Supreme Court of Ireland Decisions

1. The background to this case has been set out in some of the many interlocutory applications during the course of the proceedings which have come before the High Court and this court. It is set out in detail in the lengthy judgment of the High Court (Lynch J.) which is the subject of this appeal. For

2. The litigation has its origins in the discovery nearly thirty years ago by a company called the Tara Exploration and Development Company Limited of rich deposits of lead and zinc in the Nevinstown area of County Meath, following extensive drilling operations. Approximately 1/6th of the ore body was underneath a farm of 120 acres owned by Patrick Wright. Unlike the rest of the ore body, which was the property of the State, this portion was owned by Mr. Wright.

3. The first named defendants are a mining company (hereafter “Tara”) associated with the company which discovered the minerals. Their attempts to acquire the minerals under Mr. Wright’s land were unsuccessful. He elected instead to enter into arrangements for the development of the minerals under his land with the personal plaintiffs in the present proceedings and, for that purpose, they formed the first named plaintiff (hereafter “Limited”) as a limited company. The fifteenth named defendant (hereafter “the Minister”) made a compulsory purchase order in respect of the minerals owned by Mr. Wright on the 15th March 1971, but that order was found to be invalid by the High Court in proceedings instituted by the third named plaintiff and Limited and that

4. Following the abortive compulsory purchase order, the Minister entered into discussions with Limited, the personal plaintiffs and Mr. Wright with a view to securing for the State some interest in the development of the privately owned minerals. As a result, what was described as an agreement in principle was entered into on the 26th July 1974 between those parties and the second named plaintiff (hereafter “Holdings”) which owned 80% of the issued shares in Limited and was in turn owned by the personal plaintiffs through the medium of other private companies. Under the terms of the agreement in principle, the Minister was to acquire 49% of the issued shares in Limited, but was to surrender his voting rights in 21% of the shares to the third named plaintiff or his nominees.

5. On the 19th September 1975 the Minister granted to Tara a lease of the minerals owned by the State. On the 12th December 1975, the agreement in principle of the 26th July 1974 was implemented by a document which became known as “the Inter Party Agreement” and was entered into between the same parties. It will be necessary to refer to some of the provisions of the lease and the Inter Party Agreement in more detail at a later stage.

6. Tara obtained planning permission for an underground mine which went into production in June 1977. Limited applied for permission for an open cast

7. Although the Bula mine (as I shall call the ore body below Mr. Wright’s land) never went into production, Limited borrowed extensively from banks in order to finance the acquisition of other land which was necessary for the project and various other expenses. Since Limited had no cash flow during all those years to pay the interest or repay any of the borrowings, they inevitably found themselves in serious financial difficulties. By the year 1984, matters had reached the stage that the banks concerned had obtained judgments against the personal plaintiffs on foot of their guarantees and were threatening to appoint a receiver to Limited. This was a matter of concern, not merely to the personal plaintiffs, but also to the Minister who had made a substantial financial investment in the Bula mine and was, in any event, naturally concerned to ensure that the entire ore body, and not merely that leased to Tara, was profitably developed so as to ensure both a return to the tax payer and employment opportunities in the Navan area. As a result, there were negotiations between the Minister, Holdings and Limited, a number of banks

8. The Minister’s officials, who were involved in the Bankers’ Trust Package negotiations, were naturally concerned that no viable proposal might emerge and, accordingly, sought to keep alive the only other proposition which seemed to them likely to protect the State’s interest in the matter, i.e. a

9. These negotiations led to a detailed proposal by Tara for the take-over of the Bula mine which was sent to the Minister on the 21st December 1984. It was accepted by the four personal plaintiffs but before being implemented was superseded by a further offer called “the improved proposal” on the 20th March 1985. The improved proposal was accepted verbally by the personal plaintiffs through their solicitor on the 4th April 1985 and throughout the following months there were negotiations between Tara and the Minister and between the Minister and the personal plaintiffs. A final agreement was reached between the Minister and Tara late in August 1985 and the detailed contract was then

10. In the course of the following year, Mr. Wymes sought to interest Tara, who were now controlled by Outokumpu, in what was called a “tolling” arrangement in respect of the Bula mine. Such arrangements are not uncommon in the mining industry: in broad terms, a mining company under a tolling agreement extracts and processes minerals which it does not own in return for an agreed proportion of the profits. That proposal also came to

11. The statement of claim delivered in the proceedings, subsequently extensively amended, contained a vast array of allegations against each of the defendants, including pleas that some of the defendants had conspired between themselves to inflict economic loss on Limited and to force Limited to dispose of their ore body to Tara at an under value and had trespassed on the Bula ore body and wrongfully extracted some of the ore therefrom for their own benefit.

12. The trial before Lynch J. lasted 277 days. At the outset, the court was informed that the 3rd and 4th named plaintiffs were not proceeding with their claim and they were dismissed from the action. During the course of the hearing which followed, some of the claims made in the statement of claim were either expressly abandoned or not pursued and all the remaining claims were dismissed by Lynch J. in his reserved judgment delivered on the 24th February 1997. A lengthy notice of appeal was then served on behalf of the remaining plaintiffs and written submissions delivered on behalf of both the plaintiffs and the defendants. At the outset of the appeal to this court, however, it was accepted by Mr. Michael Peart, solicitor, on behalf of Limited and

13. Holdings, and by the fifth and sixth named plaintiffs, who appeared in person, that two grounds of appeal only were being advanced on their behalf, viz:-

14. It was accepted on behalf of Tara that, at the time they made the takeover proposal on the 21st December 1984 and the improved proposal on the 20th March 1985, the agreements governing their financial relationships with their banks contained a number of restrictive covenants which would have to be waived by the banks concerned before those proposals could be implemented.

15. The case on behalf of the plaintiffs in relation to this ground of appeal was that, in making the offers in question, the Tara Defendants were representing to the plaintiffs that they were in a position to implement the proposals in question and that there was no impediment to their so doing. It was urged that, not merely was there no evidence in the High Court that these covenants had been waived, but that, on the contrary, there had been a positive refusal to waive them. It was also contended that, altogether apart from the question of the covenants, Tara would not have had the necessary funds to implement either the offer of December 1984 or the improved offer of March 1985.

16. It was submitted by Mr. Peart and Mr. Wymes (whose submissions were adopted by the fifth named plaintiff) that, in making the offers in December 1984 and March 1985, Tara were representing, either expressly or by implication, that they were not aware of any reason why they could not implement the proposals, that the plaintiffs had suffered damage as a result and that consequently there had been an actionable misrepresentation on the part of Tara. It was further submitted that, in embarking on the proposals in this manner and, as it was claimed, in not disclosing the true position to the plaintiffs, as a result of which, it was said, the plaintiffs had suffered damage, Tara had acted negligently and in breach of duty.

17. Counsel on behalf of Tara objected that this case had not been pleaded in the statement of claim. However, the court decided, in the unusual circumstances of these proceedings, to allow Mr. Peart and Mr. Wymes to argue this ground of appeal on this basis.

18. It is necessary at the outset to refer to the relevant findings of the learned trial judge. At p.152 and following pages of the judgment he said:-

19. During the course of his submissions to this court, Mr. Wymes referred to a large number of documents which had been discovered by the defendants and which, he claimed, demonstrated that Tara were never in a position to implement the offers of December 1984 and March 1985. Having read all these documents, I do not find it necessary to refer to them in any detail. They demonstrate, as one would expect, that detailed discussions and correspondence took place between the Tara personnel and their banks as to the financing of the proposed takeover and the nature of the restructuring in Tara’ s borrowings which would be necessary if the proposal, either in its original or its improved form, were to proceed. Far from indicating that the banks were not prepared to finance the takeover, they reflect a willingness on their part to

20. As I have mentioned, it was urged on the plaintiffs’ behalf that it was not a case of Tara simply having failed to obtain a waiver of the restrictive covenants: it was claimed that there had been a positive refusal on the part of the banks. In support of this contention, Mr. Wymes relied on a telex from the Toronto Dominion Bank to Mr. Tully dated the 5th December 1984 in which the bank gave their responses to a number of requests made by Tara in relation to the financing of the proposed takeover. The response to the first request may be taken as characteristic of the tone of the document as a who le:-

21. The letter concludes:-

22. To treat this letter as a refusal of Tara’s application for modifications or waivers of the restrictive covenants in their existing agreement is to fly in the face of reality. Far from being such a refusal, it is no more than a statement by the bank in question of its position at that particular stage in negotiations which, it was plainly envisaged, would continue to a conclusion satisfactory to both the bank and its customer.

23. I have already set out in extenso the findings of fact made by the trial judge on this aspect of the case. These were findings of fact which he made on the basis of what he found to be credible evidence i.e. the evidence of Mr. O’Shaughnessy, Mr. Tully and Mr. Healy that Tara would have had no difficulty in obtaining the necessary funds to implement either the December or the March proposal and in obtaining waivers of the restrictive covenants. It has not been shown to this court that there is any basis on which it can interfere

24. Altogether apart from those considerations, there are insuperable difficulties in the case the plaintiffs seek to make. As the trial judge pointed out, where a person enters into an agreement of an executory nature which, it is envisaged, will be completed at a later date by inter alia the payment by the person concerned of money to the other party, the obligation to pay the money only arises at the stage of completion. If when that stage arrives, he is not in a position to meet that obligation, he is manifestly in breach of his agreement and must take the consequences in damages or whatever may be the appropriate remedy. That stage was never reached in this case and hence the obligation to pay the money never arose. Accordingly, even if the contention on behalf of the plaintiff that Tara would not have been in a position to pay the money was well founded - and I am satisfied that it is not - it affords no cause of action to the plaintiffs. Every day of the week people enter into contracts for the purchase of real or leasehold property which are executory in form and which oblige the purchaser, on completion, to pay the balance of the purchase money owing. If he fails, at the time fixed for completion, to meet such an obligation, the vendor is afforded a cause of action because of that breach. But the proposition contended for by the plaintiffs that where, as here, a particular proposal is not accepted by the party to whom it is made, and there is, as a

25. Apart from any other considerations, were such a cause of action to exist, the plaintiffs would have to demonstrate that they had in fact sustained damages as a result of the alleged misrepresentation or negligence. In the present case, that would have necessitated the adducing of evidence by the plaintiffs that, had it not been for the collapse, for whatever reason, of the Tara takeover proposal, they would have been in a position to avail of other opportunities for rescuing Limited from the perilous financial position which it was undoubtedly in during the period in question.

26. There was no such evidence before the High Court. On the contrary, the evidence established overwhelmingly that there were only two options available at the relevant time to Limited, i.e. a deal with Tara or the Bankers’ Trust Package. The former never came to fruition because the last offer which Tara were prepared to make was met with a counter proposal which they, as they were entitled to do, refused to accept. The latter proved abortive, because the Minister was not prepared to commit more public money to the Bula mine and, as is now conceded, that decision affords no cause of action to the plaintiff.

27. It must also be pointed out that the Minister was fully aware through his officials of the existence of restrictive covenants which would have to be

28. I am satisfied that the plaintiffs have not succeeded in establishing this ground of appeal.

29. Clause (f) of the State Tara Mining Lease is as follows:-

30. The plaintiffs claim that Tara were in breach of their obligations under Clause (f) of the mining lease and that, although none of them was a party to the lease, they are entitled to recover damages from Tara which, they say, resulted to them from that breach. In addition, they say that the breach by Tara of their obligations under Clause (f) led to a breach by the Minister of his obligations under Clause 8.02 of the Inter Party Agreement and that they are entitled to recover damages from the Minister resulting from his breach of Clause 8.02 and his failure to ensure the performance by Tara of their obligations under Clause (f) by invoking the arbitration clause in the lease or by pursuing Tara in litigation.

31. The breach of clause (f) is alleged to have occurred in the following circumstances. As already noted, a receiver was appointed to Limited in October 1985. Early in the following year, Mr. Wymes sought to interest Tara in a tolling arrangement and, with a view to bringing this about, suggested to the Minister’s officials that they might consider invoking Clause (f). On the 7th July 1986, the Department wrote to Mr. Hynes saying inter alia

32. In his reply of the 10th July, Mr. Hynes said that Tara would honour the undertaking in Clause (f) but said that since it was “non-specific”, co-operation which would come within its provisions would have to be the subject of detailed discussions between Tara and the Minister. On the 17th July, 1986, Mr. Wymes wrote to Mr. Hynes saying:-

33. On the 1st August 1986, the Minister in a letter to Mr. Hynes requested Tara to accede to Mr. Wymes’ request for discussion and referred to the company’s commitment to co-operate with them under Clause (f). On the 21st August, Mr. Hynes wrote to the Department saying that Tara had not received any proposition from any person whom they were advised had the authority to act on behalf of Limited and that, for Mr. Wymes to have the necessary

34. On September 3 0th, Mr. Hynes wrote to the Department stating that Tara had been advised that Clause (f) was too vague to be given any clear meaning and was, accordingly, unenforceable in law. They said they had further been advised that, if Clause (f) could be given meaning, the Minister could not require Tara to enter into discussions with Mr. Wymes, since he was neither the owner nor the operator of the Bula mine. They also said that they had, to date, received no proposal from the Minister regarding the precise nature of the negotiations which they were being required to enter into. They said that, in the light of their legal advice, they could not accept that they were under any obligation to meet with Mr. Wymes, but that they would entertain proposals from the Minister for co-operation with him for the purposes mentioned in Clause (f). On the 3rd October, 1986, Mr. Wymes wrote to Mr. Hynes stating inter alia

35. The requested meeting never took place and on the 23rd October, Mr. Wymes wrote to the Department a letter which concluded:-

36. The Chief State Solicitor replied to this letter on behalf of the Minister on the 18th November stating that the legal advice available to the Minister was that there were no further steps which he could take to require Tara to give any further consideration to the tolling arrangement than they had already done. In the meantime, however, on the 17th November, these proceedings had been issued.

37. On behalf of the plaintiffs it was submitted that:-

38. On behalf of the defendants, it was submitted that:-

39. On behalf of Tara, it was further submitted that, even if Clause (f) bore the meaning contended for on behalf of the plaintiffs and could be enforced by them against Tara, they did not in any event act in breach of it, since they were perfectly entitled to refuse to negotiate with anyone other than the person effectively in control of the Bula mine at the relevant time, i.e. the receiver.

40. On behalf of the Minister, it was further submitted that, even if the clause bore the construction contended for and there had been a breach of it by Tara actionable at the suit of the plaintiffs, the Minister had not been in breach of any of his obligation to the plaintiffs in failing to invoke the arbitration clause or institute proceedings against Tara. It was submitted that there was no specific proposal ever advanced by the plaintiffs which would have given rise to a specific dispute capable of being referred to arbitration and that all that could have been dealt with by an arbitrator was the proper construction of Clause (f) which in the event had been adjudicated upon by the High Court.

41. The learned trial judge concluded that the parties to the State Mining Lease envisaged two independent mines being separately developed and that Clause (f)

42. It will be apparent from the summary I have given of the arguments advanced on behalf of the plaintiffs that their case crucially depends on Tara having been in breach of their obligations under Clause (f). If, contrary to what was urged on their behalf, Clause (f) did not impose on Tara an obligation to enter into negotiations with the plaintiffs or any of them in the year 1986 with a view to concluding a tolling arrangement - or any other arrangement involving a joint development of the Bula mine - it would follow that neither Tara nor the Minister, on the evidence in this case, had been guilty of any breach of Clause (f).

43. In considering whether the construction advanced on behalf of the plaintiffs is the one that should have been adopted in the High Court, two general principles should be borne in mind. In the first place, where (as here) a transaction has been reduced to writing by agreement of the parties, generally speaking no evidence may be given to prove its terms except the document itself: extrinsic evidence is not admissible to vary the terms of the document. (See Macklin v. Graecen & Company [1983] IR 61 .

44. In the second place, that general rule is subject to the qualification that oral evidence may be received as to the “factual matrix” in which a written arrangement was concluded so as to explain or interpret the terms of the agreement. That is not to say that evidence of negotiations and of the parties’ subjective intentions is admissible; what is permissible is evidence of the