O'Connor v McCarthy

• Jurisdiction: Ireland
• Judgment Date: 01 January 1982
• Date: 01 January 1982
• Docket Number: [1979 No. 687 Sp.]
• Court: High Court

High Court

[1979 No. 687 Sp.]

O'Connor v. McCarthy

In the Matter of Fuller and Company Limited (in liquidation) Austin O'Connor, Applicant, and David McCarthy, Michael Walsh and John Field

Respondents

Cases mentioned in this report:—

¹ Cresta Holdings Ltd. v. Karlin [1959] 1 W.L.R. 1055.

² Goodyear Tyre & Rubber Co. (Great Britain) Ltd. v. Lancashire Batteries Ltd. [1958] 1 W.L.R. 857.

³ Bank of Ireland v. Rockfield Ltd. [1979] I.R. 21.

⁴ Lloyd v. Banks (1868) 3 Ch. App. 488.

⁵ Agra Bank Ltd. v. Barry (1874) L.R. 7 H.L. 135.

⁶ Kennedy v. Green (1834) 3 My. & K. 699.

⁷ Jones v. Smith (1841) 1 Hare 43.

⁸ Wilde v. Watson (1878) 1 L.R. Ir. 402.

Sale of land - Equity - Notice - Registration of deeds - Priority - Subsequent contract for sale by same vendor - Second contract registered - Whether second purchaser had notice of first contract - Registration of Deeds Act, 1707 (6 Anne c. 2), s. 5.

Special Summons.

On the 19th November, 1979, the applicant, in his capacity as liquidator of Fuller & Co. Ltd., issued a summons seeking the directions of the High Court in relation to two contracts for the sale of certain property of the company in Skibbereen in the county of Cork, which contracts had been made by the company on the 18th April and the 29th April, 1977, respectively. The first and second respondents were the purchasers under the second contract, and the third respondent was the purchaser under the first contract.

Section 5 of the Registration of Deeds Act, 1707, provides:—

"Every deed or conveyance not registered . . . of all or any of the honors, manors, lands, tenements, or hereditaments comprized or contained in such a deed or conveyance, a memorial whereof shall be registered in pursuance of this Act, shall be deemed and adjudged as fraudulent and void, not only against such a deed or conveyance registered as aforesaid, but likewise against . . ."

An agreement in writing for the sale of land is treated as a deed or conveyance for the purpose of the Act of 1707: see p. 171, infra, and Wilde v.Watson.⁸ (1878) 1 L.R. Ir. 402.

The following statement of facts and the inferences drawn from those facts were contained in the judgment of Costello J., infra.

"The relevant facts of the first sale are as follows. The liquidator of the parent company had been trying to sell the business of the company in Skibbereen as a going concern. When he found that he could not do so, it was then decided to sell the company's properties in separate lots. One such lot was known as "Fuller's back shop and yard." On the 18th April, 1977, an agreement in writing was entered into for the sale of this property to Mr. Field, who carried on a supermarket and bakery business in Skibbereen not far from the company's premises. The agreement came about this way. The liquidator had placed the properties on the books of a number of auctioneers in the area, one of whom was Mr. Charles McCarthy who carried on business in the town. Mr. C. McCarthy approached Mr. Field to discover if he would be interested in buying the property and on the 15th April an oral agreement for a sale at a price of £31,000 was reached. The liquidator was in Dublin but an apprentice in his firm, a Mr. Phelan, was in Skibbereen and the oral agreement was concluded at a meeting attended by Mr. Field, Mr. C. McCarthy, Mr. Phelan and a Mr. Nathan. Mr. Phelan kept in close touch by phone with the liquidator and, in agreeing the price, acted on express instructions. It was, however, also agreed that the bargain should be put in writing and Mr. C. McCarthy agreed to draw up the required document. The parties met again in Mr. McCarthy's office on the 18th April and Mr. McCarthy produced a written memorandum which provided that the purchase price was £31,000 and that a deposit of £8,000 would be paid on its signing. It was signed by Mr. Field, and then by Mr. Phelan on behalf of the company, in circumstances on which I will elaborate. On the 20th April the auctioneer sent the deposit to the liquidator and on the same day Mr. Field's solicitors wrote to the company's solicitors in Dublin confirming that they acted for Mr. Field and requesting a contract and a sight of the title. They received no immediate reply to that letter.

Mr. Field, however, received a most disturbing phone call on the 28th April from Mr. Matt O'Sullivan, another auctioneer, who was interested in the property and who practised in Clonakilty. He told Mr. Field that he had another purchaser for the property and he asked Mr. Field if he would like to increase his bid. Mr. Field immediately contacted his solicitor who wrote a stern letter on the same day to the company's solicitor stating:— "Lest your clients be in any doubt in this matter, we should make purchaser's position clear. A deal has been made with him, a deposit paid, and a memorandum of the deal has been completed. In these circumstances if your clients are attempting to break the contract you can take it that High Court proceedings for specific performance will follow." Mr. Field spoke to Mr. O'Sullivan on the same day to the same effect. The liquidator ignored the threat and directed the company's secretary to send back the deposit the following day. He gave no explanation as to why this was being done-merely expressing regret that the company "are unable to proceed with this sale."

Unknown to Mr. Field and his solicitor, the liquidator had negotiated a better deal and on the 29th April had signed a written contract with another solicitor. Mr. Field's solicitor carried out his threat. After some further correspondence Mr. Field instituted proceedings for specific performance against the company in the Cork Circuit Court by a civil bill which was issued on the 14th June, 1977. A lis pendens was registered on the 19th July and a defence was filed on the 23rd November. The action came on for hearing on the 14th July, 1978, and at its conclusion the company was ordered to perform the Field contract.

It has not been necessary for me to consider in any detail the grounds on which Mr. Field's claim was unsuccessfully contested. A copy of the memorandum of the agreement which the auctioneer had prepared contained the words "subject to contract" on it and the liquidator claimed that the bargain with Mr. Field was unenforceable because it was incomplete being at all times "subject to contract." But it was Mr. Field's good fortune that he obtained a signed copy of the memorandum and, before he signed it himself, he was prudent enough to bring it to his solicitor for his approval. His solicitor, with commendable efficiency and considerable foresight not only approved it but also photostated the document, and the photostat established beyond a shadow of a doubt that the words "subject to contract" did not appear on the document which was given to Mr. Field. It has not been necessary for me to inquire how those words were added to another copy or by whom they were added, as those matters were fully considered in the Circuit Court and that court held, after a full hearing, that the agreement which the parties signed was enforceable and had not been made "subject to contract."

The liquidator, as I have said, appealed to the High Court but then withdrew the appeal and consented to an order which was made on the 5th October, 1979, by which the order for specific performance was confirmed. Shortly afterwards he brought these present proceedings, in which he seeks the Court's assistance in the problem which arises from the fact that he entered into a second agreement, which is clearly a legally enforceable one, in respect of the same property. To the facts of this second contract I will now turn.

Mr. David McCarthy carried on a hardware business in the town of Clonakilty, which is about 20 miles from Skibbereen. He had another business in Skibbereen which was managed on his behalf by Mr. Michael Walsh. He learnt that "Fuller's back shop and yard" were for sale from Mr. Thornhill, who was interested in buying another of the company's properties which was known as "Wolfe's yard." Mr. D. McCarthy contacted Mr. Matt O'Sullivan (to whom reference has already been made) about its price. He also contacted Mr. Thornhill's solicitor, Mr. Pattwell, and asked him to act for him in the negotiations. All this happened not long before the 21st April, 1977. On the 21st April an appointment was made to view the premises. Mr. Pattwell, Mr. Phelan and Mr. O'Sullivan were present at that meeting and an offer of £35,000 was made on Mr. D. McCarthy's behalf. Thereafter, Mr. Pattwell was in touch by telephone with the liquidator, Mr. O'Connor, and suggested that, as he (Mr. Pattwell) was coming to Dublin in any event about Mr. Thornhill's contract, he would conclude with the liquidator a deal at the same time in relation to the back shop and yard. However, Mr. O'Connor was looking for a deposit. Mr. D. McCarthy contacted his manager Mr. Walsh and it was agreed that Mr. Walsh would put up the deposit and that Mr. D. McCarthy and Mr. Walsh would jointly purchase the property. They arrived at Mr. Pattwell's office on the 28th April with £9,000 in cash and, early on the 29th April, Mr. Pattwell set off for Dublin to conclude the two deals. He went straight to the liquidator's offices and from there to the offices of the company's solicitors where he discussed with Mr. Anderson (the partner in the firm dealing with the sale) the title which the company was offering. As a result of their discussions, certain special conditions were drafted relating to the title and then Mr. Pattwell signed the contract as "authorised agent for the purchasers." Mr. O'Connor also signed it as "agent for the company."

Having executed the agreement, Mr. Pattwell told Mr. Anderson...