Taylor v Smyth

• Jurisdiction: Ireland
• Judge: Mr. Justice Lardner
• Judgment Date: 20 December 1988
• Neutral Citation: 1989 WJSC-HC 2490
• Court: High Court
• Docket Number: 4617P/1981
• Date: 20 December 1988

1989 WJSC-HC 2490

HIGH COURT

4617P/1981

TAYLOR v. SMYTH

BETWEEN

SIDNEY TAYLOR

PLAINTIFF

and

PHILIP SMYTH, KAPE INVESTMENTS LIMITED, CALLA ASSOCIATES LIMITED AND NORTHERN BANK LIMITED

DEFENDANTS

Mr. Justice Lardner

1 These proceedings concern a property known as Taylors Grange, situate near Rathfarnham, County Dublin, which prior to 1972 was owned by the Plaintiff in fee simple. By a lease dated the 18th of April 1972 it was demised, for a term of 21 years from the 1st of October 1971, subject to a yearly rent of £5,000 and the convenants and conditions therein contained, by the Plaintiff to Grange Hotel Company Limited (hereinafter called the Company), which was incorporated in that year with the object of carrying on the business of a hotel at Taylors Grange. The Plaintiff was at all material times beneficially entitled to 50% of the issued share capital of the Company. And the Company thereafter carried on the business of a hotel in the premises. By an Indenture of Mortgage dated the 28th of May 1973 the respective interests of the Plaintiff and of the Company in the property became charged with the payment of all moneys owing by the Plaintiff to the Fourth Defendant namely on the 8th of July 1974, £28,036.44. Subsequently, by two separate written guarantees dated the 25th of October 1972 and the 18th of December 1973, the Plaintiff guaranteed the repayment to the Fourth Defendant of all moneys up to certain amounts owing or to become owing by the Company to the Fourth Defendant with interest thereon as therein provided. By the 9th of July 1974 the Company owed the Fourth Defendant sums in excess of £40,000. In the month of August the Company was making losses and was in financial difficulties and on the 10th of August 1974 it entered into a written agreement with the First Defendant whereby he was put into possession of the premises known as Taylors Grange Hotel, as caretaker, upon terms that he should pay all the outgoings "attendant upon the hotel" and should be entitled to the income accruing therefrom for a period initially described as ending on the 12th of September 1974 and upon certain other terms which are not material. Since the 10th of August 1974 the First Defendant has continued in occupation and possession of this property where he has been carrying on the business of a hotel.

2 Then by a written agreement dated the 12th of September 1974 the First Defendant agreed to purchase for the sum of £40,000 from the Plaintiff the freehold of this property upon terms, inter alia, that the purchase was subject to the existing charge on the freehold in favour of the Fourth Defendant; that the First Defendant would cause the Fourth Defendant to release and indemnify the Plaintiff against all guarantees by him in respect of his own or the Company's indebtedness to the Fourth Defendant. Subsequently and before completion of this agreement by the First Defendant to purchase, by virtue of several instruments in writing dated the 25th of March 1975 the Second Defendant, a Company controlled by the First Defendant, acquired by assignment the Fourth Defendant's interest in the Mortgage dated the 28th of May 1973 and under the guarantees already referred to and thereupon the Second Defendant called upon the Plaintiff to pay to it the sums owing under the said Indenture of Mortgage and the said guarantees. Subsequently the above agreement of the 12th of September 1974 for the purchase of the property by the First Defendant was rescinded by an agreement in writing dated the 15th of April 1975 between the Plaintiff and the First Defendant upon certain terms and conditions not material to this action. The Plaintiff then on the 26th of September 1975 instituted proceedings entitled The High Court 1975 No. 3757P Between Sidney Taylor Plaintiff and Philip Smyth, Kape Investments Limited, and Northern Bank Limited Defendants in which he claimed, inter alia, that he had been induced to enter into the rescission agreement by certain false and fraudulent misrepresentations made to him by the First Defendant. The Plaintiff in that action claimed

3 (a) an injunction restraining the Second Defendant or any other Defendant from exercising any of the mortgage powers whether for sale or otherwise arising under or by virtue of the Indenture of Mortgage dated the 28th of May 1973;

4 (b) an indemnity from the First and Third Defendants against all claims by the Second Defendant on the foot of the said mortgage or on foot of either of the guarantees dated the 25th of October 1972 and the 18th of December 1973;

5 (c) damages against the First Defendant for misrepresentation and breach of contract

6 (d) damages against the Third Defendant for breach of contract.

7 The First and Second Defendants by their defence and the Third Defendant by their defence contested the allegations in the Statement of Claim and pleaded that it disclosed no cause of action against the Defendants. It is not necessary for the purpose of my decision in the present proceedings to give any more extended account of the issues raised by the pleadings in the 1975 action because that action was settled by a written agreement to compromise (hereinafter called "the Consent") signed on behalf of all the parties and dated the 20th of June 1980 and expressed to be made in the proceedings numbered High Court 1975 No. 5757P. As the present action directly relates to this compromise agreement, that is "the Consent", I must refer in some detail to its terms.

Clause 1 provided

"The Plaintiff shall sell and the First named Defendant (or his nominee) shall purchase the lands and premises at Taylors Grange in the County of Dublin now comprised in Folio 879F County Dublin which were the subject of the agreement for sale made between the same parties and dated the 12th September 1974. The property is being sold in fee simple subject to and with the benefit of the lease dated the 18th of April 1972 and made between Sidney Taylor of the one part and Grange Hotel Limited of the other part, for a term of 21 years from the 1st of October 1971, subject to the yearly rent thereby reserved and the convenants and conditions therein contained, but otherwise freed and discharged of all incumbrances including any claims of Thomas Taylor brother of the Plaintiff. The Plaintiff further agrees and undertakes to give his consent and do all other acts and things that may be necessary to enable the sale of the said leasehold interest in the said lands which has already been negotiated between the official liquidator of Grange Hotel Limited, and which has been approved by the Court, to proceed and to be carried through to completion. Such consent shall be given by the Plaintiff forthwith on payment by or on behalf of the First named Defendant to the Plaintiff's solicitors as stakeholder of the agreed deposit in respect of the purchase of the freehold interest in the said lands."

Clause 2 provided

"The First named Defendant shall pay to the Plaintiff the sum of £95,000 for the said lands and premises (one quarter of which said sum shall be paid by way of deposit to the solictiors for the Plaintiff pending completion of the sale), and in addition the First and Second named Defendants shall release and discharge the Plaintiff from all sums now due and owing by the Plaintiff to them or either of them and shall release all securities and guarantees held by them or either of them to secure payment of the said debts. The sale should be completed on or before the 15th of July 1980 when the balance of the purchase moneys shall become payable by the First named Defendant (or his nominee) to the Plaintiff. Should completion of the sale be delayed beyond that date by reason of any default on the part of the First named Defendant, interest on the amount of the purchase moneys for the time being unpaid shall become payable at the rate of 22% per annum from the date when it should have become due and payable but for such default as aforesaid until the date of payment."

Clause 3 provides

"Outgoings on the property to the date of completion (other than the rent reserved by the said lease of the 18th of April 1972) shall be payable by the First named Defendant. The Plaintiff waives and abandons all claims for arrears of rent under the said lease up to the present time and down to the date for completion of the sale of the property."

Clause 4 provides

"The Plaintiff and the First and Second named Defendants mutually agree to withdraw and discontinue all other proceedings now pending between them with no Order as to costs. The First and Second named Defendants accept responsibility for any fees and expenses of a receiver appointed on their application over the rents and profits of the lands."

Clause 5 provides

"The Third named Defendant acknowledges that no moneys are now due and owing to it by the Plaintiff."

Clause 6 provides

"The Plaintiff unreservedly withdraws all allegations of fraud misrepresentation or breach of contract against the Defendants and each of them."

Clause 7 provides

"All further proceedings in this action are to be stayed and suspended save as may be necessary for the implementation of these terms of settlement. Any party shall be at liberty to apply to the Court to receive this consent and liberty shall be reserved to all parties to apply to the Court as may be necessary."

Clause 8 provides

"On the implementation of the terms of the settlement as referred to in this consent this action to be dismissed as against all three Defendants, with no Order as to costs. Each party shall bear their own costs of this action and of all other proceedings which have hitherto taken place between them (including the costs of the issue tried in these proceedings in respect of which costs were awarded against the Plaintiff), and the First named Defendant waives his claim against the Plaintiff in respect of the amount awarded to him by...