Mac A Bhaird v Commissioner of Public Works in Ireland
| Jurisdiction | Ireland |
| Judge | Ms. Justice Baker |
| Judgment Date | 05 April 2016 |
| Neutral Citation | [2016] IEHC 223 |
| Docket Number | [2013 No. 1182 P] |
| Court | High Court |
| Date | 05 April 2016 |
[2016] IEHC 223
THE HIGH COURT
Baker J.
[2013 No. 1182 P]
Contract – Breach of contract – Specific performance – Counterclaim – Essence ab initio – Extension of time
Facts: The plaintiff/vendor sought an order for the specific performance of an agreement for sale of lands to the defendant. The defendant being the purchaser had filed a counterclaim for the return of the contract deposit wherein he was also seeking a declaration to the effect that the contract had been rescinded. The plaintiff/vendor contended that the action of the defendant in rescinding the contract was invalid as the plaintiff was not able to complete the sale on the date on which the completion notice expired.
Ms. Justice Baker granted an order for the specific performance of a contract for sale to the plaintiff/vendor. The Court, however, dismissed the counterclaim filed by the defendant. The Court held that generally, time was not considered an essence in a contract for the sale of land and the service of a completion notice did not change the essential character of the contract if time was not of the essence since the inception of the contract. The Court found that since the date agreed by the parties for completion of sale had extended the time for performance of the contract, beyond the time fixed under the notice of completion, it followed that the time was not an essential element of the contract and thus, the defendant could not place reliance on the completion notice to rescind the contract.
The plaintiff seeks specific performance of an agreement made on the 4th November, 2011, for the sale to the defendant of lands at Glanmire, County Cork. This judgement primarily concerns the counter claim of the purchaser for a declaration that the contract has been rescinded, and its claim for a return of the contract deposit.
By agreement for sale made in writing on or about the 4th November, 2011, and which incorporated the Law Society General Conditions of Sale, between the plaintiff as vendor on the one part, and the defendant as purchaser on the other part, the defendant agreed to purchase and the plaintiff agreed to sell all of the premises known as Unit 4A, Glanmire Industrial Estate, Glanmire, in the County of Cork for the total purchase price of €862,000. The contract was made subject to a number of general and special conditions, and closing was to be within seven weeks of the grant of planning permission for change of use of the premises. Planning permission issued on the 25th January, 2012, and the sale fell to be completed on the 14th March, 2012, in accordance with this special condition.
The vendor served a notice in accordance with General Condition 40 of the Law Society General Conditions of Sale on the 23rd November, 2012, and the purchaser, by letter of the 9th January, 2013, purported to rescind the contract, by reason of what is said to be the inability of the vendor to close the sale on the expiration of the period of 28 days fixed for closing by the completion notice.
The 28-day period provided in the completion notice expired during the Christmas holiday, and the parties have agreed that, taking into account an agreed period during which time did not run, the closing date in accordance with the notice was the 2nd January, 2013.
Much of the evidence revolved around events that occurred since the service of the completion notice on the 23rd November, 2012, and on whether the vendor, and/or the purchaser, was in a position to comply with certain title requirements, and certain general and special conditions relating to the mode and place of closing.
Both parties agree that the contract for sale is valid, and the central issue is whether the vendor has validly rescinded the contract.
Either party to a contract for sale made under the Law Society General Conditions may serve a completion notice, under General Condition 40, and condition 40(a) provides that a completion notice is effective only if the party giving it ‘shall then either be able, ready and willing to complete the sale or is not so able, ready or willing by reason of the default or misconduct of the other party’.
Three matters were required to be dealt with by the vendor to be ready, able and willing to perform his obligations as vendor under the contract as follows:
• The lands, the subject matter of the contract for sale, were subject to a charge registered in favour of Bank of Ireland. The charge created a security over other lands not relevant to the sale, but the vendor required a deed of partial discharge from the Bank in respect of the subject lands in order to give an unencumbered title.
• The lands in sale were also subject to a charge in favour of Danske Bank, and it is common case that this charge came to light only on the 21st December, 2012, and when the purchaser made its closing searches. That charge also affected other lands not the subject matter of the sale, and again, a partial discharge was required to clear the title to the subject lands.
• The contract was subject to the vendor producing at closing a valid tax clearance certificate. At the time the completion notice was served, the vendor's tax clearance certificate had expired, and, although the evidence is that he was tax compliant, he did not have a valid tax clearance certificate until one issued from Revenue on the 4th January, 2013.
While the matter arose initially in argument, counsel have now agreed that the completion notice was valid at the date of service, and that the matters still to be done by the vendor were administrative matters wholly within his control, or did not contractually require to be in place at the date of the service of the notice.
I do not therefore propose to deal with the question raised but not answered by Clarke J. in Windham v. Maguire & Anor [2009] IEHC 359, and mentioned by Finlay Geoghegan J. in Mackin v. Deane [2010] IEHC 192, as to the consequence of a party becoming unable to close in the currency of a notice which was valid at the date of service.
After the service of the completion notice on the 23rd November, 2012, nothing was heard from the solicitor for the purchaser until a phone call on the 18th December, 2012, followed up by an e-mail on 19th December, 2012, in which she sought details of the redemption figures on the Bank of Ireland mortgage up to Friday 21st December, 2012. This was because of Special Condition 9 of the contract, which required a separate cheque to be made payable to Bank of Ireland in respect of the balance of the purchase price after taking off the costs of sale and VAT on the transaction.
By an e-mail sent at 14.58 on the 19th December, 2012, the solicitor for the purchaser, after repeating her request for details of the redemption figures, suggested that in lieu of the furnishing of separate bank drafts, as was required by the Special Condition, that the balance of the purchase price could be transferred into the account of the vendor's solicitor. It was said that confirmation of this proposal was required as a matter of urgency as ‘in order for the monies to be in your account by Monday next, I need details of your firm's account today.’ The Monday referred to was Christmas Eve, the 24th December, 2012.
In an e-mail some 20 minutes later, at 15.19, the purchaser proposed a closing in the office of the vendor's solicitor on either Friday the 21st December or Monday the 24th December, 2012. The email mentioned again the fact that in order for the option of an electronic transfer to be available, details of the relevant bank account were required on that day, 19th December, 2012.
On the following day, the 20th December, 2012, by fax, and letter hand-delivered by courier, the solicitor for the vendor furnished details of the relevant bank account, but gave no reply as to a proposed date and time for closing. The exact time that this faxed letter was sent is unclear, but from the attendance note on the file of the purchaser's solicitor of a phone call from the office of the solicitor for the vendor at 14.35 requesting confirmation that a fax had been received, I conclude that the letter was faxed at or near that time.
At 15.46, the solicitor for the purchaser sent a letter marked ‘urgent’ in which it was pointed out that the option of the electronic transfer was no longer available as there had been a limited, and now expired, window within which such transfer could happen.
Some time was given over in the course of evidence to the reasons for this, and to an arguable lack of clarity in the letters from the purchaser's solicitor, in that they had not expressly identified the fact that the option could not be availed of after the 19th December, 2012. I consider that correspondence is sufficiently clear. The offer of an electronic transfer was by variation on Special Condition 9, which provided for a three-way physical closing and the furnishing of three bank drafts in the relevant amounts. The variation was not accepted in accordance with the terms of the letter, and accordingly that option never became a variation on the conditions relating to closing.
The solicitor for the vendor on Friday the 21st December, 2012, by fax sent at 11.51, indicated that the sale could complete either that afternoon, or on Monday the 24th and asked for confirmation that the purchase monies had been transferred to her client account. That letter also contained details of the redemption figures. I consider that, as the option of an electronic transfer of funds was no longer available, the solicitor for the...
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McA Bhaird v Commissioner of Public Works in Ireland [No 2]
...be appropriate. JUDGMENT of Ms. Justice Baker delivered on the 8th day of November, 2016. 1 In a judgment delivered on 5th April, 2016, [2016] IEHC 223, I made an order that the plaintiff be entitled to a decree of specific performance of a contract for the sale of certain premises in Glan......