Aga Khan v Firestone

JurisdictionIreland
JudgeMr. Justice Morris
Judgment Date01 January 1992
Neutral Citation[1991] IEHC 3
Docket NumberNo. 840P/1990
CourtHigh Court
Date01 January 1992

[1991] IEHC 3

THE HIGH COURT

No. 840P/1990
AGA KHAN v. FIRESTONE

BETWEEN

KARIM AGA KHAN
PLAINTIFF

AND

BERTRAM R. FIRESTONE AND DIANA M.J. FIRESTONE
YOSHIKA AKAZAWA
PLAINTIFF

AND

BERTRAM R. FIRESTONE AND DIANA M.J. FIRESTONE
DEFENDANTS

Citations:

STATUTE OF FRAUDS 1695

MULHALL V HAREN 1981 IR 364

LAND ACT 1965 S45

MOORECOCK, THE PRINCIPLE 1889 14 PD 64

MANCHESTER SHIP CANAL CO V MANCHESTER RACECOURSE CO 1909 2 CH 37

MURRAY V TOW STROKES LTD 1973 3 AER 357

CARTHY V O'NEILL 1981 ILRM 443

Synopsis:

SALE OF LAND

Contract

Specific performance - Third party - Claim - Enforcement - Prior option to purchase - Option exercised by third party after vendor's oral agreement - No consideration furnished by third party - Option unenforceable - Memorandum of vendor's agreement - Essential terms - (1990/840 P - Morris J. - 25/7/91) - 1992 ILRM 31

|Aga Khan v. Firestone|

|Akazawa v. Firestone|

1

Judgment of Mr. Justice Morris delivered the 25th day of July 1991

2

By Order of the High Court made by Consent it was ordered that the two above entitled actions be heard together. This Order was made because of the fact that the two actions are interrelated one to the other and the reliefs obtained by the Plaintiff in one affects the rights of the other.

3

In the first of the above entitled actions, that is the claim brought by his Highness the Aga Khan (hereinafter referred to as the Aga Khan) he claims that on the 27th of November 1989 (not the 28th as stated in the Pleadings) his agent Mr. Henry Carnegie entered into a contract with Mr. and Mrs. Firestone's agent Mr. Philip Broughton whereby it was agreed that Mr. and Mrs. Firestone would sell to the Aga Khan for the sum of 14.2 million dollars a stud farm know as Gilltown and certain other lands (hereinafter referred to as Gilltown). The Aga Khan claims that by letter dated the 1st of December 1989 amended as to page 2 thereof by letter dated the 4th of December 1989 and signed by the Defendant's agent a sufficient note of a memorandum to satisfy the Statute of Frauds was created. In the circumstances he seeks specific performance of the verbal contract and an injunction to restrain the sale of the lands to Mr. Akazawa.

4

As an alternative to this claim the Aga Khan says that the aforesaid letter of the 1st/4th of December 1989 constituted an offer to sell lands which offer was accepted by him by way of a letter dated the 20th of December 1989 written by Mr. Carnegie on the Aga Khan's behalf.

5

A further claim was made. This was not pleaded and it emerged at a late stage in the trial. In this claim the Aga Khan claimed that the letter of the 1th/4th of December 1989 constituted an offer which, he says, he "assented to" and it was accordingly accepted. This concept of "assent" arises by virtue of a letter written on behalf of Mr. and Mrs. Firestone by their agent Mr. Broughton dated the 22nd of December 1989 in which the assumption is made by him that the Aga Khan assented to these terms. Objection was not taken to this case being made even though it wasn't pleaded subject to the comment that it only arose at a very late stage in the trial.

6

Mr. and Mrs. Firestone essentially raise three points in their Defence. They deny in the first place that there was any agreement reached on the 27th of November 1989. They say secondly that if there was such an agreement the letter of the 1st/4th of December 1989 does not constitute a sufficient note of memorandum to satisfy the Statute of Frauds and they say that at no stage was the letter of the 1st/4th of December 1989 any more than an offer to treat. Thirdly they say that the letter of 1st/4th of December 1989 did not constitute an offer to sell but if it did it was at all stages subject to an option in favour of Mr. Akazawa. This option has been described as a "first refusal option" over the lands. This plea is not raised in relation to the Aga Khan's primary claim namely the alleged verbal contract of the 27th of November 1989. It is only raised in relation to the second claim which is that the letter of 1st/4th of December 1989 was an offer which was subsequently accepted by letter of the 20th of December 1989.

7

The position of the Plaintiff in the second case, Mr. Akazawa, is as follows:-

8

In his Statement of Claim he claims against Mr. and Mrs. Firestone that on or about the 3rd of October 1989 in consideration of his agreeing to buy certain other property (comprising bloodstock and real estate in America) Mr. and Mrs. Firestone afforded him the right of first refusal to purchase from them the property known as Gilltown on such terms and conditions as in any offer received by them from any other party which Mr. and Mrs. Firestone were prepared to accept. (The first refusal document was in fact signed on the 5th October 1989 but no point arises on the date). Mr. Akazawa in his Statement of Claim goes on to allege that in December of 1989 they Mr. and Mrs. Firestone entered into a contract for the sale of the property with the Aga Khan for the price of 14.2 million dollars and he, Mr. Akazawa, on the 9th of January 1990 executed his option to purchase the lands at that figure. He alleges that on the 12th of January 1990 the parties executed a contract for the sale and Mr. Akazawa duly paid a deposit on that sale. Mr. Akazawa alleges a breach of contract on the part of Mr. and Mrs. Firestone in that they have failed to complete that sale and claims a declaration that in pursuance of the agreement of the 3rd of October 1989 (the first refusal option) he Mr. Akazawa is entitled to seek specific performance of the agreement and claims an injunction to restrain Mr. and Mrs Firestone from disposing of the property by completing the sale with the Aga Khan. In the alternative he claims damages for breach of contract.

9

The circumstances in which the transaction on the 27th of November 1989 between the Aga Khan and Mr. and Mrs. Firestone arose are as follows:

10

It would appear that prior to 1970 the lands which are the subject-matter of these proceedings were owned by the Aga Khan's Grandfather. However in 1970 or 1971 the lands were sold to Mr. and Mrs. Firestone. This left the Aga Khan with two significant holdings in Ireland namely sheshoon and Ballymany. In 1975 by reason of the construction of the Naas bypass it became necessary for the Aga Khan to consider the acquisition of additional land in Ireland. He had a particular affection for the lands at Gilltown and was particularly interested in acquiring them. He became aware of the fact that Mr. and Mrs. Firestone were contemplating selling Gilltown and accordingly directed his lawyer Mr. Carnegie to open negotiations for their acquisition. These negotiations came to nothing. Again in 1987 there were new negotiations. These progressed a stage further and indeed progressed to the stage where a contract for the sale was drawn up by the lawyers for the respective parties and was signed by the Aga Khan. However at that stage for his own reasons Mr. Firestone did not wish to proceed with the sale and the sale fell through. That contract would have envisaged the acquisition of not only the lands but also the bloodstock on the lands. In the process of negotiating that sale and carrying it through to the stage of a contract every detail of the contract was examined and agreed to by the American lawyers acting on behalf of the parties and also the Irish lawyers.

11

These two sets of negotiations having come to nought the matter lay dormant until the month of September 1989. At that stage Mr. Carnegie received a call from Mr. Broughton an American Attorney acting on behalf of Mr. and Mrs. Firestone and as a result of that call Mr. Carnegie returned the call to Mr. Broughton. Mr. Carnegie was aware at that time, as was the Aga Khan, of rumours circulating that Gilltown might be coming onto the market. Contact was made between the two lawyers and Mr. Carnegie was informed by Mr. Broughton that the Firestones were contemplating selling Gilltown. At the time it had not been decided whether the bloodstock was to be included in the sale and he, Mr. Carnegie, was invited to re-open negotiations for the acquisition of the land. He informed Mr. Broughton that the Aga Khan wanted to be "in at the beginning of the negotiations". He did not want to be involved in "a bidding war" but that he was prepared to buy as much bloodstock as was necessary to ensure the acquisition of the land. The lawyers agreed eventually to meet at Mr. Broughton's office on the 16th of October 1989. This meeting was altered to a breakfast meeting on the 16th of October 1989 which in fact took place in the Plaza Hotel in New York. At this meeting Mr. Broughton indicated that the bloodstock would not be included in the transaction and the price for the land was to be "around 15,000,000 dollars". He also indicated that two houses namely the Muldoon's house and Donnelly's house would be excluded from the sale. Mr. Carnegie confirmed that all the above matters were acceptable to the Aga Khan but stressed that he did not want to be one of a number of persons in negotiation for the acquisition of the land. Nothing came of that meeting save that it was pointed out that certain personal assets were not to be included in the sale such as the Waterford Glass Chandelier and art works which were of particular interest to the Firestone family. This did not present any problem as they had been identified during the course of the previous negotiations and were known to both parties.

12

The next step in the negotiations was a telephone call from Mr. Carnegie to Mr. Broughton who, having ascertained the price of land in Ireland offered to "begin to talk at the level of 11,000,000 dollars". Also in that conversation Mr. Carnegie brought to Mr. Broughton's attention the fact that there were rumours that Japanese interests had purchased certain lands which...

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