Court rules deal to buy stake for €3.6m agreed only in price

A construction company has lost a High Court claim for a declaration that it concluded an agreement in July 2002 for the purchase of a shareholding in another firm for €3.6 million.

McGill Construction Ltd, Rathmines Road, had sued Mr Paul McKeon and Mr Declan Hogan, both of Cabinteely; Mr Patrick Brock, Shankill; Whitefield Construction Ltd, Herbert Street; Patrick Brock and Son Ltd, trading as Brock Building Contractors, Dún Laoghaire; Mr Adrian Hegarty, Churchtown Road; Mr David Taylor, Portmarnock; and Mr Patrick O'Dowd, Blackrock (all Dublin).

McGill claimed it had concluded an agreement on July 2nd, 2002 under which it agreed to purchase, and the individual defendants agreed to sell, their shareholdings in Whitefield Construction for €3.6 million.

Whitefield owns lands at Rochestown Avenue, Dún Laoghaire, and obtained planning permission for the development of those lands, consisting of refurbishment of an existing house, its conversion into apartments and the construction of town houses and apartment blocks. Much of the development has been completed.

Giving his reserved judgment yesterday, the president of the High Court, Mr Justice Finnegan, said he was satisfied that if agreement was reached at a July 2002 meeting, it was an agreement on price only.

There were many other matters yet to be agreed and resolved before a concluded agreement could exist, he found.

He was satisfied that both parties had envisaged the reaching of a formal agreement, of the nature normally involved in the sale of the issued capital in a company which had traded with warranties and indemnities tailored to meet its particular circumstances.

There was no discussion or agreement with regard to a deposit, the judge said.

There was also no consideration as to how the taxation liabilities of Whitefield Construction - in respect of the development which it had carried out - would be dealt with.

No closing date was agreed. Both parties envisaged a formal agreement for the sale of shares being executed and the terms of this and the indemnities were not discussed or agreed.

In those circumstances, the judge was driven to the conclusion that all that was agreed on July 2nd, 2002 was the price which the plaintiff was prepared to pay and the shareholders were prepared to accept.

He believed a great deal more remained to be agreed and reduced to writing.

In those circumstances, there was no concluded agreement.

On the basis that all that was agreed was the price at which the parties were prepared to deal, he was satisfied there was no intention at that time to create a contractual relationship on either part.

The conduct of the plaintiff after July 2nd, 2002 in approaching a bank to arrange finance was more consistent with the judge's view that an agreement on price only was reached rather than that a complete oral agreement had been concluded.

The plaintiff had failed to establish that a concluded oral agreement was reached and accordingly failed in its claim for damages for breach of contract, the judge said.