Gerard Blackall (and by order Iris Blackall as personal representative) (plaintiff) v Eileen Blackall and Rose Blackall (defendants) and (by order of the Court) Chesington Ltd (co-defendant).
Real Property - Tenants in common - Sale by the court - Application for directions - Whether memorandum to satisfy Statute of Frauds necessary for contract to be enforceable - Who is the vendor in a court sale - Who is the solicitor having carriage of the sale agent for - Whether payment of deposit condition precedent or a term of the contract - Time for payment of the de- posit - Who can approve variation in terms - Who can serve a valid and effective notice under the agreement - Whether notice given by all of the parties to the solicitor having carriage would have been effective - Grounds upon which bidding can be reopened - Incorporated Law Society of Ireland Standard Form 1991 Edition - Rules of the Superior Courts, Order 41 Rule 7, Order 51 Rule 1 - Statute of Frauds (Ireland) 1695 - Sale of Land by Auction Act 1867 - Partition Acts 1868-76.
The High Court (Mr Justice Finnegan); judgment delivered 6 June 2000.
Where, on a sale by the court of land in respect of which the plaintiff and the defendants are tenants in common and jointly are the vendors, there is a breach of the contract for sale which entitles the vendor to terminate the contract, the defendants alone do not have the power or authority to interfere in the sale.
The High Court so held on appeal from the Circuit Court.
Caroline Costello BL for the plaintiff; George Brady SC, Michael Forde SC and Timothy Sheehan BL for the defendants; Anthony Aston SC and David Barniville BL for the co-defendant; Brian Leonard SC for the solicitor having carriage of the sale.
Mr Justice Finnegan said that the matter came 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 23 July 1991. The action had commenced in 1991, by Equity Civil Bill issued by the plaintiff against the defendants, seeking partition or sale of premises in Blackrock, County Dublin. The parties were entitled to the premises as tenants in common. 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. Carriage of the sale was given to the plaintiff's solicitor. The order was appealed to the High Court, which in July 1992 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. In October 1992 the High Court ordered that the solicitor for the first defendant, Brendan Maloney, should have carriage of the sale. The first defendant subsequently discharged the solicitor having carriage and the High Court confirmed, in December 1993, that Mr Maloney should have carriage of the sale notwithstanding that he no longer acted for any party to the action. The Circuit Court ordered, on 19 July 1995, that the premises be sold to the purchaser for £400,0 00 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. On appeal, the High Court confirmed the order for sale in February 1997. The sale approved by the court was a sale upon the terms of the contract for sale exhibited on affidavit before the Circuit Court on 19 July 1995.
The delay in progressing the matter from July 1995 was due to a determination by the defendants that the sale should not be completed; it was not in any way attributable to the plaintiff or to the purchaser. During the period of delay the defendants obtained an increased offer for the premises and they purported, by letter dated 17 December 1998, to rescind the contract. The court noted that the purchaser's solicitor had tendered the deposit on 18 May 1999.
The first issue which the court dealt with was whether an enforceable contract had been concluded. The question of whether a memorandum to satisfy the Statute of Frauds was necessary remained an open question in this jurisdiction. Daniell's Chancery Practice, 7th edition, volume 1, page 415, Sugden: Vendor and Purchaser page 109, and AG v Day [1749] 1 Ves. Sen. 466 were authorities for the proposition that on a court sale none was necessary and that the court would enforce its order. Mr Justice Finnegan held that upon the making of the order for sale on 19 July 1995 there was a binding contract for sale which the court would enforce. Mr Justice Finnegan went on to hold, citing Bank of Ireland v Smith and Others [1966] IR 646, at pages 655-656, that in a court sale the court is not the vendor. However he departed from that case and Bank of Ireland v Waldron [1944] IR 30 in holding that the solicitor having carriage is agent for all the parties to the suit, citing Daniell's Chancery Practice, 7th edition, volume 1, page 876, Dalby v Pullen [1831] Russ & M 296, Re Bannister, Broad v Munton [1879] 12 Ch. D. 131 and Halsbury's Laws, 4th edition reissue volume 42, paragraph 135. The effect of the Rules of the Superior Courts, Order 51 Rule 1, was that all of the parties to the suit were bound by the sale. The plaintiff and the defendants jointly were the vendors and the solicitor having carriage was their agent, so that they were bound by his acts or defaults. In arriving at his view as to who was the vendor, Mr Justice Finnegan stated that he had considered Connolly v Keating (No 2) [1903] 1 IR 356, Union Bank v Munster 37 Ch D 51 and the statements of Jessel MR in Re Bannister, Broad v Munton 12 Ch D 131.
The court went on to consider whether the payment of the deposit was a condition precedent. The defendants argued, relying on Myton Ltd v Schwab-Morris [1974] 1 WLR 331, that condition 5(a) of the general conditions of sale in the Incorporated Law Society of Ireland standard form 1991 edition was a condition precedent. Condition 5(a) provided where the sale was by private treaty the purchaser should, on or before the date of the sale, pay to the vendor's solicitor as stakeholder, a deposit of the amount stated in the memorandum, in part payment of the purchase price. This question had been left open by the Supreme Court in Kramer v Arnold [1997] 3 IR 43, at page 60, and in Damon SA v Hapag-Lloyd SA [1985] 1 WLR 435. The contrary view, namely that the obligation to pay a deposit was a term of the contract, which was taken in Millichamp v Jones [1983] 1 All ER 267, was the view preferred by the court. Condition 5(a) was a term of the contract, non-performance of which would entitle the vendors to rescind immediately, but so long as they refrained from so doing the contractual obligations of both vendor and purchaser remained. In coming to this view the court also referred to the terms of general conditions 31 and 1.
Mr Justice Finnegan next considered the time for payment of the deposit. The obligation under condition 5(a) was to pay the deposit on or before the date of the sale. Date of sale but not date of the sale was defined in general condition 2. Date of sale was defined as the date upon which the contract became binding on the vendor and the purchaser. Mr Justice Finnegan held that the same was the date upon which the order for sale to the purchaser was made, namely 19 July 1995. However, condition 5(a) referred not to date of sale but to the date of the sale. As this was a sale by the court, it was a sale on 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 edition volume 1, pages 904-905. Mr Justice Finnegan held that that the word "the" in general condition 5 was included in error, and in construing the contract it was entitled to reject same and should do so: Norton on Deeds, 2nd edition page 91. Accordingly, the deposit was payable on or before the date of sale, 19 July 1995, and it had not been paid.
As the deposit had not been paid there was a breach of condition 5(a) and under condition 31 the vendor became entitled to terminate the sale, but until that happened the agreement remained in force. Vendor was defined in general condition 3 and was of assistance in determining whether one or more of the several vendors, but not all, could serve a valid and effective notice under the agreement insofar as it stipulated that liability was joint as well as several. The defendants contended that they were entitled to serve such a notice. The general law as between landlord and tenant and the rights of joint tenants and, a fortiori, tenants in common, was set out by the Court of Appeal in Leek and Moorlands Building Society v Clarke and Others [1952] 2 All ER 492, where it was 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. More strongly against the entitlement of one, or some, but not all of the parties to a suit intervening, was Dean v Wilson 10 CD 136, where it was held that interference on a court sale, by a party to the suit who had not been given carriage, was a special contempt, i.e. not a contempt coming within the Rules of the Superior Courts Order 41 Rule 7: see Daniell's Chancery Practice, 7th edition volume 1, pages 716-717. On the basis of the authorities Mr Justice Finnegan was satisfied that the defendants had not power or authority to interfere in the sale. If the defendants were dissatisfied with the manner in which the sale was proceeding, the proper course was to apply to the court. Likewise, where an issue such as failure of the purchaser to pay the deposit arose, the party having conduct, or the solicitor having carriage, should apply to the court for directions. Mr Justice Finnegan said it was not necessary to decide whether a notice given by all the parties through the solicitor having carriage would have been effective, but took the view that in the circumstances it would have been. Without the authority of all the parties, or the approval of the court, the solicitor having carriage had no authority, actual, implied or apparent, to give such notice. However, the purchaser having tendered the deposit, it was not now open to take any of these courses. The purported termination by the defendants, by letter dated 17 December 1998, was of no effect and that the contract remained in existence.
Finally, Mr Justice Finnegan considered the question of open biddings. Mr Justice Finnegan noted that this 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, Wiley: Judicature Acts, and Re Bartlett 16 Ch D 561. However, Mr Justice Finnegan held, citing Munster Bank v Munster Motor Company [1922] IR 15, that it was now well settled that bidding could only be reopened on the ground of fraud or improper conduct in the management of the sale. The defendants argued that the failure of the purchaser to pay the deposit amounted to improper conduct. The power had been exercised where there had been a misstatement in the conditions of the sale. It was held in Longvale Brick and Lime Works Ltd [1917] Ch 321, that improper conduct did not mean something bordering on fraud. However, having considered the cases, Mr Justice Finnegan was satisfied that this jurisdiction was exercised when something occurred in the course of the sale which resulted in a sale at an undervalue or an overvalue. The practice of open bidding did not apply in the present case, nor was there any necessity that it should, as the terms of the contract for sale adequately protected the parties who in the event of a failure to pay the deposit could, as could the solicitor having carriage, apply to the court, which had full power to terminate the contract.
Accordingly, Mr Justice Finnegan found that the contract had not been terminated but remained in full force and effect. Mr Justice Finnegan held that in addition to the purchase price, the purchaser must pay interest on the deposit at the contract rate from the date of the sale to the date of completion.
Solicitors: O'Higgins (Dublin) for the plaintiff; Dermot P. Coyne (Lucan) for the defendants; Eugene F. Collins (Dublin) for the co-defendant; Brendan Maloney (Bray), solicitor having carriage of the sale.
