Fergus Haynes (Developments) Ltd v Carty and Another
| Jurisdiction | Ireland |
| Judge | Mr. Justice Roderick Murphy,Ms. Justice Laffoy |
| Judgment Date | 01 September 2008 |
| Neutral Citation | [2007] IEHC 284 |
| Docket Number | No. 550 P/2006,[No. 347 COS/2008] |
| Court | High Court |
| Date | 01 September 2008 |
AND
AND
AND
[2007] IEHC 284
THE HIGH COURT
CONTRACT
Terms
Agreement to conduct works - Release from obligations under prior agreement - Purported variation of agreement - Conflicting interpretations - Defective deed - Whether failure of consideration - Whether agreement enforceable - Whether variation enforceable under Statute of Frauds - Whether works to be conducted on basis of work previously done - Whether extrinsic evidence and evidence of collateral oral contracts admissible - Whether claim and counterclaim should be dismissed and additional summary proceedings decided - Statute of Frauds 1695 (& Will 3, c 12) - Companies Act 1963 (No 33), s 8 - Proceedings adjourned - (2006/550P - Murphy J - 24/7/2007) [2007] IEHC 284
Fergus Haynes (Developments) Ltd v Carty
In the first proceedings, the plaintiff claimed a declaration that there had been a total failure of consideration in respect of an agreement entered into between the plaintiff and the defendant. By counterclaim the defendant sought a declaration that the agreement remained in full effect. In the second set of proceedings, Carty Contractors Limited claimed a sum by way of summary summons.
Held by Murphy J. in adjourning the matter for a week that rather than making an order dismissing the claim and dismissing the counterclaim and proceeding with the claim in respect of the summary summons, the court would invite the parties to consider the court’s decision.
Reporter: R.W
HALSBURY'S LAWS OF ENGLAND VOL 13 4ED 163
dated 24th July, 2007 .
By plenary summons dated 6th February, 2006 in the first named proceedings (the plenary proceedings) the plaintiff claimed, inter alia, a declaration that there had been a total failure of consideration in respect of an agreement entered into between the plaintiff and the defendant of 23rd March, 2003 whereby in consideration of the sum of €225,000 the defendant agreed to carry out agreed works on the plaintiff's lands, which said works the defendant had failed, refused and neglected to do.
There was also a claim that the caution registered by the defendant be removed from Folio 19525 County Donegal.
By counterclaim to the plenary proceedings the defendant sought a declaration that the agreement remained in full effect between the parties and sought a degree of specific performance of the agreement to transfer.
In the second set of proceedings, the summary proceedings, Carty Contractors Limited, whose principal is Aidan Carty, claimed the sum of €143, 513.85 in respect of the delivery of quarry stone in the sum of €92, 634 on 20th September, 2005 which sum included a small amount of €400 in respect of stone delivered on 31st October, 2003. The balance of the claim was for plant hire from the latter date to the former date - a period of almost two years.
The issue in the plenary proceedings relates to the interpretation of agreements made on 23rd March, 2003 between the parties, the first of which purported to release the plaintiff from a contract made on the - day of June, 2001.
A second agreement, dated 25th March, is the subject of the plenary proceedings. The operative part is as follows:
2 "1. … in consideration of the sum of €225,000 paid by [the plaintiff to [the defendant], [the defendant] shall reinstate all the ground which is the subject of an excavation for the pipeline at Single Street, Finner, Bundoran, extending to the Stable Lane, Tullan Strand and which said monies shall be paid by the plaintiff to the defendant within a period of twelve months from the date hereof.
2. If [the plaintiff] fails to pay the said monies within the time stipulated herein, then [the plaintiff] shall transfer sites two to seven in Magheracar as indicated on the site map attached free from encumbrances.
3. The [defendant] agrees to carry out all infrastructural works including the construction of the pumping station at Magheracar development in order that the remainder of the site is satisfactorily serviced including sewage and surface water but not including roads."
The first memorandum of agreement, according to the parties and the defendant's solicitor, was also made on the 23rd day of March, 2003, though dated 25th March, 2003. The same parties, recite a former contract between them, whereby the plaintiff agreed for the sale to the defendant of sites Nos. 1 to 7 at Finner, Bundoran, in the County of Donegal. That contract, though undated in the first memorandum, was made on the day of 1999. The evidence of Mr. Carty, which was not controverted, was that the date was June, 2001. Subject to the terms and conditions contained in the first memorandum the plaintiff had agreed with the defendant to release the defendant from the obligations contained in the said contract and to pay to the defendant the sum of €200,000 provided that the defendant would release the plaintiff from its obligation pursuant to the said contract.
The operative part of the deed witnesseth:
"That in consideration of the sum of €200,000 paid by [the plaintiff] to the [defendant], the defendant shall release the first party from the terms, obligations and conditions of the said contract and that he will release the property the subject matter of the said contract from any and all interest which he may have in the said property."
It is common case that these two agreements were finalised between the parties over a weekend in the residence of the solicitor then acting for both and. that the consideration was paid some time thereafter.
Mr. Charles Fergus, the principal of Fergus Haynes (Developments) Limited, the plaintiff, said that the reason for the two agreements was that the company could borrow from the bank in respect of the payment of €200,000 under the first agreement and could also pay the sum of €225,000 within a period of twelve months in respect of work to be done pursuant to the second agreement.
Mr. Carty, on the other hand stated that the consideration was €425,000 for the release of the plaintiff's obligation. The first agreement referred to above was, in fact, the principal agreement while the second agreement related to a deferral of the balance due to be paid within twelve months. That consideration was notionally for an insubstantial amount of work relating to the excavation of the pipeline, recited in the first paragraph. It did not relate to the work referred to in the third paragraph of the operative part of the second agreement. The second paragraph was simply a mechanism whereby Mr. Carty could have security in respect of the outstanding balance of €225,000 during the twelve-month period.
The two memoranda, agreed to have been executed on even date, 23rd March, are confusing, both in terms of recitals and operative part. The effect of the first (mistakenly dated 25th March) is clear on the face of the deed: a release from obligations contained in an undated contract in consideration of €200,000. Curiously, however, there is no receipt clause nor, indeed, any indication of when consideration was to be paid though it is not controverted case that that sum was paid on 14th April, 2003.
The evidence is that Mr. Fergus signed on behalf of the company. Pursuant to s. 8 of the Companies Act,1963 he would be deemed to have bound the company. However, the attestation reads "sealed with the common seal of Fergus Haynes (Developments) Limited in the presence of". There is no issue arising in relation thereto.
The second memorandum, dated 23rd March, 2003, in printed form, has two recitals which correspond to paras, 1 and 2 of the operative part of the deed.
The second paragraph of the operative part does not indicate to whom sites two and seven at Magheracar are to be transferred. This seems to be a critical omission in the deed.
It is the third operative paragraph that causes some difficulty. There is no recital in relation thereto. No consideration is indicated. It is not preceded by a phrase linking the previous paragraph such as "in that event" (a failure to pay the monies within the twelve months). Moreover, while the detail of the work to be done is somewhat vague ("all infrastructure works … in order that the remainder of the site is satisfactorily serviced").
The reference to the reinstating of all the ground which is subject to an excavation for the pipeline is somewhat more detailed and is, of course, clearly related to the consideration.
However, I am satisfied from the evidence of both parties that the work involved in reinstating was of a relatively minor nature and could not have been intended, notwithstanding what the deed says, to justify the consideration.
In essence, the argument of Mr. Carty is that the consideration was always €425,000 and that the agreement dated 23rd March was a mechanism to split the consideration into two contracts to facilitate the company.
The understanding of Mr. Fergus, on behalf of the company is that the €225,000 was in respect of para. 3 of the operative part of the agreement which, it was common case, was a much more extensive work to be carried out.
It is common case that the consideration of €225,000 was not paid within the period of twelve months. The parties, who had an ongoing commercial as well as a social relationship, did no more than resort to a certain amount of banter with Mr. Fergus, saying that the money would be paid and Mr. Carty asking how his sites were. Some work was done by Mr. Carty, or almost all...
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