Sepia Ltd v M. P. Hanlon Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Costello
• Judgment Date: 23 January 1979
• Neutral Citation: 1978 WJSC-HC 529
• Docket Number: 3560 p /1977
• Court: High Court
• Date: 23 January 1979

1978 WJSC-HC 529

THE HIGH COURT

3560 p /1977

SEPIA LTD. v. M. P. HANLON

SEPIA LIMITED AND OPAL LIMITED

Plaintiffs.

and

M. & P. HANLON LIMITED AND SEABORN LIMITED

Defendants.

1 Judgment of Mr. Justice Costello delivered the 23rd day of January 1979.

Introduction

2 Moore Street and Moore Lane are two streets in the heart of the City of Dublin which run parallel to each other terminating at one end in Parnell Street and at the other in Henry Street. Some distance down from Parnell Street they are joined by a narrow public thorough are known as O'Rehilly Parada. The four roads, Parnell Street, Moore Street, O'Rahilly Parade and Moore Lane form a square in which a number of different premises are situated. This area figures largely in this case and I will refer to it as the "Parnell Street site". Portion, but only portion, of the Parnell Street site consisted of premises of which the first-named defendants had an interest, i.e. Numbers 61 - 62 Parnell Street; Numbers 13, 15-18 O'Rahilly Parade: Numbers 27 and 27s Moore Street; and Number 16 Moore Lane. These premises have been referred to throughout these proceedings as "Block A" and I will so describe them in this judgment. The defendant also own further property on the Henry Street side of O'Rahilly Parade: Number 21-25 Moore Street; Number 13-15 Moore Lane; Number 1-3 O'Rahilly Parade; and Number 1-2 Murray's Court. These have been referred to as "Block B" and I will continue so to describe them. The premises comprising both blocks, although old, were none the less of considerable value as they were situated in a part of the City of Dublin which for some time prior to the year 1974 had been considered ripe for re-development At the time of the contract of sale which are in controversy in this case most of them were occupied by the Defendants for the purposes of their businesses.

3 The plaintiff Companies carry on business as property developers. They are private Companies registered in the Isle of Man where the principal shareholder of these Companies resides. This action concerns a contract for the sale of Block A which the first-named plaintiff entered into on the 16th May 1974 and a second contract for the sale of Block B (a contract which also amended the terms of the first contract) on the 16th May 1975. The defendant Companies are also inter-related and I will, for case of reference, treat both plaintiffs and both defendants as being contracting parties to both contracts. It will be necessary to examine the terms of these contracts in more detail later in this judgment. For the moment and for the purpose of introducing the issue which arise in this case it is sufficient now to point out that in the events that happened the closing date in respect of both contracts became the 31st December 1976; by notice of the 7th April 1977 the defendants called on the plaintiffs to close both sales within three months and made time the essence of the contract; the sales were not closed and the defendants claimed to be entitled to retain the sum of £30,000 paid by the plaintiffs on the signing of the first contract and the sum of £25,000 paid on the signing of the second contract. The plaintiffs riposted by instituting these proceedings in which they have claimed a number of declaratory orders.

4 As to the first contract, the plaintiffs claim a declaration that it is a subsisting and binding contract and that the defendants are not entitled to forfeit the sum of £30,000. As to the second contract, the plaintiffs say that the first-named defendant impliedly undertook that satisfactory evidence of title to Block B would be produced in sufficient time to enable the plaintiffs to exercise the option contained in the contract; that the defendants failed to furnish any sufficient title; that there was a total failure of consideration for the payment of the sum of £25,000 and that it is accordingly repayable. In addition they plead that prior to the making of the second contract the first-named defendants expressly or impliedly warranted and represented that outline planning approval had been given to the first-named defendants for a scheme of development of a character and description similar to the scheme of development which the first-named plaintiff had intimated to the first-named defendants they had in mind for Block B; that there was a breach of warranty and a false representation made as the first-named defendants had not received any planning approval in respect of Block B. The Plaintiffs" principal claim in relation to the second contract is that it is a subsisting and binding one but in addition and in the alternative they say that the sum of £25,000 ought to be repaid to them as money paid on foot of a false representation or alternatively as money paid on a consideration which has wholly failed.

5 The defendants" defence was a denial of the plaintiffs" pleas and a counter-claim in which a declaration was sought that the defendants were entitled to treat the contracts as being at an end and they are entitled to retain the sums of £30,000 and £25,000.

6 It will be noted that the plaintiffs' original claim was for a declaration that the two contracts were valid and subsisting ones - no claim for an order that they be specifically performed was made. During the course of the hearing, however, (and for reasons which will become clear later) an application was made to amend the Statement of Claim by inserting a claim for specific performance of both contracts. I acceded to this application because (a) I did not consider an amendment would cause any serious prejudice to the defendants and (b) it was obviously desirable that all the issues in controversy between the parties should be tried together in these present proceedings. Thus, it is clear that the central issue in these proceedings is whether the contracts are valid and subsisting ones. If it is decided that they are, then the plaintiffs right to an order for their specific performance can be considered. If they are not, then the defendants" claim to the retention of the two sums of £30,000 and £25,000 can be examined and in this connection consideration can be given to the plaintiffs" claim as to the return of £25,000 which, as I have just pointed out, is based on an allegation of breach of warranty, misrepresentation and failure of consideration. And in the heart of the central issue lies the question of the reasonableness of the time fixed for completion of the contracts by the notice of the 7th April 1977.

7 As all the circumstances of the case must be taken into consideration in determining whether or not the notice was a reasonable one it will be necessary for me to review the salient facts of the history of the transactions between the parties. Before doing so, however, I should refer to the roles played by the parties' representatives to whom reference will be made. The plaintiffs employed a Company known as Manchester and District Properties Limited whose registered offices were in Manchester to act as their agents in the project. The Director in charge of it was Mr. Gradel. He was the decision-maker on the plaintiffs' side and was, in fact, very experienced in the business of property development having been involved in very substantial projects over many years in the Manchester area. In Dublin the Plaintiffs had the assistance of an auctioneer;. Mrs. Cooney, a Director of the firm of Messrs Archibald Corry and O'Connor. Mrs. Conney's task was to negotiate contracts for sale, not only with the defendants but also with other property owners in the area. Mr. David Keane was the plaintiffs' architect - his responsibility was to prepare plans in accordance with his clients' instructions for the development of a shopping complex and submit them to the Dublin Corporation for planning permission. Mr. Haynes and later Mr. Sexton, two partners in the firm of Messrs Holmes O'Halley and Sexton acted as solicitors for the plaintiffs. On the defendants" side negotiations were carried on on their behalf by Mr. Hardy, their Managing Director, and Mr. Rigney, who was the Company Secretary and Financial Controller. Mr. Fish, a partner in the firm of Messrs Arthur Cox & Co. acted as the defendants" solicitor. It is clear that both parties had: the benefit of experienced and highly qualified professional advisers.

The First Contract

8 Before turning to deal with the terms of the first contract I must refer to some of the events leading up to it for these have now assumed a considerable significance in this case. The plaintiffs were interested in acquiring as much property in the Parnell Street site as they could. Having received instructions the first contact which Mrs. Cooney made was not with the defendants but with a Mr. O'Sullivan whose Company had a lease-hold interest in Number 59 Parnell Street. At the end of January 1974 she concluded an option agreement for the purchase of this interest at a price of £130,000 (or £30 per square foot) - the option to be exercised by the following month of November. The option was not, in fact, exercised, with results which proved catastrophic from the plaintiffs" point of view and with which I will deal later in their proper chronological place. In January, however, Mr. O'Sullivan expressed a helpful attitude to Mrs. Cooney and her proposals for the development of the site and directed her to the defendants having advised her that they had an important holding in the site Mrs. Cooney met Mr. Hardy at the end of January and a general discussion took place concerning a possible purchase of the defendants" interest. Nothing very much turns on these preliminary meetings and I can pass from them with the comment that Mr. Hardy is a businessman who believes in leaving the legal aspects of his affairs to his lawyers and I do not think that he concerned himself with the nature of the tenure his Company enjoyed in the...