Lawlor v Ross

JurisdictionIreland
JudgeKeane C.J.,FENNELLY J.
Judgment Date22 November 2001
Neutral Citation[2001] IESC 110
Docket Number316/00
CourtSupreme Court
Date22 November 2001
LAWLOR v. ROSS & MENOLLY HOMES LTD & ANOR

BETWEEN

LIAM LAWLOR
PLAINTIFF/RESPONDENT

AND

SEAMUS ROSS MENOLLY HOMES LIMITED AND MENOLLY PROPERTIESLIMITED
DEFENDANTS/APPELLANT

[2001] IESC 110

Keane C.J.

Geoghegan J.

Fennelly J.

316/00

THE SUPREME COURT

Synopsis:

CONTRACT

Specific performance

Property - Practice and procedure - Land law - Alleged joint venture arrangement - Application to dismiss proceedings - Criteria to be applied - Negotiations - Financial arrangements not finalised - Whether binding contract concluded - Whether proceedings frivolous or vexatious - Whether plaintiff's claim bound to fail - Statute of Frauds, 1695 (316/2000 - Supreme Court - 22/11/01)

Lawlor v Ross

Facts: The plaintiff had brought proceedings alleging that he had entered into a joint venture with certain parties (including the defendants) to develop certain lands. The plaintiff contended that it had been agreed that the development would take place through a limited liability company and that the plaintiff would hold 20 per cent of the shares of this company. The plaintiff contended the parties had proceeded to develop the lands without making any provision for his shareholding. The plaintiff relied on a handwritten document, signed by the first named defendant but not by him to satisfy the Statute of Frauds. The first named defendant maintained that there was no concluded contract between the parties and that the lands were acquired for a sum in excess of the price mentioned in the document. The defendants sought to have the plaintiff's claim dismissed as being frivolous or vexatious or constituting an abuse of the process of the court. Mr. Justice McKechnie refused the application in the High Court and the defendants appealed.

Held by Mr. Justice Fennelly in allowing the appeal and dismissing the plaintiff's claim. The test to be applied in this instance was whether the plaintiff's claim was bound to fail. The fatal defect in the plaintiff's claim was that the issue of how the entire project was to be financed was left over for discussion at a later date. The parties might well have reached an agreement in principle to enter a joint venture however they remained in negotiation so long as no agreement on finance was reached. The transaction was not a straightforward sale of property from vendor to purchaser where the law would not imply, in the absence of express reference, any need for financial provision. Held by the Chief Justice in dismissing the plaintiff's claim. Even making every assumption in favour of the plaintiff as to the stage which negotiations had reached, they remained negotiations. The contract relied on could not possibly constitute a concluded contract between the parties which could give rise to any action at law. Mr. Justice Geoghegan agreed with both judgments.

Citations:

BARRY V BUCKLEY 1981 IR 306

SUN FAT CHAN V OSSEOUS LTD 1992 1 IR 425

STATUTE OF FRAUDS (IRL) 1695

SUPERMACS IRELAND LTD V KATESAN LTD 2000 IR 273

LAC MINERALS V CHEVRON CORPORATION UNREP KEANE 6.8.1993 1993/12/3862

1

JUDGMENT delivered the 22nd day of November, 2001 by Keane C.J.

2

The facts in this case are comprehensively stated in the judgment which will be delivered by Fennelly J and need not be set out by me.

3

The applicable legal principles are not in doubt. This is not a case, as Mr. Frank Clarke SC conceded on behalf of the appellants, in which it could be successfully contended that the statement of claim itself disclosed no reasonable cause of action or one that was frivolous or vexatious. The appellants say, however, that the proceedings should have been struck out inthe exercise of the inherent jurisdiction of the High Court to take that course where it is clear that the plaintiff's claim must fail.

4

That such a jurisdiction exists is beyond doubt. However, as was made clear by Costello J, as he then was, in Barry -v- Buckley [1981] IR 306 and by this court in Sun Fat Chan -v- OsseousLimited [1992] 1 IR 425, it is a jurisdiction which should be sparingly exercised by the High Court. As McCarthy J observed in the latter case:

"Experience has shown that the trial of an action will identify a variety of circumstances perhaps not entirely contemplated at earlier stages of the proceedings; often times it may appear that the facts are clear and established but the trial itself will disclose a different picture."

5

Since the defendant who brings such a motion must satisfy the court that, even assuming that all the facts pleaded and relied upon by the plaintiff in his statement of claim are established in evidence, his or her action will nonetheless inevitably fail, the burden resting on the defendant in bringing such a motion is undoubtedly a heavy one.

6

It remains to consider the application of those principles to the facts of the present case. As I understand the statement of claim and particulars, the plaintiff claims that he entered into what he describes as "a joint venture partnership agreement" with the defendants and a Mr. Peter Dwyer under which a company was to be formed for the purpose of acquiring and developing certain lands known as "The Guinness lands" in West County Dublin. If the lands in question could be acquired for £8 million, the project was to go ahead and the shareholding in the company and the distribution of profits which, it was hoped, would result from the venture were to be divided in the proportions of 40% to the defendants, 40% to Mr. Dwyer and the remaining 20% to the plaintiff. If it transpired that the purchase price of the lands was in excess of £8 million, the parties would not be bound to proceed with the acquisition and development of the lands. If, however, the parties were willing to proceed with the acquisition of the lands, even though the purchase price was in excess of £8 million, the company would then be formed with the shares held in the agreed proportions. The plaintiff's case is that the lands were subsequently acquired for a sum admittedly significantly in excess of £8 million, i.e., £19 million, but that, in breach of the agreement he had arrived at with the defendants and Mr. Dwyer, he was given no opportunity of participating in their further development through the medium of the proposed newcompany.

7

It is undoubtedly the case that, as pleaded in the statement of claim, certain aspects of the alleged agreement remain remarkably vague. There was no agreement as to the details of the development to be carried out on the lands and the entire question of how the project was to be financed seems to have been left in the air. It may be that at the trial of the action, if it is allowed to proceed, the plaintiff will be able to establish that there was an agreement between himself, the defendants and Mr. Dwyer that the company in question was to be formed, that the lands when acquired were to be vested in the company and that the profits of any development were to be divided in the agreed proportions. It is conceded on behalf of the plaintiff, however, that there was no agreement as to how the project was to be financed and that the details of the proposed development were also, in effect, left for further agreement. Accordingly, even making every assumption in favour of the plaintiff as to the stage which negotiations had reached, they remained negotiations. None of the parties would be in a position to hold the other parties to whatever arrangements in principle were envisaged, if it was not possible to reach agreement on matters such as finance and the nature of the proposed development. In these circumstances, it seems to me that this constitutes one of those cases in which, making every assumption in favour of the plaintiff, the contract relied on could not possibly constitute a concluded contract between the parties which would give rise to any action at law.

8

I would allow the appeal and substitute for the order of the High Court an order dismissing the plaintiff's claim.

9

arLiamLawlor-v-SeamusRossMenollyHomes&Ors.

10

JUDGMENT delivered the 22nd day of November, 2001 by FENNELLY J.

11

The defendants/appellants (hereinafter "the appellants") have appealed against the refusal of Mr Justice McKechnie in the High Court to accede to their motion to dismiss the plaintiff's claim for being frivolous or vexatious, an abuse of the process of the court and not being maintainable in law. They rely on the inherent jurisdiction of the court to strike out proceedings which are doomed to fail. This jurisdiction was first fully explained by Costello J in Barry vBuckley [1981] I.R. 306.

12

It is agreed that the court may exercise this jurisdiction only if it is demonstrated beyond argument that the plaintiff's claim must fail. As a corollary, it must beassumed that the facts will be established as the plaintiff alleges them. With those strictures in mind, I will endeavour to describe the plaintiff's claim.

13

The plaintiff is an engineer and businessman, residing near Lucan, Co Dublin. The proceedings concern an alleged joint venture project for the development of substantial areas of land in West County Dublin.

14

The plaintiff pleads, in the statement of claim, that prior to March 1997, he and one Peter Dwyer were "in the process of developing certain lands at or near but not limited to those lands situate at the Phibblestown/Castaheany and Allendale areas of County Dublin for residential purposes and, in addition, were engaged in the process of evaluating the overall future development potential of the entirety of the lands....."

15

It is here necessary to quote in full certain paragraphs of the statement of claim:

16

2 "5. Furthermore and with a view to the overall development of the lands as aforesaid, and in particular certain other additional lands hereinafter referred to as "the Guinness lands", which same were situate at or near those outlined in the previous paragraph...

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