Option Agreement contains ambiguity which ought to be rectified

Peart J and Hogan J (concurring): Conveyancing – appeal of High Court order in respect of Option Agreement – defendants agreed to sell to the company the lands for a price of €6 million, subject to an option to re-purchase in favour of the defendants and an option to lease back in favour of the company – construction of a settlement agreement – rectification – construction of the option agreement – whether the agreement should be rectified – Delany, Equity and the Law of Trusts in Ireland (Dublin, 2016)(6th. ed.) – settlement agreement contains what amounts to an omission in that it does not in terms address the question of when the purchase option may be exercised – High Court decision affirmed – appeal dismissed.

"The present case is accordingly almost a paradigm example of where the principle of noscitur a sociis comes into play. There is, admittedly, no express prohibition in the agreement on the exercise of the purchase option prior to 2042. Yet as it is clear that the detailed provisions of clause 6 – referring as they do to standard clauses in windfarm leases in 2042 and the market rent for such leases in 2042 - are only operable in the year 2042, it necessarily follows that these provisions serve to create an implied prohibition on the exercise of this right to exercise the purchase option prior to 2042."

Whelan J (dissenting): Conveyancing – appeal of High Court order in respect of Option Agreement – defendants agreed to sell to the company the lands for a price of €6 million, subject to an option to re-purchase in favour of the defendants and an option to lease back in favour of the company – whether the written notice served by the appellants exercising the option to purchase “is null and void and to no effect” – rectification by reason of unilateral mistake – time when option is first exercisable – elements of sharp practice – correction by construction – s. 83 of the Land and Conveyancing Law Reform Act 2009 – general rules with regards to interpretation of contracts – the burden of proof – 33rd Edition of Snell’s “Equity” – settlement agreement not sufficiently clear to establish a prior agreement unequivocally providing that the exercise (as distinct from the completion) of the option to purchase was to be impermissible until 2042 – unilateral mistake and unconscionability – fairness – proper approach to interpretation of an express term – role of the court in implying terms into contracts – Contra proferentem – JC Wylie “The Land and Conveyancing Law Reform Act 2009: Annotations and Commentary”, 3rd Ed., 2017 – s. 60 of the Conveyancing Act 1881 – exclusion – relevance of covenant against assignment – estoppel by convention – time of the essence – Barnsley’s Land Options, 6th Ed., 2016 – Wylie and Woods “Irish Conveyancing Law”, 3rd Ed., 2005 – appeal allowed.

"In my view the proper interpretation of the Option Agreement as a whole, both having regard to its text and the context in which it was concluded – particularly in light of the tenor of the antecedent accord of 22nd May 2012- is such that it must be held to include a right to exercise the option to purchase at any time after its execution. Exercise of the option did not interfere with the company’s beneficial ownership and occupation of the lands pending 2042."