Prunty v Crowley
| Jurisdiction | Ireland |
| Judge | Ms. Justice Iseult O'Malley |
| Judgment Date | 30 May 2016 |
| Neutral Citation | [2016] IEHC 293 |
| Court | High Court |
| Docket Number | [2012 No. 169 CA] |
| Date | 30 May 2016 |
[2016] IEHC 293
THE HIGH COURT
O'Malley J
[2012 No. 169 CA]
AND
Contract – Breach of contract – Specific performance – Past performance – Estoppel – Unconscionable bargain
Facts: The plaintiff had filed an appeal against the order of the Circuit Court for compelling the defendant (deceased) for specific performance of a contract entered into between the plaintiff and the said defendant. The plaintiff contended that he had discontinued his claim of specific performance of a contract against the developer upon assurance by the said defendant that he would take over the said contract by which the developer agreed to purchase the relevant site from the plaintiff. The first named defendant had filed a counterclaim for return of money deposited into the account of the plaintiff's solicitors, which was credited by the developer into the account of the said defendant.
Ms. Justice Iseult O'Malley granted an order for specific performance in favour of the plaintiff. The Court held that the letter by the solicitors of the said defendant to the effect that if the plaintiff would surrender his claim against the developer, he would be entitled to a specific sum of money amounted to a concluded contract. The Court observed that the use of the term ‘subject to contract’ in an agreement by a party would operate as proprietary estoppel, if the other party had acted on the representation of that party to his detriment and on the belief that ‘subject to contract’ agreement would be relied upon. The Court found that the plaintiff had had acted contrary to his interests by withdrawing a strong case against the developer who was contracting on behalf of a partnership of which the said defendant was a member.
This is an appeal from an order of the Circuit Court in relation to a claim for specific performance. It turns on the status of contractual negotiations between the parties, for the sale of a property belonging to the plaintiff, and on the effect of certain steps taken in the course of those negotiations.
The plaintiff's case is that the correspondence evidences a concluded contract. The doctrine of part performance is also relied upon, because of the fact that the plaintiff abandoned a claim against another individual, allegedly at the request of the first named defendant. It is also argued that the defendants are estopped from denying the existence of a contract on the basis that it would be unconscionable were they to do so.
The background to the case was a proposal to develop a new shopping centre in Longford town. Those involved in the project included the defendant, Mr. Crowley, who was an architect and is now deceased, and Mr. Clem Kenny, a developer. The hope at the time was that Dunnes Stores would invest a sum of around €12 million in the development. Mr. Crowley, who acted as architect and also put some of his own money into the project, is said to have had good contacts with key personnel in that firm.
According to the uncontradicted evidence of Mr. Kenny, Mr. Crowley's role was to act as architect to the development on a no-foal-no-fee basis. He was also to provide the money for the deposits necessary to purchase the lands needed for the site.
The plan to assemble a site for the shopping centre envisaged, amongst other aspects, the acquisition of certain properties in the town including three adjacent residential properties. One of these was a house belonging to a Mr. Stokes, who was agreeable to disposing of his home but wanted a house to be built on a particular site in exchange. The site, which is outside the town and was not part of the development plan, belonged to the plaintiff. The plaintiff was agreeable to the sale of his property. He says that Mr. Kenny executed a contract with him in 2004, and he and Mr. Kenny both say that in so doing Mr. Kenny was purchasing in trust for himself and Mr. Crowley. The price agreed was €110,000 and a deposit of €11,000 was paid.
Mr. Kenny did not complete the purchase and the plaintiff commenced specific performance proceedings against him in the High Court in February, 2005.
Mr. Crowley and Mr. Kenny fell out, and the plaintiff says that he was contacted by Mr. Crowley with an offer to take over the contract. Mr. Crowley proposed, and the plaintiff agreed, that the plaintiff should serve a notice of forfeiture on Mr. Kenny and discontinue the proceedings against him. This was done (at least to the extent that the solicitor thought that he had filed a notice of discontinuance, gave notice that he had done so and did serve a notice of forfeiture), and the deposit paid by Mr. Kenny was then credited to Mr. Crowley for the purposes of the sale.
The balance of the purchase monies, amounting to €99,000, was subsequently transferred by Mr. Crowley's solicitor to the plaintiff's solicitor.
Meanwhile, one of the other property owners whose site was required for the proposed development decided that she did not want to sell her house.
Mr. Crowley's solicitor subsequently wrote to the plaintiff denying that there was any contract. A counterclaim in these proceedings seeks the return of the money.
The contract with Mr. Kenny
In late July, 2004 Mr. Mark Connellan, the plaintiff's solicitor, received a sales advice note from a firm of auctioneers on foot of which he prepared the documentation for the sale of the plaintiff's house. The proposed purchaser was ‘The Blayney Partnership’, with an address care of Keans Solicitors in Dublin. The purchase price was €110,000 and a booking deposit of €5,000 had already been paid. It was requested that the sale be closed as quickly as possible.
It is common case that the agreed price represented the market value of the property and was in no sense a ‘ransom’ price.
On the 3rd August, 2004, Mr. Connellan wrote to Mr. Donal King at Keans, enclosing various documents relating to the property and contracts in duplicate. Mr. King responded with certain queries, in a letter headed ‘Subject to contract/contract denied’ which contained a statement that the firm had no authority to bind its client and that the letter was sent without prejudice and strictly subject to formal exchange of contracts.
Correspondence continued over the next few weeks. All letters from both solicitors continued to be headed ‘Subject to contract/contract denied’.
On the 7th September, 2004, Mr. Connellan wrote a letter in which he said that unless he received a signed contract with the balance of the deposit by close of business on the following day his client would sell the property to another interested party.
The following day Mr. Connellan received an email from a Mr. Michael J. Blayney of the Blayney Partnership. This gentleman said that he had assured the plaintiff earlier that day that it was still proposed to acquire the property at the agreed price. He apologised for what he termed a ‘hiccup’ and said that he hoped to sign the contract on the next day.
Ultimately, Keans forwarded a signed contract, dated the 23rd September, 2004, and a deposit cheque in the sum of €11,000 under cover of a letter dated the 22nd September, 2004. The letter was headed ‘Subject to contract/contract denied’. There was a request for a reply to the non-title queries and for one part signed contract.
The contract refers to the plaintiff as the vendor. The purchaser appears to have originally been described as ‘The Blayney Partnership’ (in typewriting) but this was crossed out and the words ‘Clem Kenny (in trust)’ were written in by hand. The document was signed ‘Clem Kenny (in trust)’. Mr. Connellan said in evidence that he knew who Mr. Kenny was, and that at that stage he knew why the property was being acquired.
The closing date was to be four weeks later.
Mr. Connellan replied on the 29th September, 2004, enclosing the contract as signed by the plaintiff together with the replies to the requisitions.
The closing date came and went. After further correspondence Mr. Connellan served a completion notice on Keans under cover of a registered letter dated the 22nd November, 2004. Clause 4 of the notice stated that if the sale was not completed, and the balance of the purchase monies plus interest paid, within twenty-eight days, the deposit would be forfeited and the vendor would either rescind the contract or re-sell the property.
On the 7th January, 2005, Mr. Connellan wrote to Keans observing that the completion notice had expired. He noted that Mr. Kenny had signed the contract in trust, and called for identification of the principal. This letter was described in evidence by Mr. Connellan as an attempt by him to ratchet up the pressure, in that he could not have forfeited the deposit without serving a formal forfeiture notice.
The letter, and follow-up correspondence, was not responded to and on the 21st February, 2005, Mr. Connellan sent a plenary summons to Keans, inquiring whether they had authority to accept service. The proceedings sought an order for specific performance against Mr. Kenny.
On the 7th March, 2005, Mr. Gerald Kean, the principal of Keans Solicitors, sent a fax to Mr. Connellan in which he said that his clients were proceeding to complete the purchase. He apologised for the delay and asked Mr. Connellan to send him an apportionment account. He said that he would arrange for the funds to complete the purchase without any further problems.
Mr. Connellan responded on the 10th March, 2005. He said that he awaited requisitions and...
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