THE HIGH COURT
1999 NO. 9769P
BETWEEN
ELIZABETH KAVANAGH
PLAINTIFF
AND
MICHAEL CAULFIELD
DEFENDANT
JUDGMENT of Mr. Justice Roderick Murphy dated the 19th day of June, 2002.
1. PLAINTIFF’S CLAIM
She also seeks an injunction restraining the Defendant from disposing of the said dwelling house and an Order directing the Defendant to reply to requisitions arising from the said agreement and to give all proper replies in respect of statutory notices.
The grounding Affidavit was that of Lorna Shannon sworn the 7th of November, 2000 in which Ms. Shannon, a Solicitor in the firm of Gaffney Halligan, acting for the Plaintiff, referred to the Memorandum of Agreement and the payment of the deposit aforesaid. An appearance was entered into on behalf of the Defendant on the 19th of October, 1999. A twenty one day warning letter was sent on the 2nd of October, 2000 consenting to late filing of defence which was exhibited.
2. DEFENCE
3. PARTICULARS
The fifth statement dated the 9th of April, 1998 with a slightly larger balance, was in the name of “The Order of Saint Charbel”. Significantly, statements number two and three covering the period in which the payment of £7,500 was alleged to have been made, were not available.
4. CONTRACT FOR SALE
“6 The purchasers are furnished with statutory declarations of Bernard Kavanagh dated the 7th of July, 1983 and the 15th of July, 1983 in respect of the division of the property into a number of self contained units. The vendor shall not be obliged to furnish any other evidence that the premises was divided into a number of units prior to the operative date of the Planning Act, 1963 and in this regard general condition number 36 shall be deleted in respect of the division of the property into several units. No other evidence, declarations, planning permissions or certificates in respect of the division of the property into several units will be furnished.”
5. POST CONTRACTUAL ISSUES
A completion notice was served on the 21st July, 1999. A lis pendens was registered as notified to the Defendant’s Solicitor on the 7th of October, 1999.
“35 Where prior to the sale
(a) Any closing, demolition or clearance Order
or
(b) Any notice (not being of the contents of the Development Plan other than an actual or proposed designation of all or any part of the subject property for compulsory acquisition) made or issued by or at the behest of a Competent Authority in respect of the subject property and affecting same at the date of sale has been notified or given to the Vendor (whether personally or by advertisement of posting on the subject property or in any other manner) or is otherwise known to the Vendor or where the subject property is at the date of the sale affected by any award or grant which is or may be repayable by the Vendor’s successor and title then if the Vendor fails to show
(i) that, before the sale, the Purchaser received notice or was aware of the matter in question
or
(ii) that same is no longer applicable or material
or
(iii) that the same does not prejudicially affect the value of the subject property
or
(iv) that the subject thereof can and will be dealt with fully in the Apportionment Account
The Purchaser may by notice given to the Vendor rescind the sale.”
“ As you are aware general condition number 35 of the contract executed by our respective clients deals specifically with notices serviced by Local Authorities in respect of premises. As your client is not prepared or not in a position to furnish an Architect’s certificate of compliance in relation to the notice furnished our instructions are to request a reduction in the purchase price of approximately £10,000 noting our client’s Architect’s estimate it will cost approximately that amount to carry out the works as indicated in the notice of the 26th of August, 1986. We have written to our clients lending institution in order to ascertain their requirements in relation to the matter and as soon as we receive a response we will revert.
In the meanwhile, we would be obliged if you would take your clients’ instructions regarding a reduced purchase price in this instance noting that our clients reserves the right to rescind the contract pursuant to general condition number 35 in this instance.
In the meantime please not (sic) we have no authority expressed or implied to bind our clients to contracts in this instant and no contract should be deemed to exist between our mutual clients until all matters pertaining to the contract, in particular general condition 35, have been dealt with.
Yours faithfully”.
“ ... We are instructed to inform you that our client takes the view that since you contend that there is no contract in existence he does not intend to proceed with the sale of the property to your clients and we are instructed therefore to return your clients deposit. Please find enclosed our clients account cheque in the sum of the deposit paid to us.”
Almost all relate to purchases made after the 8th of June, 1999, the alleged date of the Plaintiff allegedly denying the existence of the contract.
“I am satisfied that the legal principles applicable to this conflict of evidence are relatively straightforward. If there was a contract which, on the apparent intention of the parties at the time of its formation, could be and would be carried out in a legal fashion even though one of the parties, namely the Defendant, in reality intended to carry it out in an illegal fashion it is enforceable. If, on the other hand, the acknowledged and accepted intention of both the parties at the time of the formation of the contract was that in the event of this export or import control being imposed the contract would be carried out by a smuggling operation, it is unenforceable and is contrary to public policy and cannot be upheld by the Court.”Judgment was given against the Defendant for breach of contract on the basis that the onus of proving the illegality of the contract is on the party alleging it and that the Defendant had not proved an illegal intention on the part of the Plaintiffs.
“I accept that, the granting of an injunction being an equitable remedy, the Court has a discretion, where it is satisfied that a person has come to the Court, as is so frequently expressed, otherwise than “with clean hands”, by that fact alone to refuse the equitable relief of an injunction. It seems to me, however, that this phrase must of necessity involved an element of turpitude and cannot necessarily be equated with a mere breach of contract.”This reasoning echoes that of the House of Lords in Tinsley -v- Milligan (1994) 1 AC 340 at 353 F, 354 F and 359 B per Lord Goff of Chieveley. The underlying principle is the so called public conscience test. The Court must weigh, or balance, the adverse consequences of granting relief against the adverse consequences of refusing relief. The ultimate decision calls for value judgment (see Nicholas L. J. in Tinker -v- Tinker (1970) 1 All ER 540. Lord Goff referred to the basic principle of Lord Mansfield C. J. in Holman -v- Johnson (1775) 1 COWP 341, 343:
“The objection, that a contract is immoral or illegal as between Plaintiff and Defendant, sounds at all times very ill in the mouth of the Defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the Defendant has the advantage of, contrary to real justice, as between him and the Plaintiff, by accident, if I may say so. The principle of public policy is this: ex dolo malo non oritur actio. No Court will then give aid to a man who founds his cause of action upon an immoral or an illegal act.”
Three questions need to be answered:. First, whether there has been an illegality of which the Court should take notice and, second, whether in the circumstances it would be an affront to the public conscience if by affording him the relief sought the Court were seen to be indirectly assisting or encouraging a criminal act. Thirdly, the Court must be satisfied that the contract has not been otherwise rendered ineffective. It is clear that the onus of proving illegality of a contract is, in this case, on the Defendant. The Defendant must prove an illegal intention on the part of the Plaintiff. It seems to me from the agreed facts of the case that the request to pay money to an alleged charity did, indeed, induce the contract. It does not follow that that, in itself, rendered the contract illegal or unenforceable. It was the Defendant who described the payee as a charity. While the cheque was given by the Plaintiff’s son to the Defendant it was in the name of the charity. There is no evidence of an intention of the Plaintiff to defraud. This was a contract which, on the apparent intention of the parties at the time of its formation, could be and would be carried out in a legal fashion. There does not seem to me to be evidence sufficient to prove that the Plaintiff intended to carry it out in an illegal fashion. This is so despite the plea in defence by the Defendant. Accordingly, I find that there is no illegality such as to render the contract unenforceable. Moreover, no conveyance resulted for an undervalued consideration such as would defraud the revenue in relation to stamp duty.
However that does not dispose of the matter.
The closing paragraph states that
(a) the Solicitors have no authority to bind the purchaser, and
(b) no contract should be deemed to exist between “our mutual clients” until all matters pertaining to the contract, in particular general conditions 35 have been complied with.