Murphy & Mackin v Ryan & McGreevy Enterprises Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Kelly |
| Judgment Date | 24 June 2009 |
| Neutral Citation | [2009] IEHC 305 |
| Court | High Court |
| Date | 24 June 2009 |
[2009] IEHC 305
THE HIGH COURT
BETWEEN
AND
ANALOG DEVICES BV & ORS v ZURICH INSURANCE CO & ANOR 2005 1 IR 274 2005 2 ILRM 131 2005/2/242 2005 IESC 12
INVESTORS COMPENSATION SCHEME LTD v WEST BROMWICH BUILDING SOCIETY (NO 1) 1998 1 WLR 896 1998 1 AER 98
WOODS & ORS v MACKENZIE HILL LTD 1975 2 AER 170 1975 1 WLR 613
FARRELL IRISH LAW OF SPECIFIC PERFORMANCE 1994 PARA 1.06
O'NEILL v RYAN (NO 3) 1992 1 IR 166 1991 ILRM 672
FARRELL IRISH LAW OF SPECIFIC PERFORMANCE 1994 PARA 9.01
MOUNT KENNETT INVESTMENT CO v O'MEARA & ORS UNREP SMYTH 21.11.2007 2007/42/8875 2007 IEHC 420
DUFFY v RIDLEY PROPERTIES LTD & STOKES 2008 4 IR 282 2008/15/3221 2008 IESC 23
CONTRACT
Specific performance
Sale of land - Terms - Interpretation - Closing date - Completion notice - Whether completion notice valid - Relevant date - Whether plaintiff entitled to enforce contract - Whether specific performance appropriate remedy - Equitable principles - Analog Devices BV v Zurich Insurance Co [2005] IESC 12, [2005] 1 IR 274, O'Neill v Ryan (No.3) [1992] 1 IR 166, Mount Kennett Investment Co v O'Meara & ors [2007] IEHC 420, (Unrep, Smyth J, 21/11/2007) and Duffy v Ridley Properties Ltd [2008] IESC 23, [2008] 4 IR 282 applied; Investors Compensation Scheme Ltd v West Bromwich Building Society (No1) [1998] 1 All ER 98 and Woods v MacKenzie Hill Ltd [1975] 2 All ER 170 - Specific performance granted (2008/8910P - Kelly J - 24/06/2009) [2009] IEHC 305
Murphy v Ryan, McGreevy and McGreevy Enterprises
Facts: The plaintiffs claimed specific performance of a contract entered into with the first and second defendants in 2008 for the purchase of lands for a price of €16,500,000. The second defendant admitted that he signed the contract to help his friend without having seen the lands before. In 2006 an agreement had been reached and was then rescinded. A new contract for sale was entered into in 2008 and the purchase price was reduced and a smaller deposit of €400,000 was provided for in the contract, less than the first agreement. The remainder of the purchase price was to be paid in two tranches. There was a failure to comply with the terms of the new contract and a completion notice was served. The issue arose inter alia as to the validity of the completion notice served and whether the special conditions required the entire purchase monies to be paid on a specified date and against whom the specific performance notice could be served.
Held by Kelly J. That the defendants had entered into an unconditional contract without the necessary finance to complete it and they could not now walk away from their bargain. The plaintiffs were entitled to an order for specific performance as against the first and second named defendants. Specific performance would take place within 21 days from the date of the decision of the Court. It was not appropriate to grant a decree against the third defendant at this stage.
Reporter: E.F.
JUDGMENT of Mr. Justice Kelly delivered on the 24th day of June, 2009
The plaintiffs claim specific performance of a contract which they entered into with the first and second defendants on 25 th May, 2008. The contract provided for the sale by the plaintiffs of lands at Mullingar, County Westmeath to the first and second defendants for a purchase price of €16,500,000. The third defendant is joined in the proceedings as the guarantor of the payment obligations undertaken by the first and second defendants.
The background to the case is unusual. One of the more extraordinary features of it is the admission by the second defendant that he signed the contract in suit to help his friend the first defendant and without having seen the lands or indeed ever having been in Mullingar in his life.
On 19 th July 2006, the plaintiffs and the first defendant entered into a contract for the sale of the lands in suit for a purchase price of €18,000,000. The first defendant failed to honour his obligations on foot of that agreement and specific performance proceedings ensued. On 10 th December, 2007 the court was informed that those proceedings had been settled. That settlement was not honoured. Consequently, on 11 th February, 2008 the plaintiffs obtained a decree for specific performance of the contract of 19 th July, 2006.
Notwithstanding that decree, negotiations continued between the parties and the second defendant, who is a friend of the first defendant, arrived on the scene. These negotiations resulted in a further agreement being entered into on 25 th May, 2008.
Under the terms of this new agreement, the parties agreed to rescind the contract of 19 th July, 2006 with the deposit of €900,000 which had been paid thereunder being forfeited to the plaintiffs. A further contract for the sale of the property between the original parties but with the addition of the second defendant was executed. The original proceedings were, by consent, struck out and all orders made therein vacated.
On the same date (25 th May, 2008), a new contract for the sale of the land was entered into between the plaintiffs and the first and second defendants. The contract contained twelve special conditions and incorporated the Law Society of Ireland General Conditions of Sale 2001 edition.
On this occasion, the purchase price was reduced from the original €18,000,000 to €16,500,000. Unusually, a deposit of just €400,000 was provided for in this contract. The remainder of the purchase price was to be paid in two tranches. The first, the sum of €12,100,000 was to be paid on Friday, 25 th July, 2008. That is also the date which was described as the 'closing date' in the contract. The remainder, a sum of €4,000,000, was to be paid on Thursday 25 th September, 2008. These payment terms were contained in special condition 10.
The first and second defendants agreed to procure the obtaining of a valid and effective written guarantee from the third defendant guaranteeing payment of all sums due under the contract.
As the title to the lands was by then well known to the defendants, special condition No. 9 of the contract expressly acknowledged that replies to requisitions had been furnished, were confirmed by the plaintiffs and the defendants accepted that they would raise no further requisitions in relation to the lands.
Condition No. 11 provided as follows:-
"It is acknowledged that both the purchaser, Gerard McGreevy and Tom Ryan are jointly and severally liable for payment of all sums due under this contract. Title documents will be handed over on payment of €12,100,000 and this contract will remain valid and effective as regards the balancing payment of €4,000,000 and the purchaser shall in addition, as further security procure a valid and effective written guarantee from McGreevy Enterprises Limited complying with all Company Act (sic) Legislation in order to guarantee payment of all sums due under this contract. In this regard, Gerard McGreevy in his capacity also as Director of McGreevy Enterprises Limited and duly authorised officer on behalf of the Company, hereby agrees that McGreevy Enterprises Limited will provide said guarantee. In the event the sums due herein are not paid on time on the payment dates referred to, interest will accrue at the contract rate from the date the payment was due and the vendor shall be at liberty to refuse to complete if such interest is unpaid on the date of any late payment of the said principal sums."
Given the previous history, it is probably not surprising that yet again there was a failure to comply with the terms of this new contract. The €12,100,000 due to be paid on 25 th July, 2008 was not paid. On that date, a letter was written to the defendant's solicitors confirming that if the funds were not received on the due date, a notice to complete would be served on 30 th July. The letter pointed out that it should not be construed as an extension of the completion date but rather as a gesture of good will. It did not produce any result and so a completion notice was served.
On 30 th July, a completion notice in the following terms was served on the defendant's solicitors. It read:-
"Completion Notice
Vendors: Adrian Murphy and Seán Mackin
Purchasers: Tom Ryan and Gerard McGreevy
Premises: Lands at Ardmore Road, Co. Westmeath
In respect of the premises known as part of the lands at Ballinderry, barony of Moyashel, and Magheradernon in the County of Westmeath together with other premises being the premises more particularly described in memorandum of agreement dated 25 th day of May, 2008 made between Adrian Murphy and Seán Mackin (the vendors) and Tom Ryan and Gerard McGreevy (the purchasers) NOTICE is hereby given by the vendors that the vendors are ready, willing and able to complete the sale in accordance with the conditions contained in the said agreement dated 25 th day of May, 2008. NOTICE is hereby further given by the vendors that the vendors require the sale to be completed in accordance with the conditions in the said agreement and the vendors hereby call on the purchasers to complete the sale within a period of 28 days after the date of service of this notice and in respect of such period time shall be of the essence of the said agreement. The vendor hereby fully claims interest at the rate specified in the said agreement.
Dated this 30 th day of July, 2008"
The completion notice was not complied with and these proceedings were commenced on 30 th October, 2008.
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