Mount Kennett Investment Company v O'Meara and Others

• Jurisdiction: Ireland
• Court: High Court
• Judge: MR. JUSTICE T.C. SMYTH
• Judgment Date: 21 November 2007
• Neutral Citation: [2007] IEHC 420
• Date: 21 November 2007
• Docket Number: Case No. 1657p/2005

[2007] IEHC 420

THE HIGH COURT

DUBLIN

Case No. 1657p/2005

Mount Kennett Investment Company v O'Meara & Ors

MOUNT KENNETT INVESTMENT COMPANY

Plaintiff

and

PATRICK O'MEARA & OTHERS

Defendants

LAW SOCIETY OF IRELAND GENERAL CONDITIONS OF SALE 2001 5

LAW SOCIETY OF IRELAND GENERAL CONDITIONS OF SALE 2001 6

LAW SOCIETY OF IRELAND GENERAL CONDITIONS OF SALE 2001 10

DUFFY v RIDLEY PROPERTIES LTD & STOKES UNREP FINLAY GEOGHEGAN 7.7.2005 2005/18/3649 2005 IEHC 314

FARRELL IRISH LAW OF SPECIFIC PERFORMANCE 1994 59

CONTRACT LAW

Specific performance

Contract for sale of land - Agreement in writing - Conditions - Consent of Commissioners of Charitable Donations required - Valid contract - Discretionary nature of remedy - Onus of displacing entitlement to specific performance -Whether consent probable if lesser element of profit on âÇÿsell on contract' accepted - Breach of obligations to close sale - Whether frustration in fulfilling obligations to close sale - Whether defence of impossibility of performance sustainable - Duffy v Ridley Properties Ltd [2005] IEHC 314, (Unrep, Finlay Geoghegan J, 7/7/2005) - Decree of specific performance granted (2005/1657P - Smyth J - 21/11/2007) [2007] IEHC 420

Mount Kennett Investment Co v O'Meara

MR. JUSTICE T.C. SMYTH

1 I hereby certify the following to be a true and accurate transcript of my shorthand notes of the evidence in the above-named matter.

GWEN MALONE

=STENOGRAPHY SERVICES LTD.=

LAW LIBRARY, P.O. BOX 5939, 145-151 CHURCH STREET, DUBLIN 7

2 TEL: (01) 8782000 / 8782033. FAX: (01) 8782058. MOBILE: 087 2491316

3 E-MAIL: gmalone@gmss.ie WEB: www.gmss.ie

4 MR. JUSTICE SMYTH: This is a purchaser's specific performance action. It arises from an agreement in writing dated 28th January 2003 made between the Defendants and one Tom Pollard (In Trust) for and on behalf of the Plaintiff. The agreed purchase price was €3,900,000 in respect of which €195,000 was paid as a deposit. The closing date for the sale was 30th March 2005. The property in sale in known locally in Clonmel, County Kilkenny as "The Show Ground"; the property being sold excluded the property known as the Dog Track - which adjoins or is continuous to The show Ground - which had for some years earlier been transferred to Bord na gCon.

5 The contract was based on the General Conditions of sale (2001 Edition) of the Incorporated Law society of Ireland and was subject to a number of Special Conditions, of which numbers 5, 6 and 10 were central to this case. These provide as follows: -

"5. The property was subject to leases of 1st July 1931, 3rd October 1941 and 1st July 1944 between Clonmel Horse Show & Agricultural Society Ltd of the One Part and Thomas A. Morris & ors of the Other Part. The Lessees under the said Leases have long since vacated the property in sale. No surrender was ever completed by the parties. The terms devised under the Leases aforesaid have now expired. A declaration along these lines from Clonmel Horse Show & Agricultural Society Limited will be furnished if requested on closing. The Purchaser shall not require Surrender in respect of the said Leases.

6. The Purchaser is referred to Lease made 2nd August 1988 in favour of Clonmel Leisure Group Limited. The Lessees in respect of this Lease have vacated and surrendered the property. On or before the closing the vendors shall furnish a Surrender duly executed in respect of the said Lease.

8. (If) 'the sale to the Vendors herein has not closed no objection or requisition shall be raised by reason of the fact that the Vendors have not completed the sale to them or are not registered owners.

10. Not withstanding the title document schedule and the documents therein the vendor shall deduce fee simple title without burdens or restrictive covenants to the subject property on or before closing.'"

6 The evidence establishes that condition 10, which appears in manuscript form in the contract, was inserted at the behest of the Plaintiff with the consent of the Defendant Mr. Tobin (who is not only a Defendant but also the solicitor for the Defendants in the action and also is a controlling shareholder in Clonmel Leisure Group Limited) prior to the signing of the contract.

7 Clonmel Leisure Group Limited was a private limited liability company of which the three Defendants are shareholders, it came to have, through and arrangement with a Mr. Buckley, an interest in purchasing The Show Ground from the Clonmel Horse Show & Agricultural Society Limited ("the Society") which it is common case was a registered charity, and as such required the consent of the Commissioners of charitable Donations & Bequests for Ireland ("the commissioners") to dispose of its asset(s). The contract between Mr. Buckley and the Society was expressly made subject to the consent of the Commissioners.

8 The parties hereto have signed the contract of 28th January 2005, the Plaintiff's solicitors on 31st January sought documentation specifically in relation to special conditions 5 and 6 of the contract and title deduction pursuant to special condition 10. The response of the Defendants' solicitor - (the Defendant Mr. Tobin) - of 8th March 2005 was:

"We are not in a position to furnish the documentation, particularly in relation to Special Condition 5, 6 and 10."

9 It is common case that what was in sale was development land, and by 11th March the Plaintiff was at an advance stage of finalising a planning application, and negotiating with intended anchor tenants - this incidental matter was not proven in evidence but the letter of 11th March 2005 alluding to it was not disputed during the hearing by the Defendants. More pertinently, the Plaintiff's solicitor in that letter stated:

"Our client wishes to complete the sale on the closing date specified in the Contract. Under general condition 7 your client is obliged to furnish the documents referred to in the Documentation Schedule to the Contract. we don't understand as to why you would not be in a position to furnish these or those in Special Conditions 5, 6 and 7 to the Contract as you must have been in possession of same when the contract was drafted."

10 No response was forthcoming and on 4th April 2005 the Plaintiff served a Completion Notice on the Defendants' solicitor. The Defendants were in no doubt that the Plaintiff would pursue the contract through litigation if the Completion Notice was not complied, for a draft Plenary Summons and draft Statement of Claim accompanied the letter of 4th April 2005.

11 Issue was joined when the Defendants' solicitor by letter dated 20th May 2005 (inter alia) stated:

"We refer to the above matter and we would refer in particular to contract dated 28th day of January 2005. We take this opportunity to again remind you, as I did during the course of our telephone conversations, that we are not in a position to proceed with this sale as the Charitable Commissioners have not granted their consent to the purchase by our clients of the lands in question. On the presentation of the contracts in this matter to your goodself you inserted a special condition making the contract subject to devolution of a fee simple title, namely special condition number ten. By reason of the fact that the Charitable Commissioners have refused their consent, we are not in a position to satisfy that condition and the contract is therefore at an end. There is no question of any liability in respect of non performance resting on your clients in this matter."

12 It goes on as follows:

"In short this is quite simply a case of a contract being conditioned in respect of a particular issue that condition not being satisfied then in such an event the contract is at an end. If you wish to have this issue adjudicated by the High Court that is a matter entirely for yourself, but we would respectfully suggest that it is totally unnecessary...