O'Neill v Ryan (No. 3)
|01 January 1992
|01 January 1992
|[1990 No. 8240P]
Cases mentioned in this report:—
(1881) 19 Ch. D. 175; 51 L.J. Ch. 296; 45 L.T. 606.
 2 Ch. 249;  W.N. 88.
Contract - Mistake - Action - Written compromise offer - Construction at variance with offeror's intention - Objective construction - Reasonable interpretation - Effects - Whether contract void - Parol evidence of offeror's intention - Admissibility - Equity - Relief - Setting aside - Remedies - Rectification - Specific performance - Rescission - Exercise - Criteria.
Evidence - Contract in writing - Unambiguous terms - Mistake - Intentions of contracting parties - Parol evidence - Admissibility - Appreciation by offeree of offeror's mistake - Relevance.
Equity - Contract - Remedies - Specific performance - Exercise - Criteria - Company - Number - Oppression - Share purchase - Offer - Companies Act, 1963 (No. 33), s. 205.
The facts are summarised in the headnote and appear fully in the judgment of Costello J. post. Earlier chapters in the disputes between the parties to the present specific performance proceedings are reported in  I.R. 126;  2 I.R. 200;  1 I.R. 160. The term "Calderbank" letter derives from an English matrimonial case,  Fam. 93; see Foskett, The Law and Practice of Compromise, 2nd ed. (1985), p. 103et seq. The proceedings were heard on oral evidence by the High Court (Costello J.) on the 17th, 18th and 22nd January, 1991.
The defendants appealed by notice of appeal of the 6th May, 1991, to the Supreme Court from the judgment and order of the High Court. The appeal was heard before the Supreme Court on the 10th and 11th July, 1991. The judgments in the Supreme Court were delivered ex tempore and the judgments recorded below represent the stenographer's note of the judgments as approved by the judges.
The plaintiff owned 7.2% of the shares and was chief executive of Ryanair Ltd. of which the second, third and fourth defendants were major shareholders. Following his dismissal as chief executive he instituted two sets of proceedings in the High Court: a petition seeking relief from oppression under s. 205 of the Companies Act, 1963, in which all four defendants were named as respondents (1988 No. 8775P) and in which the relief sought was purchase by the respondents of his 7.2% shareholding at an enhanced price; and a plenary action claiming damages inter alia for conspiracy, fraudulent or negligent misrepresentation, and breaches of the competition rules of the European Economic Community (1988 No. 8774P) and in which the first defendant and Ryanair Ltd. were named with four other defendants. The plenary action included a claim for wrongful dismissal against Ryanair Ltd. By order of the High Court (Lynch J.) made on the 24th November, 1989, upon motion by the four remaining defendants in the plenary action, the action against them was dismissed under the rule in on the grounds that any right of action for protection of the value of the 7.2% shareholding was maintainable, if at all, by Ryanair Ltd. and not by the plaintiff: see . The order of dismissal against the remaining four defendants in the plenary action was appealed by the plaintiff to the Supreme Court but had not yet come on for hearing.
By a further notice of motion, the respondents in the s. 205 proceedings sought to have those proceedings consolidated with the plenary action together with liberty to amend their defences for the purposes of making a single lodgment in respect of both the s. 205 proceedings and the plenary action. On the 21st May, 1990, Blayney J. refused to order consolidation but directed that the proceedings and action be heard simultaneously and refused the making of a single lodgment for both the s. 205 proceedings and the plenary action: holding that the provisions of the Rules of the Superior Courts permitting lodgments related only to actions for damages at common law and not to claims for statutory relief from oppression under the Companies Act, 1963: see . At this stage in the s. 205 proceedings the plaintiff was represented by Messrs. K. a different firm of solicitors to those in the plenary action.
Three days later on the 24th May, 1990, a joint letter of offer on behalf of the solicitors for the first defendant and those for the remaining defendants was sent to Messrs. K. It was headed "Without prejudice except in relation to costs" and was further headed with the names of the four defendants, "Re: Eugene P. O'Neill, The High Court 1988 No. 8775P". It referred to the decision refusing them liberty to make a lodgment in the s. 205 proceedings and continued:—
"At paragraph 33 (e) and (f) of the petition your client requests the court to direct that the second named respondent or the third and fourth named respondent should be directed to purchase your client's 727,513 10p shares at a price of £24.35 per share. As we understand it your client claims this higher valuation on the basis that the court should take into account all of the matters put in issue by your client, with the exception of your client's claim for wrongful dismissal against the company."
The letter concluded with an offer to purchase the shares at £1.01 each for a total of £734,788.13 together with an offer to discharge the plaintiff's costs to date and warned that the offer was for seven days only and that if the court should later order the share purchase at a lower price then that letter would be used to support an application for further costs from the date of the letter. By letter of the 30th May, 1990, Messrs. K. accepted the offer and proposed a meeting on the 5th June for exchange of the share certificates for a bank draft. On the 1st June the two firms acting for the defendants wrote
"As was stated by your counsel and reiterated in our letter of the 24th May, 1990, your client's claim to be bought out of his shareholding at an enhanced valuation is made on the basis that the court should take into account each of the various matters alleged by your client in both proceedings. In making our offer we made it clear that we did so by taking these matters into account (with the exception of his claim for wrongful dismissal against the company) . . . [this] . . . requires something more than a mere execution of a share transfer form . . . in order to give effect to it . . . [which] might result in your client seeking to be compensated twice over for the same alleged wrongdoing. This would be patently absurd."
They suggested striking out both the s. 205 proceedings and the plenary action, other than the claim for wrongful dismissal, with costs in both to the plaintiff. On the 7th June, 1990, the plaintiff issued a plenary summons for specific performance of the share transfer agreement. At the trial the defendants argued that Messrs. K. had erroneously misunderstood the reasonable construction of an offer to settle both proceedings and that the parties were not ad idem and that then the court might take into account the subjective intent of the offerors when writing the letter.
Held by Costello J., in granting the plaintiff specific performance on the terms of the letter of the 24th May, 1990, in the manner accepted by his solicitors, 1, that having regard to the objective and reasonable construction of the words used in the letter together with the named respondents, record number and terminology appropriate to the s. 205 proceedings and the failure to specify an offer to discharge costs in both proceedings, that the letter could only be construed as an offer to settle the s. 205 proceedings alone.
2. That the intention of the defendants when making the offer had been to settle both the s. 205 proceedings and the plenary action.
3. That, on analysis of the offer and the acceptance, the agreement made did not come within the limited category of cases in which a shared common mistake as to the existence of the subject matter of the contract rendered the contract void at common law.
4. That the agreement would not be set aside in equity since the parties thereto were not under a common fundamental misapprehension either as to facts or as to their relative and respective rights which relief might further be refused if the party seeking it was himself at fault.
5. That the equitable relief of rectification of the written terms falsely recording true agreement by the parties did not arise; nor was there evidence that the plaintiff had entered into the written agreement in the knowledge that they contained a mistake as to the defendants' intentions.
6. That although the defendants might have been operating under some mistake when effecting the agreement, its terms of offer and acceptance did not suffer from such latent ambiguity that it was impossible reasonably to impute any agreement between them, or to prefer...
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