McMahon v O Loughlin

JurisdictionIreland
JudgeMr. Justice Roderick Murphy
Judgment Date09 June 2005
Neutral Citation[2005] IEHC 196
CourtHigh Court
Docket NumberNo. 10980 P/2002
Date09 June 2005

[2005] IEHC 196

THE HIGH COURT

No. 10980 P/2002
MCMAHON v O'LOUGHLIN
BETWEEN/
MICHAEL McMAHON
PLAINTIFF

AND

PATRICK O'LOUGHLIN
DEFENDANT

FAMILY HOME PROTECTION ACT 1976 S2

ARBITRATION ACT 1954

KELLY v IRISH NURSERY & LANDSCAPE LTD 1983 IR 221

AIB v O'NEILL 1995 2 IR 473

FAMILY HOME PROTECTION ACT 1976 S3

WYLIE IRISH CONVEYANCING LAW 2ED 1.32

COMPETITION ACT 2002

CONVEYANCING ACT 1882 S3

MASSEY v MIDLAND BANK 1995 1 ALL ER 929

BANCO EXTERIOR INTERNATIONAL v MANN 1995 1 ALL ER 936

BANK OF BARODA v RAYAREL 1995 2 FLR 376

FAMILY HOME PROTECTION ACT 1976 S1

BANK OF IRELAND v SMYTH 1995 2 IR 459

ROBERTS v O'NEILL 1983 IR 47

IRISH LIFE v DUBLIN LAND SECURITIES 1989 IR 332

ROONEY MCFARLAND v CARLIN 1981 NI 138

CHANCERY AMENDMENT ACT (LORD'S CAIRN'S ACT) 1858 S3

DELANY EQUITY & THE LAW OF TRUSTS IN IRELAND 3ED 45

SOMERS v W 1979 IR 94

NORTHERN BANK v HENRY 1981 IR 1

SNELL EQUITY

WYLIE IRISH CONVEYANCING LAW 2ED 6.03

WYLIE IRISH CONVEYANCING LAW 2ED 6.33

FAMILY LAW ACT 1995

BANK OF IRELAND v PURCELL 1989 IR 332 1990 ILRM 106

NESTOR v MURPHY 1979 IR 326

FARRELL IRISH LAW OF SPECIFIC PERFORMANCE 1994

IRISH LIFE ASSURANCE CO LTD v DUBLIN LAND SECURITIES LTD 1986 IR 332

CHANCERY AMENDMENT ACT (LORD'S CAIRN'S ACT) 1858 S2

WROTH v TYLER 1974 CH 30 1973 2 WLR 405

SALE OF LAND

Contract

Formation - Finality - Exchange of contracts -Family home - Conveyance - Validity -Condition precedent - Prior written consent of other spouse - No consent in writing by wife to disposition of interest in family home -48 Specific performance - Discretionary remedy- Whether plaintiff purchaser entitled to specific performance of contract - Whether award of damages should be substituted for decree - Conveyancing Act 1882 (45 & 46Vict, c 39), s 3 - Family Home Protection Act1976 (No 27), s 3 - Order for specific performance refused (2002/10980P - Murphy J - 9/6/2005) [2005] IEHC 196

McMahon v O'Loughlin

Facts: By agreement in writing the plaintiff agreed to purchase and the defendant agreed to sell certain lands and premises comprising a petrol station and dwelling house. Subsequently, the defendant requested the plaintiff to sign a supply agreement with a third party, Irish Shell Limited (Shell). The plaintiff refused to sign that agreement and consequently, the defendant purported to rescind the contract and return the deposit paid by the plaintiff. Following the defendant’s failure to comply with the terms of the contract the plaintiff claimed specific performance of the contract and damages for breach of contract in lieu of or in addition to specific performance. The defendant denied that there was any concluded enforceable agreement between the parties. The defendant claimed that there was no prior consent of his spouse and further that there was a collateral agreement between the parties that the premises would be purchased subject to the plaintiff taking over the agreements then in force between the defendant and Shell.

Held by Murphy J. in refusing to award specific performance:

1. That having introduced a condition to the effect that the purchaser would not assume responsibility for any contracts, agreements or obligations of a continuing or ongoing nature and having raised the matter in requisitions, the plaintiff was entitled to proceed on the basis that he would not be bound by any obligation and , in particular by the agreement with Shell.

2. That the contract for sale was not re-executed after the wife’s written consent was obtained and accordingly the provisions of the Act of 1976 were not complied with. In the circumstances of the case, specifically the practical difficulties with regard to the severing of the dwelling from the petrol station and further difficulties with planning permission it would not be appropriate to sever the dwelling from the petrol station. Consequently, the entire contract was void by reason of the non-compliance with the prior written consent of the vendor’s spouse.

3. That counsel should be heard as to whether damages should be awarded in the circumstances.

Reporter: L.O’S.

Judgment of
Mr. Justice Roderick Murphy
1

delivered the 9th day of June, 2005 .

1. Claim
2

On 19th April, 2002 by agreement in writing the plaintiff agreed to purchase and the defendant agreed to sell certain lands and premises being a petrol filling station and dwelling house comprised in folios 55139F and 16018F in the County of Galway, at an agreed purchase price of £450,000 or €571,382. The closing date was 28 days from the signing of the agreement by the vendor. In the following months of May and June the defendant requested the plaintiff to sign a supply agreement with a third party, Irish Shell Limited (Shell). It was claimed that on or about 5th July, 2002 the defendant's agents indicated that the defendant would not complete the contract unless the plaintiff entered into an agreement with Shell. On 10th July, 2002 the defendant purported to rescind the contract and return the deposit paid by the plaintiff.

3

The plaintiff claimed to be ready, willing and able to purchase the lands and called upon the defendant to comply with the terms of the contract of 19th April, 2002. The defendant failed to do so. The plaintiff claimed,inter alia, specific performance of the contract of 19th April, 2002 and damages for breach of contract in lieu of or in addition to specific performance.

2. Defence
4

The defendant denied that there was any concluded enforceable agreement. The premises were a family home within the meaning of s. 2 of the Family Home Protection Act,1976. The prior consent of the defendant's spouse, Eileen O'Loughlin, was not obtained nor furnished. The defendant contended that the contract of 19th April, 2002 was void.

5

If there had been an agreement, which was denied, it was subject to a pre-condition that no contracts existed or should have been deemed to exist until the contracts for sale had been signed and exchanged between the parties and the deposit paid. The defendant denied any such exchange.

6

The defendant claimed that in the course of the negotiations between the parties the plaintiff was furnished with a sales agreement dated 1st September, 1999 made between Shell as the supplier and the defendant as the buyer and that the plaintiff confirmed to the defendant that he was prepared to purchase the premises and to be bound by the said agreements. It was a collateral agreement between the parties that the premises would be purchased subject to the plaintiff taking over the agreements then enforced between the defendant and Irish Shell Limited and that the plaintiff had agreed to execute such documentation as might be required but refused to do so.

7

In fact, the evidence showed, and it was common case that a sales agreement of 1st September, 1999 and an undated loan agreement was not furnished to the plaintiff before the execution of the contract of 19th April, 2002. What was furnished to the plaintiff by the defendant's agent was a letter of 17th April, 1998 from Shell to the defendant. That letter comprised an offer which was accepted subject to the terms and conditions as outlined therein by the defendant.

8

In his defence, the defendant denied that he had wrongfully rescinded the contract of 19th April, 2002 if it was ever valid or effective. The defendant further denied that he was in breach of his contractual obligations or that his conduct had caused the plaintiff to suffer loss and damage. If the plaintiff had suffered any loss or damage the same was not by reason of any wrongful act of the defendant as alleged.

3. The contract
9

The memorandum of agreement of 19th April, 2002, on its face, appears to be preceded by the consent in writing signed by the vendor's spouse.

10

An additional special condition was inserted at the behest of the plaintiff purchaser's solicitor as follows:

11

4. The goodwill of the business carried on, and the property in sale is included in the price. The vendor shall be responsible for and undertakes to pay all debts and liabilities and to observe and perform all obligations regarding the conduct of the business prior to completion. The vendor further warrants and certifies that there are no employees whose employment requires to be continued by the purchaser and the purchaser shall be indemnified in relation to any claims from staff, current or past. The purchaser shall not assume responsibility for any contracts, agreements or obligations of a continuing or ongoing nature.

12

The memorandum was executed by the plaintiff purchaser subject to that special condition among others. There was no mention of the agreements between the defendant and Shell.

4. Agreement with Irish Shell Limited
13

2 4.1 The defendant had a series of ten-year sales agreements and a loan agreement with Shell.

14

3 4.2 The brochure, prepared by Casey Auctioneers on behalf of the defendant, as vendor, showed a photograph of the premises with the canopy marked "Shell", the pumps and other fixtures and fittings with the same distinctive colours. Under the heading of "description" the brochure highlighted in red the following: "There is an agreement with Irish Shell to April, 2008".

15

4 4.3 Mr. Peter Casey of Casey Auctioneers furnished to the plaintiff a copy of the letter from Shell to the defendant dated 17th April, 1998, together with copies of the accounts before the execution of the memorandum of agreement of 19th April, 2002.

16

That letter contained the following material paragraphs:

"Irish Shell Limited, in return for a ten-year sales agreement between Patrick O'Loughlin and Irish Shell, are pleased to detail the following offer as a means of enhancing the future sales volume of this site."

17

(1) Equipment.

18

We will supply the following equipment on a free-loan basis:

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