McKenny (plaintiff) v Martin

JurisdictionIreland
JudgeMiss Justice Laffoy
Judgment Date19 May 2010
Neutral Citation[2010] IEHC 293
Docket Number[No. 1286P/2006]
CourtHigh Court
Date19 May 2010

[2010] IEHC 293

THE HIGH COURT

[No. 1286P/2006]
McKenny v Martin

BETWEEN

GERALD McKENNY
PLAINTIFF

AND

ALEX MARTIN
DEFENDANT

RSC O.28 r12

LAW SOCIETY OF IRELAND GENERAL CONDITIONS OF SALE 2001 SPECIAL CONDITION 4

LAW SOCIETY OF IRELAND GENERAL CONDITIONS OF SALE 2001 SPECIAL CONDITION 8

LAW SOCIETY OF IRELAND GENERAL CONDITIONS OF SALE 2001 SPECIAL CONDITION 5

LAW SOCIETY OF IRELAND GENERAL CONDITIONS OF SALE 2001 SPECIAL CONDITION 10

FAMILY HOME PROTECTION ACT 1976

O'CONNOR v COADY 2004 3 IR 271 2005 1 ILRM 256 2004/38/8706 2004 IESC 54

MALONEY v ELF INVESTMENTS LTD 1979 ILRM 253 1980/2/342

SPECIFIC PERFORMANCE

Sale of land

Contract - Condition - Subject to grant of planning permission - Contract not signed by defendant - Part performance - Deposit returned - Breach of contract - Whether binding agreement - Whether plaintiff's obligations fulfilled - Whether agreement wrongfully repudiated - Whether contract still in being - Conor v Coady [2005] 1 ILRM 256 and Maloney v Elf Investments [1979] ILRM 253 considered - Relief granted (2006/1286P - Laffoy J - 19/5/2010) [2010] IEHC 293

McKenny v Martin

Facts The plaintiff by way of plenary summons claimed specific performance of a contract for the sale of a site entered into with the defendant. It had been agreed between the parties that the defendant would sell a site off his lands to the plaintiff at a price of €38,092.14 and it was further agreed that the plaintiff would pay a deposit of €31,743.45. The contract was in the standard form conditions of sale published by the Incorporated Law Society. Special condition 4 provided that the sale was subject to the plaintiff applying for and obtaining outline planning permission for the erection of one dwelling house on the site by a particular date or such extended period as may be agreed between the parties. The plaintiff paid the deposit as agreed to the defendant in August 2002 and subsequently made three separate applications for planning permission. The defendant subsequently refused to close the contract for sale and returned the deposit to the plaintiff. It was submitted on behalf of the defendant that the contract was subject to planning permission and that the defendant was entitled to terminate the contract on returning the deposit as so no planning permission had been obtained. The plaintiff also sought damages relating to certain sums expended by him in relation to the applications for planning permission.

Held by Laffoy J. in awarding specific performance: That enforcement of the contract against the plaintiff was conditional on special condition 4 being fulfilled. However, that special condition was exclusively for the benefit of the plaintiff and was capable of being waived by him while still extant. The release of the deposit brought the contract into being and the contract was still in being when the defendant purported to terminate it because he had implicitly, if not expressly, agreed to an extension of the period for obtaining planning permission until the plaintiff's third application was finally adjudicated upon. By his peremptory action, the defendant was in breach of his contractual obligations. The proper course both on the facts and in law was to make an order for specific performance of the contract but excluding special condition 4 so as to give effect to the plaintiff's waiver of that condition. However, the plaintiff was not entitled to any damages.

Reporter: L.O'S.

Miss Justice Laffoy
1

Like too many matters which have come before this Court in recent times, the trial of this action, which was heard on 11th May, 2010, was played out in a most unsatisfactory fashion, because, after the action had been set down for trial by the defendant's solicitors, the solicitors who had been on record for the plaintiff had been allowed by the Court to come off record. Therefore, the plaintiff, Mr. McKenny, appeared in person on 11th May, 2010. The defendant, Mr. Martin, was represented by a solicitor and counsel. Because of those circumstances, in this judgment I propose to outline the relevant facts and principles and to set out my decision in terms which I hope a lay litigant can understand.

2

The proceedings have been ongoing since the 21st March, 2006, when the plaintiff's solicitors issued the plenary summons herein claiming specific performance of a contract for the sale of a site. The statement of claim was delivered on 18th July, 2006 and the defence was delivered on 5th September, 2006. I mention those procedural matters, because, when the action came on for hearing on 11th May, 2010, there was before the Court a motion, which issued on 6th May, 2010, in which the defendant sought an order deeming good service of a counter-claim which was "served" on the plaintiff's solicitors on the 28th March, 2007.

3

The position in relation to that motion is that, the defendant's solicitors having sent the counter-claim document by letter to the plaintiff's solicitors nine months after the defence was delivered, the plaintiff's solicitors responded promptly on 29th March, 2007 stating that they were taking their client's instructions in relation to it. The matter was not pursued at that stage, notwithstanding that a motion was brought before this Court in January 2007 for an order vacating a lis pendens which had been registered by the plaintiff. That motion was subsequently amended in May 2007 to include an application for an order striking out the plaintiff's claim on the grounds that it was frivolous or vexatious or that it must fail. The motion was heard on 6th June, 2007. An order was made on that day which preserved the lis pendens in relation to the site the subject of the contract between Mr. McKenny and Mr. Martin and refused the application to dismiss.

4

The matter of the counter-claim was not raised again by the defendant's solicitors until January 2009, when they wrote to the plaintiff's solicitors indicating that they would rely on Order 28, rule 12 of the Rules of the Superior Courts and would make an application at the hearing for an order pursuant to that rule. If I may say so, it was a bit presumptuous of the defendant's solicitors to assume that the Court would allow an amendment to a pleading on foot of a motion which issued less than a week before the listed hearing date. The fact that the defendant's solicitors were aware for three months that the plaintiff was not legally represented compounded matters. In my view, the defendant's solicitor's application was much too late and it would have been unfair and unjust to the plaintiff to accede to it. It was refused.

5

I will turn now to the substantive issues in the proceedings.

6

Mr. Martin is the owner of land at Reaghstown, Ardee, County Louth which is registered on Folio 12593F of the Register of Freeholders, County Louth. It is common case that before July 2002 he did a deal with Mr. McKenny, who is a builder, to sell a site off those lands comprising 0.331 hectares to Mr. McKenny at the price of €38,092.14. The deal was a very unusual deal, in that it was agreed that a deposit of €31,743.45 would be paid by Mr. McKenny to Mr. Martin under the contract and that the deposit would be released to Mr. Martin, who needed the funds. The deposit represented, on my mathematics, over 83% of the purchase price.

7

On 29th July, 2002, Mr. Martin's solicitors, Richard H. McDonnell, sent contracts to Mr. McKenny's solicitors. Mr. John Mulvihill was the solicitor in the firm of Richard H. McDonnell dealing with the transaction. He testified at the hearing, although the firm of Richard H. McDonnell did not act for Mr. Martin in these proceedings.

8

The contract was in the standard form conditions of sale published by the Incorporated Law Society (2001 Ed.). The important provisions, for present purposes, are three of the special conditions.

9

Special condition 4 as it originally appeared in the contract provided:

"The sale is subject to the purchaser applying for and obtaining a grant of outline planning permission for the erection of one dwelling house on the site within a period of six weeks from the 19th June, 2002 or such extended period thereof as may be agreed between the parties provided that in the event of the grant of outline planning permission not issuing within the aforesaid period or such extension thereof as may be agreed [between] the parties, then this contract shall be rescinded in which event the purchaser shall be entitled to return of his deposit without interest, costs or compensation."

Mr. McKenny's solicitors made three amendments to special condition 4. First, they deleted the word "outline" where it appeared, so that the condition, as amended, made the contract subject to Mr. McKenny obtaining full planning permission. Secondly, they changed the period of "six weeks" to three months. Thirdly, they changed the commencement of that period from 19th June, 2002 to lst August, 2002. In the light of what happened immediately after the contract was returned by Mr. McKenny's solicitors and, in particular, the fact that, at the request of Mr. Martin, the deposit was released to him, there can be no doubt but that Mr. Martin accepted those amendments and the amendment to special condition 10 referred to later. Having said that, in my view, the most important element in special condition 4...

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