not in a position to close on that nominated date. I consider that as a matter of law the purchaser could not have rescinded the contract until the expiration of the full 28-day period in respect to which time was of the essence. This is apparent from the decision of the Chancery Division of the English High Court in Oakdown Ltd. v. Bernstein & Co. & anor. [1984] 49 P. & C.R. 282. That case concerned a vendor’s notice to complete in response to which the purchaser proposed to complete on the first day of the Passover. The vendor, who was of the Jewish faith, refused to complete on that date, and also refused to deliver the title deeds on the day before. The plaintiff successfully sued for specific performance. Scott J. held that while both the party serving and the party receiving a completion notice had an obligation to complete within the 28-day period, the giving of a notice of a willingness or readiness to complete within that 28 day period would not mean that the other party was in breach. The obligation is more simply stated: It is an obligation on both parties to complete within the 28 day period, and no failure on either party to complete before that on an intermediate date could render the contract capable of being rescinded by the other party.
85
Scott J. said as follows:
‘First, the obligation which binds the recipient of the notice and in respect of which time is of the essence is to complete within 28 days. I do not see why the corresponding obligation which binds the giver of the notice and in respect of which time is of the essence should be an obligation to complete on such day within the 28-day period as may be nominated by the recipient of the notice. Secondly, if the recipient of the notice selects a day for completion, say, five days after service and fails then to complete it is clear, in my judgment, that the failure does not place the recipient of the notice in breach of his obligations under the notice. He can still remedy that failure by completion within the remaining 23 days. I do not follow why the failure of the giver of the notice to complete on the selected day should have a repudiatory effect whereas the like failure of the recipient of the notice does not have that effect.
I accept, of course, that the failure by the giver of the notice to complete on an intermediate date within the 28-day period would be a breach of contractual obligation and might, in an appropriate case, affect the running of interest on the purchase money. But it would not, in my judgment, per se entitle the recipient of the notice to treat the contract as at an end’
86
Scott J. regarded the conclusion in Quadrangle Development and Construction Company Ltd. v. Jenner [1974] 1 ALL ER 729, often regarded as the leading decision on completion notices, that a party who serves a completion notice must be ready to complete at all times within the period specified, not to be authority for a wider proposition that that the recipient could call for an earlier closing. I agree. If either party is not ready, willing and able to complete within that fixed period, the other can rescind once the notice has expired, but not before. The period of 28 days is absolute in the sense that the party not at fault may not rescind until the notice has expired, and the full period of 28 days has to be given to both recipient and sender.
87
I consider that the use of formulae by the solicitor for the purchaser in her correspondence suggestive of the reservation of rights had no meaning as the purchaser had no right to rescind before the end of the period provided by the completion notice on the 2nd January, 2013. Thus, the reservation of rights to rescind had no legal effect.
88
Further, the rights expressly reserved by the solicitor for the purchaser were those under the contract, such as the right to purchase the premises at the agreed price, not to be charged interest, to the benefit of the various special conditions etc. There was no express reservation of rights that might have arisen by virtue of the failure of the vendor to be ready and able to close at the expiration of the completion notice. The reservation of rights in accordance with the authorities mentioned above must be clear and unequivocal and I am not satisfied that the solicitor for the purchaser clearly and unequivocally reserved her client’s right to rescind by virtue of the failure of the vendor to be in a position to close. The purchaser did in my view have a right to rescind on the 2nd January, 2013, but continued to engage as if the contract subsisted and indicated a willingness to close thereafter, and not having expressly reserved the right to rescind by these negotiations, it has hereby lost that right. To borrow the words of Goulding J. in Luck v. White, the solicitor for the purchaser encouraged the vendor to close on a later date. She cannot now resile from that position, and seek to rely on the essential nature of time in the contract, without making time of the essence afresh.
Conclusion
89
I consider then, that the defendant did not have a right to rescind the contract for sale in reliance on the completion notice of the vendor. The date agreed for completion was outside the time fixed under that notice, and accordingly time was not of the essence of the agreed extension. As the purchaser did not make time of the essence of the new date it cannot rescind for failure of the purchaser to close on that agreed date.
90
The counterclaim fails. The vendor seeks specific performance, and as the vendor is ready, willing and able to close, and no argument is made that a reasonable time has not been allowed to the purchaser to perform the obligations arising, the vendor is entitled to specific performance of the contract. I will hear further argument with regard to the claim for interest on the purchase price.
Northern Bank Ltd v Duffy
[1981] ILRM 308
MR. JUSTICE COSTELLO 16th DAY OF MARCH 1981.
On the 30th March, 1979, the plaintiffs agreed to sell to the defendant their interest in certain premises in Talbot Street in the City of Dublin for the sum of £130,000 utilising the 1978 edition of the General Conditions of Sale printed by the Incorporated Law Society of Ireland. The parties agreed that the sale would be completed on the 18th may, 1979 and that if it was not then the purchaser would pay interest on the balance of the purchase price from the 18th May to the date of actual completion in certain circumstances. The plaintiffs say that the circumstances envisaged in the contract have occurred and that they are entitled to interest on the sum of £104,000 from the 18th May to the 23rd August – the date of actual completion. The rate of interest specified in the parties agreement was a high one (20% per annum) as a result of which if interest becomes payable the defendant’s liability works out at a rate of £57 per day.
The plaintiffs’ claim is based on the provisions of Condition 4 of the Conditions of Sale which provides that:-
“The purchase shall be completed and the balance of the purchase money paid by the purchaser on or before the closing date which shall be the date specified in the Memorandum… Completion shall take place at the office of the vendors solicitor. If by reason of any default on the part of the purchaser the purchase shall not be completed on or before the closing date, the purchaser shall pay interest to the vendor at the rate specified in the Memorandum on the balance of the purchase money remaining unpaid from the closing date up to the date of actual completion, or the vendor may elect… to take the rents and profits less the outgoings of the property for such period in lieu of interest…”
There was, the plaintiffs say, “default” by the purchaser within the meaning of this Condition as a result of which the purchase was not completed on the 18th May. The plaintiffs did not elect to take the rents and profits up to the date of actual completion in lieu of interest and claim that they are entitled to interest up to the 23rd August at the rate to which I have just referred.
The defendant denies that he was in “default” within the meaning of the condition and this will be the first matter which I will have to decide. But a finding that the purchaser was in default will not determine all the issues which arise in these proceedings. It is urged on the defendant’s behalf that (a) even if he was in default the default was only for a period of sixteen days and payment of interest should be limited to this period only, and (b) alternatively interest is only payable from the 18th May to the 10th July as after that day the delay in completion was attributable to the purchaser’s default.
I find the concept of “default” in contracts for the sale of land most succinctly and clearly explained by parker, J. (as he then was) in Baylay-Worthington and Choen’ Contract (1909) 1 Ch. 648.The judgment commenced with a summary of the law based on a careful analysis of earlier cases (for example In Re Young and Horston’ Contract 31 Ch. D.168, and In Re Hetling and Merton’s Contract (1893) 3 Ch. 269 and Bennet .v. Stone 1902 1 Ch. 226) to which reference is made in modern text-books on the subject.
The statement of the law to which I wish to refer is as follows:-
“Default must, I think, involve either not doing what you ought or doing what you ought not, having regard to your relations with the other parties concerned in the transaction; in other words, it involves the breach of some duty you owe to another or others. It refers to personal conduct and is not the same thing as breach of contract. If A. contracts that B. shall do something by a certain day and B. does not do it by the day named, A. commits a breach of contract; but if the question arises whether the delay be due to A.’s default, A.’s personal conduct has to be considered, and the question will be whether he has committed some breach of his duty towards B. So, in contracts for the sale of real estate providing for completion at a certain date, and containing provisions as to what is to happen if completion be delayed beyond that date by or without the default, or wilful default, of either party, the conduct of that party has to be considered; and if he has been guilty of no breach of duty he will not, I think, be in default within the meaning of the contract. Of course the duties of each party towards the other must be determined by all the circumstances, including the nature of the contract and its provisions; and in determining these duties the complexities of the English law of real property must be borne in mind. The duties of, at any rate, the vendor under a contract for sale of real estate cannot be gauged by the standard applicable to other contracts, for example the sale of goods. Thus the vendor is not in every case bound to know of a defect in his title, but he is bound to remove any such defect if it be pointed out and it is in his power to remove it. If he proceeds with diligence to remove it when pointed out, he will not be guilty of default merely because completion has to be delayed pending such removal. If, however, he refuse to remove such defect when pointed out, I think he will be guilty of default, for his duty to the purchaser is to comply with or remove all proper requisitions or objections as to title. On the other hand, though the purchaser is entitled to make all proper requisitions or objections as to title, and to refuse to complete until they have been complied with or removed, he owes a duty to the vendor not to refuse to complete on the ground that some untenable requisition or objection made by him has not been complied with or removed; and if he refuse to complete on any such ground he is, I think, guilty of default. There may, of course, be cases in which there is a bona fide dispute as to what is a proper requisition or objection, and the only way of settling such dispute may be by application to the Court. If the Court decide that an objection or requisition is untenable, it in effect decides that it ought not to have been insisted on, and consequently that the purchaser was in default in refusing to complete till it was complied with or removed. If, on the other hand, the Court decide that the requisition or objection was good, it in effect decides that the vendor was in default in not complying with or removing it, if it was in his power so to do. The honest belief of either party in the validity of his own view will not prevent such party being in default, though it may Prevent such default being a wilful default within the meaning of the contract in question”.
In order to apply the principles of law which I have just quoted I must examine in some detail what happened between the 30th March, 1979 (the date the contract was signed) and the 23rd August (when the sale was actually completed) and in particular consider whether or not firstly the purchaser had been in breach of duty towards the vendor and secondly whether or not the vendor was subsequently in breach of duty towards the purchaser.
By letter of the 19th April the vendor’s solicitors sent to the purchaser’s solicitors copies of the documents necessary to vouch the title which had been shown in the Conditions of Sale. There was at that time a postal strike in existence and the purchaser’s solicitor had arranged for the delivery of letters by hand during the period of the strike. The evidence establishes that letters from him were usually delivered on the day after the date which the letter bears. This means that the copy documents of title would have reached the purchaser’s solicitors on the 20th April, 1979. Condition 9 of the Conditions of Sale provided that the purchasers had ten days after the delivery of the copy documents of title in which to send Requisitions on Title and in this connection time was expressly made the essence of the condition. So, the Requisitions should have reached the vendor’s solicitors by the 30th April, But the title was by no means an easy one and the purchaser’s solicitors were not in a position to send the Requisition until the 3rd May, On that day a letter was written for delivery to the vendor’s solicitors. Unfortunately it did not arrive at the offices of the vendor’s solicitors until the 16th May. It is not certain what caused the delay. The purchasers’ solicitors had also made arrangements during the postal strike to have their correspondence delivered by hand and the evidence of Mrs Coughlan who was then handling the sale in the office of the purchasers’ solicitors establishes that she signed the letter on the 3rd May. Due to some default in the delivery service the letter and the requisitions accompanying it took thirteen days to reach the vendor’s solicitors office.
The parties had agreed that the sale would be closed on the 18th May and as the Requisitions arrived only two days before this date it would obviously be impossible to complete a sale within two days. I must conclude that there was “default” on the purchasers part within the meaning of Condition 4 by reason of the hold-up in the delivery of the Requisitions. The purchaser was quite clearly under a duty to ensure that the Requisitions were delivered in sufficient time to enable the sale to be closed on the 18th May and this default resulted in failure to close on the day specified in the contract. It follows therefore that the plaintiffs became entitled to claim interest under Condition 4 or elect in lieu of interest to claim the rents and profits from the 18th May. What I now have to consider is, the vendors not electing to take the rents and profits, the period for which interest is payable.
With considerable expedition Mr. Crawford who was handling the sale in the office of the vendor’s solicitors replied on the 17th May, to the purchasers Requisitions and on the 22nd May, the closing day having passed, he informed the purchasers solicitors that a claim to interest under the contract was being made. Mrs. Coughla replied on the 28th May, raising further objections to the title, and these were dealt with by Mr. Crawford on the 30th May. On the same day he wrote directly to the purchaser requiring completion within 28 days and making time the essence of the contract. On the 6th June Mrs. Coughlan wrote indicating that the replies to the Requisitions were satisfactory and requiring that a statutory declaration be handed over on closing on terms set out on the letter. She also enclosed a draft deed of assignment for the vendor’s approval which was immediately approved and sent back on the 8th June. On the 11th June Mrs Coughlan wrote requesting that an appointment to close be arranged, but on the 19th June made it clear that the purchaser was denying liability to pay interest. After some further correspondence and telephone calls relating to the purchaser’s liability for interest an appointment to close in the offices of the mortagees solicitors (Messrs Sheedy Hickey and Co) was made for the 10th July. The recollection of Mr. Crawford and Mrs Coughlan differ as to what arrangements had been made in relation to the vendor’s claim to interest. Mr. Crawford believes that the purchasers had agreed to pay interest up to closing on the 10th July without any qualification. Mrs. Coughlan says that she had agreed to pay interest but made it clear that it would be without prejudice to the purchasers right to claim it back. It seems to me that there was a perfectly genuine misunderstanding as to the conditions under which interest would be paid and that it is a misunderstanding which in the events which happened in no way affects the parties rights under the contract.
When the solicitors met to close on the 10th July a further and completely unexpected difficulty arose. A search in the Registry of Deeds, which only became available on the 10th July, revealed that a Judgment Mortgage was registered against the interest of one of the vendors in the property. Mr. Crawford immediately gave his personal undertaking that he would discharge this mortgage out of the purchase price and requested that the sale be closed forthwith. Mrs. Coughlan was perfectly prepared to accept this undertaking but maintained that the existence of the Judgment Mortgage meant that the purchaser was not liable to pay interest on the balance of the purchase price. This led, as can well be imagined, to some considerable controversy. Mrs. Coughlan telephoned her principal in the vendor’s solicitors office and as a result agreed to pay the balance of the purchase price and close the sale there and then on the understanding that the purchasers obligation to pay interest would be determined by the Court on a summons brought under the provisions of the Vendor and Purchaser Act 1874. Mr. Crawford refused to close on these terms and the meeting terminated in what was described as “some disorder”.
The position concerning the Judgment Mortgage was investigaged and it transpired that some time previously the mortgage had in fact been discharged and that due to an oversight in lodging the necessary documents to vacate the mortgage the mortgage still appeared in the Registry of Deeds as a valid incumbrance. The vendor’s solicitor also obtained information which led him to believe that Mrs. Coughlan had been aware when the parties had met on the 10th July both of the existence of the Judgment Mortgage and of the fact that it had been discharged. I need not delay in reviewing the evidence on this aspect of the case as I am quite satisfied that Mrs. Coughlan had no knowledge of the exact position relating to the Judgment Mortgage on the 10th July. Whilst it is true that she had been involved in a previous sale of portion of the property in Talbot Street the subject matter of the contract of the 30th March, 1979 she was not present at the closing of that sale and had no details of what had happened to the Judgment Mortgage.
The parties continued in dispute for some time as to the purchasers liability to pay interest and eventually on the 9th August the vendor’s solicitor suggested that the sale be closed without prejudice to the interest question, that the amount of interest due to actual closing be put on a joint account and that an application to the Court be made to determine the purchasers liability. It will be noted that this was in substance the proposal which Mrs. Coughlan had put forward on the 10th July and so this suggestion was readily agreed to and the sale was closed on the 23rd August, 1979. Subsequently these proceedings were instituted by the vendor’s solicitor and I now have to decide what sum the defendant should pay by way of interest to the plaintiffs.
My conclusions on the facts which I have just outlined are as follows. The delay in closing the sale between the 18th May (when the purchasers solicitors received the replies to the Requisitions on Title) and the 7th June (when the vendor’s solicitors received intimation that the title was satisfactory) arose because of further objections to the title raised by the purchaser. Although the vendor’s solicitor was able to show that the points raised by the purchasers solicitor were without foundation I am gaite satisfied that in raising them there was no “default” on the purchasers behalf. As I have said, the title was somewhat complicated and it cannot be said that by raising the objections the purchaser was guilty of a breach of duty towards the vendor . Further delay arose between the 7th June and the 10th July, a delay occasioned by the claim to interest which the vendors were maintaining and which the purchaser was disputing. As the purchaser had been in “default” prior to the 18th May and as the sale was not closed due to this default the vendor was entitled to claim interest under Condition 4. The delay in closing after the 7th June, therefore, was occasioned by the purchasers unjustified insistence that interest was not payable.
In the light of these conclusions I am quite satisfied that the purchaser is certainly required to pay interest up to the 10th July. It is true that some of the delay between the 18th May and the 10th July was attributable to the ordinary problems which can occur in the investigation of a complex title but I do not think that this assists the purchaser in any way or mitigates his liability under Condition 4. There was imposed on the purchaser an obligation to pay interest from the closing date fixed in the contract to the date of actual completion if by reason of any default on his part the purchase was not completed on the closing date. I cannot imply a term into that condition that the amount of interest is to be limited to that period between the specified closing date and the date of actual completion which equals the period prior to the specified closing date during which the purchaser was in actual default. The parties agreement is clear; if there is default by the purchaser which results in the sale not being closed on the day agreed upon the interest is payable even though some further delay occurs after the specified completion date which is not attributable to his default but which arises from the ordinary problems of investigating a title.
I come now to consider the effects of the events of the 10th July on the purchasers liability to pay interest beyond that date. What I now have to decide is (a) whether the delay between the 10th July and the 23rd August is attributable to the vendor’s acts or omissions and (b) if so, is the purchaser thereby relieved from liability to pay interest beyond the 10th July.
Just as a purchaser owes a duty to his vendor in the course of the implementation of a contract for sale so to does a vendor owe a duty to the purchaser. The nature and extent of that duty will of course be different as the sale progresses. I think that by the 10th July the vendor in this case owed a duty to the purchaser to co-operate with him in closing the sale as expeditiously as possible, a duty which was acknowledged and partly fulfilled when the vendor’s solicitor agreed to undertake to discharge the judgment mortgage out of the proceeds of sale. But it seems to me that the sale could well have been closed on the 10th July and what prohibited its closing was a failure by the Vendors to agree to close on the terms suggested by the purchaser’s Solicitor. Those terms were reasonable ones and were substantially the same as those suggested by the Purchasers Solicitors a month later and which in fact were the basis on which the sale was actually closed on the 23rd August. In my opinion by failing to close on the 10th July the vendors were in all the circumstances then pertaining in breach of their duty to their purchaser and so were in “default” on that date. Does this “default” disentitle them to interest from the 10th July?
It has long been settled that the “wilful” default of a vendor can affect the liability of a purchaser to pay interest even when the contract requires him to pay interest when the delay is occasioned by any cause whatsoever. This principle was applied in Menton .v. Mannion (1948) I.R. 324, a case in which the parties had agreed that interest would be paid by the purchaser “if for any cause whatsoever” the purchase was not completed on the day specified in the agreement. The Court held that this should be construed as meaning that interest would be payable if for any reason the sale was not completed on the day stated “other than the wilful default or vexatious conduct of the vendor.” Construing a similar clause in Sheridan .v. Higgins (1971) I.R. 291 the Chief Justice pointed out (p.304) that it could never have been the intention that the purchaser was to pay interest when the delay in completion was due to the wilful default of the vendor. In the present case I am not considering an interest clause which imposes an obligation to pay interest “if for any cause whatsoever” there is delay in completion; the condition here is a less onerous one and only imposes a liability when there is some “default” on the purchasers part. But it seems to me that I should construe this contract as the Chief Justice did in Sheridan .v. Higgins and conclude that the parties must have intended that the purchaser would not be required to pay interest for any delay which could be shown to have been caused by the wilful default of the vendor. If it were otherwise the contract would permit the most unfair and oppressive conduct on the part of a defaulting vendor and I do not think that the parties contemplated that their contract would permit such conduct. It seems to me that I should construe Condition 4 as meaning that if added to the default of the purchaser which results in his liability to pay interest under the contract there is “wilful default” on the part of the vendor after the specified completion date which results in further delay in actual completion interest should not be payable for that period attributable to the vendor’s wilful default.
I have already referred to what I understand is meant by the word “default” in a contract of this sort. I think I should make it clear that the adjective “wilful” does not carry ary overtones of moral obliquity. As pointed out by Bowen L.J. In Re Young and Harston’s Contract 31 Ch. D. 168 at 174, “wilful”
“is a word of familiar use in every branch of the law, and although in some branches of the law it may have a special meaning, it generally, as used in Courts of Law, implies nothing blameable, but merely that the person of whose action or default the expression is used is a free agent, and that what has been done arises from the spontaneous action of his will. It amounts to nothing more than this, that he knows what he is doing, and intends to do what he is doing, and is a free agent”.
I conclude therefore that the vendor’s breach of duty on and after the 10th July not only amounted to “default” but also to “wilful default” as that term is understood in the law of vendor and purchaser and that they are disentitled to interest for the period 10th July to 23rd August. In the result, the plaintiffs should get interest only from the 18th May to the 10th July (i.e. for 53 days) at the rate of £57.00 per day, namely the sum of £3,021.00.
There is one final matter to be considered. The parties by their agreement whilst imposing an obligation on the purchaser to pay interest from the specified closing date to actual completion also gave him the rents and profits (less outgoings) during that period. If however their agreement is to be interpreted as meaning that for a portion of that period the purchaser may be relieved of his obligation to pay interest it should also be interpreted as meaning that for the same period he should not be entitled to the benefits of the rents and profits. It seems to me that the parties could not have intended that the purchaser should take the benefit of the rents and profits at a time when he was not obliged to pay interest to the vendor. This means that in this case in addition to paying the sum in interest which I have just mentioned the purchaser should repay a sum equal to the rents and profits less outgoings for the period 10th July to 23rd August which was credited to him on the closing of the sale.
Collins v Duffy & Callan
[2009] IEHC 290
Ms. Justice Finlay Geoghegan
The plaintiffs are husband and wife and engaged in property development. The defendants are property developers.
By an agreement in writing made on 12th September, 2007, the plaintiffs agreed to sell and the defendants agreed to purchase the lands comprised in folio 8328 of the Register of Freeholders, County Dublin, in consideration of €6.3 million (“the Contract”). The defendants paid to the plaintiffs a non-refundable deposit of €630,000 pursuant to the Contract. The Contract provided a closing date of 30th July, 2008. The defendants obtained planning permission for eighteen houses on 1st August, 2008. In the summer of 2008, the plaintiffs and the defendants agreed to a six-week extension and a new completion date of 12th September, 2008.
The defendants failed to complete the contract on 12th September, 2008. By letter of 16th September, 2008, the solicitors for the defendants indicated that their clients had now arranged for a survey of the property and that a preliminary report had been provided, indicating that there was a discrepancy between the Property Registration Authority map for folio 8328, County Dublin, and the actual boundaries on the ground. They indicated that they were seeking a map clearly indicating the extent of the discrepancy and that they were uncertain as to the “full extent or relevance of the discrepancy”. They indicated that they hoped a map would be prepared prior to the end of the week and would send it for comments. No such map was sent.
There was further correspondence in the second half of September, including an allegation made on behalf of the plaintiffs that one of the defendants had indicated that he did not intend completing the purchase of the property. Specific performance proceedings were threatened and a plenary summons issued on 9th October, 2008, claiming specific performance of the Contract, damages, and other ancillary reliefs.
At the end of the hearing, the plaintiffs, through their counsel, indicated that they were opting to pursue a claim for damagesin lieu of specific performance and not seeking an order for specific performance of the Contract. The defendants each gave evidence of their current inability to raise finance to complete the Contract. It is common case that the plaintiffs are only entitled to damages in lieu of specific performance if they establish an entitlement to an order for specific performance of the Contract.
The defendants admit the Contract and raise no issue as to its validity. They defend the claim for specific performance on three grounds.
i (i) The Contract was contingent upon the plaintiffs ensuring that the first named plaintiff and/or his associates purchased from a company owned by the defendants, Pecan Investments Limited, two units to be built by it at the development to be known as Metro Point Business Park, Kettles Lane, Swords, County Dublin, for a total price of €2,266,800.00 plus VAT.
ii (ii) The plaintiffs did not serve a completion notice pursuant to condition 40 of the general conditions of sale and in the absence of same are not entitled to maintain proceedings for specific performance.
iii (iii) The plaintiffs were not ready, willing and able to complete the sale of the property at the time of the issue of the plenary summons by reason of the alleged discrepancy in relation to the western boundary of the site and an issue as to whether or not the stream along the western boundary forms part of the property the subject matter of the sale.
7. It is not in dispute that at the end of 2006 or early 2007, the first named plaintiff and his business partner, Niall Doyle, put a booking deposit on two units being developed by the defendants’ company, Pecan Investments Limited, at Metro Point Business Park, Kettles Lane, Swords, County Dublin. It is further agreed that ultimately the plaintiff and Mr. Doyle determined not to proceed with the proposed purchase by reason of a potential increased stamp duty liability on the transactions and that the booking deposits were returned. I have concluded, on the oral evidence of the first named plaintiff, Mr. Michael Greene (the auctioneer and valuer for the plaintiffs) and the defendants, and find as a fact that there was not even an oral agreement making the purchase by the defendants of the property in folio 8328, County Dublin, pursuant to the Contract, contingent on the purchase of the two units at Kettles Lane, Swords, County Dublin.
8. Irrespective of the existence of any oral agreement, condition 5 of the special conditions of the Contract provides, “it is hereby further agreed that this document contains the entire terms and conditions of the agreement between the parties hereto…..” I am satisfied that the Contract does contain the entire terms and conditions of the agreement between the parties in relation to the sale and purchase of the lands in folio 8328, County Dublin, and was not contingent on any purchase by the first named plaintiff of units at Kettles Lane, Swords, County Dublin.
9. The defendants contend that time was not of the essence in respect of the Closing Date and accordingly, in the absence of the service of a completion notice pursuant to condition 40 of the general conditions of sale, the plaintiffs were not entitled to commence proceedings for specific performance and obtain an order for specific performance of the Contract. They rely, in particular, upon general condition 40(d) which provides:
“Save where time is of the essence in respect of the Closing Date, the following provisions shall apply:”
(a) …
(d) if the Purchaser shall not comply with such a notice within the said period (or within any extension thereof which the Vendor may agree) he shall be deemed to have failed to comply with these Conditions in a material respect and the Vendor may enforce against the Purchaser, without further notice, such rights and remedies as may be available to the Vendor at law or in equity, or (without prejudice to such rights and remedies) may invoke and impose the provisions of Condition 41 ….”
Condition 41 refers to the right of a vendor to forfeit the deposit and resell the property.
10. Counsel for the defendants did not refer to any authority in support of the proposition that a vendor is obliged to serve a completion notice prior to commencing proceedings seeking an order for specific performance. The submission is contrary to the view expressed in Farrell, ‘Irish Law of Specific Performance’ (Dublin, Butterworths, 1994) at para. 8.38, where it is stated, “[a] plaintiff seems to be entitled to sue for specific performance once the agreed completion date has passed without making time of the essence”. Mr. Farrell refers, as authority for that statement, to an unreported decision of O’Caoimh P. of 18th May, 1973, Sidebottom Limited v. Leonard. In that decision, O’Caoimh P. stated:
“Now it has been argued that before a vendor can institute proceedings for specific performance of a contract when the time for completion has passed and the completion date has been not insisted upon by the vendor he must serve a notice making time of the essence. I know of no authority for this proposition. I accept that if the vendor wishes to enforce rights under the contract to forfeit the deposit he must make time of the essence and that in default of some notice it does not. Making time of the essence I think is a misdescription because time can never be made of the essence of a non-commercial contract unless the contract makes it such. I think this is the effect of Mr. Justice Harmon’s decision. What the notice can do is give to the other party notice that his failure to complete within a reasonable time specified in the notice will be treated by the other party as a refusal on his part to carry out the contract and that is what normally is meant by making time of the essence in a contract such as this, but I don’t think it is necessary there should be such a notice in the case of an action by a vendor, not to call off the contract and pocket the deposit, but merely to call upon the purchaser to do what he has engaged to do and I think the vendors are entitled to a decree for specific performance. On the whole I think it better not to say anything about title in the decree, just make a decree for specific performance.”
11. Whilst the contract for sale, the subject matter of the above decision, probably included an earlier version of the Law Society general conditions, I am in agreement with O’Caoimh P. and do not consider that general condition 40 in any way alters the entitlement of a vendor to bring proceedings, certainly after a closing date, where a purchaser has indicated an unwillingness to complete as he was contracted to do. On the facts herein, I find, on the evidence, that the purchasers, through their solicitors in the correspondence between 16th September, 2008, and the date of issue of the summons, had made clear that they were then unwilling to complete the purchase.
12. There is only a small difference in the evidence of the experts called by the plaintiffs and the defendants in relation to the alleged boundary discrepancy, as it was referred to, or perhaps more accurately, an uncertainty in relation to the boundary. The property comprised in folio 8328, County Dublin, is at present agricultural land with no difficulty identifying the precise boundaries on the ground in relation to the northern, eastern and southern perimeters. At the western perimeter, a stream runs along the entire length. The evidence is that on the ground, the eastern side of the stream is overgrown with thicket, hedgerows, bushes, etc. The steam is down a ravine of differing heights along the length of the perimeter. The Ordinance Survey maps indicate that the western boundary of folio 8328 is also the town land boundary. The Ordinance Survey map, from which the Property Registration Authority map is taken, identifies the western boundary as being “6′ [or now 1.83m] FF”. Mr. Bruffini, who gave evidence for the plaintiff, explains that this, on an Ordinance Survey map, means six feet from a fence. However, he also stated that in some instances there were no such fences, that what is being referred to is a hedgerow or similar.
13. Mr. Williams, a surveyor called by the defendants, gave evidence that on his reading of the Ordinance Survey maps and the Property Registration Authority map taken therefrom, including the above referred to explanation, the boundary line falls on the western side of the stream. Mr. Bruffini, by reason of the identification of the boundary at 6′ from a fence and by reason of the fact that the stream, as a matter of probability, is not uniformly 6′ wide along the length of the western boundary, stated that, in his view, the boundary line may fall at some points on the western side of the stream, but also if, for example, the stream were ten feet wide, it would fall in the stream. Also, that it depended on the distance of the stream from whatever is being referred to as the old fence or hedgerow. Mr. Williams also stated that there was evidence along the stream of some activity including cutting down of trees on the eastern edge of the stream by adjoining landowners.
14. I am satisfied, on the evidence of the surveyors, that as a matter of fact, it is not possible to identify precisely from the Property Registration Authority map where exactly the boundary falls in relation to the stream running along or adjacent to the western perimeter of the property. Whilst there are indications that it may be at the western edge of the stream, that is not certain.
15. In relation to the legal issues, it is common case between the parties that by reason of s. 85 of the Registration of Title Act, 1964 (as substituted by s. 62 of the Registration of Deeds and Title Act, 2006), the Property Registration Authority map is not conclusive as to the boundaries or extent of the land comprised in folio 8328. There, however, agreement ends.
16. The plaintiffs submit that they agreed to sell all the lands comprised in folio 8328, County Dublin, and are under no obligation to identify on the ground the precise boundaries of the property being sold, having regard, in particular, to condition 14 of the general conditions. They also submit, having regard to special condition 4, that it is a matter for the defendants to satisfy themselves as to the exact location of the western boundary on the ground. The plaintiffs further subit that they were, on 12th September, 2008, and at the date of issue of the plenary summons, ready, willing and able to complete the sale.
17. The defendants submit that there was, at least since 16th September, 2008, a genuine issue raised in relation to a possible discrepancy concerning the western boundary and that the plaintiffs are obliged to resolve this matter prior to being entitled to require the defendants to complete the sale. They also contend that the plaintiffs were not ready, willing and able to complete the Contract, as they were not in a position to give vacant possession of the entire of the lands in folio 8328 by reason of evidence of use or occupation by the adjoining landowners of an area on the eastern edge of the stream.
18. The plaintiffs also sought to rely on the fact that the defendants did not have finance in place to complete the Contract in September, 2008. On the evidence, I find as a fact, that the defendants did not have finance in place to complete the Contract in September 2008. Nevertheless, such finding is not relevant to the issues as to whether the plaintiffs were entitled to require the defendants to complete the Contract in September, 2008, and were themselves ready, willing and able to do so.
19. The Contract describes the property in sale as:
“All that and those the lands and premises situate at Killsallaghan, Rolestown, County Dublin, being all the property comprises (sic) in Folio 8328 of the register of Freeholders, County Dublin, held in fee simple”.
20. The document schedule contains folio 8328, County Dublin, and file plan 8328, County Dublin. There is no map attached to the Contract. General condition 14 provides:
“The Purchaser shall accept such evidence of identify as may be gathered from the descriptions in the documents of title plus (if circumstances require) a statutory declaration to be made by a competent person, at the Purchaser’s expense, that the Subject Property has been held and enjoyed for at least twelve years in accordance with the title shown. The Vendor shall be obliged to furnish such information as is in his possession relative to the identify and extent of the Subject Property, but shall not be required to define exact boundaries, fences, ditches, hedges or walls or to specify which (if any) of the same are of a party nature, nor shall the Vendor be required to identify parts of the Subject Property held under different titles.”
21. As already indicated, the only documents of title are the folio and file plan. The latter is not conclusive as to boundaries. There was no statutory declaration such as referred to in condition 14. It is not suggested that the plaintiffs had any other information in their possession relative to the identity or extent of the property. I am satisfied that in accordance with the express terms of condition 14, which forms part of the Contract and therefore the terms under which the defendants agreed to purchase the property, the plaintiffs are not required to define exact boundaries. In the light of this conclusion, it is unnecessary for me to consider the plaintiffs’ reliance on special condition 4.
22. I am also satisfied that the plaintiffs were ready, willing and able to complete the Contract on 12th September, 2008, and all material dates thereafter, up to and including the date of issue of the plenary summons. The admissible minimal evidence of work done by adjoining landowners on the eastern side of the stream does not, in my view, preclude a finding that the plaintiffs were able to deliver vacant possession of the property comprised in folio 8328, County Dublin. Even that evidence results from a survey in December 2008. Further, whilst evidence was sought to be given by the defendants of claims made by adjoining landowners in November 2008, those persons were not called. There is no admissible evidence of any such claim.
23. The solicitor for the defendants gave evidence of difficulties which he envisaged in the development of the property if the defendants were required to complete the purchase without precise identification of the western boundary on the ground. That may be so. However, the defendants entered into the Contract with the benefit of legal advice and are bound by its terms. Having regard to condition 14 of the general conditions to which they agreed, they are not entitled to require the plaintiffs to identify the boundary before being obliged to complete.
24. Accordingly, I am satisfied that the plaintiffs, if they had pursued a claim for same, would have been entitled to an order for specific performance of the Contract. As they have opted for damages in lieu of specific performance and having regard to the evidence of the defendants as to their present financial circumstances I consider I should exercise my discretion to award damages must determine the appropriate amount.
25. The damages to be awarded to the plaintiffs should be such as will put the plaintiffs in as good a position as if the Contract had been performed. There is no dispute that such is the principle. If the sale had been completed in accordance with the Contract, the plaintiffs would have received the balance of the purchase price of €5,670,000.00 on 12th September, 2008, or within a short period thereafter. They have not received this sum and by reason of the option taken at the end of the proceedings i.e. not to seek an order for specific performance they are, in effect, accepting the breach of contract by the defendants and now treating the Contract as discharged. The plaintiffs therefore retain the lands and must give credit for those lands at their current value against the gross loss of €5,670,000.00.
26. There is great difficulty in present market conditions in reaching a conclusion as to the probable current value of this property. Evidence was adduced on behalf of the plaintiffs from Mr. Greene and by the defendants from Mr. Duff, both valuers. Each valued the lands, having regard to potential development in accordance with the planning permission for eighteen houses obtained in August, 2008. Nevertheless, the evidence of Mr. Duff was that, at present, there is no market for the sale of a site such as these lands, or, indeed, for the sale of individual house sites if the property were to be laid out with roads and services and eighteen individual sites sold. Insofar as he placed a value on those individual sites, those values would only apply if the market picked up and finance becomes available. The evidence of Mr. Greene on this point was less explicit but nevertheless it was clear there was great uncertainty, in his view, of what is the current market value. He gave evidence of some recent sales of houses which he considered relevant to the prices used in his valuation. I am satisfied that both valuers genuinely attempted to assist the Court in a time of great uncertainty..
27. Mr. Greene approached the valuation of the site in two ways. First, if the property were fully developed and houses built in accordance with the planning permission obtained, for the detailed reasons given to the Court, including probable house prices and building costs, he formed a view that, taking into account a required contribution for social and affordable housing, the site has a current market value in the order of €1,884,000.00. In the context of a witness statement which had been delivered from Mr. Duff, he also considered a valuation upon a basis that approximately €300,000.00 would be spent to put services and roads on the lands and then eighteen individual sites sold off. On that basis, again with a contribution for social and affordable housing, he estimated the value of the entire site to be in the order of €2,102,000.00. There was some controversy in relation to VAT which if not applied, as he stated, might increase his value on this basis by a further €400,000.00 approximately.
28. Mr. Duff, on the other hand, expressed the view that if roads and services were put in the eighteen sites would then realise, on average, not less than €250,000.00 each and might even achieve €300,000.00. Taking into account the agreed sum of €300,000.00 for roads and services, and a social and affordable housing contribution in the order of €500,000.00, and using €250,000.00 this results in an estimated value of the site of €3.7 million. Nevertheless, as already stated Mr. Duff accepted that there is, at present, no market for the sale of this site at that price or the eighteen individual sites and an average of €250,000.00 each. Accordingly, this cannot be considered as a current market value but rather a potential value when the market picks up.
29. There was also evidence of a valuation of the site in 2005, before rezoning, at €1.8 million and, after rezoning, at €4.0 million. In Mr Greene’s view, current land values are now lower than 2005 values. He expressed a view that they were closer to 2003 or 2004 values. Unfortunately, I have no evidence of the value of this property or a comparable site in 2003 or 2004.
30. On all the evidence given by the valuers, I have concluded that the value of the property in sale has reduced from the price agreed in the Contract by more than 50%. I have concluded that the evidence given by Mr. Greene in relation to a current market value (with his VAT treatment) is at the lower end of a probable current value but that Mr Duff’s valuation is more significantly higher. I have determined that, in assessing the damages herein, the plaintiffs should give credit for the retention of the lands at a current value of €2.6 million. The balance due pursuant to the Contract was €5.670 million. This results in a net award of €3,070,000.00.
31. The remaining issue is that of interest. The plaintiffs claim interest pursuant to the Contract on the outstanding balance of €5,670,000.00. The rate of interest under the Contract is 8%. As damages are being awarded in lieu of specific performance, it appears to me that in accordance with the principle of putting the plaintiffs in the position they would have been if the Contract had been performed, and taking into account the fact that they now retain the property, interest should only be payable on the net amount of the award. If the Contract had been performed, completion should have taken place on 12th September, 2008, or within a short period thereafter. Having regard to condition 40 of the general conditions, and the fact that no completion notice was served, I have concluded that I should exercise the discretion given me by the Courts Act in relation to interest (also at 8%), to award the plaintiffs interest on the sum of €3,070,000.00 from the date of commencement of proceedings i.e. 9th October, 2008, pursuant to the Courts Act, (at the rate of 8%) until the date of judgment.
There will be judgment in favour of the plaintiffs against the defendants, jointly and severally, in the sum of €3,070,000.00, together with €175, 621.00 being my estimate of interest at 8% from 9th October, 2008, to the date of this judgment, giving a total of €3,245,621.00.
Monica Kiely (nee Phelan) v Ronald Delaney
[2012] IESC 41
Supreme Court
Mr. Justice Fennelly
I would paraphrase the grounds of appeal as they appear from the notice of appeal as arguing on behalf of the appellant that the learned High Court judge erred in the following respects:
· In holding the appellant to be estopped from relying on condition 18 having regard to the specifics of the contract of sale and the facts of the case;
· In holding that the right to rescind pursuant to condition 18 was not available to a vendor in a case where the purchaser maintains a claim for compensation pursuant to condition 33;
· In holding the behaviour of the appellant to have been unreasonable arbitrary or capricious;
· In applying an incorrect legal test to the right to rescind pursuant to condition 18, namely whether her solicitor had been imprudent when drafting the contract for sale;
· In failing to attach weight to the imprudence, negligence or recklessness of the respondents;
· In attaching excessive weight to the evidence on affidavit of a solicitor as to matters of law;
· In finding that the appellant had been engaged in procrastination, delay or excuses in order to avoid the arbitration.
29
Condition 18 of the Law Society of Ireland General Conditions of Sale (2001 edition) provides:
“If the purchasers shall make and insist on any objection or requisition as to the title, the Assurance to him or any other matter relating or incidental to the Sale which the Vendor shall, on the grounds of unreasonable delay or expense or other reasonable ground, be unable or unwilling to remove or comply with, the Vendor shall be at liberty (notwithstanding any intermediate negotiation or litigation or attempts to remove or comply with the same) by giving to the purchasers or his solicitor not less than five working days notice to rescind the Sale. In that case unless the objection or requisition in question shall in the meantime have been withdrawn, the Sale shall be rescinded at the expiration of such notice”.
30
Condition 33 provides:
(a) In this Condition, ‘error’ includes any omission, non-disclosure, discrepancy, difference, inaccuracy, misstatement or misrepresentation made in the Memorandum, the Particulars or the Conditions or the Non-Title Information Sheet or in the course of any representation response where negotiations leading to the Sale and whether in respect of measurements, quantities, descriptions or otherwise.
a (b)The Purchaser shall be entitled to be compensated by the Vendor for any loss suffered by the Purchaser in his bargain relative to the sale as a result of an error made by or on behalf of the Vendor provided, however, that no compensation shall be payable for loss of trifling materiality unless attributable to recklessness or fraud on the part of the Vendor nor in respect of any matter of which the Purchaser shall be deemed to have had notice under section 16 (a) nor in relation to any error in a location or similar plan furnished for identification only.
(c) Nothing in this Memorandum, the Particulars or the Conditions shall:
(i) Entitle the Vendor to require the Purchaser to accept property which differs substantially from the property agreed to be sold whether in quantity, quality, tenure or otherwise, if the Purchaser would be prejudiced materially by reason of any such difference, or
(ii) Affect the right of the Purchaser to rescind or repudiate the Sale where compensation for a claim attributable to a material error made by or on behalf of the Vendor cannot be reasonably assessed.
(d) Save as aforesaid, no error shall annul the Sale or entitle the Vendor or the Purchaser, as the case may be, to be discharged therefrom”.
31
Professor J.C.W. Wylie inIrish Conveyancing Law (Butterworths 2nd ed. at paragraph 15.30) comments on the exercise of the right of rescission pursuant to condition 18 as follows:
“This right of rescission constitutes a considerable restriction on the purchaser’s rights and so it is not surprising that the courts have been alert to see that it is not abused. In fact, the courts have laid down a number of qualifications to the vendor’s right of rescission. First, it is settled that the vendor must exercise it in a reasonable manner or, as it is more usually put, he must not invoke it without reasonable cause. He must not act capriciously or arbitrarily and, if necessary, will have to convince the court that the objection or requisition which has caused him to invoke his right of rescission is one which will cause him substantial expense or involve him in litigation if he is to comply with it or remove it. Thus, he cannot use the right as a convenient method of getting out of his contract with the purchaser, e.g., in order to be able to accept a higher offer for the property from a third party. Condition 18 recognises this principle for it provides that the vendor must be unable or unwilling “on the grounds of unreasonable delay or expense or other reasonable ground.””
32
The learned author notes, however (at par. 15.28), that the right to avail of condition 18 is not limited to matters of title or conveyance but extends to”any other matter relating to the sale, eg as to descriptions of quantity.”
33
Murphy J considered the well-established case-law concerning the exercise of the contractual right of rescission in his judgment in the High Court inLyons v Thomas [1986] I.R. 666. The vendor in that case had served a rescission notice under an earlier version of condition 18. There was a dispute between vendor and purchaser arising from the deterioration in the condition of the property being sold (an unoccupied dwellinghouse). The vendor refused to agree a reduction in the purchase price due to the damage to the property and served the rescission notice. Murphy J noted the wide terms of the rescission clause, but added, at page 677, that it was “settled law…… that there are restraints imposed on a vendor seeking to invoke a clause of this nature.” He reviewed the case law, much of which is discussed by the learned High Court judge in this case. He did not think (see page 681) that “a purchaser who insists upon a right to be compensated for damage to property in which he is interested is acting unreasonably.” His conclusion was:
“……under the terms of the contract for sale in accordance with established legal principles the purchaser is entitled to be paid a substantial sum by the vendor by way of compensation for the vendor’s wrongdoing. Whilst in my view it is entirely understandable that the vendor should wish to escape this liability I could not accept that it would be reasonable for a vendor to invoke a rescission clause so as to enable him to escape liability which was caused by and indeed consisted of his or her wilful default.”
34
Murphy J, like MacMenamin J in the present case, reviewed the cases going back to the mid-nineteenth century. It may be sufficient to cite the dictum of Lord Radcliffe inSelkirk v Romar Investments Ltd [1963] 1 W.L.R. at 1422:
“Now, on what can the appellant rest his claim to set aside the respondent’s notice of rescission? It is plain enough that, so far as the terms of the contract go, the respondent is within its rights. Clause 3 (3) is as much a part of the various undertakings and stipulations that make up the total nexus of the parties’ agreement as any other of its clauses, and it is in fact a stipulation that was included in the draft put forward by the purchaser. If a vendor, having stipulated for or been conceded such a right, is to be precluded from asserting it in any particular context, it must be by virtue of some equitable principle which enures for the protection of the purchaser; and it is not in dispute that courts of equity have on numerous occasions intervened to restrain or control the exercise of such a right of rescission in contracts for the sale of land, despite what, on the face of the contract, its terms seem to secure for the vendor.”
“It does not appear to their Lordships, any more than it did to the judge who tried the action, that there is any room for uncertainty as to the nature of the equitable principle that is invoked in these cases. It has frequently been analysed, and frequently applied, by Chancery judges, and, although the epithets that describe the vendor’s offending action have shown some variety of expression, they are all related to the same underlying idea, and their variety is only due to the fact that, as each case is decided according to the whole context of its circumstances and the course of conduct of the vendor, one may illustrate more vividly than another some particular aspect of that idea. Thus, it has been said that a vendor, in seeking to rescind, must not act arbitrarily, or capriciously, or unreasonably. Much less can he act in bad faith. He may not use the power of rescission to get out of a sale “brevi manu,” since by doing so he makes a nullity of the whole elaborate and protracted transaction.”
35
Finlay C.J. inWilliams & another v Kennedy (Supreme Court unreported 19th July 1993) repeated part of this language, stating that the first principle was that “it must be shown if the vendor is to exercise his right in availing of the clause that he is acting reasonably, not arbitrarily, not capriciously.”
36
It seems to me to be very well settled, therefore, that a vendor may not unreasonably exercise the right to rescind conferred by a contract, even where it is expressed in the wide terms of condition 18. Indeed as Professor Wylie notes, the very words of the condition itself limit its exercise to cases where the vendor has reasonable grounds for doing so. There is a difference, of course, between reasonable grounds and reasonable behaviour, although there will in most cases be a relationship between the two. The courts have long recognised that equitable principles may act to restrain the conduct of the vendor.
37
In my view, it is perfectly clear that, on the facts of the present case, the appellant did not validly invoke the right to rescind the contract. The copy folio produced at the auction purported to show that there was to be a right of way appurtenant to the land. It is not absolutely clear whether the lands, without the right of way are landlocked. Some of the evidence says that they are. At any rate as the learned judge observed, the right of way”is clearly of considerable importance as an amenity to the land.”
38
The difficulty arose, apparently, from a conveyancing error. It is impossible not to have considerable sympathy for the appellant. This error was not her fault. Her original solicitor explained as early as December 2003 that the sale of the intervening strip of ground which was responsible for the severance of the right of way had been unknown to him. In March 2003 he said that this had come as a major surprise. The sale was effected by the appellant’s predecessor in title. The appellant apparently believed that the right of way existed based on evidence on the ground. However all that may be, it was not the fault of the respondents.
39
When early though desultory efforts to solve the problem had come to nought, the appellant, at least through her solicitors, permitted unforgivable delay to overtake the case. An arbitrator was appointed. The appellant delayed the conduct of the arbitration by failing to respond to correspondence, to produce Points of Defence or to agree a date for the arbitration.
40
Almost three years after the date of the contract, the appellant effected a completevolte face by claiming that she was, after all, in a position to provide the right of way. In view of the original explanations, this was completely implausible. Without the agreement of the purchaser of the intervening plot, there could be no right of way. That agreement was, it appears, not available. During all of this period, the respondents had made it clear that they were prepared to close the sale on the basis of condition 33, with an arbitrator determining the amount of compensation. The appellant permitted the matter to proceed to arbitration, though she did not cooperate with it.
41
In all of these circumstances, I am satisfied that the learned judge was perfectly correct to hold that the appellant acted so unreasonably that she lost her right effectively to exercise the right to rescind the contract.
42
That conclusion is sufficient to dispose of the appeal, which must be dismissed. However, I believe it is important to express a view on the second part of the case about which I am less satisfied. The learned judge headed this part of his judgment: “Imprudence or recklessness?” He remarked that there seemed to be some uncertainty as to which of these terms gave the appropriate test.
43
The learned judge attached particular importance to the affidavit evidence of Mr William Devine, an eminent conveyancing solicitor, which was not contradicted. Mr Devine had considered, in some detail, the obligations of the vendor’s solicitor in a case where the land in the sale was said to have the benefit of a right of way. His central criticism related to the failure to requisition a copy of the folio and of the filed plan prior to the sale. In his view, “ordinary prudent conveyancing practice would require that this be done prior to the auction wherever the lands under sale do not abut a public highway…” His conclusion was that there was an omission “on the part of the vendors solicitor in the present case to take the normal and straightforward step of inspecting the filed plan in advance of the sale…”
44
The learned judge recalled the history of the folios, in effect the sale of the intervening plot, which led to all the trouble. He thought that these facts should have”alerted the vendors solicitors to the possibility that the right of way no longer served the plot in sale without an easement.” He did not consider that “the authorities fullyestablished that ordinary imprudence on the part of a vendors solicitor would be sufficient to prevent rescission.” However, he added:
“But what occurred here must be seen as a preparedness on the part of the vendor’s solicitor to take a calculated risk when there were significant warning signs to the contrary. I think this fell well short of what would be considered ordinary prudent conveyancing practice. This was compounded by the statements made by the auctioneer prior to the bidding. All the circumstances taken together, justify a finding of a very high degree of imprudence sufficient on the facts constitute a bar to rescission.”
45
I would make two points about these passages. Firstly, the learned judge did not find any recklessness on the part of the appellant or her solicitors. He relied, in part at least, on the evidence of Mr Devine to establish, not recklessness, but imprudence. Secondly, he found that the vendors solicitor had taken “a calculated risk.” There was, of course, evidence that the auctioneer, being the agent of the appellant, had given assurances prior to the auction that the access to the lands was in order. After the auction and prior to the signing of the contract, the vendor’s then solicitor gave a similar assurance. It was against that solicitor that the learned judge made the finding that he had taken “a calculated risk.” I would be reluctant to uphold that finding. It is a serious one and, if true, it would arguably amount to a finding of recklessness. If the risk was a calculated one, it was taken with knowledge of at least some doubt concerning the right of way. I do not think the evidence justified such a finding. The case was heard on affidavit. I do not find any such an allegation made in the papers or even in the very detailed written submissions provided by the respondents. The appellant’s first solicitor did not swear any affidavit. If an allegation that he had taken a calculated risk had been made, he might well have been, and in fairness should have been asked to provide an affidavit. But the matter did not arise, since the allegation had not been made.
46
For the reasons mentioned above, the learned judge was undoubtedly justified in making a finding of imprudence. The vendor offered the land for sale with the benefit of a right of way which simply did not exist. The fact that the folio had earlier been divided should have put a careful conveyancing solicitor on notice of a possible problem. In short, there was imprudence.
47
However, the standard adopted in several of the passages from the authorities cited is “recklessness,” or, perhaps more accurately, indifference to the interests of the purchaser bordering on recklessness. Professor Wylie, in the passage (par. 15.31) immediately following the one quoted above on the question of a reasonable exercise of the right to rescind proceeded to say:
“Secondly, the courts have refused to allow the vendor to invoke the right where he was guilty of “recklessness” in entering into the contract. In this context, recklessness is to be distinguished from fraud or dishonesty, and generally consists of an indifference towards the purchaser as regards whether he will obtain the title contracted to be sold. Thus, the vendor must not induce the purchaser to enter into the contract by making some misrepresentation which he had little or no grounds for believing was true and then purport to exercise his right of rescission when the purchaser raises an objection or requisition about the same matter….”
48
Lord Radcliffe in the passage in his judgment inSelkirk v Romar Investments Ltd, cited above, continued as follows:
“Above all, perhaps, he[the vendor] must not be guilty of “recklessness” in entering into his contract, a term frequently resorted to in discussions of the legal principle and which their Lordships understand to connote an unacceptable indifference to the situation of a purchaser who is allowed to enter into a contract with the expectation of obtaining a title which the vendor has no reasonable anticipation of being able to deliver.”
49
This passage is obviously the source for the second sentence in Professor Wylie’s passage. Finlay C.J. inWilliams & another v Kennedy, cited above, also added as a second principle that: “it must be shown that the vendor in entering into the contract in the form in which it was concluded between him and purchaser had not been reckless.” In that case, a contract for the sale of a property in Dublin erroneously contained a warranty with regard to the availability of planning permission. It had been held in the High Court and was upheld in this court that it was not reckless to have left this erroneous warranty in the contract.
50
The respondents relied particularly in the High Court on the decision inBaines v Tweddle [1959 1 Ch. 679, where two mortgages affected the property to be sold but the sale was to be free of incumbrances. The facts were found to be as follows:
“The vendor did not, before he signed the contract to sell, inquire of the mortgagees whether they would concur in the sale but he did ask his solicitor to communicate with the building society. At the time of the signing he inquired as to the position and was told that his solicitor “had the matter in hand.” The vendor knew that his solicitor had not then in fact communicated with the society. The vendor was in arrear with the instalments payable under the mortgage and the society refused to concur in the sale.”
51
Lord Evershed M.R. delivering the judgment to the Court of Appeal expressed the test in terms that”if the vendor here is to be disabled from asserting his contractual right to rescind, he must be shown to have had that shortcoming, which, although not amounting to anything in the nature of dishonesty, could be described as recklessness.” In that case, the vendor had taken what was described as “a considerable risk” in assuming that either the two mortgagees would join in the conveyance or that he could sell subject to the mortgage. He was held not entitled to rescind.
52
The test applied by Lord Evershed which he described as”the foundation of the case law on the whole subject-matter,” was laid down by Henn Collins M.R. in In re Jackson and Hayden’s Contract [1906] 1 Ch 412 at 422. It is admittedly expressed in a somewhat roundabout way, is as follows:
“As I have already said, numerous cases have been most carefully set before us, which I have had the opportunity of examining as they were read, and it seems to me that, in every case where the vendor was allowed to avail himself of a stipulation like this, there was always absent that element of shortcoming on his part which, though falling short of fraud or dishonesty, might be described as ‘recklessness.'”
53
The reason the learned High Court judge questioned whether the test should be “imprudence or recklessness” was that the respondents had suggested in their written submissions in the High Court that the different test of prudence had been adopted in Irish law, particularly in the judgment of Costello J inKennedy v Wrenne [1981] I.L.R.M. 81. In that case, Costello J found that, prior to his entry into the contract, the vendor had entered into an agreement to the effect that he would obtain the release of a mortgage affecting the property by the mortgagee, which was collateral to the main contract and held that he could not rely on the terms of the lattter to defeat his obligations under that prior agreement. He referred to Baines v Tweddle and to In re Jackson and Hayden’s Contract. It is true that none of the passages cited by Costello J expressly quote the words of the test laid down by Henn Collins M.R. He stated, however, that the qualifications to the right to rescind “which have ben put on by the courts over a great number of years ……have been well stated in the case of Jackson and Hayden’s Contract…” There is nothing to suggest that Costello J intended to vary the test laid down in that case. Murphy J cited the dictum of Henn Collins M.R. from In re Jackson and Hayden’s Contract in his judgment in Lyons v Thomas, already cited, without any hint of disagreement.
54
The learned judge in this case held that the authorities did not”fully establish that ordinary imprudence on the part of a vendor’s solicitor would be sufficient to prevent rescission.” His decision, therefore, was founded on his conclusion that there had been shown to be “preparedness on the part of the vendor’s solicitor to take a calculated risk when there were significant warning signs to the contrary.” He found that this to amount to “a very high degree of imprudence sufficient on the facts to constitute a bar to rescission.” This is not the same as a finding of what Lord Radcliffe called “unacceptable indifference to the situation of a purchaser who is allowed to enter into a contract with the expectation of obtaining a title which the vendor has no reasonable anticipation of being able to deliver,” which seems to be the principal source of Professor Wylie’s statement. Nor is it what Henn Collins M.R. described as a shortcoming “which, though falling short of fraud or dishonesty, might be described as ‘recklessness.’
55
I would, therefore, not uphold that part of the learned judge’s judgment which held that the appellant was deprived of her right to rescind on this ground.
56
The learned judge also proceeded to determine the more general question of the relationship between conditions 18 and 33. This was based on the interpretation of those conditions in the light of the contract as a whole. He held that the appellant was not entitled to rescind where the purchaser had limited his claim to compensation. The point clearly has broader implications. It is not dependant on the facts of this particular case. The judge had written submissions and arguments from both parties. He declined to accept the authority ofAshburner v. Sewell (1891) 3 Ch. 409. In circumstances where the court has not had the benefit of submissions on the point from one party and where it is, in any event, not necessary to decide it, I would prefer to leave the matter for consideration in a later case.
57
For the reasons 1 have given, I would dismiss the appeal.
Hegarty and Another v Fusano Properties Ltd
[2006] IEHC 54
Miss Justice Laffoy
The affidavit evidence before the court consists of:
(1) an affidavit sworn by the second plaintiff on 4th October, 2005, the day before the special summons was returnable before the Master and four months after it issued (the plaintiffs” first affidavit), a rather limp excuse being given for the affidavit not having been filed and served contemporaneously with the special summons;
(2) an affidavit of Joseph Linders, who averred that he is responsible for the general management of the Smithfield Market development, which was sworn on 1st November, 2005 (the defendant’s affidavit); and
(3) a further affidavit sworn by the second plaintiff on 13th December, 2005 (the plaintiffs” second affidavit).
On the issue as to the effectiveness of the completion notice, in the plaintiffs” first affidavit the second plaintiff averred, by reference to a booklet of photographs, that the outside approaches to the apartment were still a “hard hat” building site, both on the date of the notice (3rd May, 2005) and the date of the purported forfeiture (1st June, 2005). He averred that he inspected the property on 1st June, 2005 and observed that the approaches were still a “hard hat” building site and there was still a”Danger, Do Not Enter” sign on a barrier blocking the principal entrance that had been displayed in that position for at least most of the month of May and well into June, 2005.
In the defendant’s affidavit, Mr. Linders averred that around 1st June, 2005 some finishing works such as tiling and the laying of paving stones etc. were still going on around the entire development, including Block A, and, accordingly, it was necessary to direct access of people coming and going to apartments as and when such finishing works were going on. He acknowledged that this created a certain amount of inconvenience for residents and persons who had purchased units, but he averred that it did not amount to a situation where the apartment contracted for by the plaintiffs was not reasonably habitable by the date on which the completion notice took effect. He exhibited a photograph taken on 7th June, 2005 in the vicinity of Block A and averred that, far from being the “hard hat” area suggested by the plaintiffs at that time, the area was virtually completely finished. He suggested that the plaintiffs were disingenuous in that the photographs they put before the court were taken at various locations around the entire development, which did not reflect the real position around Block A.
In the plaintiffs” second affidavit the second plaintiff reiterated that at the time of the determination of the notice to complete on 1st June, 2005, there was no way of accessing apartment 117 without passing through a “hard hat” site. In reliance on the photographs which were put before the court, he averred that they show that from time to time there were no less than two tower cranes, a cherry-picker, various lifts, hoists, unprotected scaffolding, unmade ground, building materials and debris, and other typical hazards of a “hard hat” building site there, and that the position was much worse at the date of the service of the notice to complete (4th May, 2005). He averred that the work continuing in the area around Block A around 1st June, 2005, was of a far heavier nature than mere tiling and paving. He averred that the apartment was not reasonably habitable at either the date of delivery, or at any time up to the determination of the notice to complete, or indeed for a long period afterwards, as it was not possible to access the apartment safely, if at all. On this basis he averred that the vendor was not ready, willing and able to close the sale on 1st June, 2005.
Turning now to the misrepresentation issue, in the plaintiffs” first affidavit the second plaintiff averred that the plaintiffs were made aware of the location of the conciergerie. They took the reference to the concierge in the brochure to mean that the entry to apartment 117 would be through the conciergerie and that the plaintiffs would have the benefit of the security and services of a concierge, but they were not alerted to the contrary. In fact, the entrance to apartment 117 is from a street called “The Curved Street” or “Thundercut Alley”. However, the post box for apartment 117 is in the conciergerie, at some distance from the apartment, involving a walking through the weather and the open air, which cannot be undertaken in a relaxed state of dress, or without protection from bad weather. The second plaintiff further averred that nothing in the brochure or in the documents available when the booking deposit was paid contradicted “the misrepresentation as to the entrance facility through the conciergerie”. The plaintiffs have ended up without the security of a concierge and with an inconvenient walk outside in the open to the post box. The budget documentation in relation to the service charge furnished later made it clear that the plaintiffs would be paying an equal share of the €135,000 initially estimated as the cost of the concierge service, which misled them into thinking that they would have the benefit of the expenditure. The second plaintiff, without indicating what, if any, expertise he has in relation to valuing residential property, averred that apartment 117 is worth less than the price the plaintiffs contracted for. He further averred that, regardless of any effect on market value, the loss of value to the plaintiffs, by comparison with the apartment they thought they were buying is in their estimation, of the order of 10% to 20% of the purchase price, that is to say, between €62,500 and €125,000. While acknowledging that the Curved Street is a “broad alley, built in a pleasing style” the second plaintiff averred that it contains many design features that would provide excellent hiding places for thieves and muggers and it is distant from the conciergerie and the security man for whom they will be paying.
In the defendant’s affidavit, Mr. Linders averred that the provision of a central concierge facility in the development is to benefit occupants of residential units in all apartment blocks in relation to taking in of packages and general assistance. The plaintiffs will have the benefit of this service, as much as any other resident in the development and all the purchasers of apartments who contribute to the same via the service charge. A concierge is not a security guard. The development will have a security man on duty on a constant basis. Each apartment block, including block A, is equipped with a CCTV camera outside the main entrance, which is connected to the concierge’s office, so that there is constant monitoring of the various blocks. Each individual apartment has a video facility which allows the occupant to monitor the entrance to the block. Mr. Linders further asserted that, insofar as the plaintiffs complain that the conciergerie depicted on the initial sales literature for the development was not in fact where they imagined it would be, they should have checked the position before signing the contract, so that the principles ofcaveat emptor apply. My understanding of the plaintiffs” complaint is not that the conciergerie is not where they imagined it would be but that apartment 117 is not accessed through it. Mr. Linders exhibited a valuation dated 24th October, 2005 from Hooke and MacDonald, Auctioneers, Valuers and Estate Agents, to the effect that the value of apartment 117 has increased since the plaintiffs contracted for it and the approximate likely sale price now is in the region of €715,000.
In the plaintiffs” second affidavit the second plaintiff contradicted some of the averments made by Mr. Linders in the defendant’s affidavit: some only (Nos. 106 to 127), not all, of the apartments in Block A are accessed through the entrance on Thundercut Alley; there are three, not one, concierge areas servicing the seven residential blocks in Smithfield Market; and there is no CCTV security camera outside the door of Block A. The second plaintiff also suggested that the connection between apartment 117 and the conciergerie intended when the contract was signed has been altered because the connecting corridor has been “bisected by the extension of two apartments”. It was suggested that this is apparent from a drawing put before the court by the plaintiffs. I have to say it is not apparent to me. Finally, the second plaintiff persisted in his contention that the value of apartment 117 to the plaintiffs is less by in the region of 10% to 20% because what they contracted to buy was an apartment “with the full amenity, including security protection, of a conciergerie”.
The defendant raised a jurisdictional issue, contending that the plaintiffs were seeking to litigate matters which are outside the scope of what a vendor and purchaser summons is designed to deal with having regard to the provisions of s. 9 of the Vendor and Purchaser Act, 1874 (the Act of 1874).
Section 9 of the Act of 1874 set out first the jurisdiction of the English courts as follows:
“A vendor or purchaser of real or leasehold estate in England, or their representatives respectively, may at any time or times and from time to time apply in a summary way to a judge of the Court of Chancery in England in chambers, in respect of any requisitions or objections, or any claim for compensation, or any question arising out of or connected with the contract, (not being a question affecting the existence or validity of the contract) and the judge shall make such order upon the application as to him shall appear just, and shall order how and by whom all or any of the costs of and incidental to the application shall be borne and paid.”
Section 9 then went on to deal with the jurisdiction of the courts in Ireland as follows:
“A vendor or purchaser of real or leasehold estate in Ireland, or their representatives respectively, may in like manner and for the same purpose apply to a judge of the Court of Chancery in Ireland and the judge shall make such order upon the application as to him shall appear just, and shall order how and by whom all or any of the costs of and incidental to the application shall be borne and paid.”
Under the Rules of the Superior Courts, 1986 a vendor and purchaser summons may be brought by way of special summons. The summons is grounded on affidavit, but a party may seek to cross-examine a deponent (Order 38, rule 3). It is of significance that in this case, which has thrown up a plethora of factual conflicts on the affidavits, neither side sought to cross-examine the other’s deponent. Further, neither side suggested that this was an appropriate matter to go to plenary hearing.
The court was referred to the comprehensive commentary on vendor and purchaser summonses in Farrell onIrish Law of Specific Performance (Butterworths) at paras. 8.53 to 8.59 and the commentary on the same topic in Wylie on Irish Conveyancing Law (2nd Edition, Butterworths) at paras. 13.26 to 13.29.
I am satisfied that the court has jurisdiction to determine a question as to the validity of a notice to compete on a vendor and purchaser summons. Further, s. 9 expressly empowers the court to determine any claim for compensation on a vendor and purchaser summons. However, it is well settled that the claim for compensation must arise out of or be connected with the contract. As Farrell points out at para. 8.59, in principle, this would cover a claim for a declaration that a purchaser is entitled to compensation or an abatement of the purchase money by reason, for example, of the existence of a right of way, or a shortfall in the area of land sold. However, Farrell goes on to say that for a number of reasons there does not seem to be very much opportunity in practice for the use of s. 9 in relation to a claim for compensation. The reasons are: that standard contracts contain clauses likely to cover parties” rights in relation to misdescription and abatement and they are likely to have arbitration clauses; in the absence of a standard contract there is a greater chance of an issue “affecting the existence or validity of the contract”, which would take the matter outside the scope of s. 9; and some English case law has distinguished between compensation and damages, the latter being outside s. 9.
It is notable that two of the authorities relied on by counsel for the parties were cases in which the vendor was relying on a condition which entitled him to annul the sale, if the purchaser persisted in an objection or requisition which the vendor was unable or unwilling to comply with (In Re Terry and White’s Contract [1886] 32 ChD 14, cited by counsel for the plaintiffs; and Re Molphy v. Coyne [1919] 53 ILTR 177, cited by counsel for the defendant). For present purposes, those authorities go no further than to establish jurisdiction, which I am satisfied the court has. They are no assistance to the court beyond that, because this is not a case in which the defendant sought to rely on a condition of the type under consideration in them, the jurisprudence in relation to which is conveniently summarised in Wylie op. cit. at paras. 15.27 to 15.35 inclusive.
In relation to the issue as to the effectiveness of the notice to complete, the case made by the plaintiffs was that apartment No. 117 was not reasonably habitable either on 4th May, 2005, the date of service of the notice, or on the date of its expiry, 1st June, 2005, because it was not possible to access the apartment safely. It is not possible to determine whether the notice to complete was effective or not having regard to the current state of the evidence for the following reasons. First, the court does not have evidence of all of the relevant contractual terms. The “completion date”, as defined in the contract, relates to the completion of the works, that is to say the construction of apartment 117 together with such necessary works and services as may be necessary to render it reasonably habitable. The contract provides a mechanism for fixing the completion date (clause 12 of the building provisions). The closing date is defined as being fourteen days after the completion date. However, in the absence of evidence of the relevant general condition in relation to service of notices to complete after the closing date, which I assume are conditions 40 and 41 of the 2001 edition of the General Conditions, it is not possible to express any view on whether the notice to complete was properly served in accordance with the conditions invoked by the defendant. Secondly, and more importantly, there is a total conflict on the affidavits as to whether apartment 117, including the necessary works and services to render it reasonably habitable, had been completed either on 3rd or 4th May, 2005 or on 1st June, 2005. That conflict cannot be resolved. As I have stated, neither side saw fit to cross-examine the other side’s deponent. For the foregoing reasons, it is not possible to find that the plaintiffs have established that the notice to complete was ineffective. On the other hand, that does not mean that it was effective.
Fortunately, the concierge issue can be dealt with more definitively. What the brochure stated was that the development would have a concierge. The court was referred to the definition of concierge inThe Concise Oxford Dictionary of Current English (Clarendon Press, 9th edition, 1995), which gives one definition of concierge, especially in France, as “a door-keeper or porter of a block of flats etc.”. What the brochure represented was that the development, which obviously means the residential development at Smithfield Market, would have a concierge. On the plaintiffs” own case the residential development has no less than three concierges. To that extent the representation has been fulfilled. The case being made by the plaintiffs on the basis of the statement in the brochure is that the defendant represented that apartment 117 would be accessed through the conciergerie. In my view, the statement in the brochure is not, on any reasonable construction, open to such interpretation. Even if one assumes that it was to be inferred from the entire statement that the concierge would be a security feature, the entire statement is not open to the construction that the plaintiffs seek to put on it. Therefore, in my view, the statement in the brochure was not a representation that apartment 117 would be accessed through the conciergerie. That, in my view, is a complete answer to the plaintiffs” allegation of misrepresentation.
If it were not, the court could not advance the matter any further on the current state of the evidence. It would not be appropriate to express any view on whether the alteration to the access to apartment 117 which the second plaintiff merely speculates may have happened would have been permissible under condition 10 of the building provisions in the contract. Finally, if the plaintiffs had established that there was a compensatable misrepresentation, I think it improbable that the measure of compensation provided by law for such a wrong is an injured party’s subjective estimation of the value of the lost amenity to him, for example, the second plaintiff’s broad brush estimation. However, no submissions were offered on the measure of compensation. Further, no evidential basis at all was laid for measuring an appropriate reduction in the service charge.
The plaintiffs have not established entitlement to any of the reliefs sought in the special summons and their claim is dismissed.
Commane v Walsh
[1983] 5 JIC 0202
O’Hanlon J. 2nd May, 1983.
By a Memorandum of Agreement in the standard form for Sale by Private Treaty made available by the Incorporated Law Society of Ireland, the Plaintiff agreed to purchase from the Defendant for the sum of £66,000 three parcels of land situate at Burnchurch, Co. Tipperary, as described in Paragraphs 1, 2 and 3 of the Particulars in the said Agreement.
The acreage of each parcel was given in the descriptive particulars and the three parcels added together comprised approximately 51a.3r. but the final sentence in the section marked “Particulars” read as follows :- “The total acreage being sold under this contract is believed to contain 54.2 acres statute measure or thereabouts.”
This obvious discrepancy want unnoticed at the time of the execution of the Agreement and gave rise to some difficulty at a later stage.
The date of the Agreement was the 3rd April, 1981, and the Closing Date was given as the 1st May, 1981. Time was not expressed to be of the essence of the contract in relation to the named date for closing. Clause 28 of the Agreement provided as follows:-
“28. Save where the Special Conditions provide that time shall be of the essence of the Contract in respect of the closing date the following provisions shall apply:-”
(1) If the sale be not completed on or before the closing date, either party may on that date or at any time thereafter (unless the Contract shall first have been rescinded or become void) give to the other party notice in writing to complete the sale in accordance with this condition, but such notice shall be effective only if the party giving it shall then either be able, ready and willing to complete the sale or is not so ready by reason of the default or midconduct of the other party.
(2) Upon service of such notice the party upon whom it has been served shall complete the sale within twenty eight days after the date of such service (excluding the day of service) and in respect of such period time shall be of the essence of the contract (but without prejudice to any intermediate right of rescission by either party).
(3) If the Purchaser does not comply with such notice within the said period (or within any extension thereof which the Vendor may permit) he shall be deemed to have failed to comply with these Conditions in a material respect and the provisions of Clause 29 hereof shall apply accordingly.
(4) If the Vendor does not comply with such an effective notice within the said period (or within any extension thereof which the Purchaser may permit) then the Purchaser may elect either to enforce against the Vendor, without further notice, such rights and remedies as may be available to the Purchaser at law or in equity or (without prejudice to any right of the Purchaser to damages) to give notice in writing to the Vendor forthwith to repay to the Purchaser his deposit and any money paid on account of the purchase price. If the Purchaser serves such a notice and the Vendor makes such payment, the Purchaser shall no longer be entitled to specific performance of the Contract and shall return forthwith all documents in his possession belonging to the Vendor and (at the Vendor’s expense) procure the cancellation discharge or release of any entry relating to the Contract in any register.
(5) The party serving a notice under this condition may at the request of or with the consent of the other party extend the term of the notice for one or more specified further periods of time and in that case the term of the notice shall be deemed to expire on the last day of such extended period or periods and the notice shall operate as though such extended period had been specified in this Condition in lieu of twenty eight days and time shall be of the essence in relation to such extended period.”
The Vendor was selling in her capacity as personal representative of Patrick Reidy deceased. Two of the parcels of land, comprising in all 48a.Or.25p., were registered on Folio 40033 of the Register, Co. Tipperary, and the third parcel of land comprising 3.234a., was registered on Folio 13155, Co. Tipperary. The Special Conditions stated that, “No requisition or objection shall be raised as to the accuracy of the area in sale and Purchaser shall deem to have inspected the property prior to completion of the Contract.”
The Agreement, duly executed by the Purchaser, was returned to the Vendor’s solicitors, accompanied by deposit of £16,500, by letter dated the 8th April, 1981, but the copy contract document completed by the Vendor was not sent to the Purchaser’s Solicitors until the 5th May, 1981, which was later in time than the official date fixed for the closing of the sale by the terms of the Agreement. In the letter enclosing same, the Vendor’s solicitors referred to the fact that Mary Reidy deceased was the registered owner of the lands in Folio 13155, she having died in 1929, and that they were taking steps to have the title rectified with regard to this plot of ground. This evoked a reply from the Purchaser’s solicitors, dated 7th May, 1981, enclosing Requisitions on Title, and referring to the delay which was likely to arise in relation to the property registered in Mary Reidy’s name. They suggested apportioning the purchase money. They wrote again without receiving a reply, on the 20th May, 1981; 26th May, 1981, and17th June, 1981, although it appears that the solicitors were in communication by telephone at some stage during that period. It is accepted by the Purchaser’s solicitors that they did make an offer during the month of May, 1981, to close the sale in relation to the two larger lost registered on Folio 40033 and to leave over until later the closing of the sale in relation to the small parcel comprised in Folio 13155, the purchase money to be apportioned for this purpose and part of it to be retained on joint deposit until clear title could be given to the third parcel of land. This offer was not taken up at that time by the Vendor’s solicitors and appears to have been left hanging in mid-air for some time afterwards.
By letter of the 15th July, 1981, the Purchaser’s solicitors complained that the acreage which was being transferred did not amount to 54.2a. as represented by the Agreement for sale, and on the 21st August, 1981, the Vendor’s solicitors replied, drawing attention to the Special Conditions in relation to area.
At some stage during the Summer the Purchaser entered on the land and saved a crop of hay which he cut and baled and put into barns on the land, so it would seem that at that stage he was still fully committed to the idea of going through with the purchase of the lands in spite of the delay in completion which had already taken place. Ultimately, however, his patience ran out and on the 18th September, 1981, his solicitors wrote a letter invoking the provisions of Clause 28 of the Agreement for Sale and calling on the Vendor to complete the sale on or before the 19th October,1981. As the Vendor was unable to establish a clear registered title to the lands in Folio 13155 within the time specified, a further letter was written on the 20th October, 1981, requiring a return of the deposit and these proceedings are brought under the provisions of the Vendor and Purchaser Act, 1874, claiming a declaration that the Agreement for Sale has been validly rescinded, and for other ancillary relief.
The service of the 28-day notice did appear to galvanise the Vendor’s Solicitors into action. They wrote a long letter on the 30th September, 1981, purporting to accept on behalf of the Vendor the offer previously made to complete the transfer of the major part of the property, to which title could be shown without any difficulty, and to postpone the transfer, and the payment of a small apportioned part of the purchase money, in respect of the small parcel in Folio 13155, until the Vendor could have herself registered on the title. This proposal was rejected by the Purchaser’s solicitors by letter dated 1st October, 1981. On the 13th October, 1981, with the stipulated time for closing fast running out, the Vendor’s solicitors again wrote to say that the difficulties regarding title were well on the way to being cleared up, by the extraction of a grant of Letters of Administration to the estate of Mary Reidy deceased. The Purchaser’s solicitors replied on the 14th October, 1981, as follows:
“Thank you for your letter of the 13th inst. We look forward to receiving copy of the Grant if and when it issues.”
The Vendor and her to solicitors might be forgiven for thinking that that terse communication indicated a change of heart on the part of the Purchaser and his solicitors, and that some further time was being allowed to remedy a flaw in the title which was at all times more technical than real, but the letter of the 20th October, 1981, was sufficient to dispel any illusions that might have been left by the earlier message.
Mr. Ryan for the Defendant contended that the Plaintiff had nailed his colors firmly to the mast provided by Clause 28 of the Agreement for Sale and that unless it could be shown that there had been full compliance with the requirements of that Clause, the claim could not succeed. I am by no means convinced that this contention is correct, although the Indorsement of Claim on the Special Summons refers expressly to the provisions of Clause 28. The claim is essentially one that the Agreement for Sale has been validly rescinded, and should, I think, be judged on this basis without necessarily confining the Plaintiff to the strict rights conferred by Clause 28 of the Agreement, and excluding from consideration the general right of a vendor or purchaser to expect compliance with the terms of an agreement for the sale of land within a reasonable time.
In Woods and Others .v. Mackenzie Hill Ltd., (1975) 2 AER 170, a 28-day notice served on a purchaser was held to be defective and invalid as it purported to be given by only two out of three vendors. Megarry J. held that the service of a completion notice was not a prerequisite to the enforcement of a contract which included express provision for the service of such a notice, and the inclusion of such a provision did not exclude the contractual obligation to complete on the date fixed for completion or within a reasonable time thereafter.
Turning to consider the validity of the notice served in the present case, in the light of the provisions of Clause 28 of the Agreement for Sale, which is invoked in the notice itself, it is challenged under two headings by Mr. Ryan, as Counsel for the Defendant. In the first place it reiterates the claim which had previously been made on behalf of the Purchaser that his entitlement was to receive 54.2 acres. It does so in the following terms:-
“In addition our client contracted to buy 54.2 acres and the purchase price agreed was based on that acreage. Our client has instructed us to insist that this is the acreage which he expects to purchase and which in fact must be handed over to him on any completion of the sale”.
The Vendor was not in a position to transfer 54.2 acres, but only the somewhat smaller acreage referred to at the outset, and the Special Conditions in my opinion, precluded the Purchaser from relying in any way upon the small discrepancy which emerged between the stated total and the total which was offered by the Vendor. In addition, the Purchaser, by adding together the acreage of the three lots as described in the Agreements for Sale, would have arrived at the correct acreage which the Vendor was able and willing to transfer once the title to Folio 13155 had been regularised. Accordingly, I accept Mr. Ryan’s submission that the notice was not a valid notice under Clause 28 of the Agreement since it was not served on behalf of a Purchaser who was then “able, ready and willing to complete the sale” in accordance with his own obligations under the Agreement for Sale.
The notice bore the second unusual feature that it purported to call upon the Vendor to complete the sale by the 19th October, 1981, but stated at the same time that, “In view of the fact that four months have passed since the closing date out client reserves his right to repudiate the contract in full, since the length of time that has passed is excessive in all of the circumstances… As stated above it should be noted that our client reserves the right to repudiate the Agreement in full should you be in a position to comply with this notice on or before the expiry date.”
In my opinion, a party seeking to invoke the provisions of Clause 28 of the Agreement for Sale must do so in a clear and unequivocal manner. I consider that the terms of the notice given in the present case are not consistent with the form such notice should take in order to comply with the special procedure provided for by Clause 28, and on this ground also I hold that the notice was invalid for this purpose.
I feel, however, that I should also consider whether, leaving the special provisions of Clause 28 out of consideration altogether, the Agreement was validly rescinded because of unreasonable delay on the part of the Vendor in completing the transfer of the lands.
I have no hesitation in finding that the Vendor and her solicitors were extremely dilatory in the way the sale was dealt with between May and October, 1981, but the correspondence does not suggest that the delay was a source of great annoyance or upset to the Purchaser at the time. The offer was made in the month of May to close the sale in respect of the greater part of the lands, leaving over until later the transfer of the small parcel in Folio 13155, and this offer was never formally withdrawn until after the Vendor’s solicitors had written on the 30th September, 1981, expressing the Vendor’s willingness to put through the sale in this manner. The offer when made remained open until it was withdrawn, or until it would be unreasonable to hold the Purchaser to it any longer because of the length of time which had elapsed without acceptance. What is a reasonable time is a question of fact depending on the circumstances of each particular case. (See, Ramsgate Hotel Co. .v. Montefiore,( 1866 LR 1 Ex. 109). In the present case, because of the rather casual approach adopted by both parties to the time for closing of the sale, and their early agreement that they would have to proceed on the basis of a good deal of delay in straightening out the title to Folio 13155, I would regard the offer to deal separately with this parcel of land as remaining open into the month of September, 1981, and I do not consider that the letter of the 19th September, 1981, should be regarded as a revocation of the offer.
In this situation the Vendor was willing to comply with her obligations under the Agreement for Sale, as varied by the special terms later arranged about Folio 13155, within the time which the Purchaser sought to make of the essence of the contract. I think it very likely that the Purchaser would have consented to the sale going through on this basis had he not become involved in a dispute about the acreage, when he asserted a claim which he was unable to enforce.
Consequently, if the matter had to be determined under the general law as to delay on completion and the entitlement of a Purchaser in such circumstances to withdraw from his bargain, I would again hold that the contract had not been validly rescinded having regard to all the circumstances of the present case. The Plaintiff’s claim accordingly stands refused.
Roche & Roche v Leacy
[2012] IEHC 96
Miss Justice Laffoy
2 4.1 I have outlined the two grounds on which the plaintiffs pleaded that the notice to complete was not a valid notice to complete at para. 2.3 above.
3 4.2 As regards the first ground, that the notice to complete was not addressed to the plaintiffs, as counsel for the defendant pointed out a similar point was dealt with in the High Court by Finnegan P. in Haldane v. Rooney [2004] 3 I.R. 581. Finnegan P. stated (at p. 590):
“Finally, objection is taken to the notice upon the basis that condition 40(a) requires the completion notice to be given to the other party, whereas the notice in this case was addressed to and served upon the plaintiffs’ solicitor. Condition 49(b) provides that a notice may be given or served by directing it to the intended recipient and delivering it by hand or sending by pre-paid-post to the office of the solicitor representing the intended recipient in the sale. This leaves, however, the issue as to whether completion notices, required by condition 40 to be given to the other party, must be addressed to that party and not to his solicitor. There is no denial of the plaintiffs’ solicitor’s general authority to act in the transaction and in these circumstances the general rule is that notice to a solicitor is actual notice to his client:Espin v. Pemberton (1859) 3 DeG. & J. 547. Further, the notice to complete was sent under cover of a letter addressed to the plaintiffs’ solicitor which clearly set out that solicitor’s clients were the plaintiffs. I am satisfied that it is appropriate to read the letter together with the notice and, doing so, I am satisfied that this complies with the requirements of condition 40.”
Similarly, I am satisfied that it is appropriate to read the letter dated 28th January, 2009 to the plaintiffs’ solicitors, which identifies their clients as the plaintiffs, together with the notice to complete of the same date, which was stated to be enclosed by way of service. While in format the notice was only addressed to the plaintiffs’ solicitors at the end, it stated expressly in clear and unequivocal terms that the purchaser, namely, the defendant, was thereby giving notice to the vendors, namely, the plaintiffs, to complete the sale in accordance with general condition 40 of the contract. That is all that was required, in my view. Accordingly, I am satisfied that the manner in which the notice was given complied with the requirements of general condition 40.
4 4.3 In relation to the second ground of objection, that the notice failed to specify the appropriate time, that can also be readily disposed of by reference to the decision of Finnegan P. in Haldane v. Rooney. Paragraph (a) of condition 40 of the general conditions of sale in the contract provided that either party might give the other party “notice to complete the sale in accordance with this condition”. Paragraph (b) provided that upon service of such notice the party on whom it was served should “complete the sale within a period of twenty-eight days after the date of such service (as defined in Condition 49 and excluding the date of service)”. The notice to complete dated 28th January, 2009 gave notice to the plaintiffs “to complete the sale in accordance with General Condition 40 of the Contract”. It further stipulated that the plaintiffs were required to complete the transaction “within a period of twenty-eight days after the date of service hereof”. It was not expressly provided that the date of service was excluded from the calculation of the twenty-eight day period. However, in my view, that was clearly implicit, as it was made clear that the notice was being served in accordance with general condition 40. Apart from that, as Finnegan P. pointed out in Haldane v. Rooney at p. 590, the general rule of construction which applies where a period is allowed within which an act must be done is that the first day is excluded: Goldsmiths’ Company v West Metropolitan Railway [1904] 1 K.B. 1.
5 4.4 Accordingly, in my view, the notice to complete served by the defendant was not invalid on either of the grounds alleged. As I have stated earlier, I am satisfied that on 28th January, 2009 the defendant was “willing” to complete, in the sense in which para. (a) of general condition 40 requires the party serving notice under that condition to be “able, ready and willing to complete”. Having regard to the evidence, which I am of the view was strong on this point, I consider that it is appropriate to find that the defendant was able to complete on that date, in the sense that he could have drawn down the finance from his lending institution for the purposes of completing at any time up to 2nd March, 2009.
2 5.1 Having regard to the nature of the title to the land the subject of the contract, it is possible to state with absolute confidence that, if the defendant had completed the purchase of the lands the subject of the contract on the 1st or 2nd March, 2009, the defendant would have acquired title to the lands free from all claims by Mrs. Roche as the applicant in the proceedings in the Circuit Court the subject of the lis pendens which had been registered by her. The crucial factors were that the property the subject of the contract was registered land and, notwithstanding what was pleaded in the defence, the lis pendens was not registered as a burden on the relevant folio.
3 5.2 The system of registration of lis pendens was introduced in this jurisdiction in the Judgments (Ireland) Act 1844 at a time when the title to all of the land in Ireland was unregistered title. Section 10 of that Act provided that no lis pendens could bind or affect a purchaser or a mortgagee who had no express notice of it, unless and until a memorandum containing the requisite details concerning the suit was registered in court, latterly meaning in the Central Office of the High Court. Under s. 5 of the Judgment Mortgage (Ireland) Act 1850 it was provided that no lis pendens should bind or affect a purchaser or a mortgagee without express notice thereof unless relevant memorandum had been registered in the Central Office within five years before the execution of the conveyance to the purchaser. Section 2 of the Lis Pendens Act 1867, which was held by the Supreme Court in Flynn v. Buckley [1980] I.R. 423 as having applied to Ireland, was the provision which empowered the court in which the litigation was pending to vacate the lis pendens, without the consent of the party who registered it “upon the determination of the lis pendens, or during the pendency thereof, where the court shall be satisfied that the litigation is not prosecuted bona fide”. Finally, s. 21 of the Act of 1871 remedied a lacuna, in that it made provision for the registration of a vacate in what is now the Central Office, the object being to cancel the registration in the Central Office, which would appear on a judgment search. All of those provisions affected land the title to which was unregistered. There are corresponding provisions to be found now in Part XII of the Land and Conveyancing Law Reform Act 2009, which operate prospectively, including a provision which recognises that since the Act of 1995 a County Registrar has power to vacate a lis pendens on the application of the person who originally registered it (s. 126).
4 5.3 The position in relation to registered land is different, as is stated in the following passage in McAllister on Registration of Title (at p. 215):
“As regards registered land, thelis pendens, in order to affect a purchaser must be registered as a burden on the register of the lands affected, and not in the Registry of Judgments. Its re-registration every five years is unnecessary. So long as the lis pendens remains undischarged it remains on the register and binds any purchaser.”
Similarly, in Fitzgerald onLand Registry Practice (2nd Ed.) it is stated (at p. 210) that to affect registered land a lis pendens must be registered as a burden on the folio.
5 5.4 An analysis of the statutory basis of the foregoing propositions in relation to registered land must start with s. 69 of the Registration of Title Act 1964 (the Act of 1964). By virtue of subs. (1)(i) of that section a lis pendens may be registered as affecting registered land. The effect of a transfer of freehold land is set out in s. 52(1) of the Act of 1964 which provides:
“On the registration of a transferee of freehold land as full owner with an absolute title, the instrument of transfer shall operate as a conveyance by deed … and there shall be vested in the registered transferee an estate in fee simple in the land transferred… subject to -”
(a) the burdens, if any, registered as affecting the land, and
(b) the burdens to which, though not so registered, the land is subject by virtue of section 72,
but shall be free from all other rights, including rights of the State.”
While unregistered rights may be created over registered land, s. 68(2) of the Act of 1964, provides that all such rights shall be subject to the provisions of the Act of 1964 with respect to registered transfers of land or charges for valuable consideration. This is consistent with subs. (2) of s. 52, which provides that where the transfer is made “without valuable consideration” it shall be subject to all unregistered rights subject to which the transferor had held the lands transferred.
6 5.5 Applying the foregoing provisions to the contractual position of the defendant, if he had completed the purchase on, say, 1st March, 2009, at that time no lis pendens in relation to the proceedings brought by Mrs. Roche, or indeed any proceedings, was registered as a s. 69 burden against the lands the subject of the contract on Folio 23035, County Wexford. It is true that the defendant was on notice that Mrs. Roche had registered a lis pendens against the first named plaintiff in the Central Office some months previously, although how the lis could have affected the part of the lands registered on Folio 23035 the subject of the contract was not clear. Even if it did affect the lands the subject of the contract, the defendant’s solicitors had been furnished with a copy of the letter of 4th February, 2009 from Redmond & Co., who identified Mrs. Roche as their client, which stated that an application would be made to remove the lis pendens as a matter of urgency. Further, the defendant’s solicitors had been informed by the plaintiff’s solicitors in the letter of 18th February, 2009 that, in conjunction with Redmond & Co., as solicitors for the applicant, that is to say, Mrs. Roche, they had filed an ex parte application for the following Monday for the removal of the lis pendens. Finally, by the letter dated 24th February, 2009 the defendant’s solicitors were informed that the County Registrar had made the order in Court on 23rd February, 2009 that the lis pendens be vacated and that they would be filing the order of the County Registrar in the Central Office in due course. The order of the County Registrar was effective from the moment it was pronounced in court. Mr. Cullen who conveyed the information that the order had been made, as a solicitor, is an officer of the Court. Irrespective of the fact that the vacation of the lis pendens had not been noted on the index in the Central Office, in my view, the defendant was no longer on notice that there was a lis pendens affecting the property, because he had been informed that it had been vacated. If he had completed the purchase on 1st March, 2009, in my view, he would have obtained good marketable title to the lands the subject of the contract free from any rights of Mrs. Roche.
7 5.6 Moreover, that situation could not have changed after completion but before his registration on the relevant folio. Staying with the hypothetical situation in which the defendant had completed the purchase on 1st March, 2009, if Mrs. Roche were to change her mind and subsequently decide to register a lis pendens as a burden in the Land Registry as against Folio 23035 before the transfer from the plaintiffs, as personal representatives of James Roche, deceased, in favour of the defendant was registered by the Property Registration Authority and the defendant was registered on the relevant folio as full owner with absolute title so as to get the benefit of s. 52(1) of the Act of 1964, on the authority of the decision of the Supreme Court in Coffey v. Brunell Construction [1983] I.R. 36, the defendant would have been able to procure an order directing the cancellation of the burden so registered. Therefore, the defendant would not have been at any risk of his title being subject to a claim by Mrs. Roche in completing the purchase on 1st March, 2009.
8 5.7 It was the contention of counsel for the defendant, referring to Wylie on Irish Conveyancing Law (3rd Ed.) at para. 14.06, that the duty of the plaintiffs to show good title was a duty which had two aspects, i.e. to show good title, in the sense of stating all matters essential to the title contracted to be sold, and to make good title, in the sense of proving by proper evidence those matters. Counsel also referred to the Irish authority cited by Wylie as demonstrating that distinction: Higgins v. Irish Land Commission [1960] I.R. 277. In that case, Teevan J. was hearing an appeal from the Taxing Master’s taxation of costs. The costs issue arose in circumstances where the Land Commission had been given leave to resume the holding of John Higgins and the compensation payable to Mr. Higgins was fixed at IR£408, and the order also provided that he make good title to the tenancy. There was a provision that the Land Commission would pay, inter alia, the costs of “showing title”.
9 5.8 In order to illustrate what the case was about, it is necessary to consider the title position in some detail. It had been found by an Examiner of Title in the Land Commission that Mr. Higgins was entitled to the land as personal representative of Mary Higgins, deceased. The title was traced from Patrick Higgins, who died in 1928. His widow, Mary Higgins, inherited under his will, which was proved in 1928. Mary Higgins died in 1940, having devised the land to her daughter, Margaret Higgins. Margaret Higgins died in 1952 intestate, but at that stage the will of Mary Higgins had not been proved. In fact, the existence of the will was obviously unknown and letters of administration intestate to the estate of Mary Higgins were granted to Mr. Higgins in 1956, after the death of Margaret Higgins. When the existence of the will of Mary Higgins was discovered, the grant of letters of administration intestate to her estate had to be revoked, which happened, and a grant of letters of administration with the will of Mary Higgins annexed were granted to Mr. Higgins, which was the evidence of his title. However, to get to that stage, he had to extract a grant of letters of administration intestate to the estate of Margaret Higgins.
10 5.9 The issue with which Teevan J. was concerned was whether Mr. Higgins was entitled to recover from the Land Commission the costs of extracting the grant of administration with the will of Mary Higgins annexed to replace the revoked grant and also the costs of extracting the grant of administration intestate to the estate of Margaret Higgins. An argument advanced on behalf of Mr. Higgins was that, on acquisition of lands under the Land Clauses Consolidation Act, the owners had been allowed costs against the acquiring authorities for work done in perfecting good holding titles to the requirements of the acquiring authorities, such as extracting grants of representation, which the owners would otherwise not have extracted and which were not requisite for other purposes. In the passage from the judgment of Teevan J. relied on by counsel for the defendant, he stated (at p. 279):
“A distinction is very clearly made in the resumption order betweenmaking title and showing title, a distinction which would be readily discerned by conveyancers. Whether I am correct in stating the existence of such a general discernment or not, I accept the judgment of Farwell L.J. in In re Elementary Education Acts, 1870 and 1873 [ [1909] 1 ch. 55] at p. 59:- ‘The production of the probate would be evidence of the title, the procuring of probate would be the making of the title’. For ‘production’ and ‘procuring’ may be substituted, without change of significance, ‘showing’ and ‘making title’ respectively. This does not conflict with the Irish decisions cited in relation to costs under the Lands Clauses Consolidation Act.”
Teevan J. decided that the resumption order had been framed so as to shut out all costs incurred in procuring a good title and that it was confined to costs of submitting the evidence of title and on that basis he upheld the decision of the Taxing Master which disallowed the costs of extracting the two grants in issue. Frankly, I cannot see how that decision is of any relevance to the issues before the Court.
11 5.10 Counsel for the defendant submitted that, in order to “show” that they had a clear unencumbered title to the property the subject of the contract, the plaintiffs should have furnished to the defendant’s solicitors either the written consent of Mrs. Roche to the vacating of the lis pendens or, alternatively, a copy of the perfected order of the County Registrar. The response of counsel for the plaintiffs to that proposition was that what the defendant’s solicitors had expressly sought in their letter of 16th December, 2008, namely, the “release” of the lis pendens, had been procured and the defendant’s solicitors had been informed of that fact in their letter of 24th February, 2009. It was further submitted by counsel for the plaintiffs that the defendant had gone “to ground” in early 2009 and that the defendant’s solicitors had not indicated at any time what evidence they required of the release of the lis pendens.
12 5.11 In my view, the position as at, say, 1st March, 2009 was that an order had been made vacating the lis pendens registered by Mrs. Roche and it had been made on her application. The perfection of the order was a formality which remained to be completed, as was the lodging of the memorandum in the Central Office and the recording of the vacation of the lis pendens in the register of judgments. As regards the clearing of the lis pendens off the index in the Central Office, s. 21 of the Act of 1871 referred to at para. 5.2 above provides:
“… the said registrar shall, upon the lodgment with him of a certificate that anylis pendens which may have been registered in the said office has been duly vacated by an order of the Court in which lis pendens may be, signed by the proper officer in that behalf, and which certificate such officer is hereby authorised and required to give, cause a memorandum of such vacate to be subscribed to the entry of the registry of such lis pendens specifying the date of such order, and shall sign such memorandum and upon every search made in the said office subsequently to the entry of such memorandum as aforesaid whereupon such lis pendens shall appear the entry of such memorandum shall be stated.”
In short, the County Registrar having made the order vacating thelis pendens on 23rd February, 2009, the entry of the memorandum of such vacate in the Central Office in accordance with s. 21 was mandatory. The written consent of Mrs. Roche was not necessary to perfect the plaintiffs’ title. The perfected order of the County Registrar could be obtained at any time.
13 5.12 In summary, the lis pendens had never been registered as a burden on the folio against the lands the subject of the sale on Folio 23035. It had been vacated by order of the County Registrar which inevitably would have been noted in the Register of Judgments in the Central Office. Therefore, the plaintiffs were in a position to furnish title to the defendant free from any claims by Mrs. Roche and the defendant’s solicitors had been so informed. Accordingly, the defendant was not entitled to rescind the contract, as he purported to do in the letter of 4th March, 2009 from the defendant’s solicitors to the plaintiffs’ solicitors. The contract still subsists and the plaintiffs are entitled to enforce it against the defendant.
14 5.13 In reaching the foregoing conclusion, I have not attached weight to some of the submissions made on behalf of the plaintiffs as demonstrating the plaintiffs’ entitlement to an order for specific performance. I have not attached weight to the fact that the plaintiffs were selling as personal representatives of James Roche, deceased, or to the submission that the outcome of any action pursued by Mrs. Roche against the first plaintiff could only attach to the proceeds of the sale of the lands the subject of the contract, as the defendant had a contractual right to insist on completion. Nor have I attached weight to the undertaking proffered by the plaintiffs’ solicitors to the defendant in the letter of 17th December, 2008, and the submission that the defendant should have completed the purchase in reliance on it. While there may be some merit in those submissions, in my view, it is not necessary to resort to them.
2 6.1 Subject to hearing further submissions from the parties as to the appropriate form of order to be made, I would propose making an order against the defendant for specific performance of the contract.
3 6.2 The defendant’s counterclaim will be dismissed.