Jodifern Ltd v Fitzgerald

JurisdictionIreland
CourtSupreme Court
JudgeKeane, J.,BARRON J.,Murray, J.
Judgment Date21 December 1999
Neutral Citation[1999] IESC 88
Docket Number188/1999,[S.C. No. 188 of 1999]
Date21 December 1999
JODIFERN LTD v. FITZGERALD

BETWEEN

JODIFERN LIMITED
Plaintiff

AND

PATRICK G. FITZGERALD AND MARGARETFITZGERALD
Defendants

[1999] IESC 88

Hamilton,CJ

Keane, J.

Murphy, J.

Barron, J

Murray, J.

188/1999

THE SUPREME COURT

Synopsis

Contract

Contract; specific performance; plaintiff's appeal from Order of High Court that proceedings be struck out in the exercise of the inherent jurisdiction of the court; proposed sale of farm; two contracts of sale headed "subject to contract/contract denied" furnished by defendants" solicitor to plaintiff's agent's solicitor accompanied by letter which stated that agreements were not to come into effect until both solicitors had agreed that that should happen; both agreements executed by the respective solicitors; further correspondence ensued between solicitors; all of the letters forming part of this correspondence emanating from defendants" solicitor headed "subject to contract/contract denied"; defendants" solicitor indicated that his clients were not prepared to proceed with the transaction and returned plaintiff's deposit; plaintiff sought specific performance; whether letter and subsequent correspondence between the solicitors could be construed as negating the existence of a concluded contract; whether the case could not possibly succeed or involved a frivolous or vexatious claim and was an abuse of the process of the court.

Held: Appeal allowed.

Jodifern Limited v. Fitzgerald - Supreme Court: Hamilton C.J., Keane J., Murphy J., Barron J., Murray J. - 21/12/99 - [2000] 3 IR 321

The plaintiff had instituted proceedings for specific performance of an alleged agreement entered into by the parties relating to the sale of land. The defendants successfully applied to have the proceedings dismissed on the grounds that they were an abuse of process of the courts. The plaintiff appealed. Held by the Supreme Court in allowing the appeal and setting the order of the High Court aside. On the basis of the disclosed facts there were quite clearly issues disclosed which required determination in a plenary hearing.

Citations:

MULHALL V HAREN 1981 IR 364

BOYLE V LEE 1992 1 IR 555

SUN FAT CHAN V OSSEOUS LTD 1992 1 IR 425

STATUTE OF FRAUDS 1695

ROSSITER V MILLAR 3 AC 1124

LAW V ROBERTS & CO (IRL) LTD 1964 IR 292

WILLIAMS VENDOR & PURCHASER

BARRY V BUCKLEY 1981 IR 306

1

Judgment delivered the 21st day of December, 1999, by Keane, J.

2

These proceedings were commenced by plenary summons on the 16th March of this year. The statement of claim contained the following averment at paragraph 3:-

"By two agreements in writing made in or around the month of November between the plaintiff through his agent, Thomas Coughlan, of the one part and the defendants of the other part, the defendants agreed to sell and the plaintiff agreed to purchase ALL THAT part of the lands comprised in Folio 10845 of the Registrar of Freeholders County of Cork comprising approximately 111 acres or thereabouts and as therein identified for the total price or sum of£2,000,000."

3

Paragraph 4 contained an averment that the plaintiff had at all times been ready, willing and able to perform the agreement on its part but that the defendants had failed, refused and neglected to perform the agreement and had purported to return to the plaintiff the deposit which it had paid. The relief claimed included specific performance of the agreement and damages in addition to or in lieu of specificperformance.

4

On the 24th May, the defendants applied by notice of motion to the High Court for an order striking out the plenary summons and statement of claim on the grounds that they disclosed no reasonable cause of action against the defendants and/or that any cause of action thereby disclosed was frivolous or vexatious and in the alternative an order pursuant to the inherent jurisdiction of the High Court striking out the plaintiffs action on the ground that it was clearly unsustainable, bound to fail and frivolous and/or vexatious. In a reserved judgment dated the 28th July 1999, McCracken J. acceded to the defendants" application and ordered the proceedings to be struck out. From that judgment and order, the plaintiff now appeal to this court.

5

The facts, to the extent that they are not in dispute at this stage or would not be in dispute if the action was allowed to proceed, are as follows. Two agreements in writing dated the 1st December 1998 for the sale of the lands referred to in paragraph 3 of the statement of claim for the sum of £2,000,000 were executed by the respective solicitors for Thomas Coughlan, described in the statement of claim as the agent of the plaintiff, and the defendants. It is not in dispute that these are the agreements referred to in paragraph 3 of the Statement of Claim and that they were executed with the authority of Thomas Coughlan and the defendants. The agreements were in the standard form approved by the Incorporated LawSociety and provided for a total deposit of £200,000. While no deposit was paid at the time, the defendants" solicitor was sent a cheque on the 20th January 1999 in the sum of £150,000 as adeposit.

6

Following the execution of the two agreements of December 1st 1998, there was correspondence between the solicitors for the plaintiff and the defendants on certain features of the transaction. These relatedto:

7

(a) the date on which the sale was to be completed;

8

(b) an arrangement under which the defendants were to remain on in possession of the lands not immediately required by the plaintiff under a caretaker's agreement;

9

(c) the consent of the defendants to the plaintiff lodging an application for planning permission in relation to the development of the lands;

10

(e) the granting of a wayleave to Bord Gais Eireann across thelands;

11

(f) assurances which the defendants required that the plaintiff would be in a position to complete the sale.

12

All of the letters forming part of this correspondence and emanating from the defendants" solicitor were headed:- "SUBJECT TO CONTRACT-CONTRACT DENIED." On the 4th March, 1999 thedefendants" solicitor wrote to the plaintiff's solicitor asfollows:-

"Further to previous correspondence herein we wish to confirm that our clients have decided not to proceed with the proposed transaction and wereturn herewith your firm's client account cheque dated 20th January 1999 for £150,000."

13

Shortly thereafter the present proceedings were issued.

14

The two agreements in writing dated the 1st December 1998 were sent by the defendants" solicitor to the plaintiffs solicitor together with the following letter dated 30th November 1998:-

15

SUBJECT TO CONTRACT/CONTRACT DENIED

16

Re: Our client: Patrick G. Fitzgerald, Junior

17

Your client: Mr. Thomas Coughlan, BE (In trust)

18

Property: circa 111 Acres at Ballinviskrig, Whte's Cross

19

Dear Ray,

20

I refer to my telephone discussion with you and I now enclose herewith two contracts splitting the development land from the remainder of the property. I confirm that these are pro-forma contract which, although signed by the parties, will not come into effect until both you and I agree that that should be the case. It may well be that some alterations may be negotiated to the contracts before the matter isfinalised.

21

As you are aware it is important that the contracts be signed and dated before tomorrow. I will therefore need to get the contracts back from you, duly signed by lunch time tomorrow, to facilitate the execution thereof by my client.

22

If you have any queries please do not hesitate to contactme.

23

Yours sincerely

24

There is a note in the handwriting of the plaintiffs solicitor on the letter to the following effect:-

"Signed per client's instructions today 1st December 1998 - deposits will follow once agreement is to hand."

25

It is also not in dispute that, at the time that letter was written and the two agreements were signed, there was speculation that the rate in respect of capital gains tax might be increased in the imminent budget from 20% to 40%. The defendants, or their advisers, wished to be in a position to satisfy the Revenue Commissioners, if a question arose as to the higher rate being payable, that contracts for the sale of the land had been entered into prior to the date of the budget.

26

The case, accordingly, which the plaintiff wishes to make is that a concluded agreement had been reached on the 1st December 1998 for the sale of the lands at the price of £2,000,000 and that the agreements in writing of that date constitute a note or memorandum in writing signed by the party to be charged therewith sufficient to satisfy the requirements of s.2 of the Irish Statute of Frauds.

27

In his judgment the learned High Court judge reviewed in some detail the correspondence subsequent to the execution of those two contracts and the letter of March 4th returning the cheque for £150,000. He concluded that the defendants had at all times insisted that there must be certainty as to the availability of funds to the plaintiff and had at all times maintained that they were not satisfied as to the relevant assurances and that for that reason alone, there was not a completed agreement between the parties. He also rejected the plaintiff's claim that the agreements of 1st December remained the basic agreement and said that the letters written on behalf of the plaintiff's solicitors quite clearly envisaged a future contract and were also headed "SUBJECT TO CONTRACT/CONTRACT DENIED". In addition, he concluded that, since those agreements were sent by thedefendants" solicitor on the express condition that they would only come into force when both solicitors agreed that that should be the case and were never mentioned by the solicitors again, they had quite clearly never agreed that they should come into force.

28

For these reasons, the learned High...

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