Planning Matters
Cases
O’Connor v. Coady
[2004] IESC 54
[Judgments delivered by Geoghegan J. & McCracken J.; McGuinness J. concurred with both.]
JUDGMENT of Mr. Justice Geoghegan delivered the 21st day of October 2004
The background to this appeal is that the appellant sold certain property to the respondent subject to the obtaining of planning permission within four months and with no specific closing date but with the provision that the sale was to be closed within seven days of the granting of the permission. The planning permission was not granted until more than a year after the date of the contract. When the four month period had expired without the permission being granted, neither party initially gave any notice to the other indicating that he or she was treating the contract as at an end. At a time, however, when it appeared that planning permission was shortly going to issue the respondent became active and through his solicitor made suggestions as to how the sale would proceed. This letter was responded to by the solicitors for the appellant in a letter headed “subject to contract/contract denied”. They expressed surprise at the contents and asserted that the contract had lapsed after the four months period. The same solicitors suggested that there was, therefore, no longer any contract but that their client would be willing to renegotiate a new contract at a new price. The respondent displayed indignation at this response on the alleged basis that all the indications had been that the appellant was treating the contract as still alive and indeed the deposit had never been returned. The respondent, accordingly, launched specific performance proceedings in the Circuit Court. The appellant thereupon instituted these proceedings in the High Court under the Vendor and Purchaser Act, 1874. The special endorsement of claim on the Special Summons sought clarification from the court on three questions (the third of which is not now regarded as relevant). That special endorsement of claim subsequently became amended by the addition of further questions. In its original form the two relevant questions were as follows:
1. Was the plaintiff entitled to rescind the contract dated the 31st May following the failure of the defendant to comply with the special condition on obtaining planning permission by the 30th September, 2001?
2. Did the plaintiff in fact validly rescind said contract of the 31st May, 2001?
For reasons which I will be developing further in this judgment, I believe that those were the relevant questions and that it is somewhat unfortunate that unnecessary confusion was introduced into the case by the additional questions in the amended special endorsement of claim. Those additional questions were as follows:
“3. Was the plaintiff under the said contract entitled to regard the said contract as being at an end when the provisions in relation to the obtaining of planning permission within the time limit prescribed were not complied with, in that the said planning permission did not issue?
4. Was it incumbent upon the plaintiff, being the vendor under the said contract, to notify the defendant, being the purchaser, that the said contract was at an end?
5. The said contract being conditional upon the said issue of planning permission did the plaintiff, being the vendor under the same, either expressly or by implication do any act or thing as would have indicated to the purchaser that they were waiving the requirement of compliance with the said condition or otherwise indicating that she was treating the said contract as unconditional?
6. Was the defendant, being the purchaser under a conditional contract entitled to assume in the absence of the said condition being fulfilled as therein provided that the plaintiff being the vendor, had waived the said condition or that the contract had otherwise become unconditional or otherwise enforceable.”
The case came for hearing before Carroll J. and she delivered a reserved judgment on the 12th November, 2003. The effect of the answers which she gave to the questions was that the respondent succeeded in his contention that there was still a subsisting contract.
It would seem to me that the reasoning of Carroll J. was based on the arguments and agreed parameters of the case put before her by counsel which were more or less repeated at the hearing of the appeal before this court. For instance, the learned trial judge states in her judgment that the vendor submitted firstly that the condition about planning permission was a condition precedent, “in which case no contract came into existence”. It would seem to me that to quite an extent, even before this court, counsel on both sides accepted that there was a relevant issue as to whether the condition was a “condition precedent” or a “condition subsequent”. For reasons which I will elaborate on, I do not consider that that distinction is either particularly relevant or particularly helpful.
Of the many cases included in the book of authorities the one which the learned trial judge found most relevant was Sepia Limited v. M. and P. Hanlon Limited [1979] I.L.R.M. 11, a decision of Costello J. I would respectfully differ from the learned trial judge in the degree of relevance that she attached to that case which would seem to me to be quite different in a number of respects. In the Sepia case there had been a contract of sale subject to the granting of planning permission. There was no time limit on the condition as to planning permission but there was a specified closing date in connection with which it had been made clear that time was of the essence and in the context that the planning permission had to be obtained before the closing date. A second contract was then entered into relating to separate property and containing no condition as to planning permission but amending also the first contract the end result of which was that there was a common closing date in respect of which for the reasons given by Costello J. time was not of the essence. Since there was only a non-essential closing date and no express time limit on the planning condition, clearly the only relevant date could be a date created by a notice making time of the essence. Costello J., however, pointed out at p. 24 of the report that in the case of the first contract if the purchaser did not waive the special condition relating to planning permission that contract “would come to an end at the expiration of the notice (the condition relating to planning permission not having been complied with)” and the learned judge cites Smith v. Butler [1900] 1 Q.B. 694; and Aberfoyle Plantation Limited v. Cheng [1960] AC 115 (a case relied on by the appellant on this appeal). If anything, that sentence, in my opinion, is more helpful to the appellant than to the respondent but I do not think that Costello J’s words should be interpreted as his having expressed any view as to whether in the case of a conditional contract, if the condition fails there is a self-executing termination of the contract or on the other hand if one of the parties has to indicate that he or she is treating it as at an end. It will emerge later in this judgment that I favour the latter view and in so doing, I am satisfied that I am in no way differing from any views expressed by Costello J. I do not think that he addressed that question at all as it did not arise.
Returning to the case at hand, the position, as I see it, is that although a helpful book of authorities has been furnished to the court none of the cases are directly in point to the precise questions that arise here. It is important, however, to note that whatever answers may be arrived at by this court to the questions raised in the summons it does not necessarily follow that they can be transported to some other future case in which a planning permission condition or some similar condition is inserted. In every case, as to what is to happen in the event of a condition not being fulfilled is first and foremost a matter for agreement between the parties. The courts will uphold any lawful agreement in this connection. Such agreement may be expressed or implied. If, however, there are no express provisions and if there are no concrete outside circumstances which would raise particular implications there are principles which a court can lay down as applicable in interpreting what the implied agreement of the parties is.
The important principles in this connection were in fact laid down by the Privy Council in Aberfoyle Plantations Limited v. Cheng cited above, principles which in whole or in part have been referred to in Irish cases as well as Australia, New Zealand, Northern Ireland and other English cases. Lord Jenkins (who sat with Lord Denning and the Rt. Hon. L.M.D. de Silva) in giving the advice of the Board laid down the following principles as applicable subject of course to different arrangements having been agreed between the parties.
“(i) Where a conditional contract of sale fixes a date for completion of the sale, then the condition must be fulfilled by that date;
(ii) Where a conditional contract of sale fixes no date for completion of the sale then the condition must be fulfilled within 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.”
The decision of the Privy Council in Aberfoyle has always been controversial but only in one respect. On one interpretation of the opinion delivered by Lord Jenkins (I put it this way because there are hugely varying interpretations as to what he did in fact mean) the condition in that case was treated as a condition precedent in the sense of a condition precedent to the coming into existence of the contract. But as far as I can understand from the case law both in this jurisdiction, in Northern Ireland, in England, in Australia and New Zealand there is no judicial controversy as to the principle that if a time limit is specified in such a condition, then, in the absence of agreement to the contrary it is non-extendable. Not only was this principle accepted by Costello J. in Sepia as referred to above but it was also acknowledged by McWilliam J. in Maloney v. Elf Investments Limited (unreported judgment in the High Court delivered 7th December, 1979). Speaking in the context of waiver of the condition which of course does not apply here, McWilliam J. at p. 8 of the judgment said that he was of opinion that “in the absence of any other authority, that the decision in the Aberfoyle case as to the necessity for exact compliance with the date mentioned in the condition means that there can be no question of waiver after that date has passed.” Again in reliance on Aberfoyle Murray J. in the Northern Ireland case of McKillop v. McMullan [1979] N.I. 85 at 92 appears to endorse the view that where there was a specified completion date and the contract was subject to planning permission that date had to be adhered to for fulfilment of the condition. In this non-controversial respect Aberfoyle has been followed also in judgments delivered in the High Court of Australia in Perri v. Coolangatta Investments Property Limited (1982) 149 CLR 537. In relation to all aspects of this case I have gained considerable assistance from the judgments in that Australian case and I will be returning to them. It is of some passing interest to note that the five judge court comprised three judges all of whom are now former Chief Justices of the High Court of Australia and each of whom delivered written judgments. The court consisted of Gibbs C.J., Stephen, Mason, Wilson and Brennan JJ.
The judgment of Kenny J. in Healy v. Healy (unreported judgment 3rd December, 1973) deals with the question of waiver and is not of any real assistance in this case except that by way of obiter dicta Kenny J. throws out the suggestion that where, as in this case, the closing date is fixed by reference to the grant of the planning permission under the condition and where no planning permission has in fact issued by the date the so called contract without the obligation to comply with the condition might be void for uncertainty. It would seem to me that a court would be slow to come to that conclusion unless it was absolutely compelled to do so. Fortunately the question does not arise to be determined on this Vendor and Purchaser summons.
I am of the view, for the reasons which I have indicated, that once the date mentioned in the condition had passed without the planning permission being available there was an entitlement to bring the contract to an end. I put it that way because I do not accept (and it is clear from the judgment of Carroll J. that counsel for the appellant in the High Court was in agreement on this) that the contract automatically came to an end. It was capable of being brought to an end by notification from one party to the other. I cannot agree with the learned High Court judge that a twenty eight day notice under the contract would have to be served. Indeed the clause in the form of Law Society contract used requiring in certain circumstances a twenty eight day notice is not drafted so as to cover the situation which arose here.
There is no doubt that the condition was not fulfilled within the prescribed time but the question is, did the appellant effectively bring the contract to an end?
It is at this point that it is helpful and relevant to summarise the relevant facts. The relevant condition read as follows:
“The contract herein is subject to the purchaser, his servants or agents obtaining Final Grant of Planning Permission for the residential development applied for by him, his servants or agents on the property at sale herein and after conclusion of all appeals (if any) within 4 months of the date hereof.”
It is that “special condition” which rendered the contract a “conditional contract” an expression to which I will return. A subsequent “special condition” read as follows:
“The closing date herein shall be 7 days after issue of the Final Grant of Planning Permission referred to at special condition 4 above.”
It is clear from the correspondence exhibited that the contract had been drawn up about two months before it was actually signed and had originally inserted a six month period which because of the delay was altered to four months. The closing date suggested by the purchaser of four weeks after the issue of the planning permission was altered to seven days on the insistence of the respondent. The only significance of those negotiations is that they clearly negative any suggestion that the time limit on the condition was not intended to be essential. There is quite clearly nothing therefore to negative the general law on this as enunciated in Aberfoyle.
The subsequent events were in many ways strange and remain unexplained. A perfectly sensible letter was written on the 23rd August, 2001 by Patrick Tallan and Co., solicitors for the appellant to Richard Dennehy and Co. the solicitors for the respondents. The letter noted that the solicitors for the vendor had not heard from the other solicitors for some time in relation to the planning application and asked for information as to the status thereof and as to when the purchaser would be in a position to complete. The affidavit of the appellant states that that letter elicited no reply or information. However, this is disputed in a replying affidavit of the respondent in which he says that it is incorrect to assert that the appellant received no reply or information from the respondent regarding that query contained in the letter. He says that he is instructed by his solicitor that the solicitor telephoned the appellant’s firm in or about 19th September, 2001 and advised Ms. Brenda Rushe of that firm that he was not in a position to confirm the planning application as he had difficulties contacting his clients who were out of the country on business at that time and further advised her that he was not in a position to confirm matters in writing due to a family bereavement. It is stated that the solicitors suggested to Ms. Rushe that she should request her clients to call into the offices of C. and M. Holdings Limited in Ashbourne to speak to either a Mr. Gerard Foran or himself as to the current status of the planning permission. In the event, whether this happened or not is not particularly relevant because it appears that no further correspondence passed between the parties until September, 2002. The first such letter came from Richard Dennehy and Co. to Patrick Tallan and Co. and was dated the 3rd September, 2002. It read as follows:
“Dear Sirs
We refer to the above and our recent conversation regarding the same.
We now understand that planning permission issued in June of this year. However an appeal was lodged and this appeal is pending hearing in September or October of this year.
Our clients are confident that the appeal will not cause difficulty to them.
Further to the same and to enable completion can you please reply to our requisitions on title which were forwarded on the 26th June, of last year and confirm that our draft transfer deed is approved.
Yours faithfully”
There was a follow up letter of the 11th September requiring a Residential Property Tax Clearance Certificate and a Capital Gains Tax Clearance Certificate but nothing turns on that since the letter of the 3rd September was replied to by Patrick Tallan & Co. by a letter of the 12th September, 2002. It is important that I should quote this letter in full. It reads as follows:
“Subject to contract/contract denied
Re: Your client: Patrick Coady
Our client: Mary O’Connor, lands at Castle Street,
Ashbourne, Co. Meath
Dear Sirs
We acknowledge receipt of your letter of the 3rd inst. And were most surprised at the contents. As you are aware, under the terms of the contract, this contract has lapsed and is at an end.
Without prejudice, however, our clients will be prepared to renegotiate terms for the sale of the property and if your client wishes to make an offer perhaps you would let us hear from you at your earliest possible convenience.
In order to finalise matters we return herewith deposit in the sum of âŹ57,138.21 (ÂŁ45,000).
In the meantime, of course, we have no authority to bind our clients in this or any related correspondence and they will not be so bound until formal contracts have been executed by them and a full deposit paid. We are not agents within the meaning of the Statute of Frauds.
Yours faithfully”
A number of points are worth noting from this letter. First of all it is not a letter expressly purporting to rescind the contract. On the face of it, it is simply expressing surprise on the basis that the contract had lapsed once the date on the condition had passed. It is necessary, however, to look at the substance and not the mere form of the letter. There is no doubt that the letter is making clear that the vendor does not regard herself as bound by the contract. The denial of contract at the head of the letter copper fastens that view. Once the condition was not fulfilled within the correct time either party was entitled to treat the contract as at an end but was bound to notify the other party that he or she was so treating it. Once such notification in whatever form took place there was no longer a contract unless the party purporting to treat the contract as at an end had in fact expressly or impliedly affirmed the contract. Mere lapse of time would not necessarily constitute such affirmation, there would have to be some positive indication that the party otherwise entitled to rescind was treating the contract as still in being. Although time was allowed to elapse in this case no such affirmation took place and, therefore, this voidable contract was effectively avoided or rescinded by the letter of the 12th September, 2002.
As I have already pointed out, counsel for the appellant has not argued in either court that the contract automatically came to an end. On one view this concession was surprising in the light of the terms of the letter of the 12th September, 2002 in which the case of automatic lapse was made. I agree with the views of McCracken J. that the issue of automatic lapse does not arise but, for reasons which I will be indicating, my present view at any rate, would be that such a conditional contract is voidable and not void on the non-fulfilment of the condition.
The second point to be noted from the letter of the 12th September, 2002 is the phrase “in order to finalise matters” preceding a statement that they were returning the deposit. The deposit was not in fact enclosed. However, as McCracken J. points out in his judgment it appears to be accepted that this was an oversight. The non-return of the deposit therefore is not inconsistent with the rescission.
If I am right in my view that the time limit on the condition would not be self-executing and that an act of rescission would be required, the basis for such requirement must be considered as flowing from the implied agreement of the parties. Obviously such rescission cannot be effective after a positive affirmation of the contract.
In fairness to the parties on both sides of this case and their legal advisers, the questions raised are not without difficulty and have not really been considered before by the Irish courts. Analogous questions, however, have been considered in the Australian case of Perri referred to above. I do not intend to go into the facts of that case in too much detail. The condition involved was not a planning permission condition though other Australian cases involving such a condition are considered throughout the judgments in the context of their relevance. The condition in the Perri case was that the contract was being entered into subject to the purchasers completing a sale of certain other properties. No express time limit was fixed for the performance of the condition but it was held, as would be held in these courts, that it had to be complied with within a reasonable time. Nor was there an express completion date. Despite the differences in the factual background the observations of the judges were in many instances highly relevant to this case. First of all, a number of the judgments dealt with the distinction between condition precedent and condition subsequent. Both counsel in this case and, I think by implication, the learned trial judge considered that distinction relevant. But the Australian judgments and references to other cases and articles contained therein dealing with that distinction have convinced me that it is not really a helpful one. On the hearing of the appeal before this court, counsel for the appellant, Mr. O’Dwyer, S.C. and counsel for the respondent, Mr. Ralston, S.C. seemed to assume that the expression “condition precedent” necessarily and exclusively refers to a condition the effect of non-compliance with which means that no contract of any kind comes into existence. They seemed to take the view that every other kind of a condition that might be said to render the contract “conditional” was a condition subsequent. Gibbs C.J. in the Perri case considered that the completion of the sale of the other property was a “condition precedent to the performance of certain of the obligations of the parties under the contract including the obligation of the respondent to complete the sale.” He goes on to make the following observation:
“It has sometimes proved difficult to decide whether a particular condition of a contract should be classified as a condition precedent or a condition subsequent, and as Professor Stoljar has pointed out in ‘the contractual concept of condition’ Law Quarterly Review Volume 69 (1953) 485 at p. 506 if the words ‘precedent’ and ‘subsequent’ are to make sense they must be connected with a definite point of reference since they express a relationship in time, the question which must be asked is ‘precedent to what? Subsequent to what?’. However, provided the effect of a condition is clearly understood, its classification may be merely a matter of words. The condition in the present case was not a condition precedent to the formation of a binding contract (my emphasis). It is clear that a binding contract came into existence immediately upon signature, and that the parties to it were from that moment subject to certain obligations.”
Referring to a passage in a judgment of Isaacs J. in another Australian case Maynard v. Goode (1926) 37 CLR at 540 he agrees with Isaacs J. in pointing out that
“In one sense the stipulation might be a condition precedent to the performance of a particular term of the contract, while in another sense it was a condition subsequent in relation to the whole contract, since the failure of the stipulation would have entitled the vendor to retire from the transaction altogether.”
He goes on to refer to other cases in which it was pointed out the problems of making any relevant distinction between condition precedent and condition subsequent. Mason J. deals with the topic in similar vein in his judgment. He points out that generally speaking the court will tend to favour the construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of the contract. He points out that in most cases it is artificial to say in the face of the details settled upon by the parties that there is no binding contract unless the event in question happens. This view exactly corresponds with the view expressed by McWilliam J. in O’Mullane v. Riordan [1978] I.L.R.M. 73 at 77 where he said the following:
“The price of the land has increased astronomically since May 1972 and it has been argued that, as this contract was subject to a condition (i.e. the obtaining of planning permission) there was no contract until the planning permission had been obtained and that this is the time at which I have to ascertain the value of the land for the purpose of establishing the fairness of the bargain. I was referred in this context to the case of Aberfoyle Plantations Limited v. Kajw Bien Cheng [1960] AC 115. I cannot accept this argument. The fact that a contract is subject to a condition has the effect of making it unenforceable until the condition is fulfilled, but it does not mean that there is no contract at all and the case cited decided that the purchaser was entitled to recover his deposit under a term of the agreement. A conditional contract is one which becomes enforceable provided the condition is fulfilled within the time provided by the contract or if no time is provided within a reasonable time.”
I think that this was the view adopted also by Murray J. in the Northern Ireland case of McKillop cited above notwithstanding the adverse views on that case expressed by the learned High Court judge.
Returning to the Perri case and moving to the judgment of Wilson J. he refers to a passage in the judgment of the well known New Zealand judge, Cooke J., in a case called
Hunt v. Wilson (1978) 2 NZLR 261 at 267 in which that judge said the following:
“I venture to think that the ambiguous labels precedent and subsequent when applied to conditions are seldom of real help in solving issues in this branch of contract law. Certainly they can be positively misleading unless the meaning of what has been said is made specific by explaining to what the condition in question is seen as precedent or subsequent”.
Wilson J. goes on to agree with that view and to point out that the special condition in the Perri case could be described with accuracy as either a condition subsequent to the formation of the contract or is a condition precedent to an obligation in either party to proceed to completion. These views as to the respective meanings of “condition precedent” and “condition subsequent” and as to their frequent overlap were endorsed in the judgment of Brennan J. with which Stephen J. agreed.
In my view, the more helpful terminology is the distinction between a “conditional contract” and an “unconditional contract”. As we all know, by a strange quirk of the law, ordinary terms of an unconditional contract if they are of sufficient importance will themselves be described as “conditions” but that does not mean that the contract is conditional. Normally, a conditional contract will not mean a contract which only comes into existence upon fulfilment of the condition but rather a contract which can only be enforced upon fulfilment of the condition. That is what this contract was.
As I have explained, it has already been conceded that the contract did not automatically lapse upon the breach of condition. Although not all of the views of the judges in the Perri case on this point fully coincided, I think that the case can be read as supporting that concession. But if the contract does not automatically “lapse” to use the terminology contained in the letter from the solicitors for the appellant, how does it come to an end? That is the question which now has to be explored in more detail and on that question also there was no real assistance to be gained from any of the authorities in the book of authorities but I did find assistance from the judgments in the Perri case. Gibbs C.J. in paragraph 10 of his judgment said the following:
“For these reasons I consider that when the time has elapsed for performance of a condition which is not a promissory condition, but a condition precedent to the obligation to complete a contract of sale, either party, if not in default, can elect to treat the contract as at an end if the condition has not been fulfilled or waived and that it is not necessary first to give a notice calling on the party in default to complete the contract or fulfil the condition.”
Later in the same paragraph the same judge says the following:
“Although in Aberfoyle Plantations Limited v. Cheng ⌠an erroneous view may have been taken of the nature of the condition there considered, nevertheless, in my respectful opinion, it was correct to hold that the time fixed by the contract for performance of the condition was not to be extended by reference to equitable principles, ⌔
But in paragraph 11 the same judge also observes:
“In the view that I have formed, it was then open to the respondent to avoid the contract without first giving any notice limiting a reasonable time for completion. By instituting the proceedings, before the condition had been either fulfilled or waived the respondent sufficiently evidenced its election to avoid the contract.”
I should point out that these views expressed by Gibbs C. J. were in the context of his approving similar views expressed in other Australian cases and in particular the following passage expressed in a case of Gange v. Sullivan (1966) 116 CLR 441:
“Whilst the effect of a condition must in every case depend upon the language in which it is expressed and a decision upon the meaning of one condition cannot determine the meaning of a different condition, the authorities cited do show a disposition on the part of the courts to treat non-fulfilment of a condition such as that here under consideration as rendering a contract voidable rather than void in order to forestall a party to a contract from gaining some advantage from his own conduct in securing or contributing to the non-fulfilment of a condition bringing the contract to an end. Accordingly ⌠we are prepared to treat the non-fulfilment of the condition as rendering the contract voidable rather than void.”
Mason J. also makes it clear that, in his view, the time clause would not be self-executing and that the party relying on it would have to rescind. Indeed, that appears to have been the view of all the judges. As there is no authority requiring this court to hold otherwise, I have likewise taken the same view as the Australian courts endorsed in English cases also that non-fulfilment of the condition within the time stipulated renders the contract voidable rather than void. This would seem to me to be especially sensible in the Irish context. I think that two Irish solicitors dealing with each other on a sale would naturally assume that if one was going to treat the contract as at an end because of the breach of the condition he would so inform the other and that it is reasonable to imply such an obligation. This observation is necessarily obiter as the question was not argued in the light of counsel’s concession.
I would allow the appeal. I would answer the questions in the manner suggested by McCracken J. in his judgment.
Connor v Coady (Supreme Court)
THE SUPREME COURT
414/03
McGuinness J
Geoghegan J
McCracken J
In the Matter of the Vendor and Purchaser Act 1874
Between:
Mary O’Connor
Plaintiff/ Appellant
AND
Patrick Coady
Defendant/ Respondent
Judgment of Mr Justice McCracken delivered the 21st day of October 2004
___________________
The Contract
By a contract in writing dated 31st May 2001 and made between the Appellant as vendor and the Respondent as purchaser the Respondent agreed to purchase the lands comprised in Folio 35939F of the Register of Freeholders County Meath for the sum of ÂŁ450,000. The contract was subject to a number of special conditions, two of which are relevant to the present dispute. They are:-
“3. The contract herein is subject to the purchaser, his servants or agents obtaining final grant of planning permission for the residential development applied for by him, his servants or agents on the property at sale herein and after conclusion of all appeals (if any) within four months of the date hereof.”
“6. The closing date herein shall be seven days after the issue of the final grant of planning permission referred to at special condition four above.”
Quite clearly the reference in the latter special condition ought to be to special condition three as quoted above.
The general conditions of the contract were those contained in the Incorporated Law Society of Ireland General Conditions of Sale (1995) edition. These contained a provision regarding completion notices, the relevant portions of which are:-
“40. Save where time is of the essence in respect of the closing date, the following provisions shall apply:-
(a) If the sale be not completed on or before the closing date either party may on or after that date (unless the sale shall first have been rescinded or become void) give to the other party notice to complete the sale in accordance with this condition, but such notice shall be effective only if the party giving it shall then either be able, ready and willing to complete the sale or is not so able, ready or willing by reason of the default or misconduct of the other party.
(b) Upon service of such notice the party upon whom it shall have been served shall complete the sale within a period of twenty-eight days after the date of such service (as defined in condition 49 and excluding the date of service), and in respect of such period time shall be of the essence of the contract but without prejudice to any intermediate right of rescission by either party.”
Subsequent Actions of the Parties
At the date of the contract the Respondent had already applied for planning permission, which application included both the lands in sale and other adjoining lands the property of the Respondent, however no planning permission issued within the four month period referred to in special condition (3). By letter dated 23rd August 2001 the Appellant solicitor inquired as to the status of the planning application and as to when the Respondent expected to be in a position to complete the contract. There is some dispute as to whether there was a verbal response to this letter but that is not really relevant to these proceedings, and it is common case that no further correspondence took place on either side until over a year later, long after the four month period had expired.
On 3rd September 2002 the Respondent solicitor wrote to the Appellant solicitor in the following terms:-
“Re: Your client Mary O’Connor
Our client Patrick Coady
Lands at Castle Street, Ashbourne, County Meath
Dear Sirs
We refer to the above and our recent conversation regarding the same.
We now understand that Planning Permission issued in June of this year. However an Appeal was lodged and this Appeal is pending hearing in September or October of this year.
Our clients are confident that the Appeal will not cause difficulty to them.
Further to the same and to enable completion can you please reply to our requisitions on title which were forwarded on the 26th June of last year and confirm that our Draft Transfer Deed is approved.”
This was replied to by the Appellant’s solicitors by letter of 12th September 2002 headed “SUBJECT TO CONTRACT/ CONTRACT DENIED”.
The letter read:-
“Re: Your client Patrick Coady
Our client May O’Connor
Lands at Castle Street Ashbourne County Meath.
Dear Sirs
We acknowledge receipt of your letter of the 3rd inst. and were most surprised at the contents. As you are aware, under the terms of the Contract, this Contract has lapsed and is at an end.
Without prejudice, however, our clients would be prepared to re-negotiate terms for the sale of the property and if your client wishes to make an offer, perhaps you would let us hear from you at your earliest possible convenience.
In order to finalise matters, we return herewith deposit in the sum of âŹ57,138.21 (IRÂŁ45,000).
In the meantime, of course, we have no authority to bind our clients in this or any related correspondence and they will not be so bound until former contracts have been executed by them and a full deposit paid. We are not agents within the meaning of The Statute of Frauds.
Yours faithfully”
Due to what appears to be accepted as an oversight the deposit was not in fact enclosed with that letter, but was returned shortly afterwards. On 20th September 2000 the Respondent lodged a caution in the Land Registry. Planning Permission was ultimately granted by An Bord Pleanala on 4th October 2002. On 19th November 2002 the Respondent issue specific performance proceedings in the Circuit Court. These present proceedings were issued by the Appellant on 11th November 2002.
The Relief Sought
The initial special summons issued by the Appellant sought the decision of the Court pursuant to the provisions of the Vendor and Purchaser Act 1874 of the following matters:-
“Was the plaintiff entitled to rescind the contract dated 31st May following the failure of the defendant to comply with the special condition on obtaining planning permission by the 30th September 2001.
Did the plaintiff in fact validly rescind the said contract of the 31st May 2001.
Is the defendant entitled to register the said caution in the Land Registry.”
The latter point did not in fact become an issue in these proceedings, but the special summons was subsequently amended by the addition of the following queries:-
“Was the plaintiff under the said contract entitled to regard the said contract as being at an end when the provision in relation to the obtaining of planning permission within the time limit prescribed was not complied with, in that the said planning permission did not issue?
Was it incumbent upon the plaintiff, being the vendor under the said contract, to notify the defendant, being the purchaser, that the said contract was at an end?
The said contract being conditional upon the said issue of planning permission, did the plaintiff, being the vendor under the same, either expressly or by implication to any act or thing as would have indicated to the purchaser that they were waiving the requirement of compliance with the said condition or otherwise indicating that she was treating the said contract as unconditional?
Was the defendant, being the purchaser under a conditional contract entitled to assume in the absence of the said condition being fulfilled as therein provided that the plaintiff, being the vendor, had waived the said condition or that the contract had other wise become unconditional or otherwise enforceable?”
Decision of the High Court
The summons came for hearing before Carroll J and by her judgment dated 12th November 2003 she answered the queries raised in the amended summons as follows:-
“1 The plaintiff was entitled to rescind the contract following the failure of the defendant to obtain planning permission by 30th September 2001 provided she served a completion notice under clause 40 of the General Conditions of Sale and if the defendant failed to comply with the notice.
2 The plaintiff did not in fact validly rescind the contract of 31st May 2001.
3 The plaintiff was not entitled to regard the contract as being at an end when the planning permission was not obtained within the time prescribed by the contract.
4 The plaintiff was not entitled to notify the defendant that the contract was at an end when planning permission was not obtained within the time prescribed by the contract.
5 & 6 The plaintiff did not indicate to the defendant that she was waiving the requirement of compliance with the condition relating to the issue of planning permission. It was the defendant who had the right to waive this condition not the plaintiff. The contract did not become unconditional or otherwise unenforceable.”
In her judgment the learned trial Judge partially relied on the decision of Costello J (as he then was) in Sepia Ltd and Opal Ltd v. M & P Hanlon Ltd and Seaborn Ltd [1979] ILRM 11. Having quoted a passage from the judgment in that case, she said at page six of her judgment:-
“In my view the construction given by Costello J to the first contract must equally be applied to the contract in this case. Time was not made of the essence of the contract when the closing date was fixed. After the purchaser was in default in closing the sale on the day fixed, then in order to bring finality to the contract the vendor would have to serve a notice making time of the essence of the contract under clause 40 of the General Condition of Sale. At the end of the period of 28 days provided for in clause 40, if planning permission had been obtained, the purchaser was bound to complete. If planning permission had not been obtained, the purchaser could waive the provision and complete the sale. If the purchaser did not waive the condition then the contract would come to an end at the expiration of the notice.
The vendor was not entitled to say in this case that the contract was at an end and return the deposit, just because the planning permission had not then come through within the time limited by the contract.
It was essential that a completion notice under clause 40 of the general conditions be served and that the time fixed by the notice should have elapsed without completion, before the vendor could treat the contract as at an end.”
I am afraid I cannot agree with this construction of the contract. Clause 40 of the General Conditions of Sale relates expressly to the completion of the sale and not to compliance with a condition. In fact, under that clause a 28 day notice cannot be served until after the closing date has passed. Under the present contract the closing date was seven days after the granting of planning permission, and therefore it is clear that no notice could be served until after the condition had been complied with and planning permission had been granted. However, it is true to say that in relation to the time limit for compliance with the condition, there was no express provision that time should be of the essence of the contract. It is therefore arguable that, after the time limit had expired, it was necessary for the Appellant to serve a notice making time of the essence of the contract, and giving a reasonable period within which the condition was to be complied with.
The Nature of the Condition
Both before the learned trial Judge and at the hearing of this appeal there was considerable discussion as to whether the condition relating to planning permission was a condition precedent or a condition subsequent. The distinction may at times be of considerable importance, in that if there is a condition precedent, then no contract comes into existence unless the condition is fulfilled, while if there is a condition subsequent, there is a valid contract in being, but it is not enforceable unless the condition is fulfilled. However, the distinction does not seem to me to be relevant in the present case. The real issue in this case is not whether a contract ever existed, but whether the terms of the contract can be enforced once the time for compliance with the condition has passed.
Effect of the Condition
The important features of this condition are, firstly that it relates to a planning application which was already in existence, secondly there was a fixed period for compliance with the condition and thirdly time was not made of the essence of the contract in relation to that period. The general principles relating to conditional contracts were laid down expressly and succinctly by Lord Jenkins giving the judgment of the Privy Council in Aberfoyle Plantations Ltd v. Cheng [1960] AC 115. After pointing out that the intention of the parties as expressed in the contract ought to be implied from the language used therein was all important, he said at page 124:-
“But, subject to this overriding consideration, their Lordships would adopt as warranted by authority and manifestly reasonable in themselves, the following general principles: (I) Where a conditional contract of sale fixes a date for the completion of the sale, then the condition must be fulfilled by that date; (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.”
While that case did not refer to a planning condition, nevertheless the principles enunciated have since been adopted as being applicable to planning conditions.
The condition in the present case clearly comes within the principles set out at (III) cited above.
In an earlier case, cited in the Aberfoyle Plantations Limited case, somewhat similar views were expressed by Maugham J. In In Re Sandwell Park Colliery Company [1929] 1 CH 277 a contract was subject to what was admittedly clearly a condition precedent, namely the approval of the Court. At page 282 Maugham J stated as a general principle:-
“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 the 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 of 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 on 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 purchaser must be bore in mind.”
While that case concerned a condition precedent and concerned a condition to be performed by the vendor rather than the purchaser, in my view the same principles apply to the present case. Whether this is a condition precedent or a condition subsequent, the existence of the mutual obligations, or their enforcement, is dependant on the performance of the condition. There is no undertaking by the purchaser in this case that the condition will be fulfilled, and the vendor does not know whether he will ever get his money.
The effect of a conditional contract has been considered in several Irish cases since the Aberfoyle Plantations Limited case. In O’Mullane v. Riordan [1978] ILRM 73 McWilliam J implicitly refused to accept that a planning condition was a condition precedent to the coming into operation of a contract, and said at page 77:-
“The fact that a contract is subject to a condition has the effect of making it unenforceable until the condition is fulfilled, but it does not mean that there is no contract at all and the case cited (the Aberfoyle Plantations Ltd case) decided that the purchaser was entitled to recover his deposit under a term in the agreement. A condition contract is one which becomes enforceable provided the condition is fulfilled within the time provided by the contract or, if no time is provided, within a reasonable time.”
Similarly in Maloney v. Elf Investments Ltd (Unreported 7th December 1979) McWilliam J expressly rejected the argument that by analogy with the date fixed for closing, the time fixed in a contract for performance of a condition in relation to planning should be regarded in equity as the date fixed in the contract or a reasonable time thereafter unless time had been made of the essence of the contract. He expressly approved the third proposition in the Aberfoyle Plantations Limited case.
In Sepia Ltd & Anor v. M & P Hanlon Ltd & Anor [1979] ILRM 11 the effect of a planning condition was also considered. The facts of the case were somewhat complicated by the fact that there were two contracts involved, but the first contract contained a special condition which read:-
“(11) The contract is subject to the purchaser obtaining planning permission to develop the property the subject matter of the sale, which permission the purchaser shall apply for and take all proper steps to obtain with all reasonable speed, but nothing herein shall be deemed to effect the provisions of special condition number 8 herein.”
That there was no specific date by which the planning permission was to be complied with but condition 8 expressly made time of the essence of the contract in relation to the completion of the sale. In considering the effect of this, Costello J said at page 24:-
“In the first contract the parties had expressly made time of the essence of the contract when they provided that the sale was to be closed on 1 May 1975. Condition 11 relating to planning permission must be interpreted in the light of the necessity strictly to observe the date set for closing. The result is, in my opinion, that if the plaintiffs had failed to obtain planning permission by 1 May 1975 and if the closing date was not extended by mutual agreement then the defendants were entitled to treat the contract as at an end if the plaintiffs refused to complete: the absence of planning permission would not have excused the non performance by the plaintiffs of the contract.”
This was a case which came within the first proposition in the Aberfoyle Plantations Limited case, and is in accordance with that decision.
Finally, in the Northern Ireland case of McKillop v. McMullen [1979] NI 85 the Aberfoyle Plantation Limited case was expressly approved.
Strangely enough, there does not appear to be any case in which the Aberfoyle Plantations Limited decision was considered by this Court. However, it has been approved and followed in England, Australia and New Zealand. It appears to me to be a correct analysis of the legal position of conditions inserted in a contract which postpone the enforceability of the contract, be they conditions precedent or conditions subsequent. These propositions are clearly particularly applicable to conditions relating to the obtaining of planning permission, and indeed to any condition to where the time required for its performance is uncertain. Particularly in contracts for the sale of land, certainty is important to both parties. I am quite satisfied that the effect of the contract in the present case is that at the expiration of the four month period for obtaining planning permission the condition had not been fulfilled and the time allowed for its fulfilment could not be extended by reference to equitable principles.
The Effect of Non Compliance
Somewhat surprisingly the Appellant has not sought to argue that the contract came to an end immediately on the expiration of the four month period allowed for fulfilment of the condition. Indeed, the wording of the questions in the summons seems to make it clear that the Appellant considers that the failure to comply with the condition rendered the contract voidable rather than void. In my view there is certainly an argument to be made that where there is a fixed date by which there must be completion of a condition, the contract automatically becomes void on the failure to comply with the time limit. However, that is not an argument which this Court has been asked to consider, nor is it one raised on the pleadings, and accordingly, expressly without deciding the point, for the purposes of this decision I am assuming that the contract became voidable.
The letter of 12th September 2002 from the vendor’s solicitors did not opt to avoid the contract in express terms. It did state, rightly or wrongly, the belief and contention of the Appellant’s solicitor at the time that the contract had lapsed “and is at an end”. It offered to enter into negotiations for a new contract and it purported to return the deposit. Perhaps more importantly it was headed “Subject to Contract/ Contract Denied”. In my view this letter in unequivocal terms notified the Respondent solicitor that the Appellant was treating the contract as being at an end. In the absence of any express contractual provision, the rescission of a voidable contract does not have to be in any particular form. What is required is a clear notification that the relevant party is treating the contract as at an end. In my view this letter clearly complies with that requirement.
The only question, therefore, is whether the Appellant’s right to avoid the contract became lost due to the passage of time, either by reason of the Appellant’s delay in taking any action or by reason of the waiver of the condition by the Appellant. There is no doubt that there are many cases of this nature in which a condition inserted for the benefit of one party, in this case the Respondent, can be waived by that party, but that requires some positive act by that party. The fact that the Respondent in the present case continued his planning application and made no attempt to notify the Appellant that he was prepared to complete without the condition being fulfilled, seems to me to make it quite clear that the Respondent always considered that the condition remained. Indeed, the Respondent’s solicitor’s letter of 3rd September, which brought matters to a head, was written on the basis that the condition remained, but was shortly going to be complied with. Accordingly, in my view no question of waiver can arise.
The question of the Appellant’s delay might have been very serious had she done anything to encourage the Respondent to believe that she was not going to enforce the time limit attached to the condition. It could then possibly be argued that the situation amounted to an estoppel. However, there is no suggestion of anything of that nature in the present case. The Appellant simply did nothing until the Respondent notified her solicitor that the planning permission was shortly going to issue. The most that could be said is that her solicitor held the deposit, which of course belonged to the Respondent. On the other hand, the Respondent never requested the return of the deposit, and there is no suggestion that the Appellant personally benefited in any way from it being held by her solicitor. In those circumstances, I do not consider that the delay in any way effected the Appellant’s right to avoid the contract.
Conclusion
In the circumstances of this case I would allow the appeal. I am doing so on the basis that the contract became voidable on the expiration of the four month period for compliance with the planning condition, that the letter of 12th September 2002 constituted a valid rescission of the contract, and that this rescission took place before the planning condition had been fulfilled and in the absence of any waiver on the part of the Respondent.
I would therefore answer the questions in the summons as follows:-
1 The Plaintiff/ Appellant was entitled to rescind the contract dated 31st May following the failure of the Defendant to comply with the special condition on obtaining planning permission by 30th September 2001.
2 The Plaintiff/ Appellant did in fact validly rescind the said contract by the letter of 12th September 2002.
3 Whether the Plaintiff/ Appellant was entitled to regard the said contract as being at an end when the provisions in relation to the obtaining of planning permission within the time limit prescribed were not complied with, was not argued before this Court.
4 In view of the findings at (2) above, the question of whether it was incumbent on the Plaintiff/ Appellant to notify the Defendant/ Respondent that the contract was at an end does not arise.
5 The Plaintiff/ Appellant did not either expressly or by implication do any act or thing as would have indicated to the purchaser that she was waiving the requirement of compliance with the said condition or otherwise indicating that she was treating the said contract as unconditional.
6 The Defendant/ Respondent was not entitled to assume in the absence of the said condition being fulfilled as therein provided that the Plaintiff/ Appellant had waived the said condition or that the contract had otherwise become unconditional or otherwise unenforceable.
Hand v. Greaney
[2004] IEHC 391 (15 December 2004)
JUDGMENT of Mr. Justice Clarke delivered the 15th day of December, 2004.
In these proceedings the plaintiff seeks a determination by the court of a series of questions relating to the current status of a contract for the sale of lands dated 22nd September 2001 between the plaintiff of the one part and the defendant (in trust) of the other part. The plaintiff sold in his capacity as personal representative of the estate of the late Ann Kearney. In the relevant contract it was agreed that certain lands in County Offaly were to be sold by the plaintiff in his capacity as such personal representative to the defendant for a sum of âŹ2,850,000. The agreement was subject, inter alia, to certain clauses and conditions relating to planning permission the interpretation and application of which form the basis of the dispute between the parties which the court is now required to resolve.
It is appropriate, therefore, to set out in full the relevant clauses which are contained in the special conditions to that contract.
They are as follows:-
“7. This sale is strictly subject and conditional, to the vendor obtaining a Grant of full Planning Permission for 93 detached two storey dwelling houses, from Offaly County Council on foot of planning permission planning register reference number PL2/02/470, which said application for such planning permission has been applied for to date via a joint application between Golden Vale Marts Limited and Bridie Lee. Upon the said grant of planning permission issuing from Offaly County Council pertaining to the lands the subject matter of this sale, this sale shall be completed 14 days thereafter and/or 14 days subsequent to the issue of the original grant of probate of the estate of the late Annie Kearney deceased whichever is the latest. Once the said grant of planning permission has issued it is then the responsibility of the purchaser to comply with any/all conditions attached thereto, insofar as it relates to that portion of the lands the subject matter of this sale, and duly comprised in part of Folio 8649 of the Register of County Kings AND also in conjunction with the owners of the neighbouring lands duly owned by Golden Vale Marts Limited in relation to (a) the common entrance, (b) the roundabout and (c) the common services pertaining to this entire development on foot on the entire grant of planning permission planning register reference number PL2/02/470. In that respect the vendor herein must enter into an agreement with the owner/developer of the adjoining neighbouring lands duly owned at present by Golden Vale Mart Limited in relation to the main access road (i.e. the common entrance) roundabout and common/work services affecting the boundaries of each of the respective properties.
19. The purchaser shall not be obliged to close until:-
(a) the final grant of permission has issued from the local authority and An Bord PleanĂĄla satisfactorily in all respects to the purchaser in his absolute discretion and particularly as regards compliance with the section schedule to planning permission reference PL2/02/470 being requirements of the local authority and approval required to be lodged before any development can commence and any other matter.
(b) the vendor shall make all necessary arrangements as per the amendments to condition 7 herein to agree with Golden Vale Marts Limited arrangements satisfactory to the purchaser in his absolute discretion in relation to the services to be constructed for the joint benefit of Golden Vale Marts Limited and the vendor. The purchaser shall be advised of these arrangements as they progress and shall be notified of the arrangements prior to any final agreement being concluded between the vendor and Golden Vale Marts Limited regarding the provision of the services necessary to the development of the lands in sale and adjoining lands of Golden Vale Marts Limited.
21. In the event that conditions 19(a) or 19(b) above are not met to the satisfaction of the purchaser then and in that case the deposit will be returned immediately with interest accruing to the purchaser. If the purchaser confirms that conditions 19(a) and 19(b) are met to his satisfaction then the sale will close not later than 21 days following on the grant of satisfactory permission and conclusion of an agreement with Golden Vale Marts Limited and the issuing of a grant of probate to the estate of Annie Kearney, deceased, whichever event is the later.”
The only other material provision to be found in the special conditions is clause 6 which provides that the sale is subject to a grant of probate pertaining to the estate of the late Annie Kearney deceased being extracted as soon as possible.
As appears from the determination of An Bord PleanĂĄla proved in evidence a notification of a decision to grant planning permission by the local authority for a development subject to 33 conditions was issued by the planning authority per order dated 17th July, 2003.
Thereafter a third party appeal was brought to the planning board as a result of which the Board decided to refuse permission for reasons which are not material to the issues which I have to decide. The factual situation which gives rise to these proceedings emerged in the course of correspondence which passed between the parties subsequent to that refusal of An Bord PleanĂĄla which was made on 17th December, 2003.
On 16th January, 2004 the vendor’s solicitors wrote to the purchaser’s solicitors referring to the then recent decision of An Bord PleanĂĄla to refuse planning permission and went on to state as follows:-
“And with particular reference to special conditions 7, and 19(a) of the contract of sale I now presume that special condition 21 of the said contract for sale will now be invoked”.
The purchaser’s solicitors sent a holding reply on 19th January with a more detailed holding reply on 21st which concluded as follows:-
“Should our client elect to proceed you might indicate to us what the likely closing date would be. Obviously he has to consider the position carefully not only from a planning point of view but also from a bankable point of view”.
By letter of 4th February, 2004 the vendor’s solicitors returned the deposit together with interest accrued thereon and gave as the reason for so doing “the fact that on 17th December, 2003 last An Bord PleanĂĄla refused planning permission for this development; because of this our client is now invoking special condition 21 of the contract for sale by returning to your client the entire deposit along with all interest thereon, thus rescinding this contract for sale in its entirety”.
In a reply of 9th February, 2004 the purchaser’s solicitors relied upon the decision of this court in the case of O’Connor v. Coady (to which I will refer later). Based upon that decision it was contended that planning had not yet being received and “currently our clients are considering whether to waive that condition or not”. Reliance was also placed upon a contention that by virtue of the determination of this court in the above case a notice to complete was required prior to determination of the contract.
In a further reply dated 25th February, 2004 the vendor’s solicitors referred to special conditions 7, 9, 19, 20, 21 and 22 and specified that condition 19(a) was a condition subsequent and “quite clearly made planning permission a fundamental term”. The letter went on to contend that it was common case that such a permission cannot now issue and that the condition further restricts planning to planning reference PL2/02/470. The letter asserted that that condition could never thereafter be complied with and therefore, it was said, the contract stood discharged by the operation of the doctrine of frustration. In the premises therefore, it was asserted that a completion notice could not be served.
By letter of 5th March, 2004 the purchaser’s solicitors indicated on behalf of their client that he was willing to proceed with the purchase. After subsequent correspondence the content of that letter was clarified by a letter of 9th March which made it clear that the purchaser was purporting to elect to proceed with the purchase “without the benefit of planning permission”.
Thereafter proceedings commenced.
Having regard to the arguments addressed at the hearing the only further fact which appears to be of any relevance to the issues in the case is that the grant of probate to the estate of the late Anne Kearney issued on 21st day of April, 2004.
While a number of issues are raised in the questions in respect of which the court’s answer is sought in the pleadings the argument of counsel for the plaintiff concentrated on one line of reasoning. It should be noted that this argument did not follow exactly the contentions raised in the correspondence referred to above. However it is equally clear that the position of the defendant has had to alter from that adopted in that correspondence by virtue of the fact that the decision of this court in O’Connor v. Coady was reversed on appeal by the Supreme Court in a judgment delivered on 21st day of October, 2004.
It is therefore appropriate to set out the contending positions of the parties before proceeding to issue a determination in respect thereof.
In the O’Connor case the Supreme Court was required to consider the effect of a failure to obtain planning permission within a period specified in the contract (being on the facts of that case a four month period). Planning permission was not obtained within that period and thereafter, by letter, the vendor’s solicitors stated that the contract had lapsed “and is at an end”. The court held that the relevant letter complied with the requirement for rescission of being a clear notification that the relevant party is treating the contract as at an end. The court went on to note that a condition inserted for the benefit of one party can be waived by that party but that such waiver required a positive act by that party. The court specifically overruled the determination of this court to the effect that it was necessary to serve a completion notice.
While agreeing on the outcome of the case there was a possible difference of opinion between McCracken J. and Geoghegan J. as to whether the contract automatically came to an end (as opposed to being merely voidable) on the failure to obtain planning permission within the four month period specified in the contract. As was pointed out in the course of both judgments that issue was not argued and therefore did not fall for formal determination in the case. However McCracken J. noted that “somewhat surprisingly the appellant has not sought to argue that the contract came to an end immediately on the expiration of the four month period allowed for fulfilment of the condition”. On the other hand Geoghegan J. expressed the view that the contract became voidable upon the failure to obtain planning permission within the relevant period.
The Plaintiff’s Case
In those circumstances the plaintiff in these proceedings contends that the contract was conditional upon a planning permission being obtained. That as of the date of the refusal by An Bord PleanĂĄla the condition became incapable of performance so as to render the contract either at an end or, at a minimum, voidable. The plaintiff goes on to argue that the letter of 4th February, 2004 amounts to a clear indication on the part of the plaintiff that he is not bound by the contract. In reliance on the fact that the purported waiver occurred subsequent to both the refusal by An Bord PleanĂĄla and, indeed, the letter of 4th February the plaintiff argues that the contract was at best voidable subsequent to the refusal by An Bord PleanĂĄla of the planning permission concerned and thus came to an end at the latest on the receipt of the letter of 4th February.
The Defendant’s Contentions
The defendant contends that on a proper construction of the contract and in particular clauses 19 and 21 thereof and with particular reference to the fact that at all material times during February and March 2003 the grant of probate to the estate of the late Annie Kearney was outstanding, the time specified for compliance with the conditions to the contract had not expired. In those circumstances it is argued, in accordance with the principles set out in Aberfoyle Plantations Limited v. Cheng (1960) AC 115 that the date by which the conditional contract required the conditions to be fulfilled had not expired so that the purchaser remained entitled (until the date of the grant of probate) to consider whether to waive the planning clause. On that basis, it is contended, the purchaser retained the right to waive as of the exchange of correspondence in early March where it was, at the very least by 9th March, made clear that the purchaser intended to go ahead with the contract notwithstanding the refusal of planning permission and without the benefit thereof.
The Decision
It seems to me that the starting point for any consideration of the issues in this case is as to the proper construction of the contract. It is obvious that the precise way in which parties who wish a contract to be “subject to planning permission” may decide to structure the arrangements to that end is a matter for agreement between the parties. Thus the nature of the bargain entered into between the parties in relation to planning is ultimately a matter which requires a proper construction of the terms which they have negotiated and included in the contract. However in general terms it is likely that any effective “subject to planning” clause contained in a contract for the sale of land will have to address a number of matters but two in particular:-
(a) when the contract is stated to be subject to planning what is meant by planning. In this regard it is necessary for any such clause to set out the means by which it should be possible to determine whether planning has in fact been obtained in the manner contemplated. Precisely how this is to be done is a matter for agreement between the parties. In the clause in the instant case it is clear that whether or not the planning permission was satisfactory for the purposes of the contract was a matter to be determined in the absolute discretion of the purchaser. This absolute discretion vested in the purchaser extended to the question as to whether agreements between the vendor and Golden Vale Marts Limited (the neighbouring landowner who had submitted a joint planning application) which were anticipated as being likely to be required to give full effect to the planning permission were also satisfactory. In one sense it might almost be said that the contract, in substance, more resembles an option to purchase given the wide discretion granted to the purchaser by the terms thereof in relation to satisfaction with the planning permission ultimately to be obtained.
(b) The time within which the planning is to be obtained. In almost all of the cases to which I was referred (most of which are reviewed in O’Connor v. Coady), the relevant clause provided that planning was to be obtained within a specified period of time. However the clause in the instant case is quite different in that the contract is stated, in paragraph 7 of the special conditions, to be conditional upon the obtaining of a grant of planning permission “for 93 detached two storey dwelling houses” .. “on foot of planning permission planning register reference number PL2/02/470”. Thus the condition in this case was unusual in that it related to a specific planning application rather than leaving that matter at large and imposing a time limit. This is perhaps understandable in the context of the facts of this case where the local authority had already issued a notice of intention to grant planning permission and the parties were, therefore, as of the date of signing the agreement, aware of the specific planning application (and indeed decision of the local authority) to which the contract was being made subject.
As was pointed out by Geoghegan J. in O’Connor v. Coady (following an exhaustive review of the relevant authorities) it is more helpful to consider clauses of this type as being clauses which render a contract unenforceable until such time as the clause has been complied with rather than seeking to make distinctions between what might be termed conditions precedent and conditions subsequent. In that context the established jurisprudence on waiver (which was accepted by both parties) is to the effect that a waiver can only take place up to the date for fulfilling the condition but not later. Maloney v. Elf Investments Limited [1979] I.L.R.M. 253 at 256; Crean v. Drinan [1983] I.L.R.M. 82 at 86. Thus in the case of a planning condition which requires planning permission to be obtained within a specified period of time the combined effect of Aberfoyle (to the effect that time will be of the essence for compliance with a condition in the absence of an express term to the contrary) and the Maloney and Crean cases (to the effect that waiver can only take place up to the time specified for compliance with a condition) is that a party who might contemplate waiving a planning condition can do so up and until the time specified in the contract for compliance with the planning condition but not later.
However the key question in this case concerns the application of those principles to circumstances in which the contract (as here) specifies a specific planning application rather than a general time limit in the relevant condition.
It seems to me that the underlying principle behind the accepted jurisprudence referred to above is that waiver must take place at a time when there is at least a possibility of the contract being completed in accordance with its terms. As soon as that possibility disappears the contract ceases to be capable of being completed in accordance with its terms and waiver becomes impossible. Applying that general principle to the unusual terms contained in this contract it seems to me that compliance with the relevant condition became impossible when An Bord PleanĂĄla refused planning permission. That this was not a matter which the parties had in the forefront of their contemplation can be seen from the fact that while there are carefully drafted clauses concerning what is to happen if the planning permission might be, in the view of the purchaser, unsatisfactory there is no provision expressly dealing with the circumstances which are to prevail in the event that An Bord PleanĂĄla were to allow the third party appeal and thus refuse permission.
However the principle seems clear. Clause 7 in its terms makes the contract conditional upon obtaining a grant of planning permission on foot of the specific application which was, at the time of executing the contract, the subject of a notice of intention to grant by the local authority but subject to appeal to the Board. When the Board refused permission that condition ceased to be capable of being fulfilled.
Against this counsel for the defendant argues that as of late February or early March the contract remained conditional (and thus capable of waiver) by virtue of the fact that the grant of probate had not issued. While it is true to say that clause 21 specifies that closing is to take place not later than 21 days following on the grant of satisfactory permission and conclusion of an agreement with Golden Vale Marts Limited (as would be required to give effect to the permission) and the issuing of a grant of probate which ever be the later it seems to me that that clause is of no relevance in circumstances where the planning aspect of the contract cannot be complied with. The date specified in clause 21 can never occur because there can never be a “grant of satisfactory permission” in the only sense in which that phrase can be interpreted for the purposes of this contract (that is to say a permission on foot of reference number PL2/02/470).
Thus in the absence of a waiver in respect of the planning condition the grant of probate had also become an irrelevance as soon as An Bord PleanĂĄla refused the application.
Therefore whether one treats the contract as having come to an end at that stage (following the tentative views expressed by McCracken J. in Coady) or treats it as merely being voidable (following Geoghegan J.) does not seem to be relevant for the purposes of resolving this case. The vendor gave, in the letter of 4th February, a clear indication that he no longer considered himself bound by the contract. While the precise contractual clause referred to in that letter does not appear to be, in itself, relevant that does not, it seems to me, take away from the fact that as of that date the purchaser was aware that the vendor was treating the contract as at an end. Given that, for the reasons set out above, the vendor was, in my view, entitled to treat the contract as at least voidable upon the refusal by An Bord PleanĂĄla of the specified application for planning permission, it seems to me that the letter of 4th of February operates as a notification that the vendor was treating the contract as at an end. As was pointed out by Geoghegan J. in Coady in construing any such notification it is necessary to look at the substance and not the mere form of the letter. Furthermore it is noted (at p. 14 of the judgment) that once “the condition” is not fulfilled within the correct time either party becomes entitled to treat the contract as at an end but is bound to notify the other party that he or she is so treating it. Once such notification, in whatever form, takes place there is no longer a contract in being unless the party purporting to treat the contract as at an end has, in fact, expressly or impliedly affirmed the contract. Mere lapse of time does not necessarily constitute such affirmation, as there would have to be some positive indication that the party otherwise entitled to rescind was treating the contract as still in being.
There is nothing on the facts of this case which could be said to amount to an act on the part of the vendor which might be regarded as treating the contract as still in being.
In those circumstances I am satisfied that at the very latest upon the receipt of the letter of 4th February 2004 the contract was at an end. As this resolves the substance of the case it is unnecessary to decide whether it was already at an end from the 17th December 2003 when the Board gave it’s decision.
In the circumstances I would propose permitting a further amendment of the special endorsement of claim to seek in the alternative an answer to a further question as follows:-
“Did the contract for sale come to an end not later than the receipt of a letter of 4th February, 2004 from the vendor’s solicitors to the purchaser’s solicitors”.
I would propose answering that question “yes.”
In the light of that answer it is unnecessary to answer any of the other questions. The above question is, in reality, an aspect of the questions already asked.
Approved: Clarke J.
Sepia Ltd and Opal Ltd v M. & P. Hanlon Ltd and Seaborn Ltd
[1979] I.L.R.M. 11
(Costello J)
23 January 1979
COSTELLO J
delivered his judgment on 23 January 1979 saying: Moore Street and Moore Lane are two streets in the heart of the City of Dublin which run parallel to each other terminating at one end in Parnell Street and at the other in Henry Street. Some distance down from Parnell Street they are joined by a narrow public thoroughfare known as O’Rahilly Parade. The four roads, Parnell *13 Street, Moore Street, O’Rahilly Parade and Moore Lane form a square in which a number of different premises are situated. This area figures largely in this case and I will refer to it as the âParnell Street siteâ. Portion, but only portion, of the Parnell Street site consisted of premises of which the first-named defendants had an interest, i.e. Nos. 61â62 Parnell Street; Nos. 13, 15â18 O’Rahilly Parade; Nos. 27 and 27a Moore Street; and No. 16 Moore Lane. These premises have been referred to throughout these proceedings as âBlock Aâ and I will so describe them in this judgment. The defendants also own further property on the Henry Street side of O’Rahilly Parade; Nos. 21â25 Moore Street; Nos. 13â15 Moore Lane; Nos. 1â3 O’Rahilly Parade; and Nos. 1â2 Murray’s Court. These have been referred to as âBlock Bâ and I will continue so to describe them. The premises comprising both blocks, although old, were none the less of considerable value as they were situated in a part of the City of Dublin which for some time prior to the year 1974 had been considered ripe for re-development. At the time of the contracts of sale which are in controversy in this case most of them were occupied by the defendants for the purpose of their businesses.
The plaintiff companies carry on business as property developers. They are private companies registered in the Isle of Man where the principal shareholder of these companies resides. This action concerns a contract for the sale of Block A which the first-named plaintiff entered into on 16 May 1974 and a second contract for the sale of Block B (a contract which also amended the terms of the first contract) on 16 May 1975. The defendant companies are also inter-related and I will, for ease of reference, treat both plaintiffs and both defendants as being contracting parties to both contracts. It will be necessary to examine the terms of these contracts in more detail later in this judgment. For the moment and for the purpose of introducing the issues which may arise in this case it is sufficient now to point out that in the events that happened the closing date in respect of both contracts became 31 December 1976; by notice of 7 April 1977 the defendants called on the plaintiffs to close both sales within three months and made time the essence of the contract; the sales were not closed and the defendants claimed to be entitled to retain the sum of ÂŁ30,000 paid by the plaintiffs on the signing of the first contract and the sum of ÂŁ25,000 paid on the signing of the second contract. The plaintiffs riposted by instituting these proceedings in which they have claimed a number of declaratory orders.
As to the first contract, the plaintiffs claim a declaration that it is a subsisting and binding contract and that the defendants are not entitled to forfeit the sum of ÂŁ30,000. As to the second contract, the plaintiffs say that the first-named defendant impliedly undertook that satisfactory evidence of title to Block B would be produced in sufficient time to enable the plaintiffs to exercise the option contained in the contract; that the defendants failed to furnish any sufficient title; that there was a total failure of consideration for the payment of the sum of ÂŁ25,000 and that it is accordingly repayable. In addition they plead that prior to the making of the second contract the first-named defendants expressly or impliedly warranted and represented that outline planning approval had been given to the first-named defendants for a scheme of development of a character and description similar to the scheme of development which the first-named plaintiff had intimated to *14 the first-named defendants they had in mind for Block B; that there was a breach of warranty and a false representation made as the first-named defendants had not received any planning approval in respect of Block B. The plaintiffs’ principal claim in relation to the second contract is that it is a subsisting and binding one but in addition and in the alternative they say that the sum of ÂŁ25,000 ought to be repaid to them as money on foot of a false representation or alternatively as money paid on a consideration which has wholly failed.
The defendants’ defence was a denial of the plaintiffs’ pleas and a counterclaim in which a declaration was sought that the defendants were entitled to treat the contracts as being at an end and they are entitled to retain the sums of ÂŁ30,000 and ÂŁ25,000.
It will be noted that the plaintiffs’ original claim was for a declaration that the two contracts were valid and subsisting ones â no claim for an order that they be specifically performed was made. During the course of the hearing, however, (and for reasons which will become clear later) an application was made to amend the statement of claim by inserting a claim for specific performance of both contracts. I acceded to this application because (a) I did not consider an amendment would cause any serious prejudice to the defendants and (b) it was obviously desirable that all the issues in controversy between the parties should be tried together in these present proceedings. Thus, it is clear that the central issue in these proceedings is whether the contracts are valid and subsisting ones. If it is decided that they are, then the plaintiffs’ right to an order for their specific performance can be considered. If they are not, then the defendants’ claim to the retention of the two sums of ÂŁ30,000 and ÂŁ25,000 can be examined and in this connection consideration can be given to the plaintiffs’ claim as to the return of ÂŁ25,000 which, as I have just pointed out, is based on an allegation of breach of warranty, misrepresentation and failure of consideration. And in the heart of the central issue lies the question of the reasonableness of the time fixed for completion of the contracts by the notice of 7 April 1977.
As all the circumstances of the case must be taken into consideration in determining whether or not the notice was a reasonable one it will be necessary for me to review the salient facts of the history of the transactions between the parties. Before doing so, however, I should refer to the roles played by the parties’ representatives to whom reference will be made. The plaintiffs employed a company known as Manchester and District Properties Ltd whose registered offices were in Manchester to act as their agents in the project. The director in charge of it was Mr Gradel. He was the decision-maker on the plaintiffs’ side and was, in fact, very experienced in the business of property development having been involved in very substantial projects over many years in the Manchester area. In Dublin the plaintiffs had the assistance of an auctioneer, Mrs Cooney, a director of the firm of Messrs Archibald Corry and O’Connor. Mrs Cooney’s task was to negotiate contracts for sale, not only with the defendants but also with other property owners in the area. Mr David Keane was the plaintiffs’ architect: his responsibility was to prepare plans in accordance with his clients’ instructions for the development of a shopping complex and submit them to the Dublin Corporation for planning permission. Mr Hayes and later Mr Sexton, *15 two partners in the firm of Messrs Holmes O’Malley and Sexton acted as solicitors for the plaintiffs. On the defendants’ side negotiations were carried on on their behalf by Mr Hardy, their managing director, and Mr Rigney, who was the company secretary and financial controller. Mr Fish, a partner in the firm of Messrs Arthur Cox & Co acted as the defendants’ solicitor. It is clear that both parties had the benefit of experienced and highly qualified professional advisers.
The First Contract
Before turning to deal with the terms of the first contract I must refer to some of the events leading up to it for these have now assumed a considerable significance in this case. The plaintiffs were interested in acquiring as much property in the Parnell Street site as they could. Having received instructions the first contract which Mrs Cooney made was not with the defendants but with a Mr O’Sullivan whose company had a lease-hold interest in No. 59 Parnell Street. At the end of January 1974 she concluded an option agreement for the purchase of this interest at a price of ÂŁ130,000 (or ÂŁ30 per square foot) â the option to be exercised by the following month of November. The option was not, in fact, exercised, with results which proved catastrophic from the plaintiffs’ point of view and with which I will deal later in their proper chronological place. In January, however, Mr O’Sullivan expressed a helpful attitude to Mrs Cooney and her proposals for the development of the site and directed her to the defendants having advised her that they had an important holding in the site. Mrs Cooney met Mr Hardy at the end of January and a general discussion took place concerning a possible purchase of the defendants’ interest. Nothing very much turns on these preliminary meetings and I can pass from them with the comment that Mr Hardy is a businessman who believes in leaving the legal aspects of his affairs to his lawyers and I do not think that he concerned himself with the nature of the tenure his company enjoyed in the property and I believe that it is unlikely that he told Mrs Cooney that the title was a freehold one. Be that as it may, Mrs Cooney made an offer in writing on 15 February and in doing so made it perfectly clear that the deal was to be subject to the plaintiffs obtaining planning permission. A further offer was made by letter of 1 March 1974 and again it was made clear that the offer was subject to planning permission âand a closing date of 12 monthsâ. A provision relating to planning permission was in fact inserted in the finalised written agreement; it is clear that this occurred due to the insistence of the plaintiffs. In these preliminary negotiations reference was made by Mrs Cooney to the question of planning permission and Mr Hardy thought that the reference was related to permission for the whole of the Parnell Street site. As will be seen, however, there was a provision that the sale was subject to the plaintiffs obtaining planning permission in relation to Block âAâ only, and not for the whole of the Parnell Street side.
I must now refer to another matter raised in the pre-contract negotiations which has assumed considerable importance in this case. In the course of these negotiations reference was made to the freehold interest of the premises which the defendants owned. Although, understandably enough, some difference exists *16 as to the exact words used there is no disagreement as to their effect; Mr Rigney and Mr Hardy agreed to help Mrs Cooney in acquiring a freehold interest in the defendants’ premises. The offer of help was made in a general and unspecified way. The importance of this offer was not that it had any contractual significance (such has never been alleged) but the fact that it was made and the failure to honour it subsequently loomed largely in the complaints made against the defendants when the plaintiffs came to seek an extension of the closing dates of the two contracts. The defendants, it was said, offered to help acquire the freeholds of their property; they did not help or did not adequately help; this failure on their part contributed, it was claimed, to the delays in implementing the plaintiffs’ plans. The actions taken by the defendants in relation to their freeholds have thus assumed significance in the issues which arise for determination in this case as they bear on the reasons for the delays in closing the sales and, in consequence, on the reasonableness of the notice of 7 April 1977.
Mrs Cooney having successfully negotiated terms with Mr Hardy and Mr Rigney, the matter was then referred to the parties’ legal advisers. On 5 April 1974 a draft contract was sent together with copy documents of title by Mr Fish to Mr Hayes. As the contract was not signed until 16 May the plaintiffs’ solicitors had a reasonable opportunity to consider its terms and the title on offer. On 23 April Mr Hayes wrote to Mr Fish and in the course of his letter confirmed that the defendants had agreed to facilitate the plaintiffs in their efforts to purchase the various superior interests. In addition he returned the draft contract having added special condition number 11 which made the contract subject to planning permission. After some further routine correspondence Mr Fish wrote on 6 May that agreement had been reached that the closing date would be 1 May 1975 and adding:
This should give your clients ample time to make their planning application but it must be clearly understood (as provided in special conditions 8 and 11) that in the event of your clients not having obtained planning permission by that date the contract would be at an end and of course our clients would be entitled to retain the deposit outright.
The property described in the contract (which as I have said was executed on 16 May 1974 consisted of eight lots. Lot One comprised the premises Nos. 11 and 12 O’Rahilly Parade; Lot Two, Number 13 O’Rahilly Parade; Lot Three, No. 15 O’Rahilly Parade; Lot Four, Nos. 17 and 18 O’Rahilly Parade; Lot Five, Nos. 27 and 27a Moore Street; Lot Six, No. 61 Parnell Street and 14 O’Rahilly Parade; Lot Seven, No. 62 Parnell Street; and Lot Eight, No. 16 Moore Lane. The Second Schedule contained a number of special conditions. Condition 8 provided as follows:
8. The deposit or sum of ÂŁ30,000 payable by the purchaser on the signing hereof shall be paid to the vendor absolutely as consideration of these presents and shall not be returnable to the purchaser. The sum shall however in the event of the sale being completed on the closing day (but only on that happening) be credited against the total purchase price. For the purpose of this condition time shall be of the essence of the contract in respect of the closing date. General Conditions 2, 3 and 29 hereof are modified extended or amended accordingly.
*17
The special conditions also contained a condition relating to planning permission in the following terms:
(11) The contract is subject to the purchaser obtaining planning permission to develop the property the subject matter of the sale, which permission the purchaser shall apply for and take all proper steps to obtain with all reasonable speed, but nothing herein shall be deemed to effect the provisions of special condition No. 8 herein.
Special Condition No. 10 provided that the purchase price was to be calculated at the rate of ÂŁ15 per square foot. At the time the contract was signed the exact area of the defendants’ property had not been finally established. It was subsequently agreed that the area purchased resulted in a purchase price somewhat in excess of ÂŁ300,000.
The Memorandum of the contract provided that the closing date was to be 1 May 1975 and reference was made in relation to that date to Special Condition No. 8. The contract contained a provision relating to the payment of interest on the purchase price. General Condition No. 3 provided that the purchase money was to be paid on the date for completion specified as âthe closing dateâ and further provided that if for any cause other than the default of the vendor the sale was not completed on that date that the purchaser would pay interest at the rate specified in the Memorandum on the balance of the purchase money remaining unpaid from the closing date up to the date of completion. The Memorandum provided that the interest payable was at the rate of 5% per annum âabove finest bank rateâ.
The ÂŁ30,000 referred to in the contract was duly paid (after a slight interval of time which I need not delay to explain). If the plaintiffs’ submissions are correct they are not entitled to have the contract performed with credit for this sum against the purchase price payable under the contract. On the other hand, if the defendants are correct and the contract is no longer a subsisting one the ÂŁ30,000 is theirs â and no claim against it can be made by the plaintiffs.
Developments: May 1974-May 1975
(a) The Purchase of the Defendants’ Freeholds
(a) The importance of the purchase of the freeholds from the plaintiffs’ point of view was made perfectly clear in the course of the negotiations. Their contemplated development would involve an expenditure of several millions of pounds and this money would have to be borrowed from financial institutions. Before they could obtain the necessary funds the plaintiffs were required to produce (a) planning permission in relation to the proposed development and (b) a freehold interest in the property to be developed or, at least, a long leasehold interest. The purchase of the freeholds of the Parnell Street site, including the freeholds of the defendants’ property was therefore of considerable importance for the success of the plaintiffs’ plans. The defendants’ freeholds were owned by a number of different estates. The Ball Estate owned the freehold of 27 and 27a Moore Street and in addition the freeholds of Nos. 26, 28, Moore Street and 58â61 Parnell Street (No. 14 O’Rahilly Parade being included in No. 16 Parnell Street). By purchasing the Ball Estate , therefore, the plaintiffs would obtain the freehold of a significant portion of the entire site *18 including, it will be noted, a freehold of No. 59 Parnell Street in respect of which Mr O’Sullivan’s company held the leasehold interest. Another estate known as the Pentland Estate had the freehold of No. 62 Parnell Street. The Peel Scully Estate owned the freehold in No. 13 O’Rahilly Parade.
Mr Fish had been apprised of the defendants’ offer to assist in the purchase of their freeholds and prior to the execution of the contract had written a letter (on 24 April) to the solicitor for the Ball Estate enquiring about the possibility of the purchase of the freehold interest. He received no reply to this letter and wrote again on 19 May, again in the month of July and again on 8 August. He received no reply whatsoever to these letters and he explained the position to Mr Sexton. With Mr Fish’s consent Mr Sexton took over direct negotiations with the Ball Estate at the end of 1974. Mr Sexton called to the solicitor’s office personally and was there told by the solicitor he interviewed that he had had no personal contract with anyone. This conversation appears to have been the cause of some of the misunderstanding that subsequently arose because the plaintiffs were mistakenly under the impression that Mr Fish had done nothing to assist in the purchase of the Ball Estate . Negotiations by Mr Sexton went on throughout 1975 in relation to this matter and by December 1975 agreement as to the terms of a purchase had been reached.
Mr Fish was also active in relation to the purchase of the freehold in 62 Parnell Street, owned by the Pentland Estate . He wrote his first letter on 27 May to the estate’s solicitors and throughout 1974 he corresponded regularly with them keeping the plaintiff’s solicitors informed of what was happening and obtaining authorisation as to the offer to be made for the freehold. On 15 October he advised Mr Sexton that the Pentland Estate held the premises under a fee farm grant. On 10 December Mr Sexton wrote to him suggesting a figure for the purchase of the defendants’ interest. On 21 January 1975 a further suggested figure to be put to the solicitors was given by Mr Sexton to Mr Fish but on 5 February these solicitors wrote stating that their clients did not wish to dispose of their interest at the present time. Mr Fish contacted the solicitor of the firm dealing with the matter for an explanation and then wrote to Mrs Cooney explaining to her that for estate duty reasons the freeholders did not wish to sell for about six months but that they would be willing to do so then. As a result of a further letter on 14 March 1975 Mr Fish passed on an offer to the solicitors and there the matter lay for some time. Thus the situation had been reached that due to Mr Fish’s efforts an agreement to a sale had been negotiated in principle and all that remained to do was to agree a figure for the purchase of the ground rent â obviously not a very difficult task. Mr Sexton in fact conceded in the course of his evidence that the criticisms he made in a letter of 16 July 1976 about the delays in negotiating the purchase of this particular freehold were not accurate ones. On 23 June 1976 Mr Fish had authorised Mrs Cooney to negotiate direct with the solicitors concerned and some time later that year a contract for sale was successfully negotiated.
Evidence relating to the purchase of the Peel Scully Estate which owned the freehold of No. 13 O’Rahilly Parade was very limited. It is clear, however, that no complaint was pressed at the hearing that Mr Fish had been dilatory in relation *19 to this matter. Negotiations for the purchase of the freehold of these premises resulted in an offer of ÂŁ150 being made and as late as 12 May 1976 Mr Sexton wrote to Mr Fish about this offer but indicating that there was no hurry about it and that he, Mr Fish, could let him know the position âat his leisureâ.
The evidence satisfies me that the defendants, through their solicitor, gave every reasonable assistance to the plaintiffs to enable them to purchase the freehold in the defendants’ property and that they are not in any way responsible for the delays which occurred in this connection. In addition, it is clear that the plaintiffs were aware at the end of 1974 and in the early months of 1975 that the owners of both the Ball Estate and the Pentland Estate were, in principle, willing to sell their interests.
(b) The Purchase of the Parnell Street Site
(b) The plaintiffs had made it clear from the outset of the negotiations with the defendants that they were interested in the development of the Parnell Street site and that the acquisition of the defendants’ property was only part of the acquisition process they had to undertake. Mr Hardy knew that the task of amassing a viable site was not an easy one â as he told Mrs Cooney. There had been at least two attempts by different developers to acquire a suitable block of properties on the Parnell Street site and each attempt had failed. The plaintiffs had to acquire the freeholds to satisfy their financial backers but in addition they had to acquire leasehold interests so that the properties could be demolished and re-developed. Negotiations proved to be slow and tedious. Evidence as to the dates on which the different interests were acquired was not very precise but by 15 April 1975 (i.e. shortly before the completion date provided for the first contract) the position as described by Mrs Cooney to Mr Keane was as follows:
Parnell Street : the plaintiffs held no interest in Nos. 58, 59, 63â65 Parnell Street. They held what was described as a âyear leaseâ in respect of No. 60, a 99-year lease in respect of 61 and a 200-year lease in respect of No. 62 and a 99-year lease in respect of No. 64.
Moore Street : The plaintiffs held no interest in Nos. 28, 29, 30 and 30a Moore Street. In respect of No. 26 (a licensed premises) they held a 99-year lease and in respect of Nos. 27 and 27a a 99-year lease.
O’Rahilly Parade : The plaintiffs held no interest in Nos. 14 and 16 O’Rahilly Parade. In respect of 17/18 they held an option on a 900-year lease; in respect of No. 15 they held an option on a 21-year lease; in respect of No. 13 they held an option on a 100-year lease.
By April 1975, therefore, the plaintiffs had not succeeded in putting together a site suitable for the commercial development they had in mind. They were, indeed, still negotiating and were far from abandoning hope in relation to the site. They had, however, decided in the previous November not to take up the option held in relation to No. 59 Parnell Street but they re-opened negotiations with Mr O’Sullivan for the purchase of his interest in this property, negotiations which failed due to what the plaintiffs considered to be Mr O’Sullivan’s unreasonable demands.
(c) Planning Permission
(c) Mr Keane first became involved in the plaintiff’s proposals for the Parnell Street site in the early months of 1974. His first task *20 was to prepare a general report on the proposed development of the site as a shopping centre. This he did and sent it to Manchester on 13 March of that year. His next step was to prepare detailed drawings in accordance with his clients’ proposals. These were completed and sent to Manchester in August 1974. The August scheme was, however, found to be too ambitious and accordingly a second set of detailed drawings was prepared in October 1974. These drawings were based on a development comprising the Parnell Street site and not merely the site acquired from the defendants. Scheme Two was accepted by his clients but they were obviously then in no position to instruct him to lodge them with the Dublin Corporation for planning permission.
Mr Keane was aware that before permission for development under the Local Government (Planning and Development) Act, 1963 could be obtained permission under the Housing Act, 1969 was required. This Act provides that when it is proposed to demolish a âhabitable houseâ permission under the 1969 Act to do so is required and an application for permission under the 1963 Act will not be decided until the 1969 Act application has been finally determined. The Act also provides that the Corporation when granting permission to demolish a habitable house may make the permission subject to a condition that the applicant would provide replacement residential accommodation and Mr Keane was well aware that it was highly probable that the permission to demolish the habitable houses on the Parnell Street site would be accompanied by a condition that the plaintiffs, in their new shopping complex, would be required to include a number of residential units. Mr Keane, however, was conversant with s. 9 of the Act which exempted from its provision a demolition which was carried out âfor any statutory purposeâ. It was known that the Dublin Corporation proposed to acquire some of the houses on the site for road widening purposes and accordingly Mr Keane wrote on 14 February 1975 to the Dublin Corporation pointing out that he would âshortlyâ be submitting an application under the 1969 Act for permission for demolition but asking whether or not he should include in the application those properties which were subject to the Corporation’s road widening proposals. He was informed on 27 February 1975 that an application under the 1969 Act was in fact necessary even though the demolition of the property might, at a later date, be required for road widening purposes. He was in touch with Mrs Cooney to ascertain exactly what premises were to be included in the 1969 Act application and how they were occupied and on 15 April 1975 Mrs Cooney sent to him the particulars to which I have already referred. The closing date for the sale of Block A was by then fast approaching but Mr Keane had obtained no instructions to apply either for a 1969 Act permission or a 1963 Act permission and it was not until the following year, on 26 February 1976, that formal instructions to obtain the necessary permissions were given to him. In the meantime developments had taken place both in relation to the negotiation and conclusion of a new contract between the parties and in relation to the acquisition of properties in the Parnell Street site to which I must now turn.
*21
The Second Contract
As early as 16 January 1975 preliminary discussions took place about a possible purchase by the plaintiffs of the defendants’ premises on the Henry Street side of O’Rahilly Parade. Mrs Cooney expressed the belief during the course of her direct evidence that the question of a sale of Block B was first raised by the defendants but having refreshed her memory from a short memorandum which she made of the meeting of 16 January she conceded that she had raised the matter first with the defendants. It is quite clear that at this time the plaintiffs were concerned with the lack of progress in putting together a viable site and were considering possible alternatives and the defendants’ property across O’Rahilly Parade and fronting on to Moore Street was an obvious one. On 28 January Mrs Cooney made an offer for Block B and after a further meeting with Mr Rigney and Mr Hardy a fresh offer was made on 13 February. The matter was allowed to rest there for some time. The plaintiffs’ attitude is illustrated by a letter from Mr Gradel to Mrs Cooney on 13 March in which, having referred to a conversation which he had had with Mr Hayes, he added:
It is clear that in order for this scheme to work we must first conclude the purchase of the freehold, and then tie-up the new Hanlon deal 19â25 Moore Street on favourable terms.
On 25 April (a very short time before the completion date fixed for the first contract) a meeting was held in the offices of Messrs. Arthur Cox and Company in Dublin between Mrs Cooney, Mr Sexton, Mr Fish and Mr Rigney. The difficulties encountered by the plaintiffs were explained, as was their anxiety to complete the original contract. Their willingness to enter into a new contract in respect of Block B was expressed and an extension of the closing date on the first contract was sought. For the purpose of demonstrating the bona fides of the plaintiffs an invitation was extended to the defendants’ representatives to visit Manchester â an invitation which was accepted and which resulted in a further meeting on 28 April at which Mr Gradel was present. No final decisions were then taken but a purchase price in respect of Block B and completion dates in relation to a sale of Block B were discussed, as was the extension of the closing date of the first contract. As a temporary measure the date of completion was extended by letter from the defendants’ solicitor to 16 May. On 15 May they had written a letter which contained a detailed offer for the sale of Block B and an amendment of the closing date of the first contract. This offer was accepted on 16 May, the letter having been amended by Mr Sexton, amendments which were acceptable to Mr Fish. The letter of 15 May had contemplated the drawing up of a formal contract but for reasons which will appear later a draft contract was prepared but never executed. Both the plaintiffs and the defendants however agree that the letter of 15 May as amended constitutes a binding agreement between the parties and it is in this document that the rights and obligations of the parties are to be found.
Two aspects of the pre-contract negotiations call for special mention. The plaintiffs say that in the course of the preliminary negotiations both in Dublin and in Manchester the defendants falsely represented that they had obtained outline planning permission in respect of Block B and as an alternative to their *22 claim that the contracts are subsisting ones and should be specifically performed. They claim that this false representation now entitles them to a return of the sum of ÂŁ25,000 paid on the signing of the second contract. I am quite satisfied that the alleged representation was never made and I think the recollection of Mr Hardy and Mr Rigney as to what was said at the relevant meetings is more accurate than that of Mrs Cooney and Mr Gradel. I am satisfied that what was said, and said in a rather casual manner, was that the defendants had applied for outline planning permission â not that they had obtained planning permission. This had, in fact, been the position during the negotiations. The application was made on 17 February and the order refusing the application on 1 August 1975. If the defendants’ representatives had stated that they had obtained planning permission such a statement must have been a deliberately false one as both Mr Hardy and Mr Rigney must have been aware of the true position. I am quite satisfied that neither of these gentlemen would be guilty of such conduct. It is clear how the present dispute arose. The statements made were not regarded as of any importance by the plaintiffs at the time of the pre-contract negotiations. They made no further enquiry as to the alleged permission until nearly two years later when, after withdrawal of their planning application, it became necessary to make an application which included Block B. It was only then that their minds were directed to what Mr Hardy and Mr Rigney had said to them and their recollection was inaccurate. In reaching this conclusion I have not overlooked evidence of a meeting of 11 March 1977 at which it is alleged that admissions on this aspect of the case were made by Mr Fish. I accept Mr Fish’s account of what happened at the meeting and accordingly the evidence in relation to it does not affect the conclusions to which I have already referred.
It follows, therefore, that the alternative claim made by the plaintiffs in these proceedings based on the alleged false representation fails.
The other matter which arose in the pre-contract negotiations which has now become relevant is this. The final contract contained a provision that the price payable if the sale was closed on 30 June 1976 would be ÂŁ540,000 but that the sale could also be closed on 31 December 1976, in which event the purchaser would have to pay ÂŁ60,000 more. In the pre-contract negotiations the defendants had made it clear that if the plaintiffs wanted an extension of the closing date for a further six months beyond 30 June they would have to pay a higher purchase price because the high interest rates which it was anticipated would then be operating would mean that the postponement of the payment of the purchase price would cause the defendants financial loss.
I now turn to deal with the clauses of the agreement of 16 May 1975 which are relevant to these proceedings. Clause 1 of the agreement provided as follows:
Our clients would be prepared to enter into a contract with your clients for the sale of Block B on the following basis:
(a) That your clients pay an immediate sum of ÂŁ25,000 which will be non-refundable to your clients.
(b) That on giving the notice referred to in paragraph 2 hereof in the event of your clients completing the purchase on or before 30 June 1976 the purchase price will be ÂŁ540,000.
(c) That on giving the notice referred to in paragraph 2 hereof in the event of your clients *23 completing the transaction after 30 June 1976 but on or before 31 December 1976 the consideration will be ÂŁ600,000.
(d) The closing date for the purchase of Block A (being the property comprised in the existing contract) would be extended so that this transaction would be closed on dates simultaneously with the dates for closing for Block B.
Clause two of the agreement provided that the plaintiffs would have the right to purchase Block A and Block B on giving three months notice in writing prior to either 30 June 1976 or 31 December 1976 in which event a sum of ÂŁ70,000 would be immediately paid as a deposit. Clause 2 also provided that adequate evidence acceptable to the defendants as to the availability of funds to the plaintiffs to enable them to complete on the due date was to be forthcoming. Paragraph 3 made provision for the payment of the balance of the purchase money. By virtue of this clause the money due under both contracts for Block A and Block B would be paid on completion less the non-refundable payments of ÂŁ30,000 in respect of the contract for Block A and ÂŁ20,000 in respect of the contract for Block B and the sum of ÂŁ70,000 paid by way of deposit on what was described as âthe exercise of the said optionâ. The agreement provided that the defendants were to remain in occupation and in receipt of rents and profits subject to certain provisions of paragraphs 5 and 6 for a period of four months from completion, and paragraphs 5 and 6 made provision for vacant possession to be handed over and for a letting to the defendants on portion of the new premises.
Before signing the letter of 15 May and accepting the proposals contained in it, Mr Sexton with the knowledge and agreement of Mr Fish added in handwriting the following paragraph:
As agents for Opal Limited, having its registered office at Kensington House, Rosemount, Douglas, Isle of Man, we confirm acceptance of the proposals set out above subject to the production of satisfactory evidence of title. The proposals are as amended in this ink.
The reason for this added paragraph was that the defendants prior to the letter of 15 May had not produced any documents of title to the property the subject matter of the proposed sale: indeed neither solicitor was aware of the exact nature of the defendants’ title.
The letter of 15 May referred to the property to be sold as being situated in âO’Rahilly Parade and Moore Laneâ. In fact, the property comprised Nos. 20â25 Moore Street, Nos 30â35 Moore Lane; Nos. 1 and 2 Murray’s Court and Nos. 1â2 O’Rahilly Parade.
In summary, what the parties agreed to was this. The time for completion of the first contract was extended to either 30 June 1976 or 31 December 1976, on which dates the contract for sale in relation to Block B would also be completed; the purchase price for Block B would be increased by ÂŁ60,000 if the later closing date was availed of; the sum of ÂŁ25,000 was to be paid on the signing of the second contract and a sum of ÂŁ70,000 paid by way of deposit when notice to complete was given; both the non-refundable deposit of ÂŁ30,000 paid in respect of the first contract and the non-refundable deposit of ÂŁ25,000 payable in respect of the second contract would be forfeited to the defendants if the sales did not go through.
It would I think be helpful if I pause here in the narrative of the transaction *24 to give my conclusions on the construction of the two contracts as by so doing I would hope to bring into focus the facts relevant to the issues which I have to determine. My conclusions are as follows:
1. In the first contract the parties had expressly made time of the essence of the contract when they provided that the sale was to be closed on 1 May 1975. Condition 11 relating to planning permission must be interpreted in the light of the necessity strictly to observe the date set for closing. The result is, in my opinion, that if the plaintiffs had failed to obtain planning permission by 1 May 1975 and if the closing date was not extended by mutual agreement then the defendants were entitled to treat the contract as at an end if the plaintiffs refused to complete: the absence of planning permission would not have excused the non-performance by the plaintiffs of the contract.
2. The second contract of 16 May did not make time of the essence of the contract in relation to the sale of Block B and when it amended the closing date of the first contract it did not provide that in respect of the new closing date time was to be of the essence of the contract. In addition it will be observed that the two sales were to be closed simultaneously. It was not, in my opinion, the intention of the parties that time was to be the essence of the first contract but not of the second contract. The result was that two possible closing dates in respect of both sales were agreed to but time was not made the essence of the contract in respect of either sale.
3. The second sale was not made subject to planning permission being obtained but the first sale remained subject to special condition 11. The result of the amendment of the first contract was that if the plaintiffs were in default in closing the sales on either of the dates specified then the vendors could serve a notice making time the essence of the contract and fixing a reasonable time for their completion. If time was made the essence of the contract and the period for completion given a reasonable one then the position at the expiration of the notice would be this. If planning permission had then been obtained the plaintiffs were bound to complete both sales. If planning permission had not been obtained then the plaintiffs could waive this provision of the contract (for reasons given in the next succeeding contract) and complete both sales. If however the plaintiffs did not waive special condition 11 then the first contract would come to an end at the expiration of the notice (the condition relating to planning permission not having been complied with) (see Smith v Butler [1900] 1 QB 694; Aberfoyle Plantation Ltd v Cheng [1960] AC 115). Alternatively, the plaintiffs’ refusal to complete would amount to a repudiation of the contract entitling the defendants to treat it as at an end. In either case, the defendant would be entitled to retain the non-refundable deposit of ÂŁ30,000. As to the second contract (which was not expressly subject to a condition relating to planning permission) the plaintiffs’ failure to complete at the expiration of the notice would entitle the defendants to treat this contract as at an end and to retain the non-refundable deposit of ÂŁ20,000.
4. The evidence satisfies me that the clause in the first contract relating to planning permission had been inserted for the exclusive benefit of the plaintiffs. This means that it could be waived by them. In this connection I should refer to an unreported judgment of Kenny J referred to in Wylie, Irish Conveyancing Law at p. 393 as follows:
In view of the importance of planning permission where the purchaser intends to develop the land it is becoming increasingly common to make the contract conditional upon the purchaser obtaining planning permission for his proposed development. Thus, in Healy v Healy a special condition in the contract for sale made it subject to full planning permission for a residential development of at least seven houses being obtained within seventeen months. If such permission was not obtained by then the purchaser was to be entitled to the return of his deposit subject to certain deductions. Completion was to be within two months of planning permission being received for part of the land, and within six months for the rest of it. In fact permission was not so obtained and the purchaser sought to waive that condition and to have the contract treated as absolute and to be completed within two months, whereas the vendor sought a declaration that it was determined. Kenny J upheld the purchaser’s claim, holding that a party to a contract could waive such a condition inserted solely for his benefit and which is severable from the rest of the contract.
The principle that a condition inserted exclusively for the benefit of one party can be waived *25 by that party is referred to in Heron Garage Properties Ltd v Moss [1974] 1 WLR 148. The plaintiffs therefore could have waived condition 11 if they wished to close the sale in the absence of planning permission.
5. The two contracts remained separate and independent contracts notwithstanding the provision that they were to be closed simultaneously. In certain events the parties might have been under an obligation to complete one but not the other. In the events that have happened, however, a single notice fixing a date for the simultaneous closing of the two contracts was permissible.
6. In my opinion the acceptance by the plaintiffs of the defendants’ proposal of 15 May 1975 âsubject to the production of satisfactory evidence of titleâ coupled with the provision of two alternative closing dates meant that the defendants were required to produce satisfactory evidence of title in sufficient time to enable the plaintiffs to serve a notice on 30 March 1976 to enable them to close the sales on 30 June 1976 if they so wished. This obligation, however, could be waived by the plaintiffs. The consequences of any breach of it would depend on the circumstances surrounding the breach.
7. Under the terms of the second contract no interest was payable on the purchase price if the completion date was delayed.
Developments from May 1975
(a) Application for Planning Permission
(a) The plaintiffs, having entered into an agreement relating to the purchase of Block B, then proceeded with their plans virtually without reference to it. Mr Rigney had thought that the plaintiffs had found their plans for the Parnell Street site thwarted and purchased Block B to enable them develop on the Henry Street side of O’Rahilly Parade. This was not so. The plaintiffs, having secured an extension of the closing date in respect of Block A continued to pin their hopes on acquiring sufficient properties on the Parnell Street site to enable its economic development to take place. Block B remained part of their contingency plans. Mr Gradel’s evidence satisfies me that the plaintiffs’ first preference remained the development of the Parnell Street site and only if their plans there came to nought would Block B be used. In such an event the shopping centre would be placed on Block B and Block A used for parking facilities. As a result, no drawings for the development of Block B were prepared by Mr Keane until 20 months had elapsed from the signing of the second contract. The application for planning permission in respect of Block A and the Parnell Street site was further delayed pending acquisition of further properties in the Parnell Street site.
Evidence relating to the different negotiations carried on from May 1975 onwards was not given in any detail. The salient facts are, however, clear. Negotiations with Mr Costelloe, the proprietor of a well known hotel in O’Connell Street and the owner of a substantial interest in No. 16â19 Moore Lane, resulted in an agreement for his consent to the plaintiffs’ application for planning permission. Options in relation to Nos. 60 and 63 Parnell Street were obtained. A substantial interest in No. 64 Parnell Street was purchased from the official assignee. On 27 February 1976 the freeholds of Nos. 62, 64, 65, 66, 70 and 71 Parnell Street owned by the Richard Estate were purchased. In January 1976 the freehold interests in Nos. 58, 59, 60 and 61 Parnell Street and in Nos. 26, 27, 27A, 28 and 29 Moore Street (owned by the Ball Estate) were obtained. Negotiations with Mr O’Sullivan in relation to 59 Parnell Street came to nothing. *26 The plaintiffs wished to purchase No. 66 Parnell Street in which an hotel business was carried on but negotiations for its purchase proved very troublesome. Mrs Cooney’s evidence made it clear that this property was regarded by the plaintiffs as being of particular importance and that it was only when it became clear that they could not be acquired that Mr Gradel finally gave instructions for the planning application to be made, excluding this property. Whilst the exact date of these instructions was not stated it is clear that they were some time shortly before 27 February 1976. The plaintiffs also wished to include No. 65 Parnell Street in the proposed development. When an application for permission to demolish habitable dwellings was made on 26 February 1976 pursuant to the provisions of the Housing Act, 1969 the application included No. 65 Parnell Street. When permission was granted subject to a number of conditions a decision was taken to omit No. 65 Parnell Street from the application. This involved further delay as it became necessary for the Housing Act application to be resubmitted and it was not until 7 May 1976 that the application for planning permission was in fact filed. When eventually it was made it was made in respect of Nos. 59/64 Parnell Street, Nos. 20â27 Moore Street, and Nos. 12â18 O’Rahilly Parade. The application, inter alia, stated that the plaintiffs had a legal interest in all these properties ranging from outright ownership to options to purchase.
Mr Keane could not, of course, finalise his drawings and lodge the application for full planning permission until the plaintiffs had decided what properties were to be included in the application. He had, however, been in consultation with an English consultant employed by the plaintiffs about the plans and had also been in negotiations with the Corporation as to what their requirements would be for residential units in the new development to replace those which were to be demolished. When instructed to do so he made on 26 February a formal application under the 1969 Act for permission to demolish and reapplied when a decision to exclude No. 65 Parnell Street was taken. Thus, it was not until 7 May 1976 (just two years after the signing of the first contract) that he was in a position to apply for planning permission under the 1963 Act.
The subsequent unhappy history of the application can be briefly given. The Dublin Corporation wrote for further information in relation to the application on 30 June 1976. Paragraph 14 of their letter reads as follows:
Documentary evidence suitable to the Planning Authority to be furnished showing that the applicants have sufficient legal estate or interest in No. 59 Parnell Street to enable them to carry out the proposed development or that they had the consent of a person holding such estate or interest.
The information sought was given by Mr Keane apparently to the satisfaction of the Dublin Corporation with the exception of the point raised in paragraph 14 of their letter. On 30 September they wrote again requesting further information stating:
In view of the conflicting claims to the ownership of this site the applicants (or their agents) are required to furnish copies of such legal documents relating to the acquisition by them of the premises No. 59 Parnell Street as will satisfy the Planning Authority that they (the applicants) hold sufficient legal estate or interest in these premises to enable them to carry out the proposed development or that they have obtained the consent of a person holding such estate or interest.
*27
No. 59 Parnell Street was to be the rock on which the application was to founder. Mr O’Sullivan had objected to the plaintiffs’ application and the point raised by the Dublin Corporation following his objection resulted from a decision of the Supreme Court in Frescati Estates Ltd v Walker [1975] IR 177 which decided that an application for development permission under the 1963 Act to be valid must be made by or with the approval of a person who is able to assert sufficient legal estate or interest to enable him to carry out the proposed development or so much of the proposed development as relates to the property in question. The point raised by the Dublin Corporation was obviously a legal one and had been passed to Mr Sexton for his consideration. He travelled to Dublin and after an informal meeting with the Corporation’s Law Agent obtained the opinion of a leading senior counsel specialising in planning law on the right of the plaintiff to apply for planning permission in relation to No. 59 Parnell Street in the light of the nature of the leasehold interest in it enjoyed by Mr O’Sullivan’s company. Counsel’s opinion was to the effect that the plaintiffs’ application would be refused by virtue of the decision in the Frescati Estates Ltd case as the freehold interest which they enjoyed in the premises was insufficient in the light of Mr O’Sullivan’s leasehold interest to permit them to carry out the proposed development. This had been the informal view conveyed to Mr Sexton at his meeting with the Law Agent and accordingly, rather than allow the application to be refused, it was withdrawn by letter dated 2 December 1976.
I am quite satisfied that the failure to apply for planning permission before 7 May 1976 was due to the plaintiffs’ decision to defer an application until they had put together a site which they considered to be commercially viable. I am also satisfied that bearing in mind the magnitude of the proposed development the Dublin Corporation did not delay unduly in considering the application and that by 30 September the only outstanding matter on which the Corporation required further information was the plaintiffs’ title to No. 59 Parnell Street. In addition, I am satisfied that a decision not to serve the notice to close the sale on 30 June or 31 December 1976 as required by the second contract was based on the fact that planning permission had not been obtained: the plaintiffs did not intend to close the sale in the absence of planning permission.
(b) The title to Block B
(b) I must now return to the defendants’ obligation to produce satisfactory evidence of title to Block B. The documents of title were in fact lodged with the defendants’ mortgagee and it took some time for them to be transferred to the mortgagee’s solicitors. On 1 July 1975 Mr Fish wrote to Mr Sexton enclosing certain copy documents relating to the title. Mr Sexton replied stating that he had read quickly through the documents but that the exercise was a bit pointless as he had no contract to refer to and on 24 October a draft contract together with copy documents of title were sent to him. Following receipt in November of a document which had been omitted from the earlier letter Mr Sexton came to Dublin early in December to have a discussion about the title with Mr Fish. Unfortunately the arrangement fell through and no meeting was held. Four months then passed in which nothing happened in relation to the draft contract or the defendants’ title. The inactivity is significant. The first *28 closing date was 30 June and if the plaintiffs had wished to close on that date they should have served a notice by 30 March. No notice was served. Had concern about obtaining a satisfactory title to Block B been a factor in the decision not to serve it, it seems to me that Mr Sexton would certainly have been more active in the matter. Instead he awaited a call from Mr Fish (who for his part was awaiting a call from Mr Sexton) and it was not until 15 April 1976 that a discussion between Mr Sexton and Mr Fish concerning the title to Block B again took place in the course of which Mr Sexton asked Mr Fish to recommend a counsel to him who might advise on the title. This was done and counsel’s opinion was obtained and sent on 11 May 1976 (i.e. 12 months after the terms of the contract had been agreed). Mr Sexton requested Mr Fish to deal with the matters raised by counsel and let him know what steps would be taken towards âclarifying the problem areasâ. Mr Sexton explained that the advice he had obtained was that, at present, the title was such that his clients could not complete.
In the event, it transpired that the objections raised were not very serious ones. The title to Lot One was considered to be adequate but a request to delete special condition 6 of the draft contract (which related to the production of original documents) was made. The title to Lot Two was stated to be acceptable, subject again to the deletion of special section six. In relation to Lot Three the question relating to the production of an original conveyance was raised. As to Lot Four clarification of the deed which was to be a root of title was sought. The principal title problem related to Lot Five. This Lot was No. 14 Moore Lane and the document of title to it was stated to be a deed of exchange dated 1 April 1973. In relation to this Lot Mr Sexton wrote:
Counsel here advise that a property investment company would be very reluctant to take this title and obviously we shall have to check this through our clients before accepting it. Please let us know if you can improve the position of this title. Otherwise it appears that Counsel advises that this particular title is unacceptable.
This letter was acknowledged on 18 May 1976 and on 23 June Mr Fish suggested that counsel might consider examining the documents of title in the offices of the mortgagee’s solicitors. This suggestion was not acted on. Instead on 16 July Mr Sexton wrote a long letter in which for the first time an extension of the time for completion of the two contracts was raised. To support the case for an extension a number of matters of complaint were raised, the first of which related to the delays in furnishing the title to Block B. Mr Fish replied on 15 August; the complaints relating to delay were reiterated in a letter of 19 August; and on 6 September Mr Fish wrote a short letter pointing out that his clients did not consider that they were in default in any way and they were refusing the extension sought. Nothing further occurred for three months in relation to the title. Again, it is to be observed that the plaintiffs were required to serve a notice to complete by 30 September. Had the plaintiffs wished to serve the notice but were unable to do so because of lack of title to Block B, I would have expected that Mr Sexton would have taken steps to clarify the queries raised rather than complain, as he did, of past delays and seek an extension of the closing date which, then, was seven months away. In the event, the matter was reactivated *29 by a letter of 7 December 1976 in which Mr Fish wrote referring to the points raised on the title in the letter of 11 May. In this letter the defendants’ agreement to the deletion of special condition six was confirmed; the points made in relation to Lots Two and Three were dealt with in accordance with the plaintiffs’ wishes; an explanation as to the title to Lot Four was given; as to Lot Five Mr Fish confirmed that the only title available was that disclosed in the contract. Some further documents were sent on 9 December and Mr Sexton stated in evidence that on receipt of these two letters and the documents referred to in them his requirements as regards the title were satisfied. Thus, notwithstanding the shortness of the root of title in relation to Lot Five the plaintiffs were prepared to accept the title offered and the problem raised in relation to the other Lots proved to be insubstantial. Although the title was then acceptable no formal contract was ever signed as by then serious disagreements about the completion of the two contracts had arisen between the parties.
From the outline of the evidence which I have just given it will be seen that the pace of the correspondence and discussions between the plaintiffs’ solicitor and the defendants’ solicitor after the signing of the agreement of 16 May 1975 was a leisurely one and the delays which took place on the part of the defendants’ solicitor were compounded by delays on the part of the plaintiffs’ solicitor. The reason for this is not hard to find. Although the plaintiffs had made it clear that they wanted the title to Block B clarified and a formal contract completed there was as far as they were concerned no immediate urgency about it; the plaintiffs’ development proposals were concentrated entirely on the Parnell Street site and the title to Block B was at that time of no relevance to them or to the planning application they were preparing. But the events I have outlined have given rise to serious differences in these proceedings. The defendants say that there was no breach of contract on their part. Mr Fish in evidence expressed the view that under the May 1975 agreement he was required to produce the sort of title which would be given to the solicitor of an intending purchaser prior to the execution of a formal contract; that he had fulfilled this requirement when sending the documents in October 1975; that further correspondence related to the sort of queries on title which normally arise after a contract is signed. The plaintiffs on the other hand submit that the defendants were under an obligation to produce satisfactory evidence of title to enable the option to purchase to be exercised by 30 March 1976 and that the defendants were in breach of contract in failing to do so, and that they are entitled to a return of the sum of ÂŁ25,000. In addition they say the defendants’ delays are relevant in considering the reasonableness of closure notice.
In view of the conclusions of fact which I have come to it is not necessary for me to make any formal finding as to whether the defendants were in breach of contract in relation to these title matters. Mr Gradel was the person responsible for making the decision as to (a) when the application for planning permission was to be submitted and (b) whether the notice to complete the sale envisaged in the May 1975 contract was to be given. Even if the defendants were in breach of contract in failing to supply satisfactory evidence of title to âBlock Bâ by 30 March 1976 it was a breach devoid of legal consequences. The title to Block *30 B did not enter into Mr Gradel’s considerations when he decided not to serve the notice and complete the sale on 30 May 1976. The application for planning permission had not been served on 30 March and it was the absence of planning permission and not the absence of title to Block B (which at that time had nothing to do with the plaintiffs’ development plans) which motivated Mr Gradel. Again, the failure to serve a notice on 30 September 1976 for completion at the end of the year had nothing to do with the title of âBlock Bâ. In July an application for extension of the December deadline had been made and I am quite satisfied that Mr Gradel had no intention of closing the sale in the absence of planning permission â an absence in no way contributed to by questions of the title to âBlock Bâ. I conclude therefore that the delays in relation to the title to âBlock Bâ (and the breach of contract, if any, which may have been involved) are of no significance in considering the reasonableness of the notice to complete of 7 April 1977 as they had not in any way contributed to the causes which resulted in the failure of the plaintiffs to complete the sales on the contractual dates. I also conclude that the claim in paragraph 9 of the statement of claim fails. The plaintiffs now admit (contrary to what is therein pleaded) that a satisfactory title to âBlock Bâ had been furnished by 9 December 1976. Thus when the title to this block became relevant to the plaintiffs’ plans (as it did when the planning application was withdrawn and a decision to make a fresh application which included âBlock Bâ was taken) the defendants were in compliance with their contractual obligations and there was no failure of consideration. The plaintiffs, it follows, are not entitled to a return of the ÂŁ25,000 they paid when the contract was signed.
(c) Notice to Complete
(c) I have already referred to the request for extension of the closing date which was contained in the letter of 16 July 1976. This letter not only contained a complaint about delays in relation to the title to âBlock Bâ but also complained of the failure on the defendants’ part to assist in obtaining the freehold to Block A â a complaint with which I have already dealt. This letter and one in similar terms written by Mrs Cooney direct to Mr Hardy about the same time marked the commencement of the deterioration in the relationship between the parties. Mr Fish wrote on 5 August denying the accusation (as did Mr Hardy to Mrs Cooney on the same day) and after Mr Sexton had reiterated his client’s complaints on 19 August Mr Fish wrote on 6 September stating:
Our clients do not consider that they are at fault in any way and under the circumstances are not prepared to agree to an extension of the existing time limits.
Thus by early September 1976 the plaintiffs were put on notice that the defendants required them to complete the sale on 31 December following. A meeting between the parties’ representatives took place on 8 November. The atmosphere at it was chilly and its outcome inconclusive. The defendants made the point that their property had been tied up for a long time, that they had co-operated in every way they could, that if a new contract was entered into there would have to be an increased price. Mr Gradel explained the plaintiffs’ position. He said that any increase in price would make the whole project unviable and he put forward *31 the idea of a joint venture between the parties. A further meeting was held on 13 December. By then the plaintiffs’ application for planning permission had been withdrawn and the defendants were told of this. Mr Fish told the meeting that the closing date of the existing contract was 31 December but that he had been advised that to rescind the contract he would require to serve a notice making time the essence of the contract. Bearing this in mind and the fact that his clients wished to do business with the plaintiffs he put forward a number of alternative proposals.
(1) The defendants would give two months notice to complete the existing contracts, that is to say up to 1 March 1977 and there would be no change in the financial terms of the agreements.
(2) Alternatively, the closing date on the Block A contract would be extended to 1 May 1977; there would be no financial change in this contract and the ÂŁ30,000 paid as a deposit would be allowed against the price. The plaintiffs however would lose Block B and the sum of ÂŁ25,000 paid when the contract was signed.
(3) As a further alternative it was suggested that the closing dates of both contracts should be extended to 1 January 1978; that the purchase price would remain the same but that in addition ÂŁ50,000 would be paid by way of non-refundable deposit; or, that the purchase price would be increased to ÂŁ680,000 and that an additional ÂŁ20,000 be paid as a non-refundable deposit. Proposals as to the contrary in which payments were to be made and as to the granting of a twelve month rent free period to the defendants after completion were also made. These proposals were met with little enthusiasm. Counter proposals were sent to Mr Sexton on 3 January and further proposals on 27 January by Mr Fish. These were turned down by letter of 1 April. In the course of the letter of 1 April Mr Sexton made explicit the position which I am satisfied his clients had taken up for some considerable time: the plaintiffs would not agree that completion would take place on a specified date and they insisted that completion be conditional on the plaintiffs obtaining a grant of planning permission.
Negotiations for the conclusion of a new contract had clearly come to an end. On 7 April Mr Fish wrote:
We now give you notice that our clients require you to complete the purchase of Block A and of Block B on or before 7 July 1977 and time is hereby made of the essence of the contract. If your clients intend to complete the transaction we are satisfied that this will give them ample time to do so.
When the sales were not completed Mr Fish wrote on 26 July stating that the plaintiffs were in breach of contract and that his clients were treating the breach as a repudiation of the contract and that they were retaining the non-returnable deposits. Unknown to him the plaintiffs had, on 21 July, commenced these proceedings by the issue of a plenary summons.
The oral evidence which I have heard, the correspondence to which I have referred and the course of the plaintiffs’ pleadings in these proceedings satisfy me that at the time the notice was served and for some time before it the plaintiffs had decided that they would not complete the sales unless they had first obtained planning permission. That this was their attitude is clearly borne out by their *32 pleadings. When instituted in July 1977 and when the statement of claim was filed on 26 January 1978 the plaintiffs had not yet received planning permission in respect of their revised plans. Neither the summons nor the statement of claim contained an averment that they were ready and willing to close the sales and no claim for their specific performance was made. By the time the case came on for hearing, planning permission had been obtained. Only after the receipt of planning permission were the plaintiffs prepared to seek relief by way of specific performance.
Before considering the reasonableness of the time given by the notice of 7 April I should make brief reference to the second application for planning permission. After the first application was withdrawn it was, as far as Mr Keane was concerned, a case of âback to the drawing boardâ. Completely new detailed drawings had to be prepared and these were lodged on 4 May 1977. In essence, the new scheme was for the development of Block B as a shopping area, with Block A and some surrounding area to be used for parking facilities. Permission was granted by the Dublin Corporation on 4 August 1977 but an objector appealed against this decision and the appeal was not finally determined in the plaintiffs’ favour until June 1978. It is of some relevance to record Mr Keane’s view that had the revised plans been lodged with the Dublin Corporation in May 1975 after the signing of the second contract (and not in May 1976) permission in all probability would have been obtained to permit the completion of the two sales in accordance with the contract.
(d) Reasonableness of the Notice
(d) The legal principles to be applied in this case are clear and well established. If a stipulation as to time is not of the essence of a contract then when one party has been guilty of undue delay the other may give notice requiring the contract to be performed within a reasonable time specified in the notice. In considering the reasonableness of the time so limited the court will consider not merely what remains to be done at the date of the notice but all the circumstances of the case, including the previous delay of the purchaser and the attitude of the vendor to it. If the notice is a reasonable one the vendor may at its expiration treat the contract as at an end if the purchaser refuses to complete (see Stickney v Keeble [1915] AC 386; and Ajit v Sammy [1967] 1 AC 255). In this case there was without any doubt delay on the part of the plaintiffs after 31 December 1976. In the previous July the plaintiffs had intimated that they were not prepared to close and on 7 September they had been made aware that their request for an extension of time had been refused. By 7 April 1977 three months had expired from the contractual closing date and the plaintiffs had by this time made it perfectly clear that they were not going to close the sale for an indefinite period (if at all). In these circumstances the defendants became entitled to serve a notice specifying a closing date and making time the essence of the contract. The real issue in the case, however, is whether the length of time given by the notice of 7 April was a reasonable one.
I have come to the conclusion that in all the circumstances of this case, the notice given was in fact a reasonable one. In reaching this conclusion, I have borne the following considerations in mind:
*33
(1) I cannot accept the plaintiffs’ submission that as they could not possibly have obtained planning permission in three months from 7 April 1977 the notice given was not a reasonable one. If they are right it would follow that they were entitled to a fourteen months notice as planning permission, in the event, was not obtained until June 1978. This cannot be correct. In my opinion, the time to be fixed by the notice is not to be measured by the time it would then take the plaintiffs to obtain planning permission. Certainly, the position on 7 April concerning the plantiffs’ application for planning permission is a factor to be taken into account in considering the reasonableness of this notice. But the length of time which had elapsed prior to the date of the notice, during which the plaintiffs had an opportunity to obtain planning permission must be considered; and so must the causes for the long delays in relation to it.
(2) The length of notice given in April 1977 should be viewed in relation to the opportunity given to the plaintiffs to obtain planning permission. A year was given for the closing of the sale in the first contract and this time limit was extended by a further twenty months by the second contract. When the April notice was served, nearly three years had elapsed from the date of the first contract and nearly two from the date of the second contract. It seems to me that a three month notice to complete given at the end of such lengthy periods cannot in principle be regarded as an unreasonable one.
(3) The delays which resulted in the failure to close the sales on the dates contemplated in the contracts were the plaintiffs’ responsibility. The plaintiffs decided not to complete the contracts in the absence of planning permission and their failure to obtain planning permission in the time contemplated in the agreements arose from the plaintiffs’ considerations as to what was to their commercial advantage in developing the two sites. It is also to be borne in mind that the planning authority was not responsible for any unexpectedly long delay in processing the plaintiffs’ application. Had it been established that the defendants’ inaction contributed to the delay in completion then the three months limit might have been unreasonably short. But the delay in this case was clearly the responsibility of the plaintiffs. In the light of the history of the transaction I do not think that the notice given was an unreasonably short one.
(4) The length of notice can also be viewed by reference to the defendants’ attitude to the plaintiffs’ failure to complete. On 7 September 1976 they had made it perfectly clear that they would not agree to an extension of the completion date. Thus the plaintiffs had nearly four months notice of the defendants’ attitude and the negotiations which took place in the following months did not disclose any fundamental change in this attitude. When the completion notice was in fact served, seven months had passed from the defendants’ first refusal to extend the time, and the length of time given by it meant that ten months in all elapsed from the first intimation of the defendants’ attitude to the closing dates.
(5) The plaintiffs’ own attitude in April 1977 is also of relevance. Their position was that, notwithstanding the length of time that had elapsed from the date of the first contract, notwithstanding the fact that a completely new scheme of development had to be prepared and considered by the planning authority, and notwithstanding the strong probability that a considerable time would elapse *34 before final determination on their new application, they were not prepared to complete the two sales in the absence of planning permission. Whilst this point of view is, perhaps, an understandable one, it is not one in accordance with the plaintiffs’ contractual rights. They had bound themselves to complete on certain dates or in a reasonable time thereafter. Their attitude was not justified by the provisions in relation to planning permission in the first contract; nor could it be regarded as reasonable in the circumstances. Viewed in the light of this intransigence I think a three months notice can be considered a reasonable one.
(6) The parties had agreed in the second contract that the purchase price payable on Block B in June 1976 would be increased by ÂŁ60,000 if the sale was closed six months later. They thereby acknowledged that in time of inflation and high interest rates a deferment of closing justified the payment of a higher purchase price. It is to be inferred from this agreement that the parties contemplated that any extension of the later closing time (time not being of the essence of the contract) would be a moderate one as anything other than a moderate extension would involve the payment of an unchanged contract price at the end of the period of anticipated high inflation for which the defendants would not be compensated. In the events that happened, the effect of the notice given on 7 April was to extend the closing date and the time of the unchanged purchase price for a period of six months from that provided for in the agreement â a reasonable time, in my opinion, by reference to the parties’ agreement.
(7) The time limit should be looked at from the effect of delay on the defendants’ position. They were, in my opinion, entitled to have the uncertainty concerning the future of their property brought to an end within a reasonable time. The property was a very valuable one and delay in closing meant that the defendants’ freedom in dealing with it was constrained by their obligations to the plaintiffs. Their future trading plans were also affected by the delay and attendant uncertainties. Their business was carried on in most of the premises the subject of the contracts and in anticipation of closing they had made some alternative arrangements elsewhere. They were entitled to know, within a reasonable time, whether or not these alternative arrangements should be extended or terminated. Furthermore, delay in completion not only deferred the payment to them of a very substantial capital sum but they were contractually entitled to interest only on the purchase price of Block A: the second contract did not contain any interest clause. Considerations of these factors would suggest that a three months notice given in April 1977 was a reasonable one.
(8) Finally, in considering the time limit prescribed by the notice it is to be borne in mind that the plaintiffs could have waived the condition relating to planning permission in the first contract. The length of time to consider this option was a reasonable one in my opinion having regard to the very lengthy periods which had already elapsed prior to its service for the preparation and presentation of the planning application.
Conclusion
It follows from the views which I have expressed that the plaintiffs’ failure to *35 complete the sales after 7 July 1977 meant that the contracts came to an end. The first contract terminated because the plaintffs failed to waive the condition relating to planning permission and complete. The second contract terminated either for the same reason or (if it was not subject impliedly to the provision of planning permission) by virtue of its repudiation by the plaintiffs. The plaintiffs are not therefore entitled to an order for specific performance or to the declaration they sought. The defendants are entitled to retain the sum of ÂŁ30,000 paid on the signing of the first contract and to the sum of ÂŁ25,000 paid on the signing of the second contract. To clarify their rights the order will declare that as and from 7 July 1977 the defendants were discharged from further performance of the contract and that they were entitled to retain the sums to which I have referred.
Michael Maloney v Elf Investments Ltd
1979 No. 295 Sp
High Court
7 December 1979
[1979] I.L.R.M. 253
(McWilliam J)
McWILLIAM J
delivered his judgment on 7 December 1979 saying: By agreement in writing dated 16 March 1978, on the 1976 edition of the Incorporated Law Society form, the plaintiff agreed to sell certain lands at Lisduff, *254 Co. Clare, to the defendant for the sum of ÂŁ39,500. The closing date was expressed to be â20 days after full planning permission and Land Commission consent received or 10 July 1978 whichever be later.â
The following special conditions were included:
(1) Sale subject to purchaser getting full planning permission before 31 July 1978. If full planning permission is not forthcoming before this date purchaser to be refunded his deposit without interest costs or compensation.
(2) Vendor reserves the right to build on Site No. 9. It will be a dwelling in keeping with the other proposed dwellings and not a system or pre-fab building. Transfer to purchaser shall contain a covenant to this effect by vendor and such covenant shall be registered as a burden on the property retained by the vendor.
(3) Property sold subject to subdivision consent being obtained from I.L.C.
(4) Vendor has right of grazing until lands are fenced off.
(5) Sale subject to trial holes for building and drainage being satisfactory.
Planning permission was not obtained by the defendant until November 1978. The consent of the Land Commission to subdivision was obtained on 11 September 1978.
By letter of 11 August 1978, the solicitors for the plaintiff wrote to the solicitors for the defendant in the following terms:
Dear Sirs,
Further to the above our client has instructed us that as the closing day i.e. 21 July 1978, has passed they wish to withdraw from this sale.
You can send a copy of this letter to Mr De Courcy and this is to authorise him to return the deposit to your client.
He would be obliged for any folios etc. that you have to hand.
This letter was formally acknowledged on 15 August 1978, and, by letter of 23 August, the solicitors for the defendant wrote to say that their client was quite happy about the planning position and, in the circumstances, waived the special condition in number (1) in the contract. They also asked to be furnished with a copy of the Land Commission consent so that they could furnish their requisitions on title. They wrote a further letter on 28 August calling for certain information to enable them to apply for the consent of the Land Commission to the defendant as required by s. 45 of the Land Act, 1965. Notwithstanding their letter of 11 August the solicitors for the plaintiff on 31 August replied to the letter of 28 August and furnished the information therein requested and, by the last paragraph of their letter, indicated that the transaction was then proceeding. It is not clear how this letter of 31 August came to be written but it led to the plaintiff discharging his solicitors and retaining his present solicitors who, by letter of 15 September, directed the auctioneers to return the deposit to the defendant. This was done and confirmed by letter of 18 September to the solicitors for the defendant who replied threatening proceedings for specific performance. There was further correspondence but no proceedings for specific performance were instituted by the defendant and, on 17 May 1979, the plaintiff issued a special summons for a declaration that the contract terminated on 31 July 1978, because full planning permission had not been forthcoming by that date.
*255
It has been argued on behalf of the defendant that the letter of 11 August 1978 was not sufficiently clear in that it did not refer to special condition (1) but only to the closing date and that the defendant was entitled to disregard it. Whether the point is relevant or not, I am satisfied that the letter was written to inform the defendant, and was understood by the representatives of the defendant to mean, that, the date for obtaining planning permission having passed without obtaining such permission, the plaintiff was treating the contract as at an end.
The real issue in the case is whether the defendant was entitled to waive the condition as to planning permission so as to be able to compel the plaintiff to complete the sale.
It appears to me that the first thing to do is to consider what is the nature and effect of special condition (1). It provides that âsale is subject to purchasers getting full planning permission before 31 July 1978â. 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 of the essence of the contract and that a reasonable time ought to be allowed to obtain the permission by analogy to the principle that the 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 shall be 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 p. 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 equitable principles.
On the question of waiver I was referred to the judgment dated 3 December 1973 of Kenny J, in Healy v Healy, to the case of Heron Garage Properties Ltd v Moss [1974] 1 WLR 148 and to the judgment dated 23 January 1979, of Costello J, in Sepia Ltd v M. & P. Hanlon Ltd [1979] ILRM 11. The principle with regard to waiver appearing from these decisions is that a condition inserted exclusively for the benefit of one party can be waived by that party. It is said on behalf of the defendant that special condition (1) is inserted exclusively for the benefit of the defendant and that it is severable from the rest of the contract. It is argued on behalf of the plaintiff that the provisions of special condition (2) reserving a right to him to build a dwelling on Site No. 9 are such as to give him a very considerable interest in the grant of planning permission and that *256 this interest is inextricably mixed with the interest of the defendant. Although I am satisfied that special condition (1) was inserted mainly for the benefit of the defendant, it seems to me that the argument on behalf of the plaintiff is correct and that, as the plaintiff was to have the right to build on site No. 9, he had a real interest in the planning permission for a development comprising at least eight other houses with the services these would require. Accordingly, on this ground, I am of opinion that, on the facts of the case, the defendant was not entitled to waive the condition without the consent of the plaintiff.
Although this disposes of the case, another aspect arises which I should also consider. Kenny J, in Healy’s case, was dealing with a situation in which the condition was waived before the time for compliance with it had expired. Similarly in Heron’s case. Accordingly, in those cases the question of the right to waive a condition after the time for compliance had expired was not discussed. Kenny J did, however, refer to the possibility of the contract being void for uncertainty where the date for completion was fixed by reference to the date on which planning permission was obtained. It seems to me that this question does not arise in the present case because, if the condition as to obtaining planning permission was properly waived, the alternative date of 20 days after the Land Commission consent was given would alone apply. To return to the question of waiver I am of opinion, in the absence of any other authority, that the decision in the Aberfoyle case as to the necessity for exact compliance with the date mentioned in the condition means that there can be no question of waiver after that date has passed and, more particularly after the other party has already stated that he is relying on the condition. I am aware that there are several cases, mainly actions for specific performance, in which waiver of a term of a contract has been allowed as late as the hearing of the action, but I have not been referred to any case in which such a term was expressed as a condition to be performed by a definite date.
Accordingly, I will make the declaration sought by the plaintiff.
Hannon & Ors v BQ Investments
[2009] IEHC 191 Judgment of Miss Justice Laffoy delivered on the 24th day of April 2009.
Factual background
The plaintiffs sue in their capacity as trustees of Thomond Football Club (the Club). In that capacity they entered into an agreement for sale, which bears the date 22nd December, 1998 (the Agreement for Sale), and was made between them, as vendors, and Paul OâBrien, a solicitor acting in trust, as purchaser, which has turned out to be a very contentious transaction. The Agreement for Sale related to part of the lands comprised in Folio 24105F of the Register of Freeholders, County Limerick, as depicted on the map annexed thereto and outlined in red and marked with the letter âBâ, which was stated to measure in area circa 8.76 acres (the sold lands). The purchase price was ÂŁ330,000. Under the special conditions it was provided that the sale was subject to the purchaser obtaining acceptable planning permission within âthe relevant periodâ, as defined. There were special conditions in relation to the proposed development, what constituted an acceptable planning permission and the definition of âthe relevant periodâ. Nothing much turns on those special conditions, because an acceptable planning permission was granted by An Bord PleanĂĄla on 17th October, 2000 for the development of the sold lands as a student housing development of 238 apartments.
Under the heading âExceptions and Reservationsâ in the special conditions it was provided that there would be granted to the plaintiffs a right of way to access the remaining part of their lands comprised on Folio 24105F (the retained lands) by the purchaser, and that the right of way would be marked on the Land Registry map for approval by the plaintiffs and that the purchaser would assent to same. There followed four special conditions, special conditions 8, 9, 10 and 11. In special condition 8 the purchaser agreed to provide âtwo suitable rugby playing pitches, levelled, top soiled and ready for seedingâ on the retained lands, the suitability of the pitches to be agreed with an independent engineer. Special condition 9 provided that the purchaser would re-locate the existing flood lighting and ESB sub-station to the site of one of the new playing pitches to be decided upon by the plaintiffs.
The dispute which is the subject of these proceedings arises out of special condition 10, which provided as follows:
âThere will be reserved in favour of the [plaintiffs] for the use of the football pitches and the clubhouse a right of way over the roadway having a width of six metres with a footpath on both sides and appropriate public lighting with the location of the said right of way to be decided upon by the Purchaser who will consult with the [plaintiffs] on the Planning Application with regard to the location of the said right of way.â
No issue arises in these proceedings on special condition 11, under which a wayleave to connect into the services to be installed by the purchaser on the sold lands was to be granted by the purchaser to the plaintiffs.
The date of 22nd December, 1998, which appeared on the Agreement for Sale, was inserted by Mr. OâBrien when, having executed it in trust, he returned it to D.J. OâMalley & Co., the plaintiffsâ solicitors. The Agreement for Sale as executed by the plaintiffs was returned by D. J. OâMalley & Co., to the purchaserâs solicitors on 25th March, 1999. Accordingly, 25th March, 1999 was the operative date of the Agreement for Sale. In the interim period between the execution of the Agreement for Sale by Mr. OâBrien and its execution by the plaintiffs, there was correspondence between the solicitors for the parties in relation to a number of issues, one of which related to the location of the right of way. What emerges from a letter of 28th January, 1999 from the purchaserâs solicitors to the plaintiffsâ solicitors is that the purchaser could not identify the exact location of the right of way at that stage. However, a special condition in the terms of special condition 10 was suggested by the purchaserâs solicitor. It may be, and the evidence is not clear on this point, that special condition 10 was inserted in consequence of that letter. In any event, nothing turns on when it was inserted, because it is common case that both sides were bound by special condition 10. The dispute between the parties relates to what it means.
The purchaserâs planning permission having issued on 17th October, 2000, the sale was due to be closed within four weeks of that date. However, a difficulty arose in that the purchaser needed additional land to provide an attenuation pond. That difficulty was ultimately resolved when the plaintiffs agreed to make available to the purchaser an additional two acres of land subject to the payment of an additional sum at a price pro-rata to the price in the Agreement for Sale. As I understand the position, the additional land, was separately transferred by the plaintiffs to the defendant subsequent to the completion of the sale of the sold lands.
That sale was completed on 21st December, 2000. By a transfer of that date (the Transfer), the plaintiffs, in consideration of ÂŁ330,000, transferred the lands described in the first schedule, being part of the lands comprised in Folio 24105F outlined in red on the map annexed thereto (which, for present purposes, I am assuming equated to the sold lands, although the area differs somewhat from the area referred to in the Agreement for Sale) to BQ Investments Limited in fee simple. I am also assuming that BQ Investments Limited subsequently became an unlimited company and corresponds to the defendant. There was excepted and reserved out of the transfer of the sold lands unto the plaintiffs the âExcepted Easementsâ as defined, which included the following:
âA right of way over the roads and footpaths now laid or at any time within the Perpetuity Period laid on in or under the Sold Land going to and from the Retained Lands or any part therof along the way coloured pink on the Plan.â
I note that it was stated in a letter of 21st November, 2000 from the purchaserâs solicitors to the plaintiffsâ solicitors that special conditions 10 and 11 had been dealt with in the third schedule to the draft deed of transfer which accompanied the letter. The third schedule to the executed transfer is a verbatim transposition of that draft.
After the closing of the sale, the plaintiffs were allowed to remain in possession of the sold land. As I understand it, the intention was that they would remain in possession until the defendant fulfilled its obligations under special conditions 8 and 9 of the Agreement for Sale. In mid-2002 the defendant decided that it wanted possession of the sold lands. Circuit Court proceedings were instituted. Those proceedings were eventually compromised in October 2002 on the basis that the defendant paid an agreed sum of âŹ126,974 as compensation for âbuying outâ special conditions 8 and 9. It had been the defendantâs contention that planning permission could not be obtained to enable the defendant to fulfil its obligations under special conditions 8 and 9. As I understand it, the result of the compromise was that the defendant obtained possession of the sold lands, which it sold on to a third party. Eventually, the sold lands were developed as a student village.
There followed a lull in the hostilities between the plaintiffs and the defendant until October 2003, when, in a letter of 14th October, 2003 to the purchaserâs solicitors, the plaintiffsâ solicitors raised the issue of special condition 10 in the Agreement for Sale, contending that the right of way in favour of the plaintiffs was to be a âconstructed roadwayâ having a width of 6 metres and a footpath on both sides, with appropriate public lighting located thereon. The plaintiffsâ solicitors sought confirmation that the defendant would honour the contract, which, as regards compliance with special condition 10, it was asserted, required the construction of a roadway. Despite a reminder, no reply was forthcoming.
These proceedings were initiated by a plenary summons which issued on 17th May, 2004.
The case as pleaded and the response to it
As the defendant attached great weight to the case as pleaded, it is necessary to outline the relevant aspects of the pleadings in greater detail than is usually necessary.
Plenary summons/statement of claim
The primary reliefs sought by the plaintiff in the plenary summons and in the statement of claim, which was delivered on 10th March, 2005, were mandatory injunctions compelling the defendant –
(1) to provide, for the benefit of the plaintiffs, a right of way over part of Folio 24105F of the Register of Freeholders, County Limerick, which apparently was outlined in red on the map annexed to the statement of claim and coloured yellow thereon; and
(2) to so construct the right of way as to make it consist of a roadway having a width of 6 metres, with a footpath on both sides and appropriate lighting for the proper use thereof.
The plaintiff also sought damages in addition to, or in lieu of, specific performance and/or injunctive relief.
There is no dispute between the parties as to the location of the right of way and the area on which the plaintiffs say the road should be constructed. It is the area between the points marked A and B on drawing no. G045 â 01A prepared by Dennany Reidy Associates, Consulting Civil and Structural Engineers, which was put in evidence. As I understand the position, that area corresponds with the area over which the right of way was reserved in the Transfer. There is a notation on the map on the Transfer that it was a â10m wide right of wayâ. I will refer to this area as the âright of way stripâ.
In the statement of claim, having recited the Agreement for Sale, it was asserted in paragraph 4 thereof as follows:
âIt was an express and/or implied term of the said agreement and the Defendant represented to the Plaintiffs and/or warranted that it would construct a roadway with adjoining footpaths and adequate lighting on the said lands, to allow the Plaintiffs access to the remainder of their lands, not sold to the Defendant. The Plaintiffs were also granted a right of way over the said lands purchased by the Defendant.â
The plaintiffs then pleaded a breach of the Agreement for Sale, in that the defendant would ânot construct or pay for the construction of the said roadway for the benefit of the plaintiffs, thus frustrating the use of the plaintiffsâ right of wayâ.
Notice for particulars/replies
At the hearing the defendantâs focus was on two aspects of its request for particulars in its notice for particulars dated 17th August, 2005. Those aspects were addressed in paras. 8 and 16.
In para. 8 the defendant raised the following query:
âPlease clarify whether the Plaintiffs accept that the right of way to which reference is made in the Statement of Claim is a right of way to facilitate use of the football pitches and clubhouse. Please also clarify whether the Plaintiffs are alleging that the football pitches and clubhouse in question exist. In the event that the Plaintiffs confirm that the football pitches and clubhouse in question do not exist, the Plaintiffs are requested to clarify on what basis they seek to have the Defendant construct the roadway when the purpose or object of the right of way does not yet exist.â
In their replies dated 4th October, 2005, the plaintiffs dealt with that query as follows:
âThe use being made of the right of way is not a matter for the defendant. The defendant contracted to provide a roadway and footpaths and lighting and it has not done so. As a result, the plaintiffs are unable to use their lands as they wish and they are unable to develop facilities thereon.â
The defendant was not happy with that response and, in a notice for further and better particulars of 30th August, 2006, which post-dated the delivery of the defendantâs defence, it apprised the plaintiffs of that and repeated the query in its entirety. The plaintiffsâ ultimate response in replies, apparently dated 23rd February, 2007, was to the following effect:
âThe plaintiffs wish to develop their lands and they are unable to do so as there is no proper access provided thereto even though the defendant covenanted to so provide. The plaintiffs simply allege that the roadway has not been provided. They have no need, and have not alleged anything further, and this request is an attempt to prompt them to do so, and this is fundamentally improper.â
The query raised by the defendant in para. 16 of the notice for particulars was to require the plaintiffs to identify with particularity the use or uses which the plaintiffs intended to make of the right of way and, if the plaintiffs were alleging that the use or uses related to use of the lands for playing pitches together with the provision of a clubhouse facility, full and detailed particulars were sought of the planning permission upon which the plaintiffs were relying in support of such use of the lands. The plaintiffsâ response in their replies of 4th October, 2005 was that the plaintiffsâ plans for the future development of the lands were not relevant; the plaintiffs were unable to access their lands by means of a proper roadway, footpaths and lighting as they would like to and any âenhanced uses as they may plan for the futureâ were not relevant, save that their plans had been impeded by the defendantâs breach of agreement.
The defendant did not agree that the particulars sought were irrelevant and repeated the para. 16 query in their notice of 30th August, 2006. The plaintiffsâ response in their replies of 23rd February, 2007 was as follows:
âThe Plaintiffâs plans for future development of its lands and future use is not relevant herein. The fact is that the Defendant agreed to provide a proper roadway, footpaths and lighting and it has not done so. The enhanced uses that the Plaintiffs may plan for the future are not relevant herein, save that their plans have been impeded by the Defendantâs breach of agreement ⌠and thus have caused damage to the Plaintiffs. If special damage is capable of being computed herein, upon expert advice, then the Plaintiffs will give details of such special damage and any necessary details of specific plans being thwarted.â
Between the replies to the notice for particulars and the raising of the notice for further and better particulars, on 22nd December, 2005, the Club had obtained planning permission from Limerick County Council. The planning permission, which was granted on foot of an application of 21st March, 2005, authorised the construction of a sports pavilion, incorporating changing rooms, weight room, meeting rooms, stores, entrance, roadway parking and ancillary site works on the retained lands.
Defence
The defendantâs defence was delivered on 2nd October, 2006. In it, the defendant denied that it has acted in breach of the Agreement for Sale or in breach of the Transfer. The opening two lines of special condition 10 were quoted, with emphasis being added to the words âfor the use of the football pitches and the clubhouseâ. It was then pleaded, and this is the core element of the defendantâs defence to these proceedings, as follows:
âAs the plaintiffs have neither pitches nor a clubhouse, which would benefit from the construction of a roadway on the right of way, the defendant cannot be in breach of the Agreement. For the avoidance of doubt, the defendant has reserved out of the sold lands a right of way, which the plaintiffs are at liberty to enjoy. The Defendant will construct the roadway when and if the plaintiffs have a clubhouse and pitches, which can benefit from same.â
My understanding of the reference to the defendant having reserved out of the sold lands a right of way is that, when the defendant sold on to a third party the sold lands on which the student village has now been constructed, it reserved thereout the capacity to implement special condition 10 of the contract. No documentary evidence to support that understanding was adduced. In any event, as a matter of title, the sale on had to have been subject to the right of way reserved out of the Transfer.
Reply
Finally, in their reply delivered on 29th July, 2008, the plaintiffs joined issue with the defendantâs assertion that its contractual obligations relating to the construction of a roadway are dependent on the plaintiffs âhaving a clubhouse and pitches presently in existence or ⌠Planning Permission for sameâ. Further, the existence of the plaintiffsâ planning permission, of which formal notice had been given to the defendantâs solicitors on 21st April, 2009, was pleaded.
Summary of the case as pleaded
There are a number of matters to which the pleadings do not advert at all. There is no reliance by the plaintiffs on the reservation in the Transfer of a right of way in favour of the plaintiffs over the right of way strip. There is no mention of the âbuying outâ of special conditions 8 and 9 of the Agreement for Sale. At the hearing, neither side attached any significance to the fact that special conditions 8 and 9, under which the purchaser had assumed liability to provide two pitches and re-locate flood lighting and the ESB sub-station, but not to provide a clubhouse, ceased to be operative in October 2002, in the context of identifying the extent of the defendantâs liability under special condition 10. Nor was any significance attached by either side to the fact that special condition 10 merely referred to the reservation of a right of way over a roadway of the specification set out, but did not expressly provide for on whom responsibility for constructing the roadway lay, although, as the right of way strip was located on the sold lands, it may be reasonable to infer that it was intended to lie on the purchaserâs principal, the defendant.
The respective positions adopted by the parties simplified the Courtâs task considerably, in that the dispute between the parties was reduced to a single issue, namely, when, as a matter of construction of special condition 10, the contractual liability of the defendant to build the road, which liability the defendant admitted, arose or will arise. The respective positions of the parties on that single issue raised the following questions: whether it does not arise until there is a clubhouse and pitches on the retained lands, as the defendant submitted; or whether it arose on the completion of the purchase of the sold lands as a freestanding obligation regardless of how the retained lands were being, or were capable of being, used, as the plaintiffs contended.
In his closing submissions, counsel for the defendant submitted, with justification, that the case had mutated at the hearing beyond the case as pleaded, in that the plaintiffs adduced evidence with a view to establishing that there were pitches on the retained lands and club facilities which fulfilled the use requirement in special condition 10, insofar as there was a requirement. The evidence adduced by the plaintiffs also sought to establish an alternative scenario: that upgraded facilities which would meet that use requirement could be provided reasonably quickly. Counsel for the defendant argued that, on the issue of whether there were pitches and a clubhouse on the retained lands, the crucial date was May 2004 when these proceedings were instituted on the basis that the plaintiff was asserting that the defendant was then contractually bound to construct the road.
The evidence
In relation to the user and condition of the right of way strip since its transfer to the defendant in 2000, the evidence was that it was used as a construction road in connection with the development of the student village on the sold lands. Currently, it is fenced off from the student village. It has been used by the Club for access to the sold lands. The evidence was that the road, as it is now, was put into place by the Club over a period of years and it was upgraded on a yearly basis. Currently it has a stone hardcore surface blinded with smaller aggregate. The surface is not suitable for a permanent roadway. It is susceptible to âwear and tearâ and adverse weather conditions. There are potholes in it and it has become overgrown. It does not have lighting and, on the basis of the photographic evidence, it does not have footpaths. Members of the Club have had concerns about the safety of children using the road. It is considered dangerous and unfit for use in winter time. The evidence was that the Club has spent âŹ67,833 in developing and maintaining the right of way strip over the years.
The evidence in relation to the user of the retained lands was that, after the Club had to vacate the sold lands, part of the retained lands was used for training purposes. In recent years two pitches have been created. The first to be created has been passed by the governing body of the sport, the Munster branch of the I.R.F.U., as suitable for matches. This occurred in either the summer of 2006 or 2007, the evidence being somewhat unclear on this point. The more recently created pitch is used for training purposes, not for playing matches, which I take to mean games against other club teams. Apart from the ESB sub-station, there is no building on the retained lands. There is currently what was variously described as a âwagonâ, a âcontainerâ and a âPortakabinâ on the sold lands, which is used for storing gear. It has seating and is also used for changing purposes. However, there are no windows in it, for security reasons, and it is not serviced with electricity, running water or sewage. Until recently there was a second similar container on the retained lands. The evidence was that Portakabins specifically designed for sporting purposes, with showers, toilets and changing facilities, are readily available on the market.
Insofar as is necessary, I find on the facts that the two pitches on the sold lands are football pitches as envisaged in special condition 10. However, I find that the container which is now on the sold lands is not a clubhouse as envisaged in special condition 10.
While the Club has planning permission for the construction of a pavilion, the construction of the pavilion is part of a ten year plan into the future, the intention of the Club being to develop playing fields during the first five years. Therefore, aside from the crucial factor mentioned in the next paragraph, on the basis of the evidence of the Clubâs intentions, I find that it is improbable that the construction of the pavilion will take place until well after the first five years of the implementation of the plan, if it takes place then.
The most significant evidence to emerge at the hearing concerned the likely impact of the Limerick Regeneration Project on the Clubâs plans for the sold lands. The evidence was that a proposal to build a link road in the area has had a long history, with, until recently, a twenty year timeframe envisaged. However, it appears that, following the report of Mr. John Fitzgerald in April 2007, the plans of the Limerick Northside Regeneration Agency for the construction of a relief road, which will pass through the retained lands, have been front loaded. Since 2008 an Environmental Impact Assessment is being conducted and the compulsory acquisition process is in train, at any rate on an informal basis, which will involve the compulsory acquisition of some or all of the sold lands. While a compulsory purchase order has not been made, I find on the evidence that, as a matter of probability, the sold lands are unlikely ever to be developed in accordance with the planning permission which issued in 2005.
Contractual liability on the part of the defendant?
It was suggested by counsel for the plaintiffs in opening the case that the Court might decide the liability issue first, namely, whether a mandatory order should issue against the defendant compelling it to comply with special condition 10 and that the issue of damages be left over. I did not understand the defendant to demur from that position.
Counsel for the defendant referred the Court to the adoption by the Supreme Court in the judgment of Geoghegan J. in Analog Devices B.V. v. Zurich Insurance Company [2005] 1 IR 274 (at p. 280) of the general principles enunciated by Lord Hoffman in his speech in I.C.S. v. West Bromwich B.S. [1998] 1 WLR 896 and, in particular, the fifth principle which is as follows (at p. 913):
âThe âruleâ that words should be given their ânatural and ordinary meaningâ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201:
âIf detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.ââ
It was submitted on behalf of the defendant that the words in special condition 10 are clear and that interpreting them on their plain ordinary meaning does not give rise to any difficulty. The roadway to be constructed by the defendant is to be constructed âfor use of the football pitches and the clubhouseâ. To give the special condition a meaning which would require construction of the roadway without the plaintiffs having provided themselves with pitches and a clubhouse would be to supply words in a contract which was negotiated between solicitors and is a commercial agreement.
It was submitted on behalf of the plaintiffs that the essence of the defendantâs argument is that its contractual obligation is suspended until a pre-condition, the provision of the pitches and the clubhouse, is fulfilled. Special condition 10 does not use any of the expressions normally associated with the creation of a condition precedent, such as âsubject toâ, âifâ, or âprovided thatâ. To interpret special condition 10 as suspending the defendantâs obligation until there are pitches and a clubhouse on the sold lands necessitates implying additional words into the provision. It is not possible to give the provision the meaning for which the defendant contends by reading the words that are there, as the defendant asserted. Counsel for the plaintiffs submitted that the object of the words âfor the use of the football pitches and the clubhouseâ in special condition 10 was to limit the purpose for which the plaintiffs were to be entitled to use the road when constructed.
As a matter of the interpretation of special condition 10, in my view, the contractual liability of the defendant thereunder arose on the completion of the sale on 21st December, 2000. That liability, to the extent that it involved an easement over the right of way strip in favour of the plaintiffs, was complied with, in that the right of way was provided for in the third schedule to the Transfer and the defendant consented to its registration as a burden on the relevant folio (clause J of the Transfer). In the reservation in the Transfer, the exercise of the easement by the owners for the time being of the dominant tenement, the retained lands, was not expressly limited to the use of the dominant tenement as football pitches and a clubhouse, as one would have expected. However that is not an issue between the parties at this juncture.
To the extent that special condition 10 imposed an obligation on the defendant to construct a road, and it is admitted by the defendant that it did impose such an obligation, in my view, giving the words in the special condition their natural and ordinary meaning, they do not provide that the defendantâs contractual liability to construct the road has not arisen yet because there is no clubhouse on the retained lands. The words âfor the use of the football pitches and the clubhouseâ in special condition 10 are expressly connected with the reservation of the right of way in favour of the plaintiffs, not with the construction of the road. Although not spelt out, the necessary implication is that the reservation is in favour of the plaintiffs and their successors as the owners for the time being, and for the benefit, of the retained lands. The dominant tenement is the retained lands and the exercise of the easement, which was created by the reservation in the Transfer, is, according to special condition 10, limited to the use of the retained lands as a sporting facility, not, say, as an abattoir or a nuclear power station or whatever. That interpretation fully accords with, and does not in any way flout, business common sense. To read special condition 10 as having the meaning urged by the defendant â that the roadway to be constructed is to be constructed âfor use of the football pitches and clubhouseâ â would involve re-writing it and, thereby, re-writing the partiesâ bargain.
Accordingly, on the basis of the defendantâs admission that it is obliged to construct a roadway on the right of way strip, I find that, by not having done so, the defendant is in breach of contract.
The remedy?
Even when evidence of the advanced stage of the plans for the relief road which will affect the retained lands emerged at the hearing of the action, counsel for the plaintiffs still persisted in seeking the remedies claimed in the statement of claim. It was submitted that a compulsory purchase order affecting the retained lands might not be proceeded with or, alternatively, if it were, the level of compensation to which the plaintiffs would be entitled would be the greater if the retained lands were serviced by a roadway constructed in accordance with special condition 10.
What the plaintiffs are seeking, in effect, is specific performance of an agreement to build a road. They are seeking an equitable remedy, which is discretionary.
At the hearing, the parties did not address whether it is appropriate that a court should make such an order, given the traditional approach, which has been that contracts to build or repair should rarely be enforced by way of specific performance, particularly, as their uncertain nature would make it difficult for the court to determine whether any order made has been complied with, as is discussed in Delany on Equity and the Law of Trusts in Ireland (Thompson Round Hall, 4th ed.) at p. 636. Apart from the usual considerations which apply in determining whether to make such an order, in this case, on the basis of the finding I have made, that the probability is that the life of the retained lands as a sports facility is limited, the plaintiffs are asking the Court to order the carrying out of what in all probability will be a waste of resources and a futile exercise.
Having regard to the foregoing considerations, in my view, the more appropriate remedy for the plaintiffs for the breach of contract would be an award of damages. However, I propose postponing making a final decision on that point so as to afford the parties an opportunity to make further submissions on the appropriate remedy and to adduce any further evidence which they consider necessary.