6
June, 2000
Finnegan
J
This
Matter comes before the Court by way of an appeal from the decision of the
Circuit Court on an application for directions by the Solicitor having carriage
of a sale pursuant to an Order of the Circuit Court the original order for sale
having been made on the 23rd July, 1991. While the factual matrix is clear and
undisputed save in one particular, namely whether the purchaser (who was added
as a co-Defendant to the application for directions) Chesington Limited ("the
purchaser") was at any material time in sufficient funds to enable it to comply
with its obligations under the order for sale. A number of legal issues arise
upon which the law or the application of the law to the facts is uncertain.
FACTUAL
BACKGROUND
The
Action commenced on the 21st January, 1991 by Equity Civil Bill issued by
Gerard Blackall, Plaintiff against Eileen Blackall and Rose Blackall,
Defendants (together called "the parties") seeking partition or sale of
premises Marino Park, Blackrock, Co Dublin ("the premises"). The parties are
entitled to the premises as tenants in common, the Plaintiff as to one
undivided quarter share, the first named Defendant as to one undivided quarter
share and the second named Defendant as to one undivided half share. By Order
dated the 23rd July, 1991 it was ordered that the premises be sold by public
auction subject to the approval of the Court and to such conditions of sale as
should be settled by the Court and carriage of the sale was given to the
Plaintiff's Solicitor Mr James O'Higgins. This Order was appealed to the High
Court and on the 20th July, 1992 the High Court ordered the sale of the
premises subject to the approval of the Court and to such conditions of sale as
should be settled by the Court. The matter again came before the High Court on
the 30th October, 1992 when it was ordered that the Solicitor for the first
named Defendant Brendan Moloney ("the Solicitor having carriage") should have
carriage of the sale. The first named Defendant discharged the Solicitor having
carriage and a Notice of Change of Solicitor was filed in the matter on the
16th June, 1993. The High Court by order dated 15th December, 1993 confirmed
that the Solicitor having carriage should have carriage of the sale
notwithstanding the circumstance that he no longer acted for any party to the
Action. By Order of the Circuit Court made on the 19th July, 1995 it was
ordered that the premises be sold to the purchaser for the sum of L400,000 and
liberty was given to the County Registrar or his authorised officer to sign the
contract for sale in default of signing by any of the parties.
The
contract of sale was available in Court on that day and it was signed on behalf
of the purchaser. It was not however, signed by or on behalf of the Plaintiff
or the Defendants then or at any later time. By that order the Defendants were
allowed six months from the date of signing the contract to deliver vacant
possession.
That
order in turn was appealed to the High Court and by order of the High Court
made on the 12th February, 1997 the order for sale was confirmed.
As
the contract for sale was exhibited on affidavit before the Circuit Court on
the 19th July, 1995 and as the order expressly refers to "the contract" it is
indisputable that the sale approved by the Court was a sale upon the terms of
that contract.
The
delay in progressing the matter from the 19th July, 1995 to date was due to a
determination by the Defendants that the sale should not be completed and in
addition to appealing the order they refused to yield up vacant possession so
that it was necessary inter alia to have them evicted by the Sheriff to make
vacant possession available for the purchaser. The Defendants refused to sign
an assurance to the purchaser. The delay in completing the sale was not in any
way attributable to the Plaintiff or to the purchaser.
During
the period of delay the premises have appreciated greatly in value. On the 7th
December, 1998 the Defendants had obtained an offer of L1,040,000 for the
premises. On the 11th December, 1998 the Solicitors to the Defendants wrote to
the Solicitors to the purchasers in which they said -
"We
would respectfully remind you that there is no contract for sale signed herein
by the vendors or otherwise. Nor indeed, a contract deposit paid."
The
Solicitors to the purchaser replied on the 16th December, 1998 in effect
stating that their client had an enforceable agreement to purchase the
premises. By letter dated 17th December, 1998 the Solicitors to the Defendants
wrote to the Solicitors to the purchasers as follows -
"Many
thanks for your letter of 16th December, 1998 re the above. Our clients Eileen
and Rose Blackall have no contractual or legally cognisable obligations to your
clients.
Without
prejudice to our entitlement to so contend, insofar as there may be some
contractual obligations to your client in respect of the transfer of the above
lands take notice that we rescind the contract because your client does not
comply with such obligations as he may have under it. We shall endeavour to
ensure that such deposit as may have been paid is returned to your client
promptly."
The
Plaintiff at that time was willing to complete the sale to the purchaser and
maintained this position at all times up to and including the hearing before
me. On the evidence given by the purchaser's Solicitor I am satisfied that he
was in funds to pay the deposit as of the 19th July, 1995 but was awaiting
confirmation of the contract being signed by the parties. The deposit was
tendered by him on the 18th May, 1999.
THE
CONTRACT FOR SALE
The
contract for sale in is the Incorporated Law Society of Ireland standard form
1991 edition and is signed on behalf of the purchaser. It provides in the
memorandum for a deposit of L40,000. The special conditions are not relevant to
the issues raised on this application. The following general conditions are
relevant.
General
Condition 2
"Date
of sale" means the date of the auction when the sale shall have been by auction
and otherwise means the date upon which the contract for the sale shall have
become binding on the vendor and the purchaser.
General
Condition 3
The
words "vendor" and "purchaser" respectively include (where appropriate) parties
deriving title under them or either of them and shall apply to any one or more
of several vendors and purchasers as the case may be so that the stipulations
and the conditions contained shall be capable of being enforced on a joint and
several basis.
General
Condition 5 (a)
Where
the sale is by private treaty the purchaser shall on or before the date of the
sale pay to the vendor's Solicitor as stake holder a deposit of the amount
stated in the memorandum in part payment of purchase price.
General
Condition 31
The
failure by the purchaser to pay in full the deposit hereinbefore specified as
payable by him shall constitute a breach of condition entitling the vendor to
terminate the sale or to sue the purchaser for damages or both but such
entitlement shall be without prejudice to any rights otherwise available to the
vendor.
THE
LEGAL ISSUES
(a)
Was an enforceable contract concluded
No
issue as to the Statute of Fraud was raised in these proceedings and while the
question of whether a memorandum to satisfy the statute is necessary remains an
open question in this jurisdiction there are a number of authorities for the
proposition that on a Court sale none is necessary and that the Court will
enforce its order; Daniell's Chancery Practice 7th Ed Vol. 1, 415, Sugden
Vendor & Purchaser p. 109, A. G. -v- Day [1749] 1 Ves Sen. 466. The
agreement here is contained in the Court order of the 19th July, 1995 as
amended by subsequent orders the only relevant amendment being as to the
Solicitor having carriage and the contracts signed by the purchaser. Upon the
making of the order for sale on the 19th July, 1995 there was a binding
contract for sale which the Court would enforce.
In
a Court sale the Court is not the vendor Bank of Ireland -v- Smith & Ors
[1966] IR 646 at 655-656. In that case and in Bank of Ireland -v- Waldron
[1944] IR 30 the Court held that the party to the action having conduct of the
sale was the vendor and that their Solicitors and auctioneers were their agents
for whose acts they were liable. Insofar as it was so held the statements were
obiter and not in accordance with authority. The Solicitor having carriage is
agent for all the parties to the suit: see Daniell's Chancery Practice 7th Ed.
Vol. 1 p. 876 and Dalby -v- Pullen [1831] Russ & M 296, Re Bannister, Broad
-v- Munton (1879) 12 Ch. D.131. Again see Hallsbury 4th Ed. reissue Vol. 42
para 135 -
'As
between the vendor and the purchaser the Solicitor for the party or person
having the conduct of the sale is deemed to be agent of all parties to the
action"
Again
the effect of the Rules of the Superior Courts Order 51 rule 1 is that all
parties to the suit are bound by the sale. In these circumstances I am
satisfied that the parties i.e. the Plaintiff and the Defendants jointly are
the vendors and that the Solicitor having carriage is their agent so that they
are bound by his acts of defaults. Thus while in both Bank of Ireland -v- Smith
and Bank of Ireland -v- Waldron the party having conduct was held liable to the
purchaser he being the vendor named in the agreement for sale it is clear that
that party would be entitled to recover over all or a proportion of the expense
incurred against the other parties to the suit depending on the circumstances:
Smith -v- Nelson 2 Sim and Stu. 557, Berry -v- Johnson 2 Yo and Col. 564. In
arriving at the view as to who is the vendor I have considered the judgments in
Connolly -v- Keating (No 2) [1903] 1 IR 356, Union Bank -v- Munster 37 Ch. D 51
and the statements of Jessel M.R. In Re Bannister, Broad -v- Munton
12 Ch D 131 each of which suggest that vendor's equivalent to the party having conduct
but in each case I am satisfied that the use of such language was appropriate
and sufficient for dealing with the rights of a purchaser under an order for
sale seeking compensation or to be released from his contract but was not
intended to define "vendor" contrary to existing authorities as consisting of
some only of the parties to the suit in which the order for sale was made.
(b)
Payment of the deposit as a condition precedent
It
was argued on behalf of the Defendants that the general conditions of sale
condition 5(a) is a condition precedent to any contractual liability being
incurred. The Defendants relied upon Myton Limited -v- Schwab-Morris [1974] 1
WLR 331 where a condition as to payment of deposit was so held to be. The
question whether such condition was a condition precedent or a condition of the
contract was left open by the Supreme Court in Kramer -v- Arnold [1997] 3 IR 43
at 60 and in Damon S.A. -v- Hapag-Lloyd S.A. [1985] 1 WLR 435. The contrary
view namely that the obligation to pay a deposit was a term of the contract was
taken in Millichamp -v- Jones [1983] 1 All ER 267 and in his judgment Warner J.
reviewed the authorities in arriving at this conclusion. I prefer the view
expressed by Warner J. and accordingly I construe clause 5(a) as a term of the
contract non-performance of which would entitle the vendors to rescind
immediately but so long as they refrain from so doing the contractual
obligations of both vendor and purchaser remain. I am fortified in this view by
the terms of general condition 31 which provides that failure to pay the
deposit in full constitutes a breach of condition entitling the vendor to
terminate the sale and recover damages: the damages can only be for breach of
contract. See also the definition of sale in general condition 1 - "means the
transaction evidenced by the memorandum the particulars and the conditions"
(c)
Time for payment of the deposit
The
obligation under condition 5(a) is to pay the deposit on or before "the date of
the sale". "Date of sale" but not "date of the sale" is defined in general
condition 2. Insofar as "date of sale" is concerned it is defined as the date
upon which the contract becomes binding on the vendor and the purchaser. I hold
that the same was the date upon which the order for sale to the purchaser was
made namely the 19th July, 1995. As of that date the Court had power to enforce
the sale against the parties and the purchaser notwithstanding the absence of
any memorandum: Daniell's Chancery Practice 7th Ed. Vol. 1 p. 415, Sugden
Vendor and Purchaser p. 109, A.G. v Day 1 Ves. Sen. 218. However, there is an
inconsistency in that general condition 5(a) refers not to "date of sale" but
to "date of the sale". In the event of an inconsistency a clause in the
contract must be construed contra proferentem. Reading the agreement in
conjunction with the order of 19th July, 1995 it is arguable that it was
envisaged that the contract would be signed by the parties to the action and
the purchaser. This would suggest a misapprehension by all concerned that it
was necessary for the agreement to be effective that it should be so signed.
The agreement was not in fact signed by the Plaintiff or the Defendants
although the Plaintiff was at all times willing to perform the agreement. On
this basis it would be open to take the view that the obligation to pay the
deposit in this case would only arise when the purchaser was notified that the
agreement had been executed by the parties to the action. Support for this view
is to be found in Kramer -v-Arnold [1997] 3 IR at p. 55 where Keane J. said -
"In
this case as in any case where the parties are in disagreement as to what a
particular provision of a contract means, the task of the Court is to decide
what the intention of the parties was, having regard to the language used in
the con tract and the surrounding circumstances."
Adopting
this approach it may well have been the intention of the parties that the
deposit should have been paid immediately the agreement was signed by the
parties to the suit the same having already been signed by the purchaser.
However, the intention of the parties in the case of a sale by the Court is not
paramount. A sale by the Court is a sale on the terms approved by the Court and
any variation in such terms must be approved by the Court and not by the
Solicitor having carriage: Daniell's Chancery Practice 7th Ed. Vol. 1 p.
904-905. Accordingly, neither the parties nor the purchaser had power to vary
the requirement that a deposit should be paid in accordance with the terms of
the agreement approved by the Court. It seems to me to follow from this that
there can be no question of waiver or acquiescence in breach or estoppel
operating to alter the terms of the agreement approved by the Court.
I
have come to the conclusion that the word "the" in general condition 5(a) is
included in error and in construing the contract I am entitled to reject the
same and should do so: Norton on Deeds 2nd Ed. p. 91. Accordingly, I hold that
the deposit was payable on or before the date of sale, the 19th July, 1995; it
was not paid.
Having
regard to the finding that the deposit was not paid in accordance with general
condition 5(a) there was a breach of condition and the provisions of general
condition 31 apply; the vendor became entitled to terminate the sale but until
such time as the sale was terminated the agreement remained in force. "Vendor"
is defined in general condition 3 and the definition is of assistance in
determining whether one or more of the several vendors but not all can serve a
valid and effective notice under the agreement insofar as it stipulates that
liability is joint as well as several. The Defendants contend that they were
entitled to serve such a notice and relied by way of analogy on a number of
cases relating to the giving of notice to quit. There is authority for the
proposition that one of several joint lessors can serve a valid and effective
notice to quit although there are also authorities to the contrary. The cases
tend to turn on the wording of the lease in question or in some cases on
agency. However, insofar as tenants in common are concerned signature by one of
two was held to be bad in Moroney -v- Moroney IR 8 CL 174. It is best to regard
cases on signature of notices to quit as sui generis. The general law as
between landlord and tenant and the rights of joint tenants and a fortiori
tenants in common is as set out by a strong Court of Appeal in Leek and
Moorlands Building Society -v- Clarke and Ors [1952] 2 All ER 492, which held
that where two joint tenants had a right to surrender rights held by them
jointly such rights could not be exercised by one of their number. In short,
there the Court refused to hold that a clause giving rights to lessees should
be read as giving such rights to either of the lessees. More strongly against
the entitlement of one or some but not all the parties to a suit intervening is
Dean -v- Wilson 10 C.D. 136 where it was held that interference in a Court sale
by a party to the suit who had not been given carriage was a special contempt
(i.e. a contempt not coming within the Rules of the Superior Courts Order 41
Rule 7); see Daniell's Chancery Practice 7th Ed. Vol. 1 at 716-717. On the
basis of the authorities I am satisfied that the Defendants here had not power
or authority to interfere in the sale. In the event of their being dissatisfied
with the manner in which the sale was proceeding the proper course for them to
adopt was to apply to the Court. Likewise, where an issue such as the failure
of the purchaser to pay the deposit arises the party having conduct or the
Solicitor having carriage should apply to the Court for directions. It is not
necessary for me to decide whether a notice given by all the parties through
the Solicitor having carriage would have been effective but I take the view in
the circumstances of this case that it would. Without authority of all the
parties or the approval of the Court the Solicitor having carriage has no
authority actual, implied or apparent to give such notice. However, the
purchaser having tendered the deposit it is not now open to take any of these
courses. In these circumstances I hold that the purported termination by the
Defendants by the letter dated 17th December, 1998 was of no effect and that
the contract remains in existence.
(d)
Opening Biddings
The
Defendants in this matter referred to the power of the Court to open biddings.
The practice was widespread prior to the Sale of Land by Auction Act, 1867
which Act also applied to Court sales by private treaty; In Re Oriental Bank
Corporation 56 NTLS 868 and Wiley Judicature Acts and Re Bartlett 16 Ch. D.
561. It is now well settled however, that bidding may only be reopened on the
ground of fraud or improper conduct in the management of the sale; Munster Bank
-v- Munster Motor Company [1922] IR 15. The Defendants argue that the failure
of the purchaser to pay the deposit was improper conduct. The power has been
exercised where there has been a misstatement in the conditions of sale.
It
was held in Longvale Brick and Lime Works Limited [1917] 1 Ch. 321 that
improper conduct does not mean something bordering on fraud. However, having
considered the cases I am satisfied that this jurisdiction was exercised when
something occurred in the course of the sale which resulted in a sale at an
undervalue to the detriment of the parties interested in the suit or a sale at
an overvalue to the detriment of the purchaser e.g. where there had been
puffing at the auction to the detriment of the purchaser. The practice of
opening bidding does not apply in the present case nor is it any necessity that
it should as the terms of the contract for sale adequately protect the parties
who in the event of a failure to pay the deposit can (as can the Solicitor
having carriage) apply to the Court which has full power to terminate the
contract.
CONCLUSION
Accordingly,
I find that the contract has not been terminated but remains in full force and
effect. In addition to the purchase price the purchaser must pay interest on
the deposit (less the sum of L5,000 already paid to the Solicitor having
carriage) at the contract rate from the date of sale, the 19th July, 1995 to
date of completion. I will hear Counsel for the Solicitor having carriage as to
the directions which are required. I require to be addressed as the appropriate
order as to costs.
