Supreme Court: Property developer loses appeal against order for specific performance and damages

About this case:

• Judgment:
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Delivering the unanimous judgment, Ms Justice Iseult O’Malley was satisfied that the trial judge had not erred on the facts or the law; and held that where all witnesses agreed on the salient issues, the formulation of pleadings did not outweigh the significance of oral evidence.

High Court

In the High Court, Justice Laffoy found that the agreement required property developer Gerard Gannon to take over the leasehold interest held by JLT in a property at No. 54 Northumberland Road, Dublin in exchange for JLT Financial Services Limited (formerly known as Liberty Asset Management Limited) taking a lease of premises owned by Mr Gannon.

Justice Laffoy was satisfied that the essential elements identified in Mackie v. Wilde (No. 2) 2 I.R. 578 were present:

Having regard to Holohan v Ardmoyle Estates (unrep., Supreme Court, 1st May 1967), and further having regard to the plea in the statement of claim that JLT had fully performed its obligation under the contract, Justice Laffoy considered that the lack of an explicit reference to the doctrine in the statement of claim did not preclude JLT from relying upon it.

Justice Laffoy accepted that there was no sufficient note or memorandum of the relevant contract. However, she found that there had been an agreement in principle that became a concluded contract when JLT, in reliance on the agreement, fulfilled its part by taking the lease of Mr Gannon’s property.

She therefore held that the doctrine of part performance was applicable and that, although that doctrine had not been expressly pleaded by JLT, the case had been sufficiently made out in the statement of claim and replies to particulars. Having regard to her findings of fact she further held that if the doctrine of part performance had not been available, equity would have afforded relief to JLT by virtue of estoppel.

Mr Gannon had given what she considered to be a “clear and unambiguous assurance” to JLT and could not be permitted to renege on that assurance.

Submissions on appeal

Mr Gannon’s principal submission was that Justice Laffoy failed to have sufficient regard to the pleadings in the case: JLT had claimed entitlement to specific performance of an agreement alleged to have been entered into in September 2006, while Justice Laffoy held that a concluded agreement did not exist until July 2007. Furthermore, the pleadings did not refer to the doctrine of part performance.

It was therefore argued that the basis of the case pleaded by JLT and that upon which the trial judge made her decision, on the grounds of part performance, were different. Accordingly, Holohan was said to be of no relevance, however reference was made to McGee v O’Reilly 2 I.R. 229.

It was submitted by Mr Gannon that, at its highest, there was an agreement in principle between the parties, but that no concluded agreement ever existed in relation to No. 54.

Mr Gannon submitted that the principles set out in Hay v. O’Grady did not “apply with full force in this case”, given that the Court must consider written documents such as the lengthy correspondence.

Supreme Court

Delivering the judgment of the Court, Ms Justice Iseult O’Malley stated that there was no basis for considering that the principles of Hay v O’Grady 1 I.R. 210 did not apply in the normal way to the present case.

The central findings in the High Court were based on the relationship between the oral evidence and the correspondence – in particular, she had regard to the fact that at all times the and the solicitors understood that what was envisaged was a “package”, with mutual obligations in respect of the two properties. JLT entered into the Richview lease on the basis of that agreement.

These conclusions in relation to the evidence were binding on the Supreme Court.

Justice O’Malley accepted that there was an agreement in principle between the parties, creating mutual obligations in respect of the two properties, that JLT acted upon it to its detriment by entering into the lease in circumstances where Mr Gannon was fully aware of his own corresponding obligations in respect of No. 54, and that JLT was able and willing to complete the transaction in respect of that property.

Boyle v Lee did not assist Mr Gannon, beyond the application by the trial judge (in favour of Mr Gannon) of the core principle of that authority to the effect that the “subject to contract” documents in the case did not evidence a concluded contract.

Mr Gannon argued that, whatever the original intention of the parties, the procedures adopted by the solicitors in fact separated the matter into two separate dealings – however, on the evidence, Mr Gannon’s solicitors understood that there were two aspects to one transaction. As such, Justice O’Malley rejected this argument, and distinguished the facts from Boyle v Lee.

Finding that Justice Laffoy was entitled to find that the facts of the case gave rise to the application of the doctrine of part-performance, and that her conclusions were “a straightforward application of the principles in Mackie v Wilde” – Justice O’Malley added that the judgments in Holohan v Ardmoyle Estates, Mahon v Celbridge Spinning Co. Ltd and McGee v O’Reilly did not support the proposition that the formulation of pleadings outweighed the significance of oral evidence where witnesses all agreed on the salient issues.

Dismissing the appeal, Justice O’Malley held that Mr Gannon failed to demonstrate that Justice Laffoy “fell into error in relation to either the facts or the law”.