Supreme Court dismisses appeal against High Court's finding that consultant fulfilled obligations and was authorized to sell property.

THE SUPREME COURT

APPEAL No. 311 & 319/1009

Finnegan J.

O’Donnell J.

McKechnie J.

BETWEEN

CAMPION PROPERTY CONSULTANTS LIMITED

PLAINTIFF/RESPONDENT

AND

BRENDAN KILTY

DEFENDANT/APPELLANT

Judgment of Mr Justice Finnegan delivered on the 18th day of July 2011

BACKGROUND

The appellant assembled a site at Sandycove, Co. Dublin, with a view to developing the same. Part of the site had been his family

home and he acquired two adjoining premises. For the purposes of the project he borrowed short term from the Irish Nationwide

Building Society. The project was beset by planning and other difficulties. On the 11th February 2004 a second application for

planning permission was refused. The terms of the refusal gave some grounds for confidence that an amended application might well

receive permission but by this date the Irish Nationwide Building Society was pressing for repayment and had issued proceedings in

the High Court seeking possession of the site.

The appellant took the advice of his solicitor, Mr Rory O’Donnell, who suggested that he retain the services of the respondent. The

respondent was well known to Mr O’Donnell as an auctioneer with particular knowledge and experience of developers and

developments in the Dublin area and who was “well got” with Mr Fingleton the chairman of the appellant’s lender. The appellant met

with the respondent and engaged him on written terms which were signed by both the appellant and the respondent. The terms

provided for a total fee of 5% plus VAT on the price achieved on the sale of the site, 3% being the fee as sole selling agent and 2%

being the fee for consultancy services to be provided in relation to issues arising under the following categories:

1. Planning matters (not including planning application)

2. Land values.

3. Site development appraisal.

4. Economic appraisal.

5. Investment guidelines.

6. Finance and loan issues.

7. Valuation and surveying.

8. Appointments (design team, architects, engineers, town planning consultants).

The respondent met with Mr Fingleton and obtained an adjournment of the High Court proceedings, initially for one week and then for

a further six weeks, to enable the respondent to develop a strategy for bringing the site to the market. The decision was made to

offer the site for sale by public auction.

The auction was held on the 28th April 2004. The site was purchased at auction for €3,700,000. The sale was completed on the 16th

July 2004. On the 12th July 2004 the respondent sought payment of his fees calculated at 5% of the sale price together with outlay

and VAT in the amount of €231,862.10. On the 18th August 2004 the present proceedings were instituted by summary summons

claiming that amount.

PLEADINGS

The matter was remitted to plenary hearing. The statement of claim pleads the agreement between the parties, the performance by

the respondent of the same and claims the amount due by the appellant on foot of the agreement together with interest. The

defence delivered by the appellant admits the agreement and raises the following by way of defence:-

1. The appellant was induced to enter into the agreement by representations made by the respondent which were false

and untrue or made recklessly and not caring whether they were true or false and that by reason thereof the agreement

is unenforceable. The representations are particularised as follows:-

(a) that the respondent is a chartered surveyor;

(b) that the respondent could and would obtain from the Irish Nationwide Building Society a substantial reduction in

the appellant’s debt prior to the sale;

2. In breach of the agreement the respondent failed to negotiate or agree a substantial reduction or any reduction in the

appellant’s debt to the Irish Nationwide Building Society;

3. The respondent was in breach of contract and/or negligent and in breach of duty in carrying out his duties as sales

agent in the following particulars:-

(a) failed to properly market, advertise or promote the site to achieve the best price for the same;

(b) failed to follow up all potential purchasers or persons interested;

(c) failed to inform the appellant of all offers made in respect of the properties and identify such persons;

(d) failed to disclose to the appellant until just before the commencement of the auction that a consortium was

interested in purchasing the site;

(e) failed to inform the defendant of the members of the consortium until just before the commencement of the

auction;

(f) failed to inform the appellant that the appellant’s solicitor was a member of the consortium;

(g) failed to disclose to the appellant dealings conducted with the consortium;

(h) conducted the auction in a manner at variance with normal and good practice;

(i) sold the site for €3,700,000 without first obtaining the appellant’s approval for a reserve price below which the

site would not be sold;

(j) failed to interrupt the auction for the purposes of obtaining the appellant’s instructions to proceed and sell where

the appellant had not agreed the amount of a reserve;

(k) sold the site without the appellant’s instructions to do so;

(l) sold the site without seeking other bids from persons present at the auction;

(m) commenced the auction soon after it had been disclosed to the appellant that his solicitor was part of a

consortium which intended to bid at the auction thereby leaving the appellant in a position where he had no

independent legal and/or auctioneering advice.

The action was heard over eleven days between the 17th December 2008 and the 13th February 2009. In total fourteen witnesses

were heard. The learned trial judge delivered a reserved judgment on the 31st March 2009. He found for the respondent and awarded

the sum of €356,386.99 with interest pursuant to the Courts Act 1981 from 31st March 2009 until payment.

JUDGMENT OF THE HIGH COURT

The learned High Court judge commenced his judgment with a detailed narrative after which he commented:-

“The above narrative is not really in dispute for the most part. Where there were minor discrepancies, the narrative

reflects my preference from the evidence. Where there is a difference of opinion on crucial matters, these will

become clear later in this judgment, where I will examine the evidence in detail before determining the facts as I

see them.”

He then identified the issues arising for determination as follows:-

“1. Did the plaintiff have authority to sell the defendant’s property on the 28th April 2004?

2. Was the auction on 28th April conducted in an appropriate and professional manner?

3. Did the plaintiff provide the services which he contracted to provide for the defendant in disposing of the properties on

28th April 2004? In particular did the plaintiff promise to negotiate a reduction of the defendant’s debt with the building

society?

4. Did the plaintiff conspire or mislead the defendant in any way with others in a way which meant that he did not get the

best price for the properties on the day of the auction?

5. Is the plaintiff entitled to the sum claimed in the amount of €231,862 plus interest?”

The narrative to which I have referred contains the learned trial judge’s findings of fact upon the evidence where there was no

material dispute. In addition however it was necessary for him to resolve a conflict of evidence on a number of issues. Having made

findings on the evidence the learned determined the issues which he had identified as follows:-

1. The respondent had authority to sell the site.

2. The auction was conducted in an appropriate and professional manner.

3. The respondent provided the services which he had contracted to provide for the appellant.

4. The respondent did not conspire or mislead the appellant in any way.

5. The respondent is entitled to the amount claimed.

NOTICE OF APPEAL

In submissions the appellant summarises the grounds set out in the Notice of Appeal as follows:-

(a) The learned trial judge erred in finding that the respondent had carried out the agreed services, inter alia in respect of

the respondent’s failure to seek a reduction in the debt due to the Irish Nationwide Building Society.

(b) The learned trial judge erred in drawing an inference from the evidence that there was an agreed reserve for the

properties and that a bid of €3.6m placed prior to and remaining after the auction was the agreed reserve or was the

price likely to be achieved at auction.

(c) The learned trial judge erred in holding that the respondent had the appellant’s authority to sell. The respondent’s

evidence was that he did not have instructions to sell before the commencement of the action. The appellant was not

present in the auction room during the auction and the respondent gave evidence that he left the room to consult with

the appellant and to obtain instructions to put the property on the market at €3.6m and to sell at that price or better

price. There was a conflict of evidence as to whether the respondent left the room at all. If there was no break in the

auction the respondent could not have obtained instructions to sell. The appellant brought a motion before this court

seeking leave to adduce further evidence which, it was submitted, would have a significant bearing on the creditability of

the witnesses to this issue. The motion stood adjourned to the hearing of the appeal.

(d) The learned trial judge erred in holding that the respondent had carried out and rendered the associated services

stated in the letter of appointment which represented 2% of the fee.

DISCUSSION OF THE GROUNDS OF APPEAL

The matters raised at (a) and (d) above can be considered together. Immediately after the initial contract between the appellant and

the respondent the respondent contacted Mr Fingleton of the Irish Nationwide Building Society and agreed an adjournment of the High

Court proceedings for one week and then for a further six weeks to enable a strategy for bringing the site to the market to be

developed. When it was decided that the properties should be sold by public auction the respondent obtained the Building Society’s

agreement to this. A three week marketing campaign was mounted and during this period there was a great deal of contact between

the appellant and the respondent. The respondent gave evidence that he consulted with town planners and with a firm of architects,

the latter preparing some sketches of new proposals for the development of the properties. Expressions of interest received were

dealt with. The appellant complains firstly that the respondent did not negotiate any reduction in the amount owed to the Irish

Nationwide Building Society. The learned trial judge dealt with this issue as follow:-

“I have difficulty in accepting that what the plaintiff promised in this regard was anything more than a promise to use his

best efforts to secure a reduction. No specific promise guaranteeing a result in this regard is to be found in the agreement

itself or in any other documents relating to the contract. Further, I am of the view that a reduction before the auction

would not be considered by the Building Society. Why should the Building Society agree such a reduction at that time,

when it might transpire that a price far in excess of its debt would be achieved at auction? The only possibility of a

reduction in my view, and there was evidence before the court to this effect, would be if the price achieved at auction

was less than the sum owed to the Building Society, and then only if it was a marginal deficiency. It was also suggested

in court that the Irish Nationwide Building Society was not known for its generosity in such dealings. Mr Mortimer, for the

Building Society, gave evidence to that effect and said it would not be normal to give a reduction when an auction was

scheduled. Mr Campion gave evidence that he did ask Mr Fingleton for a reduction but it was refused. There is a further

difficulty in accepting the reasonableness of the defendant’s position when it is recalled that the plaintiff was never given

the total indebtedness of the defendant at any time in the run up to the auction. The defendant did not disclose that

there was a judgment mortgage of approximately €O.2m on the property nor did he inform Mr Campion that he had other

investors with an interest in the property who were owed somewhere in the region of €O.58m. Furthermore, although the

defendant had established that his indebtedness to the Building Society was €3.4m days before the auction, he had not

disclosed this to his own financial adviser, Mr Mullen, or to Mr Campion. In fact, he made Mr Campion phone the Building

Society at the meeting in the offices of O’Donnell Sweeney, solicitors for the defendant, on the morning of the auction to

get the figure from the Building Society in spite of the fact that the defendant knew it himself. It was always open to the

defendant to request from the Building Society what his redemption figure was. Further, the question of the redemption

figure was of less significance in this case as the properties had to be sold anyway, even if the highest bid did not reach

the redemption figure. The Building Society wanted its money. Mr Campion had also been told by Mr Rory O’Donnell not to

negotiate with the Building Society close to the auction and his help was never enlisted after the auction when the

lawyers took over. Mr Campion was never briefed fully by the defendant as to his total indebtedness; he was never

equipped to enter into meaningful negotiations with the Building Society.”

The terms of the written agreement between the appellant and the respondent are significant. In relation to consultancy the

agreement provides in relation to the fee of 2% plus VAT as follows:-

“I undertake to deal with all issues under the following categories:”

There then follows the eight categories which are set out above. Within those categories the respondent did seek to agree a

reduction with the Irish Nationwide Building Society but without success. However the learned trial judge found that the terms of the

agreement did not require success in dealing with the Building Society. As for the remainder of the categories the respondent was

required under the terms of the agreement to deal with all issues. Insofar as issues arose they were dealt with. Thus in relation to

one potential purchaser, Mr Power, the respondent suggested a reconfiguration of the site to make it more attractive and sketches

were prepared showing this reconfiguration.

However in relation to this ground the appellant seeks to introduce additional evidence as contained in his affidavit. He deposes that

at the hearing the respondent named Tom Phillips and William Murray as persons he consulted in relation with planning matters. Since

the hearing the appellant has spoken to Mr Murray. From that conversation he is satisfied that Mr Murray did not provide any advices

to the respondent but that Mr Murray has no wish to become involved in the dispute. The appellant made a Data Protection Act

request to Tom Phillips and in response was told by Mr Phillips that he had had no dealings with the respondent. The affidavit does

not contain admissible evidence but only inadmissible hearsay and I would not allow it to be introduced: it consists of hearsay only.

The learned trial judge was satisfied that the respondent had done all that he was required to do in relation to consultancy services

and so had fulfilled the terms of the agreement. I am satisfied that there was before the court evidence to support that conclusion

and I would not interfere with the same.

The next ground concerns the fixing of the reserve. The learned trial judge dealt with this issue as follows:-

“A great deal of evidence advanced on behalf of the defendant related to the nature and necessity for a clear ‘reserve’ to

be in place for such an auction. Although the evidence was protracted, it appears to me that there was agreement that

the purpose of a reserve is two-fold: first, it indicates a floor price below which the property is not to be sold; second,

when in place, the reserve, authorises the auctioneer to sell the property at that, or a higher price. Instead of focussing

on the word ‘reserve’ in the present dispute, given that the floor was effectively set by the consortium’s €3.6m bid, the

real question for determination is: did the plaintiff have authority to sell the property on the day for €3.7m? Having

considered all the evidence I have come to the conclusion that the plaintiff did have such authority.”

Having considered in detail the evidence of what transpired on the day of the auction I am satisfied that the learned trial judge was

correct in identifying as the true issue not whether a reserve

Perhaps the strongest evidence of the respondent’s authority is the fact that the appellant after the auction signed the agreement

for sale and some two and a half months later the necessary assurances to the purchaser and completed the sale.

The auction was, however, unusual in that prior to the auction Mr Rory O’Donnell’s consortium made a bid of €3.6m which it was

agreed would be allowed stand at the auction. That bid was in fact made by Mr Mullen on behalf of the consortium at the auction, Mr

Mullen being the appellant’s financial adviser. However much of the evidence centred on what transpired at the auction. Three bids

were made. A number of witnesses gave evidence that the respondent then left the auction room to consult with the appellant. This

was the evidence of Mr Collins the appellant’s solicitor, Ms Delahunt and Ms Cleary from the respondent’s office, and Mr Rory

O’Donnell. Mr O’Donnell’s evidence was that the respondent left the auction room, spoke to the appellant and his wife and got

instructions to return and try and get more than €3.6m for the properties. Mr Mullen, the appellant’s financial adviser, did not recall

any break in the action. Mr O’Malley, solicitor, who attended for others interested in the outcome of the auction was satisfied that

there was no break. On the evidence the learned trial judge concluded that the respondent left the room and consulted briefly with

the appellant and his wife and that he got instructions to put the property on the market. The property was put on the market and

was sold at €3.7m.

At this point I propose to deal with other portions of the additional evidence which the appellant seeks leave to introduce. Firstly the

evidence concerns a document prepared by the respondent entitled “Summary for Profit”. This document was referred to in the

course of the hearing and while the respondent agreed to produce it, it was not in fact produced in the course of the hearing. The

appellant now says that on the basis of this document the properties were worth more than the price achieved at auction. I am not

at all satisfied that this is so. The conclusion is arrived at by attributing valuations to parts of the properties and selling the same in

lots. In fact the property was offered in lots but the total amount achieved was less than the ultimate price achieved by the sale of

the site as one lot. In any event valuation, while touched upon in the context of the manner in which the auction was conducted,

does not appear as an issue on the appeal or within the grounds relied upon in the appellant’s submissions. In addition to his own

affidavit the appellant seeks to rely on an affidavit of Patrick Stephenson a chartered surveyor. Mr Stephenson was present in the

High Court as an expert witness but did not give valuation evidence. However, leave is sought for him to give such evidence on

affidavit. It was, of course, always open to the appellant to call Mr Stephenson to give evidence as to valuation at the hearing but

this was not done. For this reason it would be inappropriate to allow the evidence to be introduced at this point. Finally a number of

matters are raised in respect of which additional evidence is sought to be adduced principally relating to delay in the contract being

signed by the purchaser and delay in the deposit being paid. None of these matters affect the core issues which are before the court

and do not appear to me to be relevant on the appeal.

CONCLUSION

On the motion for leave to adduce new evidence I am satisfied that of the evidence sought to be adduced some is hearsay and

accordingly inadmissible, some is not relevant to issues which were before the High Court but arose after the High Court hearing and

the remainder relate to matters which could have been dealt with in evidence at the hearing had the appellant so wished. In the

circumstances I would not give leave to adduce the evidence contained in the affidavits sworn by the appellant and by Patrick

Stephenson.

The substantive issues arising on the appeal fall to be determined on application of the well established principles in Hay .v. O’Grady

[1992] I.R. 210. McCarthy J. in giving judgment said:-

“Order 58 of the Rules of the Superior Courts 1986 provides:-

‘1. All appeals to the Supreme Court shall be by way of rehearing and (save from the refusal of an ex parte

application) shall be brought by Notice of Motion (in this Order called ‘the Notice of Appeal’). The appellant may

appeal from the whole or any part of any judgment or order and the Notice of Appeal shall state whether the whole

or part only of such judgment or order is complained of and, in the latter case, shall specify such part.’

This does not mean that the Supreme Court rehears oral evidence but, rather, the arguments based upon the findings of

fact, including arguments that the findings are unsupported by evidence, itself a question law. Although the jurisdiction

confirmed by Article 34 s.4 sub.s 3 is, save as there expressed and already instanced, unlimited, the court has, in effect,

limited its jurisdiction in the manner detailed in the succession of cases cited in the course of argument. The role of this

court, in my view may be stated as follows:-

1. An appellate court does not enjoy the opportunity of seeing and hearing the witnesses as does the trial judge

who hears the substance of the evidence but, also, observes the manner in which it is given and the demeanour of

those giving it. The arid pages of a transcript seldom reflect the atmosphere of a trial.

2. If the findings of fact made by the trial judge are supported by credible evidence, this court is bound by those

findings, however voluminous and apparently weighty the testimony against them. The truth is not the monopoly of

any majority.

3. Inferences of fact are drawn in most trials; it is said that an appellate court is in as good a position as the trial

judge to draw inferences of fact. (See the judgment of Holmes L.J. in The SS Gairloch, Aberdeen Glenline Steamship

Company v Macken [1899] 2 I.R. 1 cited by O’Higgins C.J. in The People (Director of Public Prosecutions) v Madden

[1977] I.R. 336 at p.339). I do not accept that this is always necessarily so. It may be that the demeanour of a

witness in giving evidence will, itself, lead to an appropriate inference which an appellate court would not draw. In

my judgment, an appellate court should be slow to substitute its own inference of fact where such depends upon

oral evidence or recollection of facts and a different inference has been drawn by the trial judge. In the drawing of

inferences from circumstantial evidence, an appellate tribunal is in as good a position as the trial judge.”

Adopting these propositions of law I am satisfied in the present case that there was evidence before the learned High Court judge

which entitled him to hold that the respondent had satisfied his obligations under the written agreement between himself and the

appellant both as to the provision of consultancy services and in seeking a reduction in the appellant’s debt to the Irish Nationwide

Building Society. Again on the issue as to whether there had been a break in the auction while there was evidence both ways the

learned trial judge was entitled to reach his conclusion on the evidence and I would not interfere with that. Finally as to whether the

respondent was authorised to sell the properties at €3.7m, again there was evidence before the court that he was so authorised. In

addition there were circumstances from which an inference could be drawn that the sale was authorised, principally the execution of

the agreement for sale and subsequently the assurances to the purchaser. I would not interfere with the drawing of that inference.

In summary then each of the grounds of appeal relied upon at the hearing of the appeal comes within the rule in Hay v O’Grady. There

was evidence to support each of the findings which are the subject of the appeal. I would dismiss the appeal and affirm the order of

the High Court.