High Court of Ireland Decisions

You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Tyndarius Ltd. v O'Mahony & Ors [2002] IEHC 167 (11 January 2002)
URL: http://www.bailii.org/ie/cases/IEHC/2002/167.html
Cite as: [2002] IEHC 167

[New search] [Printable RTF version] [Help]

THE HIGH COURT

Record No. 2000/546SP

IN THE MATTER OF SECTION 9 OF THE VENDOR AND PURCHASER ACT

BETWEEN/

TYNDARIUS LTD

Plaintiff

And

JAMES G. O'MAHONY, MICHAEL McSWEENEY AND NICHOLLS LTD.

Defendants

JUDGMENT OF MR. JUSTICE T.C. SMYTH DELIVERED ON FRIDAY, 11TH JANUARY 2002

The Plaintiff entered into a written contract to purchase 51/52 Thomas Street, Dublin 8, under the terms of a written Tender document incorporating the Law Society's "General Conditions of Sale" (1995 edition). The sale price was IR£1,211,200, and the deposit paid to the solicitors to the vendors as stakeholders, totalled IR£121,000. After some dispute as to whether the initial contract did or did not disclose the identity of the vendors, the subsequent correspondence in any event indicated that the first two Defendants, being solicitors acting on behalf of the vendors, were acting or selling "as trustees". A statutory declaration of the first-named Defendant, dated 23rd March 2000, suggested that the third-named Defendant might be a principal along with the first and second Defendants.

The Title offered to the property was a freehold title together with the benefit of a Lessees interest in Number 51 Thomas Street under lease dated 28th October 1985, between George Frederick Thompson and Ors to Nicholls (Thomas Street) Ltd. Other documentation did not disclose that the first-named Defendant had lost the deeds by which the vendors claimed to hold the property. These deeds were not stamped and according to the first- named Defendant, Statutory Declaration of 23rd March 2000, they were being held to the order of the Ulster Bank Ltd. on foot of a solicitor's undertaking. I think it may be reasonably assumed that the bank lent money on the security of these deeds and had an entitlement to have them. Not central the matters in issue in this case, it appears to me reasonable to assume that at the time of the contract the Defendants, and in particular the first Defendant, could not have been but aware that the deeds were not stamped and that the first- named Defendant knew or ought to have known that the relevant deed(s) were missing. There is a dispute concerning this latter matter in that deeds appear to have been mislaid rather than lost.

The intermediate title to the property was not furnished in accordance with General Condition 7; in response to the objections and requisitions on title sent under cover of a letter of 18th October 1999, and replied to by the vendor on 3rd March 2000, the reply to the requisition and the capacity of the vendor to sell the property was stated to be "to follow". The fact that the deed was missing was not advised to the solicitors to the Plaintiff until apparently in or around 20th March 2000.

On or about 22nd March 2000, an extract from a contract dated 8th February 1994, whereby Mavis O'Toole and Earaonn O'Brien agreed to sell 51/52 Thomas Street to the first and second Defendants for IR£250,000, was furnished, together with two draft statutory declarations. No copy of the missing deed was furnished and no mention was made of the fact that there was an assignment to Lornall Ltd. By Nicholls (Thomas Street) Ltd. of the leasehold interest to number 51 Thomas Street.

A dispute arose as to how much effort was made at that or at any other stage to obtain a copy of the "lost deed" or adequately vouch by statutory declaration its execution, terms or effect. The statutory declarations furnished did not deal with the stamping of the document nor was an arrangement made to have any copy of the deeds stamped with unpaid duty or particulars delivered stamp impressed. A statutory declaration of a Mavis O'Toole of 30th March 2000 was, so far as the

Plaintiff was concerned, from a purchaser's point of view, inadequate and inaccurate. This did not deal with the separate assignment of the leasehold interest to Lornall Ltd. Matters took a more focused shape in or about 31st March 2000, when the solicitors for the Plaintiff indicated that the Plaintiff was considering putting an end to the contract. This letter was apparently written without prejudice but was referred to freely during the course of the hearing. The Plaintiff's solicitors expressed themselves in this way:-

"You might advise as to what your clients' proposals are in respect of our clients' losses and damages incurred up to this date in respect of this property, together with estate agency fees and legal fees incurred in the event that our client wishes to bring this call of contract to an end."

The protracted correspondence in which the Defendants as vendor apparently had really failed to address or otherwise provide satisfactory answers to the problems were clearly exercising the mind of the Plaintiff in terms of obtaining a good title. The response of the vendor was quite unequivocal and by a notice dated 4th April 2000, the vendor called upon the Plaintiff to complete the sale within 28 days. The notice invoked the terms of the provisions of a contract for sale. Typically, the Completion Notice stated that:-

"(2) The vendors are ready, willing and able to complete the sale of all that and those, the hereditaments and premises known as 51 and 52 Thomas Street in the City of Dublin, both in respect of the freehold interest and the leasehold interest referred to in the Contract for Sale."

The intended effect of the notice was to make time of the essence of the contract. The response to this notice was set out in a letter of 17th April 2000, it rejected the purported Completion Notice and asserted that it was invalid on a number of grounds which are enumerated in the course of a long and detailed letter. It expressly stated at paragraph (d):-

"Our client shall continue to reserve its right to rescind the Contract for Sale due to your clients' failure to satisfy our client in this regard."

The regard in which it was referred to was in respect of the adjoinment of a certain fire escape at the rear of the premises. The letter concludes in this way:-

"Please further note that our client has instructed us to issue such proceedings as are necessary to protect its rights on foot of the contract entered between our clients and furthermore any attempts by your client to forfeit our clients' deposit will be counteracted by such appropriate injunctive proceedings against your client and we further put you on notice that we hold and continue to hold your clients responsible for all such losses, damages, costs and expenses incurred by our client as a result of or arising from the various issues raised above."

The letter was followed up two days later by a further letter of 19th April, in which the purchasers sought once again the proposals of the vendor for "resolving the various issues as set out in our correspondence". There followed a series of letters in which proposals were shuttled to and forth with a view to resolving the impasse that had arisen. No resolution was arrived at and by letter dated 25th April 2000, the vendor's solicitors wrote to say:-

"As far as we are concerned, we have adduced little [sic] in accordance with the contract and are ready, willing and able to complete. We have already served a Completion Notice herein which is due to expire on Tuesday next, 2^nd May, and interest continues to accrue against your client in the sum of £3,461.53 per week. Upon expiration of the Completion Notice, it is our client's intention to lease the property from month to month as they are entitled to the rents and profits from the property in addition to the interest claim against your client per condition 25 (a) (2) of the Agreement for Sale herein."

Whatever may have been the status of the correspondence or the meetings that were taking place at this time, a letter was written on 26^th April 2000, by the purchaser's solicitor, which (inter alia) stated:-

"We further note that at our meeting you confirmed that you have no intention of forfeiting our clients' deposit and that the purpose of the Completion Notice served by your client, dated 4th April 2000, the validity of which we dispute, was solely for the purpose of taking an action against our client, if needs be, to specifically perform the Contract for Sale. "

The letter went on to note:-

"... we have not received a formal reply to our letter of 17th April 2000, which raises a number of very pertinent and important issues as to the title of the property and to the various contractual issues involved. We would ask you to now respond to what would seem quite a number of letters that we have sent to you, as your only response to date would seem to have been the service of an invalid Completion Notice."

On 9th May 2000, the vendor's solicitors wrote to the purchaser's solicitors enquiring as to whether they had the authority to accept service of specific performance proceedings or whether the clients should be served personally. This met with an unequivocal and important letter of 5th July 2000, from the purchaser's solicitors, and is pivotal to the case in its entirety and it reads as follows:-

"We refer to previous correspondence in respect of this matter. We wish to advise that we have obtained senior counsel's opinion and confirm that your client is in breach of contract in this matter. As a result of this breach, our client is entitled to an immediate return of its deposit, together with interest and costs.

We are hereby requesting your client to return the deposit, together with interest, and provide written confirmation that it will discharge our client's costs for investigating title in this matter within seven days."

It is the contention of the Plaintiffs that this letter reaffirms a decision on its part to regard the failure to provide proper title, the service of the Completion Notice as a repudiation by the Defendant and the purchaser's solicitor's letter is an effective notice of rescission.

The matter is concluded by a latter of 11th July 2000, from the vendor's solicitors, in the terms as following:-

"We acknowledge receipt of yours of 5^th inst. We can advise that we have now located the deeds of assurance to our clients, which were previously missing. We enclose herewith copies of said deeds. We are presently attending to the stamping and registration of said deeds which should be completed by this week.

These documents are sent to you without prejudice or contention that we have already made title to the property

pursuant to the contract herein."[emphasis added]

The case of the defendant/vendor is that it was at all times ready, willing and able to furnish title in accordance with the terms of its contract and that the objections or requisitions raised by the purchaser were unreasonable and were in fact properly met, that the Completion Notice was a valid notice and at its date the vendor was ready, willing and able to complete the sale in accordance with its obligations. The case of the plaintiff/purchaser was that the Completion was (a) invalid, and (b) by its letter dated 5th July 2000, it had validly and properly rescinded the contract and that the contract was at and end and, accordingly, that it was entitled to have its deposit returned, together with the costs of investigating title and the costs of the proceedings.

I am satisfied as a matter of law that the giver of a notice to complete a sale by which term time is made of the essence was brought into existence is as equally bound thereby as the recipient of the notice (see Quadrangle Development and Construction Co. Ltd. -v- Jenner [1974] 1 WLR 68). I am satisfied that under the language of the clause, the party giving the notice must be ready and willing at the time of the giving of the notice to fulfill his own outstanding obligations under the contract (per Russel LJ in Quadrangle aforesaid at p.71 of the report). Argument was advanced on behalf of the vendor that whatever defects or deficiencies existed in the documentation prior to the service of the Completion Notice were (a) matters of conveyancing only and did not go to title, and (b) that the purchaser could be obligated to accept evidence of a secondary character concerning title, in all the circumstances of the case set out in the documentation.

In this case, I do not believe that to be so. There were too many inconsistences and frailties in the documentation proffered by the Defendant/Vendor to obligate a purchaser to accept the title in the fashion in which it was being piecemeal advanced and with a number of inaccuracies which only heightened the sense of apprehension of the Plaintiff. I find these to be matters of fact. The fact that the Plaintiff queries the validity of the Completion Notice does not detract from the fact that the vendor held themselves out as ready, willing and able to complete the sale as of the date of the notice, and that any time thereafter up to and including the 28 days of its intended effectiveness. It was never withdrawn and the fact that the matters proceeded at a leisurely pace before or thereafter does not detract from that basic fact. As stated by Russel J in Jennez aforesaid, completion of contract is an activity in which parties co-operate and each party agrees to do all that is necessary to be done to carry out the task. A term of which time becomes of the essence binds both parties and the Plaintiff was entitled to terminate the contract on 5th July 2000, both because of the failure by the Defendant to make good title and the Defendant's inability to complete the contract in accordance with the Completion Notice. In this regard, there was no waiver by the Plaintiff of its entitleme4nt to treat the inability of the Defendants to close the sale as a repudiation of the contract. Protests about the validity of the Completion Notice do not amount to such a waiver. It is true that there is law to the effect that the right to rescind a contract which has been repudiated may be lost unless it is exercised promptly. I am satisfied that it was exercised promptly in the instant case. Subsequent events and occurrences may readily cause a loss of that right; ie, the vendor may be enabled to mend his hand and restore and revert to his original position, but so long as the vendor maintains the position that gives the right to election, then he preserves and keeps open the purchaser's right.

In this, as in many other cases of vendor and purchaser, when difficulties arise, there is a good deal of posturing taken up in the correspondence and this was conceded in the submissions made to the court. I am satisfied and find as a matter of fact and of law that this case, that as of the date of the service of the Completion Notice the vendor was not in a position of being ready, willing and able to comply with its obligations. The purchase unequivocally and promptly exercised his right of election to rescind. Consequently, the Plaintiffs are entitled to recover the amount of the deposit, together with interest thereon.

END OF JUDGMENT