The High Court has stayed part of a dispute over a €46.69 million land sale in County Westmeath, directing that issues about alleged boundary errors be decided by arbitration before the court trial can be scheduled.
In a judgment delivered on 2 July 2009, Mr Justice Clarke declined to stay the entire case. He directed that issues arising under General Condition 33 of the contract be stayed pending arbitration. The remaining parts of the proceedings may continue up to service of a notice of trial, but that notice cannot be served until the arbitrator has made an award on the General Condition 33 issues.
The contract was signed on 25 May 2007. Aiden Kelly and Michael O’Sullivan, the purchasers, seek a declaration that they validly rescinded it and repayment of their €9.093 million deposit, with interest. James Lennon, the vendor, disputes their entitlement and maintains that the contract remains enforceable. Those claims were not finally determined in this judgment.
The dispute arose after the parties disagreed over differences between the land’s physical boundaries and the boundaries shown in the relevant land registry folios. They also disputed the consequences of some tenancies having ended before the proposed closing. Completion did not take place after completion notices were served.
The judge said the arbitration clause covered disputes under General Condition 33, including whether an error entitled the purchasers to treat the contract as at an end and any compensation due. But the court retained questions about the tenancies and the timing and effect of the completion notices, which fell outside the clause. The court must decide those questions even if the arbitrator rules first on the boundary issue.
Justice Clarke said the court should not decide matters the parties had agreed to arbitrate. At the same time, fully staying the proceedings would be inappropriate because the other issues remained for the court. He ordered the court process to continue on those issues, including pleadings and interlocutory matters such as discovery, while barring any pleading that invited the court to decide the General Condition 33 issues.
The judge also rejected the purchasers’ argument that Lennon’s unconditional appearance prevented him from seeking a stay. He said the Arbitration Act expressly allowed an application after appearance and before pleadings or another step in the proceedings.
The judgment addressed the sequencing of court and arbitration proceedings. It did not decide whether the sale contract had ended, whether the deposit must be repaid, or the merits of the boundary and tenancy disputes. Both parties were given liberty to apply if logistical difficulties arose.