BETWEEN
JUDGMENT of Mr. Justice Kelly delivered the 6th day of August 1999.
THE CLAIM
1. The Plaintiff's claim in these proceedings is for specific performance of an agreement for the sale to him by the Defendant of a shop, ware-rooms and store situate at Merchants Quay and O'Connell Street in the City of Waterford for a sum of [sterling]550,000.
THE PARTIES
2. The Plaintiff is a Solicitor of over 20 years experience and is the principal in the firm of M.W. Keller and Company in Waterford. His principal area of practice is property law. He has also been an investor in property. A commercial property in which he was involved with two other persons was sold in 1997. Having received his share of the sale monies, he wished to reinvest them in property. He was also interested in acquiring a new premises for his office. In the middle of 1997 he became aware of the fact that the Defendant's property was on the market.
3. The Defendant is a Waterford businessman and is the owner of the premises in suit. He has carried on the business of furniture and carpet sales from that premises for some 17 years. He is also the owner of other property at Johnstown, Co. Waterford. In 1997 he was contemplating going into semi-retirement. Part of his plan in that regard involved the sale of the premises in suit.
4. In early 1997 he placed the premises in question on the books of a number of auctioneers, one of whom was a Mr. Tom Grace of the firm of Halley Grace and Company. Mr. Grace played a pivotal role in the negotiations which led to the alleged contract which is sought to be specifically performed in these proceedings.
5. Mr. Grace has 23 years experience as an auctioneer and is a partner in his Waterford firm. Although retained by the Defendant in connection with the sale of the premises, he gave evidence for the Plaintiff in this action.
6. The crucial events with which I am concerned took place over the weekend of the 21st November, 1997 but in order to understand the relationship between the parties at that stage, it is necessary to set out in brief what occurred concerning the property prior to that weekend.
THE DEALINGS PRIOR TO THE 21st NOVEMBER 1997
7. In February 1997 the Defendant sent for Mr. Grace. He indicated that he was thinking of selling the premises and asked Mr. Grace how much the property was worth. At that time Mr. Grace thought the property was very attractive because it was in the area covered by an Urban Renewal Scheme which had considerable tax advantages for investors. Properties of the type in suit were making good money particularly when developed for apartments. However, the Urban Renewal Scheme was due to, and did in fact, come to an end in the summer of 1997. In order to avail oneself of the advantages offered by such a scheme, a project had to have been granted planning permission and a contract signed for the development works prior to the cut-off date. Given these dates, it is obvious that the Defendant was late to the market if he wished to obtain any premium on the price which he might be offered by reference to the Urban Renewal Scheme.
8. In any event, Mr. Grace went to work on the Defendant's behalf. He introduced him to a property developer who had personal discussions with the Defendant but to no avail. Mr. Grace also mentioned a Dublin person who was interested in the premises but nothing came of that. The Defendant heard little or nothing from the other auctioneers on whose books he had placed his property and his dealings concerning it were exclusively with Mr. Grace. Sometime inmid-summer, the Plaintiff's name was first mentioned to the Defendant by Mr. Grace. He was mentioned as being a potential buyer and thereafter, on the Defendant's own evidence, discussions became more frequent concerning the Plaintiff.
9. In mid-summer 1997, the Plaintiff had a conversation with Mr. Grace. Mr. Grace informed him that the property was on the market and that he should go and look at it. The Plaintiff did so and was impressed by it. Mr. Grace told him that [sterling]1/2 million was the asking price. He made it clear that that was not open to negotiation. The Plaintiff offered that sum of money. Mr. Grace told the Defendant of this offer. The Defendant indicated that he had another interest which was a little more attractive and so Mr. Grace told the Plaintiff that his[sterling]1/2 million was not acceptable. The Plaintiff was somewhat annoyed with this because he believed that Mr. Grace would obtain the property for him for the [sterling]1/2 million which was being offered.
10. Thereafter the Plaintiff met Mr. Grace from time to time. On one such occasion, Mr. Grace said to him that he thought that he might be able to buy the property for [sterling]525,000. The Plaintiff told Mr. Grace to proceed on that basis. Mr. Grace told the Defendant that he could obtain [sterling]525,000 from Mr. Keller and that he regarded that as a good offer. The Defendant indicated that he was not prepared to take that. Mr. Grace asked him what price he wanted for the premises because he felt that no progress was being made in the matter. In the words of Mr. Grace "We were not getting anywhere". Mr. Grace left it to the Defendant to indicate what he wanted for the property.
11. The Defendant contends that when this offer of [sterling]525,000 was put to him, there were two stipulations attached to it. They were (a) that the Plaintiff would be the sole party interested and (b) that a verbal binding agreement would exist if the offer was accepted. He says that he had no interest in either of these and that he made that much clear to Mr. Grace. He says that he told him specifically that all future business would have to be strictly subject to contract. This was the way in which his previous property dealings had always been conducted and he says that Mr. Grace had no authorisation to deal otherwise. At this stage the Plaintiff had made two offers to buy the premises at what he understood to be a price that was acceptable to the Defendant. Neither had met with success. Not unnaturally, he took the view that the property would be very difficult to buy and lost interest in it.
12. I turn now to consider the next chapter in the saga, namely, the events of Friday, the 21st November, 1997. Before doing so I should express my views on the witnesses who gave evidence before me and how I propose to deal with conflicts in their testimony.
THE WITNESSES
13. Three witnesses gave evidence in the case. They were the Plaintiff, the Defendant and Mr. Grace. As I already made clear, Mr. Grace gave evidence on the Plaintiff's behalf. At no stage did the Plaintiff and the Defendant ever have any direct face-to-face discussions with each other. At all stages Mr. Grace was the middleman. There were a number of substantial conflicts of testimony between the evidence given by Mr. Grace and that given by the Defendant. Those conflicts must be resolved by me.
14. Having had an opportunity to carefully listen to and observe these two individuals in the giving of their evidence, I have no doubt but that Mr. Grace's evidence is to be preferred to that of the Defendant in any area of conflict between their versions of events. It is sufficient for me to say that by comparison with Mr. Grace, the Defendant was not an impressive witness.
THE EVENTS OF THE 21st NOVEMBER 1997
15. The 21st November ,1997 was a Friday. During the course of that morning, the Plaintiff set off in his car to Galway. He was going there for the weekend in order to participate in a school reunion.
16. Meanwhile back in Waterford a meeting had been arranged between the Defendant and Mr. Grace for 10.30 that morning. It took place as arranged in the City Arms. I find as a fact that at this meeting the Defendant indicated that he was still of a mind to sell the premises. He indicated that he would require a price of[sterling]550,000, that he wanted a deposit of [sterling]100,000 paid and a closing date six months hence in May of the following year.
17. On receipt of this information, Mr. Grace telephoned the Plaintiff's office. He was told that he was not there because he had gone to a school reunion. He then made contact with him by telephone. He told him that the Defendant would sell if he would pay[sterling]550,000. The Plaintiff asked if [sterling]540,000 would buy the premises but Mr. Grace said there was no point in making such an offer.
18. The evidence satisfies me that the Plaintiff made it clear that if he was to do a deal with the Defendant it would have to be what he described as "immediately binding". If that were so, the Plaintiff was prepared to offer the [sterling]550,000. Mr. Grace said that he would have to get instructions from the Defendant in this regard. The Plaintiff made it clear that he would not make any offer unless there was a clear unequivocal undertaking that it would be immediately binding. Having regard to his former dealings with the Defendant, one can see the obvious commercial sense in the approach which was being adopted by the Plaintiff.
19. Following this conversation with the Plaintiff, Mr. Grace went to see the Defendant. I find as a fact that he told the Defendant that the Plaintiff was prepared to pay [sterling]550,000 but that he wanted a binding deal. The Defendant told Mr. Grace that he could sell the premises for [sterling]550,000. He accepted the Plaintiff's offer. They discussed the [sterling]100,000 deposit and the six months closing.
20. Following this conversation, Mr. Grace telephoned the Plaintiff. He told the Plaintiff that he had met the Defendant and that the terms of his offer were acceptable. However, he said the Defendant wanted a six months closing, a [sterling]100,000 deposit on signing the contract and that [sterling]20,000 of that would suffice for the moment. That was the first mention of these terms to the Plaintiff but he agreed to them. He told Mr. Grace that he would contact him on the following Monday to sort out matters.
21. The Defendant has contended in evidence that at all times Mr. Grace remained under instructions from an earlier stage that everything was to be subject to contract and that Mr. Grace had no authority to go outside this. It is common case that there was no mention of this"subject to contract" term in the conversations which took place on the 21st November between the Defendant and Mr. Grace. The Defendant has also contended in evidence that Mr. Grace did not mention the fact that the Plaintiff wanted a binding agreement. I reject both of these contentions.
22. First, whatever may have been the position prior to the 21st November, 1997, the Defendant did not mention to Mr. Grace on that day that his previous "subject to contract" stipulation was to remain in force. The only sensible interpretation to put upon the events, as I find them, was that there was to be no such restriction having regard to the proposition put by Mr. Keller and the acceptance of it by the Defendant having had the terms communicated to him by Mr. Grace. I am quite satisfied and find as a fact that Mr. Grace did indicate to the Defendant that the Plaintiff wanted a binding agreement and that the Defendant accepted that stipulation as part and parcel of the deal which was agreed upon.
23. The evidence satisfies me that by the evening of the 21st November, 1997 there was a final agreement in place between the Plaintiff and the Defendant which had been negotiated through Mr. Grace for the sale of the premises in suit for a price of [sterling]550,000 with a [sterling]100,000 deposit. The deposit was to be paid as to [sterling]20,000 immediately and a further [sterling]80,000 on the signing of the contract. In addition there was to be a six month closing. This agreement was not subject to any stipulation concerning "subject to contract" and was made, I am satisfied, on the express understanding that it was to be binding. Such an agreement is, of course, binding in honour upon the Defendant but is not enforceable as a matter of law unless evidenced by a sufficient note or memorandum in writing to satisfy the provisions of the Statute of Frauds (Ireland) 1695.
THE LATER EVENTS
24. On Monday the 24th November, 1997, the Plaintiff wrote a letter to Mr. Grace in the following terms:-
"Re: Sale - Michael Crowe to Mark Keller
Dear Sir,
We confirm that our above-named client has accepted your client's offer and is agreeable to purchase your client's furniture retail warehouse on Merchants Quay for [sterling]550,000 and we enclose our cheque for [sterling]20,000 booking deposit.
The enclosed deposit is sent on the understanding that this is a binding agreement for the purchase of the freehold property and on the understanding that a further deposit of [sterling]80,000 is to be paid on the signing of the contract and the closing date is to be six months from the date hereof.
Yours faithfully
M.W. Keller & Son".
25. The Plaintiff forgot to sign the cheque which was enclosed with this letter. Mr. Grace came to his office in order to have that matter remedied and it was. The cheque, which was made payable to Mr. Grace, was cashed and the proceeds placed on deposit. Mr. Grace told the Defendant that he got this letter.
26. Meanwhile the Plaintiff telephoned Mr. Grace and asked him for a receipt for the [sterling]20,000. He provided that by letter of the 26th November, 1997. His letter, which is addressed to Mr. Keller, reads as follows:-
"26th November 1997
Re: Premises at No. 25/28 The Quay, Waterford.
Michael Crowe Furniture Limited.
Dear Mark,
I acknowledge receipt of your letter, copy of which I have sent to Michael Crowe.
I wish to confirm that I have lodged your deposit of [sterling]20,000 and I am holding it as stakeholder. I have confirmed the details of this transaction to Mr. Crowe's legal representatives, Nolan Farrell and Goff and have requested them to forward you a contract.
Trusting this is in order.
Thanking you.
Yours sincerely
Tom Grace
Halley Grace & Co."
27. Meanwhile, on the 24th November, 1997 the Defendant asked Mr. Grace to confirm the deal. In compliance with this request, Mr. Grace wrote to the Defendant as follows:-
"24th November 1997
Re: Premises at No. 25/28 The Quay, Waterford
Michael Crowe Furniture Limited
Dear Michael,
Further to our recent meeting and conversation I would like to confirm that I have taken your instructions and agreed to sell the above freehold property to Mark Keller Esq for the sum of [sterling]550,000 (five hundred and fifty thousand pounds).
A booking deposit of [sterling]20,000 is to be paid to the auctioneer and a further [sterling]80,000 is payable on the signing of a contract. The closing date is to be six months from today's date but should you wish to close a little earlier there should not be a problem. I will confirm the details of this sale to your solicitor Mr. Jim Mulhearn this afternoon.
Thank you for your instructions in this regard, I will be in touch with you in due course.
Yours sincerely,
Tom Grace
Halley Grace & Co."
28. Mr. Grace's evidence is to the effect that he wrote that letter on the 24th November, 1997 and signed it. The letter was sent by his secretary on that date and is recorded as having been sent from his office. In evidence he said that the letter represents his understanding of the agreement. A copy of this letter was retained on his file and came to light when the Plaintiff carried out an inspection of that file some short time prior to trial. It is not in dispute but that this letter was created by Mr. Grace and was signed by him. Whether or not it was sent to the Defendant does not affect its efficacy as a note or memorandum for the purposes of the Statute of Frauds. Indeed, it is conceded by the Defendant that the letter is a perfect memorandum for the purposes of the Statute. The only issue that is raised concerning it is theauthority of Mr. Grace to bind the Defendant by his signature of it. Having regard to my finding concerning the authority that was given to Mr. Grace to conclude the agreement with the Plaintiff on the preceding Friday, I am quite satisfied that he also had authority to bind the Defendant by signing an appropriate note or memorandum. This is such a memorandum and consequently the contract is specificallyperformable.
29. Having so concluded, it is not necessary for me to deal in any detail with other aspects of the evidence.
30. The Defendant contends that he was sent a letter dated the 24th November, 1997 by Mr. Grace which most certainly would not qualify as a note or memorandum for the purposes of the Statute of Frauds. This is because that letter, although similar in every respect to the one on Mr. Grace's file, is headed"subject to contract and title". (See Boyle v. Lee and Goyns 1992 ILRM 65). The Defendant was, however, unable to produce the original of this letter nor could he produce a copy which he said he lodged with his bank. The copy which he actually produced in Court he told me he had kept in his possession at home on top of a wardrobe. Although a person who was apparently acutely aware of the importance of the expression "subject to contract", he never brought either the original or a copy of this letter to his solicitor for any legal advice concerning these proceedings. This is but one strange feature of the Defendant's behaviour in this litigation. Another one of note is the fact that he readily accepts that the terms of the agreement negotiated on the 21st November, 1997 as to price, closing date and deposit were precisely in accordance with his wishes. The only matter which has brought about this litigation, on his own admission, is a change of mind on his part concerning the deal. That first manifested itself on the 8th December, 1997 when Mr. Grace received a telephone call from the Defendant telling him to put the deal on hold until after Christmas. It was agreed that the Defendant and Mr. Grace would meet on the 11th December, 1997 and they did. At that meeting the Defendant said the deal was off and the property was off the market. He alleged at that stage that he thought that the property should have been auctioned. Needless to say when this information concerning the deal being off was communicated to the Plaintiff, he wasextremely annoyed. Accordingly, he wrote on both the 9th and the 10th December to the Solicitors setting out his position. It is not necessary for me to reproduce these letters in detail.
CONCLUSION
31. These proceedings result from the Defendant's failure to honour his obligations to the Plaintiff. I am of opinion that the Plaintiff is entitled to a decree of specific performance of the contract.
32. I am quite satisfied that as of the 21st November, 1997, the Defendant was bound in honour to sell his property to the Plaintiff in accordance with the terms then agreed. Happily, on this occasion, the Defendant's obligations in honour and those binding in law are coincident. This is so by virtue of the letter of 24th November, 1997, written by Mr. Grace which the Defendant says he never got. Even if that letter did not exist, however, I am of opinion that the exchange of correspondence between the Plaintiff and Mr. Grace, which I have reproduced in thisjudgment, dated respectively the 24th and the 26th November, 1997 would constitute a sufficient note or memorandum for the purposes of the Statute of Frauds..
33. There will be a decree of specific performance compelling the Defendant to effect the sale of the premises in suit to the Plaintiff for the agreed consideration of [sterling]550,000.