The Supreme Court allowed Mary O’Connor’s appeal in a dispute over a conditional land sale, finding that her September 2002 letter effectively rescinded the contract after planning permission was not obtained within the agreed four-month period.
The judgment, delivered by Mr Justice Geoghegan on 21 October 2004, arose from a contract between O’Connor, the vendor, and Patrick Coady, the purchaser. It required Coady to obtain final planning permission within four months. Completion was to take place seven days after permission issued. Permission was not granted until more than a year after the contract was made.
Neither party initially notified the other that they considered the contract ended when the four months expired. In September 2002, after Coady’s solicitors wrote seeking steps to complete the sale, O’Connor’s solicitors replied that the contract had lapsed and was at an end. They offered to renegotiate and said they were returning the deposit of €57,138.21, equivalent to £45,000. The judgment records that the deposit was not enclosed, apparently by oversight.
The High Court had answered the questions before it in a way that accepted Coady’s position that a contract still subsisted. On appeal, the Supreme Court held that failure to meet the planning deadline gave either party an entitlement to bring the contract to an end, but did not terminate it automatically. The party relying on the failed condition had to notify the other that they were treating the contract as at an end.
Geoghegan J. said the September letter was not expressly framed as a rescission, but its substance made clear that O’Connor no longer regarded herself as bound. He found that she had not previously affirmed the contract: the passage of time alone was insufficient, and there had been no positive indication that she treated the contract as continuing. The letter therefore effectively avoided or rescinded the contract.
The court rejected the view that a 28-day notice under the contract was required in these circumstances. It allowed the appeal and said it would answer the questions in the manner suggested by Mr Justice McCracken. The supplied judgment does not set out those answers. Geoghegan J. also described his view that a failed condition makes a contract voidable rather than void as obiter, because counsel had conceded that the contract did not automatically lapse.