Kelly v Callinan

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Hedigan,Mr Justice Michael Peart
• Judgment Date: 05 December 2012
• Neutral Citation: [2012] IEHC 520
• Docket Number: [2012 No. 619 J.R.]
• Date: 05 December 2012

[2012] IEHC 520

THE HIGH COURT

Record Number: No. 997 S/2010

Kelly v Callinan

Between:

Simone Kelly

Plaintiff

And

Gerard Callinan

Defendant

FINANCE ACT 1995 S48

ZUPHEN & ORS v KELLY TECHNICAL SERVICES (IRL) LTD & ORS 2000 ELR 277 2000/18/6863

WILLIAM NEVILLE & SONS LTD v GUARDIAN BUILDERS LTD 1995 1 ILRM 1 1994/12/3725

MACKLIN & MCDONALD v GRAECEN & CO LTD & ORS 1983 IR 61 1982 ILRM 82 1982/7/1218

TRADAX (IRL) LTD v IRISH GRAIN BOARD 1984 IR 1 1984 ILRM 471 1984/3/881

THE MOORCOCK, IN RE 1889 14 PD 64 1886-90 AER REP 530

MCDERMOTT CONTRACT LAW 2001 PARA 7.45

SHIRLAW v SOUTHERN FOUNDRIES (1926) LTD & FEDERATED FOUNDRIES LTD 1939 2 KB 206 1939 2 AER 113

CONTRACT LAW

Terms

Full and final settlement - Construction - Business efficacy - Implied term - Frustration - Possibility that property might not be sold - Intention - Construction of agreement - Officious bystander test - Common intention of parties - Whether payment conditional on sale of property - Whether payment due and owing - Whether agreement lacked business efficacy - Whether term should be implied into agreement - Whether agreement frustrated - Whether agreement capable of fulfilment - Whether agreement clear and workable - Zuphen v Kelly Technical Services (Ireland) Ltd [2000] IEHC 117, (Unrep, Murphy J, 24/5/2000); William Neville & Sons Ltd v Guardian Builders Ltd [1995] 1 ILRM 1; National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675; Macklin v Graecen & Company Ltd [1983] IR 61; Tradax (Ireland) Ltd v Irish Grain Board [1984] 1 IR 1; The Moorcock [1889] 14 PD 64 and Shirlaw v Southern Foundaries [1939] 2 KB 206 considered - Judgment awarded and counterclaim struck out (2010/997S - Peart J - 13/12/2011) [2011] IEHC 520

Kelly v Callinan

1 Towards the end of the year 2000 the plaintiff took up employment with the defendant who at that time was involved in property development in Cork. An employment contract was executed by the parties on the 14 ^th December 2000. That contract set out the relevant terns of that employment which was described therein as "Chief Executive Carleton Developments". It is a detailed document, setting out the duties of the plaintiff and her remuneration. Certain sales targets were set forth and a bonus package dependent upon achieving these targets. In addition, the plaintiff was given an option to acquire from Carleton developments Limited a fully furnished two-bed-roomed villa with Section 48 tax benefits at Carleton Village, Youghal, a development being undertaken at that time by the defendant, at a cost of €100,000. She did not take up that option. The plaintiff says that this option was withdrawn by the defendant, and that instead she was offered given an option to purchase an apartment at a different development referred to as Lisheen, but that never materialised either. The defendant does not know why the plaintiff did not take up either of these options. I do not need to reach any conclusion as to the reason she did not do so.

2 At some point after the plaintiff commenced her employment with the defendant, a close personal relationship developed between the parties, and they lived together until January 2005 when their personal relationship ended in circumstances which have not been elaborated upon in evidence, and are not relevant to the issue which arises for decision in these proceedings, which is whether the plaintiff is entitled to judgment for a sum of €120,000 which the defendant is obliged to pay to the plaintiff on foot of a settlement agreement entered into between the parties on the 19 ^th May 2006 in order to address issues surrounding what she claims was her constructive dismissal following the ending of their personal relationship. It appears that this agreement was entered into in order to deal with issues not only relating to their personal relationship but also their business relationship.

3 Relevant to the relationship generally is that while she was employed by the defendant it was proposed that she would get involved in a development referred to as Buxton Hill. It was agreed that she would purchase this property jointly with the defendant's two sons on a 50:50 basis, with the defendant's sons holding their interest in trust for the defendant. A loan was obtained from Irish Nationwide Building Society, and the purchase was completed. However, there were various problems relating to both title and planning permission, and the development never got under way. In due course, Irish Nationwide took proceedings to repossess the property and such an order was obtained on the 5 ^th February 2010. The Building Society has not yet sold the premises in reduction of the amount owing on the mortgage.

4 The plaintiff has stated that the opportunity for her to get involved in the development at Buxton Hill on a joint venture basis was seen by her at the time as a sign of the defendant's commitment to their personal relationship. She was unable to fund the loan given the amount of her salary, and that it was agreed that the defendant would arrange the finance and would guarantee the loan, and that upon completion of the development they would each share in the profit. The defendant has stated that he viewed the venture only as a business transaction which each party entered as such, and that it had nothing to do with their personal relationship. As far as the defendant is concerned, any profit would be shared in due course, but if losses were incurred those losses would also be shared. A number of attempts were made to sell the land at Buxton Hill but they fell through.

5 On the 6 ^th January 2006 the plaintiff filed a claim with the Employment Appeals Tribunal in which she launched her claim for constructive dismissal. Prior to that claim being heard the parties, with the assistance of their lawyers, concluded an agreement on the 6 ^th May 2006 ("the Settlement Agreement"). That agreement was entered into with a view to dealing with all issues between the parties, including the payment to the plaintiff of a sum of €120,000. That figure was a compromise of a larger sum claimed by the plaintiff as owed to her for items such as holiday pay, arrears of salary and bonuses, against which the defendant claimed to owed sums by the plaintiff. At any rate the sum of €120,000 was agreed.

The Settlement Agreement:

6 This agreement states at the outset that the terms are agreed in full and final settlement of all claims whatsoever by the plaintiff to include "all claims arising from her employment and personal and business relationship or otherwise".

7 The plaintiff agreed to resign her position in relation to any of the defendant's businesses. In addition to other matters which I shall come to, the plaintiff was required by Clause 12 thereof to furnish a letter to the defendant's solicitor addressed to the Employment Appeals Tribunal withdrawing her claim for constructive dismissal and confirming that she had no further claim or claims against the defendant or any of his companies. That letter was furnished as required, and her claim was thereby withdrawn. It could not thereafter be revived as the time for entering any claim had by then expired.

8 Clause 3 provided:

2 2 "3. Gerry Callanan or one of the Companies agrees to pay and Simone Kelly agrees to accept the sum of One Hundred and Twenty Thousand Euro (€120,000) inclusive of her costs. The total gross sum of €120,000 will be paid by way of ex gratia payment and legal costs (to be apportioned in the most tax efficient manner possible as agreed between the parties respective accountants). This payment is to be made at the time of the distribution of the net sale proceeds of Buxton Hill." (emphasis added)

9 As already stated, Buxton Hill was never developed and has never been sold, and INBS has an order for possession which effectively prevents that parties themselves achieving a sale of those lands, so that there never will be a time at which there will be a distribution of the net sale proceeds. The defendant claims therefore that under the terms of this agreement he is not yet liable to pay the sum to the plaintiff and that it is not therefore due and owing. The plaintiff on the other hand claims that while the timing of the payment was specified, it was never intended that the payment was dependent upon the sale of Buxton Hill. She claims that it was simply envisaged that the sale of Buxton Hill would provide a convenient mechanism by which the defendant could access funds to pay the sum in a tax efficient manner from his point of view, but that one way or another the sum is due and owing. She points to the fact that she withdrew her claim for constructive dismissal as required and in consideration of this payment, and that she cannot revive that claim if this agreement to pay her this sum is not fulfilled by the defendant.

10 Clause 6 is also important in understanding the meaning to be given to Clause 3. Clause 6 set out detailed agreement as to the manner of the proposed disposal of Buxton Hill as contemplated at the date of the Settlement Agreement. It provided for sale by public tender with a reserve of €1.8 million, and further that either the plaintiff or the defendant would be entitled to match the best price available above that reserve, and that in the event that each party wished to purchase, then the party who made the highest bid above the reserve shall be the purchaser. The agreement went on to say how matters should proceed thereafter by way of paying a deposit as so forth.

11 However, the agreement went on to provide for what was to happen in the event that no tender bid was received in excess of the reserve fixed. It provided in that regard that if there was no such bid received "the property shall be sold not below the reserve price by way of a sealed bid between the parties...