Kramer v Arnold

• Jurisdiction: Ireland
• Judge: Keane J.
• Judgment Date: 24 April 1997
• Neutral Citation: 1997 WJSC-SC 3148
• Court: Supreme Court
• Docket Number: No. 356/1996,[S.C. No. 356 of 1996]
• Date: 24 April 1997

KRAMER v. ARNOLD

BETWEEN

JOSEPH KRAMER

Plaintiff/Respondent

AND

DAVID ARNOLD

Defendant/Appellant

1997 WJSC-SC 3148

O'Flaherty, J.

Keane, J.

Murphy, J.

No. 356/1996

THE SUPREME COURT

Synopsis:

Contract Law

Option agreement to purchase fee simple property; exercised by plaintiff; deposit to be paid "immediately" on fixing of price; meaning of "immediately"; entitlement of defendant to terminate option agreement in event of failure to do so; specific performance - Held: Appeal allowed; deposit not paid as soon as was practicable; plaintiff's claim dismissed - (Supreme Court: O'Flaherty, Keane, Murphy JJ - 24/04/1997) [1997] 3 IR 43

|Kramer v. Arnold|

Citations:

MORROW V CARTY 1957 NI 147

MILLICHAMP V JONES 1983 1 AER 267

WYLIE IRISH CONVEYANCING LAW 2ED PARAS 10.07 & 10.08

UNITED SCIENTIFIC HOLDINGS V BURNLEY BOROUGH COUNCIL 1977 2 AER 62

EMMET ON TITLE 19ED PARA 2079

MULTI-PRINT LABEL SYSTEMS LTD, STATE V NEYLON 1984 ILRM 545

R V INSPECTOR OF TAXES EX PARTE CLARKE 1971 3 AER 394

COLEMANS DEPOSITORIES LTD V LIFE & HEALTH ASSURANCE ASSOCIATION 1987 2 KB 798

LAW SOCIETY CONDITIONS OF SALE (1988)

TODD & MCFADDENS CONTRACT, IN RE 1908 1 IR 213

MYTON LTD V SCHWAB-MORRIS 1974 1 WLR 331

NAVIERA V HAPAG-LLOYD INTERNATIONAL 1985 1 WLR 435

JUDICATURE (IRL) ACT 1877

UNITED DOMINIONS TRUST (COMMERCIAL) LTD V EAGLE AIRCRAFT SERVICES LTD 1968 1 WLR 74

CREAN V DRINAN 1983 ILRM 82

1 JUDGMENT delivered the 24th day of April, 1997 by Keane J. [NEM DISS]

2 The Plaintiff (hereafter "Mr. Kramer") is a hairdresser. He owns two hairdressing salons, in Wicklow Street, Dublin and at 2 Stillorgan Road, Country Dublin.

3 On April 28th 1988, Mr. Kramer took a 35 year lease of the ground floor of the Stillorgan Road property from a company called Monastra Developments Limited. On 7th February 1991, that company agreed to convey the property to the Defendant (hereafter "Mr. Arnold") who is a property developer. In July 1991, Mr. Kramer purchased a lease for 450 years of the ground floor of the property for a sum of £175,000, the necessary finance being advanced to him by AIB Finance Limited through their senior development manager, Ms. Ann Harper (hereafter "Ms. Harper"). Mr. Kramer wanted to acquire the rest of the property as well, but Mr. Arnold was not willing to sell at that time. However, on 27th July 1991, two days before he acquired the 450 year lease, Mr. Arnold gave Mr. Kramer an option to purchase the fee simple title to the entire premises. It is that agreement which has given rise to the present dispute.

4 On the 15th March 1994, Mr. Kramer gave notice to Mr. Arnold that he was exercising the option. No issue arises as to the validity of that notice. Since, however, the parties could not agree on a price, it was determined, in accordance with the terms of the agreement, by an independent surveyor agreed on by the parties, Mr. Peter Shannon (hereafter "Mr. Shannon"). The valuer acting for Mr. Kramer, Mr. John Costello (hereafter "Mr. Costello") received written notification from Mr. Shannon on March 31st, 1995 that he had determined the price at £92,000. Under the terms of the option agreement, a deposit of 10% i.e. £9,200 was, as a result, payable by Mr. Kramer. On 12th April, 1995 Mr. Arnold's solicitors sent a letter by hand to Mr. Kramer's solicitors purporting to terminate the option agreement on the ground that the deposit had not been paid. On the same day, Mr. Kramer's solicitor delivered by hand to Mr. Arnold's solicitors a letter containing a cheque for the amount of the deposit. The cheque was immediately returned by Mr. Arnold's solicitors and these proceedings were then instituted on Mr. Kramer's behalf claiming inter aliaspecific performance of the option agreement. They were heard by Mrs. Justice McGuinness who, in a reserved judgment, found in favour of Mr. Kramer and granted him a decree of specific performance. From that judgment and order, Mr. Arnold now appeals to this court.

5 Before dealing with the facts in more detail, I should refer to the relevant clauses of the option agreement. Clause (2)(i) provides that:

" The option shall be exercisable by (Mr. Kramer) at any time during the option period serving on (Mr. Arnold) a notice (hereinafter called the option notice) so as to reach Mr. Arnold at the address set out herein before midday on the 19th July 1995. Upon service of the option notice, (Mr. Arnold) shall be deemed to have contracted to sell and (Mr. Kramer) to purchase the property upon the terms and subject to the conditions hereinafter contained."

6 Clause 2(ii) provides that:

" (Mr. Arnold) shall be deemed to have contracted to sell and (Mr. Kramer) to purchase the property for such sum as shall be agreed between (Mr. Arnold) and (Mr. Kramer) or in default of agreement as shall be determined by an independent valuer in accordance with the provisions hereinafter contained."

7 Clause 2(iv) provides that:

" The valuer to be appointed as aforesaid shall be such person or firm as (Mr. Arnold) and (Mr. Kramer) shall jointly appoint in that behalf provided that in default of agreement between (Mr. Arnold) and (Mr. Kramer) in regard to the person or firm to be appointed (being a person or firm willing to act) they shall request the chairman for the time being (or other officer endowed with the functions of such Chairman) of the Republic of Ireland Branch of the Royal Institution of Chartered Surveyors to nominate a person or firm for this purpose and the person or firm so nominated shall be deemed to have been appointed as such valuer hereunder."

8 Clause (2)(v) provided that:

" Such valuer shall act as an arbitrator and the valuation made by such valuer on the basis aforesaid shall be the purchase price for the purposes hereof."

9 Clause (2)(vi) provided that:

" Immediately the purchase price shall have either been agreed between (Mr. Arnold) and (Mr. Kramer) or shall have been determined by such valuer in accordance with the provisions hereinbefore contained (Mr. Kramer) shall pay to (Mr. Arnold's solicitors) as stakeholder by way of deposit a sum equal to 10% of such purchase price."

10 Clause 7 provides that:

" The Incorporated Law Society of Ireland General Conditions of Sale (1988 edition) shall apply to the said sale insofar as the same have not been altered or varied by the conditions hereinbefore set out and the conditions hereinbefore set out shall prevail in the case of any conflict between them and the said general conditions."

11 Condition 31of the General Conditions provides that

" The failure by (Mr. Kramer) to pay in full the deposit hereinbefore specified as payable by him shall constitute a breach of conditions entitling (Mr. Arnold) to terminate the sale or to sue the purchaser for damages or both but such entitlement shall be without prejudice to any rights otherwise available to (Mr. Arnold)."

12 The principal dispute between the parties is as to whether the deposit was paid "immediately" within the meaning of Clause 2(vi).

13 Mr. Shannon had accepted his appointment as the arbitrator on the 6th September 1994. The actual hearing took place on the 13th March 1995 and on the 29th March 1995 Mr. Shannon wrote as follows to Mr. Costello and Mr. Morley, Mr. Arnold's valuer.

" I have now made my arbitration award concerning (premises at 2 Stillorgan Road, Dublin)."

" Copies of my award will be furnished to both valuers on payment of my costs in full by either or both parties. My costs inclusive of outlay and VAT amount to £1,210 and this amount is payable by the parties in equal shares. Receipts will be issued with copies of my award."

14 Mr. Costello received this letter on the 30th March and got in touch immediately with Mr. Kramer who sent him his share of Mr. Shannon's fees. These were paid by Mr. Kramer, at the latest, on the morning of March 31st, which was a Friday, and that afternoon Mr. Costello received a copy of Mr. Shannon's award.

15 The award was in a standard form, was dated the 28th March 1995 and was signed by Mr. Shannon. As I have already noted, he determined that the value of the property was £92,000. Mr. Costello telephoned his client Mr. Kramer at approximately 5. 30 or 6 o'clock that afternoon and advised him of the value as determined by Mr. Shannon.

16 The following Monday (April 3rd) Mr. Arnold's solicitors sent this message by fax to Mr. Kramer's solicitor:-

" We refer to your letter of the 15th of March 1994 addressed to our client, David Arnold, enclosing option notice in accordance with the terms of the option agreement dated the 29th of July 1991. We have now been instructed by our client that the premises was valued on the 28th of March 1995 at £92,000 by the valuer appointed in accordance with the terms of the option agreement. A deposit of £9,200 is now due in accordance with the provisions of Clause 2(vi) of the Option Agreement and we would be glad if you would arrange to let us have a cheque for this amount immediately."

" Clause 3 of the option agreement provided that the closing date would be six months after the service of the option notice and clause 7 provided that the Law Society General Conditions would apply insofar as they had not been altered or varied by the option. As the closing date provided for in the option arrived before the purchase price had been determined, in our opinion the only reasonable interpretation is that the position is now the same as if no date had been specified in the option agreement and that accordingly the closing date would be five weeks from the 28th of March, i.e. the 22nd of May 1995."

" You might please note that no deed of conveyance from Monastra Developments Limited has been taken by (Mr. Arnold). Accordingly the sale will be completed by way of sub-sale deed from Monastra Developments Limited and (Mr. Arnold)."

" You would have received...