BETWEEN
JUDGMENT of Mr Justice McCracken delivered the 28th day of July 1999
1. This Motion seeks an Order striking out these proceedings either pursuant to Order 19 Rule 28 of the Rules of the Superior Courts or pursuant to the inherent jurisdiction of the Court. In either case, the Defendants claim that the Plaintiff cannot succeed in these proceedings, and expressly accept that if there is any possibility of success, the Plaintiff is entitled to continue its action. Before considering the facts of this case, I think it well to set out the circumstances on which the Court has power to strike out proceedings.
2. Order 19 Rule 28 of the Rules of the Superior Courts Rules provides:-
"The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, orjudgment to be entered accordingly, as may be just."
3. In addition to the specific rule, there is an inherent jurisdiction in the Court to ensure that there is no abuse of the process of the Court.
In Barry v. Buckley (1981) I.R. 306, which, like the present action, was an action for specific performance, Costello J. said at page 308:-
"The jurisdiction should be exercised sparingly and only in clear cases; but it is one which enables the Court to avoid injustice, particularly in cases whose outcome depends on the interpretation of a contract or agreed correspondence. If, having considered the documents, the Court is satisfied that the Plaintiff's case must fail, then it would be a proper exercise of its discretion to strike out proceedings whose continued existence cannot be justified and is manifestly causing irrevocable damage to a Defendant."
4. That case was considered, although not expressly approved, by the Supreme Court in Sun Fat Chan v. Osseous Limited (1992) 1 I.R 425. In commenting on Barry v. Buckley, McCarthy J. said at page 428:-
"Generally, the High Court should be slow to entertain an application of this kind and grant the relief sought.
Experience has shown that the trial of an action will identify a variety of circumstances perhaps not entirely contemplated at earlier stages in the proceedings; often times it may appear that the facts are clear and established but the trial itself will disclose a different picture. With that qualification, however, I recognise the enforcement of a jurisdiction of this kind as a healthy development in our jurisprudence and one not to be disowned for its noveltythough there may be a certain sense of disquiet at its rigor. The procedure is peculiarly appropriate to actions for the enforcement of contracts, since it is likely that the subject matter of the contract would, but for the existence of the action, be the focus of another contract."
Barry v. Buckley was also considered and more expressly approved of by the Supreme Court in O'Neill v. Ryan (1993) ILRM 557, and was very recently considered by Macken J. in Supermac's (Ireland) Limited and Another v. Katesan (Naas) Limited and Another (unreported 15th March 1999). In her judgment in that case Macken J. distinguishes between the two types of relief, and points out that relief under Order 19, Rule 28, can only be obtained if it is clear that no case can be established purely on the pleadings. On the other hand, the approach when considering the inherent jurisdiction is set out by her at page 5 of thejudgment as follows:-
"Turning now as to the question as to whether or not the Defendants are entitled to have their relief relying on the inherent jurisdiction of the Court, when one is considering a claim of this nature based on the inherent jurisdiction of the Court, it is permissible for affidavit evidence to be filed. A number of affidavits have been filed, and although there are several conflicting elements in the affidavits there are certain principles which MrButtonshaw has correctly acknowledged and conceded, including the fact that I must assume:-
(a) That every fact pleaded by the Plaintiffs in their Statement of Claim is correct and can be proved at trial; and
(b) that every fact asserted by the Plaintiffs in their affidavits is likewise correct and can be proved at trial.
This particular approach which is adopted as being the correct approach in all of the cases in which affidavit evidence has been adduced, does mean that, in so far as there may be conflict between matters averred to by the Plaintiffs and the Defendants in their respective affidavits, such conflicts must be, at least for the purposes of this application, resolved in favour of the Plaintiff."
5. I entirely agree with her and would adopt this analysis of the position.
6. The Plaintiff's claim in the present case is stated in the Plenary Summons to be:-
"Specific performance for an agreement for sale made in or around the 20th January 1999 between the Plaintiff (acting through his agent Thomas Coughlan) of the one part, the Defendants of the other part whereby the Plaintiff agreed to purchase and the Defendants agreed to sell ALL THAT the lands at Ballinvriskig, White's Cross, in the County of Cork comprising approximately 111 acres or thereabouts for the total price or sum of [sterling]2,000,000."
7. In the Statement of Claim there is no contract of 20th January 1999 pleaded, but rather it is said at paragraph 3:-
"By two agreements in writing made in or around the month of November between the Plaintiff through its agent, Thomas Coughlan of the one part and the Defendants of the other part, the Defendants agreed to sell and the Plaintiff agreed to purchase ALL THAT part of the lands comprised in Folio 10845 of the Register of Freeholders, County of Cork comprising approximately 111 acres or thereabouts and as therein identified for the total price or sum of[sterling]2,000,000".
8. Obviously, on the wording of the Statement of Claim, it cannot be said that the Plaintiff's claim could not succeed, as it is pleaded that there were two agreements in writing. However, a considerable amount of Affidavit evidence has been filed which show that while two documents exist, they are described in the correspondence as"pro forma agreements". It is the Defendant's contention that, notwithstanding the existence of these documents, there never in fact was a completed contract between the parties and furthermore, even if there was such a completed contract, it was not the contract set out in those documents, and that any written evidence of any such agreement can only be contained in correspondence from the Defendants Solicitors which was always headed "subject to contract/contract denied".
9. There is very little dispute on the facts between the parties, as virtually the entire negotiation was carried out in correspondence, all of which has been exhibited. It would appear that prior to 8th July 1998 there was contact between the parties, and the possibility of a sale of these lands by the Defendant to ThomasCoughlan or some person nominated by him was discussed. The correspondence between the Solicitors commences on that date with the a letter from the Plaintiff's Solicitor to the first Defendant alleging that terms had been agreed in principle, subject to formal contracts for sale, for the sale of the land for[sterling]1,500,000. It rapidly became clear, however, that this was far from an agreed price, and ultimately the Plaintiff's Solicitor wrote to the Defendants' Solicitors on 23rd September 1998 saying:-
"Following our letter of the 5th August last, we understand that our clients have had further discussions. The matter has now been agreed as follows:
'Our client will acquire from your client the entire of your clients lands, excluding only the bungalow of Mr Patrick Fitzgerald Senior, together with the curtilige surrounding same, for a consideration of two million pounds ([sterling]2,000,000).
We understand that you have instructions in this regard and, accordingly, await draft contracts for sale at your convenience, and oblige.
We confirm that your clients offer to purchase does not include your clients milk quota'."
10. This letter was headed "subject to contract/contract denied".
11. In response to this, by letter dated 30th October 1998, again headed "subject to contract/contract denied" the Defendants Solicitors sent a draft contract with a certified copy of the relevant folio as follows:-
" We would be obliged if you would have the contract signed by your client and returned to us, together with cheque for [sterling]200,000 in payment of the deposit".
12. On 19th November 1998 the Plaintiff's Solicitors wrote back with comments on a number of special conditions in the draft contract, and on 25th November the Defendants' Solicitors wrote saying that the Defendants Taxation Advice indicated that the transaction should be divided into three separate contracts, namely, one for development land, one for agricultural land and one for the house and yard. Again, this correspondence was headed by both parties"subject to contract/contract denied".
13. There then was a telephone discussion between the Solicitors arising out of the fact that the budget proposals were about to be announced, and it was feared that the rate of capital gains tax would be increased, which would of course adversely affect the position of the Defendant as vendor. As a result of this, the Defendants' Solicitor drafted two contracts, one dealing with development land and the other dealing with the remainder of the lands and sent these to the Plaintiff's Solicitor under cover of a letter dated 30th November 1998, which states as follows:-
"SUBJECT TO CONTRACT/CONTRACT DENIED
Re: Our client Patrick G Fitzgerald, Junior
Your client Mr Thomas Coughlan B.E. (In Trust)
Property: circa 111 acres at Ballinvriskig, White's Cross.
Dear Ray,
I refer to my telephone discussion with you and I now enclose herewith two contracts splitting the development land from the remainder of the property.
I confirm that these are pro forma contracts which, although signed by the parties, will not come into effect until both you and I agree that that should be the case. It may well be that some alterations may be negotiated to the contracts before the matter is finalised.
As you are aware it is important that the contracts be signed and dated before tomorrow. I will therefore need to get the contracts back from you duly signed by lunch time tomorrow to facilitate the execution thereof by my client.
If you have any queries please do not hesitate to contact me.
Yours sincerely".
14. These contracts were in fact both signed by the respective Solicitors rather than by the parties, but it is acknowledged that both Solicitors were authorised by their respective clients to sign the contracts. Although the contracts were apparently signed on 1st December, no deposit was paid at that time.
15. In spite of these pro forma contracts, negotiations continued between the parties. On 18th December 1998 the Plaintiff's Solicitors wrote to the Defendants' Solicitors referring to telephone conversations between them and setting out the matters which had been discussed. This letter, notwithstanding the pro forma contracts, was also headed"subject to contract/contract denied". I think it is important to set out this letter in full, as it would appear clearly to imply that the parties were still at the negotiation stage. It reads:-
"Dear Sirs,
Following on the writer's telephone conversation with your Mr O'Flynn, Solicitor, on Tuesday of this week, the principal matters which we mentioned are as follows:-
1. That the arrangement for your client to remain on in possession of the lands not immediately required would be by way of Caretakers agreement, which agreement would incorporate a clear and reasonable provision of adequate notice for your client to vacate.
2. That there would be, on execution, the payment of the appropriate deposit of [sterling]200,000 which deposit would not be conditional upon the purchaser obtaining a grant of planning permission. Howsoever, the proposed closing date would be May or June of next year, and the proposed purchaser would, in the meantime, be permitted to lodge an appropriate application for planning, which application would probably be capable of being submitted to Cork County Council by the middle of January 1999.
3. The contract would provide that, should your client secure an alternative farm in the meantime and require funds to complete such acquisition, then your client would serve on the purchaser notice of the necessity for those funds on whatever particular date would be applicable for your client's proposed closing of his new farm, and those funds required to enable your client to complete the acquisition would then be paid on the date stipulated in your client's notice, with the balance, per our client's contract, being paid in the normal way on the stipulated closing date.
4. In addition should your client require deposit funds for the purchase of his new holding on or before the closing date stipulated in our clients' proposed contract, then your client will be permitted to use that portion of our client's deposit necessary to pay the deposit on the execution of the contracts for the purchase of your clients new agricultural holding.
The foregoing proposal does not seek nor intend to make the proposed agreement for sale between our clients subject to planning. Needless to say, in the event of our client not completing, then your client would be at liberty, per the normal conditions of sale, to exercise those provisions which would enable him to forfeit our client's deposit if our client defaulted in the manner stipulated in the draft agreement for sale. In addition, your client would, of course, have the benefit of the granted permission which our client will have obtained.
It is in respect of these matters that we have respectfully asked you to take your clients instructions and revert back to us in early course.
We hope we have adequately set out our client's position, and await hearing from you.
Yours faithfully".
16. I think this letter and the negotiations which preceded it, must be considered in the light of the fact that the budget proposals in December 1998 did not in fact increase capital gains tax, and therefore the necessity for two separate contracts did not arise. I think the only possible construction which could be taken out of this letter is that the Plaintiff's Solicitors are negotiating new terms in relation to a new contract to be executed in the future.
17. For example, the pro forma contracts refer to a right of residence over a small portion of the lands, while this proposal refers to a caretaker's agreement for such of the lands as are not immediately required. Furthermore, the closing date is to be May or June 1999 rather than January of 1999, and at paragraph 2 there is a reference to the payment of the deposit"on execution". If it was intended simply to be an amendment of the pro forma contracts, they of course had already been executed. Further, paragraph three commences "the contract would provide", again anticipating a contract in the future, and introducing totally new provisions in relation to the release of some of the purchase money, and in paragraph 4, of the deposit, to the Defendant. The letter then states that it does not intend to make"the proposed agreement for sale" subject to planning and asks the Defendants' Solicitors to take instructions.
18. On 23rd December 1998 the Defendants' Solicitors wrote back, yet again with the heading "subject to contract/contract denied" introducing a totally new term. This letter is also of considerable importance and reads:-
"We are in receipt of your letter of the 18th inst., herein. Our client is prepared to favourably consider your client's proposal subject to agreement on the duration of the caretaker's agreement, but has one major concern which would have to be eliminated.
The concern is that if our client enters into a contract to purchase an alternative farm, and pays the deposit thereon from the [sterling]200,000 held, if your clients are unable or unwilling to furnish the balance of the purchase price for the alternative farm when the sale is due to be completed, our client will be in danger of forfeiting his own deposit on the transaction and/or being sued for specific performance. We would be obliged if you would consider the point and indicate whether your clients could furnish our client with any guarantee as to the availability of funds so that our client will be certain that if he does contract to buy out an alternative farm your clients will be in a position to provide him with the total funds required to complete the purchase.
Please consider the foregoing and revert to us as soon as possible".
19. On 12th January this was replied to by the Plaintiff's Solicitor, again in a letter headed: "subject to contract/contract denied", in which he says:-
"Dear Sirs,
Thank you for your recent letter. Thank you for your client's consideration as set out in paragraph one.
The concern raised by your client in paragraph 2 is understandable. We have put this position to our client and believe we will be in a position to give the appropriate 'comfort' in the very near future.
We will get back to you very shortly.
Yours faithfully".
20. On 20th January the Plaintiff's Solicitors did indeed get back to the Defendants Solicitors saying:-
"Dear Sirs,
Our client has instructed us to forward to you deposit cheque for [sterling]150,000 in respect of the agreement herein, which payment is made subject to incorporation of those conditions in the contract for sale, as more particularly set out in our letter to you of the 18th December 1998.
We would welcome receipt of further draft special conditions incorporating the foregoing, for approval and signature by the purchaser.
Yours sincerely".
21. This is the first time during the entire correspondence that a letter is not headed "subject to contract/contract denied". This letter is, of course, a letter from the Plaintiff's Solicitor, and therefore is of no use to him as a note or memorandum of a contract for the sale of land as required by the Statute of Frauds, nor does it deal with the question of the availability of funds. It is replied to on 25th January by the Defendants' Solicitors, who again stated that their letter is"subject to contract/contract denied" and which points out that the Plaintiff has not given the appropriate comfort referred to in their letter of 12th January. On 29th January the Plaintiff's Solicitors forwarded a document from ICC Bank stating they were at present processing a loan application, and this was replied to by the Defendants' Solicitors on 1st February, with the same heading, saying that they were awaiting the outcome of the loan application and emphasising:-
"You will understand that it is absolutely crucial to our clients that they will have the certainty of being able to obtain funds from your client in the event of our clients contracting to purchase an alternative farm. We therefore look forward to hearing further from you".
22. This letter also introduced a new matter dealing with a way-leave in favour of Bord Gais Eireann, although I do not think that this is of any particular relevance. On 16th February the Plaintiff's Solicitors state that their client has received confirmation of appropriate facilities from ICC Bank and continue:-
"May we please have your confirmation that this matter can proceed along the lines of our letter. On receipt of that confirmation, our client will be in a position to lodge the planning application".
23. The Defendants' Solicitors wrote back on 17th February seeking evidence of the facilities being provided. This letter also stated that the Plaintiff has no authority to lodge any planning application until such time as contracts have been signed. On the 19th February the Plaintiff's Solicitors wrote another important letter. It reads:-
"YOUR CLIENTS:- Mr and Mrs Patrick Fitzgerald
OUR CLIENTS:- Mr Thomas Coughlan BE (In Trust)
Re Lands at Ballinvriskig, White's Cross, County Cork.
Dear Sirs,
In respect of this matter:
Contract for Sale
1. In respect of the vendor's request to be entitled to stay on in possession of the lands not immediately required, our client is happy to proceed on the basis that this will be by formal caretaker's agreement, which agreement will incorporate a reasonable provision of adequate notice for your client to vacate and in this regard, we suggest a period of two calendar months.
2. The deposit paid to date is acknowledged by the vendor to have been paid unconditionally, save only for title, requisitions on title etc and specifically has not been paid conditionally upon the purchaser obtaining a grant of planning permission. In consideration of the foregoing the closing would be the 30th of June 1999. The purchaser is in the meantime permitted to lodge an appropriate application for planning. This planning application can be lodged within seven working days of confirmation of your clients agreement to the foregoing. Your client would appreciate the urgency in relation to this matter from our clients point of view.
3. It is acknowledged by the purchaser that in the event of your client securing an alternative farm between now and the closing date at the end of June 1999, that in that event, your client is entitled to use that portion of the deposit already paid to place a deposit on the proposed farm acquisition and it is confirmed that the use of that portion of our clients deposit is unconditional and non-refundable. It is furthermore agreed that should your client require to complete the acquisition of this new holding, prior to the end of June 1999, then in that event, ourclient will arrange to close out with your client at an earlier date, subject only to reasonable notice.
4. The following information we furnish in a strictly confidential basis. This is being furnished on the strict understanding that it shall remain confidential to our client, his Solicitors together with your Mr Frank O'Flynn, Solicitor, on behalf of the vendors. A copy of this documentation may not be furnished to the vendors without the purchaser's prior consent. In this regard we enclose a copy of Schedule Two to our client's letter of loan offer of 17th February 1999.
5. Bord Gais Eireann.
Our client has instructed us to confirm your clients entitlement to proceed with the proposals as presented to your client by BGE.
You might be good enough to come back to us in early course. Our client would hope to lodge the planning application next week. Of course the application will not be lodged unless and until we have heard from you.
Yours faithfully".
24. Enclosed with this letter was a resolution of the Plaintiff company that the company do borrow [sterling]2,200,000 on the terms of an offer from ICC Bank. This letter again introduces a new concept, in that the Plaintiff is to be entitled to apply for planning permission, and also defining the length of the caretaker's agreement. It is also relevant in that it assures the Defendant that a planning application will not be lodged unless and until the Plaintiff has heard from him. On 1st March the Defendants' Solicitors wrote back again heading the letter"subject to contract/contract denied", saying they were not satisfied with the copy resolution and requiring sight of the full letter of offer from ICC so that they could be satisfied that the terms were such as would enable the Plaintiff to release funds "in accordance with the terms to be agreed in the contract for sale". That letter also contained the express statement:-
"We confirm that we have no authority to bind out clients until such time as contracts are exchanged and signed by both parties".
25. On 4th March 1999 the Defendants Solicitors wrote saying that they were not proceeding with the proposed transaction and returned the cheque from the Plaintiff's Solicitors for [sterling]150,000. It should be noted that at no time did the Plaintiff offer a deposit of [sterling]200,000.
26. In my view the Plaintiff's claim in these proceedings cannot possibly succeed. The Defendants had at all times from 23rd December 1998 insisted that there must be certainty as to the availability of funds to the Plaintiff, and at all times maintained that they were not satisfied as to the relevant assurances. For this reason alone, there was not a completed agreement between the parties.
27. The Plaintiff's claim is that the pro forma agreements of 1st December at all times remained the basic agreement, and all that was being negotiated was some slight variations to them. The correspondence does not bear this out at all, and indeed does not anywhere refer back to the agreements of 1st December. In particular, the letter of 18th December from the Plaintiff's Solicitor quite clearly and expressly envisages a future contract and, although it is written within three weeks of the pro forma agreements, makes no mention whatever of them, but on the contrary, states that the letter is being written"subject to cotnract/contract denied". In the light of this, I do not think that the Plaintiff could possible be heard to maintain that the pro forma agreements remained in force.
28. In any event, those agreements were returned by the Defendants' Solicitors on the express condition that they would only come into force when both Solicitors agreed that that should be the case. As neither Solicitor mentioned these agreements again, quite clearly they never both agreed that they should come into force.
29. Finally, even if there was a completed agreement between the parties incorporating the various matters negotiated in the correspondence after 1st December, there is no note or memorandum signed by the Defendants or their agents of such agreement sufficient to satisfy the Statute of Frauds. I am quite satisfied that the continued use on every single letter written by the Defendants Solicitors of the words"subject to contract/contract denied", coupled with the express denial of authority in their letter of 1st March, brought the case four square within the provisions of Mulhall v. Haren (1981) IR 364 and Boyle v. Lee (1992) 1 IR 555. The rule as to the interpretation of correspondence stated to be "subject to contract", and the principles behind it, are very clearly stated by Finlay C.J. in the latter case where he said at page 573:-
"It is possible, without much difficulty, to see on consideration of the cases to which we have been referred, that the many instances which occurred of the making of contracts orally for the sale of land the existence of which and the complete nature of which is not even denied in subsequent litigation, had led Courts to view with considerable disfavour the defence of non-enforceability due to a want of sufficient note or memorandum under the Statute of Frauds. It does not seem to me, however, that it can be justified, having regard to the obligation of the Courts in the implementation of plain statutory provisions, to introduce into the interpretation of Section 2 of the Act of 1695 clauses or provisos which are not consistent with its plain meaning. Furthermore, all one's experience of the massive losses and inconvenience which can be suffered by prospective purchasers or vendors of land from non-completion of what they believe to be a contract and the subsequent delays anddifficulties arising from complicated litigation concerning it, indicates that the requirements of justice are that the law applicable to the formation of contracts for the purchase of land should be as certain as it is possible to make it. In modern times, probably the most important legal transaction a great number of people make in their lifetimes is the purchase or sale of their home. The avoidance of doubt, and, therefore the avoidance of litigation concerning such a transaction must be a well worthwhile social objective, so far as the law is concerned. To that end certainty in the question of what is or is not a sufficient note or memorandum is a desirable aim. In my view, the very definite statement that a note or memorandum of a contract made orally is not sufficient to satisfy the Statute of Frauds unless it directly or by very necessary implication recognises, not only the terms to be enforced, but also the existence of a concluded contract between the parties, and the corresponding principle that no such note or memorandum which contains any term or expression such as 'subject to contract' can be sufficient, even it can be established by oral evidence that such a term or expression did not form part of the originally orally concluded agreement, achieves that certainty. The existence of such a rule or provision would not, in my view, allow for the 'exceptional cases' mentioned byKeane J in the decision in Mulhall v. Haren".
30. In the same case, McCarthy J, agreed , in a more classical context, when he said at page 578:-
"It may well be thought that this rigidity of construction will result in genuine bargains not being enforced and that a Court should, as I believe it has in the past 'to do a great right, do a little wrong' (Merchant of Venice- IV. i 215). It is reasonable to assume that the writing requirement is well known to owners and buyers of land; Portia's Rule of Construction is the preferred alternative".
31. I have no doubt that both parties in the present case fully understood the meaning of the words used by the Defendants' Solicitor in all of his correspondence.
32. There is one further matter which was raised, although not pursued with any vigour, on behalf of the Plaintiff, namely that there was part performance of the contract. This of course assumes that there was an oral contract. I am quite satisfied that nothing was done by or behalf of the Plaintiff's which could possibly be construed as part performance. They attempted to survey the land, and were prevented from doing so by the Defendants, and subsequently acknowledged that they would not apply for planning permission without the Defendants consent. They certainly applied for finance, but I do not accept that negotiating a loan with the bank could be construed as part performance of a contract for the sale of land any more than the payment of the deposit is part performance.
33. For these reasons, therefore, I will strike out these proceedings.