High Court of Ireland Decisions

1. On the 23rd May, 1997, Peter Whelan, the Plaintiff purchaser in this specific performance suit and Joseph Christopher Kavanagh the vendor Defendant, attended at the premises of Haughtons, Solicitors, 6 Martello Terrace, Dun Laoghaire. Their purpose was to execute an Agreement in Writing for the sale and purchase of number 39 Annesley Avenue, East Wall, Dublin 3. Gabriel F. Haughton, the principal of that Firm had in the past acted for both men and it was not disputed at the hearing before me that they were agreed that he should act for them both in the course of this particular transaction.

2. The Agreement was in the form of the Incorporated Law Society of Ireland, General Conditions of Sale (1995) edition. Both men acknowledged their signature on the Agreement and Mr. Buckley who was then an Assistant Solicitor in Mr. Haughton’s Firm, gave evidence that he prepared the Agreement on the instructions of and from information furnished to him by Mr. Haughton. Mr. Buckley identified the signature of the Vendor, signed in the form, “Christopher Kavanagh”, and his own signature as witness to the execution of the Agreement by the Vendor.

3. Having set out the names and addresses of the Vendor and the Purchaser, the Agreement then provides as follows:-

4. It was accepted on all sides during the hearing before me that the Purchaser wanted a closing within five or six weeks. In such circumstances there was no necessity to specify a particular closing date and the parties relied upon the terms of the General Conditions of Sale where at Condition 2 it is provided that:-

5. Mr. Haughton told me in evidence that he had received a telephone call from Mr. Peter Whelan some weeks before the 23rd May, 1997. Mr. Whelan told him that he had bought the property and that he and the Vendor were then at the property. He asked if Mr. Haughton would act in the sale for both parties and Mr. Haughton told me that he had agreed. Mr. Whelan told him that the purchase price was £24,500.00 and that Mr. Kavanagh wanted £13,000.00, “up front immediately.” Mr. Whelan told Mr. Haughton that he had given Mr. Kavanagh a cheque for £500.00 that day. In a Complaint made by Mr. Kavanagh to the Director of Public Prosecutions after the hearing before Judge O’Connor, the date of this cheque is given as 19th April, 1997 and it is recited as having being drawn on the Branch of Allied Irish Banks plc at 2., Clonkeen Road, Deansgrange, Co. Dublin by the Plaintiff.

6. Mr. Haughton told the Court that he then spoke to Mr. Kavanagh who confirmed these details. Mr. Haughton told me that he counselled Mr. Whelan against this arrangement in particular as he was aware from acting for Mr. Kavanagh that the Title Deeds were held by Allied Irish Banks plc to whom money was owed. He advised Mr. Whelan he told me not to pay any more money until a Contract had been signed and the indebtedness to the Bank ascertained. Mr. Haughton told me that it took several weeks to obtain a release of the Title Deeds on the terms of the usual Form of Undertaking which was given by his Firm on the 12th May, 1997. In the meanwhile, Mr. Haughton told me, the Defendant, Mr. Kavanagh, was on to his, (Mr. Haughton’s) office on an almost daily basis looking for his money. Mr. Kavanagh in his evidence confirmed that at this time he was in a very bad financial position. He told me that during the weekend prior to the 23rd May, 1997, which date fell on Friday, he had paid £100.00 to a Mr. Kevin Murphy to pay a booking deposit on a used Fiat Uno motor car which he, Mr. Kavanagh, was anxious to purchase for his friend Ms. Barbara Cummins and which was then available on the market at £1500.00. He was under pressure to conclude this purchase of the car by Monday the 19th May, 1997. Mr. Haughton told the Court that while he was aware of this transaction this was after he had received instructions regarding the purchase of 39 Annesley Avenue, and it was never conveyed to him other than as an additional reason why Mr. Kavanagh wanted the money urgently.

7. The Vendor did not complete the sale and on the 12th August, 1997 Haughtons Solicitors on behalf of the Purchaser served an Equity Civil Bill, claiming specific performance, all necessary accounts and inquiries, damages in lieu or in addition to specific performance and costs. At paragraphs 1 and 2 of the Endorsement of Claim, the terms of the Memorandum of Agreement, to which I have already referred, are recited. Paragraph 3 of the Endorsement of Claim is in the following terms:-

8. Paragraph 4 of the Endorsement of Claim contained the necessary averments that the Purchaser - Plaintiff was at all material times willing and able to perform the Agreement and went on to state that on the 23rd day of May, 1997 he had issued a cheque for £11,500.00 in favour of his Solicitors. This was confirmed by Mr. Haughton at the hearing of this Appeal.

9. On the 11th September, 1997, Messrs. Terence Lyons and Company, Solicitors, then acting on behalf of the Vendor/Defendant delivered a Defence which expressly admitted the terms of the Memorandum of Agreement but which claimed that the Plaintiff had only paid a deposit of £2,500.00, leaving a balance of £21,500.00 due and owing, until the payment of which the Defendant was not obliged to complete the contract. Mr. Kavanagh stated in evidence before this Court that apart from the alleged payment of £2,500.00, the remainder of this pleading is untrue and that the instructions which he gave to his then Solicitors upon which this pleading was based were also untrue.

10. The Order of Judge O’Connor made on the 25th January, 2000 gave liberty to Mr. Kavanagh to Amend this Defence on payment of all costs to that date, which costs the learned Judge measured in the sum of £7,000.00. This decision is in accord with the principles established in the case of Ely -v- Dargan (1967) I.R. 89 , (Supreme Court), and no submissions were made to me with regard to the reasonableness or otherwise of the sum measured by the learned Judge. The Amended Defence, which the Order recites, was handed into Court at the hearing of the case is in the following terms:-

11. At paragraph 8 of an Affidavit sworn by Mr. Kavanagh on 20th January, 2000 to ground his application to the Court for liberty to amend his defence, he apologises to the Court for his actions in allegedly colluding in the alleged fraudulent contract and in improperly instructing his previous Solicitors. In paragraph 14 of an Affidavit sworn by him on the 4th February, 2000 he further apologises to the Court for trying to obtain the sum of £24,500.00 for the premises instead of the true price of £14,000.00.

12. Mr. Haughton told the Court that at the signing of the Agreement on the 23rd May, 1997 he had specifically directed the attention of Mr. Kavanagh to the fact that the Agreement had been drawn in such a manner as to enable the Deposit to be paid directly to him and not to Haughtons as Stakeholder. He also told me, and this accords with the terms of a letter dated the 11th June, 1997, - 19 days after the Agreement was executed, - sent by him to Terence Lyons and Company, then Solicitors for Mr. Kavanagh, that Mr. Kavanagh wanted to have the purchase price recorded in the Memorandum of Agreement reduced to £14,000.00, the remaining £10,500.00 to be paid outside the terms of the contract, but that he, Mr. Haughton, explained to both parties that this would be a fraud on the Revenue and illegal and that he would not countenance drawing such a document. In the same letter, Mr. Haughton advised Messrs. Terence Lyons and Company as follows:-

13. In a Form Complaint made by the Defendant to the Director of Public Prosecutions after the hearing before Judge O’Connor, it is alleged that the:-

14. Mr. Buckley, Solicitor, told me in evidence that he drew up the Contract and that it was executed exactly as he had drafted it without any amendments or alterations whatsoever. Mr. Buckley agreed that Mr. Haughton had asked Mr. Kavanagh in his presence if he was satisfied with the Terms before he signed the Memorandum and that Mr. Kavanagh had confirmed that he was and did not say that he had not received the £12,500.00 balance of the Deposit.

15. Mr. Kavanagh and Ms. Cummins both gave evidence that Mr. Whelan had made some writing on a single sheet forming part of the Contract which at that time was held together by a paper clip and that Mr. Buckley took it out of the room and came back with a new sheet after which Mr. Whelan and Mr. Kavanagh signed the Contract. Neither Mr. Kavanagh nor Ms. Cummins could identify the nature of the alleged writing or the part of the Contract upon which it was alleged to have been made. Neither suggested to the Court that this alleged amendment was the insertion of a, “false purchase price of £24,500.00.”

16. Neither Mr. Haughton nor Mr. Buckley witnessed the payment of £12,500.00 by Mr. Whelan to Mr. Kavanagh. Mr. Haughton told me that on the 23rd of May, 1997 he sat at one side of his desk in his office and that Mr. Whelan sat at the other side. He told me that Mr. Whelan took out of his pocket a brown envelope containing cash and counted the cash in front of him and that it amounted to £12,500.00. He said that Mr. Whelan then put the money back into the envelope and wanted to give it to him, Mr. Haughton, to give to Mr. Kavanagh. Mr. Haughton said that he declined and told Mr. Whelan that he should give it directly to Mr. Kavanagh who was waiting in another room. Mr. Haughton said that he went down some stairs to the other room and told Mr. Kavanagh to go up to his office. He told me that Mr. Kavanagh knew where to go as he had been in that office many times over the years. Mr. Haughton told me that he was called away at this time and did not accompany Mr. Kavanagh to his office. Mr. Haughton told me that when he came down from his office to the other room, - which Mr. Buckley referred to as the “Board Room”, - Mr. Buckley, Mr. Kavanagh and Ms. Cummins were in that room.

17. Ms. Cummins gave evidence that Mr. Kavanagh met her outside the Offices of Haughtons where she was waiting for him. She said that they were shown together into a room and that neither she nor Mr. Kavanagh left that room at any time prior to the signing of the Agreement. She stated that she had no doubt about this despite the passage of some 3 years and 9 months and though subjected to a firm cross examination did not resile from this position.

18. The evidence of Mr. Whelan, whose testimony was taken first, accords in most respects with that of Mr. Haughton and Mr. Buckley. His recollection was however, that Mr. Kavanagh was shown into Mr. Haughton’s office by Mr. Haughton himself and that the money was then on Mr. Haughton’s desk in an unsealed envelope. It was his recollection that at this point Mr. Haughton was called away but he believed that Mr. Haughton had seem him hand the envelope to Mr. Kavanagh before he left the room. Mr. Whelan said that the money, which was in denominations of £20 and £50, had being accumulated by him in cash from property rents and had not been withdrawn by him from any financial institution.

19. Mr. Kavanagh told the Court that he did not receive any money from Mr. Whelan in Mr. Haughton’s office or elsewhere in the building on the 23rd May, 1997. He said that Mr. Whelan stated that after the signing of the Agreement they would go to his, Mr. Whelan’s, Bank at Deansgrange and that he would give him, Mr. Kavanagh, £2,000.00. He told me that he and Ms. Cummins followed Mr. Whelan to a named licensed premises in Deansgrange. Mr. Whelan he said asked them to go into the licensed premises and order lunch and drinks while he was going to the Bank. He said that Mr. Whelan came back after about 20 minutes with £1,000.00 in £100 notes and £1,000.00 in £50 notes bound in an A.I.B., wrapper. Mr. Kavanagh told me that Mr. Whelan handed the money to him and that he in turn handed it to Ms. Cummins who counted it and then put it in her handbag. Mr. Kavanagh said that he then bought Mr. Whelan a drink but that Mr. Whelan took only a little of it and then said he had to leave. Mr. Kavanagh said that he and Ms. Cummins then went to another named licensed premises where he gave Mr. Kevin Murphy £1,400.00 with which to complete the purchase of the car and £50.00 for himself by way of a finder’s fee. Ms. Cummins told the Court that Mr. Kavanagh had told her that he had sold the property to Mr. Whelan for £14,500.00 and stated that Mr. Kavanagh did not get any money at Haughtons. She gave evidence similar to that of Mr. Kavanagh with regard to the payment of £2,000.00 by Mr. Whelan at the named licensed premises at Deansgrange.

20. Mr. Whelan denied that he obtained £2,000.00 in cash from the Branch of Allied Irish Bank plc at Deansgrange on the 23rd May, 1997 or gave £2,000.00 in cash to Mr. Kavanagh at the named licensed premises at Deansgrange on that day or at all. Ms. Power, a staff member of that Branch told the Court that Mr. Whelan had an Account in that Branch in 1997. She told me that she had examined the Bank records for May 1997 and that the only cheque debited to Mr. Whelan’s Account on 23rd May, 1997 was in the sum of £206.00. She accepted that Mr. Whelan had been a customer of that Branch of the Bank for a considerable time and that in 1997 the Branch would have probably have cashed a third party cheque at his request. She said that the records showed that Mr. Whelan had withdrawn £4,500.00 from his Notice Deposit Account some three weeks earlier. She said that while sums of £1,000.00 in cash are usually made up into packets of £50.00 notes, a Cashier in the Bank could readily count it out in other denominations.

21. The explanation offered by Mr. Kavanagh for what he says is an inflated Purchase Price shown on the Memorandum of Agreement is that the Purchaser, Mr. Whelan, insisted upon this as a stratagem by which he could obtain an additional sum of £10,000.00 with which to renovate the property. Mr. Whelan denied ever making or considering such a proposal.

22. Despite the confident and even assertive manner in which it was given, I am unable to rely upon the evidence of Ms. Cummins as lending independent support to that of Mr. Kavanagh with respect to the events which occurred on the 23rd May, 1997. Ms. Cummins admitted that all her other information regarding the terms of the purchase agreement and surrounding events and details came solely from Mr. Kavanagh. She admitted at the hearing before me that though served with a Subpoena she had not given evidence to the Circuit Court on the 25th January, 2000, because she was afraid of Mr. Kavanagh. She accepted that she had told a person named Maggie Rowley a member of the Staff of Terence Lyons and Co., on the 19th July, 1999 that:-

23. A Memorandum containing these words is exhibited in the Affidavit sworn by the Defendant in these proceedings on the 4th February, 2000. She admitted that at a hearing before Judge O’Connor on the 21st July, 1999 she had approached the Solicitor for the Plaintiff and asked for a Garda Siochana escort from the Court because Mr. Kavanagh had said to her in Court, “I’m going to get you - I’ll get you”. While accepting that as far as she was concerned Mr. Kavanagh could be a terrifying man and that she was still a little afraid of him she told me that she was not going to allow him to intimidate her any more. She said that she came to give evidence on the hearing of this Appeal because, “It would not go away ”. By this I clearly understood her to mean that Mr. Kavanagh would not go away until she had given evidence.

24. For the Court to accept the evidence of Mr. Kavanagh that the true purchase price was £14,000.00 and not £24,500.00 as set out in the Memorandum of Agreement I would have not only to disregard the evidence of Mr. Gabriel Haughton, Solicitor who had acted for the Defendant for many years, Mr. Joseph Buckley, another Solicitor, involved in the matter and the evidence of Mr. Whelan, the Purchaser/Plaintiff, but also the fact that for almost 2 ½ years the Defendant/Vendor sought to obtain payment of sums based upon an admitted purchase price of £24,500.00 by means of what he now claims to have been false information provided by him to his then Solicitors and false Affidavits and Pleadings sworn and delivered by them on his behalf relying on that information. Initially, as appears from the letter dated 11th June, 1997 from Haughtons, Solicitors, to Terence Lyons and Company, Solicitors, Mr. Kavanagh appears to have been suggesting that he did not have his spectacles on the occasion of the 23rd May, 1997 and therefore was unaware of what was stated in the Memorandum of Agreement. In the Affidavit sworn by him on the 20th January, 2000 he claimed that a nervous ailment for which he was taking a prescribed drug named Seroxat may have affected his judgment in colluding in the fraudulent contract.

25. The Defendant admitted in evidence that on the 23rd May, 1997 he was in a bad financial position with lots of bills, money owing also to Allied Irish Banks plc and not enough money to complete the purchase of a second hand car for £1,500.00 as a birthday gift for Ms. Cummins. In these circumstances it is scarcely credible that he would have accepted a sum of only £2,000.00 from Mr. Whelan on the 23rd May, 1997 having signed a document which stated clearly that a deposit of £13,000.00 had already been paid to him by Mr. Whelan. When asked by me why he had not sued Mr. Whelan for the balance of the money allegedly due to him, he replied that he could not afford to do so even though he apparently had no difficulty in retaining since August 1997, first the services of Terence Lyons & Co., Solicitors and then those of Timothy McEniry, Solicitor. When asked by Counsel for the Plaintiff why he did not accept the balance of £11,500.00 which at all times he accepted the Plaintiff was able and willing to pay, he claimed that the existence of a Contract reciting that he had been paid £24,500.00 when he could only claim to be paid £14,000.00 had unacceptable tax implications for him, thought no evidence was lead as to what these might be.

26. In my judgment a party who has executed a contract required by Law to be evidenced in writing and which is regular and lawful on its face, and whose execution of that contract has been witnessed by his or her Solicitor should not lightly be permitted to impugn that contract, particularly to his or her own advantage, by pleading illegality as a defence to a claim for specific performance. The onus of proving such alleged illegality lies firmly with the party raising it and the burden of proof is the same as in all civil actions. Extrinsic evidence, i.e., statements, facts or circumstances, outside the document, is admissible despite some older authorities to the contrary, to prove a smaller “real” consideration inconsistent with that expressed in the agreement. ( Turner -v- Forwood (1951) 1. A.E.R., 746: Woods -v- Wise , (1955) 2. Q.B., 29: Peffer -v- Rigg , (1977) 1. W.L.R. 285 at 293.)

27. In the present case, in my judgment, there is no proof placed before the Court in this regard other than the parole evidence of the Defendant himself., unsupported by any documentation, or by any reliable corroborative evidence. This evidence I find to be altogether unreliable and heavily tainted by what the Defendant now claims were serious untruths told by him to his then Solicitors and permitted to be presented by them to the Circuit Court in Pleadings and in Affidavits delivered and filed on his behalf. I am satisfied on the evidence of the Plaintiff, which is supported by the evidence of Mr. Haughton, Mr. Buckley and Ms. Power that the purchase price in this case was at all times that stated in the Memorandum of Agreement, that a deposit of £13,000.00 in the form of a cheque for £500.00 and cash in the sum of £12,500.00 was paid by Mr. Whelan to Mr. Kavanagh and that Mr. Whelan has at all material times been willing and able to pay the balance of £11,500.00.

28. In these circumstances I will affirm the Order of Judge O’Connor made on the 25th January, 2000 but with the addition of an award of damages in favour of the Plaintiff to be calculated in the sum of £90.00 per week for the period 1st August, 1997 to 31st July, 1999, and thereafter in the sum of £115.00 per week until the Plaintiff shall have obtained actual possession and occupation of the premises, less interest at the rate of 18% per annum, uncompounded, on the sum of £11,500.00 from 1st August 1997 to the said date of actual possession and occupation. I award the Plaintiff his costs in this Court and in the Circuit Court in addition to the costs of £7,000.00 awarded by the learned Circuit Court Judge to the Plaintiff as a condition of permitting the Defendant to Amend his Defence in this case.