Declan O'Dwyer and Julia Jones-O'Dwyer v Robin Boyd

• Jurisdiction: Ireland
• Judge: MR. JUSTICE GEOGHEGAN
• Judgment Date: 04 July 2002
• Neutral Citation: [2002] IESC 54
• Court: Supreme Court
• Date: 04 July 2002

[2002] IESC 54

THE SUPREME COURT

Keane C.J.

Murphy J.

Geoghegan J.

24/01

O'DWYER v. BOYD

BETWEEN/

DECLAN O'DWYER AND JULIA JONES-O'DWYER

Plaintiffs/Appellants

and

ROBIN BOYD

Defendant/Respondent

Citations:

LAW SOCIETYS GENERAL CONDITIONS OF SALE (1991) CONDITION 51(D)

LAW SOCIETYS GENERAL CONDITIONS OF SALE (1991) CONDITION 33

ARBITRATION ACT 1980 S5(1)

ARBITRATION ACT 1980 S5(2)

ARBITRATION ACT 1854 S26

HALSBURYS LAWS OF ENGLAND 4ED REISSUE V2 PARA 627

MUSTILL & BOYD LAW & PRACTICE OF COMMERCIAL ARBITRATION 2ED 472

ARBITRATION ACT 1980

FORDS HOTEL CO LIMITED V BARTLETT 1896 AC 1

O'FLYNN V BORD GAIS EIREANN 1982 ILRM 324

PITCHERS LTD V PLAZA (QUEENSBURY) LTD 1940 1 AER 151

BRIGHTON MARINE PALACE & PIER LTD V WOODHOUSE 1893 2 CH 486

TURNER & GOUDY V MCCONNELL 1985 1 WLR 898

Synopsis:

CONTRACT

Specific performance

Land law - Arbitration - Conveyancing - Contract of sale - Practice and procedure - Litigation - Whether dispute referable to arbitration - Whether application for adjournment constituted "step" in proceedings - Whether courts had jurisdiction to grant stay - Arbitration Act, 1980 - Arbitration Act, 1954 (20/2001 - Supreme Court - 04/07/2002)

O'Dwyer v Boyd - [2003] 1 ILRM 112

Facts: The case concerned the issuing by the plaintiffs of specific performance proceedings against the defendant. The defendant had intended to sell premises to the plaintiffs and accordingly had entered into a contract of sale with the plaintiffs. However a dispute arose with regard to the title of the premises. The defendant maintained that the dispute was referable to arbitration as per the conditions in the contract of sale. The plaintiffs initiated specific performance proceedings and contended that the scope of their action went beyond the remit of the arbitration clause. In addition the plaintiff claimed that the defendant had taken a step in the specific performance proceedings and thus a stay on the court proceedings should not be granted. In the High Court O’Neill J granted a stay of the specific performance proceedings. The plaintiffs appealed against the decision.

Held by the Supreme Court (Geoghegan J delivering judgment; Keane C.J. and Murphy J agreeing ) in dismissing the appeal. The plaintiffs had signed a contract which stated that the issue in question must go to an arbitrator. If difficult legal questions arose the arbitrator could state a case to the High Court. In so far as the plaintiffs were claiming that a portion of the property was erroneously included in the contract and would only perform the contract on that basis with an appropriate abatement of purchase price, the matter had been correctly referred to arbitration. The issuing by the defendant of ejectment proceedings against the plaintiffs was not a step for the purpose of the specific performance proceedings. The application brought by the plaintiff for an adjournment of the motion for judgment was not a “step” within the meaning of the Arbitration Act, 1980. The adjournment was nothing more than a holding operation.

JUDGMENT of

MR. JUSTICE GEOGHEGAN

delivered the 4th day of July 2002

1 This is an appeal from an order of the High Court (O'Neill J.) granting a stay of these specific performance proceedings instituted by the plaintiffs/appellants against the defendant/respondent so as to enable certain matters to be referred to arbitration in accordance with the terms of a contract of sale.

2 The contract of sale was dated the 21^st of August, 1998 and was in a standard Law Society form. That standard form included"General Conditions of Sale" which by virtue of paragraph 2 of the special conditions were to be incorporated in the contract. Condition 51 of the general conditions prescribed that all differences and disputes between the vendor and the purchaser in relation to certain listed matters were to be referred to arbitration. One of these matters specified at Condition 51(d) was:

"any issue on foot of Condition 33, including the applicability of said condition, and the amount of compensation payable thereunder".

3 Condition 33 reads as follows:

4 a "33. (a) In this condition “error" includes any omission, non-disclosure, discrepancy, difference, inaccuracy, misstatement or misrepresentation made in the Memorandum, the Particulars or the Conditions or in the course of any representation, response or negotiations leading to the sale, and further in respect of measurements, quantities, descriptions or otherwise.

5 (b) The Purchaser shall be entitled to be compensated by the Vendor for any loss suffered by the Purchaser in his bargain relative to the sale as a result of an error made on behalf of the Vendor provided however that no compensation shall be payable for loss of trifling materiality unless attributable to recklessness or fraud on the part of the Vendor nor in respect of any matter of which the Purchaser shall be deemed to have had notice under Condition 16(a) nor in relation to any error in a location or similar plan furnished for identification only.

6 (c) Nothing in the Memorandum, the particulars or the conditions shall:

7 (i) entitle the Vendor to require the Purchaser to accept property which differs substantially from the property agreed to be sold whether in quantity, (quality) tenure or otherwise, if the Purchaser would be prejudiced materially by reason of any such difference.

Or

8 (ii) affect the right of the Purchaser to rescind or repudiate the sale where compensation for a claim attributable to a material error made by or on behalf of the Vendor cannot be reasonably assessed.

9 (d) Save as aforesaid, no error shall annul the sale or entitle the Vendor or the Purchaser (as the case may be) to be discharged therefrom."

10 The completion date in the contract of sale was the 30th of November, 1998 but the sale was not completed on that date, mainly because the defendant/respondent was not in a position to give vacant possession to the plaintiffs/appellants of a small area of ground containing a large slurry tank with a capacity for 400 tons of cattle excrement. There had been considerable correspondence and discussions in relation to this slurry tank area. It is neither necessary nor desirable to go into the details of these discussions at this stage. It is sufficient to state that when the time came for completion of the contract the respondent maintained and has maintained ever since that he did not own this slurry tank area and was not in a position to give title to it. The appellants do not believe this for reasons which emerge from the documentation before this court but which are not relevant to the issues on this appeal. It is clear, therefore, that this is a most unusual case in that instead of a vendor insisting that he is in a position to make title and a purchaser disputing this, the exact opposite has happened. The vendor is satisfied he cannot make title but the purchasers do not believe him. For reasons which I will explain, this disbelief on the part of the purchasers would seem to me to be irrelevant to the issues on the appeal even if, in the event, the appellant's scepticism was proved to be well-founded.

11 The case of the respondent is that the slurry tank area was included in the contract through an error and that therefore it is a case coming within Condition 33. As is clear from Condition 51(d) cited above any issue on foot of Condition 33"including the applicability of said condition"(my emphasis) falls within the arbitration clause. The appellants want all issues to be dealt with in the specific performance suit and certainly do not want the specific performance suit to be stayed and they, of course, dispute that there was any"error". But because the applicability of the condition itself is an arbitrable issue, the fact that the appellants dispute the existence of the "error" must be regarded as irrelevant. It is for this reason that on the wording of Condition 51(d) cited above the dispute relating to the slurry tank would seem clearly to fall within that condition.

12 I now turn to the history of the specific performance suit and how the question of a stay arose. On the 11^th of April, 2000 the appellants served notice of motion for judgment in default of defence which came on for hearing on the 8^th of May, 2000. The motion was listed before McCracken J. and at that stage there was before the court the appellants' affidavit and exhibits but no affidavit filed on behalf of the respondent. Counsel for the respondent requested a three week adjournment which was opposed. The learned High Court judge, in the event, granted an adjournment of one week. Apparently, it had been indicated that the respondent might want to bring a motion to have the proceedings stayed so that there be a reference to arbitration under the contract. McCracken J. gave liberty to serve short notice of motion for the same date as the resumed hearing of the motion for judgment. On the 11^th of May, 2000 a notice of motion was served seeking a stay of the specific performance proceedings under s. 5 of the Arbitration Act, 1980. Subsection (1) of that section reads:

"5.-(1) If any party to an arbitration agreement, or any person claiming through or under him, commences any proceedings in any court against any other party to such agreement, or any person claiming through or under him, in respect of any matter agreed to be referred to arbitration, any party to the proceedings may at any time after an appearance has been entered, and before delivering any pleadings or taking any other step in the proceedings, apply to the court to stay the proceedings, and the court, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an...