Supreme Court of Ireland Decisions

1. The facts in this case are comprehensively stated in the judgment which will be delivered by Fennelly J and need not be set out by me.

2. The applicable legal principles are not in doubt. This is not a case, as Mr. Frank Clarke SC conceded on behalf of the appellants, in which it could be successfully contended that the statement of claim itself disclosed no reasonable cause of action or one that was frivolous or vexatious. The appellants say, however, that the proceedings should have been struck out in the exercise of the inherent jurisdiction of the High Court to take that course where it is clear that the plaintiff’s claim must fail.

3. That such a jurisdiction exists is beyond doubt. However, as was made clear by Costello J, as he then was, in Barry -v- Buckley [1981] IR 306 and by this court in Sun Fat Chan -v- Osseous Limited [1992] 1 IR 425, it is a jurisdiction which should be sparingly exercised by the High Court. As McCarthy J observed in the latter case :

4. Since the defendant who brings such a motion must satisfy the court that, even assuming that all the facts pleaded and relied upon by the plaintiff in his statement of claim are established in evidence, his or her action will nonetheless inevitably fail, the burden resting on the defendant in bringing such a motion is undoubtedly a heavy one.

5. It remains to consider the application of those principles to the facts of the present case. As I understand the statement of claim and particulars, the plaintiff claims that he entered into what he describes as “a joint venture partnership agreement” with the defendants and a Mr. Peter Dwyer under which a company was to be formed for the purpose of acquiring and developing certain lands known as “ The Guinness lands” in West County Dublin. If the lands in question could be acquired for £8 million, the project was to go ahead and the shareholding in the company and the distribution of profits which, it was hoped, would result from the venture were to be divided in the proportions of 40% to the defendants, 40% to Mr. Dwyer and the remaining 20% to the plaintiff. If it transpired that the purchase price of the lands was in excess of £8 million, the parties would not be bound to proceed with the acquisition and development of the lands. If, however, the parties were willing to proceed with the acquisition of the lands, even though the purchase price was in excess of £8 million, the company would then be formed with the shares held in the agreed proportions. The plaintiff’s case is that the lands were subsequently acquired for a sum admittedly significantly in excess of £8 million, i.e., £19 million, but that, in breach of the agreement he had arrived at with the defendants and Mr. Dwyer, he was given no opportunity of participating in their further development through the medium of the proposed new company.

6. It is undoubtedly the case that, as pleaded in the statement of claim, certain aspects of the alleged agreement remain remarkably vague. There was no agreement as to the details of the development to be carried out on the lands and the entire question of how the project was to be financed seems to have been left in the air. It may be that at the trial of the action, if it is allowed to proceed, the plaintiff will be able to establish that there was an agreement between himself, the defendants and Mr. Dwyer that the company in question was to be formed, that the lands when acquired were to be vested in the company and that the profits of any development were to be divided in the agreed proportions. It is conceded on behalf of the plaintiff, however, that there was no agreement as to how the project was to be financed and that the details of the proposed development were also, in effect, left for further agreement. Accordingly, even making every assumption in favour of the plaintiff as to the stage which negotiations had reached, they remained negotiations. None of the parties would be in a position to hold the other parties to whatever arrangements in principle were envisaged, if it was not possible to reach agreement on matters such as finance and the nature of the proposed development. In these circumstances, it seems to me that this constitutes one of those cases in which, making every assumption in favour of the plaintiff, the contract relied on could not possibly constitute a concluded contract between the parties which would give rise to any action at law.

7. I would allow the appeal and substitute for the order of the High Court an order dismissing the plaintiff’s claim.

8. The defendants/appellants (hereinafter “the appellants”) have appealed against the refusal of Mr Justice McKechnie in the High Court to accede to their motion to dismiss the plaintiff's claim for being frivolous or vexatious, an abuse of the process of the court and not being maintainable in law. They rely on the inherent jurisdiction of the court to strike out proceedings which are doomed to fail. This jurisdiction was first fully explained by Costello J in Barry v Buckley [1981] IR 306.

9. It is agreed that the court may exercise this jurisdiction only if it is demonstrated beyond argument that the plaintiff’s claim must fail. As a corollary, it must be assumed that the facts will be established as the plaintiff alleges them. With those strictures in mind, I will endeavour to describe the plaintiff’s claim.

10. The plaintiff is an engineer and businessman, residing near Lucan, Co Dublin. The proceedings concern an alleged joint venture project for the development of substantial areas of land in West County Dublin.

11. The plaintiff pleads, in the statement of claim, that prior to March 1997, he and one Peter Dwyer were “in the process of developing certain lands at or near but not limited to those lands situate at the Phibblestown/Castaheany and Allendale areas of County Dublin for residential purposes and, in addition, were engaged in the process of evaluating the overall future development potential of the entirety of the lands ....”

12. It is here necessary to quote in full certain paragraphs of the statement of claim:

13. The essence of the plaintiff’s claim is that the appellants did not perform the agreement so pleaded. Instead, the first named appellant caused the second/named appellant to be formed as a subsidiary of the third/named appellant and to purchase the so-called “Guinness lands” and to have them developed for the benefit and profit of the appellants and without making any provision for the 20% share claimed by the plaintiff. The plaintiff claims a number of declarations regarding the existence of the agreement pleaded as well as specific performance and other relief.

14. The terms of the alleged agreement and the circumstances surrounding its negotiation were further particularised in a reply to a request for particulars made by the appellants. Two aspects of these particulars merit attention, namely the nature and extent of the intended development and the means by which it was to be financed.

15. The lands were to be all lands mentioned which would benefit from the installation of an underground infrastructure which could provide all necessary services and connections, including road connections. The development was to involve the construction of residential properties on the Guinness lands as well as the installation of the underground infrastructure necessary to drain those lands as well as all other lands in the near vicinity. The plaintiff states that he and Mr Peter Dwyer had already retained the services of experts to design the underground infrastructure. The particulars state that there were to be two large surface water mains together with foul sewer drains, manholes and the requisite pipe work to drain all the lands in the natural catchment in the Castaheany/Phibblestown area. They also state that all this was explained to and discussed in detail with the first named appellant at a meeting in February 1997, whereupon the latter asked to be allowed to co-operate with the plaintiff and Mr Dwyer in order bring into effect their advices, apparently in relation to these services.

16. The particulars state that the plaintiff and Mr Peter Dwyer had in late 1996 taken professional advice with a view to assembling a package to finance the acquisition and development and installation of services they then envisaged. They also state that, prior to the meeting of 5th March 1997, the first named appellant had expressed serious concern about his existing indebtedness and his unwillingness to provide finance for the underground services envisaged by the plaintiff. In reply to a question about financing of the acquisition, the particulars further state that the matter was raised by the plaintiff at the meeting on 5th March 1997 at the behest of the appellants and was to be discussed at a later stage as stipulated in a document of 5th March 1997, to which I will next refer, and which is central to the present issue.

17. It is agreed that a handwritten document was prepared by the plaintiff at the meeting of 5th March and subsequently signed by the first named appellant and Mr Peter Dwyer, but not by the plaintiff. In so far as is necessary, the plaintiff relies on this document to satisfy the requirements of the Statute of Frauds.

18. The parties differ fundamentally regarding the contractual value of this document. The plaintiff pleads that it represents evidence of a concluded agreement; he swears in one of his affidavits that the purpose of his “writing the terms which had been agreed between the parties was to formalise those terms.” The first named appellant says that the entire discussion was tentative and that many matters were uncertain, queried or to be discussed or agreed. These are issues that cannot be determined on a motion of this kind. The plaintiff’s version must be preferred for present purposes.

19. The handwritten document contains, firstly, some very general calculations of acreages and prices, producing a sum of £7.9, meaning £7,900,000, rounded up to “£8m.” The words, Newco Ltd, next appear, followed by an informal note of 50% each to “SR” (Seamus Ross) and “PD” (Peter Dwyer), - (minus) 10%, followed by a question mark, being written under each. Finally, there appears “Finance to be Discussed.” As already mentioned, the plaintiff, in the particulars supplied, acknowledges that the financing of the acquisition was raised by the first named appellant, but that it was “to be discussed at a later stage as stipulated in the document ...”

20. The general tenor of the contract pleaded in the statement of claim and the particulars is that it involved the acquisition by the joint venture, through the vehicle of a company to be formed, in which the plaintiff, the first named appellant and Mr Peter Dwyer would be the shareholders in agreed shares, of the Guinness lands upon which the company would construct a housing development. In addition the joint venture would construct an underground infrastructure and foul and surface water services, which would serve both the Guinness lands and extensive other lands in the area, including some lands already in the ownership of the first or third named appellants and lands owned by third parties. The revenue earned by any of the parties from the provision of such services to other developers would accrue to the joint venture company.

21. In his affidavit grounding the motion to dismiss the claim, the first named appellant maintains that there was no concluded contract between the plaintiff and any of the defendants. He agrees that he signed the handwritten document of 5th March and does not contest any of its contents. He implicitly accepts that one or other of the defendants subsequently acquired the Guinness lands, but says that the price was £19,000,000 and not £8,000,000, as mentioned in the document. The plaintiff says that the latter sum was discussed as the minimum price at the meeting of 5th March. The first named appellant says that Mr Peter Dwyer did not do anything subsequent to 5th March “to advance negotiations or tender requisite capital.”

22. By way of reply, the plaintiff repeats that it was the first named appellant who requested that the issue of finance be dealt with at a later time. He merely adds that the latter “was aware that [the plaintiff] and Mr Peter Dwyer were at an advanced stage of finalising the financial arrangements,” that these arrangements were then discontinued but that the first named appellant said that the raising of finance would not be a problem for “Newco.”

23. The legal principles to be applied on an application of this kind are not in dispute. As explained by reference to the judgment of Costello J in Barry v Buckley, at page 308, it must be clear that the plaintiff’s claim must fail. The learned judge continued:

24. Hardiman J, giving judgment in Supermacs Ireland Limited and another v Katesan (Naas) Limited and another [2000] IR 273, dismissing an application of the kind at present before the Court, approved a dictum of Keane J, as he then was, in Lac Minerals v Chevron Corporation (High Court, unreported, 6th August 1993):

25. It is also clear, and I accept, that the Court should be willing to assume in favour of the plaintiff that an appropriate amendment of the pleadings might save his case. Furthermore, it may be difficult to succeed on such a motion based only on the absence of a note or memorandum which satisfies the requirements of the Statute of Frauds. Something may be found on discovery. It is different where, as in Barry v Buckley, there is a note but it is headed “subject to contract.”

26. The question is whether the plaintiff’s claim in the current case is so deeply flawed that it cannot succeed. I assume, in the plaintiff’s favour, that there was an agreement, as pleaded: a joint venture agreement, where a company was to be formed between identified persons in agreed shares, for the purchase of an identifiable holding of land at an agreed minimum price; that housing development was to be carried out on those lands and that the opportunity of that development was to be used to carry out agreed and identifiable drainage and similar works and to plough the proceeds into the joint venture. I merely say that I assume that, because none of that is the decisive consideration in my mind. I would, in fact, have serious doubts about the uncertainty of the description of the agreed development - what density; what type of housing? - and of the sewerage and drainage works: over whose lands and according to what specification? How could the agreement be binding if the land could not, as envisaged, be bought for the assumed price of £8,000,000?

27. The fatal defect in the plaintiff’s claim is, in my view, the clear evidence, not disputed by the plaintiff, that an integral part of the agreement of 5th March 1997 was that how the entire joint venture was to be financed was left over for discussion at a later date. The plaintiff has described this term, in the particulars furnished as a stipulation and from his affidavit, it is clear that he wrote down the terms in order to formalise them. To his credit, therefore, he does not seek to escape the implications of the signed handwritten document, from which it is abundantly clear that the issue of finance was left over for future discussion. That the matter of finance was of importance to both parties is agreed to be the case. The plaintiff and Mr Peter Dwyer had been investigating it for some considerable time. All parties knew that considerable capital investment would be required to finance the intended project. This was not a case of a straightforward sale of property from vendor to purchaser, where the law would not import or imply, in the absence of express reference, any need for financial provision. The purchaser would be assumed to have the means. The agreement in this case was for the formation of a company. The parties did not address the question of the capital of that company at all. Most crucially, they agreed in the terms which the plaintiff was so careful to formalise that this issue would be discussed at a later date.

28. This provision was, indisputably, an important part of any arrangements between the parties for the purchase and development of lands. In effect, the development could not take place without finance. The parties may well have reached an agreement in principle to enter into a joint venture and on their respective shares. However, they remained in negotiation so long as they had not agreed on finance. Hence, there was no concluded contract. I would allow the appeal and dismiss the plaintiff’s claim.

29. There are a number of alternative pleas in the statement of claim. In my view, these are all subsidiary to the central question of whether there was a concluded agreement. In particular, the claim based on negligent misstatement is, in reality, a restatement of the contract claim. It is not a genuine claim in negligence for misstatement of fact. It relates to the future.

30. For these reasons, I would allow the appeal. I would dismiss the plaintiff’s claim in its entirety.