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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Duffy -v- Ridley Properties & anor [2008] IESC 23 (30 April 2008)
URL: http://www.bailii.org/ie/cases/IESC/2008/S23.html
Cite as: [2008] IESC 23
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Judgment Title: Duffy -v- Ridley Properties & anor Composition of Court: Kearns J., Macken J., Finnegan J. Judgment by: Finnegan J. Status of Judgment: Approved
Outcome: Dismiss | ||||||||||||||
THE SUPREME COURT 040/2006 and 53/2006 Kearns J. Macken J. Finnegan J. BETWEEN DONAL DUFFY PLAINTIFF/RESPONDENT and RIDLEY PROPERTIES LIMITED FIRST NAMED DEFENDANT/APPELLANT and EDWARD STOKES SECOND NAMED DEFENDANT Judgment of Mr Justice Finnegan delivered on the 30th day of April 2008 By an Agreement for Sale dated the 7th May 2003 made between Ridley Properties Limited (“the Vendor”) of the one part and the respondent (“the Purchaser”) of the other part the Vendor agreed to sell and the Purchaser agreed to purchase lands (hereinafter “the lands”) being part of the lands comprised in Folio 12382 of the Register County Longford therein described as follows:- “ALL THAT AND THOSE part of the property of the townland of Edgesworthtown in the Barony of Ardagh and County of Longford being part of the property described in Folio 12382 of the Register of the County of Longford comprising 2.05 acres or thereabouts statute measure being the property shown shaded green on the attached map hereto held by the Vendor in fee simple.” The Agreement for Sale was in the Law Society of Ireland form of General Conditions of Sale 2001 edition. The following Special Conditions are relevant:- “Special Condition 6 The Vendor shall grant a right of way to the Purchaser on completion over the access road at present being constructed by the Vendor. The grant of said right of way shall be incorporated into the transfer to the Purchaser. The access road shall be completed to the satisfaction of the Purchaser’s architect prior to completion. Special Condition 7
“Area shaded green 2.05 acres excl. public road”. The legend was signed Mary O’Hara B.E. M.I.E.I., Mary O’Hara and Co. Limited, Civil Engineering Consultants, Market Street, Ballaghaderreen. The purchase price was €520,000 with a deposit of €52,000. The closing date was two weeks from the date of the Agreement for Sale. The interest rate specified was 12% per annum. On the 2nd September 2003 the Vendor issued a completion notice requiring completion of the purchase within a period of 28 days after service of the notice and making time of the essence. In circumstances which I will detail hereafter the purchase was not completed in accordance with that notice. The Vendor issued the present proceedings on the 25th November 2003 seeking specific performance of the Agreement for Sale and damages in lieu of or in addition to specific performance. In February 2004 the Purchaser became aware that an Agreement for Sale had been entered into in respect of the same or substantially the same lands between the Vendor and the second named defendant. That Agreement for Sale was dated the 10th November 2003. The second defendant completed that purchase on the morning of the 28th November 2003. Progress of the Transaction between the Vendor and the Purchaser Kilrane O’Callaghan & Company Solicitors acted for the Vendor and Collins Crowley & Company Solicitors for the Purchaser. Prior to returning the executed Agreement for Sale Collins Crowley & Company obtained confirmation that the wall mentioned in Special Condition 7 would be constructed by Mr Kane (the Purchaser of an adjoining plot) and that the right of way provided for in Special Condition 6 would be coloured and identified clearly on a map. Both Special Conditions were the subject of discussion between the parties after which it was agreed that the Purchaser would be free to connect to the access road when completed and that the wall was to be between two and three metres in height. On the 15th May 2003 the Purchaser’s solicitors raised requisitions on title and submitted a draft transfer for approval. The Vendor’s solicitors replied to the requisitions on title on the 16th May 2003 and promised to forward a map showing the right of way duly marked in the coming days and this was done on the 21st May 2003. However the map furnished also contained a legend signed by Mary O’Hara which referred to the area to be transferred as 2.2 acres rather than 2.05 acres as provided for in the Agreement for Sale. By letter dated 3rd June 2003 the Purchaser’s solicitors queried this. By letter dated 4th June 2003 the Vendor’s solicitors explained that the measurement in the Agreement for Sale excluded the public roadway whereas the second map provided included one half the roadway adjoining the lands agreed to be sold. The Purchaser’s solicitors submitted the map to an architect for approval and a digital survey was carried out by him. His conclusion was that the area as marked on the second map excluding the roadway comprised 1.95 acres and including one half the roadway 2.031 acres: there was also a difference in the boundaries along the western side of the lands agreed to be sold between the two maps. The Vendor’s solicitors responded by letter dated 15th August 2003 in the following terms:- “The map attached to the contract entered into between our respective clients was for identification purposes only. The discrepancy arises from the fact that the map furnished with the contracts was a copy map only which resulted in the dimensions of the map being distorted.
“We refer to your letter of 15th August last in response to our letter of 4th July 2003 and confirm that we have forwarded a copy of the same to our clients architects Messrs J.P. McHugh & Company and requested a further report from them as a matter of urgency.
“We refer to yours of the 3rd September. The issue of the wall cannot hold up closing of this sale as this is the first time we have heard from your client in relation to this specific requirement regarding the wall. In any event, we note he now requires a 3 metre high wall. We have informed our clients of this and they have stated that this wall will be in place by Monday 8th September. We therefore wait hearing from you as a matter of urgency regarding closing and in that regard our client still intends to rely on the completion notice served herein.” A further survey by the Purchaser’s architect disclosed that the area to be transferred as shown on the second map comprised 1.95 acres resulting in a shortage of .10 of an acre. There was an offer by the Purchaser to complete the purchase on the basis of a pro rata reduction in the purchase price of €25,366. The Vendor’s solicitors replied that the lands to be sold were clearly defined on the ground at all times: the lands to be sold comprised 2.05 acres or thereabouts. Further that it is not a valid exercise to rely on digitally generated maps which will differ from Land Registry maps based on Ordnance Survey Sheets. The suggestion of an abatement in the purchase price was rejected. Correspondence continued between the parties without prejudice to the completion notice but there was no resolution on the matters in issue. On the 31st October 2003 the Vendor’s solicitors wrote that his client was relying on the completion notice served and proceeding accordingly. On the 6th November 2003 the Purchaser’s solicitor wrote that counsel had been briefed to draft High Court proceedings. By the 11th November 2003 the Purchaser believed that the Vendor was in the course of re-selling the lands. The plenary summons herein was issued on the 25th November 2003 and a lis pendens was registered on the 27th November 2003. It appears from affidavits filed in the matter that the Vendor entered into an agreement with the second named defendant to purchase the Lands on the 10th November 2003 at a purchase price of €465,000. Requisitions on Title were raised on the 12th November 2003 and replied to on the same day. The requisitions were in the Law Society of Ireland standard form 2001 edition and included the following requisitions:- 14.4 Is there any litigation pending or threatened or has any Court Order been made in relation to the property or any part of it or the use thereof or has any adverse claim thereto been made by any person.
b If so furnish now details of the interest acquired or claimed. Findings of Fact The learned trial judge heard evidence over three days. Evidence was given by the Purchaser, two directors of the Vendor, the second named defendant, the solicitors for the Purchaser, the solicitors for the Vendor, the Purchaser’s architect and the Vendor’s engineer. The learned trial judge made findings of fact as follows: 1. The lands the subject matter of the Agreement for Sale form part of Folio 12382 of the Register County Longford and are situate on the main road from Edgesworthtown to Longford and close to Edgesworthtown. 2. The Vendor, a development company, owned an adjacent site upon which it proposed to build houses. Planning permission for that development required the use of portion of Folio 12382 of the Register County Longford for an access road and footpath and open space. Prior to entering into the Agreement for Sale the Vendor sold a small portion of Folio 12382 to Mr. Kane who owned an adjacent garage business. 3. The lands comprised in the folio are the site of the old Mart in Edgesworthtown and the Mart buildings remained on the site. 4. From 2001 to April 2003 the lands were on offer for sale. In April 2003 the second named defendant entered into negotiations to purchase the same. At that time there were no physical features to indicate the proposed boundary of the site on the south-western, western and north-western sides (“the western boundary”). The boundary of the small portion sold to Mr. Kane was not identified on the lands. Yellow markings had been placed at certain points to roughly identify the western boundary. 5. The purchase price of €480,000 was agreed with the second named defendant and a deposit paid. Before a contract was signed the Vendor withdrew as a result of a dispute between its directors. 6. The Purchaser is a supermarket owner operating a supermarket in Edgesworthtown. The Purchaser commenced negotiations for the lands on 14th April 2003 with the Vendor’s auctioneer but concluded the terms of an agreement directly with the Vendor. He was informed by the Vendor’s auctioneer that the lands comprised 2.3 acres, was made aware that the Vendor was retaining a portion of the Mart site for the purposes of an access road, footpath and green area but was not made aware of the yellow markings. 7. Prior to signing the contract the Purchaser was aware of the area of the site being sold and had seen the yellow markings on site but was not told that they were definitive boundary marks. 8. The Agreement for Sale was signed and matters proceeded between solicitors as hereinbefore detailed. 9. There were two site meetings as follows:- (a) On the 6th May 2003 the Purchaser, his architect Mr. McHugh and Mr. Groarke a director of the Vendor attended on site. (b) On 5th June 2003 the same persons together with Ms O’Hara the Vendor’s engineer attended on site. There was a conflict in the evidence and the learned trial judge made the following findings in relation to the meetings. There are thirteen findings of fact in relation to these meetings. (i) Prior to the first meeting Mr. McHugh had been instructed by the Purchaser that he was purchasing 2.05 acres excluding the public road. (ii) Mr. Groarke confirmed that the area being transferred was 2.05 acres. (iii) At the first meeting there were yellow markings on the walls of the Mart and elsewhere and Mr. Groarke indicated that he had put on those marks as a rough guidance of the proposed western boundary. Further the marks could not be relied upon to properly determine that boundary. The Purchaser did not suggest that the marks had previously been given to him as definitive markings. (iv) Mr. Groarke, at Mr. McHugh’s request, agreed that he would have his engineer mark definitive points from which the western boundary of the site could be deduced. (v) The purpose of Mr. McHugh attending the site was to advise the Purchaser as to the area he was obtaining by reference to the actual western boundary marked on the ground. (vi) There was considerable uncertainty at the first meeting as to what was the accurate line for the western boundary. In particular it was pointed out by Mr. McHugh that on the map attached to the contract the western boundary was a straight line whereas on the ground it was “meandering somewhat”. (vii) At all times Mr. Groarke made clear that his main concern was that he would have enough space between the western boundary of the property being sold and the western boundary of the lands comprised in the folio to construct a road and footpath to serve the housing development which the Vendor proposed to commence at the rear of the Lands. (viii) On 5th June 2003 Ms. O’Hara met with Mr. Groarke at the site prior to meeting with the Purchaser and Mr. McHugh. (ix) Ms. O’Hara was the person who had prepared the map attached to the Agreement for Sale and the second map. The maps had been prepared by her reference to a map used in the application for the planning permission for the housing development at the rear of the Lands. Her instructions were to include in the property for sale that portion not required for the access road footpath and green space as per the planning permission. She prepared the maps by indicating a boundary which she considered excluded those requirements. (x) There were no physical features on the western boundary which identified the boundary of the site being sold as marked on the map. The fact that part of the old Mart building went through the proposed boundary line at certain points made identifying and marking the boundary line on the ground more difficult. Ms. O’Hara and a colleague identified certain physical features such as a bridge on the road and a drain at the north-eastern point which she considered were identifiable from the copy folio map and from those points scaling back the maps had been prepared. She attempted to mark with red paint appropriate points to identify the intended boundary line on the ground. Certain of these were on the old Mart building. Others were on the ground, a wall and one on a sheet of galvanised iron. (xi) Ms. O’Hara has no recollection of using a ranging rod. Mr. McHugh was clear in his evidence that a ranging rod was there and appeared to him to have been used as a marker. The learned trial judge concluded on balance that a ranging rod was used by Ms. O’Hara and her colleague as a marking point on the site. On 5th June 2003 when Mr. McHugh and the plaintiff arrived Ms. O’Hara indicated the points marked. She did not give to Mr. McHugh any dimensions she had used. Mr. McHugh identified the marks on that day. (xii) Mr. McHugh returned to the site a third time a few days later and carried out a digital survey using electronic equipment known as a total station and data logger. He measured the total area enclosed by the site now identified with red markings as 1.95 acres. Mr. McHugh sent to the Purchaser’s solicitors a report dated 27th June 2003 following this survey. Whilst an attempt was made at the hearing to explain the difference in area by reference to the possibility of the red mark on the galvanise sheet having been moved the learned trial judge concluded as a matter of probability it was not so caused. The learned trial judge made a number of findings in relation to the evidence as to what transpired between the solicitors. The following which are relevant:- 1. The Vendor maintained that it was entitled to rely upon the completion notice. The Purchaser at all times asserted that it was an invalid completion notice. 2. The Purchaser’s solicitor continued to seek a meeting on site between the Vendor’s engineer and the Purchaser’s architect. This was resisted by the Vendor’s solicitors. The Purchaser’s solicitors as a ground for contending that the completion notice was invalid maintained that there remains substantial uncertainty as to the identity on the ground of the Lands. 3. On receipt of a letter from the Vendor’s solicitors dated 31st October 2003 informing them that the Vendor was relying on the completion notice the Purchaser’s solicitors proceeded to instruct counsel and instituted the present proceedings on the 25th November 2003 and the registered a lis pendens on the 27th November 2003. 4. The second named defendant’s purchase was completed on the morning of the 28th November 2003. Proceedings before the High Court On the pleadings the issues arising between the Vendor and the Purchaser are as follows. 1. Was the completion notice valid? 2. If the completion was not valid should the court exercise its equitable jurisdiction and refuse an order for its specific performance. As to the validity of the completion notice it was contended on behalf of the Purchaser that at the date of service of the same the Vendor was not ready willing and able to complete for two reasons:- 1. Special Condition 7 had not been complied with as the boundary wall had not been built. 2. In relation to the identity of the lands agreed to be sold the Purchaser could not be certain of the identification on the ground of the Lands.
Accordingly the learned trial judge found that the completion notice was invalid. The learned trial judge then proceeded to consider whether or not applying equitable principles the remedy of specific performance being discretionary she should order specific performance of the Agreement for Sale. She referred to Farrell Irish Law Specific Performance at p. 223 where the author stated:-
“For the reasons which I have already set out above I have concluded that the contract for sale of the 7th May 2003, between the plaintiff and the first named defendant did not desribe with certainty the lands to be transferred herein nor did it include either in the general conditions nor by way of a Special Condition a mechanism by which the western boundary of the plot to be transferred was to be identified on the ground.
The learned trial judge went on to hold that the Purchaser was entitled to damages in lieu of specific performance. The learned trial judge having so decided an issue arose in the following circumstances. The statement of claim sought damages for breach of contract in the following terms:- “Further, or in the alternative, damages for breach of contract and/or negligence against the first defendant, its servants or agents.” The learned trial judge asked the Purchaser’s counsel on the opening of the case if the claim being pursued was for specific performance only. The effect of counsel’s reply was that the Purchaser was pursuing a claim for specific performance with the alternative of damages in respect of the damage, loss and expense sustained by the plaintiff by reason of the wrongful repudiation of the Agreement for Sale. In the course of the exchanges counsel said:- “I am asking basically for an affirmation of the contract, My Lord, and a decree of specific performance.” The learned trial judge understood that the Purchaser was seeking specific performance but was not seeking any special damages; rather general damages were being sought on the basis that the proposed development of the lands by the Purchaser had been delayed. No evidence was given to support a claim for special damages as to the difference in value of the site between May 2003 and the date of the hearing. At the conclusion of the Purchaser’s evidence counsel on behalf of the Vendor asked that the Purchaser should then elect as to the remedy he was seeking. It was submitted that if the Purchaser elected to seek specific performance he is not entitled to damages. As a result of exchanges it was quite clear that the Purchaser was seeking specific performance but if for whatever reasons that relief were not granted he was seeking damages in lieu of specific performance. Further if specific performance should be granted the Purchaser was seeking damages in addition thereto for the delay in completion. In relation to damages in addition to specific performance counsel said that he was not seeking special damages but general damages for delay for the loss of business opportunity. Accordingly the Purchaser’s claim for damages encompassed the following:
2. In the event that specific performance is granted, damages in addition thereto by way of general damages for delay and the resulting loss of business opportunity. The Purchaser’s evidence had been that he proposed building a new supermarket on the lands which would be twice as big as the one which he operated and would have resulted in a natural expansion of the business and that that has been delayed.
(b) Whether any fees were paid by the plaintiff to Mr McHugh or are due and owing by the plaintiff to Mr McHugh for the work done by Mr McHugh for the plaintiff in connection with the contract in 2003. (c) Whether any fees have been paid or are due and owing by the plaintiff to his solicitor in connection with the work done in connection with the contract up until the 22nd October 2003.” Having determined that an order for specific performance should be refused it was unnecessary for the learned trial judge to consider the claim against the second named defendant. The damages hearing and the award of damages When the matter was re-listed in relation to the time and mode for taking of the additional evidence referred to in the learned trial judge’s judgment counsel for the Purchaser informed the court that the learned trial judge had misunderstood the plaintiff’s position in relation to his claim for damages in lieu of specific performance and that it had been the intention of the plaintiff at all times to pursue a claim for loss of bargain based on the increased value of the property since the date of the contract in the event that specific performance should be refused. He sought to adduce evidence of the current value of the lands. Counsel for the Vendor objected to the admission of any evidence other than that referred to in the judgment of the learned trial judge. The learned trial judge had understood from counsel for the Purchaser that he was not making any claim for special damages whether in relation to a claim for damages in addition to specific performance or in relation to damages in lieu of specific performance. Counsel for the Purchaser informed the court that in dealing with the questions raised as to the nature of the claim for damages he was addressing only the claim for damages in addition to specific performance. The additional evidence which the learned trial judge directed in her judgment of the 7th July 2005 was so directed on the basis of her misunderstanding of what she had been told by counsel for the Purchaser that no claim for special damages was being made. She had understood counsel to have informed her that no claim was being made, that the lands had increased in value between May 2003 and the date of the hearing. The learned trial judge carefully re-considered the transcript of the exchanges which took place on the second day of the hearing. No order had been made up on foot of the learned trial judge’s ruling. The learned trial judge determined that in the circumstances she was entitled to alter the ruling which she had given. The learned trial judge proceeded to hear evidence of valuation. In relation to the deposit of €52,000 she held that the Purchaser was entitled to the return of the same together with interest earned thereon. The Purchaser’s valuer placed a valuation on the lands as at the 7th July 2005 of €2,000,000. The Vendor’s valuer placed a valuation on the lands at that date of €900,000. The learned trial judge held that the 7th July 2005 was the appropriate date by reference to which the loss of bargain should be calculated. The learned trial judge determined that the value of the lands as at the relevant date was €1,400,000 and the measure of damages for loss of bargain was accordingly €880,000. She refused to assess damages at an earlier date on the basis of the Vendor’s submission that the proceedings ought to have been heard and determined in July 2004 and also refused to take into account that the Vendor had not been enriched by the second transaction the same having been at the reduced price of €485,000. The Notice of Appeal and Notice to Vary The vendor in its Notice of Appeal relies upon the following grounds:- 1. The learned trial judge erred in law in determining that the plaintiff was entitled to an award of damages in lieu of specific performance. 2. The learned trial judge erred in law in awarding damages in lieu of specific performance where it was determined that the court did not have the power to compel the Agreement by reason of the fact that the contract did not describe with certainty the lands to be transferred and did not contain a mechanism by which the boundaries were to be defined. 3. Since the reason why the learned High Court judge refused to grant specific performance was that the alleged contract neither specified the lands to be sold nor provided a mechanism for those lands to be ascertained it followed that there was no binding contract between the plaintiff and the first defendant and consequently there could be no breach of that alleged contract by the first defendant, so that it was inappropriate to award the plaintiff damages for breach of contract by the first defendant. 4. The learned trial judge erred in law in awarding damages in lieu of specific performance when the logic of the judgment required a finding that there was not a binding contract between the plaintiff and the first defendant. 5. The learned trial judge erred in law in awarding damages in lieu of specific performance when specific performance could not have been decreed because no valid or enforceable contract existed between the plaintiff and the first defendant. 6. Since the learned trial judge could not have decreed specific performance it was not open to her to award damages in lieu of specific performance. 7. The learned trial judge erred in law in not finding that there was no concluded contract between the plaintiff and the first defendant. 8. The learned trial judge erred in law in allowing the plaintiff adduce evidence of loss of bargain after the issues had been determined and judgment handed down on the 7th day of July 2005. 9. The learned trial judge erred in law in measuring damages for loss of bargain. 10. The learned trial judge erred in law in not assessing damages for loss of bargain by reference to the current market price at the date of the judgment. (sic) 11. The learned trial judge erred in law in not assessing the quantum of damages by reference to a date earlier than the date of judgment. 12. The learned trial judge erred in the method of assessment of the current market value of the said property. 13. The measurement of damages by reference to current property values where there has been a dramatic increase in those values is unfair and inequitable and does an injustice to the first defendant. 14. The learned trial judge ought to have taken into account the finding that there was a justifiable apprehension on the part of the first defendant as to the plaintiff’s enthusiasm for completing the transaction when measuring damages herein. 15. The amount of the award of damages was excessive and amounts to a windfall profit for the plaintiff. The Purchaser’s notice to vary challenges the learned High Court judgment insofar as she refused specific performance and granted damages in lieu and seeks an order for specific performance. The following grounds are relied upon:- 1. The finding of the learned trial judge that there was uncertainty in relation to the identity of the property to be sold when the respondent agreed to purchase the property is not borne out by the weight of the evidence. 2. The learned trial judge failed to take account of the fact that the appellant altered the boundaries of the lands to be sold after the initial agreement with the respondent. 3. The learned trial judge was mistaken in fact in finding that the respondent was not told that the yellow markings on the site where definitive boundary marks. 4. The learned trial judge was mistaken in fact and in law in failing take account of the fact that the appellant by agreeing to take a reduced purchase price had acknowledged that it had reduced the size of the property to be sold from that originally offered to the respondent. 5. The learned trial judge was mistaken in fact and in law in holding that the uncertainty, if any, in relation to determining the lands to be transferred was such as to deprive the respondent of his entitlement to a decree for specific performance. 6. The learned trial judge was mistaken in fact and in law in holding that the uncertainty if any in relation to the western boundary of the lands to be transferred was such as to deprive the respondent of his entitlement to a decree for specific performance. 7. The learned trial judge was mistaken in fact and in law in holding that the uncertainty, if any, in relation to determining the lands to be transferred was such as to justify her exercising her discretion to refuse a decree to a specific performance. 8. The learned trial judge was mistaken in fact and in law in failing to take any or any sufficient account of the fact that the appellant having conceded that the corner points of the boundaries should be adjusted failed to take any further steps in that regard notwithstanding the repeated requests of the respondent that the respective engineers meet on site for that purpose. 9. The learned trial judge was mistaken in fact in finding that the appellant had justifiable apprehension as to the respondent’s enthusiasm for completing the transaction. 10. The learned trial judge was mistaken in fact in holding that the respondent had any reasons other than his justifiable requirement that the boundaries of the lands be properly defined on the ground for not completing the transaction. 11. The learned trial judge was mistaken in fact and in law in finding that the contract should have included a mechanism for the finding the western boundary of the lands. 12. The learned trial judge erred in law when, having found that there was a validly subsisting contract and that the twenty eight day completion notice served by the appellant was invalid and of no effect failed to exercise her discretion by granting specific performance. 13. The learned trial judge erred in failing to take cognisance of the fact that the appellant had subsequently constructed boundaries around the lands the subject matter of the contract and that the lands enclosed by the said boundaries comprised just short of 2.05 acres resulting in the removal of the uncertainty, if any, in
15. The learned trial judge erred in not taking any or any sufficient cognisance of the fact that the appellant in purporting to enter into a contract with the second named defendant was prepared to accept a purchase price which as €55,000 less than that in the contract with the respondent for the same lands a reduction of 10.5% in rising market. 16. The learned trial judge erred in not taking any or any sufficient cognisance of the conduct of the appellant in giving false and misleading replies to requisitions to the second named defendant in which they knew to be false and misleading in order to avoid disclosing the existence of the prior contract with the respondent. 17. The learned trial judge erred in not taking any or any sufficient cognisance of the conduct of the appellant in giving false and misleading replies to requisitions and which they knew to be false and misleading in denying that there was any dispute or any litigation pending in order to avoid disclosing that another party had an existing interest in the property. On the hearing before this court the Vendor’s grounds of appeal were reduced and consolidated to four grounds as follows:- 1. That the learned trial judge was in error in determining that the plaintiff was entitled to an award of damages in lieu of specific performance. 2. That the learned trial judge was in error in allowing the plaintiff to adduce evidence of loss of bargain after the issues had been determined. 3. The learned trial judge was in error as to the relevant date for assessing damages. 4. That the learned trial judge was in error in the method of assessing valuation.
1. That the learned trial judge was in error in determining that the plaintiff was entitled to an award of damages in lieu of specific performance.
On behalf of the Vendor it is also submitted that notwithstanding the existence of a concluded and still subsisting Agreement for Sale the court had no jurisdiction to award damages in lieu of specific performance. Firstly, it is submitted, that specific performance could not be granted because of lack of mutuality. A Court of Equity will not grant a decree for specific performance of an agreement unless at the time the agreement was entered into it might have been enforced by either of the parties against the other. By reason of the uncertainty as found by the learned trial judge neither party was entitled to specific performance of the Agreement for Sale they contended for and accordingly neither would be entitled to damages in lieu. As I understand it this is merely to restate the argument that there was no concluded agreement in the first place. In any event mutuality is a matter to be considered in relation to the exercise of the court’s discretion as opposed to a bar on the award of specific performance: Price v Strange [1978] Ch. 337. Again it is submitted that Lord Cairn’s Act section 2 conferred upon the court jurisdiction to award damages in lieu of specific performance only where it had jurisdiction to grant specific performance. Reliance is placed on Ferguson v Wilson [1866] 2 Ch. App. 77 where Lord Cairn’s held that the Act:- “did not in any way give the court a power where it had no jurisdiction to decree specific performance for want of the subject matter whereon its decree would operate to give damages by reason of some antecedent breach of contract.” Again in Lavery v Purcell [1866] 39 Ch. D. 508:- “The jurisdiction to give damages in substitution or in addition to specific performance has not been extended to cases where specific performance could not possibly have been directed.” I have no difficulty in accepting that this is undoubtedly the law. For the Purchaser it is submitted that the learned trial judge having found that there was a subsisting contract exercised her discretion in refusing to decree specific performance and instead under Lord Cairn’s Act to award damagers in lieu. She relied on a passage in Farrell, Irish Law of Specific Performance at page 7: 1.11:- “If a contract is ‘completely uncertain’ it is equally void at law and in equity. There is a degree of uncertainty which will lose the right to specific performance without also destroying remedies at law. As Lord Redesdale pointed out in 1805 (Harnett v Yielding [1805] 2 Schoales & Lefroy 549):-
In this case the learned trial judge had found a completed and subsisting agreement and her refusal to order specific performance was merely an exercise of her discretion. The power to award damages in any event existed at common law and was not dependant on Lord Cairn’s Act. I am satisfied that it was no part of the Vendor’s case that the contract was uncertain. That case was not pleaded nor was it canvassed in evidence. No application was made to amend the pleadings. In those circumstances I am satisfied that it was within the learned trial judge’s discretion to refuse to allow that issue to be raised. Quite apart from this insofar as the learned trial judge held that there was a subsisting contract I am satisfied that she was correct in so doing. It is the experience of conveyancers’ that there are very many contracts for the sale of registered land where the lands to be sold are identified by reference to a Land Registry Map. For the entire of the folio this would generally give rise to no difficulty notwithstanding that Land Registry Maps are not conclusive as to boundaries. Where part of a folio is being sold almost invariably a photocopy folio of the Land Registry Map is marked and even if there are boundaries ascertainable on the ground by way of hedges and ditches there remains the difficulty identified in the course of the evidence in this case that scaling from such a map onto the ground cannot be conducted with complete accuracy: the same is true of an original Ordnance Survey Sheet. Such sales are in general completed without difficulty and where difficulty is encountered it can be resolved. The reason for this is the obligation which the law places on the parties to a contract for the sale of land as identified by Costello J. in Northern Bank Limited & Ors v Duffy [1981] I.L.R.M. 309. He cited with approval a passage from Bayley-Worthington and Cohen’s Contract [1909] 1 Ch 648 in the context of a default by a party to a contract as a result of which it was not completed but it is clear from the passage which I now cite that it is of wider application. The passage cited by Costello J. with approval is the following:-
Costello J. remarked:- “Just as a Purchaser owes a duty to his Vendor in the course of the implementation of a contract for sale so does a Vendor owe a duty to the Purchaser. The nature and extent of that duty will, of course, be different as the sale progresses.” Upon the basis that the court had no jurisdiction to grant specific performance there being no concluded agreement the Vendor argues that the court likewise had no jurisdiction to grant damages in lieu of specific performance. If the premise were correct in this case, that there was no concluded agreement, the court would have no jurisdiction to award damages in lieu of specific performance. However the issue as defined in the pleadings and as presented to the court was whether there being a concluded agreement that agreement had been determined by a notice to complete. Where there is a concluded agreement but the court in its discretion refuses to grant specific performance the court has jurisdiction to award damages. Having regard to the ruling of the learned trial judge, which in my opinion was correct, it is not open to the Vendor on this appeal to argue that there was no completed agreement. The award of a decree of specific performance is discretionary. The award of damages whether at common law for breach of contract or under Lord Cairn’s Act in lieu of a decree for specific performance arises where there is a breach of a concluded subsisting agreement. It is a matter for the plaintiff to seek whichever remedy he wishes. The circumstances in which the court will exercise its discretion and refuse to award specific performance are myriad. Both of the cases referred to in Farrell in the passage cited above require some scrutiny. In Williams v Kenneally Barton J. held that there was a binding agreement for a lease of the exclusive right of fishing on the River Lee where it passed through the lands of the defendant. There was no memorandum and the plaintiff relied on part performance. The plaintiff alleged that the agreement was for a term of five years for the season 1909 and the following four seasons. The plaintiff entered into possession in January 1909 and again in January 1910. The learned trial judge found that there was uncertainty as to the date from which the Agreement was to run, whether 1909 or 1910 and as to liability for rates. He purported to follow Harnett v Yielding and on the basis of that uncertainty dismissed the action without costs. The decision appears at variance with the well established law that an agreement for a lease is enforceable only if the parties, the property, the length of term, the rent and the date of commencement are fixed. I do not regard it as correct in law. The brief head note in Harnett v Yielding reads as follows:- “Equity will not decree specific execution upon a contract, the terms of which are uncertain as to its extent.
Nor, where it is doubtful whether the party meant to contract to the extent that he is sought to be charged.” “I promise and agree to perfect a fresh lease to Mr Daniel Harnett, at any time he shall demand the same at £5 a year less than the within mentioned rent.” The endorsement was duly signed and the lessee continued in possession for a further seventeen years paying the reduced rent but without having a new lease executed. He assigned the lease to his son, the plaintiff, and when the term granted was close to expiration the plaintiff applied for renewal which the defendant refused. On behalf of the defendant it was argued:- 1. That the endorsement did not import an agreement for any more than one term of twenty one years. 2. That he was tenant for life with a power to demise for twenty one years only in possession at the best improved rent. The plaintiff indicated that he would accept a lease for twenty one years commencing on the expiration of the original lease. The court construed the endorsement and expressed it clear and effectual to grant a term of twenty one years but that it did not import into the endorsement the provisions of the original lease providing for renewal. Having construed the endorsement the court refused to grant specific performance of the agreement as that agreement was beyond the powers of the defendant as a tenant for life and this being known to the plaintiff. The conclusion of the judgment reads as follows:- “…nothing can be more mischievous than to permit a person who knows that another has only a limited power, to enter into a contract with that other person, which if executed, would be a fraud on the power; and when that is objected to, to say ‘I will take the best you can give me’. A Court of Equity ought to say to persons coming before it in such a way ‘make the best of your case with a jury’. On the whole, I think, (though I have had considerable doubts) that this Bill ought to be dismissed. If the plaintiff shall think fit to waive any action at law against the defendant, I will dismiss it without costs; if otherwise, with costs. This is frequently being done in cases of this kind to put an end to litigation.” The judgment must be seen in its historical context. Equity did not award damages although in certain circumstances it would award compensation. A party seeking damages for breach of a contract for the sale of lands had his remedy at common law or as Redesdale L.C. said “make the best of your case with a jury”. The ruling on costs equally recognise that an action lay at common law for damages for breach of a contract for the sale of lands where specific performance was refused. This action predated Lord Cairn’s Act (Chancery Amendment Act 1858) and the Judicature Acts which empowered courts of chancery to award damages. Specifically Harnett v Yielding is a case involving a concluded subsisting Agreement where in exercise of its discretion the court refused to order specific performance of the same, such performance being in excess of the powers of the defendant as a tenant for life but also on the grounds that from the circumstances it was doubtful whether the defendant meant to contract to the extent that the court found him liable. It recognised the entitlement of the plaintiff to damages at common law where the court in its discretion refused specific performance: after Lord Cairn’s Act and the Judicature Act it is not necessary for two separate actions to be brought. It does not support the vendor’s contention that the court has no power to award damages where it refuses to order specific performance.
It is customary in the indorsement of claim and statement of claim in an action for specific performance, as here, to claim damages in addition to or in lieu of specific performance but also to claim as a relief if necessary an inquiry as to title and an inquiry as to damages. It is not necessary to do so. Special damages should be claimed and particularised in the Statement of Claim. Prior to Lord Cairn’s Act the Court of Chancery in refusing to grant specific performance of a concluded agreement did so without prejudice to the right of the plaintiff to bring an action at common law for damages. After Lord Cairn’s Act the Court of Chancery and after the Judicature Act the High Court in refusing specific performance will proceed to consider the question of damages even where such question is not raised by the pleadings. See Daniell’s Chancery Practice 10th edition page 1134 and cases there cited. In recent times at least, the common practice for the court in refusing to award specific performance is to direct an inquiry as to damages: see In the Matter of Greendale Developments Limited (in liquidation). In this case the learned trial judge found that the Purchaser had not in opening the case waived its claim to damages in lieu of specific performance. She was entitled to so find and I would not interfere with that finding. Accordingly on refusing to award a decree of specific performance the learned trial judge was entitled under Rules of the Superior Courts, Order 36 Rule 38 and well established practice to adjourn the case for further consideration before her. Both McMullan v Clancy and In the Matter of Greendale Developments Limited (in liquidation) have no application here the former concerning amendments to an erroneous order and the latter the setting aside by the Supreme Court of an earlier order. The learned trial judge was clearly entitled to proceed as she did.
Wroth v Tyler was followed in this jurisdiction in O’Connor v McCarthy & Ors [1982] I.L.R.M. 201 where however it was accepted by counsel that damages should be assessed at the date of judgment. It is submitted on behalf of the Vendor that it is open to the court in awarding damages in lieu of specific performance to fix a date other than the date of breach or the date of judgment and I accept that this was held by Megarry J. at page 60 and that that represents the law in this jurisdiction also. The Vendor relies on Suleman v Savari & Ors [1989] 2 All. E.R. 460. In that case damages were assessed as at the date of the judgment. While not material it is to be noted that that was a claim against the solicitor for a vendor who signed a contract without the authority of the vendor and the measure of damages in these circumstances would be the same as in an action against a vendor. In the course of his judgment Andrew Parke Q.C. summarised his conclusions on the cases as follows:- (a) A purchaser who loses his purchase is entitled to damages at common law as well as to damages in lieu of specific performance under Lord Cairn’s Act. (b) The usual measure of damages at common law has in the past been the difference between the contract price and the price at completion plus interest from completion until judgment. (c) This is not an absolute rule of law, and damages may be assessed by reference to the value at a different date if it would be more just to do so. (d) Where, as often in recent years, there have been dramatic changes in property values, it may be more just to assess damages at a different date. (e) This is particularly so where the innocent party reasonably continues to try to have the contract completed: in such a case it is logical and just to assess damages as at the date when (otherwise than by his default) the contract is lost. On behalf of the Vendor it is argued that in the present case the Vendor comes within paragraph (e) above. At the hearing on damages it was submitted on behalf of the Vendor that by reason of the delay of the plaintiff in prosecuting the proceedings that the damages for loss of bargain should be assessed by reference to the market value of the property at a date earlier than the date of judgment, the 24th July 2004 being suggested, that being the date when the proceedings ought to have been heard and determined. It was further submitted that the court should take into account the attempts by the vendor to complete the sale at a reduced price in the autumn of 2003 and the fact that the Vendor sold the property to the second defendant for £485,000, that is less than the purchase price and the Agreement for Sale with the plaintiff, and as a result has not been enriched. Neither of these submissions found favour with the learned trial judge. No submission was made to the learned trial judge on the basis of Suleman v Savari & Ors. Again in this court the Vendor argued that the present case can be distinguished from Wroth v Tyler. In that case damages were measured on the basis that the plaintiff should be put in a position to purchase a replacement or alternative property of an equivalent nature: in the present case the evidence was that the lands represented a once-off or unique site and therefore the approach in Wroth v Tyler was not appropriate. The purchaser relies on Wroth v Tyler as authority for the damages being assessed as of the date of the judgment. I am satisfied that damages were correctly assessed as of the date of the judgment and that Wroth v Tyler represents the law in this jurisdiction. I am not satisfied that either of the earlier dates suggested by the Vendor are appropriate. The chronology of the proceedings is as follows:- Chronology 1. 31st October 2003 theVendor’s solicitor notified Purchaser’s solicitors that the Vendor would rely on the Notice to Complete. 2. 23rd November 2003 plenary summons issued. 3. 2nd January 2004 the Vendor entered appearance. 4. 19th February 2004 the Purchaser delivered statement of claim. 5. 8th April 2004 the Purchaser issued motion to join second named defendant. 6. 30th April 2004 the purchaser issued motion for judgment in default of defence. 7. 4th May 2004 the Vendor delivered defence. 8. 2nd November 2004 second named defendant joined. 9. 6th December 2004 second named defendant delivered defence. 10. 24th February 2005 the Purchaser served notice of trial. 11. 26th April 2005 hearing commenced. 12. 7th July 2005 judgment delivered on liability issue. 13. 28th November 2005 hearing on damages. 14. 7th October 2005 judgment delivered on damages. I am not satisfied that this chronology discloses any material delay on the part of the purchaser. I do not see that the resale at a lower price is relevant. If, as the Vendor argues, the lands are unique then it should be recalled that underlying the remedy of specific performance in contracts for the sale of lands is the notion that each property is unique. The availability of similar properties will assist the court in arriving at the measure of damages as the price at which such properties can be acquired be relevant. Where there are no similar properties available the court must have regard to expert evidence as with the case here. To apply the test postulated in Suleman v Savari & Ors at (e) above will not avail the Vendor. In that case damages were assessed at the date at which the plaintiff lost his purchase with interest thereon. The earliest date at which the purchaser could be said to have lost his purchase in this case is the date of judgment when specific performance was refused. Even at that date, however, the possibility of being awarded specific performance on appeal remained and that possibility was only lost when in the period between the hearing in the High Court and the hearing of the appeal the second named defendant became registered as full owner of the Lands. In these circumstances I am satisfied that in assessing damages the learned trial judge correctly had regard to the value of the lands at the date of judgment. The Vendor was only ever willing to complete on its own terms: no satisfactory map was offered and the Vendor was unwilling to mark boundaries on the ground. 4. That the learned trial judge was in error in the method of assessing valuation. I am satisfied that the learned trial judge was entitled to adopt the approach which she did. She dealt with the matter on the basis of the evidence which the parties chose to adduce. She rationalised clearly the basis upon which she assessed the evidence of the valuers each of whom gave oral evidence and were cross-examined. This court should not interfere with her finding. Where specific performance is refused and damages for loss of bargain awarded in lieu the difference in value as of the date of judgment and the date of contract as the measure of loss requires adjustment to arrive at the correct measure of damages. The object of an award of damages is to give the claimant compensation for the damage, loss or injury he has suffered. The question to be asked is what if the plaintiff lost and not what the defendant ought fairly and reasonably to pay: General Tire and Rubber Company v Firestone Tyre and Rubber Company [1975] 1 W.L.R. 819. In In re Daniell [1917] 2 Ch. 405 it was held that a Purchaser awarded damages in lieu of specific performance cannot claim his conveyancing costs as these would have been incurred if the contract had been completed: no such claim as made here. From this, however, it logically follows that the Vendor could claim to deduct from the damages costs, expenses and stamp duty which the Purchaser would have paid had the transaction been completed: see Court of Appeal in Ridley v Geerts [1945] 2 All E.R. 654. Applying these principles to the present case has the following effects:- 1. The transaction had proceeded to the point of completion and the Purchaser has incurred liability for his solicitors’ fees. Accordingly it differs from a case where a contract having been entered into the Vendor takes no steps to complete and accordingly no conveyancing fees or minimal conveyancing fees are incurred by the Purchaser. In these circumstances the Vendor is not entitled to a deduction in respect of solicitors fees. 2. Had specific performance been ordered the Purchaser would have incurred stamp duty on the consideration passing. As the transaction did not proceed to completion he is saved this expense. It is accordingly appropriate that the Vendor should receive credit against the difference in value at the date of contract and the date of judgment for the amount of the same. 3. Had the purchase been completed the Purchaser, if in funds, would have been at the loss of the balance of the purchase price from the contractual date of completion up to the date at which damages are assessed. If not in funds he would have incurred borrowing costs. While it is clear from the evidence that the Purchaser proposed to borrow this is the extent of the information available. To reflect loss of use of funds or borrowing costs which would have been incurred by the Purchaser it is appropriate that a deduction be made from the difference in value at the contract date and date of judgment. In the absence of evidence this allowance should be the amount calculated at Courts Act rate on the balance of the purchase price from the completion date to the date of judgment that is on the sum of €468,000 from the 21st May 2003 to the 7th July 2005. In the Matter of Fuller and Company Limited (in liquidation) [1982] I.R. 161 the vendor claimed a similar deduction and was unsuccessful. That case concerned urban property and the ratio for the refusal is that had the contract been completed by the vendor the purchaser would have had the rents and profits of the lands: in this case the court is concerned with development lands and no claim was advanced by the Purchaser that he was at the loss of rents and profits. It will be possible for the parties to compute and agree the sum which would have been payable by the Purchaser for stamp duty and the amount of interest calculated at Courts Act rate on the balance of the purchase money for the period which I mention. Conclusion For the reasons set out above I would dismiss the appeal and affirm the order of the High Court save and except that the award of damages would be adjusted as hereinbefore indicated by the deduction of the amount of stamp duty which would have been incurred by the Purchaser and a sum equal to interest at Courts Act rate on the balance of the purchase price from the 21st May 2003 to the 7th July 2005. | ||||||||||||||