McGrath v Stewart

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 29 July 2016
• Neutral Citation: [2016] IESC 52
• Court: Supreme Court
• Docket Number: [Appeal No. 160 of 2010],[S.C. No. 160 of 2010]
• Date: 29 July 2016

[2016] IESC 52

THE SUPREME COURT

Laffoy J.

[Appeal No. 160 of 2010]

O'Donnell J.

Laffoy J.

O'Malley J.

BETWEEN

P. J. McGRATH

PLAINTIFF/RESPONDENT

AND

DEREK STEWART

DEFENDANT/APPELLANT

AND

BETWEEN

P. J. McGRATH

AND

THOMAS McGRATH

PLAINTIFFS

AND

DEREK STEWART

DEFENDANT/APPELLANT

Contract – Sale of property – Specific performance – Appellant seeking to vacate order of the High Court in plenary actions awarding damages – Whether trial judge was entitled to make an award of damages in lieu of specific performance

Facts: The plaintiff/respondent, Mr PJ McGrath, in the first plenary action as purchaser, and the plaintiffs/respondents, Mr PJ McGrath and Mr T McGrath, in the second plenary action as purchasers, sued the defendant/appellant, Mr Stewart, as vendor, for specific performance of two contracts, each of which was for the sale of property in the City of Dublin. Apart from the fact that each of the contracts related to a different property, there was very little difference between the two contracts in issue and between the factual basis, the pleadings and the procedural process in both actions. On 15th July, 2004, the first plenary action was initiated by a plenary summons in which Mr PJ McGrath sought specific performance of the contract dated 8th June, 1998 in relation to 14 Rutland Street and damages. A statement of claim was delivered on 31st January, 2005 in which the reliefs claimed were specific performance of the contract and damages in lieu of specific performance. A defence and counterclaim was delivered by Mr Stewart on 17th February, 2005 in which it was asserted that Mr PJ McGrath?s claim was statute-barred and, without prejudice to that plea, the various matters pleaded by Mr PJ McGrath were traversed. In the counterclaim, it was pleaded that the sale, which was denied, was subject to ?existing tenancies? and that it was an express provision of the contract that Mr PJ McGrath would not be given vacant possession on closing. Rectification of the contract was sought. Both plenary actions were heard together in the High Court before Murphy J. The trial judge refused the plaintiffs? claims for decrees of specific performance of the contracts for sale and awarded damages in lieu of the decrees of specific performance ([2008] IEHC 348). The orders of the High Court having been perfected on 19th November, 2009, notice of appeal was filed on behalf of Mr Stewart in the Supreme Court on 16th June, 2010 against both orders of the High Court. There were eleven grounds of appeal which contended that the trial judge erred ?in ignoring or not taking any or any sufficient account of certain evidence?, which was described as ?uncontradicted evidence? given by three witnesses who were called to give evidence on behalf of Mr Stewart, including Mr Stewart. The eleventh ground asserted that even on the basis set out therein alone, there was no consensus ad idem and therefore no agreement between the parties. It was asserted that, if there was an agreement between Mr Stewart and Mr PJ McGrath, which was denied, the trial judge erred in failing to hold that the failure and/or refusal of Mr PJ McGrath to complete the sale amounted to a repudiation thereof and that the contract was thereupon at an end and entitled to be so treated by Mr Stewart. It was asserted that the trial judge erred in fact and in law in having held on the one hand that there was delay on the part of Mr PJ McGrath in issuing proceedings which disentitled him to specific performance and that he then in error granted to Mr PJ McGrath damages in lieu of specific performance, as if he was entitled to specific performance, when he should have dismissed Mr PJ McGrath?s claim and recognised and held that Mr PJ McGrath was not entitled to the reliefs sought on account of such delay and inactivity. Without prejudice to the foregoing grounds, it was asserted that the trial judge erred in his assessment of the damages on various bases.

Held by Laffoy J that the only issue which it was appropriate for the Court to consider on this appeal was whether the trial judge was entitled to make an award of damages in lieu of specific performance in favour of the respondents in circumstances where he had found that they were not entitled to a decree of specific performance in either plenary action, because Mr Stewart had established laches on their part. On that issue, Laffoy J was of the view that the trial judge did not have jurisdiction to award damages in lieu of specific performance. As regards the argument advanced on behalf of the respondents, that they were entitled to damages at common law for breach of contract, Laffoy J considered that, as no such claim was made or pleaded in the High Court or considered by the trial judge, they could not pursue such a claim on the appeal.

Laffoy J held that there should be an order allowing Mr Stewart?s appeal and vacating the order of the High Court in both plenary actions awarding damages in lieu of specific performance and quantifying those damages.

Appeal allowed.

Judgment of Ms. Justice Laffoy delivered the 29th day of July, 2016

Underlying High Court proceedings leading to judgment and orders appealed against

1 The two plenary actions underlying this conjoined appeal were heard together in the High Court. In the first, the plaintiff, as purchaser, and in the second, the plaintiffs, as purchasers, sued the defendant, as vendor, for specific performance of two contracts, each of which was for the sale of property in the City of Dublin. Apart from the obvious fact that each of the contracts related to a different property, there is very little difference between the two contracts in issue and between the factual basis, the pleadings and the procedural process in both actions. That being the case, it is convenient to outline the background to this appeal by reference to the first plenary action.

2 The contract the subject of the first plenary action (Record No. 2004/ 10969P) was a contract in the standard form published by the Incorporated Law Society of Ireland for a sale by private treaty which was dated 8th June, 1998 and was expressed to be made between the defendant in the first action (Mr. Stewart), as vendor, and, in its final form, by the plaintiff in the first action, P.J. McGrath (Mr. McGrath) in trust, as purchaser, for the sale of the dwelling house and premises know as 14 Rutland Street in the City of Dublin at the price of IR£25,000. The relevant features of the contract were the following:

(a) that the interest being sold was a long leasehold interest for the residue of a term of nine hundred and four years from 29th September, 1882;

(b) that the special conditions did not disclose that the sale was subject to any tenancy, so that by virtue of General Condition 21, ex facie, Mr. McGrath was entitled to vacant possession on completion of the sale;

(c) that the closing date was 23rd July, 1998; and

(d) that a deposit of IR£2,500 was payable by Mr. McGrath on the execution of the contract.

The correspondence put before this Court demonstrates that the solicitors for Mr. Stewart, Stewart & Co., sent that contract and two other contracts, to Mr. McGrath's solicitors, Tom Collins & Co. on 8th June, 1998 on a ?subject to contract/contract denied? basis. The contracts as so furnished named William Black (Mr. Black) as purchaser. Mr. McGrath's solicitors having obtained confirmation from Mr. Black that it was in order to do so, Mr. McGrath's name was substituted for Mr. Black's name as purchaser. The contracts thus amended were returned to Mr. Stewart's solicitors by letter dated 25th June, 1998 together with a cheque, which will be referred to at the end of the judgment, which covered the deposit on that transaction and on the two other transactions and also requisitions on title. Of the other two contracts, one, which was the subject of the second plenary action (Record No. 2004/ 10973P), was for the sale of 9 Summerhill Place in the City of Dublin to Mr. McGrath (in trust) for IR£25,000 on similar terms to the terms in relation to the sale of 14 Rutland Street outlined above. The subsequent interaction between the parties and the pleadings disclose that Mr. McGrath was contracting to purchase 9 Summerhill Place in trust for himself and the second named plaintiff in the second plenary action, Thomas McGrath (the second Respondent).

3 On 2nd July, 1998, in accordance with normal practice, one part of the contract signed by both Mr. Stewart and Mr. McGrath was returned to Mr. McGrath's solicitors. Subsequently by letter dated 10th July, 1998 Mr. Stewart's solicitors furnished their replies to the requisitions on title, which were in the standard form published by the Law Society. The replies disclosed that the property was occupied by a tenant who was in possession at a weekly rent. By letter dated 8th September, 1998, Mr. McGrath's solicitors informed Mr. Stewart's solicitors that their client would seek vacant possession on closing of the transaction. The response of Mr. Stewart's solicitors by letter dated 14th September, 1998 was that they were not in a position to give vacant possession on closing of 14 Rutland Street or of 9 Summerhill Place, which the replies to the relevant requisitions disclosed was also occupied by a tenant who was in possession at a weekly rent.

4 As regards the third contract, which related to another property in the area, 13 Summerhill Place, of which Mr. Stewart had vacant possession, the sale of that property was completed on 9th October, 1998. However, neither the sale of 14 Rutland Street nor of 9 Summerhill Place was completed. Thereafter correspondence continued from Mr. McGrath's solicitors to Mr. Stewart's solicitors seeking to know when the transactions could be completed with vacant possession. Although the relevant letter has not been put before this Court, it would seem that...