Supermacs Ireland Ltd v Katesan (Naas) Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Geoghegan,HARDIMAN J.
• Judgment Date: 07 June 2000
• Neutral Citation: [2000] IESC 17
• Court: Supreme Court
• Docket Number: [S.C. No. 155 of 1999]
• Date: 07 June 2000

SUPERMACS IRELAND LTD & MCDONAGH v. KATESAN (NAAS) LTD & SWEENEY

BETWEEN

SUPERMAC'S IRELAND LIMITED AND PATRICKMcDONAGH

PLAINTIFFS

AND

KATESAN (NAAS) LIMITED AND PATRICKSWEENEY

DEFENDANTS

[2000] IESC 17

155/99

THE SUPREME COURT

Synopsis

Practice and Procedure

Practice and procedure; appeal from order of High Court dismissing defendant's motion to strike out plaintiff's claim as unsustainable and constituting an abuse of process of the court; plaintiff seeks specific performance of agreement with defendant to sell to plaintiff premises and business of certain fast food outlets; correspondence had been marked "subject to contract"; whether there had been a concluded oral agreement; whether such agreement enforceable pursuant to Statute of Frauds; whether agreement as to completion dates and deposit had been essential to full agreement; whether absence of agreement with regard to sitting tenant had been fatal to presence of a concluded agreement.

Held: Appeal dismissed; order of trial judge affirmed.

Supermac's Ireland Ltd. v. Kateson (Naas) Ltd. - Supreme Court: Hardiman J., Geoghegan J., Denham J. - 07/06/00 - [2000] 4 IR 273 - [2001] 1 ILRM 401

The plaintiffs had issued proceedings seeking a decree of specific performance against the defendants in relation to the sale of property. The defendants brought a motion seeking to have the plaintiffs' claim dismissed pursuant to the inherent jurisdiction of the court. The defendants claimed inter alia that as a deposit had not been agreed the plaintiffs' claim could not succeed. In the alternative it was claimed that there was no note in existence which would satisfy the Statute of Frauds. In the High Court the defendants' motion was dismissed and the defendants appealed. Geoghegan J, delivering judgment, there were issues involved in the case which should be argued out and tried at the action. It could not be said that the agreement in question could definitely not constitute a concluded agreement. The defendants' motion would be refused and the appeal dismissed. Hardiman J, delivering judgment, discussed the various grounds by which the defendants sought to have the claim dismissed. On mamy of the issues it could not be said that the plaintiff had no case. The appeal should be dismissed.

Citations:

RSC O.19 r28

BARRY V BUCKLEY 1981 IR 306

JODIFERN LTD V FITZGERALD UNREP SUPREME 21.12.1999

STATUTE OF FRAUDS 1695

BOYLE V LEE 1992 1 IR 555

FARRELL IRISH LAW OF SPECIFIC PERFORMANCE

SHIRLEY ENGINEERING LTD V IRISH TELECOMMUNICATIONS INVESTMENTS PLC UNREP GEOGHEGAN 2.12.1999

LYNCH V O'MEARA UNREP SUPREME 8.5.1975

BLACK V KAVANAGH 1974 108 ILTR 91

BARRETT V COSTELLOE UNREP KENNY 13.7.1973 (NOTED IN 1973 107 ILTR 239)

GODLEY V POWER 1957 95 ILTR 135

VAN HATZFELDT WILDENBERG V ALEXANDER 1912 1 CH 284

1 JUDGMENT OF HARDIMAN J.delivered the 7th day of June 2000

2 This is an appeal from the Order of the High Court (Macken J.) of the 15th March 1999 whereby the Defendants Motion to strike out the Plaintiffs claim on the ground that it was unsustainable and amounts to an abuse of the process of the Court was dismissed.

3 This Order was sought under Order 19 Rule 28 of the Rules of the Superior Courts and, independently, under the inherent jurisdiction of the Court. At the hearing of this appeal, however, the claim to relief grounded on Order 19 Rule 28 was not pursued.

The Proceedings

4 By Plenary Summons issued the 22nd May 1988 the Plaintiffs claim specific performance and certain declaratory and ancillary reliefs. In the Statement of Claim of the 25th November 1998, the essential claim is set out at paragraph 6 as follows:

"By an agreement in writing and/or evidenced in writing dated the 7th November 1997 hereinafter referred to as the agreement) and varied in or about 14th November 1997 and made between the second named Defendant acting on his own behalf and on behalf of the first named Defendant of the one part, and the second

named Plaintiff acting on his own behalf and/or on behalf of the first named Plaintiff of the other part, the second Defendant agreed, inter alia, to sell to the first and/or second named Plaintiffs the various fast food outlets identified at paragraph 5 hereof, the businesses pertaining thereto and the premises for an aggregate consideration of £4,000,000."

5 It appears that the Plaintiffs ran a restaurant franchising business in the course of which it entered into franchise agreements with individuals or companies, allowing them to operate fast food restaurants under the name "Supermac's". The first named Defendant operated a number of such restaurants from premises which it owned in Loughrea, Thurles, Roscrea, Tullamore and Kilkenny. In 1997 there were negotiations between the Plaintiffs and the Defendants with a view to the purchase of the restaurant properties. The Plaintiffs were also interested in buying premises in Naas which were not in fact in operation as a restaurant but which had planning permission for that use. These premises were occupied by a sitting tenant. The first named Plaintiff was the franchisor in all cases except that of the Naas premises and each premises was operated under a separate franchiseagreement.

6 The background to the proposed purchase seems to have been a dispute between the parties arising from the fact that the Defendants became involved in a major restaurant operation known as "MotherHubbards Roadside Restaurant" at Moyvalley, Co. Meath. ThePlaintiffs were of the view that this was a breach of their obligations as franchisees and that the new premises would undoubtedly end up in direct competition with the franchised business.

7 It also appears that the Defendants had purchased the premises in Naas and had applied for a further Supermac's franchise to be operated from it sometime in the year 1996 but that no such agreement had actually been completed, by reason of the dispute summarised above.

8 It also appears that the purchase negotiations were facilitated by Mr Michael Chambers who was formerly a Bank Manager and is now a professional mediator. This gentleman was introduced into the transaction by the second named Defendant, Mr Patrick Sweeney. The latter says in his affidavit "at all times my understanding was that the goal of this mediation process was to work out an agreement in principle which would then be implemented following detailed negotiations between the parties respective solicitors".

The Agreement and Variation

9 The agreement sued upon is pleaded as being an agreement of the 7th November 1997 subsequently varied on the 14th November 1997. The document of the 7th November headed "Paddy Sweeney and Pat McDonagh, headings of agreement". It is a typewritten document which has a space for the signature for both Mr McDonagh and Mr Sweeney but it is in fact signed only by Mr Chambers. On the hearing of this appeal Mr Cush S.C. conceded that it had to be assumed for the purpose of this motion that Mr Chambers was acting as the Defendantsagent.

10 This document recites that:

"Paddy has agreed to sell his freehold premises at Roscrea, Co. Tipperary, Thurles, Co. Tipperary, Loughrea, Co. Galway and Naas, Co. Kildare together with his leasehold premises at Tullamore, Co. Offaly and Kilkenny, Co. Kilkenny to Pat McDonagh."

11 It goes on to make various other provisions some of which are clearly directed to the orderly handing over of the business as a going concern. It provides for consideration under five separate headings totalling£4,000,000. In this document £1,940,000 is attributed to the properties and £1,390,000 to the goodwill. The variation document attributes a specific price to each property making an increased total of £2,875,000 in respect of property only. Other items however are adjusted leaving the overall consideration at £4,000,000. In relation to the Naas premises specifically the sum of £370,000 is ascribed. Other terms are substantially the same though there is an additional note about confidentiality and a hand over period of two years is envisaged. Part of the consideration is a consultancy fee payable to the Defendants "to ensure smooth transfer of thebusiness". This second document is not signed by anyperson.

12 It is undisputed that the sale of the other five premises has beencompleted.

The Present Motion

13 By their present Motion the Defendants assert that the proceedings are unsustainable. It is said they amount to an abuse of the process of the Court and should be struck out in the exercise of the Court's inherentjurisdiction.

14 There was no dispute between the parties as to the legal principles to be applied in considering this Motion. These have been extensively set out in the judgment of the learnedtrial judge and I need only say that I agree with what she says. The position is aptly summarised in Lac Minerals v Chevron Corporation (1995) ILRM 161 as follows:-

"The Judge acceding to an application to dismiss must be confident that no matter what may arise on discovery or at the trial of the action the course of the action will be resolved in a manner fatal to the Plaintiffs contention."

15 This clearly, is a very difficult hurdle for the Defendants toclear.

16 On behalf of the Defendants, Mr Cush S.C. put his case with incisive brevity. He submitted that there was no concluded oral agreement between the parties and that, even if there was a concluded oral agreement, it is unenforceable because there is no sufficient note or memorandum to satisfy the Statute of Frauds. He says that the parties, in the persons of Mr Sweeney and Mr McDonagh had got together with a professional mediator to work out an agreement in principle but no more than that. The entire history of the transaction, he says, has to be read against the background of the correspondence between the solicitors all of which is marked "subject to contract".

17 More specifically, Mr Cush submits...