Contract Issues
Cases
J.C. v. W.C.
[2004] IEHC 33
[2003 No. 10 CA]
High Court 19th December 2003
Murphy J.
19th December, 2003
[Murphy J. set out in detail the background of the case and evidence given by the plaintiff, the defendant, an auctioneer and a sister of the defendant. He continued as follows.]
This matter comes by way of rehearing to the High Court on an ejectment civil bill claiming an injunction restraining the defendant from attending at the plaintiff (his father)’s house and lands and an order restraining him from intimidating the plaintiff and any other person the plaintiff desires to bring on the premises. That ejectment civil bill was filed in the Circuit Court on the 23rd November, 2001. The defence and counterclaim, delivered on the 22nd January, 2002, denied the intimidation and interference with the peaceful enjoyment or occupation of the premises. It was further denied that lawful demands had been made of him to vacate. He pleaded estoppel by reason of the conduct and actions of the plaintiff. Further, by reason of representations made to him and by reason of the plaintiff’s conduct, he relied on the doctrine of legitimate expectation.
Both parties sought interlocutory relief. The defendant had counterclaimed that he had worked extensively on and for the benefit of the family farm from a date prior to his thirteenth birthday when he was withdrawn from school initially and permanently from the age of fifteen. From that time until 1999 approximately, he believed that the farm would be his home and his living throughout his life and that he would inherit the farm in its entirety on the death of the plaintiff. This belief, he said, was encouraged by the plaintiff and other members of the family. When, in 1997 approximately, the plaintiff had reservations about the succession, this was not communicated to him. He said that instructions given on behalf of the plaintiff recorded his intention to transfer the entire of his interest to the defendant. He had relied on this expectation and had worked on the farm for in excess of 25 years, having received what he alleged was a pittance and having taken on debts.
The defendant had claimed that a person who is promised or encouraged to expect an interest in property thereby becomes entitled by way of estoppel to that interest. He referred to Dillwyn v. Llewelyn (1862) 4 De Gex F. & J. 517, Ramsden v. Dyson (1866) L.R. 1 H.L. 129 and Inwards v. Baker [1965] 2 Q.B. 29 where, at pp. 36 to 37, the doctrine was stated by Lord Denning in the following terms:-
“It is quite plain from those authorities that if the owner of land requests another, or indeed allows another, to expend money on the land under an expectation created or encouraged by the landlord that he will be able to remain there, that raises an equity in the licensee such as to entitle him to stay.”
He also relied on Crabb v. Arun District Council [1976] Ch. 179 in relation to a right of way; and to Pascoe v. Turner [1979] 1 W.L.R. 431 where a lifelong partner, though not married, was entitled to security of tenure by way of a transfer of the fee simple in the home. In re Basham [1986] 1 W.L.R. 1498 dealt with the expectation to succession to an estate where the promisor had died, where it was held that the correct classification of cases of proprietary estoppel were as a form of constructive trust, the equity being raised by the promisee’s alteration of his position on the faith of the understanding. The claim in relation to a trust was not pursued.
The defendant also referred to Smyth v. Halpin [1997] 2 I.L.R.M. 38 where Geoghegan J. considered the court’s power in the case of proprietary estoppel and the necessity to make an order such as was necessary for the protection of the equity.
In McCabe v. McCabe (Unreported, Circuit Court, Judge O’Leary) it was held that, notwithstanding the lack of any specific form of words giving rise to the expectation of inheritance, “the complete course of the plaintiff’s life had been dominated by this earlier decision made for him by his parents that he be taken from school and put to work on the family farm”. The judge ordered that the farm be held on trust for the plaintiff in remainder and prohibited acts which would affect the farm for more than nine months after his parents’ death. In the meantime the plaintiff’s right to reside in the farm was upheld.
The defendant submitted that McCabe v. McCabe (Unreported, Circuit Court, Judge O’Leary) is closest to his circumstances. In that case the Circuit Court Judge accepted that the promise was made and that the plaintiff acted to his detriment (p. 5 of the note of the judgment). It had also been found that the benefits received were far short of what was necessary to pay the plaintiff. No such findings were made in relation to the present case.In McCarron v. McCarron (Unreported, Supreme Court, 13th February, 1997) Murphy J., with whom Hamilton C.J. and Keane J. agreed, upheld the High Court decision to grant an order for specific performance on the basis of a contract made between the plaintiff and the deceased. The plaintiff had worked extensively for the deceased for sixteen years – for long hours – without reward. The deceased had said to him that he supposed that the plaintiff was wondering about some compensation for his work and told him that he would “be a rich man after my day”. In addition, the deceased told him that “I want you to look after me and take your father up and we will draw up some class of agreement”. There was no change of mind.
The facts in the present case differ substantially and, of course, the defendant seeks a declaration of present entitlement.
Similar circumstances arose in Byrne v. Byrne (Unreported, Ex tempore,High Court, Gilligan J., 11th December, 2003). There the appellant was told by his father that “the house is yours when I die” and in respect of the storm damaged house: “this is coming to you on my death, would you consider putting it in good condition?” The appellant paid a total of IR£23,000.
The deceased consulted his solicitor for the purpose of signing over the dwelling house and was advised that it was easier and cheaper to do it by will.
The court held that it would be unconscionable not to give effect to the agreement which gave rise to a species of constructive trust. A declaration was sought that the defendant held the premises in trust for the plaintiff appellant.
In Jones v. Padavatton [1969] 1 W.L.R. 328, the plaintiff gave up a good job and prospects in the United States in response to a request to return and a promise to inherit. There is no evidence in this case that the defendant gave up a job or prospects elsewhere.
In Cameron v. Cameron (1892) 11 N.Z.L.R. 642, a lease and subsequent agreement to pay a father £25 for a promise to leave land to the plaintiff in his will was upheld as a contract. The evidence in the present case does not go as far as payment much less a promise to leave land in consideration of payment.
The defendant sought a declaration as to the entire legal and beneficial interest in the property and, indeed, an order of specific performance of an agreement partly performed by him. The primary claim for a declaration that the lands were held by the plaintiff on trust for the defendant was not proceeded with.
In relation to the application for a specific performance on the basis of an agreement partly performed it is, of course, necessary to prove an
agreement. Having carefully considered the oral and documentary evidence adduced at the hearing of this action, it does not appear that there was, at its height, any evidence other than a desire on the part of both the plaintiff and his wife that the defendant would succeed and, with greater certainty, be looked after. As time went on this desire that he succeed became less certain. Indeed, at the earlier stages it was, in my view, taking it as its height, clearly unenforceable by reason of the absence of consideration. As time went on and evidence of part performance became more stateable, the more uncertain the desire became. This became abundantly clear from a letter written by the plaintiff and his wife to all of their children:-
“We insist that everyone mind their own business from now on.
[The parents’] business was divided from [the defendant], at the request of [the defendant]. It must be truly separated for it to work correctly which means everyone pays their own bills and collects their own income and cannot use the others’ workman without fully paying him. There was an agreement between both parties for hire of tractors, made in March and considered fair by all but if that does not suit either party they can both hire elsewhere.
In relation to [the house and lands] we will not be bullied, charmed or forced by anyone.
It is not up for general discussion. We have raised all of you and nourished and supported you to the best of our ability. We would now expect to be treated with respect in our later years. No one person will get [the house and lands] outright, no one person disinherited. All will be as fairly treated as possible and taking into account all previous years but it will be our decision.
At this point everyone has their own work to get on with and lives to live. And we insist that we are left alone to do the same and concentrate on our health, on this we must insist and anyone not complying will have to be dealt with.
Until February, 2001
J.C. (Daddy)
K.C. (Mammy).”
In relation to part performance, Lord Reid explained in Steadman v. Steadman [1976] A.C. 536 at p. 540:-
“If one party to an agreement stands by and lets the other party incur expense or prejudice his position on the faith of the agreement being valid he will not then be allowed to turn round and assert that the agreement is unenforceable.”
It is stressing the obvious to say that an application for specific performance requires an agreement involving definite terms of offer and acceptance in addition to consideration. If there was an agreement then the lack of formality requiring the contract to be in writing to satisfy the Statute of Frauds, would in the circumstances not be necessary.
For a plaintiff to get as far as relying on part performance there must be a concluded contract. If there is not then the question of part performance does not arise: see McQuaid v. Lynam [1965] I.R. 564 at p. 574.
Farrell on Irish Law of Specific Performance (1994) summarises the older cases involving questions of part performance. The terms of the contract must be made out satisfactorily to the court and must be shown “plainly and distinctly”. Plaintiffs seeking specific performance against estates of deceased persons should be treated with great caution. Where the onus of proof remains on the balance of probabilities, Keane J. held in Silver Wraith Ltd. v. Siúcra Éireann cpt (Unreported, High Court, Keane J., 8th June, 1989) at p. 12, that the acts of part performance should be”unequivocally referable to the type of contract alleged”.
It does not seem to me that the evidence in this case supports any concluded agreement of the nature contended. Moreover, the plaintiff did transfer a dwelling house and lands to the defendant. It is clear that, while this was undoubtedly done to enable the defendant to raise money and to qualify for grants, the open market value was in excess of the borrowing assumed by the defendant and the equity has substantially increased in value. The defendant had been paid for work he had done on the plaintiff’s farm and was maintained from the profits of that farm. He was also in receipt of the rent from the dwelling house transferred to him.
It is, of course, significant that the defendant worked outside the farm, particularly in relation to the years in which he was employed as a sub-contractor on the national roads network.
Accounts in relation to the plaintiff’s farm and the defendant’s farm were prepared by a sister of the defendant. While these were not adduced in evidence, it is common case that they were signed by both parties for the purpose of the Revenue Commissioners. I am satisfied in relation to the abstracts prepared by both parties that payments made by the defendant to the plaintiff’s account were in respect of repayment of loans and hire of the plaintiff’s machinery and not otherwise. It seems to follow from the evidence that each party was trading separately and that this separate trading was not a mere device to maximise on farm grants.
In relation to work which the defendant says he did for the benefit of the plaintiff I make the following findings. There was some evidence of work done for which no formal payment was made during the early years. I accept that the plaintiff and his wife did give money to the defendant in addition to his maintenance. It seems to me that no case can be made, especially in those earlier years of financial difficulties, that this constituted part performance. The evidence in relation to a second stage was that the defendant was paid formally in respect of the days he worked and the machinery he employed on the plaintiff’s farm. A third, overlapping, stage was reached when the defendant was in business on his own where he leased land from the plaintiff (in addition to the lands conveyed to him) and paid the plaintiff for the hire of machinery which he used on the road projects.
The only evidence in relation to work on the plaintiff’s farm was the building of the gateway, in which the defendant was involved. I do not think that this amounts to part performance in relation to any promise made.
It does not seem to me that there is any basis to establish part performance even if there was an agreement in relation to the devolution of land after the death of the plaintiff.
Indeed, it is clear from the letter of the plaintiff and his wife to their children that the plaintiff had a separate business to the children and would not be influenced in regard to the devolution of their assets but would make provision for each of them. While it may seem unfair that the bulk of the assets would go to one or other of the sons rather than to the sons and daughters, there was nothing unusual in such a putative arrangement.
The defendant claims a declaration to a present entitlement. The cases cited distinguish between such an entitlement and a right to inherit after the death of the owner.
If there had been a contractual basis then specific performance could be ordered. As found by the court, there is not sufficient evidence of a concluded contract. Specific performance does not arise. There can be no declaration of a present entitlement.
The right to inherit can only arise as against the personal representative as a claim against the estate. Indeed, much of the caselaw relied on refers to such claims.
Parents have a right to the quiet enjoyment of their home and lands. There is no legal obligation to provide for their adult children during their lifetime. Parents are also entitled to exercise their discretion with regard to testamentary provision subject to the provisions of the Succession Act 1965.
It was unfortunate that when the plaintiff indicated his decision to favour the younger brother with regard to the succession to the farm, the defendant sought to restrain the plaintiff from harvesting his crops and allegedly incited others to interfere with his enjoyment of his lands. It was unfortunate that this matter led to the injunctive proceedings and to these proceedings which, apart from adversely affecting the relationship between family members, has had the effect of incurring substantial legal costs.
It was also unfortunate that this dispute commenced at a time when the plaintiff’s wife, the defendant’s mother, was in ill-health.
There needs to be some finality with regard to the dispute between the parties so that relationships can be put on a proper footing.
The plaintiff is entitled to an injunction restraining the defendant from attending the plaintiff’s house and lands in terms of the endorsement of claim herewith. The court dismisses the counterclaim.
Fastwell Ltd -v- OCL Capital Plc
[2018] IEHC 39
Murphy J.
Introduction
1. This judgment, which is quite fact specific, leads to a determination about whether the plaintiff can rely on an agreement for lease dated 14th April, 2014, for two kiosks at Grand Canal Harbour, Dublin (“AFL”). This Court has delivered pre-trial rulings and a judgment [2017] IEHC 144 following the application to amend the statement of claim which caused the trial to be adjourned in July 2016. The trial ultimately resumed in December 2017 following necessary case management.
2. The principal areas of dispute as to fact concerned:
(i) the extent of the demise covered by the lease mentioned in the AFL;
(ii) the effect of the failure to obtain planning permission limited to and covering the entirety of the development within the demise on the provision for terminating the AFL; and
(iii) the consequences of subsequent support for the development of the demised premises relating to the landlord’s purported termination of the AFL.
3. The evidence in controversy concerned the history of dealings between the parties from the date of a letter dated 16th January, 2014, setting out an offer from the principal behind the plaintiff to lease, to the date of the AFL in April 2014 and then from a letter dated the 10th June, 2015, requesting a schedule of the works from solicitors for the defendant landlord, to 6th July, 2015, when the defendant itself served notice terminating the AFL.
4. The prayer in the final amended statement of claim delivered in 2017 (“ASC”) was confined to:-
(i) a declaration that the AFL is valid and effective and has not been terminated;
(ii) an order compelling the defendant to withdraw its notice of termination dated 6th July, 2015, (“NOT”) in respect of the AFL and to facilitate the completion by the plaintiff of the two kiosks;
(iii) “if necessary an order rectifying the AFL to provide that planning permission for the purposes of clause 11, includes permission for a development in accordance with the Plans” [this is related to the plaintiff’s claim that the demise extended to a part of the basement which is the subject of a planning permission]; and
(iv) damages for breach of contract.
5. The defence to the substantive elements in the ASC as narrowed in the final days of trial in December 2017, focused on:-
(i) the alleged entitlement of either party under clause 11 of the AFL to terminate due to the absence of a notification of grant of planning permission (“NGP”) by 14th October, 2014, (“the long stop date”) for kiosk 1 to be used “as a refreshment and Drinks kiosk including wine” and kiosk 2 to be used “for the sale of flowers, gifts and other confectionaries”;
(ii) the alleged waiver by the defendant in a letter dated 10th June, 2015, and subsequent discussions of its entitlement to terminate; and
(iii) the submission for the plaintiff that there was a continuing common intention that the plaintiff was to get an unused part of the basement beneath the ground level kiosks incorporated into the area to be demised.
Background to AFL
6. Mr. Ray Peers (managing director at Q-Park Ireland which had a short-term lease to operate the car park in the basement of Grand Canal Dock) acknowledged that he was neither an agent nor an authorised official for either of the parties to negotiate or conclude an agreement for the kiosks which are above the car park. He outlined for the Court the benefits of engaging with Harry Crosbie (“HC”), the principal behind the plaintiff as the latter had worked on creating the Grand Canal Harbour development.
7. Following the introduction of Mr. Peers to Mr. Michael Maye, an investor whose company managed assets for the defendant, the defendant acquired the car park as the investment manager for a qualified investment fund (“QIF”). A copy of the transfer from the Dublin Docklands Development Authority (“DDDA”) to Michael Maye Limited dated 13th January, 2014, was furnished to this Court. There was no debate at trial about the status of the defendant to grant the lease provided for by the AFL even though the defendant had transferred its interests in the car park to a third party by December 2017.
The dispute concerning the basement
8. The evidence of Mr. Peers, Mr. Maye and Mr. Paul Pugh (who worked with Mr. Maye and who explained that he attended Court on foot of a subpoena) did not diverge. The Court appreciates that these three gentlemen were positive and worked towards an agreement with HC. However, they were not authorised to agree the detail about the use of the basement as contended by HC. They did not purport to have agreed the details which HC, without notice to the plaintiff’s own legal team, gave evidence about on Thursday, 30th June, 2016. This surprise delayed the conclusion of the trial of these proceedings so that the plaintiff could add in a claim for rectification of the area to be demised in order to incorporate an area of the basement mentioned by HC in cross-examination.
Michael Neary Solicitor
9. Although HC testified that the AFL and draft lease exchanged between the solicitors for the parties ought to have included some part of the basement, there is no mention of the basement in the AFL or lease which was returned by the plaintiff’s own solicitor. Mr. Michael Neary, then a senior associate solicitor in the firm acting for the defendant, noted in his evidence on 14th December, 2017, that the cover page of the draft lease for the AFL had been marked by the plaintiff’s solicitor to delete the words “[basement car park]” prior to the execution of the AFL by Mr. Pugh as instructed by Mr. Panos Nikopolitidis of the defendant.
10. Mr. Neary was clear and fair in his understanding of HC’s position. While Mr. Pugh was unsure about whether a map was attached to the documents which he signed for the defendant, the evidence of Mr. Neary satisfied the Court that the ground floor plan with the triangular areas for the two kiosks incorporating stairwells marked Map 1B was the plan identified in Part 2 (“the demised premises”) in the AFL. The execution of the AFL was somewhat rushed at the prompting of HC for commercial and planning reasons. That, however, did not deflect Mr. Neary from fulfilling his duty to the defendant, which was his client. He was requested by HC to visit the area for the two kiosks so that he could finalise the AFL and draft sublease. He walked around with HC for about twenty minutes when HC pointed out where a toilet and kitchen would be situated in the kiosk stairwell.
11. Mr. Neary was pressed in cross-examination about a letter from HC to Mr. Maye dated 16th January, 2014, and its consistency with HC’s belief that everyone was agreed that the AFL incorporated some basement area. Mr. Neary explained that his instructions and understanding related to the cages for the kiosk and not to the basement.
12. The suggestion on behalf of the plaintiff that the defendant was bound by Mr. Neary’s purported knowledge of the plans for the basement by reason of a short cover email dated 30th April, 2014, from Ms. Nikki O’Donnell, an architect engaged for the plaintiff, to Mr. Neary was unwarranted. The plaintiff, in relying on this email, conveniently ignored that the email post-dated the AFL and sought to cast a burden on a solicitor for the other side which had no basis. The email had a large file attachment with plans which had been submitted to the DDDA. I find it extraordinary in the circumstances that the plaintiff’s team expected Mr. Neary to interpret that email as amending his instructions about the extent of the demise. The email did not ask Mr. Neary to note anything in particular and Ms. O’Donnell in her evidence did not state or infer that Mr. Neary failed in his duty in any respect.
Attention to detail of HC
13. On the 30th June, 2016, HC answered a question during cross-examination along the lines that it was Mr. Maye who called to his door and told him that he (Mr. Maye) was representing “a large English capital fund” in seeking to purchase the car park. That account differed slightly with that given by Mr. Maye and Mr. Peers which is not particularly significant. However, in addressing me on the 14th December, 2017, HC took the opportunity in answering a question from Counsel for the defendant, to mention that the root cause for the confusion leading to this litigation arose from his lack of knowledge that “there was a British Vulture Fund” behind Mr. Maye. This Court formed the impression that HC has and gave a global picture rather than being attentive to pertinent details. Therefore, where there is a dispute between accounts of witnesses, I rely on such an impression along with my wider perception of the witnesses and their evidence.
14. In addition, the Plaintiff’s witnesses were unable to clarify satisfactorily why Q-Park had been identified as the owner of the car park enclosures for the DDDA when lodging the Section 25 application for permission to develop the kiosks. Further, the curious copying of the alleged execution page of the lease to the DDDA did not instil confidence that the full unvarnished account of that which had transpired was given at trial.
15. Having said that, I do not find as put to HC by Counsel for the defendant on instructions during the final cross-examination in December 2017, that the plaintiff has been “squarely dishonest” which HC strenuously denied. The defendant in making such an allegation in this type of case bears an onus of proving same on the balance of probabilities which the defendant has not discharged. Moreover, dishonesty was not pleaded and HC’s umbrage on the part of the plaintiff to that question had some justification and particularly when it had not been alleged in such specific terms during the trial in 2016.
Separate claim
16. In assessing the overall situation, I have had little regard to the storage area in the basement which was the “Disputed Area” in proceedings commenced on the 9th September, 2015, by the defendant against the plaintiff claiming alleged trespass. That disputed area was not described and the Court was informed that that particular row had been compromised in December 2017 or around that time. This indicated that there was some separate arrangement about that area in the basement.
Conclusion on the evidence
17. I prefer the evidence of Mr. Neary to that given by HC where it differed. Mr. Neary was consistent and thorough while HC tended to show a lack of attention to detail along with being an inconsistent historian about some facts. I listened to the evidence carefully and have had the benefit of transcripts for all the days of hearings. In those circumstances, I conclude that the basement was not agreed to be part of the demised premises in the AFL which is consistent with the written terms. The plaintiff and HC may have had designs for the basement as can be inferred from the application to Dublin City Council (“DCC”) which is discussed later.
18. It is unfortunate that HC and the plaintiff persisted in the claim that the AFL included an agreement relating to the basement, not least because the trial of these proceedings could have been concluded in the days allotted by this Court for the trial at the end of June and beginning of July 2016.
Principles on interpretation of contract
19. The relevant principles on the interpretation of a contract were, as submitted by Counsel, those described by Fennelly J. in ICDL v European Computer Driving Licence Foundation Ltd [2012] 3 I.R. 327 at paras. [65] – [75]. I specifically have regard to the statement that there must be precise observance of any conditions or procedures governing termination of the agreement.
Law Relating to Rectification
20. The submissions on the law relating to the claim for rectification have become redundant and the Court merely identifies that the law relating to unilateral mistake was recently summarised by Ryan P. in Slattery v. Friends First [2015] 3 I.R. 292 at paras. [34] – [39]. In the context of this claim I quote from para. [37] in particular:-
“The first principle is that it is difficult for a party to a written contract to escape the effects of its provisions by reason of mistake. When he has had the benefit of legal advice and versions of the deed have gone back and forth in the course of drafting, the undertaking is even more onerous for a party seeking to establish entitlement to rectification. There is, however, an equitable jurisdiction in exceptional cases for a court to order that the written formal document be rectified by removing, inserting or altering the provisions so as to reflect what the parties truly intended, understood and agreed.”
21. The defendant did not agree a plan or map referring to the basement in the context of the AFL. In Slattery, there had been sharp practice by the non-mistaken party. The plaintiff in the present case does not allege sharp practice but alleges a common continuing intention which was not reflected in the AFL. The plaintiff has not established such a common intention at the time of the AFL. At its height, HC for the plaintiff may have alluded to the basement when speaking with advisers but there was not a continuing common intention on the part of the defendant at the time of executing the AFL that it would lease part of the basement to the plaintiff for developing the two kiosks.
22. I am satisfied that the defendant did not agree to include any part of the basement in the AFL. Moreover, the plaintiff did not produce any plan or map which was available at the time of the AFL and was agreed to identify the basement area to be demised.
Interpretation issue
23. A further issue posed for the Court (“the interpretation issue”) was whether the certificate dated 23rd September, 2014, (“the first certificate”) from the DDDA granting permission for a change of use for one of the kiosks is a valid permission within the meaning of clause 11 of the AFL so as to trigger the entitlement of the plaintiff to a grant of the lease.
24. The plaintiff’s approach to the interpretation of clause 11 was to proceed on the basis that the AFL is ambiguous so as to give rise to the need to have regard to external matters and construe the relevant terms in some way other than would arise from their plain meaning. It was submitted that the question of what constitutes a valid planning permission for the purposes of the AFL can only be determined by an interpretation of the AFL against its “background matrix of facts” known or which ought to have been known to both parties.
25. It was contended on behalf of the defendant that the terms of the relevant provisions precluded or did not require a consideration of the background matrix. The following particular clauses were highlighted:-
(a) Clause 1.1 under the heading “definitions and interpretation” for the AFL had:-
“Planning Permission” is defined as “a notification of grant of planning permission for a change of use in respect of the Premises for the Permitted Use.”
“Premises” is defined as meaning “…the Demised Premises as defined in the lease.”
“Permitted Use” is defined as meaning “the permitted use as defined in the lease”.
(b) Clause 1.1 of the draft lease to which the AFL referred (“the lease”) provided the following definitions:-
“Permitted Use” as meaning “the use of the Demised Premises as …
(i) to the area marked red for use as a refreshment and drinks kiosk including wine; and
(ii) as to the area coloured green for the use as a kiosk for the sale of flowers, gifts and other confectionaries”.
“Demised Premises” was defined as meaning the land and premises described in Part 2 of Schedule 1 to the lease, which schedule referred to “…the hereditaments and premises known as the kiosks at Grand Canal car park being all of the property outlined in red and green on the plans annexed.”
(c) Clause 11 of the AFL provided as followed:-
“In the event that a Planning Permission has not issued by the Long Stop Date, then either the Landlord or the Tenant may terminate this Agreement by service of five (5) Business Days with notice to this effect on the other whereupon this Agreement shall become null and void and cease to be binding on the parties hereto but without liability on the part of the Landlord to the Tenant or the Tenant to the Landlord respectively.”
(d) For completeness, the “Long Stop Date” was defined at clause 1.1 of the AFL as meaning “six months from the date of this Agreement”.
26. The first certificate did not grant the plaintiff permission for the change of use required for kiosk 1. The written submissions for the plaintiff recited that:-
“Insofar as the first planning permission granted permission for the change of use of one of these kiosks to the use permitted for it under the Lease without permitting the change of use of the other kiosk to any use not permitted under the Lease, it was a planning permission for the Permitted Use within the meaning of this term and it is used in clause 11 of the Lease.”
27. The defendant in reply contended that the plaintiff could not sever the use of one kiosk from the other and that the plaintiff did not notify the defendant of the grant of the certificate in the first place.
28. Given the evidence of HC and others relating to the viability of the project to use the kiosks, it was readily apparent that the plaintiff had no interest in triggering the obligation of the defendant to grant a lease if only one of the kiosks could be operated. This fact is corroborated by the failure of the plaintiff to notify the defendant about the first certificate when it issued. Ms. O’Donnell confirmed that there was an estimated cost of €750,000 for recladding the two units. It was said that it did not make sense to develop the two units if only one was to function.
NGP from DCC
29. Ultimately, DCC decided by order dated 27th April, 2015, (a date after the Long Stop Date) to grant permission to change the two metal structures which accommodated pedestrian access to the basement car park to two kiosks in the form of metal mesh panels with glazing panels. The NGP referred to a 77sq m coffee/refreshment kiosk with a new sales hatch and a second unit of 67sq m to accommodate a flower shop with a new entrance. The conditions provided that it was not to be construed as approving any development which was not part of the plans published for the purposes of obtaining the planning permission from DCC. The covering letter with the application had included reference to storage accommodation in the basement for both kiosks.
Discovery of NGP and support in June 2015
30. Mr. John Pryor was a senior project manager in a firm which provided property advisory services to the defendant in 2015. After he learnt that the plaintiff wanted to start work by dismantling the cages at the location for the new kiosks in June 2015, he contacted Mr. John Lupton of the defendant who confirmed that the website of DCC had details of the NGP. In short, this prompted a letter from the defendant’s solicitor to the plaintiff’s solicitor dated 10th June, 2015, which attached a copy of the notification of final decision dated the 5th May, 2015. This letter, which did not reserve the right to terminate or insert an alternative to clause 11 as a condition of continuing with the proposal in respect of the kiosks, went on to state:-
“Our client now wishes to grant the lease but before doing so requires the information set out in the schedule annexed to be delivered within the next 10 days.”
31. There was a flurry of activity on the part of HC, Ms. O’Donnell, Mr. Pryor and others to progress the development which had the support of the defendant as noted by Mr. Neary in his email to the plaintiff’s solicitor of 18th June, 2015 at 23.41. Mr. Pryor struck me as independent or colloquially having “no skin in the game”. He was clear that the AFL did not include the basement and that he, as an adviser to the defendant, had not received sufficient information to advise that the plans now relied upon by HC should be put into effect. Despite a rigorous cross-examination, Mr. Pryor maintained his position that HC, if allowed to proceed according to the latter’s request, would have disrupted the basement which was not in the interest of the defendant. More significantly, he was concerned that the proposal to work on both kiosks at the same time would deny or hinder pedestrian access to the car park.
32. Mr. Matthew Gill is a chartered civil engineer who worked with Tobin Consulting Engineers in 2015 when it advised the defendant on the kiosk project. He explained to the Court that the existing car parking arrangement in the basement would have had to be reconfigured without necessarily reducing the number of spaces to facilitate the plaintiff’s then plan to complete the development of the kiosks.
33. In summary, HC had a vision for the kiosks and knew the area well. He treated the area where the kiosks were to be situated and its surrounds as an area which he should be allowed to develop as long as he, rather than the defendant and its advisers, decided that it did not affect the defendant. The Court noted HC’s apparent frustration and his allegation of “racist remarks” towards him made at a meeting on the 29th June, 2015, which were denied and not supported by other evidence. In fact, the plaintiff through HC took a subjugating type position while the defendant did not have any authorised person in Dublin to make decisions to implement HC’s vision for the kiosks and the area below the kiosks in the period from 10th June, 2015, until 6th July, 2015.
“NOT” and these proceedings
34. On the 6th July, 2015, the defendant, as opposed to its solicitors, wrote in the following terms to the plaintiff in relation to the AFL as follows:-
“Planning permission was not obtained within the six month period referred to in clause 11 of the Agreement. Please accept this letter as notice terminating the Agreement in accordance with clause 11. The Agreement shall terminate on 13th July, 2015, being five Business Days from the date hereof.”
35. Solicitors for the plaintiff by letter dated 8th July, 2015, wrote to Mr. Neary:-
“Your client in serving the said Notice has acted in bad faith and we note such behaviour to be vexatious and unacceptable. […] We might also add that, even if permitted on the face of Clause 11, the many representations of intention to proceed, made by your client following the expiry of the six month period, on which our client has extensively and detrimentally relied, would have been such as to estop it from repudiating under this clause. The fact of the planning permission having issued however, makes your client’s actions unlawful irrespective of any such estoppel.”
36. Solicitors for the defendant replied to deny the bad faith allegation and to assert that the NOT was valid and would not be withdrawn. In a later letter dated the 14th July, 2015, it was denied that the right to terminate had been waived and these proceedings were issued on that day also.
37. Following applications and exchanges the defendant undertook, pending the determination of these proceedings, not to develop the kiosks.
Superseding agreement?
38. The intricate arguments for both sides on the interpretation issue ranging from the meaning of definitions in the AFL and accompanying lease to the effects of silence on the part of the plaintiff about what was happening and the literal interpretation of the AFL were in this Court’s view superseded by the willingness of the defendant and its advisers to accommodate the required works for the kiosks in June 2015. The fact that neither of the parties took issue with the authority of advisers to bind the parties until the hiatus caused by the NOT on 6th July, 2015, informs the Court that the parties had a degree of understanding amounting to an agreement based on the AFL with the draft lease which had been agreed by the solicitors for both parties. In short, positions had changed and there was a consensus that the developments of the kiosks should proceed. The NOT on 6th July, 2015, ignored what had transpired since the discovery by the defendant in June 2015 of DCC’s grant of permission.
39. The kiosk developments meant a lot to the plaintiff and HC while they were just an enhancing feature for the defendant’s interest in the car park at Grand Canal Square. The Court was informed when this matter resumed in December 2017, that the defendant had recently transferred its interest in the car park to a third party.
40. Neither side to this litigation did themselves favours by their conduct or lack of attention to detail in relation to the operation of the AFL as time elapsed and particularly after 10th June, 2015. The Court is satisfied particularly that the plaintiff should have worked on satisfying the requirements set out in the letter of the 10th June, 2015, without insisting on enlarging the demise to the basement. The term “hedging bets” might describe the approach taken on behalf of the plaintiff. Assuming that an adviser or a solicitor for your landlord or supplier will divine your vision or reasons for “hedging bets” in a commercial transaction has no legal basis. HC and his family members who were directors of the plaintiff are familiar with significant property developments and the roles and duties of advisers and solicitors acting on the other side to commercial agreements.
41. I have already determined what Mr. Neary, then solicitor for the defendant, understood to be the situation and what was intended to be the subject of the demise to the plaintiff. It is quite remarkable that on the last day of oral submissions at the trial of these proceedings, Counsel for the plaintiff informed the Court, in answer to the Court’s question, that the plaintiff had no idea until Mr. Pryor and Mr. Neary had given evidence on 13th and 14th December, 2017, that the defendant conceded that the demise included the stairwell immediately beneath the surface area for kiosk 1. This tends to show a significant lack of engagement since July 2015 to iron out and fulfil the requirements of the defendant’s engineers and the plan of action agreed as mentioned in the email from the plaintiff’s solicitor dated 29th June, 2015. A breakdown of trust between the defendant and HC acting for the plaintiff had occurred.
Resurrection of right to terminate
42. As for the refrain on behalf of the defendant that the NGP from DCC was issued after the Long Stop Date and that it related to the basement as well as the kiosks and stairwells, it is a fact that until the NOT on the 6th July, 2015, the defendant had led the plaintiff to believe that it did not intend to terminate the AFL using those points. The grant of permission did not stipulate that the work in the basement had to be done in order for the kiosks to be completed. Rather, the plan submitted to DCC referred to work in the basement. This is somewhat analogous to a permission for three houses. The purchaser of one house which is built has a valid permission for that house even if the third house has not been built by the developer unless the planning authority makes it a condition that all houses should be finished before sales or occupation occur. Although there were suggestions that the basement may be required to reroute drainage and redesigned ventilation (mechanical and engineering features), neither Ms. O’Donnell nor any other witness with professional experience stated that the project involving the kiosks and stairwell without the basement will contravene the NGP.
43. It was submitted on behalf of the defendant that “it is clear that there is explicit conditionality placed on the invitation to proceed” in the letter of 10th June, 2015, and that those conditions were never met. Further, it was contended that the email from the plaintiff’s solicitor dated 29th June, 2015, referred to a plan of action which had been agreed with “our client’s design team regarding the preparation of a pack so the below request [the list of outstanding items from Mr. Neary in his email earlier that day] may have been superseded by events”.
44. There was indeed a requirement for the plaintiff with its professional advisers to carry out an action plan in respect of which they had the obligation to propose for the approval of the defendant and its advisers within the footprint of the demise. The remedy for the defendant where the plaintiff fails in or rejects that obligation may be termination of the revised agreement based on the AFL with reasonable notice. The Court did not hear submissions in that regard but it is a fact that the defendant chose to resurrect the right to terminate which it had never exercised or communicated its intention to reserve when supporting the plaintiff to carry out the kiosk project after 10th June, 2015. The plaintiff acted on the unqualified support given, albeit in a manner which stretched the limits of the demise without the legal right to do so. The NOT did not mention the real reason for the defendant to terminate. The true cause was the breakdown of trust between HC and the defendant. The Court recognizes the dilemma which faced the defendant but in line with the statement by Fennelly J. in ICDL v European Computer Driving Licence Foundation Ltd [2012] 3 I.R. 327 at para. [75], “precise observance of any conditions or procedures governing termination” is required. It may be open for the defendant to give notice of termination for failure to comply with the plan of action mentioned by the plaintiff’s solicitor in his email of the 29th June, 2015, at 15:15 which followed his attendance at “the design team meeting” that morning and the subsequent relevant exchanges. The defendant’s solicitor did not give evidence. While the Court is loath to invite another spat, I am not in a position to determine this final issue about notice without hearing the parties further.
45. A cost benefit analysis of the stances taken by each of the parties may reveal a significant disproportion between the ultimate costs of development and the cost of this litigation. I say this based on the estimates of costs which were submitted for the application seeking security for costs.
Reliefs
46. In those circumstances the Court proposes after hearing Counsel further to make orders which relate to the reliefs set out in the prayer to the ASC delivered on the 7th March, 2017, along the following lines:-
(i) A declaration that the agreement between the parties which incorporates the terms of the AFL save for clause 11 thereof, has not been terminated;
(ii) An order which will enable the plaintiff to commence work within and by such time (for which I will hear submissions from Counsel) on the kiosks and stairwell in compliance with the permission granted by DCC for the work on the kiosk and stairwell only;
(iii) An order dismissing the plaintiff’s claim for rectification.
(iv) An order dismissing the claim for damages for breach of contract.
47. The claim for damages was not actively pursued and evaporated due to the absence of substantive evidence that the plaintiff itself has a liability or entitlement to sums which were mentioned at the trial in 2016. In addition, the plaintiff failed to mitigate any loss which it could have advanced. Lest there be any doubt, the Court was not satisfied that the plaintiff suffered loss or damage due to the purported NOT.
Post-delivery of judgement note: Counsel for the parties will address the Court on the outstanding issues including the terms of the final order of the Court arising from this judgement on the 2nd March 2018.
Donnelly v O’Connell
[1924] 58 I.L.T.R 164
Creed Meredith J.
Dec. 4, 5, 1924
Meredith, J.
This case really turns on the construction of the document which, on March 27th, was drawn up and signed in the house-agent’s office. The question seems, indeed, to be whether the expression “conditions of sale” in that document is to be interpreted in its ordinary meaning or whether, owing to the circumstances of the case, some special meaning is to be attached to it. The document provides for due preparation of title and of the conditions of sale by the vendor’s solicitor. Those conditions of sale would provide for the amount of deposit to be paid, for the cases in which the vendor would rescind and for a number of other matters. There was virtually no limit to the terms which the solicitor, so long as he acted bona fide, might introduce into the contract; in short, the terms of the contract were still to be agreed upon. I am of opinion, therefore, that the document of March 27th did not constitute a binding contract and was not valid or enforceable. I must construe the expression “conditions of sale” in its ordinary way. I would like to say that, in my opinion, any document in which reference is made to a solicitor should be construed generously by the Court so that the parties may have all reasonable protection. This remains the proper rule to be enforced even though the parties may not realise the importance of obtaining legal advice. I shall always interpret such documents generously. So far as the evidence in this case is concerned I must say that I originally regarded certain aspects of this transaction with distinct disfavour, but now, having heard the evidence of Mr. and Mrs. Etchingham, I am quite satisfied that there was no intention to act otherwise than bona fide. Of course, coming to any arrangement with A while an enforceable prior agreement with B is in existence is not a very satisfactory way of doing business, but I am now satisfied that there was no intention to deceive the purchaser in this case. I must dismiss the plaintiff’s claim with costs.
Moloney & Anor -v- Fox
[2010] IEHC 72 (22 February 2010)
Feeney J.
1. The claim brought by the plaintiffs in these proceedings is based upon a contract dated the 25th September, 2006. That contract (hereinafter referred to as the sub-contract) was between John Moloney and Patrick Meade as vendors and Tadhg Fox (in trust) as purchaser whereby the vendors agreed to sell and the purchaser agreed to purchase the registered lands described therein, namely, all that and those part of the lands situated at Foulkscourt, Barony of Galmoy and County of Kilkenny being part of the property comprised in Folio 14004 of the register County of Kilkenny together with part of the property comprised in Folio 10759F of the register County of Kilkenny for the total purchase price of €2,900,000 subject to the terms and conditions set out in the memorandum of agreement.
2. Special conditions contained in the sub-contract between the plaintiffs as vendors and the defendant as purchaser provided that the vendors were selling on foot of a contract (hereinafter referred to as the head contract) for sale dated the 9th May, 2006 and made between Margaret Fitzpatrick of the one part and the vendors of the other part. The sub-contract was essentially an unconditional contract and contained a closing date of the 1st February, 2007.
3. The defendant failed to close the sale by the stated date and a completion notice dated the 26th February, 2007 was served on the defendant/purchaser on behalf of the plaintiffs. That completion notice was signed by Neil Corbett who was a solicitor acting for both the plaintiffs/vendors and the defendant/purchaser in relation to the sale and purchase pursuant to the sub-contract. The completion notice called upon the purchaser in accordance with general condition No. 40 of the contract to complete the sale within 28 days from the date of the service of that notice. It was also stated that if the purchasers should fail to complete the sale within the specified period that the vendors would enforce against the purchaser such rights and remedies as may be available to them at law or in equity.
4. The defendant/purchaser failed to respond to the completion notice and the plaintiffs thereafter proceeded on the basis that the defendant was in fundamental breach of contract.
5. The plaintiffs issued proceedings against the defendant by plenary summons dated the 30th April, 2008 wherein a claim for specific performance was made together with an alternative plea, at the election of the plaintiffs, seeking rescission of the said contract. The statement of claim was served on the defendant on the 1st August, 2008 seeking the same alternative reliefs as identified in the plenary summons. The defendant raised a notice for particulars dated the 23rd October, 2008 and in a reply thereto dated the 10th March, 2009, the plaintiffs elected to rescind the contract and stated that they accepted that their contract with Margaret Fitzpatrick has been rescinded and that they have therefore elected to pursue a remedy in damages.
6. The defendant delivered a defence and counter-claim dated the 20th November, 2008 wherein he admitted the agreement of the 25th September, 2006 (the sub-contract). The defendant pleaded that it was an express, or in the alternative, an implied term of that agreement that the plaintiffs would be in a position to convey to the defendant good title of the said lands on completion of the agreement. The defendant also sought to rely on a plea that he had entered into the said contract as trustee for Trotfox Limited. The plea that the defendant was acting as trustee for a limited liability company was not pursued at the hearing before the Court and the case proceeded on the basis that the defendant was the real principle and that the plaintiffs could rely on the general conditions set out in the contract and that any liability under the contract was the liability of the defendant. The defendant further pleaded, at para. 15 of the defence, that further in the alternative, it was an express condition of the said contract for sale between Margaret Fitzpatrick and the plaintiffs that the plaintiffs would apply for a specified planning permission within three months of the date of that contract and further that in the event of their failing to apply for the said planning permission, the contract could be rescinded by the said Margaret Fitzpatrick. The defendant alleged that in breach of the said condition the plaintiffs failed, refused and neglected to apply for the agreed or any planning permission and accordingly the contract for sale between Margaret Fitzpatrick and the plaintiffs was voidable at the instance of Margaret Fitzpatrick as and from the 9th August, 2006. Based upon such plea it was contended (at para. 17) in the defence that the only consideration received by the defendant on foot of the agreement with the plaintiffs was their rights pursuant to a contract which was unilaterally voidable at the instance of the other party thereto. It was denied that the defendant received or was to receive any or any adequate consideration from the plaintiffs and in those circumstances it was denied that the agreement was enforceable as against the defendant. The defendant further contended (at para. 24) that by reason of the rescission of the contract (the head contract) for sale between Margaret Fitzpatrick and the plaintiffs, which said rescission was caused solely by reason of the failure of the plaintiffs to apply for planning permission, the contract the subject matter of the proceedings could not now be performed. It was further claimed by the defendant that specific performance of the agreement the subject matter of the proceedings or any relief thereunder would be unjust, inequitable and contrary to public policy in circumstances where the agreement was prepared by the solicitor for the plaintiffs and where the defendant to the knowledge of the plaintiffs did not receive impartial or independent legal advice in relation to the terms of the said agreement. The defendant counter-claimed for rescission of the agreement the subject matter of the proceedings (the sub-contract) and for an order directing the plaintiffs to return the deposit paid by the defendant and for damages for breach of contract.
7. The plaintiffs delivered a reply and defence to counter-claim dated the 10th March, 2009 in which it was denied that the contract for sale made between Margaret Fitzpatrick and the plaintiffs (the head contract) was void for uncertainty or unenforceable. The defendant had pleaded in his defence that the contract for sale between Margaret Fitzpatrick and the plaintiffs was void for uncertainty and unenforceable in that the special conditions within that contract as set out at special conditions 4, 5, 6 and 8 were mutually contradictory and irreconcilable. That was expressly denied in the reply and defence to counter-claim. It was pleaded that even if the contract between the plaintiffs and Margaret Fitzpatrick (the head contract) was void for uncertainty, that that did not affect the liability of the defendant under the contract the subject matter of the proceedings. The plaintiffs further pleaded in the reply and defence to counter-claim that if the head contract with Margaret Fitzpatrick was voidable, the same did not and does not affect the liability of the defendant as the contract between the plaintiffs and Margaret Fitzpatrick was not avoided at any material time. It was admitted that the head contract between the plaintiffs and Margaret Fitzpatrick was rescinded on the 11th October, 2007 but it was denied that such rescission was affected by the reason of any failure on the part of the plaintiffs to make the agreed or any application for planning permission. The plaintiffs also denied all pleas contained in the defendant’s counter-claim.
8. The matter came on for hearing before the High Court in Clonmel and oral evidence was heard on the 2nd and 3rd December, 2009. The Court heard evidence from the first named plaintiff. The Court also heard evidence from Ian Corbett, solicitor, who had acted for both the plaintiffs and the defendant in relation to the sub-contract, the subject matter of these proceedings. The Court also heard evidence from Margaret Fitzpatrick who was the person identified in special condition 7 of the sub-contract, and who was the vendor in the head contract for the sale of the said lands to the plaintiffs. Special condition 7 of the sub-contract specified that the sale to the defendant was to be a sale by way of sub-sale on foot of that head contract. The evidence of Margaret Fitzpatrick dealt with the issue of the increased deposit agreed to be paid under the head contract with the plaintiffs. This matter will be dealt with later in the judgment. She also gave evidence that if she was asked to complete the sale to the plaintiffs in September 2006 or in February 2007 or on the closing date that she would have closed the sale. Her evidence was that she would have completed the sale under the head contract if she had been paid the agreed purchase price. She was expressly asked if she would have done so even though there was no planning and she stated that she would have done so. The evidence before the Court established that Margaret Fitzpatrick on the dates material to these proceedings was willing and able to complete the sale of the property to the plaintiffs if the purchase money had been forthcoming. All relevant documents and correspondence were admitted in evidence including a letter from the solicitor acting for Margaret Fitzpatrick dated the 11th October, 2007 wherein the head contract between Margaret Fitzpatrick and John Moloney and Patrick Meade was rescinded. The stated reason for the rescission was that John Moloney and Patrick Meade had not received planning permission in accordance with special condition 4 of the agreement between those parties. The Court also heard evidence from Jim Moran who was an official with Allied Irish Banks. Mr. Moran gave evidence that his bank had advanced a loan to the plaintiffs for the purchase of the said lands and in particular to enable the plaintiffs to pay an increased deposit under their contract with Margaret Fitpatrick. Mr. Moran’s evidence was that the bank advanced such loan on the basis of a requirement that before the money would be advanced that there be an unconditional contract in existence between the plaintiffs and a sub-purchaser. The loan was repayable on the 1st February, 2007. The bank also required an undertaking from Mr. Corbett, solicitor, to lodge the money from the proceeds of sale. Evidence was also given by Mr. Moran that the bank ultimately took proceedings against the plaintiffs in respect of the sum advanced in relation to the contract between the plaintiffs and Margaret Fitzpatrick and in respect of other outstanding sums. Evidence was given that judgment was obtained by Allied Irish Banks Plc against the plaintiffs on the 18th May, 2009 for a sum of €1,202,891.53 together with costs and that sum included as part of the total in the €450,000 loaned to fund the deposit paid to Margaret Fitzpatrick together with interest thereon. Mr. Moran identified that the sum for interest was €79,797.04 up to the 2nd December, 2009.
9. The Court also heard evidence from Pat Shine who was a property intermediary involved in the transaction the subject matter of the proceedings. Mr. Shine was involved in introducing the defendant to the plaintiffs with a view to a potential agreement for the sale and purchase of the lands the subject matter of these proceedings. The sub-contract between the plaintiffs and the defendant provided for a deposit of €150,000 and Mr. Shine gave evidence that the arrangement agreed was that a sum of €50,000 was to be paid by the defendant to the solicitor, Mr. Corbett, and that the payment of the outstanding balance of €100,000 was agreed to be deferred until the closing of the sale with that sum then being paid by the defendant, Mr. Fox directly to Mr. Shine. That sum of €100,000 was never paid as the contract was never completed. The Court also heard evidence that Mr. Fox paid a cheque of €50,000 to Mr. Corbett, as deposit but that that cheque was not cashed. The original of that cheque was produced.
10. The Court heard evidence that in relation to the head contract the original deposit agreed and as provided for in the memorandum of agreement of the 9th May, 2006 was in the sum of €50,000. The purchase price was €2m.
11. In special condition 5 in the head contract, the purchasers, namely the plaintiffs herein, undertook as a condition of that contract that an application for planning permission would be lodged with the planning authority within three months from the date of the contract. That time period expired on the 8th August, 2006 but the Court heard evidence that following negotiations between Margaret Fitzpatrick and the plaintiffs that that special condition was deleted by agreement. The evidence established that as John Moloney and Patrick Meade were aware of a potential sub-sale of the lands to a third party, namely, Tadhg Fox, for a consideration greater than the sum provided for in their contract with Margaret Fitzpatrick, that they entered into negotiations with Margaret Fitzpatrick and agreed that the time limit for them to obtain planning permission would be extended to the 1st February, 2007 and that special condition No. 5 in the head contract could be deleted. In consideration for such agreement, John Moloney and Patrick Meade agreed to pay an additional non-refundable deposit of €450,000 over and above the €50,000 non-refundable deposit already paid. It was agreed that the further non-refundable deposit of €450,000 would be paid within 14 days of such agreement being concluded. That agreement was confirmed by letter of the 27th October, 2006 from Margaret Fitzpatrick’s solicitors, Butler Cunningham & Molony, addressed to Neil Corbett, the solicitor acting for the plaintiffs. The additional sum of €450,000 was duly paid within the agreed time period.
12. The extra deposit was additional to the original deposit and it was a special condition (No. 6) that the deposit would be non-refundable notwithstanding the provisions of any of the general conditions or special conditions in the contract for sale, that is the head contract. An issue arose during the proceedings as to whether Tadhg Fox was aware of such alteration to the head contract and of the payment of the additional €450,000 non-refundable deposit to Margaret Fitzpatrick. I will return to this issue later in this judgment. The Court also heard evidence that when Margaret Fitzpatrick rescinded the head contract by solicitors’ letter of the 11th October, 2007, she retained the total deposit of €500,000, which was up to that time held by the solicitor as stakeholder.
13. The Court also heard evidence from the defendant. Mr. Fox gave evidence that through Mr. Shine he became involved in the purchase of the lands the subject matter of these proceedings. Together with Mr. Shine he met Mr. Corbett, solicitor. Mr. Corbett had acted for him in respect of one small transaction on a previous occasion and Mr. Fox gave evidence that he, together with Mr. Shine and Mr. Corbett, visited the lands. During that journey Mr. Fox indicated that it was agreed that Mr. Corbett would become his solicitor in respect of the purchase. Mr. Fox was aware that Mr. Corbett was also acting for the vendors, the plaintiffs herein. An agreement was reached between Mr. Fox and Mr. Corbett as to the payment of a €150,000 deposit on the lands, €50,000 of that sum to be paid by Mr. Fox by cheque to Mr. Corbett and the remaining €100,000 “deposit” being deferred and to be paid directly to Mr. Shine on closing.
14. Mr. Fox was a business man involved in the purchase and development of property. He had been working in that capacity for five or six years, having previously been employed by Radio Kerry. Mr. Fox purchased land and then developed the land by building houses thereon. He had built houses in County Galway and apartments in County Kerry and he sought to purchase the lands the subject matter of these proceedings with a view to obtaining planning permission and building houses. The reason that he was interested in the lands was that his housing development in Gort was almost complete. Mr. Fox also explained to the Court that the reason that the purchase of the lands in the sub-contract fell through “was the finance”. He explained that at the time that he was buying the land he had been in negotiation with Anglo Irish Bank in Cork, a bank with which he had done a lot of business, and the bank were quite happy and had looked at the land. Mr. Fox went on to explain that as the market started to fall and he was unable to produce planning permission, the finance was not forthcoming from the bank. Mr. Fox indicated that he was aware that he had signed a contract for the purchase of the lands in September 2006 and that when he signed that contract, he thought that the money necessary to complete the sale was available from Anglo Irish Bank and that he would not have signed the contract if he did not so believe. In cross-examination Mr. Fox openly admitted that he was not able to complete the contract and that that was not as a result of anything to do with the head contract.
15. Mr. Corbett was the solicitor acting for both the plaintiffs and the defendant. He drew up the sub-contract the subject matter of the proceedings herein which was ultimately dated the 25th September, 2006. In that contract it was expressly identified that the vendors therein were selling on foot of a contract for sale dated the 9th May, 2006 and made between Margaret Fitzpatrick, of the one part, and the vendors, of the other part, that is the plaintiffs herein. It was also expressly provided in special condition No. 7 that the sale shall be closed by way of a sub-sale. Mr. Corbett sent out the contract to the defendant. The defendant returned it through the post having signed the contract. Mr. Corbett indicated that the defendant knew that he was signing an unconditional contract. Mr. Corbett did not expect to receive the signed contract returned through the post. Mr. Corbett’s evidence was that Mr. Fox at all times knew that for the sale under the head contract to proceed that it was necessary that he as the sub-purchaser sign an unconditional contract. When the signed sub-contract came back through the post, Mr. Corbett contacted the plaintiffs, who came in and signed the contract which was dated the 25th September, 2006. Mr. Corbett indicated that he had expected Mr. Fox to call in and go through the contract before signing it but that Mr. Fox did not do so. When he received the signed contract from Mr. Fox he acknowledged the contract, had it signed by the plaintiffs and then sent a copy of the signed contract to the Allied Irish Bank who were providing finance to the plaintiffs. That resulted in the bank providing the funds and the first named plaintiff was able to pay the agreed €450,000 additional deposit.
16. A dispute which arose in the evidence between the defendant and Mr. Corbett was whether or not Mr. Fox was aware of the increased non-refundable deposit of €450,000 to be paid to Mrs. Margaret Fitzpatrick. Mr. Corbett gave evidence that he fully informed Mr. Fox of that fact and that Mr. Fox was well aware of the terms of the re-negotiation between Mrs. Fitzpatrick and Mr. Moloney and Mr. Meade. It was that re-negotiation which allowed the matter to proceed and Mr. Corbett gave evidence that Mr. Fox was fully informed of such re-negotiation. He also gave evidence that Mr. Fox had been informed that Allied Irish Bank would only fund the additional deposit if there was an unconditional contract in place and that that was made clear to Mr. Fox. This position was described by Mr. Corbett in evidence as being “a chicken and egg” situation, that is to say that without the unconditional contract signed by Mr. Fox that the bridging necessary to fund the additional deposit would not have been available. Mr. Fox gave evidence that Mr. Corbett did not tell him about the additional €450,000 deposit and contended that even though the reason why he had not proceeded was due to the lack of finance from his bank, that he had been subsequently led to believe that he had no obligation to proceed as the head contract had been rescinded. On cross-examination he was uncertain in relation to that matter even though he acknowledged that he knew that he was buying by way of sub-sale. Mr. Fox disputed that he had knowledge of the increased €450,000 deposit in the head contract. The Court is satisfied that in relation to this conflict of evidence that the evidence of Mr. Corbett is to be preferred. Whilst Mr. Corbett was in many ways an unsatisfactory witness who demonstrated a disregard for the standard procedures and professional good practice required in dealing with the sale of lands, that in relation to this matter Mr. Corbett’s evidence is to be preferred. There was no doubt that Mr. Fox knew that he was purchasing by way of sub-contract and the Court is satisfied that the circumstances which prevailed in this case were such that in all probability Mr. Fox was made aware and knew of the fact that for his purchase to proceed that the head contract must be in place and that additional funds were required to ensure that that could occur and that those funds would only be available if Mr. Fox signed an unconditional contract. There is no doubt but that that was the position of the bank and the willingness and alacrity with which Mr. Fox signed the contract is indicative of the fact that he knew that an unconditional contract was required to be signed by him to enable the head contract to proceed. The Court accepts the evidence from Mr. Corbett that he fully informed Mr. Fox of the altered terms of the head contract and of the willingness of the vendor under that contract to permit the head contract to proceed notwithstanding the terms of special condition No. 5 therein. If the vendor under the head contract had not been prepared to waive special condition No. 5, then the plaintiffs could not have proceeded to identify a future date for the closing of the sub-contract between them and the defendant. The Court is satisfied and accepts the evidence from Mr. Corbett that Mr. Fox was made aware of the amendments to the head contract and agreed to same and that Mr. Corbett’s evidence is to be believed when he stated that he told Mr. Fox that the plaintiffs in this action could not sell to him without the amendments to the head contract. The Court accepts the evidence of Mr. Corbett and is satisfied that it is supported by the surrounding circumstances and facts. When Mr. Corbett gave evidence that he informed Mr. Fox of the terms of the re-negotiations between the plaintiffs and Mrs. Fitzpatrick, he was doing no more than indicating the basis upon which the plaintiffs could proceed with the proposed sub-sale to Mr. Fox and given the position of Allied Irish Bank, it was clearly a necessity that an unconditional contract be in place. The Court is satisfied that Mr. Corbett’s evidence is to be believed when he stated that he showed the defendant the head contract and went through it with him. This is supported by Mr. Corbett’s evidence that he tippexed out the purchase price in the head contract prior to showing it to Mr. Fox so that he would be unaware of the actual purchase price in the head contract which would be kept confidential as between the parties to that contract. Even though Mr. Corbett did not have any attendances, there was available to the Court on Mr. Corbett’s file the head contract with the details tippexed out which was supportive of his recollection of what occurred. The evidence to the Court establishes that the amendments to the head contract were required in order to allow the sub-sale to proceed. The Court is satisfied that on the balance of probabilities Mr. Corbett’s evidence that the defendant was fully informed of the amendments including the additional €450,000 non-refundable deposit is to be preferred over Mr. Fox’s evidence in relation to this matter. Circumstances required that the defendant execute an unconditional contract and the Court is satisfied that those circumstances were explained to the defendant. 17. The Court does not accept the defendant’s denial that he knew nothing of the amendments to the head contract. However, even if the Court had been so satisfied the position is that the defendant signed an unconditional contract knowing that it was a sale by sub-contract for the agreed purchase price of €2.9m. The amendments to the head contract enabled that unconditional contract to be completed and ensured that the defendant’s purchase would not be undermined by a rescission of the head contract. The agreed amendments to the head contract also enabled a three way closing to take place and identified a closing date and these amendments were for the benefit of the defendant. The amendments which were agreed to the head contract ensured that the defendant was put in the position where the parties could complete the purchase of the lands on 1st February, 2007.
18. An issue which arose in legal argument related to the fact that Mr. Corbett acted for both the plaintiffs and the defendant in the sub-contract. Irrespective of the desirability of such conduct and of the slipshod and casual manner in which Mr. Corbett proceeded, the Court cannot identify a basis based on Mr. Corbett’s conduct which alters the defendant’s liability to the plaintiffs. Mr. Corbett’s conduct in how he dealt with the defendant is not a manner which is the responsibility of the plaintiffs. The facts are that Mr. Corbett was acting under a dual mandate to the plaintiffs and the defendant. The defendant was well aware of that dual mandate and proceeded to instruct Mr. Corbett to act on his behalf notwithstanding that he knew that he was acting for the plaintiffs. Mr. Fox was free to proceed with the proposed contract with or without legal assistance. If he chose to receive legal assistance it was open to him to choose whether or not to instruct an entirely independent solicitor or to instruct Mr. Corbett to act under a dual retainer. Mr. Fox was an experienced property developer and on the facts of this case chose to instruct Mr. Corbett under a dual retainer. How Mr. Corbett carried out that retainer in representing Mr. Fox is not the responsibility of the plaintiffs or something for which the plaintiffs can be held responsible. Further, on the facts of this case, Mr. Fox has failed to identify any acts or neglect on the part of Mr. Corbett that has caused the defendant any damage. The facts of this case establish that the defendant desired an unconditional contract for the purchase of the lands the subject matter of these proceedings and that that is what he received. Insofar as the amendments to the head contract are relevant, the amendments which were agreed were such as to enable that contract to be completed and not to be undermined by its rescission. Such amendments as were agreed were for the potential benefit of the defendant and the defendant has failed to identify any prejudice which arises from any alleged default of Mr. Corbett even if such default was to be deemed relevant. Central to the factual background of this case is the fact that the defendant desired to purchase the lands in question for a stated price on foot of an unconditional contract and that the reason why the contract did not proceed was that the defendant was unable to raise the finance when it was required.
19. A number of legal defences were raised by the defendant which are hereinafter dealt with. The factual position which was established before the Court is that there was no issue between the parties to the head contract in relation to the presence or absence of an express completion date in the head contract. The evidence available to the Court provided no support for any contention that the vendor under the head contract, Mrs. Fitzpatrick, was unwilling to complete that contract. The evidence from Mrs. Fitzpatrick established that she was able and willing to complete the sale under the head contract and would have done so if the money was forthcoming. It follows that the issue which was raised by the defendant in relation to the ambiguity of a closing date under the head contract is not relevant on the facts of this case as the clear evidence was that the vendor under the head contract was willing and able to complete as of the 1st February, 2007. Any argument in relation to a suggested ambiguity in relation to a completion date under the head contract is therefore a theoretical argument as the evidence establishes that such ambiguity as there was would not have prevented the completion of the head contract.
20. The evidence establishes that the defendant entered into an unconditional contract with the plaintiffs with a specified closing date of the 1st February, 2007 and that the defendant failed to close on that date. Thereafter, Mr. Corbett acting as solicitor for the plaintiffs served a completion notice on the defendant on the 26th February, 2007. The defendant failed to respond to that completion notice and failed to complete the sale within the time specified therein. It follows that the defendant is in fundamental breach of contract. After the service of the completion notice attempts were made to complete the sale and to raise the finance required by the defendant to permit a completion. Those attempts failed and the sale did not proceed. This resulted in the vendor under the head contract, Mrs. Fitzpatrick, rescinding the head contract.
21. The contract between the plaintiffs and the defendant was a sub-contract in that the sale was to be closed by way of sub-sale. The consequence of that was that the legal estate was vested in the vendor under the head contract, Mrs. Margaret Fitzpatrick. The legal requirement on the plaintiffs under the sub-contract of the 25th September, 2006 was to procure Mrs. Fitzpatrick’s participation in the completion of the transaction so as to cause the legal estate to pass to the defendant. The evidence before the Court was that the plaintiffs were in a position to secure Mrs. Fitzpatrick’s participation in the transaction causing the legal estate to pass to the defendant. It was contended on behalf of the defendant that the plaintiffs could not discharge that obligation but there is no reality in that claim. The Court heard the evidence of Mrs. Fitzpatrick which was clear and to the point in confirming that she was willing to complete provided she was paid. The Court must look to see what the position was as of the closing date identified in the sub-contract, the 1st February, 2007. By that date an agreement had been reached between the plaintiffs and Mrs. Fitzpatrick to amend the original head contract of the 9th May, 2006. That contract had been amended by the deletion of special condition No. 5 and an effective closing date with a proposed three way closing of 1st February, 2007 had been identified. That closing date was consistent with the closing date in the sub-contract of the 25th September, 2006. It was also the position as of the 1st February, 2007 that the time period provided for in special condition No. 4 in the head contract which would have enabled Mrs. Fitzpatrick to rescind that contract had not run as the period of nine months from the 9th May, 2006 had not yet elapsed. It is also the case that after that date Mrs. Fitzpatrick did not seek to rescind and remained able and willing to complete the head contract.
22. The position therefore is that as of the 1st February, 2007, Mrs. Fitzpatrick had contracted to sell the lands in issue to the plaintiffs, that the plaintiffs had an entitlement under the head contract to complete that sale at any time whether or not planning had issued, as provided for in special condition No. 8, and could therefore enforce the head contract against Mrs. Fitzpatrick as of the 1st February, 2007. The plaintiffs were therefore in the position that by the proposed closing date of the 1st February, 2007 they had obtained a sufficient interest in the lands the subject matter of the proceedings and could compel the owner of those lands to concur in the proposed sale. The fact that the plaintiffs’ capacity to so compel was dependent upon an amendment agreed to the head contract entered into after the date of the agreement of the 26th September, 2006 was of no relevance as it is not the interest which the plaintiffs had as of the date of the contract of the 26th September, 2006 which is relevant but rather whether by the date of the closing on the 1st February, 2007, the plaintiffs had sufficient interest or were in a position to compel Mrs. Fitzpatrick to concur in the sale. By that date they were in that position and therefore were in a position to complete the sub-contract as of the 1st February, 2007 and were in a position to fulfil their bargain with the defendant. The requirement that a Court focus on the position as of the date that the vendor under a contract is obliged to perform that contract is illustrated in the judgment of Harmon J. in Harold Elliott and H. Elliott (Builders) Ltd. v. Pierson [1948] 1 Ch 452 at p. 455 in the following words:
“At law A may contract to sell to B any defined subject matter and can enforce the contract if by the time when he is obliged to do so he has obtained a sufficient interest or can compel other interested parties to concur in the sale. It matters not at all that at the date of the contract A had no interest if he obtain it in time to fulfil the bargain.”
The judgment of Harmon J. went on to deal with a qualification to that statement but the qualification related to a set of circumstances which do not apply to this case as there was no attempt by the defendant in this action to repudiate at any time prior to the closing date of the 1st February, 2007. It is also the case that after the 7th February, 2007 the plaintiffs had a sufficient interest to fulfil the bargain with the defendant as Mrs. Fitzpatrick had not and did not seek to repudiate the head contract under special condition No. 4.
23. The defendant raises a number of points in relation to the provisions contained in the head contract. Whilst the Court will deal with those points, the legal obligations between the plaintiffs and the defendant arise out of the sub-contract of the 26th September, 2006. The defendant entered into an unconditional contract where the sale was to be closed by way of sub-sale. In the documents set out in the schedule on the second page of the sub-contract at para. 4, one of the documents of title identified was the contract for sale dated the 9th May, 2006, Margaret Fitzpatrick to vendors. The defendant was thereby fixed with notice of the contents of the document schedule including the head contract of the 9th May, 2006. He was so fixed whether or not he read the documents or whether or not he received advice from his solicitor in respect of the contents of those documents. The position as provided for in the general conditions of sale contained in the contract of the 25th September, 2006 and in particular, condition No. 6 identified that the documents specified in the document schedule have been available for inspection by the purchaser or his solicitor prior to the date of sale. The factual position was that the head contract, in its amended form, was unconditional in that it enabled the plaintiffs to complete that contract with or without planning permission, as such entitlement was expressly provided for in special condition No. 8. The plaintiffs could override special condition No. 4 and make it effectively inoperable as of the date of the 1st February, 2007.
24. The defendant made a number of points in relation to the terms of the head contract and, in particular, to the special conditions therein and it is therefore appropriate to set out special conditions No. 4, 5 and 8:
(4) The sale is conditional upon the purchaser obtaining full Planning Permission for the erection on the property in sale of a minimum of 96 houses in accordance with Plans and Specifications whereof details will be submitted to the local Planning Authority for the purpose of obtaining such permission and if, at the expiration of 9 months from the date hereof Planning Permission as aforesaid shall not have been granted and that fact shall have been notified to the vendor within seven days after the expiration of the said period then either party may by notice in writing in that behalf served upon the other rescind this agreement whereupon the vendor shall return the deposit to the purchaser but without interest costs or compensation and the purchaser shall return the copy title deeds and any other papers furnished to him and neither party shall be entitled to any sum in respect of costs, compensation or otherwise.
(5) The purchasers hereby undertake and it is a condition of this contract that their application for Planning Permission as described in the preceding special conditions shall be lodged by them with the Planning Authority within three months of the date of this Contract. In the event that the purchasers do not lodge their Planning Application within the said period of three months then the vendor may, at her option, rescind this agreement whereupon the vendor shall return the deposit to the purchaser but without interest costs or compensation thereon.
(8) The purchasers shall have the right to complete this sale at any time whether or not planning has issued in accordance with condition No. 4 herein.
25. The defendant contended that the head contract did not specify a closing date for completion in that the contract indicated that the closing date should be ascertained by “see special conditions” and the special conditions did not in fact identify a specific closing date. The position of the plaintiffs in relation to a closing date was articulated by Mr. Corbett in his evidence when he stated that the provisions contained in special condition No. 4 meant that the closing date for that contract was the 9th February, 2007. That special condition provided that if full planning permission was not obtained by the 9th February, 2007 that either party to the head contract could serve a notice in writing and rescind the contract. In effect, the head contract was voidable at the instance of Mrs. Fitzpatrick if full planning permission had not been obtained by the 9th February, 2007. Mr. Corbett stated in evidence that it was therefore his view that the closing date could be ascertained as being the 9th February, 2007. Special condition No. 5 had been deleted by agreement between the parties and any entitlement to rescind thereunder no longer existed. The defendant’s argument in relation to there being uncertainty in relation to the closing date for the head contract is effectively dealt with by special condition No. 8 which was inserted by Mr. Corbett acting as solicitor for the plaintiffs to enable the sub-sale to the defendant to take place. That special condition allowed and permitted the plaintiffs as the purchasers under the head contract to have the right to complete that sale at any time whether or not planning had issued in accordance with special condition No. 4. The Court is satisfied that, even though the special conditions in the head contract are not drafted in the most lucid form, they are sufficiently apparent and comprehensible to enable the Court to be satisfied that the head contract in its amended form was unconditional in that it enabled the plaintiffs to complete without full planning permission prior to the 9th February, 2007. That is the clear effect of special condition No. 8 and therefore any contention raised by the defendant reliant upon there being no closing date in the head contract or relying upon any uncertainty within that contract is without foundation. In any event, as the Court has already indicated, even if there is any basis to the defendant’s argument in relation to the uncertainty as to the closing date within the head contract, it is clear that following the deletion of special condition No. 5 and given the terms of special condition No. 8 that as of the 1st February, 2007, the plaintiffs had a sufficient interest and were in a position to compel Mrs. Fitzpatrick to concur in the proposed sale to the defendant. Mrs. Fitzpatrick was also ready, willing and able to close the sale under the head contract. The relevant date for this Court in considering the contractual obligations of the parties to these proceedings is the 1st February, 2007 and it is irrelevant that at the time that the plaintiffs entered into the sub-contract of the 25th September, 2006 with the defendant that they were in breach of special condition No. 5 of the head contract given that by the date of the proposed closing, the vendor under the head contract had agreed to the deletion of special condition No. 5 and had agreed that the plaintiffs should have the right to compete the sale under the head contract at any time whether or not planning had issued therby ensuring that as of the 1st February, 2007 the provisions of special condition No. 4 had no effect. Thereafter special condition No. 4 had no effect until Mrs. Fitzpatrick sought to rescind the head contract and the position was that as of the date of the expiration of the 28 day period provided for in the completion notice, Mrs. Fitzpatrick was ready and willing and able to close the head contract and the plaintiffs were thereby able to fulfil their bargain with the defendant as of that date.
26. The defendant raises various arguments in relation to the contention that the plaintiffs were in breach of the provisions of the head contract and, in particular, special condition No. 5 as of the date of the sub-contract of the 25th September, 2006. Those arguments are theoretical given the facts of this case. Firstly, both the plaintiffs and the defendant entered into their contract well knowing that an unconditional contract was required to enable funding to be obtained by the plaintiffs. The Court has already given its conclusion in relation to this matter. As of the closing date provided for in the sub-contract, the plaintiffs were in a positron to compel Mrs. Fitzpatrick to complete the contract and in those circumstances there is no basis for the argument raised on behalf of the defendant that there was a failure of consideration based upon the contention that Mrs. Fitzpatrick could not have been so compelled as of the 25th September, 2006. The relevant date for considering such matter is the specified closing date of the 1st February, 2007 and by that date the plaintiffs had obtained sufficient interest to enable them to fulfil the bargain. The legal obligation on the plaintiffs was to be in a position to fulfil their bargain with the defendant as of the closing. As this Court is satisfied that they were in such a position both on the 1st February, 2007 and on the expiration of the 28 day notice period provided in the completion notice, it cannot be said that the consideration for the payment of the deposit by the defendant under the sub-contract was illusory.
27. The defendant raised a further defence based upon a claim that no action can be brought against the defendant on foot of the amended sub-contract unless the amended sub-contract or some note or memorandum thereof is in writing and signed by the party to be charged therewith or some other person lawfully authorised to sign on his behalf. It was accepted that for such a plea to be considered by the Court and for the defendant to succeed on this point that it would be necessary to amend the defence as the Statute of Frauds had not been pleaded. An application for such amendment was considered by the Court and the Court refused the application. In those circumstances this matter does not require to be further considered in this judgment.
28. In paragraph 24 certain special conditions in the head contract are set out. The defendant contends that there was no completion date in the head contract. The Court is satisfied that as a matter of construction of the head contract a closing date can be identified. Special Condition No. 8 does not contain any closing date but the Court is satisfied that consideration of the conditions, read together, result in a situation where the sale was to be completed on or before the period specified in condition No. 4 and having regard to the amendment to the head contract and the deletion of special condition No. 5, the relevant date for completion is the 1st February, 2007. In any event, the evidence established that none of the parties to the head contract and, in particular, the vendor made any point or took any issue in relation to the alleged lack of a closing date. The omission in special condition No. 4 in failing to provide a closing date in the event that planning was achieved, and any argument arising therefrom, is of no relevance given the evidence of what actually occurred. The plaintiffs entered into a contract for the sub-sale of the property and in those circumstances the relevant special condition became condition No. 8 and as the Court has already indicated as a matter of construction the sale was to be completed on or before the period specified in special condition No. 4 and therefore the relevant closing date identifiable from the contract is the 1st February, 2007.
29. A further matter relied upon by the defendant in his defence is a claim based upon the validity of the completion notice dated the 26th February, 2007. The defendant contends that that notice was invalid. The defendant submitted to the Court that whilst the plaintiffs may have been ready, willing and able to complete on the 1st February, 2007, they were not able to complete as of the 26th February, 2007. They based this contention on the argument that the plaintiffs were in breach of their obligation to obtain planning permission from the 8th February, 2007 and so they could not compel Mrs. Fitzpatrick to complete the head contract thereafter. The evidence available to the Court establishes that there is no basis for such argument. The facts establish that as of the date of the completion notice and the expiration of the 28 day period identified therein neither of the parties to the head contract had sought to rely on special condition No. 4 and neither had sought to rescind the contract. The evidence also established that the plaintiffs were ready, willing and able to complete the purchase under the head contract and the oral evidence of Mrs. Fitzpatrick established that she was ready, willing and able to complete the purchase and was not seeking rescission under the terms of special condition No. 4 at such time. There was, therefore, no evidence to support the contention that the plaintiffs were not ready, willing and able to complete the sale. They had sufficient interest both as of the date of the completion notice and at the end of the 28 day period provided therein to fulfil the bargain and complete the sale to the defendant. General condition No. 40 of the sub-contract deals with the issue of completion notices. Under that condition the completion notice is effective if the party giving it shall at the date of the notice be able, ready and willing to complete the sale or if not so able, ready or willing be in that position by reason of the default or misconduct of the other party. The evidence in this case establishes that the plaintiffs were ready, willing and able to complete and insofar as the completion could not take place, the same was as a result of the default of the defendant. What was envisaged was a three way closing and that closing did not take place as a result of the default of the defendant.
30. A further argument raised by the defendant in his defence relates to the basis upon which the plaintiffs’ claim damages. The defendant contends that the head contract was rescinded on a particular basis. The head contract was rescinded by letter from Mrs. Fitzpatrick’s solicitors, Butler Cunningham & Molony, dated the 11th October, 2007. That letter stated:
“As your clients have not received planning permission in accordance with special condition No. 4 and, indeed, we understand have not even lodged an application for planning permission, we have been instructed by our client to notify you that she is rescinding the contract dated the 9th May, 2006 in accordance with special condition No. 4 therein.”
The defendant argues that he cannot be held liable for the plaintiffs’ failure to obtain planning permission within the time identified in the head contract or thereafter and accordingly that the defendant cannot be held liable for any loss suffered by the plaintiffs by reason of Mrs. Fitzpatrick’s rescission of the head contract based on such failure. The defendant further contends that Mrs. Fitzpatrick was legally entitled to rescind the head contract pursuant to special condition No. 4 and that the letter of rescission, from Mrs. Fitzpatrick’s solicitors, must be taken as an accurate record of the exact reason why the head contract was terminated. It is on that basis that the defendant contends that he cannot be responsible for any loss suffered by the plaintiffs. The defendant has failed to identify any grounds upon which the rescission could have been challenged. The argument that the defendant cannot be liable for the plaintiffs’ failure to obtain planning permission and therefore is not responsible for the rescission and is not liable for any loss suffered by the plaintiffs arising from such rescission, fails to have regard to the fact that such rescission arose as a result of the defendant’s failure to compete the sub-contract when called upon to do so by the completion notice of the 26th February, 2007. When Mrs. Fitzpatrick rescinded the head contract she did so at a time when she was entitled to do so and the reason upon which she relied is irrelevant. For rescission to be valid the right to rescind must have arisen and such right must have been exercised. On the facts of this case Mrs. Fitzpatrick had a right to rescind and exercised such right. It was contended on behalf of the defendant that as time was not of the essence under special condition No. 4 and since Mrs. Fitzpatrick, the vendor under the head contract, had not served a completion notice, that the plaintiffs herein should have queried the entitlement of Mrs. Fitzpatrick to rescind the head contract. That argument fails to have regard to the fact that by the date of that letter the right to rescind had arisen and Mrs. Fitzpatrick was entitled to exercise such right. Even if it was accepted that the reason stated in the letter rescinding the head contract was incorrect, it is of no significance given that by the date of that letter the right to rescind had arisen and therefore such right could be exercised with or without a stated ground and even in such circumstances where the stated ground was incorrect. It was the entitlement to rescind as of the date of that letter which was crucial to the effectiveness of such rescission and as of the date of the letter Mrs. Fitzpatrick had such entitlement.
31. The final matter required to be considered by the Court is the issue of damages. This issue arises in circumstances where the Court is satisfied, for the reasons herein before set out, that the plaintiffs have established that the defendant was in breach of contract in failing to close the sub-contract of the 25th September, 2006 and comply with the completion notice which was served on him on the 26th February, 2007. It also follows that the defendant’s counterclaim must fail. Arising out of such breach the plaintiffs have rescinded the contract and have sued for damages. In the completion notice for the 26th February, 2007, the plaintiffs had stated that if the purchaser should fail to complete the sale within the period therein identified, that the plaintiffs would enforce against the defendant such rights and remedies as may be available to the plaintiffs at law or in equity. In paragraph 9 of the replies to particulars of the 10th March, 2009, the plaintiffs indicated that they accepted that their contract with Margaret Fitzpatrick had been rescinded and that they therefore had elected to pursue a remedy in damages. The plaintiffs thereby exercised their option in relation to the nature of the remedy which they were seeking against the defendant.
32. As a result of the defendant’s breach of contract, the plaintiffs have suffered loss and damage. That loss and damage can be quantified. Firstly, the plaintiffs have lost the total sum paid as a deposit to Mrs. Fitzpatrick under the head contract, that contract having been rescinded. The total sum of €500,000 was forfeited by Mrs. Fitzpatrick as that sum was a non-refundable deposit. The defendant raised an argument at the hearing that he should not be compelled to indemnify the plaintiffs for the loss of the additional €450,000 deposit for a number of reasons. It was first contended that as he was unaware of the additional €450,000 deposit that he should not be liable in damages for such sum. The Court is satisfied that on the evidence before it, the defendant was aware of such additional deposit and that therefore there is no factual basis for this claim. Secondly, it was contended on behalf of the defendant that the payment of the additional sum of €450,000 arose solely from the plaintiffs’ failure to comply with their contractual obligations to apply for planning permission before the 9th August, 2007 and that the defendant should not be responsible for such sum. It is correct that the payment of the additional deposit of €450,000 arose in circumstances where the plaintiffs had failed to apply for planning permission before the 9th August, 2007. However, the facts of this case establish that that payment was made to the knowledge of the defendant and was made in circumstances whereby it ensured that the plaintiffs would be in a position to fulfil their bargain with the defendant. Further, when the defendant failed to comply with the completion notice of the 26th February, 2007 and was in breach of contract, the defendant knew of the increased deposit and was well aware that a breach of contract on his part would have the potential consequences of causing Mrs. Fitzpatrick to rescind the head contract and to forfeit the non-refundable deposit. In those circumstances the loss of the entire deposit was a loss and damage which could be fairly and reasonably considered to arise naturally from the defendant’s breach of contract and to be a loss and damage that would have been in the contemplation of both the plaintiffs and the defendant. It was also the defendant’s breach of contract that caused the rescission as no rescission would have occurred but for the failure of the defendant to complete. The third ground relied upon by the defendant in an attempt to avoid liability for the additional €450,000 deposit is a claim that the defendant entered into the sub-contract of the 25th September, 2006 without the benefit of proper or independent legal advice. The facts of this case establish that the defendant was an experienced developer who chose a particular solicitor knowing that that solicitor would be a joint solicitor. Irrespective of whether or not that solicitor provided the defendant with proper or adequate legal advice, and that is a matter which this Court does not have to consider, there is no basis upon which the plaintiffs can be held responsible for any defect in the legal advice and assistance received by the defendant. Nor can any issue arise in relation to the fact that there was a common solicitor acting for the plaintiffs and the defendant given that such situation arose from the actions of the defendant when he instructed Mr. Corbett knowing he was already acting for the plaintiffs.
33. The Court is satisfied that applying the principles identified in Hadley v. Baxendale& Ors. [1854] 9 Exch 341 and [1843 – 60] All E.R. 461, that the loss of the entire deposit of €500,000 was a loss which can be identified as being; in essence, a loss actually resulting which was at the time of the contract reasonable foreseeable as likely to result from the breach. When the defendant signed the contract of the 25th September, 2006, he was aware of the requirement for an unconditional contract to facilitate the plaintiffs obtaining a loan to finance the increased deposit to Mrs. Fitzpatrick and therefore the Court is satisfied that the loss of the entire non-refundable deposit is a loss which was reasonably foreseeable to Mr. Fox at the time that he entered into the sub-contract of the 25th September, 2006 and therefore is a loss which the plaintiffs can recover arising out of Mr. Fox’s breach of contract.
34. The second loss which was foreseeable to both the plaintiffs and the defendant and must have been within their contemplation at the time that the contract was made, was that any profit that the plaintiffs would make arising out the difference in the purchase price in the head contract and in the sub-contract would be lost by the plaintiffs if the defendant failed to complete the sub-contract. The defendant did not know the amount of that profit as the purchase price in the head contract had been tippexed out when he was shown that contract. However, the defendant was well aware that any profit which the plaintiffs would generate from the difference between the two purchase prices would be lost if he failed to complete. It follows that when the defendant was in breach of contract in failing to complete, that one of the losses which would naturally arise from such breach would be the loss of that profit. The defendant is liable to the plaintiffs for the difference between the two contract prices, namely, €900,000. The defendant is liable to pay the plaintiffs as damages the two sums of €500,000 and €900,000 totalling €1,400,000. As regards the claim for interest the Court is satisfied that since the plaintiffs did not exercise their option to sue for damages as opposed to pursue a claim for specific performance until the notice of particulars of the 10th March, 2009, that any interest should only run from that date and the Court will hear the parties in relation to the issue of the amount of interest and/or its calculation. The plaintiffs are entitled to an order for the rescission of the sub-contract. As no deposit was actually paid, no order is required for forfeiture of a deposit. The plaintiffs are also entitled to damages for breach of contract in the sums identified above. The defendant’s counterclaim will be dismissed.
Geoffrey William
Fenton and Knockrabo School Ltd. v Stanley A. Schofield
Ruth S. Schofield and Schofield Scott Limited
Supreme Court
30 July 1965
[1966] 100 I.L.T.R 69
Lavery, Haugh, O’Keeffe JJ.
J
Davitt P.:
This is an action for damages for fraud and fraudulent misrepresentation in the sale of certain property. The sale was completed by the transfer of the property from one limited company to another. It was, however, essentially a transaction between the defendant Stanley A. Schofield as vendor and the plaintiff Geoffrey William Fenton as purchaser; and for the general purposes of this judgment, can be considered on that basis. The property in question, which is known as Ballygallon, consists of some 150 odd acres of land together with a residence thereon and a right of fishery in a stretch of the river Nore. The right extends to both banks of the river for a distance of about a mile and a half upstream from where the water ceases to be tidal. This case is concerned mainly with the fishery.
The representations complained of are set out in paragraphs 4, 5, 6 and 7 of the Statement of Claim. The defence does not deny that these representations were made; but pleads that those set out in paragraphs 4, 5 and 6 were substantially true and, that in so far as they were inaccurate, they were believed by Mr. Schofield to be true. As regards the representations set out in paragraph 7 it is not alleged that they were true. In respect of some of them it is pleaded that they were genuine mistakes made by Mr. Schofield without any intention of inducing Mr. Fenton to purchase, and without any fraudulent intent. It is also pleaded that in any event Mr. Fenton had agreed to purchase before those representations were made.
I do not propose to review the evidence as a whole. The following appear to me to be the essential matters. In determining matters of fact I have, of course, relied mainly upon the evidence of those witnesses whom I was prepared to accept as witnesses of truth. I regret to have to say that I could not include Mr. Schofield in that category.
Mr. Schofield’s predecessor in title was Mrs. Lindsay from whom he purchased the property in 1956. The transaction was completed by transfer to the defendant company Messrs. Schofield Scott Ltd. Mrs. Lindsay had bought the property in 1951 for £7,000. She had a paying guest Captain Lang who paid her an inclusive sum for his board and lodging and the right to fish the river; but she did not run a guest house, and did not allow any person other than Captain Lang and her guests and friends to fish the river, and these latter enjoyed the privilege free of charge. She had on one occasion let the fishing for a month—in 1953. She also fished the river herself. Captain Lang kept a record of all fish caught in the river in a book which is not now forthcoming, having been destroyed by him some years ago. When Mr. Schofield was considering the purchase he was shown over the lands and fishery by Captain Lang who conducted the negotiations on behalf of Mrs. Lindsay. Mr. Schofield paid several visits to the property during which Captain Lang walked the river bank with him describing the fishery, explaining how best to fish the several pools, and telling him the approximate annual catch of salmon. Before his last visit prior to concluding an agreement the particulars contained in Captain Lang’s record were copied *70 at his dictation by Mrs. Lindsay into a book which had been used as a shooting record by Mr. Lindsay; and on the occasion of his last visit this was shown to Mr. Schofield. This book is in evidence and shews the catch each year as follows:
1951
Salmon
26;
Grilse
34;
Total
60
1952
„
17;
„
31;
„
48
1953
„
22;
„
81;
„
103
1954
„
28;
„
18;
„
36
1955
„
14;
„
12;
„
26
1956 (to 19/6)
„
8;
„
34;
„
42
Mr. Schofield paid £12,000 for the property.
He went into possession on July 31st 1956, and in the course of a year or so spent about £2,500 on renovating and improving the residence. He fished thorughout the balance of the 1956 season and the seasons 1957-8-9-60. He has produced what purport to be records of the number of fish caught in each of these seasons, the genuineness and accuracy of which is disputed by Mr. Fenton. At an early stage of the 1957 season he apparently became dissatisfied with the returns from the fishery and entered into a voluminous correspondence which continued up to 1960, with Mr. McMahon Murphy, the Clerk to the Waterford Fishery Board. In this he complains frequently of the extent to which fish were being netted in the tidal portion of the river and of the detrimental effect of this upon the fishery.
A letter dated May 4th 1957 contains the following: “This last 10 days I have had five rods out, Mr. Maiden, Cartright, Cripps, Mrs. Schofield and myself, and we have not even seen a fish, never mind caught one.” His records purport to shew that during this period he himself had caught five fish as follows. April 24th: 2; April 27th: 2; April 29th: 1. On May 26th of the following year he wrote and in the postscript stated:
“Fishing here very bad. Not seen a fish for weeks.”
His record purports to shew that two fish were caught on May 1st, three on May 5th and one on May 8th. Again in a letter of June 16th 1958, he says: “We still have only one fish in two months.” His record shews a catch in June by Mr. Don Flanagan whose own record fixes the date as June 15th. In the two months period from April 16th to June 15th Mr. Schofield’s record purports to shew a catch of 15 fish. A letter of March 24th of the following year 1959 contains the following: “At the moment it is only at the week-ends that salmon fishing will suit the tourists, as with the heavy netting in the week hardly any fish get through to us. So much so that I rarely take a rod out nowadays in mid week.” His record purports to shew that he fished on February 8th and caught 3; February 13th and caught 5, February 15th and caught 1; February 19th and caught 1; February 20th and caught 1, March 23rd and caught 1. A letter of March 30th 1959 contains the following: “Fishing here very bad. From the records this is the worst season on record for our water yet despite low water which should be favourable to us we are 50% below the previous ‘worst ever’.” His record purports to shew that up to that date 16 fish had been caught as compared with 13 in 1957 for the corresponding period. In a letter of April 20th he said: “Fishing still b——awful—one small fish in 7 weeks now and 4 rods going.” His record purports to shew that five fish had been caught in the previous five weeks to a total weight of 65½ lbs One of these being a 23½ pounder. A letter of May 9th 1960 included: “Fishing here very bad right now. We had visitors last week and as usual they went back empty handed. Not seen a fish up here for 10 days now.” His record purports to shew that twelve fish were caught on May 1st. A letter of June 6th contains: “As at present the fishing is terrible—nothing here at all. Last year was the worst year ever on this fishery despite the large number of rods on the water, while this year is 65% below last year’s figures up to the corresponding date.”
According to his records the catch in each season up to June 6th was as follows: 1957—36; 1958—61; 1959—45; 1960—63. A letter of June 27th says: “Fishing is so bad here this year I have completely lost interest in this so called sport.” According to his records three fish were caught on June 15th; four on the 16th; six on the 17th and seven on the 18th. In a letter of July 4th he says: “We are getting nothing, in fact we (3 rods) have had only one (1) fish in 14 weeks and we fish every day—one rod is on the river all the time.” A period of 14 weeks from July 4th would go back to March 29th. His records purport to shew that between April 20th and June 18th inclusive ninety seven fish were caught.
In March 1960 he was apparently notified *71 of an increase in valuation from £5 to £10 on portion of the fishery; and on March 9th he wrote to the Secretary of Kilkenny County Council enclosing a Notice of Appeal. This contained several grounds of appeal two of which are as follows: “(1) That the fishing has deteriorated considerably over the last years and only one third of the original catches are now recorded, the over-netting of this river has reduced our catches and last year was the worst ever recorded on this fishery, and our records go back fifty years, and (7) That recently I offered for sale this fishery and the highest bid was only 50% of what I paid for it.” Mr. Schofield said in evidence that these statements were untrue. A correspondence ensued with the Valuation Office in the course of which he was asked for certain details and sent forms to complete. In an undated reply he said. “I am unable to give you the precise details asked for as I kept no records for 1957-60 of exactly where the “returned” fish were caught. I fish the Tight Estate water and the Kilkenny Anglers’ water which adjourn our own and the fish caught have not been segregated from one fishing to the other and I am not in a position to fill the forms in, nor give you the other details asked for as I kept no records other than the information previously sent when I made the appeal.” Later in the same letter he said: “To conclude it may help when I state that the last two seasons were the lowest and worst on record and the year just completed was 50% down on the previous year making this season an all time low as far as salmon fishing is concerned.” His records would appear to shew that 1960 was the second best of the four years from 1957. In a letter of September 13th he said: “You are wrong in your assumption that there are fishing records kept;” and later: “My predecessor had no records to shew me;” and again: “Not one fish has been caught on this fishery since May,” and finally: “As stated earlier there are no records kept as they are hardly worth it.” His record purports to shew that from the end of May until the end of August 193 fish had been caught. In a letter of October 16th he said: “As you are dealing with the rates of Ballygallon fishery I cannot see what useful purport it will serve to give you rod catches on my entire catch for the river when I fish several fisheries; but for your information my total for this season was 17 and last season (ending 1959) was 33.” Comment on this would be superfluous.
In accordance with the provisions of the Statistics Act 1960 Mr. Schofield made onnual returns to the Department of Fisheries of the salmon caught by him. The Statute prohibits any disclosure of such returns by an Official of the Department. In dealing with the matter of his returns Mr. Schofield said in evidence that he knew they were for census purposes, that he lied to the Department; that he could not give any explanation as to why he did; that his lying from the start was with a view to the valuation; that he made false returns for each of the seasons 1957, 1958, 1959 and 1960. He said that the first intimation he had had of an increase in valuation was in 1960; that it was common practice for people to make false returns; that he had made up his mind at the start to make false returns lest the Department should tell the Valuation Office; that he believed vaguely that he returned seventeen fish as his catch for 1960 and twenty seven as his catch for 1959. He said that he selected these figures on no basis whatever. The returns made to the Department, together with the statements contained in the letters to Mr. McMahon Murphy and to the Officials in the Valuation Office, present, of course, a picture of the fishery which is vastly different from that presented in the records which he has produced. These records are continued in two books. Those for the seasons 1957 and 1958 are contained in a book with blue cardboard cover designed for use by a fish merchant as a register of salmon and trout purchased and sold. Those for the seasons 1950 and 1960 are contained in a smaller book with red cardboard cover bearing the legend “The Irish Angler’s Record Book.” In evidence Mr. Schofield described how he kept these records. He said that he set off by keeping a day to day record, usually for the first few weeks of the season. After that he would use a folded sheet of foolscap which he kept in a plastic wallet along with his fishing licence. He would make the record on the river bank. The books would be written up from the foolscap sheet from time to time. The gap between the times of writing up the book lengthened as the season went on. In some cases it would be a couple of months. He was absent on occasions when other people would be fishing and he would learn of their catches only by what they said or by what Ross (an employee) told him. He could vouch for the entries as to fish caught by himself allowing for the odd mistake. Taken through the entries in some detail, both in direct examination and in cross examination, he was unable to explain several items and was con *72 fused about others. In cross-examination he said that he could not help as to the years when the Red book was written up. He said that it was loose to say that he had entered up details of catches on the foolscap sheet on the river bank; that it could have been then or later; that he would tot it up in various places. He said that the folded sheets of foolscap would get the worse for wear, but would still be in the wallet in 1960. He said that he would sit down from time to time and write up the record books from the foolscap sheets. He would not like to express an opinion whether all the entries were written at the one time—a considerable number were. He said that the Register was inaccurate as the totals were not added up correctly. There was no guarantee that the details were correct—or the anglers names in relation to the dates. He placed more reliance on the foolscap sheets. He could not account for copying the figures inaccurately from the sheets—it was done hurriedly. He believed the details to be correct. It was quite clear from his evidence that he was not prepared to vouch for the accuracy of the records; but that he would stand over the entries on the foolscap sheets, or his wallet records as he called them.
The wallet records were not, however, forthcoming; and he accounted for their absence as follows. He said that in the interval between the time when the Contract of Sale was made and the time the sale was completed Mr. Fenton had been bombarding him with requests for details as to what were the peak periods in the fishery; that preparatory to taking possession Mr. Fenton was staying in the Shelbourne. Hotel on January 31st 1961 and that on that morning he, Mr. Schofield, gave him the two books together with the wallet records and a letter, all wrapped up in a brown paper parcel. There was a p.p.s. to the letter on a separate sheet in which Mr. Schofield said: “It must be strictly understood as agreed that these records are for your guidance only, as to when fish approx come up and are for your use only.” He dined with Mr. Fenton that evening at the Shelbourne, but did not get the records back until the following morning when he collected them from the hall porter. They were wrapped in a brown paper parcel which he did not open until some time later, when he found that it contained the two books and the p.p.s. to the letter; the wallet records were not in it. He said that he expected these wallet records to turn up at any moment; but that he was not suggesting that Mr. Fenton was suppressing them Mr. Fenton denied that he bombarded Mr. Schofield with requests for details as to peak periods or made any such request at all. The correspondence between them in fact shows no trace of any such request. He denied that Mr. Schofield ever gave him the books, or the wallet records or the letter. Mr. Wood’s cross-examination of Mr. Schofield upon this matter effectively demonstrated the improbability of his story. I have little difficulty in accepting Mr. Fenton’s evidence as to this, and none whatever in rejecting Mr. Schofield’s. I consider that the wallet records may be safely eliminated as a material factor in this case.
On examination the records in the blue book appear to bear out Mr. Schofield’s evidence that a considerable number of entries were made at the one time. It is obvious that in some cases the original entries have been altered in respect of the number of salmon recorded as caught. In others figures shewing the number of salmon have clearly been added after the original entries had been made. In two entries for the year 1958 relating to Sergeant O’Connor and Mr. Don Flanagan the figures have been proved to be false. The record for the year 1957 appears to shew that Mr. Schofield personally killed 156 salmon. While he appears to have shared 14 with Captain Cripps. The entries in respect of 31 of these appear to me to be dubious. Guests and Mrs. Schofield are credited in dated entries with 38; and there are bulk entries as follows. “31/5/57 to 18/6/57 Guests while away 29”; “1/6—17/6 John Cripps 20.”“McAlinden 21 fish and visitors Peal 102 June July”; “S. A. S. Peal 74.” The figure 7 of this last entry appears to have been struck out with pencil marks. This would make a grand total of 452. Mr. Schofield however, totted it to 348. Accepting, as he said in evidence, that the bulk figure of 21 credited to Captain McAlinden should be included in the bulk figure of 102; and taking the last entry as being 4 instead of 74, would reduce the total of 452 by 91 to 361. Captain Cripps in fact caught 53 fish though he is credited with only 32. This record is, of course, clearly unreliable. If I were to discount entirely the bulk figures of 103 and 29 as well as the 31 dubious entries, the figure of 361 would be reduced by 162 to 199. If I were then to give credit to Captain Cripps for a further 21 the total would be 220. I could, however, have no confidence whatever in such a result.
Examining the record for 1958 in the same *73 way I find that Mr. Schofield is personally credited with 145 fish of which, however. 77 is a dubious bulk entry. Others are credited with 43 of which 17 is a bulk entry credited to “Guards”. 4 fish appear to have been shared with Captain McAlinden. The grand total acording to my reading of the record is 192. Mr. Schofield appears to have made it 211. Of my total of 192. I would regard 103 as dubious leaving a remainedr of 89. I would, however, have no confidence in this result either.
In the record for 1959 Mr. Schofield would appear to be credited (though not expressly) with 76 fish. There are bulk entries as follows: “Various and visitors 63; Tommy 9; John Cripps 64; Mac 27.” Of the dated entries those in respect of 14 fish appear to me to be dubious. Three dated entries credit “John”, i.e. Captain Cripps, with 3 fish; while the bulk entry credits him with 64; that is a total of 67. In actual fact he caught 9. The record finally contains an entry of “27 RTD which Mr. Schofield interpreted vaguely as meaning that he had returned that figure to the Department of Fisheries as his catch for the season. I make the grand total to be 239 while Mr. Schofield apparently made it 203. If I were to discount 14 represented by dubious entries as well as the bulk figures of 63 credited to visitors and various and to reduce the 67 credited to Captain Cripps to 9. I would arrive at a result of 104. I could of course have no confidence in this result either.
The dated entries for 1960 record 83 fish caught; and of these the entries in respect of 25 are dubious. There are two bulk entries “39 water let to visitors”; and “Visitors including Mac and Tommy 132”. There is a final entry “17 RTD”. I make the grand total 254 while Mr. Schofield appears to have made it 221. If I were to discount the dubious entries and the bulk entries the result would be 58.
If I were to accept these records at their face value. I would be accepting that Mr. Schofield’s annual average catch of salmon for the four seasons 1957 to 1960 was 262 I don’t accept them at their face value. I believe them to be dishonest and to be worthless as evidence of the average annual catch. If I were prepared to attach any importance to them. I would believe that they in reality represent an average annual catch of no more than about 100.
There was other evidence as to the nature of the fishery. Mrs. Lindsay said that it had the potentiality of being a good fishery if someone was prepared to develop it and spend time and money on it. Captain Lang also agreed that it was potentially good, but said that 300 would be an outrageous figure for an annual average catch. Captain Cripps’ annual average for the years 1957 to 1960 was 23. 1957, he said, was an exceptionally good year. Mrs. Schofield said that they caught more fish than they could do with that year. The deep freeze was on occasions full to the top with salmon. Catherine O’Leary, employed as a maid in Mr. Schofield’s time and since employed by Mr. Fenton, said that a lot of fish were caught in Mr. Schofield’s time; and that nothing like the same number were being caught now. She said that not quite half the space available in the deep freeze was used for salmon; but she saw space filled more than once. By way of check upon this evidence as to the deep freeze the following considerations are of some interest. The capacity of the deep freeze was 18 cubic feet and something short of half may fairly be taken as 8 cubic feet. The salmon were described as being cut into portions and placed in polythene bags; and, presumably, they were first headed, tailed and gutted. Salmon are at least as heavy as water. If the 8 cubic feet were fully packed with salmon they should weigh as much as 8 subic feet of water or 8 × 62¼ lbs.−498 lbs. It is a reasonable assumption that it would take at least that weight of whole fish to provide enough to fill the 8 cubic feet. It is of interest to note that this is more than was caught in any entire season save one in Mrs. Lindsay’s time. Her totals were as follows. 1951—413 lbs.; 1952—337 lbs.; 1953—502 lbs.; 1954—286 lbs. and 1955—219 lbs.
Captain McAlinden, who was a frequent guest of Mr. Schofield, said that his host was always catching fish and would tell him of enormous catches. He had himself seen large catches from time to time. There was an awful lot of fish caught there. He had seen fish all over the place—a big bath in the dairy full of fish. It was the best fishery he ever came across. The deep freeze was generally packed with fish on one side. Mr. Williams of Messrs. Hamilton and Hamilton fished the place for a day in July, 1960. He killed one fish but he saw a fantastic number shewing. It is worthy of note that Mr. Schofield is not recorded as having killed any fish in July, 1960. The bulk figure of 132 already men *74 tioned does relate to the period 19.7.60 to 16.8.60. Mr. Thomas Maiden was also a frequent guest. He said that the Nore was a good river and that Mr. Schofield had a good stretch of it. He believed that Mr. Schofield was a wonderful fisherman.
Mr. Schofield said in evidence that he gave a lot of fish away and sold a lot to merchants and hoteliers. He named no less than a dozen such, of whom two gave evidence. Mr. Michael Murphy of New Ross produced his record of salmon purchased. His purchases from Mr. Schofield were as follows: 1957—68; 1958—27, 1959—11; 1960—15. It does not, of course, follow that all these fish were from Ballygallon. Mrs. Ewing, of Ewing’s Hotel and Restaurant, Carlow, also gave evidence of having purchased fish from Mr. Schofield, but could give no assistance as to the amount.
Such in brief appears to be the relevant evidence as to the amount of salmon caught in Mr. Schofield’s time. What conclusions are to be drawn from it? The first conclusion I draw is that there are no reliable records and no reliable evidence otherwise, of the number of fish caught. The second is that whatever the number was Mr. Schofield was dissatisfied with it. Dissatisfaction with the fishing is a constantly recurring theme of his four years’ correspondence with Mr. McMahon Murphy. He may have been lying in his references in that correspondence to the number of fish caught; but I am satisfied that his dissatisfaction was genuine. If, however, as his records purport to show, he was catching on average 262 fish a year (much more than one for every day of the season and about five times as many as his predecessor) he could have had little grounds for such dissatisfaction. He said in evidence that he lied from the very beginning because he feared an increase in the valuation of the fishery. It is true that in an early letter to Mr. Murphy he does refer to a posssible increase in fishery rates; but I find it impossible to believe that all his complaints about poor catches are lies told with an eye on the fishery rates. He is a wealthy man. The amount involved could not be considerable. There was no question of an increase in valuation until 1960; and then the proposed increase was only £5 involving an extra annual charge of £7. Am I to believe that he committed himself to a series of lying statements under his own hand to Mr. McMahon Murphy, to the Valuation Office, and to the Department in order o avoid the possibility of having to pay this amount? If he was prepared so to act for the sake of such a sum what would he not be prepared to do in the way of misrepresentation to clinch a deal which would yield him a profit of over £15,000? My third conclusion is that he could not have got anything like an average of 250. On one side of his four-year period was Mrs. Lindsay with an average of 54; with a maximum of 103 and a minimum of 26. On the other side we have Mr. Fenton with his figure of 17 for the 1961 season before the eel weir was constructed. I have had no evidence from Mr. Schofield as to how many he caught on his 18 visits during that season. He presumably caught some fish. These figures suggest a pattern which is quite inconsistent with the figures claimed by Mr. Schofield. I do not believe that he got anything like an average of 250. I am prepared to believe that he had a good season in 1957; that the river was fished more assiduously in his time than in Mrs. Lindsay’s, and that he very possibly got better results. I discount largely the evidence as to the superabundance of fish in his time and in particular the evidence as to the brimming deep freeze. It is, of course, on the evidence impossible to arrive at any figure for the average annual catch; but I do not believe that it could have exceeded 100, and in mentioning that figure I believe that I am leaning considerably in favour of Mr. Schofield.
Such, I believe, was the position when Mr. Schofield decided to sell the property. On April 7th, 1960, he called to the offices of Messrs. Jackson, Stops and McCabe and gave instructions to Mr. Lanigan O’Keeffe. He told him that the average annual catch was 300 to 350; that the run of spring fish was very good and averaged 16½ lbs., that 17 each over 25 lbs. in weight and 6 each over 30 lbs. in weight had been caught by him that season; and that he had spent over £15,000 in renovating the residence. These statements were all grossly untrue. They were in substance repeated in good faith by Mr. Lanigan O’Keeffe in a letter to Mr. Fenton of July 8th. In that letter he stated that the average catch was about 350; that spring salmon ran large; and that the owner had 17 over 25 lbs. and 6 over 30 lbs. to his own rod that year. He did not say that the owner had spent £15,000 on renovating the residence; but was content to say that he believed that the owner had spent a great deal of money on the property. The representations in this letter are in part the subject of paragraph 4 of the *75 Statement of Claim. I am satisfied that in representing to Mr. Fenton that the annual average catch was about 350 Mr. Lanigan was acting as Mr. Schofield’s Agent. I am satisfied that as far as Mr. Schofield was concerned the representation was both false and fraudulent.
On July 15th Mr. Fenton called to Ballygallon and was shewn over the property by Mr. Schofield. Mr. Lanigan O’Keeffe arrived later when the matter of sale and purchase was discussed. It is common case that on this occas on Mr. Schofield represented to Mr. Fenton that the annual average catch of salmon was over 250, and that Mr. Schofield produced and shewed to Mr. Fenton a fishing record of some kind which substantiated this representation. Mr. Schofield in evidence said that the record produced consisted of the two books which have already been dealt with. Mr. Fenton said that these books were not shewn to him; that what was produced was a book about the size of the red book but with a blue cover; and that what stuck in his mind about it was that it shewed that in a period of three days in May one year 12 fish of over 20 lbs. weight had been caught Neither of the books produced shew any such entry.
Mr. Lanigan O’Keeffe could recall only one book being produced which on a cursory examination by him appeared to be consistent with what Mr. Schofield had told him. He had a recollection that it recorded a large number of fish caught by some priest in Mr. Schofield’s absence. The only reference to a priest in the records produced is in the blue book against the date September 1st, 1958, and it is “Fr. Casey? Not known”.
Mr. Schofield in evidence made a somewhat vague reference to the possibility of his having made a fresh copy of one of the books produced. He said “he didn’t remember making the copy—only dimly”. I doubt very much that the books produced in evidence were shewn to Mr. Fenton and Mr. Lanigan O’Keeffe on this occasion. Be that as it may I have no doubt that some kind of record was shewn them and that it represented an annual average catch of at least 250. Mr. Fenton asked if the record book would be handed over. Mr. Schofield said that it would not. He explained that a revaluation of the fishery was pending, and that he had been making falsely low returns as to the number of salmon caught with a view to keeping down the valuation. For this reason he was unwilling to hand over the record. Mr. Fenton was apparently satisfied with the explanation. He decided to purchase for the price asked—£30,000. After he had expressed his willingness to do so Mr. Schofield said that he would like to retain the right to a rod on the river for a period of ten years; and that if this were agreed he was prepared to reduce the purchase price to £27,000. This was agreed. Much reliance was placed by the defence upon this circumstance as shewing, it was submitted, that Mr. Schofield genuinely believed that his fishery was as valuable as he made it out to be, and that his representations were true. Having regard to all the circumstances. I find it quite impossible to view the matter in this light. I believe that he was amazed at the facile success of his representations and that being only too well aware of their untruth he decided to provide some means of meeting trouble should it develop subsequently. I believe that his gesture, I think it amounted to little more, was designed for subsequent use in the way in which it has been sought to use it. In describing the event in evidence he said that he was shaken by the quickness with which Mr. Fenton made his decision. I can well believe it. He appears to have made comparatively little use of his right so reserved. Mr. Fenton said that he made eighteen visits in the 1961 season. I have no evidence as to how often, if at all, he visited the place subsequently; or as to how he fared on the occasion of any of his visits. I am quite satisfied that the representations made by Mr. Schofield to Mr. Fenton on July 5th, 1960, as to the annual average catch of salmon were false and fraudulently made. These are the representations referred to in paragraphs 5 and 6 of the Statement of Claim.
On July 25th, 1960, Mr Fenton wrote to Mr. Lanigan O’Keeffe asking him for an acknowledgment of the broad basis of the purchase transactions; in relation to the fishery he said: “The fishing, I understand, produces about 300 fish per annum. Can this be confirmed? An assurance from Mr. Schofield that this has happened since he has been in possession would be adequate.” In response to this request for a confirmatory assurance as to the number of fish caught annually Mr. Schofield on 2nd August left at the office of Messrs. Jackson Stops and McCabe a document which throughout the hearing has been referred to as “document *76 K”. This was forwarded to Mr. Fenton. It purported to give particulars of the number of fish caught in each of the years 1957 to 1960 as well as some other information about the fishery. The second last paragraph was as follows: “All this information is strictly confidential for reasons previously given and is for Mr. Fenton’s observation only. I would like this summary back in due course.” Mr. Fenton did return the summary to Mr. Schofield within a few days, having first taken the precaution to make a copy, which is in evidence. The original is not forthcoming as Mr. Schofield denied having got it back. I have no difficulty in accepting Mr. Fenton’s evidence, or in accepting the copy as accurate. Its accuracy was in fact admitted by Mr. Schofield. The summary represents the catches for the years 1957 to 1960 as being respectively 479, 392, 237 and 260. It ends with this paragraph. “Previous owner showed me the catch book it recorded over 300 some years, 400 and 500 other years and when the nets were in Ballygallon 2,500-3,000 fish were taken.” It is hardly necessary to say that the summary was a tissue of untruths. It was both false and fraudulent. The representations made in this summary are those referred to in paragraph 7 of the Statement of Claim.
I have no doubt whatever that all the representations in question were false to the knowledge of Mr. Schofield and therefore fraudulent. They could have no rational purpose except to induce Mr. Fenton to purchase; and I have no doubt that they were made with that intention. There can be no question as to their materiality; and I am satisfied that they did influence him in deciding to purchase; and that they were therefore an inducing cause of the purchase. The representations made in the summary of August 2nd, 1960, were, of course, made after the parties had come to a general agreement on July 15th. That agreement, was, however, subject to contract, and I have no doubt that if Mr. Fenton had failed to get the confirmatory assurance which he asked for in his letter of July 25th to Mr. Lanigan O’Keeffe he would have balked at signing any contract. Mr. Fenton is, prima facie, clearly entitled to damages for fraudulent misrepresentation.
The next question to be considered is whether Mr. Fenton has in actual fact suffered any financial loss as a result of Mr. Schofield’s misrepresentations, in other words whether the property was worth what he gave for it, including the right to fish reserved by Mr. Schofield. He was, of course, bound if he could to take all reasonable steps to obviate or minimise any such loss; and what would appear at first sight to have been an opportunity to do so occurred in December of 1962. A gentleman, Count Coreth, had arrived here from Kenya and was contemplating the purchase of property in this country. Unknown to Mr. Fenton he paid a visit to Ballygallon and took a fancy to the property. Correspondence took place between his solicitors, Messrs Matheson, Ormsby & Prentice, and Mr. Lanigan O’Keeffe of Messrs. Jackson, Stops & McCabe, acting apparently as agents for Mr. Fenton. It appears that Count Coreth was not entirely a free agent, being under the necessity to secure the consent of certain trustees. He was prepared to recommend to the trustees a purchase at £30,500. Before giving their consent, however, they required an independent valuation of the property doubtlessly in order to be satisfied that the proposed purchase would be a financially sound transaction. The whole matter was, moreover, conditional upon the transaction being carried through in such a way as not to attract the stamp duty of 25%. This proved to be impossible and no deal was made. It is clear, however, that even if these difficulties could have been surmounted, Mr. Fenton would not have been content to sell at anything less than £35,000. As matters turned out, however, he had no real opportunity of getting either that price or the smaller price of £30,500. Quite apart from the matter of the stamp duty there was the question of an independent valuation which could have proved just as much of a stumbling block.
I have had evidence as to the value of the property from four valuation experts: Mr. Curtin of Messrs. Owen Martin; Mr. Donovan of Messrs. Harry Lisney & Son; Mr. Williams of Messrs. Hamilton & Hamilton; and Mr. Murphy of Messrs. Murphy, Buckley and Keogh. I have also had the advantage of Mr. Harris’s evidence as to the value of the fishery. Mr. Curtin and Mr. Donovan were examined on behalf of Mr. Fenton. Mr. Curtin was of opinion that the property in July, 1960, would have been worth £14,000. Mr. Donovan’s figure was £14,700. Mr. Williams and Mr. Murphy were examined on behalf of Mr. Schofield. Mr. Williams was of opinion that the present market value of the property was £32,500. Mr. Murphy was of opinion that, leaving the fishing out of account, the property would have been worth £20,000, in July, 1960, and £28,000 now. To relate Mr. Williams figure of £32,000 to July, 1960, it would be necessary to allow for the *77 increase in the value of property since that date. Mr. Williams placed this at 10%, and making allowance accordingly would give a figure for July, 1960, of £29,545. There is, as is not unusual, very considerable difference of opinion amongst the experts. According to Mr. Murphy there was an increase in value of the property, apart from the fishing of £8,000, since 1960, an increase of 40% which is rather remarkable when compared with Mr. Williams’ general estimate of 10%. Mr. Curtin’s opinion was that the increase in such property generally was from 10% to 15%. It is very hard to know what to do with evidence of this nature. Mrs. Lindsay paid £7,000 for the property in 1951 and sold it to Mr. Schofield in 1956 for £12,000 at a profit of over 70%. I do not believe, however, that there was a general appreciation during the interval of 70% in the value of such property generally. I know nothing of the circumstances of the 1951 transaction. The figure of £12,000 was arrived at after some bargaining between Captain Lang and Mrs. Lindsay, who started by asking £15,000 and Mr. Schofield who succeeded in bringing them town to £12,000. This figure seems a reasonably safe measure of the market value at the time. I have no specific evidence as to the percentage increase in value between 1956 and 1960. Mr. Donovan was of opinion that 1956 was a bad year as far as the property market was concerned; and his figure of £14,700 for 1960 would mean an increase of 22½% from 1956 Mr. Curtin’s figure of £14,000 would mean an increase of 16½%. Mr. Williams’s adjusted figure of £29,545 would mean an increase of nearly 150% while Mr. Murphy’s figure of £20,000 (which leaves the fishery out of account) would mean an increase of 75%. If £12,000 represented the market value of the property in 1956, as I think it did, then it seems reasonably clear that Mr. Curtin and Mr. Donovan are more reasonable, if also more conservative, in their est mates of value than Mr. Williams or Mr. Murphy. I am not overlooking the fact that in 1960 Mr. Lanigan O’Keeffe must have thought the property to be worth £30,000 His opinion must, however, have been influenced by the grossly false instructions which Mr. Schofield had given him. I am not forgetting either that Mr. Fenton tried to get £35,000 for the property. While I much prefer Mr. Curtin’s and Mr. Donovan’s valuations to those of Mr. Williams and Mr. Murphy I think they are somewhat conservative. I believe that they were mainly concerned in viewing the property as an agricultural proposition, and did not, perhaps, give full consideration to the possibility of its attraction from a sporting point of view to a prospective purchaser wealthy enough to indulge his tastes in that direction without much regard to cost. I believe that Mr. Williams, on the other hand, was, perhaps, too much influenced by this aspect of the matter. In arriving at a figure for the market value. I think that the possibility of such a purchaser materialising must be seriously considered. Doing the best I can with the material available I believe that the market value of the property in July, 1960, was no more than £16,000.
Mr. Fenton gave in exchange for the property £27,000, plus Mr. Schofield’s right to fish the river as agreed. It is necessary, therefore, to assess the value of that right. Mr. Schofield assessed it at £3,000 or one-tenth of the £30,000 at which he assessed the value of the property as a whole. If Mr. Menzies is right in considering that the fishery was a three rod one, the value of the fishery as a whole would be more than £9,000 or practically one-third of the total value of the property as assessed by Mr. Schofield. This, to my mind, is quite absurd. Mr. Donovan assessed the value of the property in 1960 without the fishing at £13,000 which would leave £1,700 for the fishing. This would represent between one-eighth and one-ninth the total value of the property as assessed by him Mr. Murphy assessed the present value of the property without the fishing at £28,000; while Mr. Williams’s inclusive figure was £32,500. If both these figures could be accepted they would indicate the value of the fishing to be £4,500 or practically one-seventh of the total value as assessed by Mr. Williams. I have no note as to whether Mr. Williams assessed the value of the fishing separately. Mr. Harris was of opinion that if the fishing continued as in Mrs. Lindsay’s time it would be worth £1,500 in 1960; but that it might fetch as much as £2,000 or £2,500. Doing the best I can with the material I have I think that a figure of £2,400 which is between one-sixth and one-seventh of the total value of the property as taken by me, is a reasonable figure. I assess the value of Mr. Schofield’s right at somewhat less than one-thrid of this, viz., £700. I take the view, therefore, that Mr. Fenton paid in money or moneys worth £27,700 for property which in my opinion was worth no more than £16,000.
Mr. Fenton’s returns from the fishing were very disappointing. He himself fished regularly during the seasons 1961, 1962 and 1963. He employed a whole-time professional *78 ghillie who fished constantly. In the first season he had a number of guests, all experienced fishermen. Captain Cripps also fished regularly. Neither the ghillie nor any of the guests gave evidence. Mr. Fenton said that seventeen fish were caught in 1961, twelve in 1962, and seventeen in 1963. As already mentioned there is no evidence as to what Mr. Schofield caught. Captain Cripps got none in 1961. four in 1962 and none in 1963.
The defendant’s case is that the deterioration in the fishing returns was due to certain works which Mr. Fenton had carried out in the river. As decribed by Mr. Fenton these consisted in the repair up at the Cow Gap pool of a staging of stones which had collapsed; the construction of a small wing projecting from the left bank at the top of the Seat and Telegraph pool; the construction of another small wing wall just above the entrance of the Mill River; and the construction of the eel weir. The weir was constructed at the bottom of the House Pool after the close of the 1961 season, but excavations to deepen the river at the left bank side for a considerable distance up from the site of the weir were commencerd at the end of July. The weir consists of four narrow concrete walls set lengthwise in the line of flow so as to provide three spaces or eyes in which the eel nets can be set.
I have had expert evidence from Mr. Menzies and Mr. Wilson on behalf of Mr. Schofield and from Mr. Harris on behalf of Mr. Fenton as to the effect of these works upon the fishing. The evidence of Mr. Menzies and Mr. Wilson was somewhat involved; but if I appreciate it exactly its main purport was as follows. The natural flow of the stream was mainly on the right bank side in the Seat and Telegraph Pool and the House Pool; and the best lies for salmon and grilse were in these pools. The effect of the works carried out by Mr. Fenton was to divert the main flow towards the centre in the Seat and Telegraph Pool and at the top of the House Pool; and to direct it more and more towards the left bank as the flow approached the eel weir. The river was deepened on the down stream side of the weir to accommodate the eel nets; and the Little Rocks Pool was thus completely eliminated. The river on the right bank side upstream was rendered more shallow. In the result there were fewer suitable places for fish to lie and the fishing in the Seat and Telegraph Pool and the House Pool was depreciated accordingly. Mr. Harris did not agree with Mr. Menzies or Mr. Wilson. He did not think that the works carried out by Mr. Fenton had had any appreciable effect upon the fishing. Mr. Fenton said that what he did could have had no effect upon the fishing; and he ascribed the deterioration to another cause. Mr. Schofield in 1958 had caused a large number of big rocks to be placed in the House Pool. The idea was to restore lies which had disappeared as a result of the scouring of the bottom in heavy floods in 1958 which had a very wet summer. The effect, according to Mr. Fenton and Mr. Harris, was to render the pool more shallow and to spoil the lies. Mr. Menzies and Mr. Wilson did not agree with this. It is, of course, very difficult to say what is the cause of diminishing catches of salmon, particularly for one like myself who knows nothing about salmon fishing.
I cannot help thinking that evidence such as that given by Mr. Menzies, Mr. Wilson and Mr. Harris must be to a considerable extent speculation. I doubt if the habits of salmon are so settled and their conduct so predictable that anyone can say with confidence what they will do in any particular set of circumstances. It seems to me, however, quite likely that both Mr. Fenton and Mr. Schofield contributed to the deterioration in the fishing. Mr. Menzies did not venture any opinon as to the extent of the deterioration. Mr. Wilson was of opinion that as regards the lies in the House Pool the deterioration was 50% and that it had become more difficult to fish the pool to the extent of 70%. I believe that Mr. Fenton was responsible for not more than 30% of the deterioration in the fishing as a whole.
The deterioration in the fishing is the subject of the defendant’s counter-claim. I think that a term must be implied in the contract between the parties that Mr. Fenton would not do anything to lessen the value of Mr. Schofield’s right to fish. I think therefore that he is entitled to damages for the interference with his right. I assess the damages at 30% of the value of his right, viz., £210.
From the above judgment the first and third named defendants appealed to the Supreme Court. The grounds of their appeal were as follows:—
Lavery J.:
The judgment of the Court will be read by Mr. Justice O’Keeffe.
O’Keeffe J.:
This is an appeal by the first and third named Defendants from an order of the President of the High Court made on the 19th March, 1964, awarding to the Plaintiffs the sum of £11,700 damages for fraudulent misrepresentation and awarding to the said Defendants the sum of £210 damages for interference by the Plaintiffs with the Defendant’s right of fishing. The appeal is taken against the amount of damages only, and there is no appeal against the finding of liability either by the Defendants of by the Plaintiffs.
The assessment of unliquidated damages cannot be a matter of precision. It can only be done on a general survey of the evidence leading to the expression of an individual opinion.
Where the tribunal to make the assessment is a jury their verdict can only be the figure which the members of the jury—or nine of their number—is able to accept as fair.
Where the assessment is by a judge it is simpler. He gives effect to his individual opinion.
Davitt P. has done this and this Court of three members is required to review his decision and has the function and the duty to do so.
As in the case of the verdict of a jury, the members of the Court might, individually, arrive at different amounts as appropriate damage.
The first matter for consideration is whether the decision of the judge should be interfered with.
The principle upon which a Court of Appeal examines the decision of the judge of the High Court is thus stated in The S. S. Gairloch [1899] 2 I.R. 1; 32 I.L.T.R. 33 by Holmes L.J. at p. 18.
“When a judge trying a case upon viva voce evidence comes to a conclusion regarding a specific and definite matter of fact his finding ought not to be reversed by a Court which has not the same opportunity of seeing and hearing the witnesses unless it is so clearly against the weight of the testimony as to amount to a manifest defeat of justice. The same rule does not apply, at least in the same degree, where the conclusion is an inference of fact.”
In the present case there is no specific fact in issue What has to be decided is not really an inference from facts proved but is rather an opinion formed on a consideration of those facts and the appeal court is in as good a position as was the President to form such an opinion.
The facts as to the fraudulent misrepresentation are summarised in the judgment of the learned President of the High Court and it is not necessary to review them here. It is sufficient to recall that the plaintiffs purchased Ballygallon House and lands with a fishery on the River Nore for £27,000. the defendant Mr. Schofield reserving the right to fish with one rod for a period of ten years, this right to be personal to himself. The fishery was represented to be of much greater value than subsequent experience would tend to suggest, and the President has found that the representations were false and fraudulent and that the plaintiffs are entitled to damages in respect thereof. The appellants do not seek to question this finding, but complain that in calculating the damages the President has eired, and they submit that his findings on damages are unsupported by evidence.
The plaintiffs purchased the lands and fishery in the year 1960, and, as I have already mentioned, paid a sum of £27,000. There is no dispute as to the legal principle applicable to the assessment of damages in a case such as this. The plaintiffs are entitled to recover the difference between the amount paid by them and the true value of what they purchased It is submitted that in assessing this difference the President has erred and that as a result of this error the damages awarded to the plaintiffs are excessive.
There is no contemporary evidence of the true value of the lands and the fishery as it actually was, and the President was forced to assess the damages on evidence which, in my view, was not entirely satisfactory. Two valuers gave evidence on behalf of the plaintiffs Neither of these regarded the fishery as anything more that an amenity, and their valuations may be regarded as almost entirely an attempt to assess the value in the year 1960 of the house and lands with a fishery of very little value enjoyed with that house and lands. The President has taken the view that the fishery might be regarded as one with an annual catch of about 100 *81 salmon, and I think that such a view is amply supported by evidence, not of actual catches of that figure, but by catches which tend to show that as a matter of probability the fishery was, in several years prior to the sale, capable of producing such a catch.
It is, I think, common case that an inland fishery of the kind here in queston which is capable of producing 100 salmon yearly is of considerably more than an amenity value, and since the valuers called on behalf of the plaintiffs regarded the fishery as merely an amenity their evidence of value is unsatisfactory. In my view the President, in substantially accepting this evidence, erred, as can be demonstrated by his approach to the valuation of the fishery alone for the purpose of the counterclaim.
At this point it becomes necessary to refer very briefly to the counterclaim. The defendant Stanley Schofield had reserved to himself the right to fish with one rod. It was found by the President that certain works carried out by the plaintiffs had been detrimental to the fishery, that there was an implied term of the contract between the parties that the plaintiffs would not do anything to lessen the value of Mr Schofield’s right to fish, and that he was entitled to damages for interference with that right. In order to assess the damages he found it necessary to arrive at a valuation of the fishery as a whole. The President’s valuation was based on the evidence of Mr. Harris, a well-known expert called by the plaintiffs, but an examination of the evidence of Mr. Harris demonstrates that his view of the value of the fishery was formed on the basis of certain figures of catches far less than the average of 100 a year already mentioned. The President’s view of the value of the property as a whole was clearly influenced by Mr Harris’s valuation of the fishery alone, and as that valuation was not a valuation of the fishery as found by the President, I feel that the President’s valuation of the property as a whole cannot be supported.
The defendants called valuers, one of whom gave evidence of the value of the property without the fishery, and the other gave evidence of the value of the property with a fishery of the kind which the President was not prepared to accept. I think that their evidence must, accordingly, be disregarded.
In addition, the defendants urged that a measure of the value of the property could be derived from an offer to purchase made on behalf of a Count Coreth in the year 1962, and from the attitude of the plaintiff, Mr. Fenton, towards that offer. Count Coreth was apparently willing to purchase the property for a sum of £30,000 (with a probable increase to £30,500), subject to certain conditions, one of which was that the purchaser would not be required to pay auctioneer’s commission, or 25% stamp duty. The purchaser would, however, agree to the continuation of Mr. Schofield’s right to fish for the balance of his ten-year term Mr. Fenton was not interested in that offer. He indicated that he would sell for £35,000, but he did not encourage any continuation of negotiations, and this Court has no means of knowing what higher price Count Coreth and his trustees would have been prepared to pay if Mr. Fenton had allowed negotiations to proceed.
At one time the defendants argued that the value of the property was that placed upon it by Mr. Fenton, namely £35,000, and that accordingly it could not be shown that any loss had been sustained by him. If I were satisfied that the plaintiff, Mr. Fenton, believed that the value of the property was really £35,000, I should be prepared to accept this contention, but Mr. Fenton was motivated by the fear that any sale by him might reduce the damages payable by the defendants and said so, and I am not satisfied that £35,000 was the true value of the property at any material time.
I think, however, that the evidence establishes as a matter of probability that in the year 1962 the property was of such a value that it could have been sold to Count Coreth for £30,500 (at least) on the basis that the purchaser would have to pay no auctioneer’s commission and a stamp duty of only 3%. As has been pointed out during the course of the argument in this case, this means a net price of approximately £24,000. I am satisfied that if Mr. Fenton really wished to sell this property in the year 1962, he would have been able to secure a price of at least £24,000 for it.
It has been suggested that there was an appreciation in the prices of property generally in the interval between 1960 and 1962. The President has not found as a fact what the measure of that appreciation, if any, was. In the normal course this case should be remitted to the High Court in order that the *82 question of damages might be reconsidered, but both appellants and respondents have asked that, in the event of this Court taking the view that the appeal should succeed the damages should be assessed by this Court. I do not regard the material available as entirely satisfactory, but I think that no injustice would result if, on the material available, the view was formed that the property was in the year 1960 valued for the sum of £22,000, subject to Mr. Schofield’s right of fishing, which Count Coreth was prepared to accept under the terms of his offer in 1962. On that basis, the damages awarded to the plaintiffs should, in my opinion, be reduced to the sum of £5,000.
As to the counterclaim, the defendants have adduced no satisfactory evidence as to the damage alleged to have been sustained by Mr. Schofield. The plaintiffs, on the other hand, have not appealed against the order of the President, and accordingly I think that this order ought not to be interfered with
In my opinion the order of this Court should be as follows: affirm the order of the High Court, but reduce the damages awarded to the plaintiffs to the sum of £5,000, with damages to the defendants on the counterclaim of £210, so that after the set off ordered by the High Court only £4,709 should be recovered by the plaintiffs.
Valentine
Keating, Molloy and George Roe v Bank of Ireland
and Reginald A. C. Brentland and Heather B. King
1981 No. 8823P
High Court
30 July 1982
[1983] I.L.R.M. 295
(Barrington J)
30 July 1982
BARRINGTON J
delivered his judgment on 30 July 1982 saying: The issue to be decided in this case raises a net point on the interpretation of Condition No. 21 ot the 1978 edition of the General Conditions of Sale of the Incorporated Law Society of Ireland.
The plaintiffs are the purchasers named and the defendants are the vendors named in a contract incorporating the general conditions referred to dated 30 April 1981.
The contract was a contract for the sale of certain land by the defendants to the plaintiffs. The purchase price was £306,000. A deposit of £76,500 was paid. The sale was to have been closed on 28 May 1981 on which date the balance of the purchase money amounting to £229,500 was to be paid and interest at the rate of 20% per annum was to be payable in the event of default.
The plaintiffs claim they entered into the said sale on the faith of certain representations made to them by the defendants or their agents. These representations they claim were false and misleading and they allege fraud against the defendants. They also claim that the representations, even if innocent, entitle them to relief under condition No. 21 of the contract.
In their statement of claim the plaintiffs claim damages for misrepresentation and also specific performance of the contract with £100,000 abatement of the purchase price to compensate for error omission or mis-statement in the representations and negotiations leading up to the sale.
The defendants deny all allegations of misrepresentation, whether fraudulent or innocent, in the negotiations leading up to the sale, and counterclaim for specific performance of the original agreement in accordance with its terms together with interest on the balance of the purchase money at the rate of 20% from 20 May 1981.
The parties have agreed to go to arbitration on the question of whether condition No. 21 applies in the circumstances of the present case and if so on what amount of compensation, if any, the plaintiffs are entitled to.
The issue before me raises the question of whether the closing of the sale must await the outcome of the arbitration or whether the vendors can force a closing of the sale against the purchasers’ will prior to the outcome of the arbitration.
The case put forward on behalf of the vendors is that, both parties having in their pleadings sought specific performance of the contract, the contract should now be closed, and that the question of whether there was any misrepresentation on the part of the vendors and if so, whether the purchasers are entitled to any compensation in respect of it, should be decided later.
The purchasers agree that they have sought specific performance of the contract, but they say they have sought it with an abatement — which they measure at some £100,000 — in the amount of the purchase price. They say they cannot be forced to close until they know what the balance of the purchase price will be. They say that they cannot be forced to part with their money on the basis that they will get it back if successful in the arbitration proceedings.
On 2 October 1981 the vendors’ solicitors wrote to the purchasers’ solicitors a letter in which they suggested that the sale should be closed and that any disputed amounts claimed for compensation or for interest should be placed in joint deposit to await the outcome of the arbitration proceedings.
The plaintiffs object to the suggestion of placing moneys on joint deposit because they say this would involve them, the plaintiffs, in parting with the possession of very large sums of money which would be tied up pending the outcome of the arbitration proceedings. They say that, prior to closing the sale, they are entitled to know the amount of the claimed abatement in the purchase price and what the balance of the purchase money actually payable is.
In these circumstances it is necessary for the court to decide what the formal rights of the parties are under condition No. 21 in the events which have happened.
The issues which I have to decide are raised by three questions scheduled to the Order of Carroll J in these proceedings dated 9 November 1981. The questions are as follows:
(a) Whether, if the plaintiffs in this action are successful in making a claim for compensation under condition No. 21 of the agreement dated 20 April 1981 between the plaintiffs and the defendants in this action, they are entitled to receive a sum which may be awarded by way of compensation by way of an abatement of the purchase price under the said agreement.
(b) Whether the vendors are entitled to insist upon the closing of the sale before determination of the dispute as to whether the said plaintiffs are entitled to compensation under and in accordance with clause 21 of the said agreement.
(c) If the answer to (b) is in the negative, whether the vendors are entitled to insist upon the closing of the sale prior to the determination of the said dispute on the vendors agreeing to hold on joint deposit pending the outcome of the said disoute the amount claimed by the said plaintiffs by way of compensation.
Clause 21 of the General Conditions is headed ‘Measurements Misdescription and Compensation’ and reads as follows: *298
21 1. Measurements and quantities, if substantially correctly stated, shall not be the subject of compensation for any errors therein nor shall compensation be payable in respect of any mistake or discrepancy in any sale plan furnished for the purpose of identity, but where an incorrect statement, error or omission, whether as to measurement, quantities or otherwise, materially affects the description of the property nothing herein shall prevent the payment or allowance of compensation under sub-clause 2 of this condition.
2. Subject as aforesaid, any error, omission or misstatement in the particulars of these conditions or in the course of any representations or negotiations leading up to the sale shall not annul the sale or entitle the purchaser to be discharged from his purchase but shall entitle the purchaser or the vendor (as the case may require) to compensation in respect thereof. If any dispute shall arise as to the applicability of this sub-clause or the amount of compensation, it shall be settled by arbitration by a sole arbitrator to be appointed, in default of agreement, by the President for the time being of the Incorporated Law Society of Ireland, and the Arbitration Act, 1954, shall apply accordingly.
3. Nothing herein shall, however:
(i) entitle the vendor to require the purchaser to accept or entitle the purchaser to require the vendor to convey (with or without compensation) property which differs substantially from the property agreed to be sold, whether in quantity, quality, tenure or otherwise, if the purchaser or the vendor (as the case may be) would be prejudiced by reason of such difference, or
(ii) affect the right of the purchaser to rescind or repudiate the contract where compensation for a claim attributable to a material error, omission or misstatement cannot be reasonably assessed.
The defendants suggest that the practical business way of dealing with the difficulty which has arisen is to close the sale now, leaving the moneys in dispute on joint deposit to await the outcome of the arbitration. They suggest that the purchasers have a duty to co-operate in closing the sale on this basis, and they refer to the judgment of Costello J in Northern Bank Limited and others v John B. Duffy [1981] ILRM 308.
The purchasers submit that it is not fair to ask them to put up the whole of the purchase money when the property they are obtaining may be worth very considerably less than the property they bargained for. They submit that condition No. 21 of the General Conditions is to be read in the light of the law concerning compensation and abatement of purchase money for misdescription as that law has been traditionally understood. The term ‘abatement’ they submit has traditionally meant a reduction in the purchase price ascertained prior to closing and compensation was merely the amount by which the purchase price was abated. Of course, it might be possible for the parties, by means of a supplementary agreement, to agree to put the disputed portion of the purchase price on joint deposit pending a resolution of the respective rights of the parties. But if one of the parties did not agree to do this he could not be forced to do it. In the present case it was not convenient for the purchasers to raise a sum of approximately £100,000 just for the purposes of leaving it lying on joint deposit pending the outcome of an arbitration, and they were entitled to rely upon their rights under the original contract. Condition No. 21 sub-clause 3 paragraph 1 indicated that the draughtman assumed that the amount of compensation would have been ascertained prior to conveyance. This was clear from the statement that nothing in the clause was to entitle the vendor to require the purchaser to *299 accept, or to entitle the purchaser to require the vendor to convey, ‘(with or without compensation)’, property which differed substantially from the property agreed to be sold if the purchaser or the vendor (as the case might be) would be prejudiced by reason of such difference.
Counsel for the plaintiffs submits that condition No. 21 must be read in the light of the traditional practice of the courts of equity in deducting any compensation payable to the purchaser from the purchase price prior to closing. He referred to Emmet on Title 17th Ed. page 121; Seton on Decrees 1912 Ed. page 2190; Wylie’s Irish Conveyancing Law , 1978 Ed. page 221 paragraph 6.68; Connor v Potts [1897] 1 IR 534; Cordingley v Cheeseborough Law Journal (1862) Vol 31 617 Chancery N.S. and Grant v Dawkins and others [1973] 3 All ER 897.
For instance in Connor v Potts where there was a shortfall of some 67 acres out of a possible 442 acres the Vice Chancellor in granting the purchaser a decree for specific performance with compensation said:
On the whole case 1 am of opinion that the plaintiff is entitled to judgment for the specific performance of the contract as to the portion of Knockcairn to which the defendant can show title, being 249 acres, and the entire of Fourscore 126 acres 2 roods 10 perches, and that he is entitled to compensation for the 67 acres deficiency of the acreage of Knockcairn, at the rate of £12/10s per acre to be deducted from his purchase money of £5,500. (at 539).
So likewise in the modern English case of Grant v Dawkins and others [1973] 3 All ER 897 where one of the issues discussed was the historical controversy as to the power of the court of equityto grant damages. Goff J quoted the comment of Lord Eldon in Todd v Gee (1810) 17 Vesey 273 to the following effect:
As to the merits, I should be inclined to support the whole course of previous authority against Denton v Stewart (1786) 1 Cox’s Equity Cases 258; not being aware, that this court would give relief in the shape of damages; which is very different from giving compensation our of the purchase money. (at 277–8)
It appears to me that if the plaintiffs are entitled to compensation at all they are entitled to it out of the purchase money and that they cannot be forced to close until such time as the amount of compensation, if any, and therefore the amount of the balance of the purchase price has been ascertained. There may be many cases in which the sensible thing would be to leave the sum in dispute on joint deposit and to close the sale pending the resolution of the dispute. But it appears to me that it is one thing for the parties to make a supplementary agreement, however convenient and sensible, and quite another for one of the parties to be forced by the court to close a sale before the issue of whether he is or is not entitled to compensation under the original contract has been determined. It appears to me that the law is on the side of the plaintiffs in the present case.
One further point is of importance. The plaintiffs have made an allegation of fraud in the present case. This is a serious allegation which has not been withdrawn. The defendants deny the allegation, and if it turns out that the allegation is not well founded serious consequences for the plaintiffs may ensue. *300 But until such time as the truth or otherwise of the allegation has been determined I do not think it would be proper to force the plaintiffs to close the sale.
I, accordingly, would answer the three questions as follows:
Question No. (1) Answer: Yes
Question No. (2) Answer: No
Question No. (3) Answer: No
The State (Callaghan) v Irish Land Commission
Supreme Court
16 November 1978
[1978] I.L.R.M. 201
(Nem. Diss.) (Henchy J, Kenny and Parke JJ)
HENCHY J
(Kenny and Parke JJ concurring) delivered his judgment on 16 November 1978 saying: In January 1972 the lands comprised in Folio No. 29878 Co. Roscommon were put up for sale by public auction. They were offered for sale in two lots. Lot I was knocked down to Martin Hennelly. The sale to him has gone through, with the approval of the Land Commission, as was required by the conditions of sale. Lot II was knocked down to Austin Callaghan. In his case, the consent of the Land Commission was not forthcoming, as was required by the contract.
The reason for the requirement of the consent of the Land Commission was that, some days before the auction, the Land Commission had served a notice of inspection, pursuant to s. 40(6) of the Land Act 1923, as amended. This gave the vendor warning that, notwithstanding the auction, the lands on the Folio had been earmarked for compulsory acquisition. In recognition of that threat, there was included in the conditions of sale for each of the two lots a condition that the sale would be subject to the consent of the Land Commission and that if that consent was not forthcoming
the sale and this contract shall be at an end as if these presents were not entered into and any moneys paid by the purchaser to the vendor shall be refunded without any deduction therefrom.
In the event, the Land Commission gave their consent to the sale of Lott I but withheld it in respect of Lot II. They entered on the statutory procedure to acquire Lot II compulsorily. They published a provisional list, in consequence of which those lands would become vested in the Land Commission on the appointed day unless excluded in consequence of a valid objection. The owner made no objection. In fact, the only person who sought to enter an objection was Austin Callaghan, the *202 purchaser of Lot II. The Land Commission refused to entertain his objection. They said he had no standing to make it. Austin Callaghan then proceeded to get a conditional order of mandamus requiring the Land Commission to cause his objection to be listed for hearing before the Lay Commissioners. The application to have that conditional order made absolute came before Finlay P, who held that Austin Callaghan had no standing to make an objection to the provisional list. He accordingly allowed the cause shown and discharged the conditional order of mandamus. It is from that decision that the present appeal has been taken.
The judgment under appeal expounds with admirable clarity and fullness the relevant law and reaches the conclusion that, whatever be the utmost of the range of persons who must be given a right to object to a provisional list, the purchaser (or would-be purchaser, as he turned out to be) was outside that range. I fully agree with that conclusion and the reasons given for it.
When Austin Callaghan signed the contract for the purchase of Lot II he did so on the express condition that if the consent of the Land Commission was not forthcoming, ‘the sale and this contract shall be at an end as if these presents were not entered into’. He therefore became only a conditional or contingent purchaser. The condition precedent to his becoming a purchaser with the benefit of an enforceable contract was the consent of the Land Commission. Once that consent failed to materialise, his position in law was, to borrow the words of the contract, ‘as if these presents were not entered into’. He was then in no better position in the eyes of the law than he was the day before he went to the auction. Even if an objection to the acquisition were upheld, so that the vendor became free to dispose of the lands, he could ignore Austin Callaghan as a would-be purchaser. Indeed in certain circumstances he might be bound to ignore him. For the vendor was selling as the personal representative of the registered owner, and if he were selling again in the same capacity and in due course of administration, his trustee capacity might compel him to sell to the highest bidder, who might not turn out to be Austin Callaghan. Austin Callaghan was prepared to pay £1,700 for the lands in January 1972. The price of land has leaped upward since then. So he might now be outbid. But even if the requirement of an auction did not apply, the most that could be said of Austin Callaghan’s position in relation to these lands is that he may hope or expect that the would be able to acquire them if only the Land Commission would stay their hands and consent to a sale. But relatives, friends or neighbours of the vendor (or of whomsoever is beneficially entitled) may equally harbour a similar hope or expectation. Austin Callaghan and all such persons, because they cannot claim any right, title or interest of any kind in respect of the lands, clearly fall outside the range of persons who could be said to be entitled to enter a valid objection to the compulsory acquisition. The statutory scheme of acquisition implies that an objector must have some special legal relationship with the lands which would be prejudiced if the acquisition goes through. Austin Callaghan has failed to show the existence of such a relationship.
As is pointed out in the judgment under review, the absence of any recognizable legal nexus between Austin Callaghan and the lands allow this case to be decided *203 on its special circumstances, so that an excursus on the full range of persons who are entitled to enter an objection to compulsory acquisition would be in the nature of an academic exercise. However, as that aspect of the case has been fully argued in this Court, I feel I should say that nothing I have heard in the course of the argument has persuaded me that a person who cannot arguably claim that he is entitled at law or in equity to an estate or interest in the lands could be said to have sufficient standing to lodge an objection to a provisional list. After all, the only purpose of such an objection is to prevent the vesting of the lands in the Land Commission on the appointed day. It is difficult to see, therefore, why a right to object should be accorded to any person who cannot lay claim, at least arguably, to an estate or interest which would be liable to be prejudiced by such vesting. However, an authoritative ruling on this point must await a case with concrete circumstances which call for a wider answer than is required in this case.
For the above reasons I would support the decision, which has been already announced, that this appeal should stand dismissed.
John O. Ferguson v Merchant Banking Ltd
[1993] I.L.R.M. 136
7 May 1992
MURPHY J
delivered his judgment on 7 May 1992 saying: In this case the plaintiff claims specific performance of a contract in writing made in the month of September 1984 between the defendant of the one part and the plaintiff of the other part. Under that contract the defendant agreed to sell for the sum of £38,100 the lands described in the first column of the First Schedule thereto for the estate or in accordance with the title set out opposite such lands in the second column of that schedule. The lands agreed to be sold were further identified as those ‘the numbers of which are set out in the Second Schedule with the benefit of the rents reserved by those subleases’. As appears from the two schedules, the lands in question consist of 15 ‘building estates’ on which 675 houses had been erected and disposed of by way of lease or sublease on terms that the ‘purchaser’ paid a ground rent of approximately £20 in respect of each lease. The amount of the annual ground-rent as shown in the Second Schedule to the contract is £15,298 so that the purchase price represented a multiplier of a little over twice the rent roll. In fact it appeared that all of the estates described in the contract for sale had been acquired and developed by companies within what was described as ‘the Gallagher Group’ and Merchant Banking Ltd was owned or controlled by the same persons as controlled the Gallagher Group. Apparently it was the practice of the Gallagher Group to sell off the estates as and when developed by them to the defendant. In this context the evidence was to the effect that the purchase price payable by the defendant banking company was calculated at six times the amount of the annual ground-rent.
The defendant company (sometimes hereinafter referred to as ‘the bank’) is being wound up pursuant to an order of the court dated 24 May 1982 under which Mr Patrick J. Shortall was appointed official liquidator thereof. Mr Shortall contests the right of the plaintiff to have the 1984 contract performed. Mr Shortall does not dispute the due execution of this document. It would be impossible so to do. Not only is the contract signed by Mr Shortall but its execution by him was sanctioned by the order of the court made on 19 September 1984 in the matter of the winding-up of Merchant Banking Ltd. The bank contends by way of defence and counter-claim that the agreement and consensus between the parties was for the sale by the bank and the purchase by the plaintiff of ‘certain ground-rents’ and that it was never the intention of the parties that certain lands (which have been described as ‘the development lands’) and which were delineated on a map annexed to a letter from the solicitors on behalf of the bank to the solicitors on behalf of the plaintiff dated 17 September 1985 should be *138 included in the sale. The defendants seek rescission of the contract or alternatively a rectification thereof to give effect to what they say was the true intention of the parties.
There is no doubt at all but that the official liquidator was directing his mind to the realization and disposal of ground-rents. I accept in full the evidence of Mr Shortall that this was the case. Indeed, this recollection of the transaction is fully confirmed by all of the contemporaneous documents and in particular the initial advertisement of the property for sale in which it was described as an ‘investment opportunity—yield 30% annually’.
It was argued strenuously by reference to those facts and the purchase price ultimately agreed that the only property of value which the liquidator intended to sell and the purchaser expected to acquire were the ground-rents payable out of the various estates.
However, the purchaser—and in fact the plaintiff was apparently a mere agent or nominee for a Mr Thomas Anderson—gave evidence of discussions which he had with Messrs Lombard & Co., the estate agents acting on behalf of the liquidator and with the liquidator himself in which he says it was agreed that property other than the particular sites out of which the ground-rents issued should be included in the sale. Again, Mr Shortall fully accepts that this is the case. He is in complete agreement with Mr Anderson that both parties were in agreement that what was described as various ‘bits and pieces’ were to be included in the sale. The difference between the parties relates to the nature or potential value of those ‘bits and pieces’. The liquidator was wholly unaware of the one acre or so of ‘development lands’ adjoining or forming part of one of the estates, namely, the Hillcrest Estate, Lucan. It was not until 1 July 1985 that the receiver appointed over the assets of the Gallagher Group Ltd wrote to the liquidator claiming that on the sale of the ground-rents to the bank that two parcels of development land had been included in error and that he, the receiver, was entitled to have them re-transferred to him. Having been alerted by that and subsequent correspondence, the solicitors on behalf of the official liquidator wrote to the solicitors on behalf of the purchaser on 17 September 1985 saying:
Recently it has come to the attention of our client that in error a significant area of undeveloped land in Lucan comprised in Folio 6300 was included in the contract for sale herein. We enclose herewith a map showing the area in question outlined in red.
As you know, the sale to your client was intended to include ground rental properties and ancillary lands only and not any other substantial undeveloped areas.
There is agreement between the parties to the extent that lands—whether they be described as bits and pieces or ancillary and whether valuable or valueless, were to be included above and beyond the property yielding the ground-rents. *139 Indeed, it was Mr Shortall who explained in his evidence that whilst the subject-matter of the sale was ground-rents, the method of sale was to sell the estate by reference to the folios comprising the entire estate so as to divest himself of all further responsibility for the estate—a course which would be entirely necessary and proper having regard to the capacity in which he was involved in the transaction. Unfortunately as a result of adopting this procedure there was included in the contract documents a piece of land which does have a significant value and which I accept the official liquidator did not intend to include and the existence of which he was unaware. On the other hand I also accept the evidence of Mr Anderson that he inspected the site and that he was aware that there were undeveloped areas included in the property for sale and that he was hopeful that some of these might be of value. In relation to the disputed site, Mr Anderson says that he was aware of its existence before the execution of the contract for sale and whilst it was a substantial site he did not believe it was of significant value. One reason for this belief is that there are and were very considerable problems in gaining access to these lands. The road frontage, though substantial, is along the main Western Road and it is at least questionable whether planning permission could be obtained to gain access to the site from that roadway. The possibility of other access to the site is complicated by the fact that adjoining developers reserved a strip of adjacent land to prevent development without their co-operation. In addition, problems exist in the area with regard to the adequacy of water supplies or drainage facilities to enable any additional residential development to take place. Furthermore, I would readily infer that a purchaser in Mr Anderson’s place would assume that the original developers had satisfied themselves that there was no further potential for development of the site. In the circumstances I accept that Mr Anderson believed that the lands were included in the contract and whilst he was hopeful of turning them to account that he did not appreciate that they might have a value in the order of £100,000 (if such is the case) nor did he appreciate that an error had occurred of which he might take advantage. In my view the evidence of Mr Anderson in this regard is supported by the course of dealings between him (or his nominee) and the vendors over the 18 months or so prior to the execution of the contract in the month of September 1984 and by the form of the documentation, particularly the express exclusion from some of the estates of particular lands and the discussions and documentations (in particular the Sixth Schedule to the contract for sale) dealing with the extent to which the various estates had been taken in charge by the local authorities. No doubt this debate was conducted on the vendors’ side with a view to satisfying the purchaser that the greater part of the estates had been taken in charge so that there was little or no danger of the purchaser incurring a personal liability in respect of the estates. On the other hand the discussion does show that the parties did direct their minds very clearly to the fact that there were areas of open space, *140 in particular areas of open space in the Hillcrest Estate, which had not been taken in charge and which were included in the sale.
Unquestionably a mistake was made in the sense that Mr Shortall did not intend to dispose of any property of value other than the ground-rents issuing out of the 15 named estates. He was unaware that by conveying the estates as a means of disposing of both the grounds-rents and the ancillary or incidental properties which might have given rise to a potential liability that he was at the same time including undeveloped land which did have a significant value. The question of law is whether the existence of this mistake invalidates the contract for sale or provides grounds for the rescission or rectification thereof.
The facts of the present case bear a remarkable resemblance to those of Irish Life Assurance Co. Ltd v Dublin Land Securities Ltd [1986] IR 332 and (that of the Supreme Court is to be found in) [1989] IR 253.
In the Irish Life case the assurance company decided for financial, political and social reasons to dispose of its very substantial portfolio of ground-rents. The purchase price agreed with the purchaser was arrived at by applying a multiplier of 3.36 which resulted in a purchase price of approximately £375,000. As in the present case both parties were conscious of the fact that the intended sale included lands the value of which would not properly be determined by the application of any such formula. It was recognized, for example, that some of the leases by which the rents were created were due to fall in so that revised and increased rents might be expected in some cases. In addition there were some vacant sites which offered the possibility of development. These attractive elements were described by the parties in the course of the proceedings as ‘odds and ends’ and ‘plums’ or ‘jewels in the potatoes’.
There was, however, one gem which the assurance company did not intend to include in the sale. This was a parcel of land at Palmerstown straddling the boundary of Dublin City and County and comprising some seven acres. As I understand it these lands were valued at approximately £595,000. It was accepted by the trial judge that it had been the decision of the property portfolio manager of the assurance company to exclude from the sale these seven vacant acres and that this decision had been communicated to the relevant officials of the company but due to an error in the implementation of the decision the Palmerstown lands (or so much of them as were freehold) were not excluded from the draft contract tendered to the intending purchaser.
In those circumstances Keane J declined to grant rectification of the contract for sale and, on appeal, the Supreme Court upheld that decision but declined to consider the question of rescission of the agreement as the appellants, the assurance company, refused to apply for an amendment of the pleadings to enable that case to be made.
The instant case is far weaker from the defendants’ point of view than that presented by the Irish Life Assurance Co. to the Supreme Court. Mr Shortall *141 cannot say, as the assurance company could and did, that they were conscious of their ownership of certain lands and had made a positive decision to exclude them so that the documentation ultimately prepared manifestly failed to implement the true intent of the assurance company. Mr Shortall simply did not know of the existence of the valuable vacant land. However there is one particular area in which the cases bear a striking similarity and that is the absence of a pre-existing concluded agreement establishing the common intention of the parties with a sufficient degree of particularity. In this regard Griffin J described the position (at p. 264) as follows:
… what was said by Mr Nowlan to Mr White falls very far short of establishing that there was a common intention of the parties that the vacant lands at Palmerstown, or any part of them, should be excluded from the sale. What Mr Nowlan referred to in evidence as ‘a significant area of land the subject of a cpo at Palmerstown’, and ‘significant vacant lands in Palmerstown’ completely lacked the precision necessary to enable a court to conclude what was the common intention of the parties.
Similarly in the present case the ‘pre-existing contract’, as the vendor understood it, appears to have amounted to no more than an agreement to sell the lands comprised in the various estates which were subject to the leases by which the ground rents were created together with so much of the surrounding or ancillary lands as the vendors believed to be of no value. Clearly such a bargain would be too imprecise to constitute a contract. Accordingly in my view the question of rectification of the agreement is wholly unstatable.
As no claim for rescission was made in Irish Life Assurance Co. Ltd v Dublin Land Securities Ltd the Supreme Court judgment provides no guidance as to the circumstances in which that remedy may be available. However in the High Court Keane J, whilst recognizing that it was unnecessary for him to consider in detail a claim of that nature, described as ‘apposite’ the observations of Russell LJ in Riverlate Properties Ltd v Paul [1975] Ch 133 at pp. 140–1 as follows:
Is the lessor entitled to rescission of the lease on the mere ground that it made a serious mistake in the drafting of the lease which it put forward and subsequently executed, when:
(a) the lessee did not share the mistake,
(b) the lessee did not know that the document did not give effect to the lessor’s intention, and
(c) the mistake of the lessor was in no way attributable to anything said or done by the lessee?
What is there in principle, or in authority binding upon this Court, which *142 requires a person who has acquired a leasehold interest on terms upon which he intended to obtain it, and who thought when he obtained it that the lessor intended him to obtain it on those terms, either to lose the leasehold interest, or, if he wished to keep it, to submit to keep it only on the terms which the lessor meant to impose but did not? In point of principle, we cannot find that this should be so. If reference be made to principles of equity, it operates on conscience. If conscience is clear at the time of the transaction, why should equity disrupt the transaction?
If a man may be said to have been fortunate in obtaining a property at a bargain price, or on terms that make it a good bargain, because the other party unknown to him has made a miscalculation or other mistake, some high-minded men might consider it appropriate that he should agree to a fresh bargain to cure the miscalculation or mistake, abandoning his good fortune. But if equity were to enforce the views of those high-minded men, we have no doubt that it would run counter to the attitudes of much the greater part of ordinary mankind (not least the world of commerce), and would be venturing upon the field of moral philosophy in which it would soon be in difficulties.
Accepting as I do that the foregoing is a correct statement of the law and accepting as I have done that the purchaser believed that ‘the development lands’ were included in the contract; that he did not appreciate that they were of significant value and was not aware that an error had occurred on the part of the vendor, the claim for rescission too must fail.
It does seem, as the defendants contend, that a distinction may be drawn between a contract which may be rescinded by reason of the mutual mistake of the parties thereto and the avoidance of liability where it is established that there never was a consensus ad idem . This distinction can be made in theory but in practice it is difficult to imagine a case where there was no consensus ad idem to an apparent contract save in the context of some element of unilateral or mutual mistake.
The absence of the necessary meeting of minds is best exemplified by the decision of Kenny J in Dore v Stephenson, High Court (Circuit Appeal) (Kenny J, 24 April 1980) where the parties had negotiated the sale and purchase of a cafe on the first floor premises on the High Street in Kilkenny without making any provision as to the rights of either party as to access to the premises or ownership of the foyer through which the same were entered.
In the circumstances what Kenny J said (at p. 10 of the judgment) was as follows:
I think that the nature of the property and particularly the mutual rights in the foyer made it essential that the parties should agree on whether the plaintiff was to remain the owner of the foyer with the defendant having a right for himself *143 and that the customers of the country shop and the occupants of the flat to pass through the foyer to go up the stairs or whether the defendant was to remain the owner of the foyer and the plaintiff and his customers to have a right to pass through it. Until agreement was reached on this point there was in my opinion no consensus between the parties. The court cannot ajudicate on what the contract should have been in relation to this …. I do not agree that the property to be sold had been agreed when there was no stipulation whatever about the mutual rights in the foyer which was the all important matter when the ownership of the property was being divided … the nature of this property made it essential that there should be agreement about the foyer and, in the absence of this, there was, in my opinion, no enforceable agreement between the plaintiff and the defendant.
In Mespil Ltd v Capaldi [1986] ILRM 373 the Supreme Court (per Henchy J) accepted the proposition:
that when a person enters into an agreement, giving the other person the impression that he understands the nature and effect of the agreement, the general rule is that he will not be allowed to say later that he should not be bound by the agreement because he did not at the time understand its import or effect.
In that case proceedings had been compromised on terms agreed between counsel. The agreement, hurriedly reached, expressed the compromise to relate to all matters in dispute between the parties ‘in these proceedings’ and the respective counsel by whom the agreement was reached had bona fide and differing views as to what they intended by the inclusion of that phrase. In the circumstances the Supreme Court held that the parties were at cross purposes and notwithstanding the seeming agreement expressed in the written consent that there was no agreement in fact. There was as, Henchy J held, a fundamental misunderstanding as to the basis of the settlement. The concept of fundamental mistake or misunderstanding appears clearly too in the decision of the Court of Appeal in England in Magee v Pennine Insurance Co. Ltd [1969] 2 All ER 891. In that case an insurance company and a person claiming to be one of their insured compromised a claim on foot of a policy of insurance. After the compromise had been reached the insurance company realized that in fact there was no valid policy in existence at the time. What the court held was that a misunderstanding as to the existence of the policy on foot of which a claim was made and compromised was so fundamental as to entitle the insurance company in equity to rescind the agreement made by way of compromise.
Whether the matter is viewed as fundamental mistake or absence of consensus it seems to me that the defendants in the present case are not entitled to deprive the plaintiff of the benefit of the contract into which he entered. In my view there is no fundamental error and no absence of agreement on any *144 fundamental term. The liquidator of the defendant company agreed to sell the property which was clearly defined in the legal documents executed by him. There was no material provision overlooked or neglected in that documentation. There was no want of consensus and no mistake as to what in substance was being sold. An error or misunderstanding may have arisen as to the extent of the undeveloped property and certainly an error on the part of the vendor as to the potential value thereof. These are not considerations which would give rise to a right of rescission in law or in equity in the absence of some abuse or sharp practice on the part of the vendor.
In the circumstances it seems to me that the defendants’ counterclaim must be rejected and it follows that the plaintiff is entitled to specific performance as claimed.
Ó Siodhachain v O’Mahony
unreported, High Court, Kearns J., October 31, 2002
JUDGMENT of Mr. Justice Kearns delivered the 31st day of October, 2002.
1. This sorry saga has its origins in the desire of the defendants to sell all or portion of farmlands jointly owned by them and comprising about 70 acres at Ballybeg, Co. Kerry. The farm contains a dwelling house, a number of outhouses and sheds, various fields and is also in part bog land. The events giving rise to the present dispute between the parties arose following an unsuccessful public auction to sell the farm which took place on the 14th day of August 1998.
2. The defendants are a married couple with two young children who married in 1988. The first named defendant was born in or around 1966 and his background was in farming. He left school at 16 years of age. The farm had previously been in the ownership of Sean O’Mahony’s family, but had been transferred to the defendants, subject to a right of residence in favour of Sean O’Mahony’s parents. Prior to the auction in 1998 arrangements had been agreed between the defendants and the O’Mahony parents whereunder the O’Mahony parents would waive their right of residence if the farmhouse was sold, subject to being relocated at the defendants expense.
3. Following their marriage, the defendants had initially lived in the O’Mahony farmhouse at Ballybeg, but in 1992 moved to the nearby village of Gneeveguilla, where, up to and including the time of the auction, they lived in what had formerly been Geraldine O’Mahony’s family home, which in addition had a small grocery shop and a number of petrol pumps.
4. Sean O’Mahony had been involved in a road traffic accident in 1983, following which he found it difficult to carry out farming work on the farm at Ballybeg. He also had some visual disability. In 1998, he and his wife were keen to sell off the farm and to move out of the area altogether. It was their intention at the time to place the proceeds of sale of the farm in an investment property in Dublin.
5. At the auction, the property was offered in different parcels, but neither the farm as a whole or the different parcels attracted any offers or any worthwhile interest. Later that evening, however, and without prior appointment, the plaintiffs arrived at the farmhouse and there spoke with Sean O’Mahony’s father, indicating some degree of interest in the property. On that occasion, Mr. O’Mahony Snr. showed the plaintiffs around the farmhouse, and the yard and outhouses. A phone call was made to the defendants at Gneeveguilla to inform them that the plaintiffs were on the property and some days later the first meeting between the plaintiffs and the defendants took place.
6. The plaintiffs jointly operate as Paralegal Technical Allied Services, which was set up in the mid 1990s to provide assistance to people with legal difficulties. The services consist not merely of giving assistance in getting litigation organised and assembling paper work for that purpose, but in counselling clients and providing assistance to people and families with social or other problems. The evidence in the case indicates that during the period from August 1998 to March 2001, the plaintiffs were involved in investigative work in Donegal, were assisting various litigants in court cases both in Dublin and at different country locations and were also engaged in litigation on their own account.
7. Apart from his paralegal and litigation activities, the first named plaintiff is a political activist and author and producer of cultural and other works. He is a well known figure in the Kerry area.
8. The second named plaintiff was born and educated in Scotland and obtained a BA Honours degree in Paisley. She read for an MA in England. She qualified as a secondary school teacher and came to Ireland in 1982 where she did a FÁS retraining programme in UCC. Thereafter she worked with AnCO, teaching people how to set up in business. She became interested in legal work following the breakdown of her marriage in 1986 which led to frequent court appearances for which she could not get legal aid. She started a BCL course in UCC in 1998 and was conferred with a BCL degree in September 2001. She completed her LLB studies in September of 2001 and sat entrance examinations for the Law Society in April/May, 2002.
9. In August 1998, the plaintiffs were living in rented accommodation in Scartaglen, Co. Kerry, a property which they had to vacate by April of the following year. Mrs. Herron was also the owner of a terraced house at Sunday’s Well in Cork, which had been vacant for a number of years and which was owned subject to a mortgage in favour of Cork Corporation. There are also other burdens affecting this property to which I shall later refer.
10. While Mr. Ó Siodhachain was distantly related to Sean O’Mahony, and while Mr. O’Mahony knew of Mr. Ó Siodhachain by reputation, the parties were not directly or previously acquainted until they first met some days after the abortive auction.
11. As much of the subsequent events, and in particular the intent and motivation of the parties, is hotly contested, I propose at this stage to confine myself to a narrative of the matters which are common case and deal with the conflicts in the course of my review of the evidence given by the witnesses.
12. In the days and weeks following the auction, it is not in dispute that the plaintiffs called to the defendants’ shop at Gneeveguila where discussions of a general nature took place about the possible sale of portion of the farm to the plaintiffs. The plaintiffs interest was mainly focused on the farm house, its curtilage and outhouses, and a number of adjoining fields, which together formed a parcel of about 40 acres.
13. The plaintiffs took the view at a very early stage that the O’Mahony’s were a dysfunctional family, and that Sean O’Mahony in particular was very much dominated by his parents, who very quickly appeared to have formed a dislike of the plaintiffs and were extremely unhappy at the prospect of the defendants selling the farmhouse to the plaintiffs. Mr. Ó Siodhachain encouraged Mrs. O’Mahony to develop more independence on her own account and gave her books on practical philosophy and psychology to assist her in this regard. He encouraged her to attend a course in philosophy in Killarney, which she duly did. Mrs. Herron for her part formed a friendship with Geraldine O’Mahony and the two women commenced confiding in each other.
14. As the relationship between the parties developed, the plaintiffs offered their expertise to the defendants in relation to what might be done with the proceeds of sale of the farm at Ballybeg. At different times, the plaintiffs brought the defendants to view properties as far away from each other as Athlone and Tarbert. Projections and drawings were prepared and supplied by the plaintiffs, such as might put the plaintiffs in the best possible position to apply for loan facilities from a lending institution. Amongst the various proposals under consideration at different times were the extension of the shop premises at Gneeveguilla, the opening of a business in Tarbert and a supermarket project in Rathmore, Co. Kerry, which latter option the defendants ultimately opted to pursue in 2000. Apart from one set of drawings, for which a sum of £200 was paid to Mr. Ó Siodhachain, these services were rendered as a “gift” by the plaintiffs to the defendants.
15. Again, it is not in dispute that the plaintiffs took a very pro-active role in the defendants lives. Nor is it in dispute that Mr. Ó Siodhachain advised and arranged for Mr. O’Mahony to seek and obtain psychological help and counselling to help him overcome problems identified by the plaintiffs. In particular, Mr. Ó Siodhachain recommended that Mr. O’Mahony consult with Dr. Kinsch in Tralee, advice which was taken by Sean O’Mahony. It appears that a number of counselling sessions did take place in late 1998 or early 1999, following which Dr. Kinsch paid a visit to the defendants home at Gneeveguilla for further consultation and discussion with both defendants.
16. Shortly before Christmas, 1998, the defendants spent an evening with the plaintiffs at Scartaglen where a discussion took place about the viability of purchasing a property for letting purposes by creating apartments. It appears to have been on this particular occasion that Mr. Ó Siodhachain produced figures and projections in relation to Mrs. Herron’s property in Cork, which suggested that that property, if renovated and set in flats, might produce a better income then some of the other options under consideration, including the investment property in Dublin. The Sunday’s Well property was close to UCC and thus suitable for students.
17. Following this discussion, Mr. O’Mahony, apparently on his own initiative, went to inspect the property in Cork as did his wife. A number of visits to Sunday’s Well took place, but no surveyor, architect or engineer was ever retained on behalf of the defendants for the purpose of assessing what renovations might be necessary to the Sunday’s Well property or the likely cost of same. Nonetheless, the defendants, and in particular Mrs. O’Mahony, were enthusiastic about pursuing further the idea of acquiring the Cork property, which in turn led to discussions between the parties of a “back to back” arrangement whereby the property in Cork might be transferred to the O’Mahonys in exchange for the defendants 40 acre parcel of land at Ballybeg, including the dwelling house, subject to some allowance for renovations to the Cork property..
18. Lengthy discussions then ensued between, in particular, Mr. Ó Siodhachain and Mr. O’Mahony, to see if mutually satisfactory terms could be arrived at. These discussions also involved what use Mr. O’Mahony would make of the lands at Ballybeg even if transferred to the plaintiffs, and there were also lengthy discussions about machinery, use of outhouses and a penumbra of related issues.
19. On the 10th April 1999, the plaintiffs wrote to the defendants to say that unless the proposed purchase of Ballybeg was completed within 14 days, the plaintiffs would be obliged to rent accommodation elsewhere (their time at Scartaglen having expired) and would hold the O’Mahonys to account for any rent which they might incur in so doing.
20. There then followed an all night discussion between the parties at Gneeveguilla on the 23rd April 1999 which led directly to the execution of the written document which is the subject matter of these proceedings and which is hereinafter referred to as “the first contract”. This document was drawn up and prepared by the plaintiffs. It is not in dispute that the defendants obtained no independent legal advice prior to executing the same.
21. Under the first contract, the defendants agreed to purchase the plaintiffs property at Sunday’s Well in Cork and the plaintiffs agreed to purchase the farmhouse, outbuildings and about 40 acres of land, the property of the defendants at Ballybeg. The purchase price for the Sunday’s Well property was £374,000 and the purchase price for the lands at Ballybeg was £214,000. In addition, the defendants were to get the benefit of a sum of £95,000 to be spent on renovations on the Sunday’s Well property. The document further provided that purchase and sales contracts should be signed and exchanged as soon as practicable but in any event not later than the 8th December 1999.
22. In view of the dispute which subsequently arose between the parties, it is appropriate to set out verbatim those provisions of the document which related to the use and occupation of the lands at Ballybeg prior to the completion of any contract for sale. Firstly, the “preamble” to the document recites the following:
This document is to set out the terms and conditions as agreed between all parties on Saturday April 23, 1999 at Gneeveguilla, Rathmore regarding the sale and transfer of properties between both parties and such interim arrangements as are required to allow all parties the use and benefit of the properties and security for their interests in same prior to the signing of the sales and purchase contracts on or before the 8th December 1999, at which time this agreement will cease to have effect.”
23. The document later provided:
10. “to facilitate the renovation work in Sunday’s Well and to protect the interest of the purchasers and the moneys expended in the reconstruction, the vendors as set out in (1) of the foregoing will lease to the purchasers as set out in (2) of the foregoing the property in Sunday’s Well for a 15 year period.
11. To facilitate the occupation and renovation of Ballybeg the vendors as set out in (2) of the foregoing will lease the property as set out in (4) of the foregoing to the parties as set out in (1) of the foregoing.
12. The 15 year leases as set out in (10) and (11) of the foregoing will come into effect with the signing of this agreement and will remain in force until superseded by the contracts as set out in the preamble.
13. It is agreed by all parties that the contracts for the sale and purchase of Sunday’s Well in Ballybeg properties be exchanged between the parties solicitors as soon as the renovations of the main residence of Sunday’s Well is complete or in any event not later than 8th December 1999.
17. Both parties agreed that this document will cease to have effect on the signing of the contract for both properties on or before the 8th December 1999.”
24. Following the execution of this document, the first named defendants’ parents were prevailed upon to vacate the dwelling house and move into rented accommodation. The plaintiffs moved into occupation of the defendants’ farmhouse in May 1999 and have remained there since. They have paid neither rent nor purchase moneys to the defendants.
25. In the months that followed, no work by way of renovations to Sunday’s Well was carried out, nor was any schedule of works prepared or agreed, nor was any expert or qualified professional retained to advise the defendants in any way in relation to Sunday’s Well.
26. In November 1999 the defendants asked the plaintiffs to be relieved of their obligation to proceed with the transaction insofar as the acquisition of the Sunday’s Well property was concerned. The plaintiffs agreed to this request. Without objection from the defendants, the plaintiffs continued to reside at Ballybeg. No renovations or works were carried out at Ballybeg.
27. In February, 2000, the defendants instructed their solicitor, Mr. Terence Casey, to prepare a contract for the sale of the farm at Ballybeg to the plaintiffs to the sum of £214,000. It was the agreed background position between the parties that a £1,000 deposit would be sufficient, it being recognised that the plaintiffs were not in a position to offer more at that particular time. The contracts were duly sent out and returned with a draft for £1000. This contract is hereinafter referred to as “the second contract”. This contract provided for a closing date some six months from the 11th February 2000. When on the return of the contracts signed by the plaintiffs Mr. Casey noted that a deposit of only £1,000 had been paid with a six month closing period he advised the defendants against proceeding further. For that reason that sale did not proceed and that document is not of itself an issue in these proceedings.
28. Throughout 2000, the plaintiffs made efforts both in Ireland and in the United Kingdom to raise the necessary funds to purchase the defendants’ farm. The defendants for their part remained willing to sell the farm to the plaintiffs, notwithstanding the history to that point. By mid 2000, the defendants had opted to purchase a supermarket premises in Rathmore and were themselves coming under increasing financial pressure to marshal the necessary funds both for the acquisition of the property and for the setting up of the business in Rathmore. The unchallenged evidence of Mr. O’Mahony was that the defendants paid the sum of £260,000 for the shop in Rathmore in which context they applied for and obtained loan advances of 220% of the purchase price from Anglo Irish Bank to buy, stock, and fit out the supermarket for business purposes.
29. Following this acquisition, the defendants instructed Mr. Casey to draw up another contract for the sale of Ballybeg to the plaintiffs (hereinafter referred to as the “third contract”). In this contract the purchase price for the defendants property is stated to be £220,000 with a deposit of £22,000 payable by the plaintiffs. This contract provided that the sale should be closed on or before the 15th March 2001. It further provided that the contract would not be binding on the vendors until such time as it was signed by them and that no contract for sale should be otherwise construed.
30. This contract was in turn sent back in amended form to Mr. Casey through the plaintiffs’ solicitors with a deposit of £100. Mr. Casey called the defendants into his office and advised them strongly against entering into the contract. While the second named defendant was keen to proceed, Mr. Casey said he would not act for the defendants if they insisted on going ahead. It is not in dispute that executed contracts were never returned to the plaintiff’s solicitor.
31. In early March, 2001, the plaintiffs called, without the knowledge of the defendants, to Mr. Casey’s office in Killarney. They sought an extension of the closing date in the third contract from the 15th March, 2001 for at least one month as they believed they could still sell the Cork property. Mr. Casey, who only agreed to the discussion on an “off the record” basis, felt a longer period of time would be required if no purchaser was immediately available, and there was no such purchaser, and invited the plaintiffs through their solicitor to write to him requesting an extension of time. It is not in dispute that at the particular meeting, the plaintiffs offered to waive their entitlement to enforce any claim they might have to the 40 acre farm if they got the dwelling house and yard. Following this meeting, Mr. Casey received a letter from the plaintiff’s solicitor and called his clients in for a meeting.
32. In the course of his discussions with his clients, he voiced his suspicions as to whether or not the plaintiffs were in a position to sell the property in Cork. He advised his clients to seek possession of their farm at Ballybeg and to move to eject the plaintiffs.
33. A notice to quit dated the 5th April, 2001 was served on the plaintiffs requiring them to deliver up possession on or before the 13th April, 2001.
34. District Court ejectment proceedings were commenced on the 30th April, 2001.
The proceedings and the issues
35. The present proceedings were commenced by Plenary Summons issued on the 29th August 2001.
36. In these proceedings, the plaintiffs claimed an injunction prohibiting the defendants from proceeding with the ejectment proceedings pending the determination of the present proceedings. An interlocutory injunction was also sought to restrain the first named defendant from harassing the plaintiffs or interfering with the Plaintiffs in their possession of the premises at Ballybeg pending the determination of the proceedings. The summons further sought a declaration that the document or agreement entered into by the plaintiffs and the defendant on the 28th April 1999 was a lawful and valid lease.
37. A statement of claim was delivered on the 5th September 2001, on which date the plaintiffs issued a Notice of Motion for an Interlocutory Injunction to restrain the first named defendant as hereinbefore stated.
38. A replying Affidavit of Sean O’Mahony was sworn on the 11th September 2001, following which Donal Ó Siodhachain swore an affidavit on the 26th September 2001, to which was added a supplementary affidavit of Patricia Herron on the 1st October 2001.
39. The matter came before this Court on the 22nd October, 2001 when the controversy between the parties was outlined in some detail. I decided that, in the interest of having all matters disposed of at the same time, to injunct the continuance of the District Court proceedings and to set rigid timetables for pleadings and discovery so as to facilitate the earliest possible plenary hearing of all issues.
40. Thereafter a defence and counterclaim were delivered on the 12th November 2001.
41. Before that time, Mr. Terence Casey, who had been named in the proceedings as a third named defendant, successfully brought an application before Murphy J. on the 2nd October 2001 for an order striking out the proceedings against him. This order was the subject matter of an appeal to the Supreme Court which dismissed the appeal of Mr. Ó Siodhachain and Mrs. Herron on the 6th December 2001.
42. Affidavits of discovery were sworn by Mrs. Herron and by Sean O’Mahony, including a supplemental affidavit of discovery sworn by Mrs. Herron on the 31st May, 2002.
43. On the 10th May, 2002, Mrs. Herron brought a further Motion for Discovery seeking further and better discovery as per her letter to Mr. Casey dated 13th March 2002. While this matter had been adjourned in the Master’s Court to a date subsequent to the commencement of the hearing before this Court, the same was dealt with during the course of the hearing before the Court as appears from the review of the evidence.
44. On the 10th May, 2002, the proceedings appeared in a list to fix dates before Kelly J. Having heard Mrs. Herron on that occasion, Kelly J. directed that the proceedings be listed for hearing on Tuesday the 18th June 2002. The plaintiffs appealed the order of Kelly J. to the Supreme Court.
45. On the 18th June 2002 when the matter was listed before Kelly J., the plaintiffs again unsuccessfully applied to adjourn the matter and the plaintiffs then immediately moved an application in the Supreme Court by way of appeal, from the order of Kelly, J., which said application was refused by the Supreme Court.
46. The application for adjournment was renewed to this Court on the 18th June and was also refused.
47. Further applications for adjournments were made by the plaintiffs to this Court during the hearing of the proceedings before this Court. One application which was premised on a medical indisposition affecting Mrs. Herron was granted. Further adjournment applications, sought for the purpose of initiating proceedings against me as the trial Judge in the case, together with other defendants, was refused.
48. As appears from the Affidavit of Patricia Herron sworn herein on the 10th May 2002, the case had been put in to the list to fix dates first on the 11th January, 2002. At that time, it was put back to the next list to fix dates in March, 2002 when Mrs. Herron indicated to the Court that a date for hearing in April or May would not suit her as she had law exams during those months. As already stated, Mrs. Herron, notwithstanding this adjournment, sought the further adjournment refused by Kelly J. on the 10th May, 2002. As is acknowledged by Mrs. Herron in her Affidavit, the time limits specified by me when injuncting the continuance of the District Court proceedings included the requirement that the case should go into the list of fix dates in January 2002.
49. During the course of the hearing, I invited the parties to identify the real issues in the case. As appears from the Statement of Claim delivered by the plaintiffs, certain reliefs sought are in contradiction of each other. In the course of submissions, Mrs. Herron indicated to the Court that the plaintiffs were not placing any form of reliance on the second contract. They were however asserting their right to occupy and remain in occupation of the defendants’ farmhouse and lands at Ballybeg under and by virtue of the document dated 28th April, 1999, as varied by an alleged oral agreement between the parties made thereto when the defendants withdrew from the purchase of the Sunday’s Well property. In the alternative, the plaintiffs contended that a concluded and valid contract was made between the parties in October 2000.
50. Taking in to account the defence and counterclaim delivered in the case, the issues to be determined are as follows:-
(a) Is the document dated 28th April, 1999, effective to create a valid lease for the stated period of fifteen years or otherwise?
(b) If so, was the execution of the document in question procured by undue influence, or was the making of the agreement attended by circumstances of oppression or unfairness which would require the Court to intervene to set it aside?
(c) Was there a concluded and valid contract made between the parties in respect of the lands at Ballybeg in September/October 2000?
(d) Are the defendants entitled to an Order for possession of the farmhouse and lands at Ballybeg?
The Evidence
51. The execution of the first contract not being in dispute, the Court ruled that the defendants should first give evidence in support of their contention that the making of the first contract was procured by undue influence or was otherwise attended by circumstances of oppression or unfairness which would warrant the intervention of the Court.
52. In reviewing the evidence, the Court will not again refer to those undisputed matters and events already outlined which were established in the course of the evidence, but will rather concentrate on those areas where conflicting evidence was given.
53. Sean O’Mahony told the Court that in 1998 the defendants had decided to sell their 70 acre farm with a view to raising money for investment purpose. He also had in mind moving out of the area altogether.
54. He only knew Mr. Ó Siodhachain by repute although he accepted there was a family connection. From the outset, Mr. O’Mahony felt the plaintiffs were trying to win over the trust of his wife and himself and from an early stage, he said, the plaintiffs virtually lived with them on a constant basis, offering all sorts of services, including the preparation of financial projections and plans for various business ideas in which they sought to interest the O’Mahonys. Mr. O’Mahony informed the Court that he was led to believe that the plaintiffs could do any legal work in respect of any sale of the property for nothing if the property was sold to them.
55. After a while, aspects of the relationship with the plaintiffs began to disturb Mr. O’Mahony. He felt they were driving a wedge between himself and his wife, saying, for example, that Sean should be operating the pumps outside the shop operated by his wife at Gneeveguilla, rather than sitting around while his wife did such work. The plaintiffs, according to Mr. O’Mahony, suggested openly that Sean was very manipulated by his parents.
56. Mrs. Herron suggested to Mr. O’Mahony that there were unhappy differences between Mr. O’Mahony and his wife which had led in 1992 to Geraldine leaving their home in Ballybeg without him to go back to her family home at Gneeveguilla with her baby. Mr. O’Mahony stated that they had both gone to Geraldine’s family home with their child in 1992 because her father was extremely ill at the time and required care and support. He did however accept that part of the reason was that Geraldine did not get on too well with his parents. Mrs. Herron pressed Mr. O’Mahony to accept that he was a person prone to depression, that he spent days on end in bed, both before and after the time when she and her co-plaintiff met with him. Mr. O’Mahony agreed that his parents interference did get him down at times, but not to the point where he ever needed to spend time in bed or require medical or psychiatric help. He accepted suggestions from Mrs. Herron that his parents demanded to know the reason on every occasion where Sean sought to use the family car and required him to account for the mileage.
57. Mr. O’Mahony stated that he had received psychiatric counselling from Dr. Matt Kinsch in Tralee some months after first meeting the plaintiffs. This was Mr. Ó Siodhachain’s idea. He had also seen some other counsellor whose name he could not recall. The psychiatric advice he had received was to have no further dealings with Mr. Ó Siodhachain.
58. He was challenged on his assertion that the plaintiffs “lived” with the O’Mahonys, that the plaintiffs were away a lot of the time on other unrelated business. Mr. O’Mahony agreed that this was so, but pointed out that he and his wife had travelled to Donegal with the plaintiffs and visited a number of properties with them.
59. Mr. O’Mahony stated that some months after first meeting with the plaintiffs, they indicated they had a property in Cork that might be a more suitable alternative investment opportunity. He wasn’t interested, but felt his wife Geraldine was very much won over. Some time after Christmas 1998 he went to look at the property which was located in Sundays Well in Cork. He felt it was in a very poor condition having been vacant for a long time. He said that Mr. Ó Siodhachain had suggested swapping the farm at Ballybeg for the plaintiffs property in Cork, subject to some allowance for renovations to the Cork property. This was with a view to making the Cork property fit for letting in flats. Mr. O’Mahony told the Court that he wished to have an accountant, engineer and solicitor look at the proposal, but the plaintiffs, having initially agreed to this approach, changed their minds and suggested instead that they would put the O’Mahonys in touch with solicitors of their nomination. In the event no surveyor, architect or engineer ever looked at the property on their behalf.
60. Mr. O’Mahony went on to describe the events which took place in the dwellinghouse at Gneeveguilla on the night of the 23rd April 1999. On that night, he said that without prior arrangement the plaintiffs called and the parties then sat up all night discussing the proposed deal to be made. His recollection of the leasing arrangement was to the effect that Mr. Ó Siodhachain had mentioned a 99 year lease as being effective as a means of avoiding tax. There had been no mention of any rent in respect of leases on either property. However, when the plaintiffs later that same day came back with a written document in which there was reference to a 15 year lease he asked about it and was told not to worry, that it was for “tax purposes” only. He told his own counsel that it was his understanding that if contracts were not exchanged by the 8th of December 1999, then the whole transaction would fall through. He also said that Mr. Ó Siodhachain had often said to him that the document wasn’t worth the paper it was written on. He did not accept in cross examination that the document was only signed by the parties on the 28th of April 1999. He further stated that when it was signed on Sunday 24th, he was told by the plaintiffs not to discuss the document either with Mr. Casey, the O’Mahonys solicitor, or anyone else. He denied that the document had been left with himself and his wife for some days for their careful consideration or that they had been advised to discuss the entire matter with his solicitor, or some other solicitor.
61. The first written version of the document was seen by him on Sunday evening. It was then when he signed it and he recalled changing the figure in respect of renovations on the Cork property from £75,000 to £95,000.
62. When the document had been executed, he arranged for his parents to move out of the dwellinghouse to rented accommodation. Under the new arrangements worked out with the plaintiffs, he retained use of certain outhouses and a workshop on the lands. Mr. Ó Siodhachain worked some of the fields, cutting and baling hay which, according to Mr.O’Mahony, was left in the fields and needed to be removed by Mr. O’Mahony. Later by agreement, Mr. O’Mahony, let the fields and the plaintiffs occupation of the disputed property was confined to the house and surrounding curtilage.
63. Before the year was out, Mr. O’Mahony told the Court that his wife and he had decided they no longer wished to proceed with the purchase of the Cork property, because they wished to purchase a supermarket in Rathmore. The plaintiffs had no objection to their withdrawal, because at that time no renovations had been carried out to the Cork property and Mr. Ó Siodhachain said that the Cork property was now more valuable than it had been at the time of the execution of the document in April 1999.
64. Despite the fact that the original transaction was now at an end as far as Mr. O’Mahony was concerned, he nonetheless went to see his solicitor, Terence Casey, in January or February 2000 to get him to draw up a contract for the sale of the farm at Ballybeg to the plaintiffs for the sum of £214,000. He told the Court he did not inform Mr. Casey about the document which had been executed in April 1999. However, at another point in his evidence he stated that he may have mentioned the April 1999 document before December of that year when Mr. Casey asked for details of the title to the Sundays Well property. In any event, the second contract fell through when Mr. Casey advised against proceeding further.
65. In the year 2000, Mr. O’Mahony stated that he and his wife were keen to purchase a supermarket premises in Rathmore. They were still willing to sell to the plaintiffs, who kept promising they would come up with the money. They were dealing with Anglo Irish Bank in relation to the financial arrangements for the acquisition in Rathmore. He borrowed 220% of the purchase price of £260,000 for the property. This involved monthly repayments to the bank of £5,000 – £6,000 which was a huge financial burden for them. It was at this time that the third contract came into being. Mr. O’Mahony accepted that before it was drawn up he and his wife had first asked the plaintiffs for a letter of intent to purchase the farm at Ballybeg in the hope that the letter might be sufficient to persuade some financial institution to advance money. However, Anglo Irish Bank was not content to accept the letter. The third contract was then issued by Mr. Casey at the defendants suggestion. This provided for an additional £6,000 to the purchase price which, according to Mr. O’Mahony, was to reflect the increase in value in the farm, and had nothing to do with rent for use or occupation, as was suggested to him by Mrs. Herron. He denied that he had signed or executed this document, or that it was used by way of collateral or security for the Anglo Irish advance. Mr. O’Mahony stated that, apart from the supermarket title itself, various sites on his farm had been offered as collateral to Anglo Irish. The purchase of the supermarket and the move to Rathmore took place in November 2000.
66. Mr. O’Mahony said he was aware that in March 2001 the plaintiffs had gone directly to their solicitor with a view to extending the closing date on the third contract to the end of May. However, the problem was the plaintiffs were never able to come up with the necessary moneys to close. When the third contract came back with a deposit of only £100, Mr. Casey would not accept that they should proceed.
67. Mr. O’Mahony was also cross examined by Mr. Ó Siodhachain who suggested that Mr. O’Mahony had a great deal of experience in assessing building projects and dealing with tradesmen and other business people. Mr. O’Mahony agreed. Mr. Ó Siodhachain suggested that Mr. O’Mahony was perhaps not as incompetent or helpless as he had made out before the Court.
68. Geraldine O’Mahony told the Court that from the time of the first meeting with the plaintiffs that the plaintiffs virtually “lived with them” in Gneeveguilla. Mr. Ó Siodhachain was interested in buying the dwellinghouse on the farm and had all sorts of plans for extensions to the house which would accommodate his published works and legal cases. She described in some detail the months which led up to the all night meeting in April, 1999. In the talks which took place between the parties, Mr. Ó Siodhachain gave her to understand that she was been manipulated by her husband and that she had no control in the family unit. He also came up with the idea that Sean her husband should go for counselling. There was a first counsellor and then Dr. Kinsch, both of whom were nominated by Mr. Ó Siodhachain. She was asked if she had told Mr. Ó Siodhachain that Dr. Kinsch had advised her husband to “grow up”. Mrs. O’Mahony stated that the advice given to her by Dr. Kinch was that her husband should side more with his wife, even though he was an only son. She added that Dr. Kinsch had also advised that the O’Mahonys should altogether eliminate the plaintiffs from their lives.
69. She told the court that Mr. Ó Siodhachain had advised her to, “wake herself up”. She said that Mr. Ó Siodhachain advised her that both he and Mrs. Herron had come into their lives as “a sign from God” that they were there to help them. Mr. Ó Siodhachain led her to believe that if she did as he urged, everything would be fine in their lives. She believed everything he said and the extent to which Mr. Ó Siodhachain’s advice was followed caused a rift between her and her husband which was a mistake she would regret for the rest of her life. Mr. Ó Siodhachain pressed the witness about the visit paid by Dr. Kinch to the O’Mahony family home. Mrs. O’Mahony stated that the plaintiffs had in advance listed questions for her to put to Dr. Kinch about her husband, but denied the suggestion that, in the aftermath, of the visit, she told Mr. Ó Siodhachain that her husband had been left with “no cover” and would have to do whatever was suggested of him at that stage.
70. Both plaintiffs challenged Mrs. O’Mahony on her assertion that they virtually “lived” with the O’Mahonys. It was put to the witness that Mr. Ó Siodhachain and Mrs. Herron were either in Dublin for litigation purposes or in Donegal during the months in question between the auction and the signing up of the first contract in April, 1999. It was also put to the witness that Mr. Ó Siodhachain was busy during these months in political activity on behalf of Martin Ferris of Sinn Fein in Kerry. Mrs. O’Mahony accepted that the plaintiffs were actively involved in these different ways, but they still found lots of time to be calling on the O’Mahonys. She gave an example of how this might operate. On occasions where Mr. Ó Siodhachain might be in Dublin for one of his court cases, he could still call to the shop later on the same day. He often came with stories of court cases which he felt were designed to put the fear of the law into herself and her husband so that they would be afraid to such a degree that they could never stand up in court against the plaintiffs. She told the Court that Mr. Ó Siodhachain claimed to her that he could control the Court process by getting cases adjourned again and again and that he could “put a judge in his place”. As his cases were so often adjourned in this way, he could be back in Mallow by train in the afternoon, following which he would turn up at the defendants home.
71. In relation to the first contract, Mrs. O’Mahony recalled a particular evening in April 1999 when the all night discussions took place. On this occasion, the plaintiffs arrived without prior arrangement and were very business-like and brisk. Contracts were produced, she said, “out of the blue”. Although there had been much talk of selling the farm, neither she or her husband were ready for this and both stated that they needed their solicitors advice and that they would not sign without it. However, the discussions went on all night and the contracts were eventually signed, as far as she was concerned, at 6 o’clock on Sunday morning. Again, as far as Mrs. O’Mahony was concerned, the contracts, whether in draft or typewritten form were not left with herself or her husband for even one day.
72. She told the Court that later that year, following a consultation with their accountant in Killarney, the O’Mahonys decided not to buy the property in Sundays Well. She continued to hope that the plaintiffs would come up with the necessary funds to buy the farm at Ballybeg by selling Sundays Well themselves. In the meantime, the plaintiffs kept coming up with new plans and projects for the O’Mahonys as suitable investment vehicles for the proceeds of any sale. Some of these plans and projections were drawn up by way of gift, others she paid for at £200 a time. At one point, she said, Mr. Ó Siodhachain wanted 1% of the overall figure if moneys were advanced from the bank in respect of the supermarket project at Rathmore.
73. In relation to the second contract, Mrs. O’Mahony stated she had already given cash to Mrs. Herron, out of which she believed the £1,000 deposit was paid. She had advanced moneys to Mrs. Herron, because she believed the plaintiffs did not have any money at that particular point in time.
74. When the opportunity to buy the supermarket in Rathmore came up in 2000, she was still of the view that she would give the plaintiffs a chance to come up with the money to buy the farm at Ballybeg. This was the reason why the third contract was sent out in October 2000. At this point, Mrs. O’Mahony told the Court, that she and her husband were desperate for money, that they were being pressed by suppliers and banks, all calling for payment.
75. Asked why she would give £1,000 towards a deposit to purchase her own property, Mrs. O’Mahony stated that in fact over the term of her acquaintance with Mrs. Herron between 1998 – 2000, she had in fact given to Mrs. Herron sums of money amounting to about £30,000.
76. Despite the collapse of the second contract, Mrs. O’Mahony told the court she still wanted to give the plaintiffs a chance to come up with the money even though she had begun to distance herself from the plaintiffs because of her worries about their difficulty in completing the purchase. She accepted the third contract came into being because Anglo Irish Bank would not accept a letter of intent to purchase the farmhouse from the plaintiffs. The bank required a signed contract. She did not recall any discussion about the amount of the deposit on this occasion. Her belief was that the contract specified a 10% deposit, something around £22,000. She denied that she had agreed that a deposit of £100 would suffice. She equally confirmed that she did not sign the third contract, that Mr. Casey would not permit it. This document was never produced or offered to Anglo Irish Bank by way of security. Instead, other sites from the O’Mahony farm were provided, along with the title deeds to the supermarket premises in Rathmore, as security for the loan which was advanced. Mrs. O’Mahony further stated that she had informed Mrs. Herron that the third contract had not in fact been signed by the O’Mahonys, although she kept hoping the plaintiffs might find the money to complete the transaction. Mr. Ó Siodhachain had told her they hoped to get it from England. However, from the time they moved to Rathmore in November, her husband had been pressing Mr. Ó Siodhachain for the purchase moneys all to no avail. When the third contract fell through, Mr. Casey was only then informed about the document executed in April 1999.
77. It was put to Mrs. O’Mahony that the ejectment proceedings only began when Mr. Ó Siodhachain wrote a letter threatening legal proceedings to injunct her husband from threatening behaviour and conduct. The witness disagreed, although confirming they had received such a letter. She did not accept that her husband regularly fought with tradesmen and staff in their supermarket, or that he had a problem dealing with people. She accepted the suggestion put to her that her husband was not intellectually incapacitated in anyway.
78. Mr. Casey told the Court that he was the defendants solicitor. Some weeks after the auction he heard that people wanted to buy the farmhouse. In February 2000 he was told by the O’Mahonys to draw up a contract for sale. He was advised at that time that the purchasers might not be able to pay the full deposit, so when drawing up the contract, he inserted the purchase price of £214,000 but left the amount of the deposit blank.
79. The contracts came back with a draft for £1,000 from the plaintiff’s solicitor Mr. Enright. Because there was a six month closing date and because the deposit was so small, he felt it was very unwise for the O’Mahonys to enter into contracts and so advised them. They took that advice. He later received a letter from the plaintiff’s solicitor stating that his clients were not now entering contracts and to return the deposit which he did.
80. He had a number of calls from the O’Mahonys saying that the plaintiffs were still keen on buying and had a property in Cork to sell. Through his clients, he passed on request for inspection of the title to the Cork property. He himself was sceptical that the plaintiffs had a property to sell. He was never shown or furnished with the title to the Cork property.
81. He was asked in October 2000 by Geraldine O’Mahony to draw up a further contract, that Mrs. O’Mahony believed that the property in Cork could be sold and so they wanted to go ahead. He was aware that the O’Mahonys were under pressure for money having just bought the premises in Rathmore, a transaction in which he was involved as their solicitor.
82. He drew up this further contract, which had a purchase price of £220,000 and 10% deposit.
83. He later received a telephone call from the plaintiff’s solicitor saying that the deposit was too high and asking if it could it be reduced. He said it could within reason. The contracts came back in amended form with a draft for £100. He called the clients into the office and told them he could not have it on his conscience to allow them enter into these contracts. Mrs. O’Mahony was keen to proceed. He said he would not act. At this point, Mrs. O’Mahony realised how serious the situation was, so they left his office without signing and never did sign. The contracts he said, never left his office, nor were they ever used as security for financial loans.
84. This occurred in early March.
85. Very shortly afterwards, the plaintiffs called to his office without appointment. Mr. O’Siodhachain wanted an “off the record” discussion. The plaintiffs wanted an extension of the closing date from the 15th of March, 2001 for one month, as they believed they could sell the Cork property. He asked if they had a purchaser. They had not. He said that if the property could be sold within two months he would ask the O’Mahonys for an extension.
86. He then got a letter from the plaintiff’s solicitor, Mr. Enright, looking for the extension. However, the letter was not reflective of the conversation he had had in the office with the plaintiffs in that it touched on matters relating to planning permission for the Sunday’s Well property which he had never discussed with Mr. Enright. He called the O’Mahonys in for a meeting and told them that he was suspicious as to whether or not the plaintiffs were making any effort to sell Cork.
87. In the course of this discussion he learned that his clients had entered some sort of arrangement and signed some document in April, 1999. He was completely unaware of this document until then. As soon as he saw it, he advised his clients to seek possession.
88. Cross examined as to whether the third contract was used as security for the loan obtained from Anglo Irish, Mr. Casey produced a letter from Anglo Irish Bank setting out the terms for the proposed advance. Mrs. Herron objected that this document had not been discovered. The Court then indicated that this was an appropriate juncture to deal with the Motion for further and better discovery which had been adjourned from the Master’s Court to the present hearing. Having heard submissions from both sides, the Court determined that the plaintiffs were entitled to further and better discovery such as would include production of this particular document. All other reliefs sought in the adjourned Motion for further and better discovery were refused.
89. He was asked about the meeting which had taken place in his office in March, 2001 attended by the plaintiffs. He was asked if he agreed that the plaintiffs offered to waive their entitlement to enforce their claim to the forty acre farm if they got the farmhouse and yard. Mr. Casey agreed that this suggestion had been made. He further agreed that he had not relayed this information back to its clients because of the confidential nature of the discussion. He had no authority, he said, to vary anything that might have been stated in the contract document.
90. He was asked if he had returned the £100 deposit and if not, why not? Mr. Casey replied that the draft in question remained uncashed on the file. He was asked if he had any recollection of the lease arrangement being discussed at this particular meeting and said he did not.
91. He did not think the O’Mahonys had kept the details of the first contract purposely from him. They told him when they did eventually produce it, that they had been told by the plaintiffs that it was “not worth the paper it was written on”.
92. He accepted that he had not addressed the queries about the title to the Cork premises to the plaintiffs or their solicitor. His concerns had been channelled through the O’Mahonys. His concerns first arose at the time of the second contract, not because of the disclosure of the April, 1999 document of which he then knew nothing, but because his clients kept telling him that the plaintiffs intended closing the sale out of the proceeds of sale of the property on Sundays Well. He wanted to know about the Cork property and subsequently found out that Cork Corporation had the title deeds. In searches which he made in May, 2001 he discovered there were three judgment mortgages affecting the property. The first of these was entered on the 21st of March, 1997 in proceedings between N.I.B. and Patricia Herron in the sum of £2,672. The second was entered on the 25th of April, 2000 in proceedings between A.I.B. and Patricia Herron in the sum of £9,100 and the third was entered or registered on the 26th of May, 2000 in proceedings again involving A.I.B. and Mrs. Herron, this time in the sum of £20,947. All included in addition sums for costs. The three judgment mortgages were registered on foot of judgments obtained against Mrs. Herron, the first in October, 1996 and the other two in November, 1999.
93. Mr. Casey was asked about the notice to quit and the procedures that had taken place at that time. As far as Mr. Casey was concerned, the notice to quit was served first, and then followed by a demand for possession. Asked why the notice the quit refers to a weekly tenancy, Mr. Casey said it was impossible to know from the first contract document what the basis of the plaintiff’s occupation of the farmhouse was, other than as permissive occupant. He assumed it was a week to week type of arrangement. He stressed that sites owned by the O’Mahonys were never put up as collateral for the sums advanced by Anglo Irish Bank, but that some of these sites were being sold to reduce the indebtness of the O’Mahonys to Anglo Irish Bank.
94. He could not recall whether at the meeting the plaintiffs had at one point offered to give up the house at Ballybeg within a reasonable period.
95. Mr. Ó Siodhachain gave evidence to the effect that he became aware of the possible sale of this farm from talk in the locality. On the night of the auction, he and Mrs. Herron went to the farmhouse and were shown over the farmhouse and yard by Sean O’Mahony’s father. He indicated he might be interested in the dwellinghouse and some of the old buildings. Some days later the plaintiffs met with the O’Mahonys. He only visited the farm at Ballybeg two or three times, although they did call to the defendants at their shop in Gneeveguilla. He insisted that a great deal of time was spent by both plaintiffs in Donegal and Dublin over the following months and he rejected suggestions that the plaintiffs virtually lived with the defendants.
96. He accepted a friendship and relationship did develop between the plaintiffs and the defendants. As part of the work he did with Mrs. Herron, he would get involved in counselling clients. In this instance, both he and Mrs. Herron had recognised there were grave problems affecting the O’Mahonys. Both were complaining about interference by in-laws. Mr. O’Mahony in particular was called to account for virtually everything he did by his parents and was being treated like a 15 year old. He formed the view that Sean’s behaviour was dysfunctional and immature and that he should see a counsellor. He recommended Dr. Kinsch to whom he had referred a number of other clients. He also recommended self help books to Geraldine and gave her guidance in relation to a course in practical philosophy, which she pursued as a result. He told Mr. Cross that the various interventions he had made in the O’Mahony’s lives were made for altruistic reasons. He accepted he had supplied the name of an accountancy firm to the O’Mahonys and also a particular branch of the Bank of Ireland. He also had advised and arranged for Mr. O’Mahony to see a particular Harley Street specialist in relation to his visual difficulties. He accepted he had also advised the O’Mahonys on how to furnish their home at Gneegevuilla so as to make the best possible impression on any representative of a lending institution that might call out to discuss business with the O’Mahonys.
97. He accepted that the plaintiffs had prepared background paper work, including financial projections, for a number of projects which they had discussed with the defendants. One night before Christmas 1998 the O’Mahonys came to their home in Scartaglen to discuss a particular project or property. On that particular evening, Mr. Ó Siodhachain by way of example and illustration as to how an investment property could yield profit, showed to Mr. O’Mahony some projections he had prepared in relation to Mrs. Herron’s house in Sunday’s Well to give the defendants some idea of what might be necessary when approaching a lending institution seeking finance. Some time later he found out that Sean O’Mahony had gone to Cork to look at the property from the outside and was very enthusiastic about it. Mrs. O’Mahony did likewise and both O’Mahonys came to the plaintiffs with a proposition that they would buy the Sunday’s Well property if the plaintiffs bought the farm.
98. In the months leading up to April 1999 discussions began on a back to back arrangement. These discussions took many weeks and at various times he wanted to be finished with the whole discussion because of Mr. O’Mahony’s attitude which kept stringing things out for weeks. Mr. Cross read to him the contents of a letter dated 10th April 1999, suggesting it contained a threat that unless the purchase of Ballybeg was completed within 14 days that the O’Mahonys would be held responsible for rented accommodation elsewhere should the plaintiffs move out of Scartaglen, together with other expenses which Mr. Ó Siodhachain might incur. Mr. Ó Siodhachain stated that Mrs. O’Mahony had asked for the particular letter so as to get her husband’s parents out of the dwellinghouse. They had dug in their heels after the auction and were now demanding a new house. Also, he said, Mrs. O’Mahony was getting hate mail locally. The letter was designed to bring that to an end, because it was something she could show around to her relatives to highlight the difficulty that the O’Mahonys would be in unless the deal went ahead. The only pressure applied arose from the fact that the plaintiffs had to vacate the property at Scartaglen.
99. Mr. Ó Siodhachain stated there were at least three longhand drafts of the first contract before the all night meeting at the end of April 1999. On that night, the plaintiffs brought the final draft in longhand with them. He told Mr. O’Mahony at the outset that things were going to be finalised that night or the matter would go no further. He agreed that discussions went on all night because they were discussing matters which were not dealt with in the document, such as plant and machinery and how various EC land schemes would affect the property.
100. The reference to a lease had been included in the draft and in the discussions, because he was aware from other work he had done that no bank or finance house would give money or grant a loan except on a 15 year lease. He denied that he ever said the document was not worth the paper it was written on, although his own solicitor, Mr. Enright, had told him later that he was not very happy with it.
101. Some days later a typed version of the document was presented to the O’Mahonys. Sean O’Mahony wanted to change the sum for renovations to the Cork property from £75,000 to £95,000. Mr. Ó Siodhachain agreed and offered this as the reason why the written amendment appears on the typed version of the document. The document was then left with the O’Mahonys for a few days. Mr. Ó Siodhachain told the Court that the plaintiffs urged the O’Mahonys to show it to Mr. Casey, but they did not want that. They then suggested to Mr. O’Mahony that he take it to some other solicitor. He told the Court he in fact mentioned the solicitor of a particular trader with whom Mr. O’Mahony had had business dealings with in Portlaoise. He told Mr. Cross, however, that at the time of signing up of the first contract, which he said took place on the 28th of April, he had not checked to see if the O’Mahonys had taken any legal advice in the interim from either Mr. Casey or any other solicitor.
102. Mr. Cross asked what the purpose of the 15 year lease would be in the context of a sale of the property. Mr. Ó Siodhachain stated that the first contract was “facilitatory” in the sense that if anything went wrong, both of the parties would be protected by the leases. Mr. Ó Siodhachain gave as an example the possibility of a car accident happening which might affect one or more of the parties. He also felt it could constitute a form of security to raise funds. It was not written in for tax reasons of any sort.
103. In November 1999 the O’Mahonys asked to be released from the Sundays Well transaction, something which he and Mrs. Herron were quite willing to do. In the discussions which then took place, a sum was agreed for rent up to the probable closing date. Mr. Ó Siodhachain stated that this was a round figure to cover the time from the commencement of occupation of the plaintiffs at Ballybeg until the loan which would enable them complete the purchase came through. Apart from this variation, Mr. Ó Siodhachain stated that the O’Mahonys were willing to confirm all the other arrangements in relation to the farm at Ballybeg insofar as the plaintiffs were concerned.
104. Mr. Ó Siodhachain stated he was aware the O’Mahonys needed money for their business plans, including the project at Rathmore in respect of which he had helped them with financial projections. Insofar as closing the farm deal with the O’Mahonys was concerned, Mr. Ó Siodhachain stated that he and Mrs. Herron tried to get funds from lending institutions. However, as neither of them had any conventional income, they could not raise this finance in Ireland. They therefore tried to secure the loan from a company in the UK which specialised in asset based loans. They were for all practical purposes approved for such an advance in 2000, but the foot and mouth epidemic put paid to those arrangements. At a later stage the application for funding from the UK was reactivated, but although the plaintiffs were approved in principle for a loan, the lending institution declined to advance funds in Ireland.
105. Insofar as the third contract was concerned, Mr. Ó Siodhachain stated that Geraldine O’Mahony was quite desperate because of financial pressure. She was anxious to have a contract executed for the purpose of obtaining finance. He had asked her if £100 was a sufficient deposit if the plaintiffs assisted in the execution of a third contract and she agreed. Even her own solicitor saw this deposit figure as ludicrous. Mr. Ó Siodhachain stated that the deposit figure was always intended to be £100 in the third contract, and not 10%, or £22,000, which insertion was amended by his solicitor.
106. After they executed the third contract, they kept phoning Mr. Enright to see if signed contracts had been returned. Mr. Enright kept saying that they had not come in yet.
107. Mr. Ó Siodhachain stated that the plaintiffs were concerned about the financial predicament which were the O’Mahonys were in. The plaintiffs felt they might be able to help the O’Mahonys by releasing the farm portion of the lands from the contract so that the O’Mahonys could in turn sell it and reduce their financial overheads. Against that background, he rang Mr. Casey and asked if he would meet with them, a proposal to which Mr. Casey agreed.
108. At the meeting, Mr. Casey said that the offer to not purchase the farm was really of no use, that no one would now buy the farm in the middle of a foot and mouth crisis. Mr. Ó Siodhachain stated that they also offered to vacate the dwellinghouse within a reasonable time. They also discussed the possible extension of the closing date in the contract, and Mr. Ó Siodhachain asked for one month beyond the 15th March deadline. Mr. Casey stated that more time would be required and asked if the plaintiffs would have their own solicitors write a letter to him seeking the extension in question.
109. In 2000, Mr. Ó Siodhachain stated that Mr. O’Mahony’s attitude changed and he became very two faced. Mr. Ó Siodhachain therefore stopped calling to Rathmore. After March 2001 Mr. O’Mahony resorted to threatening behaviour and was involved in a number of incidents. He kept opening and leaving open the plaintiffs gates and went through various outhouses and sheds without permission. He brought out the auction sign which had been put away and generally made a nuisance of himself with the plaintiffs. It was against that background that Mr. Ó Siodhachain had written a letter in early April threatening legal proceedings to injunct Sean O’Mahony from these activities.
110. Mr. Ó Siodhachain told Mr. Cross that he didn’t really know in any legal sense what a lease was. He accepted there was no mention of any rent in the first contract, because at that time the O’Mahonys were going to purchase the Cork property in exactly the same way as the plaintiffs were buying the farm at Ballybeg. Once the back to back arrangements ceased to exist, Mr. Ó Siodhachain accepted that some rent would have to be paid in respect of their occupation of the farm. He could not say why this sum for rent if agreed and identified as such was not mentioned or included in the second contract or described as such in the third contract.
111. Mrs. Herron told the Court that from August 1998 onwards she spent a great deal of time in Donegal, Dublin and Cork. She had three or four cases in progress in Dublin for people she was helping. She also had a Supreme Court appeal of her own in preparation and in October was doing a law course in UCC. In addition, her son was in hospital in March 1999 in Cork and required daily visits from her.
112. She accepted, however, that she would call on average about twice a week while passing the shop at Gneegevuilla and in this way became very friendly with Mrs. O’Mahony. She confirmed that the O’Mahonys had come with them to Donegal in October 1998 for several days when they looked at a range of properties. At a later point they also looked at a property in Banna, Co. Kerry.
113. She developed a friendship with Geraldine O’Mahony and noticed on one occasion that she was very upset while Mrs. Herron was present in the house. Mrs. Herron followed Geraldine into her kitchen where Geraldine confided certain matters in her. After that she would also confide in Geraldine and they became friends and remained so until March, 2001. Mrs. Herron told the Court that when the plaintiffs first met the O’Mahonys, it was her impression that they were an entirely dysfunctional family. She did not accept that pressure had been put on the O’Mahonys to sign the first document. The only pressure lay in the fact that the plaintiffs had to quickly find somewhere else to live as their stay in Scartaglen was ending. Mrs. Herron felt they had been strung along for weeks by the O’Mahonys. The purpose of the letter dated 10th April 1999 was to deal with a situation where the O’Mahonys parents would not move out of Ballybeg. The O’Mahonys had failed to spell out clearly to Sean O’Mahony’s parents that they had to go.
114. Mrs. Herron insisted that the parties worked from a longhand draft on the 23rd of April during the all night discussion. Thereafter she prepared the typed document from the longhand draft on the 26th and gave it to the O’Mahonys that evening. Everyone signed the document on the 28th. She had no recollection that Sean O’Mahony changed the figure for renovations from £75,000 to £95,000 on the typed document.
115. On the night of the long discussion, Geraldine and herself had sat away from the two men who were by the fireside. Mr. O’Mahony nit picked through every single item in the agreement. In the end, Mrs. O’Mahony told her husband to give it a rest or conclude it.
116. She accepted that she put in the preamble by way of addition to the text contained in the draft when preparing the first contract. At that time she knew nothing about land law or property law. It was only when pursuing her LLB course that she learned anything about leases or the Statute of Frauds or such matters.
117. Mr. Cross pressed Mrs. Herron as to whether or not the question of legal advice had arisen prior to the execution of the first document. Mrs. Herron stated that they had recommended to the O’Mahonys that they get legal advice, but the O’Mahonys did not want to go to Mr. Casey because he was acting for the O’Mahony parents as well. The plaintiffs had suggested that the O’Mahonys go to someone else. However, when the document was signed up on the 28th, Mrs. Herron accepted she did not ask if the O’Mahonys had sought or received any independent legal advice in the meantime.
118. In relation to the second contract, Mrs. Herron was adamant that the deposit was paid out of her own moneys and produced a draft for the deposit drawn on her own bank, TSB in Killarney. She denied that the money in question had been given to her by Geraldine O’Mahony. She did become aware, when Mr. Casey would not allow the plaintiffs sign the second contract, that Mr. Casey wanted to see the title deeds to her Cork property. She contacted Cork Corporation who had a mortgage over the property, but it took her some considerable time to get the title documents and as she never got a formal request for same from Mr. Casey she decided not to hand them over. When the O’Mahonys pulled out of the Cork transaction in November in 1999, the plaintiffs then offered to pay for the use and occupation of Ballybeg from the time they had moved in up to the probable closing date for the transaction. A sum of £6,000 was suggested by Mr. Ó Siodhachain and accepted by the O’Mahonys. Other all aspects of the arrangements concluded in April 1999 were confirmed.
119. When the second contract failed, Mrs. Herron stated that the plaintiffs continued trying to raise funds to complete the purchase of Ballybeg. She confirmed the difficulties as outlined by Mr. Ó Siodhachain.
120. In relation to the third contract, Mrs. Herron stated that Geraldine came to her in September 2000 saying she needed a letter of intent to purchase Ballybeg, which the plaintiffs gave her. She later stated that the lending institution was not satisfied with the letter of intent, that she needed a signed contract. Mrs. Herron explained that the plaintiffs did not at that time have the necessary 10% deposit, whereupon Geraldine O’Mahony stated that £100 would suffice and that she would make her solicitor take it. At no stage were the plaintiffs ever told that the O’Mahonys had not signed this third contract.
121. From 2000 onwards, Sean O’Mahony’s attitude towards the plaintiffs changed, although she remained friendly with Geraldine, often helping her in the supermarket following the O’Mahonys move to Rathmore in November 2000. In the new year of 2001, Sean O’Mahony became markedly hostile. He would make snide and nasty remarks and kept asking if the plaintiffs had the money to close the purchase, stating that the closing date was approaching. Geraldine had told Mrs. Herron that she was under terrible financial pressure.
122. The plaintiffs called to Mr. Casey’s office in March 2001 in circumstances already outlined by Mr. Ó Siodhachain. They told Mr. Casey they wanted to help the O’Mahonys. Mrs. Herron said they offered to give up the 40 acres of land and buy only the farmhouse. Mr. Casey said no one would now buy the farm during the foot and mouth crisis. They also offered to give up the house and move out altogether if given reasonable time. Mrs. Herron said that the plaintiffs told Mr. Casey they were awaiting funds, whereupon Mr. Casey suggested extending the closing date. Mr. Casey suggested a longer period than that mentioned by the plaintiffs and suggested that the plaintiffs have their solicitor write to him officially, seeking an appropriate extension. Such a letter was sent by their solicitor to Mr. Casey on the 7th of March 2001.
123. The 15th of March came and went Mrs Herron stated the plaintiffs assumed the extension was operating. Mr. O’Mahony continued to be nasty and unpleasant and when he put the FOR SALE sign, which had been in a shed, in a position where it could be seen outside the farmhouse in Ballybeg by passing traffic, they caused a letter to be sent in early April threatening proceedings against him. Notice to Quit was then served on them.
124. At a late stage in her evidence, Mr. Cross asked Mrs. Herron to put some sort of figure on the moneys which Geraldine O’Mahony had advanced to her during the term of their acquaintance. Mrs. Herron initially stated that she had received loans from Geraldine O’Mahony amounting to somewhere between £15,000 – £30,000 in total. Mr. Cross then put to Mrs. Herron a letter which she had written in May, 2000 acknowledging that as of that date a sum of £35,000 was due in respect of loans advanced by Geraldine O’Mahony to her. Mrs. Herron accepted that this was so and acknowledged her obligation to pay the sum back to Mrs. O’Mahony, whom she described as a very generous person.
Submissions of the Parties
125. On behalf of the defendants, Mr. Cross contended that the document dated 28th April 1999 was not effective to create a valid lease. Section 4 of Deasy’s Act required that any contract to create the relation of landlord and tenant for any definite period of time, not being from year to year or any lesser period, must be evidenced by note in writing. While the document was executed by all parties, clauses 11 and 12 were those provisions relied upon by the plaintiffs to suggest that a lease had been created. No other documents of any kind whatsoever had been produced to amplify or vary those terms which conspicuously failed to make provision for rent of any kind. Section 3 of Deasy’s Act specifically provided that the relationship of landlord and tenant is founded on contract made between the parties in all cases where there is an agreement by one party to hold land from another in consideration of rent.
126. While the plaintiffs had argued that upon their release from the Sundays Well agreement, the original agreement of April 1999 had been varied so as to provide for a rent of £6,000, there was no note or memorandum of this amended agreement, if any.
127. The document in any event was clear that its effect would come to an end on the 8th of December 1999. It was at all times obvious that the “leases” would remain in force only until superseded by the contracts as set out in the preamble which had to be signed before a specified date, failing which the whole arrangement came to an end. Alternatively, he submitted, the document was self contradictory, and as it was prepared by the plaintiffs, it should be construed against them under the contra preferentem rule. Alternatively, there had been a total failure of consideration in respect of the April 1999 document. The plaintiffs had paid no money of any kind to the defendants. The document relied upon failed to specify any rent for any purported lease.
128. Secondly, it was submitted that if the document of April 1999 was effective to create some sort of valid lease, it was procured by undue influence or other circumstances of oppression and unfairness which demanded that the Court should set it aside.
129. Both parties in their submissions were in agreement as to the legal requirements necessary for the court to intervene on this basis. Firstly, it could be established by the claimant that the alleged wrongdoer exerted actual undue influence on the complainant to enter into the particular transaction being impugned. Alternatively, undue influence could be presumed where there was a relationship of trust and confidence between the complainant and wrongdoer of such a nature that it was fair to presume that the wrongdoer abused the relationship in procuring the complainant to enter into the impugned transaction. Once a confidential relationship had been established by evidence, the burden shifted to an alleged wrongdoer to prove that the complainant entered into the impugned transaction freely, for example by showing that the complainant had independent legal advice.
130. Certain relationships, such as solicitor inclined, raised the presumption as a matter of law. Even where the relationship did not fall into that category, the complainant could still establish the de facto existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer, whereupon the existence of the relationship raised the presumption of undue influence. This formulation of the test had been approved by the Supreme Court in Bank of Nova Scotia -v- Hogan [1996] 3 IR 239, 246.
131. Mr. Cross submitted that the plaintiffs did in fact use actual undue influence on the defendants and on that ground alone the agreement could be set aside. Alternatively, the evidence clearly showed a relationship of trust and confidence reposed by the defendants in the plaintiffs prior to the signing of the document in April 1999 and thereafter, sufficient to shift the burden to the plaintiffs to establish that the defendants entered into the agreement freely and with independent legal advice. The evidence clearly showed that the defendants did not have the benefit of independent legal advice. Further, he submitted, the plaintiffs, and in particular the second named plaintiff, demonstrated in their evidence an understanding of the law far beyond that of a lay person, and certainly beyond that of the defendants. He submitted therefore on this limb of the test, that the plaintiffs had failed to discharge the onus of proof that the agreement had been entered voluntarily.
132. Mr. Cross further submitted that the agreement was manifestly improvident. The plaintiffs are currently living rent free in the defendants property. They have not sought to enforce any contract for sale, but rather their case is based on a contention that they enjoy a lease under which they are permitted to live at no cost in the plaintiffs property for 15 years.
133. Finally, in relation to the third contract, Mr. Cross submitted that there was no evidence that this document was ever executed by the defendants. Both defendants denied having executed the document, and this evidence was confirmed by the evidence of Mr. Terence Casey, the defendants solicitor. Furthermore, it was clear from the evidence that contrary to the suspicions held by the plaintiffs, the defendants did not rely upon any third contract, executed or otherwise, to raise finance from Anglo Irish Bank for the Rathmore supermarket.
134. If the various submissions of the defendants were accepted, Mr. Cross submitted that the court was clearly entitled to make an order for possession in the defendants favour.
135. Mrs. Herron submitted that there was the necessary note in writing sufficient to satisfy the requirement of Section 4 of Deasy’s Act. The original agreement made in April 1999, was varied orally in November 1999 when the defendants withdrew from the purchase of the plaintiffs property in Sunday’s Well. The variations were to the effect that the plaintiffs would remain in occupation of the defendants property under the 15 year lease, pending their purchase of the property to which the plaintiffs remained committed. The plaintiffs would pay to the defendants the sum of £6,000 for their occupation of the premises, such sum to be paid when the plaintiffs succeeded in selling their own property and closed the purchase of the defendants property.
136. Alternatively, if the formalities of Deasy’s Act or other legal requirements had not been complied with, the plaintiffs were entitled to an equitable lease under the rule in Walsh -v- Lonsdale [1882] 21 Ch D9. Alternatively, the plaintiffs were entitled to an equitable lease under and by virtue of the doctrine of part performance.
137. It was submitted that the alteration in the third contract of the purchase price from £214,000 to £220,000 was sufficient to satisfy the statutory requirements as to written form. Par 21 of Mrs. Herron’s written submissions sets out the various grounds relied upon in support of the contention that the amended leasing agreement was fully and adequately supported by part performance.
138. Mrs. Herron further invited the court not to hold that the April 1999 document created a licence. At par 28 of her submissions she refers to different types of licence, suggesting that the instant arrangements fall into none of the recognised categories. Further, by issuing a notice to quit and ejectment proceedings, the defendants implicitly conceded that a tenancy had been created.
139. Mrs. Herron’s submission on undue influence, though considerably more detailed than that submitted by Mr. Cross, did not differ as to the essential legal requirements. She submitted that there was no evidence of actual undue influence. She further submitted that there was no exclusive relationship between the parties resulting in the defendants placing trust in the plaintiffs so as to give rise to a presumption of undue influence. Alternatively, Mrs. Herron submitted, the evidence showed that the transaction was a free exercise of the defendants will and, in any event, no substantial benefit was obtained by the plaintiffs under the transaction. (Carroll -v- Carroll [1998] 2 ILRM 218). Alternatively, the defendants had forfeited any right to relief by delay and approbation.
140. In relation to the third contract, Mrs. Herron submitted that there was a concluded oral contract between the parties to sell the property to the plaintiffs in October 2000. It was accepted that the contract to purchase sent to the plaintiffs solicitor contained a clause that no contract would come into existence unless and until the contract to purchase was signed by the defendants. However, the defendants intention to sell their property to the plaintiffs had been their intention since April 1999 and the decision to engage professionals to draw up the contract to purchase was a legal requirement and formality which was not made with the intention of changing the terms of the contract in any way. It had been the plaintiffs belief that the defendants had executed this third contract, but even if they hadn’t, there were sufficient acts of part performance apparent from the evidence to enable the court to hold that it was effective and binding.
Conclusions
141. The Court has formed the most definite view in this case that the relationship between the plaintiffs and the defendants was at no stage a relationship between equals. On the contrary, the evidence clearly establishes that when the plaintiffs first met the defendants in August 1998, the plaintiffs were an experienced duo specialising in paralegal and litigation work, both on behalf of others and on their own account. Mr. Ó Siodhachain was a well known figure in the locality, both through his political, paralegal work and writings. Mrs. Herron, as both her personal and academic history and indeed her conduct of this case shows, is a woman with not only considerable experience of the law, but also is possessed of sharp mental skills and significant experience in contesting problems over a wide spectrum of issues.
142. By contrast, Sean O’Mahony left school at 16 years of age and has limited educational achievements. He is also to some degree handicapped as a result of injuries sustained in 1983 and visual difficulties which have left him with impaired eyesight. The evidence in the case also satisfied me that Sean O’Mahony is a person of considerable immaturity who, in 1998, had no clear or well thought out concept for his future life and that of his family. He was also clearly very much under the influence of his parents and acted, in the words of the plaintiffs, like a 15 year old. Throughout the hearing, the court had the opportunity of observing the demeanour of all the witnesses both in direct and cross examination. The Court witnessed the emotional collapse of Mr. O’Mahony at one point during the giving of his evidence, an event which required a short adjournment, and was ultimately left in no doubt and I do hereby find that Sean O’Mahony was at all relevant times an immature, emotionally underdeveloped and easily manipulated individual of limited intelligence. Insofar as his wife Geraldine is concerned, the evidence establishes to my satisfaction that she found the interference of her husband’s parents difficult to put up with, that it caused difficulties between herself and her husband at times, that she felt isolated and vulnerable and that these difficulties were all exacerbated following the introduction of the plaintiffs into their lives.
143. It is not necessary for me to find a particular number of days or dates upon which the plaintiffs visited the defendants during the period August 1998 – April 1999. I am more than satisfied on the evidence and hold that over that period the plaintiffs intervened in the lives of this young couple in a manner which was totally inappropriate for persons who had in mind purchasing the defendants property. I do not accept that these interventions were, as suggested by the plaintiffs, altruistic. They were, in my view, entirely designed to mould the defendants to the plaintiffs intention which was to secure the defendants property at Ballybeg on the best possible terms. In reaching this view, I am paying particular regard to the actions of the first named defendant in advising and recommending that Sean O’Mahony consult a psychiatrist, in arranging a particular psychiatrist whom he should consult with, and in suggesting questions for Mrs. O’Mahony to discuss with Dr. Kinsch. I accept in full Mrs. O’Mahony’s account of Mr. Ó Siodhachain behaviour during the period August 1998 – April, 1999. I further hold that Mr. Ó Siodhachain encouraged Mrs. O’Mahony to take steps and adopt life style behaviour with the object and intent of driving a wedge between herself and her husband. I do not say that the involvement of the plaintiffs was such as to amount to “brain washing” of the defendants or either of them, but, during the period August 1998 – April 1999, the plaintiffs infiltrated the lives of the defendants to such a degree, and from such a position of comparative strength, as to further imbalance an inequality of negotiating position between the parties which was present from the outset. In particular, I accept the defendants evidence that when they sought to have professional guidance in relation to the purchase of the Sundays Well property, that they were put off this idea by the plaintiffs. I further find and hold that at no stage up to and including the date of execution of the first document did the defendants have the benefit of independent legal advice. I further hold that on the evidence they were encouraged not to seek such advice and that the first named defendant made the representations described by the defendants as to the “facilitatory” nature of the first document and that he told them it was not worth the paper it was written on. At the time therefore of the execution of the document in April 1999, I hold and find that there was a relationship of confidence and trust reposed by the defendants in the plaintiffs, although I will also deal with the issue of actual undue influence in this case in due course.
144. I will now turn to the issues.
145. I accept Mr. Cross’ submissions in relation to the document executed in April 1999. It is quite clear that what this document envisaged was an exchange of properties by means of sale within a specified period. I am satisfied the reference to a “lease” in the document was not designed to create a lease as such but was intended rather to provide some sort of legal basis for occupation of the respective properties between the date of the document and the closing date on the 8th December 1999. It cannot in my view be regarded as a lease, because it fails to specify any rent. Further, I do not accept that this document was varied in any specific way by any agreement in November 1999 when the defendants withdrew from the Sunday’s Well purchase. I find it inconceivable, having regard to the meticulous way in which Mrs. Herron fastens upon and records such matters, that such an agreement, if made, would not be reflected in the second or third contracts, or in some other documentation or correspondence between solicitors. While Mrs. O’Mahony in cross examination may have said that she believed an offer of £6,000 was at some point made in respect of rent, Sean O’Mahony stated that the £6,000 in question was an adjustment to the purchase price to reflect the increase in value of Ballybeg between the date of the original document in April 1999 and October 2000. I prefer Sean O’Mahony’s evidence on this point, supported as it is by the singular absence of any other written record of some such supposed variation of the April 1999 document.
146. In my view the arrangements between the parties fell through completely as of December 1999, following which the plaintiffs were allowed to remain on as permissive occupants of the property against a background where both sides hoped the plaintiffs would produce the purchase moneys to complete the acquisition of the farm at Ballybeg.
147. I also accept that where contradictions appear in the document of April 1999, they must be construed against the plaintiffs who prepared them. The plaintiffs in evidence themselves accepted that the document should not be construed as conferring a rent free facility to the plaintiffs to live on the defendants farm for 15 years. In just the same way as the description of a tenancy arrangement as a licence cannot convert a lease into a licence, the converse seems to me to be equally true, namely, that the description under the name of a ‘lease’ of a licence or caretakers agreement cannot operate to convert a permissive occupant into a tenant where all the usual characteristics of a leasing agreement are absent. In the instant case, there is no mention in the April 1999 document of even a single covenant, such as would characterise a lease. (Gatien Motor Co -v- Continental Oil Co. [1979] IR 406).
148. Nor do I accept Mrs. Herron’s submissions that any deficiencies in legal form can be compensated under the equitable doctrine of part performance. The evidence overwhelmingly establishes that at no time were the plaintiffs ever in a position to complete the purchase of the Ballybeg property, nor did they either pay rent or any portion of the purchase moneys. As the evidence shows, a number of judgments have been obtained against Mrs. Herron during the period up to November 1999 which, because they were unsatisfied, led to judgments being registered against her property in Sunday’s Well. She had in addition by mid 2000, borrowed £35,000 from Geraldine O’Mahony, a liability she acknowledged herself in evidence. This inability to at any stage complete the transaction does, in my view, effectively put paid to any suggestion that the doctrine of part performance can be relied upon in any way in this case. Nor in my view do the plaintiffs come to court with clean hands as my findings make clear.
149. The rule in Walsh -v- Lonsdale seems to me to have no application on the facts as found by me in the instant case. This doctrine was developed to provide for the enforcement of an informal lease for valuable consideration by applying the maxim “equity regards as done what ought to be done”, whereby the parties would be treated in equity as being in the same position from the beginning as if a proper formal lease had been executed. This situation usually arose where there was no adequate note or memorandum in writing of an agreement, but where there were sufficient acts of part performance to take the case out of the Statute of Frauds. However, it almost goes without saying, that the parties must have intended to create a lease, which I have found was not the fact or intention. Even if I am mistaken in this respect, the doctrine is in any event dependent upon the availability of the remedy of specific performance in the particular case, which is a matter within the discretion of the court. If the remedy is not available on the facts of the particular case, the doctrine cannot apply. I have already set out the reasons which coercively persuade the court that it should not exercise its equitable jurisdiction in favour of the plaintiffs in this particular case.
150. I propose to deal with the issue of undue influence, lest it be held elsewhere that the document executed in April 1999 has the effect contended for by the plaintiffs.
151. In my view there was actual undue influence in this case. As already mentioned, the court regards it as totally inappropriate for an intending purchaser to have interfered and intervened to such a degree, as occurred in this case, in the lives of the parties from whom it was intended to purchase a farm and property. I am satisfied from the evidence that Mr. Ó Siodhachain did endeavour to drive a wedge between husband and wife, so as to make Mr. O’Mahony more malleable in the terms he would seek for the sale of the family farm. I am satisfied he completely won over Geraldine O’Mahony, who seems to have followed his every advice and suggestion, to the extent of following practical philosophy courses in Killarney and collaborating with Mr. Ó Siodhachain in formulating questions to put to Dr. Kinsch about her husband’s behaviour on the occasion when Dr. Kinsch was due to visit the family farm. It is important to note that the making of the agreement in April 1999 was preceded by a letter from Mr. Ó Siodhachain to the O’Mahonys threatening to make them responsible, not only for rents incurred by the plaintiffs if they could not immediately move into Ballybeg, but holding them responsible also for any other loss of income which Mr. Ó Siodhachain might suffer as a result. These threats must be seen in context. By this time, the plaintiffs had insinuated themselves into the lives of the defendants over a period of months and I am satisfied were regular visitors to the defendants home at Gneegevuilla. I also accept the description in evidence given by both O’Mahonys as to how the plaintiffs won them over and, in certain respects, instilled a fear into them as regards the possible consequences of non co-operation with the plaintiffs. The letter written on the 10th of April can only, in my view, be seen as the severest form of pressure on the defendants to co-operate with the wishes of the plaintiffs or face those consequences.
152. I am also satisfied from the evidence that on the night of the all night discussion, the plaintiffs arrived in a brisk and business-like manner, quite determined to conclude matters. There is no dispute or argument about the fact that the parties sat up all night until 6 am before agreement was reached. It is hard to imagine a less satisfactory manner of negotiating to conclusion an important event in the lives of the O’Mahonys than this. The plaintiffs were obviously aware that the defendants did not have the benefit of legal advice in relation to the matters under discussion on the night in question. I do not accept the evidence of the plaintiffs that they recommended to the defendants that they seek and obtain such advice. Instead I prefer the evidence of the defendants that they were advised not to seek legal advice, and that they were content to go along with this based on representations made by Mr. Ó Siodhachain that the document “was not worth the paper it was written on”.
153. I think it more probable that in relation to the date of signing by the parties, that the evidence given by the plaintiffs may be more accurate. In other words, I accept that the document had to have been typed up following the all night meeting, that it had to be re-presented to the defendants when that had occurred. However, it seems to me to make absolutely no difference to the issue I have to determine, given the absence of independent legal advice prior to the execution of the agreement.
154. I am also satisfied that this agreement was an extremely improvident one from the point of view of the defendants, as subsequent events have all too clearly demonstrated. To the extent that the lease may be considered valid, thereby creating a rent free 15 year occupation of the defendants farm by the plaintiffs, it is difficult to imagine more a catastrophic outcome from the defendants point of view. The distress of the defendants, which was all too apparent during the hearing before me, can only have been compounded as increasing financial pressures came on them from banks and other lending institutions while the plaintiffs continued to fob them off with promises of completing the purchase which never materialised. It follows from the findings I have made, that I do not need to consider the alternative basis upon which the court may intervene, namely, that of presumed undue influence. It equally follows that if I am mistaken in my assessment of the witnesses and their evidence on the issue of actual undue influence, it is still open to me to hold, and I do so hold, that the onus of disproving presumed undue influence in the context of a relationship of trust, which I find to have existed, has not been discharged in this case by the plaintiffs.
155. It was urged upon the court to treat the delay in moving to set aside the April 1999 document as an approbation of the arrangements put in place in consequence. However, I am quite satisfied that the defendants continued under the influence of the plaintiffs throughout 1999/2000, a situation which was compounded by the severe financial pressure which came to bear on them from October 2000 onwards. Even on the plaintiffs own evidence, the defendants were at that stage desperate for money. Nonetheless, they did not, and I so find, disclose to their own solicitor the existence of the April 1999 document until all hope was gone following the passing of the final closing date in the third contract on the 15th day of March 2001. This non-disclosure in my view was a direct result of the influence exerted on the defendants by the plaintiffs.
156. I turn then to the issue in relation to the third contract, i.e. the contract prepared in October, 2000.
157. In this regard, I accept fully the evidence of Mr. Terence Casey to the effect that this document was never signed by either of the defendants, or by him on their behalf. I also accept his evidence that this document was never used by way of collateral or security for any lending institution, and in particular, was not used for the purpose of raising finance from Anglo Irish Bank. I accept his evidence that this document never left his office and I accept fully the reasons offered by him as to why that was so. I also accept fully his evidence that he first became aware of the April 1999 document some time in March, 2001, when he called his clients into the office to discuss the situation arising when the third contract was returned with a deposit of only £100. Again, on this point as to when Mr. Casey first learned of the existence of this document, the defendants themselves gave conflicting evidence, Mrs. O’Mahony agreeing with Mr. Casey, but Mr. O’Mahony stating, mistakenly in my view, that he believed this document had been mentioned to Mr. Casey some time in November/ December, 1999. I am satisfied that any error on this point by Mr. O’Mahony arose from the lengthy period which he spent in the witness box and the manifest distress under which he laboured while giving evidence.
158. Accordingly, I hold against the plaintiffs on this issue also.
159. This brings me finally to the defendants claim for possession.
160. When this matter was first aired before me in October 2001, I acceded to Mrs. Herron’s request to injunct and halt the District Court ejectment proceedings on very specific conditions. Those conditions included requirements that pleadings be exchanged within specified time limits and that discovery equally take place between specified time limits, all with a view to having the case moved forward to a list to fix dates in early 2002. I expressly stated at the time that I was doing so as an exercise in case management and with a view to having all issues determined in a full plenary hearing. Such a hearing has now taken place before this court, extending over a period of 5 days, some 3 days longer than the parties indicated to the court at the outset of the hearing.
161. In view of my finding that the plaintiffs occupied the defendants farm at Ballybeg as permissive occupants only, that entitlement to remain in occupation terminated following the demand made for possession by the Notice to Quit. While Mrs. Herron makes the point that the Notice to Quit refers to a tenancy from week to week, Mr. Casey explained in evidence that this was inserted merely because he saw it as the most appropriate way to deal with a permissive occupancy. While a very short period only was provided to the plaintiffs to vacate the property, the fact remains that they have not done so and continue to occupy and reside in the property, paying no rent, from May 1999 up to and including the present.
162. In my view, the demand made was adequate to terminate the permissive occupancy and I accordingly declare that the defendants are entitled to an order for possession of their lands at Ballybeg.
163. While the court heard evidence that a sum of £35,000 remains due and owing by Mrs. Herron to Mrs. O’Mahony, it was accepted by Mr. Cross that this sum, although undoubtedly due, forms no part of the defendants claim in the present proceedings and I am accordingly making no order in relation to that liability.
Joseph Kramer v. David Arnold
[S.C. No. 356 of 1996]
Supreme Court 24th April 1997
[1997] 3 IR 44
O’Flaherty J.
14th April 1997
I agree with the judgment about to be delivered by Keane J.
Keane J.
The plaintiff is a hairdresser. He owns two hairdressing salons, in Wicklow Street, Dublin, and at 2 Stillorgan Road, County Dublin.
On the 28th April, 1988, the plaintiff took a 35 year lease of the ground floor of the Stillorgan Road property from a company called Monastra Developments Limited. On the 7th February, 1991, that company agreed to convey the property to the defendant who is a property developer. In July, 1991, the plaintiff purchased a lease for 450 years of the ground floor of the property for a sum of £175,000, the necessary finance being advanced to him by A.I.B. Finance Limited through their senior development manager, Ms. Ann Harper (hereafter “Ms. Harper”). The plaintiff wanted to acquire the rest of the property as well, but the defendant was not willing to sell at that time. However, on the 27th July, 1991, two days before he acquired the 450 year lease, the defendant gave the plaintiff an option to purchase the fee simple title to the entire premises. It is that agreement which has given rise to the present dispute.
On the 15th March, 1994, the plaintiff gave notice to the defendant that he was exercising the option. No issue arises as to the validity of thatnotice. Since, however, the parties could not agree on a price, it was determined, in accordance with the terms of the agreement, by an independent surveyor agreed on by the parties, Mr. Peter Shannon (hereafter”Mr. Shannon”). The valuer acting for the plaintiff, Mr. John Costello (hereafter “Mr. Costello”) received written notification from Mr. Shannon on the 31st March, 1995, that he had determined the price at £92,000. Under the terms of the option agreement, a deposit of 10 per cent i.e.£9,200 was, as a result, payable by the plaintiff. On the 12th April, 1995, the defendant’s solicitors sent a letter by hand to the plaintiff’s solicitors purporting to terminate the option agreement on the ground that the deposit had not been paid. On the same day, the plaintiff’s solicitor delivered by hand to the defendant’s solicitors a letter containing a cheque for the amount of the deposit. The cheque was immediately returned by the defendant’s solicitors and these proceedings were then instituted on the plaintiff’s behalf claiming, inter alia, specific performance of the option agreement. They were heard by McGuinness J. who, in a reserved judgment, found in favour of the plaintiff and granted him a decree of specific performance. From that judgment and order, the defendant now appeals to this Court.
Before dealing with the facts in more detail, I should refer to the relevant clauses of the option agreement. Clause 2 (i) provides that:”
“The option shall be exercisable by [the plaintiff] at any time during the option period serving on [the defendant] a notice (hereinafter called the option notice) so as to reach [the defendant] at the address set out herein before midday on the 19th July, 1995. Upon service of the option notice, [the defendant] shall be deemed to have contracted to sell and [the plaintiff] to purchase the property upon the terms and subject to the conditions hereinafter contained.”Clause 2 (ii) provides that:”
“[The defendant] shall be deemed to have contracted to sell and [the plaintiff] to purchase the property for such sum as shall be agreed between [the defendant] and [the plaintiff] or in default of agreement as shall be determined by an independent valuer in accordance with the provisions hereinafter contained.”
Clause 2 (iv) provides that:”
“The valuer to be appointed as aforesaid shall be such person or firm as [the defendant] and [the plaintiff] shall jointly appoint in that behalf provided that in default of agreement between [the defendant] and [the plaintiff] in regard to the person or firm to be appointed (being a person or firm willing to act) they shall request the chairman
for the time being (or other officer endowed with the functions of such chairman) of the Republic of Ireland Branch of the Royal Institution of Chartered Surveyors to nominate a person or firm for this purpose and the person or firm so nominated shall be deemed to have been appointed as such valuer hereunder.”
Clause 2 (v) provided that:”
“Such valuer shall act as an arbitrator and the valuation made by such valuer on the basis aforesaid shall be the purchase price for the purposes hereof.”
Clause 2 (vi) provided that:”
“Immediately the purchase price shall have either been agreed between [the defendant] and [the plaintiff] or shall have been determined by such valuer in accordance with the provisions hereinbefore contained [the plaintiff] shall pay to [the defendant’s solicitors] as stakeholder by way of deposit a sum equal to 10% of such purchase price.”
Clause 7 provides that:”
“The Incorporated Law Society of Ireland General Conditions of Sale (1988 edition) shall apply to the said sale insofar as the same have not been altered or varied by the conditions hereinbefore set out and the conditions hereinbefore set out shall prevail in the case of any conflict between them and the said general conditions.”
Condition 31 of the General Conditions provides that:”
“The failure by [the plaintiff] to pay in full the deposit hereinbefore specified as payable by him shall constitute a breach of conditions entitling [the defendant] to terminate the sale or to sue the purchaser for damages or both but such entitlement shall be without prejudice to any rights otherwise available to [the defendant].”
The principal dispute between the parties is as to whether the deposit was paid “immediately” within the meaning of clause 2 (vi).
Mr. Shannon had accepted his appointment as the arbitrator on the 6th September, 1994. The actual hearing took place on the 13th March, 1995 and, on the 29th March, 1995, Mr. Shannon wrote as follows to Mr. Costello and Mr. Morley, the defendant’s valuer.
“I have now made my arbitration award concerning (premises at 2 Stillorgan Road, Dublin).
Copies of my award will be furnished to both valuers on payment of my costs in full by either or both parties. My costs inclusive of outlay and V.A.T. amount to £1,210 and this amount is payable by the
parties in equal shares. Receipts will be issued with copies of my award.”
Mr. Costello received this letter on the 30th March, 1995, and got in touch immediately with the plaintiff who sent him his share of Mr. Shannon’s fees. These were paid by the plaintiff, at the latest, on the morning of the 31st March, 1995, which was a Friday, and that afternoon Mr. Costello received a copy of Mr. Shannon’s award.
The award was in a standard form, was dated the 28th March, 1995, and was signed by Mr. Shannon. As I have already noted, he determined that the value of the property was £92,000. Mr. Costello telephoned his client the plaintiff at approximately 5.30 or 6 o’clock that afternoon and advised him of the value as determined by Mr. Shannon.
The following Monday (the 3rd April, 1995) the defendant’s solicitors sent this message by fax to the plaintiff’s solicitor:”
“We refer to your letter of the 15th March, 1994, addressed to our client, [the defendant], enclosing option notice in accordance with the terms of the option agreement dated the 29th July, 1991. We have now been instructed by our client that the premises was valued on the 28th March, 1995, at £92,000 by the valuer appointed in accordance with the terms of the option agreement. A deposit of £9,200 is now due in accordance with the provisions of clause 2 (vi) of the option agreement and we would be glad if you would arrange to let us have a cheque for this amount immediately.
Clause 3 of the option agreement provided that the closing date would be six months after the service of the option notice and clause 7 provided that the Law Society General Conditions would apply insofar as they had not been altered or varied by the option. As the closing date provided for in the option arrived before the purchase price had been determined, in our opinion the only reasonable interpretation is that the position is now the same as if no date had been specified in the option agreement and that accordingly the closing date would be five weeks from the 28th March, 1995, i.e. the 22nd May, 1995.
You might please note that no deed of conveyance from Monastra Developments Limited has been taken by [the defendant]. Accordingly the sale will be completed by way of sub-sale deed from Monastra Developments Limited and [the defendant].
You would have received copies of the documents referred to in the third schedule of the option at the time of the earlier sale. Please let us know whether or not you wish us to furnish further copies of these for the purpose of requisitions.”
The plaintiff’s solicitor said that, although this fax was dated the 3rd April, 1995, he did not receive it until the following day. On the 5th April, 1995, (the Wednesday), Mr. Costello wrote to both the plaintiff and his solicitor enclosing a copy of the award.
On the Wednesday of the following week, the 12th April, 1995, the defendant’s solicitors wrote as follows to the plaintiff’s solicitor:”
“Further to our letter of the 3rd inst. in relation to this matter.
Under the terms of the agreement between our respective clients dated the 29th July, 1991, (hereinafter called the agreement) a deposit was payable immediately the purchase price was ascertained in accordance with the provisions of paragraph 2(vi) of the agreement which means that it should have been paid within a day of the purchaser or his solicitor or other agent becoming aware of the purchase price fixed.
We wrote to you on the 3rd April, 1995, requesting immediate payment of the deposit but heard nothing from you since.
The agreement adopts the Incorporated Law Society of Ireland General Conditions of Sale (1988 edition). Condition 31 of these general conditions provides that the failure by a purchaser to pay in full the deposit as payable by him shall constitute a breach of condition entitling the vendor to terminate the sale or to sue the purchaser etc.
As your client has committed a material breach of the contract that was deemed to come into existence on foot of the agreement we hereby give you notice on behalf of the vendor that he hereby terminates the sale pursuant to such deemed contract.”
On the same day (12th April) the plaintiff’s solicitor sent the following message by fax to the defendant’s solicitor:”
“We refer to previous correspondence in this case. At this stage you will have received our letter dated the 12th April, which was dictated yesterday the 11th April. We in turn have received your letter dated 12th April, purporting to terminate the sale of the above property, and upon receipt of this letter at approximately 12.30 p.m. the writer telephoned your office and queried whether your client was actually serious in attempting to terminate the agreement. We have requested that you obtain your client’s instructions on this matter as we completely disagree with your interpretation of the option agreement, and in particular but without prejudice to the generality of the foregoing statement, your interpretation of the time scale within which the deposit must be paid and your interpretation of the closing date, and on your client’s purported right to terminate the agreement.
We enclose herewith the deposit in the sum of £9,200 and would be obliged if you would acknowledge receipt of this.
We are instructed to inform you that unless we receive in writing by 5.00 p.m. today a withdrawal of your letter dated the 12th April, 1995, alleging termination of the sale between our respective clients, our client will immediately issue proceedings seeking specific performance of the contract between our respective clients and this letter will be used for the purpose of fixing your client with the costs of such proceedings.
We trust that this will not be necessary and we await hearing from you.”
The letter from the plaintiff’s solicitor referred to in that letter was as follows:”
“We acknowledge receipt of your letter of the 3rd inst. We have asked our client to furnish a deposit immediately and we will forward same to you as soon as we receive it. We are taking our client’s instructions in relation to the closing date and it may well be that our client would require an extra two weeks. We assume that this will not pose a problem and we will confirm the matter to you as soon as possible.
If your client has not executed any documents with respect to the property since the date of the last lease to our client then there is no need to furnish copies of documents which we already hold. However, as we have no details of the purchase by your client of the freehold interest from Monastra Developments we suggest that a draft deed of conveyance be furnished by your office. In the meantime we are drafting requisitions and will furnish these to you shortly.”
the defendant’s solicitors maintained their attitude and returned the deposit the same day.
At the hearing in the High Court, evidence was given by the plaintiff, Mr. Costello, Ms. Harper and the plaintiff’s solicitor, Mr. Noel Sheridan.
The plaintiff said that he did not think that he would have any problem with his bank in securing the necessary finance once the award was made. He said that, in the course of the week beginning Monday, the 3rd April, 1995, he had discussions with his solicitor and on the following Friday, the 7th April, got in touch with the bank. He said that he spoke to his solicitor again on the following Tuesday, the 11th April and was told by him that he should “get the deposit organised straight away and pay it over”. He said that the following morning, i.e. on Wednesday, the 12th April, 1995, he received a telephone call from his solicitor informing him that “the deal was off because the deposit had not been paid”. He said:”
“At that stage I rang the bank and I said I needed to pay this deposit straight away, will you send me something in writing that I have the loan, or what is the situation, and the bank said it is o.k. draw down on my own account and send off the deposit and the confirmation in writing would come and I did so immediately and I sent off the cheque.”
[Transcript, Q136]
The plaintiff and Ms. Harper both gave evidence that, under the bank’s lending procedures, the plaintiff’s application for finance would be placed before a credit committee which would issue the formal sanction for the loan. Ms. Harper, in the course of her evidence, said that on Friday, the 7th April, she had a telephone conversation with the plaintiff, during the course of which she assured him that there would not be any difficulty in financing the acquisition of the property for £98,000. However, on the following Wednesday, the 12th April, she had a further conversation of which she gave the following account:”
“[The plaintiff] ‘phoned me to say that he needed – that he would like to see the letter of offer and I said: ‘You sound anxious, is there a problem’ and he said that the deposit had to be paid so I said: ‘Joseph, do not delay, if you want to write a cheque for the deposit, if you need to be put in funds, you know, call up later but send on the cheque, do not hold back on my account,’ if you like, the loan approval was granted and Joseph I think, was probably cautious so I had to say, to confirm to him that it was in order for him. I do not think it was the deposit he was concerned about at the time, he just wanted to make sure everything was O.K. so I told him it was all right, the loan was approved and I think he wrote the deposit cheque.”
[Transcript, Q.209]
Mr. Sheridan said in evidence that, although he had received the fax dated the 3rd April, from the defendant’s solicitor on the morning of the 4th April, (the Tuesday), he did not take any steps to get in touch with his client, as he was waiting to receive a copy of Mr. Shannon’s award. He said that, having received the award on the 6th April, (the Thursday) he endeavoured to get in touch with his client but did not actually speak to him until the following Tuesday (the 11th April). He then dictated the second of the two letters dated the 12th April, already referred to which was delivered the following day to the defendant’s solicitors.
In her judgment, the learned trial judge, having carefully and comprehensively summarised the evidence and the principles of law which appeared to her to be applicable, summarised her conclusions as follows:”
“In clause 2 (vi) of the agreement although the word ‘immediately’ is used no exact measure of time is given, and I feel that the payment of the deposit by the 12th April, was within a reasonable time, particularly within the context of a transaction that had already continued for over a year.
I would also follow [the English decision in Millichamp v. Jones [1982] 1 W.L.R. 1422] in holding that, in view of the lack of an exact measure of time in clause 2 (vi), it was incumbent upon [the defendant] to notify [the plaintiff] of his intention to rescind if the deposit was not paid by a particular date. Then, indeed, time would have been of the essence.
Bearing in mind also that there was an area of uncertainty, however slight, over the defendant’s title to the Stillorgan property which had never been reconveyed to him by Monastra Properties, I feel that it would not be equitable to allow him, in circumstances where he can have been in no real doubt as to the willingness and the ability of the purchaser to complete the transaction, to rescind the contract in the manner in which he purported to do.”
On behalf of the defendant, counsel submitted that the trial judge was in error in treating the option agreement as containing, by implication, a term which was not to be found in the agreement itself. He said that she had, in effect, treated the word “immediately” as meaning “as soon as was reasonably possible in the circumstances”. He further submitted the trial judge was also in error in holding that there was an obligation on the defendant to notify the plaintiff in advance of his intention to treat the contract as terminated by reason of the latter’s failure to pay the deposit.
Counsel for the defendant submitted that the word “immediately” in its ordinary and natural meaning was equivalent to “forthwith” or”instantly”, citing in support Morrow v. Carty [1957] N.I. 147. He said that to interpret it as meaning “as soon as was reasonably possible in the circumstances” would be to introduce an unacceptable degree of uncertainty into the agreement.
Counsel for the defendant further submitted that the trial judge was wrong in law in holding that it was incumbent on the defendant, before he could treat the failure to pay the deposit as a repudiation of the contract, to tell the plaintiff that he intended doing so and to give him the opportunity of complying with his obligation. He said that the decision in Millichamp v. Jones [1982] 1 W.L.R. 1422, was distinguishable on the ground that, in that case, the failure to pay the deposit was merely an oversight. He said that the uncontradicted evidence in the present case was that the plaintiff had taken a calculated decision not to pay the deposit until such time as he was assured that the bank would provide the finance for the purchase. It was only when he was told that the defendant was treating the agreement as terminated that, counsel said, he was “galvanised into activity” and paid the deposit.
Finally, counsel for the defendant submitted that it was settled law that the payment of a deposit on a contract for the sale of land was an essential part of the transaction, citing in support Morrow v. Carty [1957] N.I. 147 and Wylie, Irish Conveyancing Law (2nd ed.) at paras. 10.07 and 10.08. In the result, he said, the defendant was fully entitled to treat the contract as terminated, the plaintiff having been in breach of a fundamental term of the option agreement.
On behalf of the plaintiff, counsel submitted that stipulations as to the time within which a party was to perform a promise (including the payment of the deposit in the present case) were not regarded as conditions precedent, if the failure by the party concerned to perform the promise punctually did not deprive the other party of substantially the whole benefit which it was intended that he should obtain from the contract. In this respect, the courts of common law had adopted the same rule as those of the courts of equity. He cited in support United Scientific v. Burnley Council [1978] A.C. 904. He submitted that, accordingly, that in the absence of any contra indications in the express language of the contract or in the surrounding circumstances, the time stipulated for payment of the deposit was not of the essence. The agreement, moreover, should be construed contra proferentem, which in this case meant construing it against the defendant.
Counsel for the plaintiff further submitted that no term was implied into a contract for the sale of lands that the purchaser should pay a deposit, citing Emmet on Title, (19th ed.) para. 2079. In the light of clause 2 (ii) of the option agreement, it was clear that the contract was in existence for a long time before the obligation to pay a deposit arose. Hence, the payment of the deposit could not be regarded as a condition precedent: it was a condition of the contract, but one in respect of which time was not of the essence.
Counsel for the plaintiff further submitted that the requirement to pay the deposit “immediately the purchase price . . . shall have been determined by such valuer . . .” could not be literally construed. Since the award, although dated the 28th March, did not come into the hands of Mr. Costello until the 31st March, it was obvious that literal compliance with the agreement was simply not possible.
Counsel for the plaintiff submitted that, in the light of these considerations,”immediately” should be construed as meaning “with all reasonable speed considering the circumstances of the case”. He cited in support The State (Multiprint Label Systems Ltd.) v. Neylon , [1984] I.L.R.M. 545, in which the court approved of R v. Inspector of Taxes ex p. Clarke [1974] Q.B. 220 and Re Coleman’s Depositories Limited and Life and Health Assurance Association [1907] 2 K.B. 798.
Counsel for the plaintiff referred to the Incorporated Law Society Conditions of Sale (1988 ed.) which were incorporated in the option agreement and to which, he said, regard must be had in determining whether the plaintiff was in breach of the agreement. He cited, in particular, condition 49 which permitted notices to be sent by prepaid post, in which case the notice was to be deemed to have been given at the expiration of three working days after it was put in the post.
Counsel for the plaintiff submitted that it was reasonable for the plaintiff to obtain advice from his solicitor that it was in order for him to pay the deposit. The earliest date on which Mr. Sheridan could have so advised him was when he received a copy of the arbitrator’s award from Mr. Costello on Thursday, the 7th April. Had the plaintiff availed of the postal method of sending the deposit on that date, it would be deemed to have arrived in the defendant’s solicitors’ office three working days later,i.e. on Wednesday, the 12th April, omitting the intervening Saturday and Sunday.
Counsel for the plaintiff finally submitted that Millichamp v. Jones [1982] 1 W.L.R. 1422 was clearly authority for the proposition that where, as here, a vendor wished to rely on the failure of the purchaser to pay the deposit within the stipulated time, it was incumbent on him to give the purchaser an opportunity of complying with his obligations before treating the contract as at an end.
In this case, as in any case where the parties are in disagreement as to what a particular provision of a contract means, the task of the court is to decide what the intention of the parties was, having regard to the language used in the contract itself and the surrounding circumstances.
It cannot have been the intention of the parties that the plaintiff’s obligation to pay the deposit arose as soon as Mr. Shannon made his award on the 28th March, 1995. Until the plaintiff was aware of the amount of the purchase price, it was not possible for him to forward a cheque for the required amount. Hence, as was conceded on behalf of the defendant, the earliest time at which the parties could have envisaged the plaintiff as being under an obligation to pay the deposit was the date on which he or his agent, Mr. Costello, received a copy of Mr. Shannon’s award, i.e. the 31st March.
Again, it cannot have been the intention of the parties that the plaintiff should have been obliged to pay the deposit immediately upon receipt of the award by him or his agent, using the word “immediately” in its literal sense, i.e. without any interval of time, however minimal, elapsing. Even if the plaintiff, upon learning of the award, had delivered the cheque by hand to the offices of the defendant’s solicitors, some interval of time must necessarily have elapsed.
In the event, as we have seen, Mr. Costello received the award between 5.30 and 6 o’clock on a Friday evening, at which stage the office of the defendant’s solicitors would, in the normal way, be closed. It would, no doubt, have been possible for the plaintiff to ascertain the home address of the solicitor and deliver the cheque personally to him that evening: possible, but, as a matter of common sense, hardly practicable. Again, so much was conceded on behalf of the defendant.
At the same time, since the parties chose to use the word”immediately”, it must be given some significance. It would have been open to them to provide that the deposit was to be paid within a stipulated time or to have made no reference at all to the time at which it was to be paid. Whether or not the payment of the deposit is properly regarded in law as a condition precedent, a fundamental term of the contract or simply one of the terms of the contract, it was, to put it at its lowest, a stipulation of at least some importance.
These considerations would suggest that, while the parties in using the word “immediately” were not imposing on the intending purchaser, the plaintiff, an obligation to pay the deposit within a time limit compliance with which was impossible or even impracticable, they did envisage that the deposit would be paid by him as soon as was practicable after he, or his agent, had received a copy of the award.
The earliest authority to which we were referred as to the meaning of”immediate” and cognate expressions was Re Coleman’s Depositories Limited and Life and Health Assurance Association [1907] 2 K.B. 798. That was a decision of the English Court of Appeal arising out of the repudiation by an assurance company of their liability under a policy. The policy required that the company be given “immediate notice” of any accident causing injury to a workman in respect of which the company would be liable to indemnify the insured. The policy also provided that:”
“The observance and performance of the times and terms before set out are of the essence of the contract.”
The accident happened on the 2nd January, but the insured did not give notice until the 14th March. The majority held that there was no evidence that the insured knew, or had the opportunity of knowing, the conditions of the policy, since it was not delivered to him until after the accident and that accordingly the conditions were not applicable to the particular risk so as to relieve the insurers from liability. Fletcher Moulton L.J., in the course of a dissenting judgment, said at p. 807:”
“The Courts have not always considered that they are bound to interpret provisions of this kind with unreasonable strictness, and although the word ‘immediate’ is no doubt a strong epithet, I think that it might be fairly construed as meaning with all reasonable speed considering the circumstances of the case.”
That dictum was applied by the Court of Appeal in a tax case, R. v. Inspector of Taxes, ex p. Clarke [1974] Q.B. 220, where the question was as to whether an inspector of taxes had declared his dissatisfaction with the decision of the Special Commissioners “immediately after the determination of an appeal”. The inspector did not in fact express his dissatisfaction until thirteen days after the giving of the decision. The Court of Appeal, while satisfied that the approach of Fletcher Moulton L.J. was also appropriate to the statutory provision under consideration, were unanimously of the view that the lapse of thirteen days was too long to justify the inspector’s contention that his dissatisfaction had been declared “immediately”. It was also held, however, that the failure to comply with the requirement was not of such material importance as to nullify the subsequent proceedings.
The same view was taken, by Finlay P., as he then was, in The State (Multiprint Label Systems Ltd.) v. Neylon [1984] I.L.R.M. 545. While the learned President also approved of the dictum of Fletcher Moulton L.J. and its application to the corresponding English provision in R. v. Inspector of Taxes, ex p. Clarke [1974] Q.B. 220, he took the same view as the Court of Appeal in the latter case, i.e. that the failure to comply with the requirement did not nullify the subsequent proceedings.
The meaning of the expression “immediately” was discussed by McVeigh J. in the High Court of Northern Ireland in Morrow v. Carty [1957] N.I. 174. That was a case in which a bungalow was being sold by public auction and it was a condition that the deposit should be paid “immediately after the sale”. It was knocked down to the plaintiff who, after signing the agreement, stated his inability to pay the deposit immediately. He was thereupon given an hour to produce the deposit. After the lapse of an hour, the plaintiff not having returned, the bungalow was resold to another person. The plaintiff returned later in the day and tendered a cheque for the deposit which was refused. The plaintiff’s claim for specific performance was dismissed by McVeigh J. who in the course of his judgment said:”
“There can be little doubt that the payment of a deposit is a most important matter in the sale of land and everybody knows this. As Lord MacNaghten says in Soper v. Arnold [1889] 14 A.C. 429, 435: ‘The deposit serves two purposes – if the purchase is carried out it goes against the purchase money – but its primary purpose is this, it is a guarantee that the purchaser means business; and if there is a case in which a deposit is rightly and properly forfeited it is, I think, when a man enters into a contract to buy real property without taking the trouble to consider whether he can pay for it or not.’
My view is that the words ‘immediately after the sale’ in Condition 4 meant ‘without any delay’: see Shorter Oxford English Dictionary,2nd ed.; and see Stroud’s Judicial Dictionary 3rd ed., Volume 2. I think it means that the purchaser must place himself at the disposal of the vendor or his agent so that it may be ensured that payment of the deposit takes place as soon as it is convenient to bring that about after the sale.”
McVeigh J. also referred to the decision of Kenny J. In re Todd and McFadden’s Contract [1908] 1 I.R. 213 where he held that the same phrase in conditions of sale as to delivery of an abstract of title meant”forthwith” or “instanter”.
While these decisions are undoubtedly of assistance, it is clear that the meaning of the expression “immediately the purchase price shall have been determined” must be ascertained, not only with regard to the actual language used, but also to the surrounding circumstances. Those considerations, as I have already found, would indicate that the parties intended that the deposit should be paid as soon as practicable. While the line of authority beginning with Re Coleman’s Depositories Ltd. and Life and Health Assurance Association [1907] 2 K.B. 798, undoubtedly lends support to the construction urged by counsel for the plaintiff and adopted by the trial judge, I am of the view that Morrow v. Carty [1957] N.I. 174, is more in point. That also was a case concerning the payment of a deposit on an agreement for the sale of land. The fact that it was also a sale by public auction, unlike the present case, is, of course, to be borne in mind, as is the fact that, in the present case, once the notice exercising the option had been served, a binding agreement for the sale of the land at a price to be subsequently determined had come into existence. However, even in a case such as the present – effectively a sale by private treaty where a binding contract already exists – the payment of a deposit, as MacNaghten L.J. pointed out, is “a guarantee that the purchaser means business”.Where the parties stipulate that it is to be paid “immediately”, I am satisfied that the authorities support the contention advanced on behalf of the defendant that it should be paid as soon as practicable.
It would seem to follow that, on one view, the plaintiff was in breach of the agreement in not paying the deposit on Monday, the 3rd April, when he could have arranged for the delivery of a cheque to the defendant’s solicitor’s office. Even assuming, however, that he was entitled to wait until his solicitor had received a copy of the award and advised him as to his obligations – at best, a doubtful proposition – the deposit should have been paid, at the latest on Thursday, the 6th April. The plaintiff, although not as experienced in property transactions as the defendant, agreed that he was aware of the importance of paying a deposit in a transaction of this nature and, as we have seen, was advised by his solicitor on Tuesday, the 11th April, to pay it straight away.
The plaintiff knew that the value placed by the defendant on the property was in the order of £150,000. It followed that, once Mr. Shannon had made his award, he might be required to pay anything up to £15,000 as a deposit. There appears to have been no reason why he could not have obtained sanction from the bank for the drawing of a cheque in that sum as soon as the award was received. He was clearly in good standing with the bank and, when he eventually explained the urgency of paying the deposit to Ms. Harper, she immediately sanctioned the writing of the necessary cheque. He did not take that course, however, until after his solicitor had told him that the defendant had called off the deal. In the light of this uncontradicted evidence, I do not think that it could reasonably be said that the plaintiff paid the deposit as soon as was practicable.
The plaintiff was thus in breach of clause 2 (vi) and the second issue which arises on this appeal is as to whether, in these circumstances, the defendant was entitled to treat the option agreement as repudiated by the plaintiff. That in turn depends on the legal status of a clause of this nature. It had been held in England by Goulding J. in Myton Ltd. v. Schwab-Morris [1974] 1 W.L.R. 331, that a requirement in a contract for the sale of land that a deposit be paid by the purchaser was a conditionm precedent to the contract taking effect. However, in Millichamp v. Jones [1982] 1 W.L.R. 1422, Warner J. took the view that it was not a condition precedent, failure to fulfil which prevents the contract from coming into existence, but was a fundamental term of the contract, the breach of which entitled the vendor to treat the contract as at an end. In Damon SA v. Hapag-Lloyd SA [1985] 1 W.L.R. 435, the Court of Appeal preferred the view of Warner J. on this topic to that of Goulding J. No Irish authority was cited to us which is directly in point, but it is, in any event, unnecessary to resolve the issue in the present proceedings, since whatever be the status of clause 2 (vi), it cannot be regarded as a condition precedent to the coming into effect of the option agreement. The option agreement came into effect as soon as the notice was served by the plaintiff exercising the option.
It is, however, clear that a condition of this nature is, at the least, a fundamental term of the contract. As I have already indicated, it is an earnest of the ability and willingness of the purchaser, in this case, the plaintiff, to complete the contract. Unless it is paid, the vendor, in this case, the defendant, is in the invidious position of having lost his ability to dispose of his own property, since there is a binding contract in relation to it, while at the same time he has not got the security of the payment of the deposit. It follows that, in the circumstances of the present case, the defendant was entitled to treat the contract as discharged because of the failure of the plaintiff to pay the deposit as required by clause 2 (vi).
It is well known that the courts of equity adopted a more liberal attitude to stipulations as to time in contracts than was the case in the common law courts. Thus, in contracts for the sale of land, equity would not treat the contract as voidable by reason only of the failure of either party to complete on the date fixed for completion. In general, time was not of the essence of the contract in respect of completion unless the parties had expressly so stipulated and, following the enactment of the Judicature (Ireland) Act, 1877, the common law courts applied the same rule. It is also clear that the rules under which particular stipulations are not to be of the essence of the contract have no application to cases in which an option is to be exercised within a specified time or indeed to compliance with any condition precedent to a party’s obligations: see United Dominions Trust (Commercial) Ltd. v. Eagle Aircraft Services Ltd. [1968] 1 W.L.R. 74: Crean v. Drinan [1983] I.L.R.M. 82.
We are not here concerned with the exercise of the option itself nor, for the reasons I have given, was the payment of the deposit a condition precedent to the coming into existence of the contract. The parties had, however, stipulated expressly that the deposit was to be paid”immediately” and the condition itself was a fundamental term of the contract. In those circumstances, there is, in my view, no basis for the invocation of the relevant principles as to time not being of the essence of the contract.
It is true that, in Millichamp v. Jones [1982] 1 W.L.R. 1422, Warner J., although satisfied that the requirement to pay the deposit was a fundamental term of the contract, held that in the circumstances of that case it would be inequitable to allow the vendor to treat the contract as repudiated. Since that case was strongly relied on by counsel for the plaintiff, it must be considered in more detail.
That was also a case in which the plaintiff had exercised an option to purchase. Clause 5 of the option agreement provided that at p. 1425:”
“Upon the exercise of the said option the intending purchasers shall pay to the intending vendor’s solicitors as stakeholders by way of deposit £1,457.10s.”
The plaintiffs exercised the option in April, 1980, but did not pay the deposit. It was accepted that this was simply an oversight on the part of the plaintiffs: they were unaware of the fact that the option agreement contained such a provision. It was not until the following September, when new solicitors were acting on behalf of the defendant, that the point was taken for the first time as to the non-payment of the deposit and the defendant claimed that he was entitled to treat the contract as at an end.
Warner J. said, at p. 1431:”
“What happened in 1980 suggests, however, another question, which is: what conduct on the part of the plaintiffs would constitute a breach of that fundamental term? In Dewar v. Mintoft [1912] 2 K.B. 373 there was an actual refusal to pay the deposit, as there was also in Pollway Ltd. v. Abdullah [1974] 1 W.L.R. 493 . . . Precisely what had happened in Lowe v. Hope [1970] Ch. 94 is not clear from the report. Here, there was mere oversight and the question is whether that, by itself, constituted a sufficient breach of the term to entitle the defendant to treat the contract as discharged. I do not think it did. There are no doubt cases of contracts where the mere failure to pay on time a sum due under the contract is sufficient to entitle the party to whom the payment should have been made to treat the contract as repudiated. But I think that it would be unnecessarily harsh to hold that that was so in a case of the present kind. The only authority cited to me suggesting that I should so hold was Hare v. Nicoll [1966] 2 Q.B. 130, but that was a case of an option to buy back shares, not land, under a contract so framed that if payment were not made by the specified date, the option would lapse. That was quite a different situation in my view from the situation in the present case. In my judgment, in the present case, it was incumbent on the defendant, before he could treat the plaintiffs’ failure to pay the deposit as a repudiation of the contract, to tell them that he was minded so to do and to give them an opportunity of complying with their obligation. Only if they then showed in some way that they were unwilling or unable to comply with it would he become entitled to consider their conduct a sufficiently clear breach of the contract to entitle him to treat it as discharged.”
The facts in this case are significantly different. Here, there was no question of any oversight on the plaintiff’s part. It is clear from the evidence that the defendant was not a willing vendor: he had indeed met the plaintiff shortly after the latter became aware on Friday, the 31st March, of the valuer’s determination of the purchase price and sought to persuade him, without success, to abandon the option agreement and come to some new arrangement. Neither the plaintiff nor his solicitors could have been under any illusion as to the importance of complying meticulously with the requirement as to the payment of the deposit when the letter from the defendant’s solicitors was sent on the 3rd April. Although advised by his solicitor on Tuesday, the 11th April, that he should pay the deposit “straight away”, he took no steps to do so until after he had been told on Wednesday, the 12th April, that the defendant had called off the deal. There was no question, as there was in Millichamp v. Jones [1982] 1 W.L.R. 1422, of the vendor having belatedly taken advantage of an oversight on the part of the purchaser and of acquiescence by the vendor over a period of several months in the non-payment of the deposit within the stipulated time.
Counsel for the plaintiff also sought to rely on condition 49 of the General Conditions, which permitted notices to be sent by prepaid post, and, in such cases, deemed the notice to have been given at the expiration of three working days after it was put in the post. That clause, however, has no application in the present case, where the deposit was delivered by hand, not by post, after the contract had purportedly been terminated.
The option agreement emanated from the defendant’s solicitors and would, if appropriate, fall to be construed according to the contra proferentemrule in favour of the plaintiff. That, however, would not justify the court in construing the document in a way which, as I have found, was contrary to the intentions of the parties, i.e. by substituting for the word “immediately” the expression “as soon as is reasonably possible in the circumstances”.
Counsel for the plaintiff properly did not rely on any supposed defect in the title of the defendant to the property. It was, of course, his obligation, once the deposit had been paid within the specified time, to show a good marketable title to the property. If he had failed to do so, that would have entitled the plaintiff, for his part, to repudiate the contract. Even assuming that there was any deficiency as to title – and the fact that it was proposed to complete the sale by way of a subsale deed from Monastra Developments Limited and the defendant would not, of itself, indicate any deficiency in the title – that did not affect the defendant’s right to treat the contract as at an end if the plaintiff failed to pay the deposit within the specified time.
I would allow the appeal and substitute for the order in the High Court an order dismissing the plaintiff’s claim.
Murphy J.
I agree.
Kiely -v- Delaney & Anor
[2008] IEHC 69 Mac Menamin J.
Status of Judgment: Approved
1. By agreement in writing following an action dated 28th May, 2002, made between the plaintiff (‘Ms. Kiely’) as vendor and a Mr. James Gallagher in trust for the defendants (‘the Delaneys’) as purchasers, Ms. Kiely agreed to sell, and the Delaneys agreed to purchase, all that and those lands at Bettydoyle, Ballyboughal, in the County of Dublin, being land comprised from Folio number DN 3399 of the Register of Freeholders. The agreed purchase price of the lands in question was €88,000. It was a term of the agreement that the sale would be completed by 25th June, 2002.
2. The said land was acquired by Ms. Kiely from her predecessor in title Desmond Byrne, now deceased, on the 26th of September, 2000. She had previously rented the land from Desmond Byrne. It was stated in the Folio that the land benefited from an appurtenant right of way leading from a nearby road to the boundary of the lands.
3. Until the Delaney’s solicitors, Messrs McGowans raised requisitions on title regarding this right of way, Ms. Kiely states that she believed that the land comprised in the folio benefited from the right of way. Ms. Kiely says she accessed the land thereby from the time she went into possession of the land as a tenant, and continued to do so up to the date of sale by auction. It appears from correspondence that Ms. Kiely was permitted to tarmacadam or gravel the path along the right of way.
4. The importance of this right of way is shown by the fact that it permitted access to the land in question from a main road. It is clearly of considerable importance as an amenity to the land.
5. It is asserted in affidavit sworn on behalf of the plaintiff that Mr Gallagher, a friend of the Delaneys who acted on their behalf at the auction, was informed by Thomas Potterton, Auctioneer, that the land could be accessed by the right of way. After the auction, Mr Gallagher says he specifically discussed the question of access both with the auctioneer and Mr Laurence Tierney, Ms. Kiely’s solicitor. There is an apparent conflict of evidence as to whether he was shown both the folio and the file plan. This issue is dealt with later in this judgment. On the basis that access was by right of way as described on the folio, Mr Gallagher signed the sale agreement on behalf of the Delaneys.
6. As matters transpired, Ms. Kiely’s predecessor, Desmond Byrne, on 21st May, 1998, had sold a plot of land which was then comprised in the same folio as the subject lands of the sale. Critically, this included a narrow strip of land which intervened between the boundary of the subject lands, and the right of way. While not creating a land lock, it unfortunately affected access. That plot of land now comprises Folio 123918F County Dublin. The registered owners thereof are Sean and Bernadette Boylan who are not parties to these proceedings.
7. In the 1998 sale to the Boylans, Desmond Byrne did not expressly except or reserve a grant of right of way for all purposes over the strip of land in that Instrument of Transfer. The original Folio, DN 3399 was not amended to reflect the transfer. It continued to describe the lands as previously comprised in the Folio, and so described at the auction, as benefiting from the appurtenant right of way.
Chronology
8. While the contract was signed after auction on 28th May, 2002, it was only on 5th July of that year that Mr Tierney, the vendor’s solicitor, wrote enclosing the file plan, which he had “now belatedly received”. This was five weeks after the auction. In the course of that letter, Mr Tierney described the right of way as depicted in yellow. But at that point he did not mention the essential problem. On 8th of July, 2002, Messrs. McGowans, the Delaneys’ solicitor replied, pointing out that the right of way did not extend to the subject lands. On 12th July, McGowans sent a draft declaration as to user of the right of way for completion by Ms. Kiely as vendor. On 15th August, 2002, McGowans wrote to say that the declaration which had by then come to hand referred only to the right of way as far as a gap, that is to say did not go as far as the boundary to the subject lands.
9. On 3rd September, 2002, McGowans wrote saying that the Delaneys would require a right to pass and re-pass over the Boylans’ lands in order to gain access to the lands. Despite the fact that correspondence was initiated in July 2002, it was only on 13th December, 2002, that Ms. Kiely’s solicitor acknowledged the problem which had obviously existed all along in relation to the gap in the right of way. On 20th December, 2002, McGowans wrote requesting that an approach to the Boylans be made. She was met with a request she says was unreasonable to persuade a third party to grant a right of way to the Boylan’s at another unspecified location. There is no evidence on which to make a judgment as to whether Ms. Keily’s position on this particular issue was reasonable or unreasonable.
10. The negotiations with the Boylan’s broke down on 7th March, 2003, Ms. Kiely’s solicitor wrote again. He again acknowledged the absence of the right of way and offered to refund the deposit of €8,500. On 14th April, 2003, the Delaney’s solicitor served a completion notice. On 24th April, 2003, by then some eleven months after the contract, McGowans, relying Condition 33 (b) of the contract (quoted later) said that the purchaser would proceed, but would be claiming €25,000 in compensation. They asked Ms. Kiely’s solicitor to propose three arbitrators if this sum was unacceptable. By letter of 15th May, 2003, Ms. Kiely’s solicitor offered €5,000 compensation and said they would take their client’s instructions in relation to an arbitrator. The financial offer was subsequently rejected. In the light of subsequent events it is most regrettable that matters were not either resolved by sensible negotiation. If this proved impossible, then the arbitration should have proceeded then.
11. Subsequently, the vendor/plaintiff, Ms Kiely, changed her solicitor. From 24th July 2003 onwards, McGowans were in correspondence with Messrs. Kilrane & Company, Ms. Kiely’s present solicitors.
12. At some time during the course of 2003, Judge John Buckley, a former distinguished Judge of the Circuit Court and an acknowledged expert in this aspect of law, was appointed as an arbitrator by the parties. Lengthy but one sided correspondence took place on procedure.
13. On 13th October, 2003, the arbitrator wrote to Kilrane & Company complaining about their delay and the fact that they had not replied to his previous correspondence. He felt constrained to write further reminders on 21st October, 2003 and 6th November, 2003. Ultimately, by letter on 30th January, 2004, the arbitrator fixed the 22nd February as the date of the arbitration. A copy of the letter was furnished by McGowans to Kilrane & Company on the same date. Further correspondence took place between McGowans and the arbitrator on 30th January, 2004, setting in train procedures for the arbitration itself. Even as of 30th January, 2004 the thrust of the correspondence between the arbitrator and Messrs. Kilrane & Company was quite explicit. Ms. Kiely had been dilatory in making arrangements for the arbitration. It was unclear as to whether Ms. Kiely, intended to defend the arbitration at all. This conduct was regrettable. The blame for it can only be laid at Ms. Kiely’s door.
14. It is noteworthy, and unexplained, that between September and November 2003, the arbitrator sent Ms. Kiely’s solicitor no less than seven letters without eliciting even a response. Further correspondence took place into January and February 2004. (The arbitration had been postponed) Only on 26th May, 2004, by now two years after the contract, Messrs. Kilrane & Company furnished the arbitrator with any substantive response, to the effect that they had received instructions from Ms Phelan to defend the arbitration proceedings and to put in a defence.
15. There was yet a further delay in June and July 2004. On 31st July, 2004, the arbitrator sent another letter to Messrs. Kilrane stating that he was surprised to learn (as they had stated in correspondence) that they did not have a copy of the points of claim. The arbitrator furnished a copy of these on 25th August, 2004. Remarkably, on 6th September, 2004, Messrs. Kilrane again contacted the arbitrator with the same request, and in he turn forwarded yet a further copy of the points of claim. On 8th September, 2004, Messrs. Kilrane stated that their barrister was preparing points of defence. These were eventually received at the end of the month of September, 2004.
16. On 26th November, 2004, the arbitrator wrote to Messrs. Kilrane stating that he would be available to conduct a hearing on each Monday or Tuesday during the month of January, 2004. Messrs. McGowans, acting on behalf of the Delaneys, contacted Messrs. Kilrane on 7th January, 2005, suggesting three alternative dates in January or February, 2005. There was no response. Messrs. McGowans sent repeated reminders. On 24th January, 2005, Messrs. McGowans requested the arbitrator to fix a date. Repeated efforts were made to identify and fix a date. Ultimately, it was decided that 22nd February, 2005, would be a convenient date for the hearing. This was apparently postponed yet again, at the request of Messrs. Kilrane until the morning of the 8th March. Then a request was made by Mr Kilrane by a phone call to the arbitrator, requesting that the commencement of the arbitration be put back to the afternoon, apparently because of counsel’s unavailability in the morning. The arbitrator pointed out that the arbitration had been fixed for 8th March instead of 22nd February because of the unavailability of Counsel from the earlier date. Ultimately, the arbitrator indicated that he proposed to proceed with the arbitration hearing at 10.30am on 8th March.
17. Six days before the date of the arbitration hearing, on 2nd March, 2005, Messrs. Kilrane wrote, stating that they wished specifically to put Messrs. McGowans, the Delaneys’ solicitors, on notice that their client would now contend that the lands the subject matter of these proceedings, actually did enjoy the benefit of the right of way via the laneway at the northern boundary of the lands which currently was used to gain access to the lands; that at all material times this was used, and continue to be used, to gain access to the lands. Messrs. Kilranes indicated an intention to call evidence of this at the hearing of the arbitration on the day the plaintiff was said to be ill. The arbitration yet again was postponed. Tentative dates of 12th April or 26th April were suggested. Ultimately, a date of 26th April, 2005 was proposed. On 20th of April, 2005, six days before the next date of the arbitration Messrs. Kilrane sent a lengthy letter to McGowan & Company. They then asserted that, despite the fact that the right of way as marked stopped slightly short of their client’s property, the “reality on the ground” was that the right of way continued on into their client’s property and had been exercised as a right of way and was the only means of access to the property. They contended that no-one had ever raised any objection in relation to this and that this continued to be the situation. They stated that their client was prepared to give a statutory declaration verifying this. Thus, within a period of two months two different positions had been adopted by the vendor as to the gap in the right of way. And the arbitration had been postponed or adjourned twice, by reason of a letter written on a date close to the date fixed.
18. At this point and for the first time, Messrs. Kilrane asserted that General Condition 18 of the Conditions of Sale was applicable.
19. This 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”.
20. Three years after the auction, therefore, Messrs. Kilranes now asserted that as their client was unable and unwilling to comply with the requisition on title as to the right of way. They were requiring McGowans as solicitors for the purchasers, not later than 29th April, 2005, being a date in excess of five working days from the date of receipt of the letter, to withdraw the requisition and objection raised in relation to the right of way. They said that unless this objection and requisition was withdrawn, the sale would be regarded as rescinded by their client and the deposit would be returned.
21. Messrs. McGowans replied, noting that the defence in the arbitration did not refer to General Condition 18, and enquiring whether it was the intention to apply to the arbitrator to amend the defence. They requested confirmation that the arbitrator was to have jurisdiction to deal with any such issue.
22. Further delays took place, again attended by yet more reminders from the arbitrator. On 17th May, 2005, he stated that if there was no response from Messrs. Kilranes by close of business on 23rd of May, he would have to consider calling a further meeting of the arbitration. It appears there had been an inconclusive meeting earlier but what transpired is not in evidence.
23. On 10th June, 2005, Messrs. Kilranes wrote to McGowans stating that they had discussed the matter with their client and that their instructions were to rescind the contract and return the deposit in the sum of €8,500. The arbitrator indicated that he would refrain from proceeding with the arbitration unless there was a response to the issues raised in correspondence as to his jurisdiction.. Messrs. Kilranes did not so inform him.
24. On 21st June, 2005, the vendor’s solicitors wrote that their client had rescinded the contract pursuant to General Condition 18 and that if this was not accepted, that Court proceedings should be initiated. Yet further correspondence took place between the arbitrator, Messrs. Kilranes and McGowans, on the specific question as to whether or not the former had jurisdiction to deal with the question of Condition 18. This included a proposal made on 27th June, 2005, by the arbitrator, that he states a special case for the High Court pursuant to the Arbitration Acts for a decision on the issue. This offer was not availed of. More correspondence dealt, inter alia, with considerations on relevant legal authorities, cited in correspondence, and the legal situation pertaining to the impasse.
25. A letter of 28th June, 2005 from Messrs. McGowans, set out their understanding of the legal position on a number of issues then arising: one such issue was as to the circumstances in which a vendor might rescind. Messrs. McGowans pointed out that Ms. Kiely had consistently and for a period exceeding three years, adopted an approach to this matter both in correspondence and following the emergence of the difficulty that was fundamentally at odds with the position now being adopted. As a result of this, their client had engaged in a lengthy, stressful and costly process in which Ms. Kiely had also participated. Thus they said to purport to rescind at that point was unreasonable, arbitrary and capricious, particularly in circumstances where the purchasers were not insisting that the vendor remedy the defect on title at all, but merely required compensation for the error and the resulting loss of value relative to this bargain.
26. Throughout the months of July, August and September, 2005, further efforts were made to establish a hearing date for the arbitration.
27. On 27th September, 2005, Messrs. Kilranes wrote to McGowans stating that they had received an authority from a further firm of solicitors, Messrs. Greg O’Neill & Company, who, they said, were now acting for Ms. Kiely and indicating that they may not have any further instructions. There was no change of solicitor.
28. Ultimately, on 30th November, 2005, Messrs. Kilranes issued the special summons herein and requested McGowans to confirm that they had instructions to receive service thereof. The summons does not appear to have been served with any speed as on 13th December, 2005, Messrs. McGowans wrote a letter to Kilranes indicating they intended to issue Circuit Court proceedings to deal with the matter as expeditiously as possible. Ultimately, on 14th December, 2005, the special summons herein was served.
Findings on evidence
29. A number of points arise from the course of events described at length. First, I am satisfied that Ms. Kiely engaged in what can only be seen as procrastination, delay and excuses in an effort to avoid the arbitration taking place. With the benefit of hindsight, it is difficult to avoid the conclusion that not only was the correspondence (and its absence) discourteous to the arbitrator, it was misleading. The correspondence unfortunately does not allow for any conclusion other than that there was an effort to frustrate the arbitration taking place by any expedient available. This can only be laid at Ms. Kiely’s door. She was instructing her solicitor who was acting on her instructions.
30. Second, a point which also emerges is that, on 13th December, 2002, Ms. Kiely’s then solicitor was prepared to acknowledge that a problem existed. But even from that point onwards, her stance was that any difficulty was inconsequential. As of 27th September, 2004, the defence received by the arbitrator again included a denial that any error had been made by the vendor in the contract of sale.
31. Third, as pointed out earlier, the vendor’s position shifted on at least two if not three occasions between the time of the auction and the bringing of the summons herein.
32. Fourth, Ms. Kiely’s conduct and delay led the Delaneys to act to their detriment. By any standard the issue could have and should have been resolved satisfactorily when the problem first came to light. This could have been done promptly by negotiation or arbitration. The policy was simply one of avoidance of any conclusion. All these events took place when the property market in Ireland was extremely active and when prices were escalating.
33. Fifth, in conjunction with the conduct which I consider was most regrettable, Ms. Kiely was guilty of delay of the most substantial kind before first raising the issue of the contractual conditions some three years after the auction. I consider this delay was substantial and blameworthy.
Consideration
34. On the particular facts which arise in this case I would have concluded that Ms. Kiely, is by her conduct and delay, estopped from relying on Condition 18 by reason of such conduct and delay – if estoppel could be relied upon in a contractual situation such as this. The position here stands entirely outside anything that might have been reasonably contemplated within the terms of condition 18 itself. A court would in equity not countenance or permit the vendor to avail of a right of rescission in such circumstances.
35. In the circumstances, however, the issues are best seen within the context of reasonableness, as it is defined in the authorities to which reference is made later.
36. While Ms. Kiely now seeks to rely on Condition 18 of the contract, the Delaneys in turn, rely on Condition 33 of the Conditions of Sale. This condition provides:
“33. (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.
(b) The Purchaser shall be entitled to be compensated by the Vendor for any loss suffered by the Purchaser in his bargain . . . 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”.
These provisions will now be considered.
The Law
37. The right of rescission sought by Ms. Kiely as vendor is a restriction on the purchaser’s rights. A court must be alert to ensure that it is not abused. Thus, a number of qualifications to such right of rescission have been identified in relevant case law. The vendor must exercise such right in a reasonable manner or, as is more usually put, must not invoke it without reasonable cause. He or she must not act capriciously or arbitrarily and may have to convince the Court that the objection or requisition which has led to the invocation of a right of rescission is one which will cause substantial expense or involvement in litigation if there is to be compliance with it. Thus, such right may not be used as a method of extracting the vendor from a contract with a purchaser in order to accept a higher offer from a third party. The findings and conclusions made on the estoppel issue are relevant and applicable here also.
38. The Courts will refuse to allow a vendor to invoke the right where he was guilty of “recklessness” in entering into the contract. This is to be distinguished from fraud or dishonesty. It generally consists of an indifference towards the purchaser as regards whether they will obtain the title contracted to be sold. Thus, a vendor must not induce a purchaser to enter into a contract by making some misrepresentation to where there was little ground for believing such was true and then purport to exercise a right of rescission when the purchaser raises an objection or requisition about the same matter. Other circumstances are not here material.
Has the right of rescission been exercised in a reasonable manner?
39. In the light of the findings earlier in this judgment the conclusion here is self evident. It is clear that a vendor may not invoke the right of a rescission without reasonable cause, and must not act capriciously or arbitrarily. She may have to persuade a court that the right is one which will cause him substantial expense or involve him in litigation if he is to comply with or remove it. (See Wiley: Irish Conveyancing Law 2nd edition, paras. 15.27 to 15.35). There is no such evidence.
40. In Selkirk v. Romar Investments Limited [1963] 1 W.L.R. 1415, Viscount Radcliffe observed that: “The vendor must not act arbitrarily, capriciously or unreasonably”, and that “He must 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”. The Judge in that case observed that the vendor’s solicitor “On receiving the relevant requisitions, showed no arbitrary or highhanded temper in replying to them but, on the contrary, made a serious attempt to meet them and to allay the [purchaser’s] misgivings. In Smith v. Wallace (1895) 1 Ch. 385, Romer J. observed that the vendor, in exercising his contractual right of rescission, “was bound to exercise the [right] fairly, and to determine promptly whether he would emphasise the power or not” (emphasis added). In Lyons v. Murphy [1986] I.R. 666, Murphy J. decided the issue as to whether the vendor was entitled to exercise the right of rescission on the basis of whether or not there had been reasonable conduct on his part stating “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”. (at p. 681)
41. He added:
“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 escape a liability which was caused by and indeed consisted of his or her wilful default.”
42. On this basis, Murphy J. concluded that the rescission clause had not been validly invoked, and in so doing made it clear that a court is entitled to have regard to the question of reasonableness, not merely of the vendor, but of both parties. He also made clear that the question of reasonableness is one to be judged on the basis of the post-contract conduct of the parties. This latter point is also of particular relevance to the findings made. The vendor’s conduct was not reasonable here. I will adopt and apply the dictum of Murphy J.
43. In Williams & Anor. v. Kennedy (the Supreme Court, Unreported, 19th July, 1993) Finlay C.J. observed that one of the four principles identified as governing the invocation by the vendor of Condition 18 is that “it must be shown … that he has acted reasonably, not arbitrarily, not capriciously”. I again apply this principle.
44. In the context of this case it is necessary only to refer to the unfortunate sequence of events described earlier in the chronology, starting from and including the auction onwards. As I have already found, the conduct of the vendor was, by silence, misleading in that the purchaser was misled more than once into concluding that a meaningful arbitration process was going to take place. Unreasonable too in the manner in which Ms. Kiely, on a number of occasions postponed the process of arbitration or hearings taking place; or put matters on a long finger by excuses, or by seeking to adjourn the arbitration date, once it was fixed. This procrastination and avoidance endured for a period from 28th May, 2002 until December, 2005, more than three and a half years.
45. As pointed out above, this must be seen in the context where the vendor, more than once, changed her stance as to whether or not a problem existed at all and if so, what she proposed should be done. These changes of stance took place at widely spaced intervals. The purported invocation of Condition 18, so late in the day, created yet another obstacle to the arbitration.
46. This sequence of events occurred also against a background where property prices were rising sharply. If the vendor was seeking to exercise her right to rescind in a reasonable fashion, this should have been done promptly and without delay, one of the indicia identified by Romer J. in Smith v. Wallace. Furthermore, when the vendor eventually purported to exercise her right of rescission she did not offer to reimburse the purchaser’s costs incurred in the interim period which had been incurred by reason of the fact that the purchasers had (they might have thought) embarked upon a joint arbitration process. There is no indication in the negotiation other than that the purchasers bear this expense. The unreasonableness of the vendor is, in the circumstances, the more remarkable, having regard to the fact that the purchasers did not insist on the right of way being included in the conveyance (which could not be achieved in any case) but instead merely insisted upon compensation in the form of an abatement of the purchase price. Consequently, the purchaser was merely asking to purchase what the vendor could actually sell.
47. The fact that this case proceeded to hearing in the High Court, with all its attendant cost and expense, must be seen in light of the fact that at a point earlier identified in negotiations, the only issue between Ms. Kiely and the Delaneys was whether the abatement or compensation should be €5,000 or €25,000. It would hardly require imagination to envisage that there should have been some sensible middle ground which might have been arrived at, although obviously, the court cannot be apprised of any without prejudice negotiations. On more than one occasion during the course of the hearing the parties were urged to negotiate. Unfortunately, they were unable to avail of these opportunities.
48. I conclude, therefore, that the vendor was not entitled to rescind on the basis of her capricious, arbitrary and unreasonable conduct and the delay which has taken place.
49. I am fortified in my conclusion by a further aspect of Ms. Kiely’s conduct, already briefly touched upon.
50. Although it is true that a vendor can rescind under General Condition 18, notwithstanding the fact that there has been intermediate negotiation or litigation, Wiley points out that ‘negotiation’ is not the same as ‘dispute’ so that the vendor is not protected by the provision if he instead denies that any defect exists which should justify the objection or requisition. Clearly, and on more than one occasion this was the position here. The defence ultimately delivered in the arbitration proceedings on 27th September, 2004, two years and three months after the auction, pleaded, inter alia, that the claimants (i.e. the Delaneys in these proceedings) were deemed to purchase the property in sale with the full knowledge of all rights of way that might affect same (and) to have inspected the property and:
“Further or in the alternative the respondent claims that no error was made by or on her behalf in relation to the sale of the property.”
This defence was delivered on behalf of Ms Kiely after months of involvement in an arbitration process predicated on the basis that the defect did exist. In addition to the defence, on 2nd March, 2005, immediately prior to the next date fixed for the arbitration hearing, the purchaser’s solicitors received a letter from the vendor’s solicitors again reiterating that the respondent would contend that the lands the subject matter of the proceedings has the benefit of a right of way via the laneway at the northern boundary of the lands and that it was intended to call evidence of this at the hearing of the arbitration.
51. The effect of both this letter and the specific point of defence were to make it clear that the vendor was then asserting that the right of way did indeed exist and that she actually required the purchasers to complete the contract on that basis. Indeed, it apparently was pointed out during an inconclusive hearing of the arbitration by counsel for the vendor that the vendor was asserting the existence of a right of way and that the arbitrator had no jurisdiction to determine this issue. This stance is hardly consistent with averments contained in affidavits sworn on behalf of Ms. Kiely that –
“as soon as Ms. Kiely became aware of the defect in title she acknowledged that defect in the title and did not as alleged seek to deny it. She did so in open letter sent by her solicitor, Mr. Lawrence Tierney, to the defendant’s solicitors dated 13th December, 2002 and dated 7th March, 2003”
Nor is it consistent with an averment that –
“in agreeing to refer the matter to arbitration Ms. Kiely was again acknowledging that there was a defect in the title and was prepared to attempt to resolve the matter by way of arbitration having failed to negotiate a resolution with the defendant.”
(See affidavit of Ms. Kiely’s solicitor, sworn 21st June, 2006)
52. In Gardom v. Lee (1865) 6 H&C 651, a contract for sale included a condition permitting the vendors in the event of the purchaser making any requisitions or objections, either to answer them or to rescind the contract, returning the deposit without interest. A further condition provided that the vendor’s right of rescission should not be waived or affected or prejudiced by any negotiation as to any objections or requisitions or an attempt to obviate or comply with same. The purchaser became aware that the vendor had no power of sale. He pointed this out suggesting the contract be rescinded. The vendor asserted his power of sale and called on the purchaser to complete the purchase. The purchaser then incurred expense in investigating the title, the result of which was that his concerns were upheld. Thereupon, the purchaser purported to exercise his right to rescind. The court held that the vendor had lost his right to rescind, essentially by reason of having insisted that the purchaser were mistaken and that the contract should be performed.
53. In the course of his judgment, Pollock C.B. observed:
“There was no negotiation or attempt to obviate any objection, but a dispute, the vendees saying that the vendor had no power to sell, the vendor saying that he had.”
He continued:
“The vendor should either have obviated the objection when called upon, or at once have rescinded the contract. But they did neither and much too long a period elapsed before they expressed any intention to rescind”
54. In Gardom, a period of just under one year had elapsed between the objection and the communication of the decision to rescind. The comparable period in this case is thirty-three months, a period which speaks for itself.
55. I am satisfied that on the basis of the conduct in this regard also, Ms. Kiely lost her power to rescind.
Imprudence or recklessness?
56. A further circumstance disentitling a vendor to rescind is whether the vendor was guilty of recklessness (see Selkirk v. Romar Investments). There would appear to be some uncertainty as to whether the appropriate test is imprudence or recklessness. It cannot be denied that these are different criteria (see Baines v. Tweddle (1959) Ch. 679; Merrett v. Schuster (1920) Ch. 240; In re Jackson and Haydens Contract (1906) Ch. 412; Kennedy v. Wrenn [1981] I.L.R.M. 81, Costello J.). It is noteworthy that in Williams v. Kennedy, a case in 1993 and referred to earlier, Finlay C.J. adopted the traditional test of recklessness.
57. In this context, however, it is necessary to examine carefully the evidence as to the conduct of Ms. Kiely and her then solicitor.
58. Mr. William Devine, an eminent conveyancing solicitor, swore an affidavit in the proceedings admitted without objection. He states that where lands in sale do not abut a public highway, and they are not sold subject to any express restriction relating to access, it is the duty of the vendor to satisfy himself that they have the benefit of a right of way and that any restriction on the exercise of that right of way is notified to potential purchasers.
59. Mr. Devine points out that the manner in which this issue can be dealt with is to inspect the file plan, which takes approximately six to eight weeks following a request being made for it. There is little practical reality to any purchaser procuring such a plan from the Land Registry in advance of an auction. This was an additional reason why the vendor’s solicitor should have ensured that a copy of the file plan was taken up prior to the auction. It would not be sufficient for the vendor’s solicitor to rely on the entries on the folio for the purpose of confirming the existence of a right of way appurtenant to the lands because it is well known that such entries are often not updated and are often out of date and inaccurate. Mr. Devine also avers that it would be insufficient for a vendor’s solicitor to rely on assurances from his client that the lands had been in fact accessed over a particular route, particularly where the period of such user is less than twenty years. It will remain incumbent on the vendor’s solicitor in such circumstance to ascertain by consulting the file plan or the instrument creating the easement, whether a registered or express easement exists and that for the vendor’s solicitor to advise a prospective purchaser that the lands benefit from an express or registered right of way in circumstances where the file plan disclosed to the contrary would invariably amount to carelessness.
60. No response in evidence has been provided to this affidavit as part of the case. Consequently, the point must be approached on the basis of having gone evidentially uncontested. Whether or not the purchaser’s solicitor might have discovered the problem for himself is not to the point. The question here is whether the vendor may avail of a contractual provision for rescission. It is the conduct of the vendor or her agents that is in issue. I do not consider that mere imprudence on the part of a purchaser could excuse conduct on the part of the vendor to induce the vendor’s agents in making a positive statement to induce bids which apparently happened at auction. This must be seen in the context of the fact that it was a point then raised by the purchaser’s representative. The obligations of Ms. Kiely’s then solicitor must be seen in the light of the fact that there appears very considerable doubt in the light of correspondence as to whether Ms. Kiely’s solicitors then had in fact then requisitioned the file plan. It is difficult to reconcile averments by affidavit to the effect that the file plan had been obtained prior to auction, and the subsequent correspondence already referred to on 2nd July, 2002 where Ms. Kiely/vendor’s then solicitor wrote that he had “again requested the Land Registry to furnish [him] with a map showing the right of way duly coloured”. In a further letter on 5th July, 2002, he wrote that he had “now belatedly received the map from the Land Registry”. In an averment in the grounding affidavit sworn on behalf of the vendor, it is said that the purchaser’s representative, Mr. Gallagher, discussed the question of access to the lands after the auction with the auctioneer and Laurence Tierney, Ms. Kiely’s solicitor at the time and “was shown the folio and file plan and informed that access was by right of way as described on the folio”. This conflict must be seen in the light of the fact that the deponent in this affidavit, Ms. Kiely’s present solicitor was not present at the time of the auction and is acting on instructions and received information. Neither Ms. Kiely nor Mr. Shields nor the auctioneer swore any affidavits in the proceedings. No notice to cross-examine was served.
61. In the present case, the vendor furnished prospective purchasers with a copy of the folio and folio map. There is conflict as to the special file plan. The folio stated that there was a right of way. The folio map appeared to depict a right of way to the northern end of the lands. In the circumstances, any prospective purchaser inspecting the documentation furnished by the vendor could be expected to assume that the entry relating to the right of way was accurate. This belief would have been bolstered by confirmation by the auctioneer that access to the lands was “via a laneway to the northern end of the lands”.
62. The map prepared by the auctioneers depicts the lands that were transferred out of the folio and now comprised in a different folio. An examination of the manner in which they were depicted suggests, as was the position, that they might once have formed part of folio 3399. The right of way as depicted on this map runs only as far as a point close to the boundary of the lands for sale. All these facts, combined with the statement on folio 3399 that two parts thereof had been transferred out of the folio, should at the minimum, I consider, have alerted the vendor’s solicitors to the possibility that the right of way no longer served the plot in sale without an easement.
63. I do not consider that the authorities fully establish that ordinary imprudence on the part of a vendor’s solicitor would be sufficient to prevent rescission. 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 bidding. All these circumstances, taken together, justify a finding of a very high degree of imprudence sufficient on the facts to constitute a bar to rescission.
Reliance on General Condition 18
64. For completeness, a further question which may arise (if necessary) is whether Ms. Kiely would in law be entitled to rely on General Condition 18 (recited earlier) to avoid completion of the contract at an abated price by reason of her own default.
65. A number of additional observations are relevant here. The first is that the defendant purchasers opted first for compensation under condition 33. A misrepresentation by Ms. Kiely and her agents of what she had to sell was “an error” within the definition of that term given in General Condition 33(a) of the contract. I consider that that is compensable by condition 33(b).
66. Furthermore, there has been a finding that the conduct of the vendor prior to reliance on the condition has been unreasonable, capricious and has put the purchaser to additional expense. Ms. Kiely only sought to rely on General Condition 18 only on 20th April, 2005, some thirty-three months after the purchasers pointed out the error and almost a month after the first hearing date of the arbitration. There was extreme indecision and unjustifiable delay. General Condition 18 may not be relied upon by a vendor who on the facts first denied the existence of the difficulty affecting the sale on which the purchaser is insisting. Ms. Kiely repeatedly denied that there was a problem with the promised right of way.
67. In the instant case it is possible to summarise the position of the parties thus. Ms. Kiely said:
“Even though the problem originates with my own error and even though the purchasers say they will take the land even with the defect, subject only to an abatement in price that will limit what they have to pay to that which they still have to give me, nevertheless I may use my own error to get out of the contract entirely.”
68. The Delaneys say:
“Even though the problem is the vendor’s mistake, we are still willing to proceed with the bargain and we will not insist in the impossible or on what it would cost or take too long to achieve. We are still willing to buy the land at, in general, the agreed price, subject only to an abatement to ensure we will only pay for that which, as it transpires, the vendor can give us.”
69. In re Terry & White’s Contract (1886) 32 Ch. 14 is of little assistance to Ms. Kiely, because, the case turned on the fact that the contract excluded any right to compensation so that the resolution sought by the purchaser was impermissible. It is noteworthy that in that case the condition provided inter alia:
“No error, misstatement or misrepresentation shall annul the sale, nor shall any compensation be allowed in respect thereof.”
This quite clearly is at variance with the provisions of the conditions in the instant case. Furthermore, the observations of the judges in that case are, in their general tenor, supportive of purchasers who might make the same claim in similar cases where there was no exclusion of compensation.
70. On the very different facts of this case and the findings thereon outlined earlier, I do not consider that the authority cited by counsel for the vendor of Ashburner v. Sewell (1891) 3 Ch. 409 is of assistance, even if it still constitutes a persuasive authority. The facts, here as described earlier are so different as to render it of no value to Ms. Kiely. It is doubtful whether it is in any case decisive of the issue which might arise in this case, that is an apparent conflict between Condition 18 and Condition 33.
71. While the decision in Ashburner is stated to be reliant on the decision of the Court of Appeal in Mawson v. Fletcher (1870-1) 6 Law Reports Ch. App. 91, Mawson is not an authority for preferring a clause giving a vendor a right of rescission over a clause giving a purchaser a right to compensation and excluding the vendor’s right to rescind from cases where compensation is taken. The court held that the defect, if any, was not a misdescription within the meaning of the compensation clause and that therefore the vendor having acted bona fide, was entitled to invoke his statutory right of rescission. The rationale for the decision was that the defect, if any, did not come within clause 14 (the provision for compensation).
72. Ashburner v. Sewell has seldom been followed. The decision does not appear to address the conflict between conditions that might arise where, as here, they may both apply to the same error and from the provision in the compensation clause against annulment for error save with the purchaser’s limited option. I do not think that the assessment of the contract outlined in that judgment can be said to be reliant upon objective reasonableness.
73. In fact clause 18 and clause 33 as they now are, are reconcilable, even where they do apply to the same errors but only by recognising that to treat a claim for compensation as “insistence” within the meaning of clause 18 might be to create a direct contradiction between the clauses. Clause 18 says the vendor may rescind and clause 33 says she may not, so that in respect of errors within clause 33 a claim of compensation must take the case out of clause 18 by removing the element of “insistence” required for it to apply. One cannot give the concept of insistence a meaning which produces a direct contradiction between the clauses. I consider that clause 18 is designed to protect a vendor from the trap of being obliged to give what he or she cannot reasonably give. That trap is removed where a purchaser can and does opt for compensation. I do not consider that Ms. Kiely had a right to rescind under clause 18 for the reasons outlined earlier and where the Delaneys sought compensation, and indeed had done so and progressed the claim almost to hearing before Ms. Kiely made any effort to rescind.
74. Condition 18 is not an unfettered licence to avoid a contract in reliance of one’s own error. Because of the plaintiff’s conduct and delay, her solicitor’s very substantial imprudence to the initial and subsequent denials that there was any misdescription, and because of the capriciousness and unreasonableness in seeking to rely on condition 18 at such a late stage, I do not consider reliance on Condition 18 is available to the plaintiff either for the reasons outlined above. I consider that the plaintiff’s claim fails under this heading also.
75. In the light of the foregoing, I must decline the relief sought in the summons herein on the various grounds identified in this judgment. The Court will hold that the sale has not been rescinded by the plaintiff in accordance with Condition 18 of the contract the question to be determined in the vendor and purchasers summons herein.
Daniel Crean v David Drinan
[1983] I.L.R.M. 82
(Barrington J)
BARRINGTON J
delivered his judgment on 22 May 1982 saying: In this case the plaintiff claims rescission of a contract in writing made on 23 April 1979 and the return of a deposit of 9,000 paid by the plaintiff.
*83
During the course of the proceedings the defendant unfortunately died and, immediately prior to the hearing, I, on consent, reconstituted the suit by appointing as defendant the legal personal representative of the late defendant. I did this on condition that both parties would file amended pleadings.
The defendant had filed a counterclaim claiming that the plaintiff had wrongfully repudiated the contract, seeking a declaration that the plaintiffs deposit had been validly forfeited and other relief.
As the parties agreed that the plaintiffs claim turned on a net point of law they also agreed that I should defer further consideration of the defendants counterclaim until the plaintiffs claim had been decided.
THE FACTS
The contract was for the sale of a public house as a going concern. The agreed closing date was 4 May 1979 and there seems little doubt that the plaintiff was anxious to have the sale closed as quickly as possible. But the contract was in the standard form of the Incorporated Law Society and it is clear from the wording of clauses 4 and 28 that, so far as the closing date was concerned, time was not of the essence of the contract.
The plaintiffs solicitor, Mr Tobin, had seen the title prior to executing the contract and had discovered what he believed to be a defect in it. There was with the title deeds a deed of rectification which had attempted to put right this defect but Mr Tobin believed that the deed of rectification had been ineffective and that there was still at least the possibility that a leasehold interest in the property was outstanding in two ladies named Catherine Morley and Nora Moynihan. He accordingly insisted on the following special condition in the contract which appears as special condition no. 2 and reads as follows:
The contract is subject to the vendor obtaining an assignment of any interest in the property for sale that may be vested in Catherine Morley and Nora Moynihan the surviving sisters of Sheila OShea in a form acceptable to the purchasers solicitors on or before the closing date and the vendors solicitors shall undertake to have the said assignment duly executed as expediously (sic) as possible. In the event of the said deed not being executed then the purchaser shall be refunded his deposit but without interest, costs or compensation of any kind.
Mr Tobin drafted and, ultimately, had engrossed, an assignment of the property which contemplated that the said Nora Moynihan and the said Catherine Morley should join in the conveyance to get in any outstanding interest.
This engrossment was sent to the vendors solicitors prior to closing date and it must be assumed therefore that it represented a means of getting in the outstanding interests in a form acceptable to the purchasers solicitors so far as special condition no. 2 was concerned.
The closing date fixed by the contract was 4 May 1979. The sale was not closed on that day. On 8 May 1979 Mr Tobin, who was under constant pressure from his client to have the transaction completed, wrote to the vendors solicitors, Messrs Ronan Daly Hayes Co, a letter in the following terms:
We are in receipt of yours dated 2nd instant, herein with enclosures.
The following replies would appear to be unsatisfactory:
*84
G: 65 a map must be furnished in view of the recent extension of the premises.
H: 62 planning permission for the conversion of the residential portion of the property to flats must be furnished.
H: 63 if these documents are not in the possession of the vendor a satisfactory explanation in regard to their whereabouts must be obtained and furnished.
H: 65 again this is an essential document.
Subject to compliance with the above and with outstanding requisitions on title, the matter would appear to be in order. Please let us know when the deed of assignment has been completed and when you are in a position to comply with requisitions on title.
Please note that our client is most anxious to close and is pressing us strongly in the matter.
Yours faithfully.
This letter, though dated 8 May 1979 and posted in the ordinary course of post, did not apparently reach Messrs Ronan Daly Hayes and Co. until 15 May 1979.
When Mr Tobin wrote the letter of 8 May 1979 his understanding was that the deed of assignment had not yet been executed by Nora Moynihan or by Catherine Morley. But that letter was written by him without specific references to his client and pursuant to his general instructions to have the sale closed as soon as possible.
On 15 May 1979 Mr Tobin spoke with the vendors solicitor and inquired if the assignment had yet been executed by the two sisters Catherine Morley and Nora Moynihan. He was informed that one of the sisters had executed the assignment but that the other one was, unfortunately, on holidays in Lourdes, but that the vendors solicitors would continue their efforts to have the assignment executed by the remaining sister as soon as possible. Mr Tobin then took his clients specific instructions on this point and the purchaser decided not to proceed with the sale as the vendor had been unable to have the assignment executed by the specific closing date.
On 15 May 1979 Mr Tobin accordingly wrote to Messrs Ronan, Daly, Hayes and Co. a letter in the following terms:
Further herein, we are instructed by our client to advise you that he is not proceeding with this sale in view of your clients inability to complete the sale, in accordance with the contract, on the specified closing date.
As you are aware, time is of the essence of this contract as it involves the sale of the business. Furthermore it is a condition precedent that the assignment of the interests vested in Catherine Morley and Nora Moynihan be furnished prior to closing. Our client informs us that because of your clients neglect the business has suffered considerably.
Accordingly, therefore, our client is discharged from the contract for sale and we request the immediate return of the deposit held by you as stakeholder in accordance with the special conditions of the contract for sale.
Yours faithfully.
The sister who had not executed the contract returned from her holidays in Lourdes on 18 May. The vendors solicitors met her on her return on 18 May and brought her to their offices where she executed the assignment. In fact neither sister made any difficulty whatsoever about executing the assignment.
*85
THE LAW
In these circumstances the question arises as to what the respective rights of the parties in law are.
Mr Sutton, on behalf of the plaintiff submits that the meaning of special condition no. 2 is quite clear. The term closing date used in condition no. 2 means 4 May 1979.
Special condition no. 2 provides that the contract is subject to the vendor obtaining an assignment of any interest in the property for sale that may be vested in Cathering Morley and Nora Moynihan in a form acceptable to the purchasers solicitors on or before 4 May 1979. It also provides that this deed is to be executed as expeditiously as possible. In the context this clearly means as expeditiously as possible before 4 May 1979. It also provides what is to happen if the deed is not executed the purchaser is to be refunded his deposit without interest, costs or compensation of any kind.
Mr Sutton relies principally upon the decision in Aberfoyle Plantations Limited v Cheng [1959] 3 All ER 910. In that case, which was a decision of the Privy Council, the court drew a distinction between the flexibility which courts of equity have adopted in the past in relation to the closing date in contracts for the sale of land and the rigidity which courts have adopted toward dates fixed by conditions on which the very existence of the contract depends. The court adopted with approval a passage from the judgment of Maugham J in Re Sandwell Park Colliery Co; Field v The Company [1929] 1 Ch. 277 in which he stated:
Courts of equity, in dealing with actions for specific performance relating to land, have been accustomed to give effect to the real intention, rather than to the precise words, fixing the date for completion. The effect is that a clause fixing a date for completion is equivalent to a clause stating that completion shall be on that date or within a reasonable time thereafter. But there is no ground for a similar construction in the case of a condition upon which the validity of the contract as one for sale depends. The distinction is obvious. In the first case both parties are bound and a moderate delay in completion is thought not to injure either. In the latter, the very existence of the mutual obligations is dependent upon the performance of the condition. The purchasers do not know in the first instance if their purchase money will ever be required. In general, and in the present case, there is no promise or undertaking by the vendor that the condition will be fulfilled. Equity has, I think, never applied its liberal views as to time to such a condition. If a date is mentioned, the condition must be exactly complied with. If a date is not mentioned, the condition must be fulfilled within a reasonable time; there is no difference between the views of law and equity in considering what is a reasonable time, and the uncertain position of the purchasers must be borne in mind (at 282).
In Aberfoyle Plantations v Cheng the Privy Council having referred to the overriding rule that the meaning of a contract is to be found in the intention of the parties as expressed in, or to be implied from, the language they have used, went on to adopt as warranted by authority and manifestly reasonable in themselves the following general principles of interpretation:
i. Where a conditional contract of sale fixes the date for the completion of the sale then the condition must be fulfilled by that date;
*86
ii. Where a conditional contract of sale fixes no date for completion of the sale, then the condition must be fulfilled within a reasonable time;
iii. Where a conditional contract of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles.
McWilliam J appears to have adopted this third principle in Maloney v Elf Investments Ltd High Court 1979 No 295Sp 7 December 1979. The condition under discussion in that case provided that the sale is subject to the purchasers getting full planning permission before 31 July 1978. Discussing this condition McWilliam J says:
This can only mean that the contract is only to be enforceable if the permission is obtained by that date. Certainly no other meaning has been suggested to me. But it has been argued on behalf of the defendant that time was not, in this respect, made the essence of the contract and that a reasonable time ought to be allowed to obtain the permission by analogy to the principle that time for completing a contract is regarded in equity as the date fixed for completion or a reasonable time thereafter unless time has been made of the essence of the contract in this respect.
I was referred to conditions 4 and 28 of the general conditions in the contract. Condition 4 is the normal condition relating to payment of interest should the purchase not be completed on or before the closing date and condition 28 is the normal condition providing for service of notice to complete within 28 days save where the special conditions provide that time should be made of the essence of the contract in respect of the closing date. I do not consider that these conditions give me any assistance and I was not referred to any authority in support of the proposition that a reasonable time ought to be allowed for the performance of the condition. I have however, been referred on behalf of the plaintiff to the case of Aberfoyle Plantations Ltd v Cheng [1959] 3 WLR 1011 in which this proposition was rejected and Lord Jenkins said, at 1016:
(iii) Where a conditional contract of sale fixes the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to any equitable principles.
I was concerned by the fact that special condition no. 2 in the present case refers in terms not to 4 May 1979 but to closing date.
However this matter appears to be covered by the passage in parenthesis in the third principle set out in the passage quoted above from the decision in Aberfoyle Plantations v Cheng. That principle is to the effect that where a conditional contract of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to. Moreover Mr Sutton submits that a person attempting to interpret the contract must interpret the expression closing date in special condition no. 2 as meaning 4 May 1979. No other date is fixed by the contract. The fact that a court of equity might not enforce the closing date fixed in the contract is a different matter which does not affect the interpretation of the contract or of special condition no. 2.
Mr ODriscoll, on behalf of the defendant, submitted that special condition no. 2 is not a condition precedent to the validity of the contract as a contract for *87 sale. He submitted that the matter to be put right was a minor matter concerning title, and that Nora Moynihan and Catherine Morley, having already executed an ineffective deed of rectification, could have been forced to execute a new deed of rectification had that been necessary. In fact however there was no such problem as Nora Moynihan and Catherine Morley were anxious and willing to co-operate.
He relied on Property Bloodstock Ltd v Emerton [1967] 2 All ER 839. In that case the clause provided that the sale was subject to the vendors obtaining the consent of the landlords to the assignment of the lease to the purchaser. The date fixed by the contract for completion of the sale was October 24 1966. By that date the vendor had not in fact obtained the consent of the landlord but Ungoed-Thomas J, distinguishing Aberfoyle Plantations Limited v Cheng [1959] 3 All ER 910 held that the obtaining of the consent of the landlord was not a condition precedent to the validity of the contract but was a matter of title to be attended to before completion.
In a passage of the report ([1967] 2 All ER 839) Ungoed-Thomas J states:
If what the agreement provides for is that title and not the creation of a contract of sale is subject to that consent being obtained, then that consent has to be forthcoming by the date at which title has to be established, normally actual completion (at 848).
It appears to me that the decision in Property Bloodstock Ltd v Emerton turned upon the actual wording of the contract in that case and upon the fact that the matter at issue was one of title only. It may well be in the present case that the matter at issue was also one of title, but it was a matter which Mr Tobin, for legitimate reasons of his own, saw fit to make the subject matter of a special condition in the contract. The contract is expressed to be subject to the performance of that condition and in the event of the deed referred to not being executed the special condition itself provides that the purchaser shall be refunded his deposit but without interest, costs or compensation of any kind. These words are referring not to a general failure on the part of the vendor to show title but to a specific failure to produce a duly executed assignment on time. The parties, in condition 2, provided what was to happen in the event of such a failure. It appears to me that the court must respect what the parties agreed upon and cannot substitute an alternative provision of its own for that made by the parties themselves. It appears to me that the production by the vendor of the assignment referred to duly executed by Catherine Morley and Nora Moynihan on or before 4 May was a condition precedent to the operation of the contract as a contract for sale. On the failure of the vendors to produce this deed the purchaser was discharged from his obligation and was entitled to the refund of his deposit without interest, costs or compensation.
It remains to consider whether the plaintiff waived the defendants breach of condition.
If I am correct in holding that on 4 May 1979 the contract ceased to exist as a contract for sale of the property due to the defendants breach of condition it is doubtful if the term waiver is an appropriate one. One would have to hold *88 that the plaintiff, by some act or other, revived the contract for sale which had ceased to exist.
The only act of alleged waiver or revivor that has been referred to is Mr Tobins letter of 8 May 1979. As previously stated this letter was written by Mr Tobin pursuant to his general instructions to have the sale closed as quickly as possible, and this letter did not reach the defendants solicitors until 15 May 1979.
On 15 May 1979 the plaintiff was informed that the deed referred to had not been executed and that one of the ladies who was to execute it was away in Lourdes and would not be back for some days. The plaintiff, on being informed of his rights, immediately refused to go ahead with the sale, and the vendor was told of the purchasers decision on the same date.
In these circumstances it appears to me that I could not hold that the plaintiff had waived his rights under condition 2 or revived the contract.
Leemac Ltd. v. Harvey
1973 IR 160
Kenny J.
The defendant is a solicitor and in the year 1965 he was the owner of Nos. 38 and 39 Grand Parade, Cork. Early in 1965 a firm of property developers, Gardner Railton & Co., wanted to get an option to purchase this property and retained Mr. Culbert, an auctioneer practising in Cork, to negotiate with him. The defendant gave Mr. Culbert details of the title and told him the price which he wanted, but the negotiations for the option broke down. Early in June, 1965, Mr. Maclay, a director of the plaintiff company, was in Cork and wished to buy property there for development and he called to Mr. Culbert, whom he had not met before, to find out if he knew of anything suitable. Mr. Culbert telephoned the defendant who told him that Nos. 38 and 39 Grand Parade were available for sale at £11,000. Mr. Maclay told Mr. Culbert that his company were prepared to purchase the property at this price if town-planning permission for its development could be obtained. Mr. Maclay did not meet the defendant and assumed that Mr. Culbert had been instructed by the defendant to sell the property. Some days afterwards Mr. Culbert called to see the defendant and told him that he was acting for a company which had consulted him about property development in Cork, that they wished to purchase Nos. 38 and 39 Grand Parade, that they would pay Mr. Culbert’s fees as auctioneer and that he would submit a draft agreement.
On the 11th June Mr. Culbert sent the draft agreement, which he had prepared, to the plaintiffs. The relevant part of it reads:” “We, Leemac Overseas Investments Limited . . . hereby agree to purchase the premises 38 and 39 Grand Parade, Cork. Purchase price £11,000. Pending completion of formal contract and subject to . . . (b) a satisfactory contract . . . (e) completion within four months from date of contract. Contract will include provision for the payment of £550 being 5% of the purchase price, to J. B. Culbert as commission by purchaser. We, the proposed purchasers, hereby pay £1,000 deposit on the agreement to J. B. Culbert, auctioneer, as stakeholder.”The plaintiffs, who consulted their solicitors in England, made a number of changes in the draft and returned it to Mr. Culbert who showed it to the defendant. The defendant objected to a clause which made the contract conditional upon the purchasers being able to purchase the freehold, and he did not like the provision for payment of the deposit to Mr. Culbert because, as he said in evidence, it was not his practice to have the deposit paid to an auctioneer and he wanted it paid to himself or to the solicitor who would be acting for him. Some days later, Mr. Culbert telephoned the defendant and told him that the plaintiffs refused to pay the deposit to anyone other than Mr. Culbert. This was untrue as the plaintiffs had never been consulted about the payment of the deposit to the defendant. The defendant told Mr. Culbert that he was not acting for the defendant, and the defendant said that he wanted the deposit put in the joint names of the solicitors. Mr. Culbert said that he would consult his clients again and later told the defendant that, if he insisted on this, Mr. Culbert’s clients would not go on with the transaction.
On the 19th June Mr. Culbert wrote to the plaintiffs:””We are prepared to accept an agreement as outlined by your good self, with the exclusion of clause F.” That clause dealt with the purchase of the freehold interest. On the 12th July the plaintiffs sent an agreement in duplicate, signed by them, to Mr. Culbert and asked him to send them one copy signed by the defendant. The letter included this passage:” “I also enclose our cheque for £1,000 in your favour the payment of which to you is wholly governed by the conditions contained in the agreement dated the 12th of July, 1965, referred to in this letter.”
The material parts of the agreement of the 12th July, which was signed by the defendant, were:” “Subject to agreement of the terms of a formal contract and subject as hereinafter provided, we Leemac Overseas Investments Limited . . . hereby agree to purchase from M. A. Harvey the premises 38 and 39 Grand Parade, Cork, of which the general particulars are as follows:” Title: Lease, 599 years from the 25th March, 1803, at £43 per annum. Purchase price: £11,000. This agreement is subject to:” (a) a formal contract being entered into between the parties . . . (c) town planning approval and the approval of the ground landlords being obtained for the erection of premises of at least 9,500 square feet overall floor area, on not more than 5 storeys . . . (e) completion within six months from date of formal contract . . . (g) contract will include provision for the payment of £550, being 5% of the purchase price to J. B Culbert, auctioneer, as commission by purchaser on completion of the purchase. We, the proposed purchasers, hereby pay £1,000 deposit to J. B. Culbert, auctioneer . . . as stakeholder, such deposit being repayable immediately to the proposed purchasers in full if a satisfactory contract is not signed by both parties within three months from date of this agreement.”
On the 19th August the defendant sent a draft contract to the plaintiffs’ Irish solicitors; clause 2 of the draft contract read:” “The purchaser having paid to Martin A. Harvey the vendor’s solicitor as stakeholder the sum of £2,750 part of the said purchase money as a deposit on the execution of this agreement . . .” The plaintiffs’ solicitors changed this so that it read:” “The purchaser having paid to J. B. Culbert, auctioneer, . . . the vendor’s agent as stakeholder the sum of £1,000 part of the said purchase money as a deposit on the execution of this agreement.”This agreement was not signed by the plaintiffs or by the defendant. Difficulties subsequently arose in connection with the conditions attached by the local authority to the town-planning approval and the sale was never completed.
The plaintiffs tried to recover the deposit from Mr. Culbert but succeeded in getting £399 3s. 3d. only from him. They thought that they were dealing with a solvent auctioneer and did not notify his guarantors of the proceedings; and so the plaintiffs could not recover anything against the guarantors under the Auctioneers Acts. In this action the plaintiffs claim £600 16s. 9d. against the defendant; they say that sum is payable by the defendant because Mr. Culbert was his agent to negotiate a sale and to receive the deposit and because, if Mr. Culbert was not such agent, the defendant is liable for the default of Mr. Culbert, the stakeholder, for the balance of the deposit. The parties have agreed that the document of the 12th July did not create an enforceable contract to sell the property.
Mr. Culbert was not the defendant’s agent to negotiate a sale of the property or to receive the deposit and was not held out by the defendant to the plaintiffs as being this. It was said that Mr. Culbert had the keys of the property so that he was able to show it to Mr. Maclay, but I accept the defendant’s evidence that Mr. Culbert did not have them. It was also argued that the provision for the payment of 5% auctioneer’s fees by the proposed purchasers showed that Mr. Culbert was the defendant’s agent because, it was said, this was put in to relieve the defendant of his liability to pay his agent’s fees. The clause was inserted, I think, to ensure that fees at the rate of 5% (which is not the usual rate on a sale by private treaty) would be paid to the auctioneer.
In Goding v. Frazer 7, which was not cited, Mr. Justice Sachs (as he then was) decided that an estate agent who is retained by the owner of property, and who negotiates a sale “subject to contract” and accepts a deposit, receives the deposit as the owner’s agent unless the prospective vendor and purchaser agree that he is to accept it in some other capacity. The agreement of the 12th July provides that Mr. Culbert was to be paid the deposit as a stakeholder, and so the decisions in Ryan v. Pilkington 8 and Goding v. Frazer 7 do not apply to this case. An auctioneer who receives a deposit as stakeholder has been said to be the agent for the vendor and the purchaser. Harington v.Hoggart 9 dealt with the issue whether a stakeholder was liable for the interest earned on the deposit, but in the course of his judgment Lord Tenterden said at p. 586 of the report:” “A stakeholder does not receive the money for either party, he receives it for both; and until the event is known, it is his duty to keep it in his own hands.”Similar language was used by Lord Justice Bowen in Ellis v. Goulton 10 at p. 352 of the report:” “When a deposit is paid by a purchaser under a contract for the sale of land, the person who makes the payment may enter into an agreement with the vendor that the money shall be held by the recipient as agent for both vendor and purchaser. If this is done, the person who receives it becomes a stakeholder, liable, in certain events, to return the money to the person who paid it. In the absence of such agreement, the money is paid to a person who has not the character of stakeholder; and it follows that, when the money reaches his hands, it is the same thing so far as the person who pays it is concerned as if it had reached the hands of the principal.”
The plaintiffs submit that, when a deposit is paid to a person as stakeholder who is unable to repay it when the sale is called off, the vendor is liable for the amount of the deposit which is unpaid. The defendant argues that the rule is that the vendor must bear the loss of the deposit if the sale is closed while the purchaser must do so if it is not. When the sale is by public auction, the stakeholder will be nominated by the vendor who drafts the conditions of sale and who is therefore liable for his default. Similarly if the sale is by private contract and if the stakeholder is nominated by the vendor, he is liable for his default: see Sugden on Vendors and Purchasers (14th ed. at p. 52). But in this case Mr. Culbert was not nominated by either party as stakeholder. The plaintiffs believed that Mr. Culbert was acting for the defendant, who thought that Mr. Culbert was acting for the plaintiffs.
The plaintiffs’ counsel cited a passage which appears in the first, second and third editions of Halsbury’s Laws of England and which states that, although he is a stakeholder, the auctioneer is so far the vendor’s agent that the loss of the deposit caused by his insolvency or misconduct will fall on the vendor: see also Dart on Vendors and Purchasers (8th ed. at p. 186). The authorities cited for this must be examined because Mr. O’Neill has argued that all of them are based on a misunderstanding of Fenton v. Browne. 11 In that case Sir William Grant M.R. decided that a vendor who resisted an application by the purchaser for payment of a deposit into court was liable for its loss. As, however, it had been received by the vendor’s agent, it seems to me that the case is not an authority for any rule as to who is liable for a stakeholder’s default when the sale is not by public auction.
In Smith v. Jackson 12 Sir Thomas Plumer V-C. wrongly assumed that Sir William Grant had decided that the vendor is liable in all cases. He said at p. 620 of the report:” “If then the auctioneer cannot pay over the deposit to the vendor, is he to be considered as his agent? The vendor is responsible for the loss, if any, occasioned by the auctioneer; that was determined in Fenton v.Browne. 13 At p. 621 of the report he said:” “It is considered as reasonable, that the vendor should be chargeable with any loss of the deposit received by the auctioneer, because he might, by agreement with the auctioneer, have had the money laid out at interest, or by making the auctioneer a party to a bill for a specific performance against the vendee, obtain an order for payment of the deposit into Court, and have it laid out at interest, which the vendee could not oblige the auctioneer to do, unless with the consent of the vendor. If therefore, the vendor takes no such steps, and the deposit is lost, the loss falls upon the vendor. The deposit is considered as part payment of the purchase money.”
The reasons given by the Vice-Chancellor for the general rule that the vendor should in all cases be chargeable with the loss of the deposit received by the auctioneer may have had considerable force in 1816 but they have none now. An auctioneer may now without the consent of either party deposit the money in an interest-bearing deposit account which is an authorised trustee security, while to-day an action for specific performance brought solely to obtain payment of a deposit into court would fail.
In Annesley v. Muggridge 14 the same judge said at p. 596 of the report:” “Pending the dispute as to the title, all the risk respecting the deposit rests with the vendor: for though the auctioneer is, to a certain degree, a stakeholder for vendor and vendee, vet so far as respects any risk as to the deposit, the auctioneer is considered as the agent only of the vendor . . . The deposit is the vendor’s money; and the risk belonging to it is his; and if the vendor moves to have the deposit paid into Court (which on large purchases it is always prudent to do for the sake of security, and to obtain interest on the deposit), there is good ground for the auctioneer insisting to have his costs and expenses first deducted.”
In Rowe v. May 15 a mortgagee put up property for sale by public auction and one of the conditions of sale provided that the purchaser was to pay a deposit to the auctioneer. The property was not sold at the public auction and subsequently the mortgagor instructed an auctioneer to sell the premises either by auction or by private contract subject to similar conditions of sale. The auctioneer sold the premises privately and the mortgagee, who adopted the sale, refused to complete until the full amount of the deposit was paid. The auctioneer who had received the deposit had become insolvent. In the course of his judgment Sir John Romilly M.R. said at p. 616 of the report:””Where a purchaser pays a deposit on his purchase-money to the auctioneer, and it is lost, on whom does the loss fall? If the matter goes off, because the vendor cannot make a good title, it is the vendor’s duty to repay the deposit, and the loss occasioned by the non-completion; and in case an action were brought against him for breach of the contract, the amount of deposit not repaid would be part of his loss, and the purchaser would be entitled to add it to the damages; so if the contract be completed, and the deposit cannot be recovered from the auctioneer, who for this purpose is the agent of the vendor, it will be the vendor’s loss, and not that of the purchaser.”
The last authority on this difficult question is the remark of Mr. Justice Sachs (as he then was) in Goding v. Frazer 16at p. 293 of the report:” “It is perhaps as well to add that if, contrary to my above view, estate agents do in law receive such deposits as stakeholders, I would have held that the vendor must all the same bear the risk of their insolvency.”
There is thus consistent authority from 1816 for the rule that the vendor must bear the loss when the stakeholder cannot pay the deposit. The reasons originally given for the rule were unsatisfactory but I think it is the law to-day because the deposit paid by a purchaser to a stakeholder is a payment in part of the purchase money ” see Sugden on Vendors and Purchasers (14th ed. at p. 50) ” and when a sale cannot be completed and the purchaser becomes entitled to recover the deposit from the stakeholder, the vendor should be held liable for his default.
The contract of 12th July, 1965, provided:” “We the proposed purchasers, hereby pay £1,000 deposit to J. B. Culbert, auctioneer, as stakeholder, such deposit being repayable immediately to the proposed purchasers in full if a satisfactory contract is not signed by both parties within three months from date of this agreement.” It was not pleaded or argued that the defendant was liable under this clause and, accordingly, I do not express any opinion on this point.
In this unfortunate dispute which relates to the question as to which of the two innocent parties is to bear the loss caused by Mr. Culbert’s default, there must be judgment against Mr. Harvey for £600 16s. 9d.
Geraghty v Rohan Industrial Estates Ltd
[1988] IR 419, [1988] 7 JIC 1902
HEDERMAN J.On the 24th August 1984 the arbitrator published his finding which found:-
(1) That General Condition 21 of the Conditions annexed to the Agreement of 31st March 1978 made between the respondent of the first part and the applicant of the second part and the Industrial Credit Corporation of the third part does apply to this dispute; that the applicants were entitled to invoke the provisions of this clause.
(2) That there was an error or mistake in the Agreement in that the total of the lands comprised in Folios 754 and 882 of the Register of Freeholders at the date of the Agreement and as evidenced by the Land Registry map of these Folios produced at the time of the Agreement did not amount to 54 acres 3 roods 8¾ perches and that the respondents were not in a position to sell and give vacant possession of so much of the lands as formed part of Folios 754 and 882 but which were now included in Folios 17697, 12825, 12826 and 2440 of the Register County Dublin and that the difference in acreage amounts to 2.104 acres.
(3) That the applicants were entitled to compensation for the error or misstatement and that such compensation should be calculated by reference to the overall price per acre under the said Agreement, namely £36,968,105.
(4) That the amount of the said compensation amounts to £77,781.
In effect the arbitrator found that Mr. Geraghty, at the time of the contract was not in a position to enter into a valid contract to sell and give vacant possession of the total acreage specified in the contract. There was a shortfall of 2.104 acres and he assessed compensation accordingly at an average price per acre.
Mr. Geraghty challenged the award on the grounds –
(1) that Mr. Buckley misdirected himself in law;
(2) that his findings upon the facts were perverse and were such that no arbitrator acting reasonably could or should have made;
(3) it would be contrary to public policy to enforce the award.
At the hearing of the summons issued for this purpose he was permitted to amend the special endorsement of claim by adding further grounds to the effect that –
(4) Mr. Buckley having intimated that he would make an interim award failed to do so;
(5) he decided on the materiality of an error, omission or misstatement in the particulars or conditions of sale without affording Mr. Geraghty any opportunity to adduce evidence or make submissions on this point;
(6) he decided to award compensation to Rohans without affording Mr. Geraghty any proper opportunity to adduce evidence or to make submissions as to the quantum or any such compensation.
The learned trial Judge, Carroll J. held that there was an error of law apparent on the face of the award, and that there had been misconduct within the meaning of s. 38 by reason of a failure to hear arguments on the part of Mr. Geraghty, as he had complained, and referred the matter back to Mr. Buckley.
Rohans appeal on the grounds that there was no error of law on the face of the award and that if there was a failure to hear the other side in respect of the materiality of the misdescription and/or the quantum of damages, no valid argument could have been advanced that would have altered the findings in the award. This argument is, in my judgment, well founded.
In her first judgment, Carroll J. has detailed the events that led to the creation of new Folios which applied to small portions of lands comprised in the relevant Folios – as sales prior to 1978 had taken place, a series of new Folios had been created but, as transpired, the total acreage stated in each of the relevant Folios remained undiminished and the new Folios did not identify the acquisition of part of the lands from the relevant Folios. As a result, the acreage stated in each of the relevant Folios sustained an increasing dimension of error. Mrs. Robinson on behalf of Mr. Geraghty has sought to argue that the several strips of land which now form part of the Dublin/Belfast Road are to be included ad medium filum as parts of the land in the relevant Folios and that, so doing, the necessary acreage is to be found. This envisages the idea that Rohans, when buying, for the purpose of industrial development would or should have realised that they were buying at the average price quoted over 2 acres of land which was part of the public highway. The untenable nature of this submission is highlighted by the fact that one of those stretches of highway is some hundreds of yards further north than the northern boundary – Turnapin Lane – of the lands being sold. Having reached that conclusion, it seems to me quite unnecessary to enter into any examination of the wording of the award which Mr. Geraghty claims meant that the arbitrator found that the practice of the Land Registry, as detailed by the trial Judge, had effectively reduced the area comprised in the Folios. Carroll J. upheld this argument but this finding has been challenged in this Court.
The matter to which the Court should look is the order of Mr. Justice McWilliam of 23rd June 1984 directing the arbitrator in accordance with the contract to determine the total areas to which the said contract relates. The arbitrator has found that the vendor is unable to convey the balance of 2.104 acres of the original acreage of 54 acres 3 roods and 8¾ perches. That matter is, in my view, thus concluded.
In what seems to have been a rather belated idea, Mr. Geraghty sought relief under s. 38 of the Act of 1954, basing the claim upon the failure of the arbitrator to hear him on the issues of materiality and quantum. It would in my view have been wholly unreasonable and plainly an error of law in the face of the award if the arbitrator were to hold other than that there had been material misdescription; argument to the contrary would have been futile. Furthering their pleadings, both parties, as I have already indicated, pleaded to these issues before the hearing. When asked to speculate as to any other approach that might have been made in respect of quantum, Mr. Geraghty’s counsel was unable to suggest any unfairness in Mr. Buckley’s method of assessment. In this context, therefore, I conclude that any further argument would also have been futile. S. 38 does not make it mandatory to set aside an award on the grounds of alleged misconduct of the proceedings; in my view, the Court should refuse to set aside the award despite the finding, which I accept, as was made by the trial Judge, that the arbitrator had failed to give the opportunity to Mr. Geraghty to be heard on these two issues. It could have made no difference.
In these circumstances I would allow the appeal and uphold the decision of the arbitrator.
Rate this document:
Tempany v Hynes
[1976] 6 JIC 0102, [1976] IR 101
Kenny J.
The first argument for the plaintiff was that when the contract for salewas signed on the 26th of February 1974, the company became a trusteefor the defendant who became the owner of the entire beneficial interestin the lands and that the company did not own any estate or interest onwhich the two judgment mortgages of the 2nd of May 1974 and the 1st ofJuly 1974 could operate and so they would be removed from the folio onthe registration of the transfer to the defendant. A vendor who signs acontract with a purchaser for the sale of land becomes a trustee in thesense that he is bound to take reasonable care of the property until thesale is completed but he becomes a trustee ofthe beneficial interest to the extent only to which the purchase priceis paid. He is not a trustee of the beneficial interest merely becausehe signs a contract. This is made clear by Lord Cranworth in Rose v.Watson (1864) 10 H.L. Cas. 672. “There can be no doubt, Iapprehend, that when a purchaser has paid his purchase-money, though hehas got no conveyance, the vendor becomes a trustee for him of the legalestate, and he is, in equity, considered as the owner of the estate.When instead of paying the whole of his purchase money, he pays a partof it, it would seem to follow, as a necessary corollary, that, to theextent to which he has paid his purchase-money, to that extent thevendor is a trustee for him; in other words, that he acquires a lien,exactly in the same way as if upon the payment of part of thepurchase-money the vendor had executed a mortgage to him of the estateto that extent”. Until the whole of the purchase money is paid,the vendor has in my opinion a beneficial interest in the land which maybe charged by a judgment mortgage.
Some judges and writers of standard text books (Cheshire and Magarry andWade) who have dealt with this matter have stated that from the date ofthe signature of the contract (whether the whole or any part of thepurchase money has been paid or not) the purchaser is the owner of theentire beneficial interest in the land. Thus in Shaw v. Foster (1872) L.R. 5 H.L. 221 Lord Cairns said: “There cannot be theslightest doubt of the relation subsisting in the eyes of a Court ofEquity between the vendor and the purchaser. The vendor was a trustee ofthe property for the purchaser; the purchaser was the real beneficalowner in the eye of a Court of Equity subject only to this observation,that the vendor whom I have called the trustee, was not a mere dormanttrustee, he was a trustee having a personal and substantial interest inthe property, a right to protect that interest and an active right toassert that interest if anything should be done in derogation ofit” and in Lysaght v. Edwards (1876) 2 Ch. D. 499 theMaster of the Rolls (Jessel M.R.) said that the moment you have a validcontract for sale, the beneficial ownership passes to the purchaser.Both these statements are inconsistent with the clear principle statedby Lord Cranworth and are, I believe, incorrect. When a contract forsale has been signed the vendor becomes a trustee of the beneficialinterest to the extent that the purchase money has been paid.
This issue arose in re Kissock and Currie’s Contract (1916) 1I.R. 376, a decision of the Court of Appeal in Ireland, in which ajudgment mortgage had been registered against a vendor between the dateof the contract for sale by him and its completion. The sale was closedwithout any payment being made to the judgment mortgagee. A subsequentpurchaser objected to the title because he maintained that the judgmentmortgage was valid and this claim was upheld. The Lord Chancellor, SirIgnatius O’Brien said: “I think that from the point of view of thejudgment creditor…. his debtor had an interest in land after thedate of contract for sale and until completion capable of being affectedby the judgment”. If this case was correctly decided, as I thinkit was, the principle underlying it disposes of the puzzling concept insome of the other cases that such a judgment mortgage is valid whenregistered but ceases to be affective when the sale is completed becausethen the vendor’s interest is deemed to have passed to the purchaserfrom the date of the contract. I prefer the principle stated by LordCranworth.
Counsel for the plaintiff however relied on a passage in the judgment ofMr. Justice O’Byrne in In Re Strong (1940) I.R. 382 at PP401-402. It reads: “Under the general rules of law and equity,apart from the provisions of the Local Registration of Title (Ireland)Act 1891, the position as between a purchaser oflands, who has paid his purchase money but has not obtained aconveyance, and a judgment debtor [sic] who has registered his judgmentas a mortgage affecting such lands seems to be quite clear. Where acontract is entered into for the sale and purchase of lands the vendorbecomes a trustee for the purchaser and the latter becomes owner inequity of the lands subject to certain rights of the vendor to securepayment of the balance of the purchase money and to regain possession ofthe lands should the contract not be completed”. The firstsentence is dealing with the position of a purchaser who has paid thewhole of the purchase money and has not got a conveyance when a judgmentmortgage is registered against the vendor. The purchaser then takes thelands free of the judgment mortgage. The second sentence deals with theposition after a contract for sale has been signed and no part or partonly of the purchase price has been paid. The second sentence is, in myview, incorrect. The structure of the two sentences suggests that thesecond is explanatory of the first: it is not. It is restating the viewof Lord Cairns and of Jessel M.R. which I do not accept and which is notconsistent with what Lord Cranworth said.
At the date when the two post-contract judgment mortgages wereregistered on the folio the deposit only had been paid and theytherefore effected whatever beneficial interest the company had inthe lands. I therefore reject the argument that because a contract forsale had been signed, the company who were the vendors had no beneficialinterest in the lands which could be affected by the post-contractjudgment mortgages.
The next argument (though logically it should have been the firstbecause, if correct, it disposes of the four judgment mortgages) wasbased on s. 71 sub s. (4) of the Registration of Title Act 1964which reads:
“4. Registration of an affidavit which complies with the saidsections and this section shall operate to charge the interest of thejudgment debtor subject to û”
(a) the burdens, if any, registered as affecting that interest,
(b) the burdens to which though not so registered, that interest issubject by virtue of section 72 and
(c) all unregistered rights subject to which the judgment debtorheld that interest at the time of registration of the affidavit
and the creditor shall have such rights and remedies for the enforcementof the charge as may be conferred on him by order of theCourt”.
This sub-section appears in a section dealing with the registration andeffect of judgment mortgages on registered lands.Nothing corresponding to sub s. 4 is to be found in the Act of1891.
The plaintiff’s argument was that when the receiver was appointed, therewas an equitable assignment to the debenture holders of all the propertysubject to the floating charge and that the result of this was that theclaim of the debenture holders in relation to the lands in the threefolios ranked before that of the judgment mortgagees. The two mortgagedebentures created a specific charge on the lands in folio 9792 and afloating charge over all the other assets, present and future of thecompany and the effect of the appointment of a receiver under adebenture is that there is an equitable assignment to the debentureholder of all the property subject to the floating charge (Robbieand Co. Limited v. Whitney Warehouse Limited (1963) 3 All E.R. 613: Rother Iron Works Ltd. v. Canterbury Precision EngineersLimited (1973) 1 All E.R. 394 and C. Russell Murphy v. TheRevenue Commissioners (1972 No. 153 Sp) in which judgment was givenof the 7th of February 1974). “Right” is defined by s. 3 ofthe Act of 1964 as including “estate, interest, equity andpower”. The equitable assignment effected by the appointment ofthe receiver was, in my opinion, an unregistered right subject to whichthe company held the lands on which the debentures were not registeredat the time of the registration ofthe affidavits creating the four judgment mortgages. A judgment mortgageis a process of execution and the judgment mortgagee is not a purchaserfor valuable consideration (Eyre v. McDowell) 9 H.L. Cas 619).Counsel for the defendant said that the Court should not decide thisissue in the absence of the judgment mortgagees but when the defence ofthe title being too doubtful to be forced on a purchaser is raised, itis the duty of the Court to decide this question (Alexander v.Mills (1870) 6 Ch. App. 124: Nichols v. Ven Joel’sContract (1910) 1 Ch. 43).
In my opinion the claim of the debenture holders in relation to thelands in the three folios ranks before the rights of the four judgmentmortgagees and the vendor has shown a good title to all of the lands inthe three folios. It will be the duty of the Registrar of Title, whenthe transfer from the plaintiff and the company to the defendant, themortgage debentures and the appointment of the receiver are produced tohim, to cancel the entries of the four judgment mortgages which appearon the folios without proof of the payment of any sum in respect of anyof them.
Counsel for the defendant argued that specific performance was adiscretionary remedy and that the Court should not interfere with thedecision of Mr. Justice Finlay. The President refused specificperformance only because he thought the title was too doubtful tobe forced on a purchaser and as his view on this matter was incorrect,the exercise of his discretion should in my opinion be set aside. It isright to say, however, that the effect of the appointment of thereceiver does not seem to have been argued before him because he doesnot refer to it in his judgment.
The contrast provides for the payment of interest at the rate of 18%from the date fixed for completion which was the 28th of May 1974. InMarch 1975 the solicitors had agreed that one month’s interest onlywould be payable but the defendant repudiated the agreement which theyhad made and the plaintiff is not now bound by it. It would, however, beinequitable that interest should be payable from the date fixed forcompletion because the existence of the third folio had not beendiscovered on that date. In my opinion the order that the contrast oughtto be specifically performed should provide that interest at 18% shouldbe payable from the 23rd of January 1975 when the parties became awarethat part of the property of the company was registered on a thirdfolio.
The appeal should, in my opinion, be allowed and there should be anorder that the contract ought to be specifically performed with thevariation which I have suggested. There will be liberty to apply to theHigh Court.
JUDGMENT OF HENCHY J.DELIVERED the 1st day of June 1976
The issue in this appeal is, whether the defendant as purchaser of theland was entitled to repudiate the contract in the circumstances inwhich he purported to do so. If he was – and the trial judge so held -he has a good answer to the instant claim by the plaintiff as vendor forspecific performance of the contract. The dismiss of that claim in theHigh Court should in that event stand. Otherwise, this appeal by theplaintiff should succeed.
The relevant circumstances are briefly these. The defendant entered intoa written contract to purchase from the plaintiff a garage in Longfordfor £30,500. The property is registered property governed by theRegistration of Title Act, 1964. The registered owner was Tractasales (Longford) Ltd. and the plaintiffcontracted to sell as receiver of that company. In the presentproceedings it has not been questioned that, for the purpose of makingtitle, the plaintiff as receiver was entitled to stand in the shoes ofthe registered owner.
The defendant’s solicitor proceeded to investigate the title. Because ofdifficulties in the title (such as the discovery that the property wasregistered on three folios and not on two), the date for completion asprovided for in the contract passed without the parties being ready tocomplete. Eventually, all the legal difficulties that had arisen weresmoothened out, except for one: it transpired that subsequent to thedate of the contract two judgment mortgages had been entered on thefolios as burdens affecting the interest of the registered owner. Theplaintiff was advised that it was not necessary for him, in order togive a good title, to discharge those two post-contract judgmentmortgages by paying the amounts due under them, but the defendant’ssolicitor was reluctant to complete the sale on that basis.
After lengthy negotiations a compromise was reached by the solicitors.It was agreed that the sale would be closed subject to the retention of£4,500 on joint deposit receipt, out of the purchase money, for aperiod of six weeks, during which time an application would be made tothe Registrar of the Land Registry to register the defendant freed fromthe post-contract judgment mortgages. It was agreed that if thatapplication were not successful within the six weeks, the £4,500(which would have been adequate to discharge the amounts due to thejudgment mortgagees)would be released to the defendant so that he could discharge thoseburdens by paying off the judgment mortgagees. In agreeing to thatcompromise the plaintiff was being eminently reasonable. In effect, hewas saying to the defendant, “In order to give you a good title Iam not bound to discharge the amounts due on foot of the post-contractjudgment mortgages, but, to allay any fears you may have on that score,I shall put to one side out of the purchase money £4,500 for sixweeks, so that my opinion may be put to the test in the Land Registry,and if I am not proved right in that time, I shall surrender the£4,500 to you so that you may discharge the amounts due on thejudgment mortgages”. It is no wonder that the defendant’ssolicitor agreed to completion on that basis.
However, when the defendant and his solicitor turned up for theappointment with the plaintiff’s solicitor to close the sale, thedefendant flatly repudiated the basis on which his solicitor had agreedto close. He was prepared to close only if the £4,500 wasdelivered into his custody forthwith. The plaintiff, who was selling asreceiver for a debenture holder, could not agree to that. Although hissolicitor strongly advised him to complete the sale on the agreed basis,the defendant adamantly refused to do so. With that impasse the salebroke down. Hence the present proceedings for specific performance.
One thing is clear about the defendant’s conduct between contracting tobuy the property in February 1974 and repudiating the contract in March1975: he came to regret the contract he had signed and decided to getout of it one way or another. He lived in Dublin, and he had bought thisproperty with a view to developing it as a roadhouse and garage. But, ashe frankly admitted in evidence, for family and other reasons he foundthe move to longford undesirable, so from about September 1974 he wasresolved to repudiate the contract. The ground on which he eventuallyrepudiated it in March 1975 was but the particular pretext he fastenedon for that purpose. However, his motives are irrelevant if the groundof repudiation was sound in law.
When a binding contract for the sale of land has been made, whether thepurchase money has been paid or not, the law (at least in cases wherethe parties proceed to the stage of conveyance) treats the beneficialownership as having passed to the purchaser from the time the contractwas made: see, for example, Gordon Hill Trust Ltd v. Segall 1941 2 All E.R. 379. From then until the time of completion, regardlessof whether the purchase money has been paid or not, the vendor, in whenthe legal estate is still vested, is treated for certain purposes (suchas the preservation of the property from damage by trespassers) as atrustee for the purchaser. But, coupled with this trusteeship, there isvested in the vendor, pending completion, a substantial interest in theproperty. Savewhere the contract provides otherwise, he is entitled to remain inpossession until the purchase money is paid and, as such possessor, hehas a common law lien on the property for the purchase money; even if heparts with possession of the property, he has an equitable lien on itfor the unpaid purchase money; and he is entitled to take and keep forhis own use the rents and profits up to the date fixed for completion.It is clear, therefore, that between contract and completion the vendorhas a beneficial interest in the property which is capable of beingcharged by a judgment mortgage. See Megarry and Wade, RealProperty, 4th ed., p. 575; Williams, Vendor and Purchaser,4th ed., I. 545-7; Lewin, Trusts, 16th ed., pp. 153-4;Halsbury, Laws of England, 3rd ed., paras. 484-6.
When, therefore, as here, a judgment mortgage is registered as a burdenaffecting the interest of a registered owner after an enforceablecontract has been made to sell the land, what becomes affected therebyis the transient beneficial interest of the registered owner. S. 71(4)of the Registration of Title Act, 1964, stipulated that on registration of the judgment mortgage affidavit,the charge thereby created on the interest of the judgment debtor shallbe subject to the registered burdens, the burdens taking effect under s.72 without registration, and “all unregistered rights subject towhich the judgment debtor held that interest at the time of registrationof the affidavit”. The later category applies here, for a”right” is defined in s. 3(1) as including “estate,interest, equity and power”, thus covering the estate or interestof the purchaser. Since the judgment creditor could not by registeringhis judgment as a judgment mortgage acquire any greater estate orinterest in the land than the registered owner had at the time ofregistration, all that could pass to the judgment creditor here was theinterest in the land which the registered owner had after the making ofthe contract to sell, namely an interest which would pass out ofexistence once the sale had been completed, the purchase money paid andthe purchaser registered as full owner. It follows, therefore, that ifthe defendant here goes through with the purchase and becomes registeredas full owner, the post-contract judgment mortgages will no longeraffect the lands and he will be entitled to have them cancelled from thefolios.
This conclusion is in line with that of Kennedy C.J. in In re Murphyand McCormack 1930 I.R. 322 and of the Supreme Court (SullivanC.J., Geoghegan and O’Byrne JJ.; Murnaghan and Meredith JJ. Dissenting)in In re Strong 1940 I.R. 382. Those decisions were given underthe Local Registration of Title (Ir) Act. 1891, which is now repealed bythe Registration of Title Act, 1964, and in each ofthose cases the judgment mortgage had been registered after theexecution of the deed of transfer and after payment of the full purchasemoney, whereas here the judgment mortgage was registered before the deedof transfer had been executed or the full purchase money paid. Myconcurrence in the conclusion reached in those judgments that theregistered judgment mortgage could not affect the estate or interest ofthe registered transferee is in no way affected by the latterdifference, for the reasoning in those judgments leading to thatconclusion applies with no less force to a case such as the present,where the judgment mortgage was registered after the contract of salewas entered into but before the execution of the deed of transfer or thepayment of the balance of the purchase money. If a registered judgmentmortgage could be classified as “a charge created on the land forvaluable consideration,” by the terms of s. 68(3) of the 1964 Actit would be unaffected by the unregistered right of the purchaser forvalue. But (as was held by Kennedy C.J. in In re Murphy andMcCormack and by O’Byrne J. in In re Strong) a judgmentmortgage is a process of execution and not a charge created for valuableconsideration. The conclusion reached in those judgments that thatunregistered right of a purchaser for value from the registered owner isnot subject to a judgment mortgage registered against the registeredowner subsequent to the contract to sell, wouldnow appear to have been given statutory recognition, for s. 71(4)(c) ofthe 1964 Act provides that the registration of the judgment mortgageaffidavit shall charge the interest of the judgment debtor subject to”all unregistered rights to which the judgment debtor held thatinterest at the time of registration of the affidavit”. In otherwords, in a case as this, the unregistered “right” of thedefendant as purchaser is superior to the interest of the registeredowner which became charge by the post-contract judgment mortgages.
It follows, in my opinion, that (apart from the effect on pre-contractmortgages of the appointment of the plaintiffs as receiver on foot ofmortgage debentures, an effect which was not dealt with in the HighCourt and was only touched on in this appeal) the plaintiff was notbound, in order to make good title, to discharge the moneys due on footof the post-contract mortgages. Those mortgages took effect subject tothe defendants equitable estate or interest in the land. They couldaffect only such beneficial estate or interest as the registered ownerthen had. That estate or interest could not survive the completion ofthe same and the registration of defendant as full owner. The defendantcould then have them cancelled from the folios.
As the defendant’s purported repudiation of the contract was ineffectiveto rescind it, I would allow the appeal and decree specificperformance.
It follows that the Plaintiffs’ claim must be dismissed. The Defendants are entitled to a declaration in the terms of paragraphs 1 and 3 of the counterclaim and an Order for specific performance of the contract for sale.