Registered Burdens
Cases
Irwin v Deasy
[2004] IEHC 104
JUDGMENT of
Ms. Justice Finlay Geoghegan
dated the 1st day of March 2004.
The plaintiff is the Collector General of the Revenue Commissioners. He has obtained three judgments against the defendant, one in the High Court and two in the Cork Circuit Court in respect of sums due by the defendant to the Revenue Commissioners.
The defendant and his wife Carmel Deasy are the joint owners of the lands comprised in Folio 8249 Co. Cork. The land therein comprises 19.5 hectares and it is averred by the plaintiff that it does not contain a family home within the meaning of the Family Home Protection Act, 197627.. The said folio also contains an entry relating to a right of residence of one Hannah Deasy and it is averred by the plaintiff that the said Hannah Deasy died on the 27th October, 2000.
Each of the three judgments of the plaintiff against the defendant have been converted into judgment mortgages and the said judgment mortgages have been registered on Folio 8249 Co. Cork.
The plaintiff in these proceedings essentially seeks:
1. A declaration that each of the said judgments stands well charged on the defendant’s interest in the lands and premises contained in Folio 8249 Co. Cork.
2. An order for payment of the sums alleged due on the said judgments together with continuing interest.
3. In default of payment, an order for the sale in lieu of partition of the aforesaid lands and premises and for the payment to the plaintiff out of the proceeds thereof of the sum found to be due and owing to the plaintiff following all necessary accounts and enquiries.
The proceedings were duly served by personal service on the defendant on the 10th April, 2003. An appearance was entered on behalf of the defendant and his solicitor appeared but did not make any submission on his behalf before me. The defendant’s spouse and co-owner Carmel Deasy has been served with notice of the proceedings. She has not appeared.
Notwithstanding the lack of opposition, the plaintiff must satisfy the court on the pleadings, affidavits and exhibits that it has jurisdiction to grant the reliefs sought.
When the matter came up for hearing before me in the Monday Special Summons List I was satisfied that the plaintiff was entitled to the well charging and payment orders sought. However, I sought submissions from counsel for the plaintiff as to the jurisdiction of this court to make an order for sale in lieu of partition of registered lands at the request of a judgment mortgagee and further, if the court has such jurisdiction, its ability to make such an order in the absence of Camel Deasy, the co-owner of Folio 8249, as a party to the proceedings.
Counsel for the plaintiff has made helpful submissions both in writing and orally. I have had an opportunity of considering these, the authorities referred to, and certain other older texts, and have reached the following conclusions.
The registration of the judgment mortgage affidavit by the plaintiff on Folio 8249 Co. Cork operates to charge the interest of the judgment debtor (the defendant in this case) therein. In accordance with s. 71 of the Registration of Title Act,1964the plaintiff has
“… such rights and remedies for the enforcement of the charge as may be conferred on him by order of the court.”
A charge so registered is a burden on the lands comprised in the said folio in accordance with s. 69 of the Act of 1964. Accordingly, it appears that the combined effects of s. 69 and s. 71 of the Act of 1964 mean that following the registration of each of the judgment mortgage affidavits on the folio there is registered as a burden against the lands comprised in the folio a charge against the defendants interest in the said lands to secure the judgment to which the judgment mortgage affidavit refers. The plaintiff as the judgment creditor only has the rights conferred on him by statute and cannot be considered to have any right to the ownership or possession of the lands comprised in the folio. The only rights conferred by statute are those already referred to in s. 71 of the Act of 1964, namely “such rights and remedies for the enforcement of the charge as may be conferred on him by order of the court”. A judgment creditor who has registered a judgment mortgage affidavit against registered lands has not been granted by the Act of 1964 any rights analogous to those rights conferred on the registered owner of a charge created by the owner of the registered land. An owner of a charge created by the owner has, pursuant to s. 62 (6) of the Act of 1964, “all the rights and powers of a mortgagee under a mortgage by deed, including the power to sell the estate or interest which is subject to the charge.”
Section 71 of the Act of 1964 purports in its express wording to give the court a wide discretion as to the orders it may make for the purpose of enforcing the charge created by the registration of the judgment mortgage affidavit. The section must be given an interpretation consistent with the Constitution. This necessitates avoiding a construction which would permit either an unjust attack on the property rights of persons other than the judgment debtor and also only interfering with the property rights of the judgment debtor to the extent necessary to permit the judgment creditor to realise the charge created by the registration of the judgment mortgage affidavit.
To give such a constitutional construction it appears to me that the courts should have regard to the type of orders it traditionally makes pursuant to its equitable jurisdiction for the purpose of enforcing a charge created by the registration of a judgment mortgage against unregistered lands. The probable intention of the Oireachtas in enacting s. 71 (4) of the Act of 1964 was to give the court a jurisdiction to make orders for the purpose of enforcing the charge created by the registration of a judgment mortgage on registered land similar to those the courts make for the purpose of enforcing a judgment mortgage registered in the Registry of Deeds against unregistered land.
The position of a judgment mortgagee of unregistered land under s. 7 of the Judgment Mortgage (Ireland) Act, 1850 is that the registration of the affidavit of judgment in the Registry of Deeds operates
“… to transfer to and vest in the creditor … all the lands, tenements, and hereditaments mentioned therein, for all the estate and interest of which the debtor mentioned in such affidavit shall at the time of such registration be seised or possessed at law or in equity, or might at such time create by virtue of any disposing power which he might then, without the assent of any other person, exercise for his own benefit …”
subject to redemption on payment of the money owing on the judgment. InWylie, Irish Land Law, 3rd Ed., (Dublin, 2000) the status and effect of such a mortgage is described as follows at para. 13.179
“Such a mortgage is subject to most of the principles governing mortgages in general. The usual method of enforcement is to bring an action for a declaration that the sum due is well charged, and for a sale if the amount is not paid within a specified period (3 months). Discharge does not require execution of a re-conveyance of the land and can be effected simply by entering up a memorandum of satisfaction.”
Where the judgment debtor is the sole owner of registered land, the court has exercised the discretion conferred on it by s. 71 of the Act of 1964 to make orders declaring the sum due to be well charged on the lands in the folio and, in default of payment within a specified period, an order for the sale of the lands.
The defendant and Carmel Deasy being registered as co-owners of the lands comprised in Folio 8249 Co. Cork are deemed to be joint tenants pursuant to s. 91 (2) of the Act of 1964. There is no entry in the register to the effect that they are tenants in common. Accordingly it appears appropriate to consider the orders which a court might make where a judgment mortgage is registered against unregistered lands owned by persons as joint tenants. It is well established that the registration of a judgment mortgage seeking to charge one joint tenant’s interest in lands operates to sever the joint tenancy and thereupon the co-owners hold as tenants in common and a mortgage of the estate or interest in the land held by the judgment debtor is created in favour of the judgment creditor. Thereafter the judgment creditor normally brings an action for a declaration that the sum due is well charged on the judgment debtors interest in the lands and for an order for sale in lieu of partition.
Such orders are sought pursuant to the provisions of s. 3 and s. 4 of the Partition Act, 1868 which provide:
“In a suit for partition, where, if this Act had not been passed, a decree for partition might have been made, then if it appears to the Court that, by reason of the nature of the property to which the suit relates, or of the number of the parties interested or presumptively interested therein, or of the absence or disability of some of those parties, or of any other circumstance, a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them, the Court may, if it thinks fit, on the request of any of the parties interested, and notwithstanding the dissent or disability of any others of them, direct a sale of the property accordingly, and may give all necessary or proper consequential directions.”
“In a suit for partition, where, if this Act had not been passed, a decree for partition might have been made, then if the party or parties interested, individually or collectively, to the extent of one moiety or upwards in the property to which the suit relates request the Court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested, the Court shall, unless it sees good reason to the contrary, direct a sale of the property accordingly, and give all necessary or proper consequential directions.”
In each section a precondition to the court having jurisdiction to make an order for sale is that a decree of partition might have been made if the Act of 1868 had not been passed. Doubt has been expressed by Murphy J. inO’D v O’D (Unreported, High Court, 18thNovember, 1983) as to whether the High Court retains a jurisdiction to grant a decree of partition since the passing of the Statute Law Revision (Pre-Union Irish Statutes) Act, 196229.. The doubt arises for the following reasons.
An Act of 1542 entitled “An Act for Joint Tenants” [ 33 HenVIII c. 10 (I.R.)] provided for the right of a joint tenant to compel partition. That Act appears to have expressly conferred jurisdiction to make such orders on the Common Law Courts. That Act was repealed by the Statute Law Revision (Pre-Union Irish Statues) Act,1962. However, it appears that following the passing of the Act of 1542 the Courts of Equity also asserted that they possessed a similar jurisdiction to that conferred on the Common Law Courts by the Act of 1542. Lyall, Land Law in Ireland, 2nd Ed., (Dublin, 2000) explains the rationale for the repeal of the Act of 1542 at p. 446 in the following terms:
“The Act [of 1542] itself expressly conferred jurisdiction on the common law courts, but courts of equity soon asserted that they possessed a similar jurisdiction. It seems that the equitable jurisdiction to partition survived until the Judicature Act and, since after that date it can be exercised in any court, the Act of 1542 had become obsolete. The Act of 1542 was therefore repealed in the Republic by the Statute Law Revision (Pre-Union Irish Statutes) Act, 1962.”
Notwithstanding the doubts expressed by Murphy J. inO’D v O’D(Unreported, High Court, 18th November, 1983) he did go on to consider whether he should exercise a discretion to grant an order for partition upon the assumption that the right to make such orders formed part of the inherent equitable jurisdiction of the court.
The issue was also considered by Barr J. inFF v CF [1987]I.L.R.M. 1. Barr J. considered that by reason of s. 2 (1) of the Act of 1962 the courts retain jurisdiction to make orders for partition. That section provides as follows:
“This act shall not affect any existing principle or rule of law or equity, or any established jurisdiction, form or course of dealing, practice or procedure, notwithstanding that it may have been in any manner derived from, affirmed or recognised by any enactment hereby repealed”.
I would respectfully agree with the view formed by Barr J. I have concluded that the courts retain a jurisdiction to make orders for partition notwithstanding the repeal of the Act of 1542 by the Act of 1962. It is undisputed that prior to the passing of the Act of 1962 the courts had an established jurisdiction to make orders for partition at the request of a joint owner of property. Further it appears that the Courts of Equity developed such a jurisdiction independently of the Act of 1542 which had conferred the jurisdiction on the Common Law courts. Following the passing of the Judicature Act all courts were entitled to exercise the equitable jurisdiction. Even if the jurisdiction exercised by the courts following the passing of the Judicature Act may be considered to have been derived wholly or partly from the Act of 1542, it appears that s. 2 (1) of the Act of 1962 preserves such jurisdiction.
A person may only claim an order for partition if entitled in possession or entitled to call for legal possession: see White and Tudor,Leading Cases in Equity, 7th Ed., (London, 1897),vol. 1 p.199. A mortgagee has been held entitled to claim partition op. cit. P. 201. Also a mortgagee has been held entitled to an order for sale in lieu of partition under the Act of 1868, see Davenport v King (1883) 49 L.T. (N.S.) 92. There does not appear to be any reason to distinguish a judgment mortgagee of unregistered lands from any other mortgagee of unregistered lands who has been held so entitled.
Accordingly, on proof of the other matters referred to in ss. 3 and 4 of the Partition Act, 1868 a judgment debtor who has registered a judgment mortgage affidavit in the Registry of Deeds against unregistered land is entitled to seek an order for sale in lieu of partition and the courts retain a jurisdiction and discretion to make such orders for sale in lieu of partition
The jurisdiction of the courts to make an order for partition or an order for sale in lieu of partition at the request of a judgment debtor who has registered a judgment mortgage affidavit as a charge against registered land does not appear to have been considered by the Irish courts since the passing of the Act of 1964. InFirst National Building Society v Ring [1992] 1 I.R. 375 Denham J. (whilst in the High Court) considered an application for an order for sale in lieu of partition under s. 4 of the Partition Act, 1868 in relation to registered land. However, in that case it appears to have been simply assumed by the parties that the court had jurisdiction to make an order for sale in lieu of partition in relation to registered land at the behest of a judgment debtor who had registered the judgment mortgage affidavit as a charge against the debtor’s interest in the registered land. The issue in that case was the nature of the discretion (if any) conferred on the court by s. 4 of the Act of 1868 and the circumstances in which it should be exercised in favour of the plaintiff. The claim in that case related to lands on which there was a family home then resided in by the wife who was a co-owner and by the children of the marriage.
I have concluded that the registration of a judgment affidavit under s. 71 of the Act of 1964 does not confer on the plaintiff any interest in the lands comprised in Folio 8249 Co. Cork such as would entitle him to a decree of partition in accordance with the established principles. He is not entitled in possession or to call for possession of the lands. The absence of any provision in s. 71 analogous to that contained in s. 62 (6) of the Act of 1964 in relation to the registered owners of charges created by the owner of the property in the folio means that one cannot assimilate the position of a judgment creditor in whose favour a charge is created by the registration of the judgment mortgage affidavit pursuant to s. 71 of the Act of 1964 (which is simply a burden on the property), to the position of a judgment creditor who has registered a judgment mortgage affidavit in the Registry of Deeds against unregistered land and is a mortgagee pursuant to the provisions of s. 7 of the Judgment Mortgage (Ireland) Act 1850. Support for this view is to be found in Lyall,Land Law in Ireland, 2nd Ed., (Dublin, 2000) at p. 868 where it is stated:
“In registered land a judgment mortgage does not effect a conveyance of the debtor-spouse’s interest: it creates a charge on the interest. It would seem to follow that a judgement mortgagee of registered land cannot apply for an order for sale under the Partition Acts because he or she is not a co-owner.”
It follows from my conclusion that the plaintiff is not a person in whose favour a decree of partition may be made that he is not entitled to an order for sale in lieu of partition under s. 3 or s. 4 of the Partition Act, 1868. However, as previously indicated in this judgment, s. 71 (4) of the Act of 1964 confers on the court a discretion as to the rights and remedies for the enforcement of the charge which may be conferred by order of the court. I have also previously indicated that it appears to me that such discretion should be construed as giving to the court a jurisdiction and discretion to grant orders similar to those which are and have been granted pursuant to the courts pre-existing equitable or common law jurisdiction for the enforcement of judgment mortgages registered against unregistered land. Hence, as I am satisfied that there continues to exist in the courts jurisdiction to make orders for sale in lieu of partition under ss.3 and 4 of the Act of 1868 at the request of judgment creditors who have registered judgment mortgage affidavits against unregistered land in the Registry of Deeds, it appears that the provisions of s. 71 (4) of the Act of 1964 should properly be construed as including an intention to confer on the courts an analogous jurisdiction in relation to registered land.
Considering the matter in a slightly different way, unless s. 71 (4) of the Act of 1964 is construed as giving the courts a jurisdiction to make either orders for partition or orders for sale in lieu of partition for the purposes of enforcing a charge on the interest of a judgment debtor who is a co-owner, the only other order which might possibly enforce the charge would be an order for the sale of the judgment debtors interest in the lands. In most instants this would bean unrealistic order for the purposes of enforcing a charge. It is highly improbable that the sale of an undivided interest (whether as joint tenant or a tenant in common) would be a marketable commodity. In certain situations it may be saleable to the co-owner. Where it is, it is probable that this would be done by agreement before enforcement orders are sought.
Counsel for the plaintiff has made submissions on the question as to whether the registration of the judgment mortgage affidavit under s. 71 operates to sever the joint tenancy of the defendant and Mrs. Deasy. It does not now seem necessary to resolve this question for the issues I have to decide. Hence it should be left for a case where it is in issue.
Hence, I have concluded that the rights and remedies which the court may order under s. 71 (4) for the enforcement of a charge registered pursuant to that section must include in an appropriate case an order for partition and/or an order for sale in lieu of partition. It further appears appropriate that the court should by analogy exercise its discretion in accordance with the principles established in relation to the granting of decrees of partition and to the making of orders for sale in lieu of partition in accordance with the provisions of s. 3 and s. 4 of the Act of 1868.
Counsel for the plaintiff submits that he is entitled to obtain an order for sale in lieu of partition notwithstanding that Carmel Deasy, the joint owner of the property, is not a party to the proceedings. He makes this submission primarily in reliance upon s. 9 of the Act of 1868. For the reasons already given, the application for the order for sale in lieu of partition is not strictly speaking an application under the Partition Act, 1868 but rather an application for such order under s. 71 (4) of the Act of 1964. The courts are bound to exercise the jurisdictions and discretions conferred on it in accordance with the constitutional principles of fair procedures.
I have concluded that even if s. 9 of the Act of 1868 did strictly apply in a situation where there are only two co-owners of the property and an application for an order for sale in lieu of partition is being made by a mortgagee of one such owner that unless the other owner is not available for some reason to be joined as a party to the proceedings that he/she should be joined as a party to the proceedings. The judgment mortgagee is effectively making the claim through the interest of the judgment debtor in the property and therefore at least one co-owner of the judgment debtor should be joined as defendant. If not, as between the co-owners only the judgment debtor’s interest in the property is represented both through the plaintiff and the defendant. Also, it is well established on the authorities relating to s. 3 of the Act of 1868 that the court in considering whether it would be more beneficial for the parties interested in the property to make an order for sale must take into account the circumstances of all the parties interested and not imply the person who is the applicant for the order for sale in lieu of partition.
Even if I did not form this view on s. 9 it appears to me that in accordance with the constitutional principles of fair procedures that where a judgment creditor is seeking an order for sale of the entire property a person who is the only co-owner of the property with the judgment debtor should be joined as a party to the proceedings. Putting them on notice of the proceedings does not appear sufficient. Hence I am not prepared to permit the application for an order for sale in lieu of partition to proceed without Carmel Deasy being joined in the proceedings.
I would also observe at this stage in the proceedings that if, as I have indicated, this court is to exercise a discretion under s. 71 (4) of the Act of 1964 on principles analogous to those established by the authorities relating to s. 3 and s. 4 of the Act of 1868, the plaintiff has not set out on affidavit facts which would either permit the court to decide whether it is exercising discretion under s. 3 or s. 4 of the Act of 1868 or factual matters which would permit it to exercise its discretion in favour of making an order for sale in lieu of partition. Those factual matters would have to be addressed before the court could consider exercising its discretion.
I will hear counsel and solicitor as to the precise form of order which should now be made in respect of the reliefs to which the plaintiff is entitled and to permit the plaintiff, if he wishes, to bring an application to amend the summons and join Carmel Deasy as a party to the proceedings and to put before the court such additional facts as are considered appropriate to permit the court to consider an application on principles analogous to those established by s. 3 and s. 4 of the Partition Act, 1868.
Johnston v Horace
[1993] ILRM 594
Judge: Mr. Justice Lavan
THE LAW
Section 81 of the Registration of Title Act, 1964provides:
“A right of residence in or on registered land, whether a general right of residence on the land or an exclusive right of residence in or on part of the land, shall be deemed to be personal to the person beneficially entitled thereto and to be a right in the nature of a lien for money’s worth in or over land and shall not operate to create any equitable estate in the land.”
The First named Plaintiff comes within the first category namely enjoying a general right of residence and has accordingly a lien for money’s worth in or over the land. The discussion contained in Irish Land Law, 2nd Ed. Wiley, 20.13–20.24 on Rights of Residence concludes that Section 81 of the Act of 1964 excludes the plaintiff from having the statutory powers of a tenant for life. Her rights being in the nature of a lien is the right to bind the property for payment of the money’s worth of the residential use.
Neither the case law nor the statute clarifies whether or not the beneficiary of the right or the owner of the property can insist on the right being converted into money’s worth.
In the case to hand the Plaintiff asserts that she has been deprived of the right, the Defendant denies this. The Plaintiff wishes her right to be valued.
I have no doubt but that there are circumstances on which a Court could enter by agreement of the parties into a valuation of their respective interests. There are also circumstances where a Court might compel such a valuation in the general interest of the administration of justice or under its equitable jurisdiction. The Court in valuing the right should carry out an objective valuation independent of the alleged circumstances in which the valuation is sought.
There are no authorities as to how such a valuation should be carried out. Such case law as does exist predates the statute and provides only a general guide as in National Bank .v. Keegan 1931 I.R. 344 at 354 where Kennedy J. states “the general right of residence charged on a holding is capable of being valued in moneys numbered at an annual sum and of being represented by an annuity or money charge”.
The reference above to an annual sum reflects the fact that the right is of an ongoing nature and as such it should be measured by reference to some reasonable periodic period depending on the circumstances of the parties. In that context the period could be monthly, quarterly or yearly.
Before considering the money’s worth the characteristics of the right as granted have to be established. In this case the First named Plaintiff enjoyed;
(a) A right to share with otherse the use and occupation of the premises.
(b) While not granted any exclusive rights she enjoyed the personal use of one bedroom in a three bedroom cottage.
In the circumstances it would be reasonable to say that her proportionate interest in the use and occupation of the premises was one-third.
In so far as the plaintiff did not contribute to the substantial improvement of the premises it would be reasonable to apply the principle applied in use and occupation cases as set out in McGregor on Damages, 15th Edition at paragraph 1420 namely that the value of the right should be assessed on the assumption that the premises were unimproved.
In the absence of any market in rights of residence the Court must look to such comparables as can be found for guidance on valuations. One such method is the rental value of similar premises. In this case the question to be asked is what would represent a third of the rental value of the cottage in its unimproved condition or of such similar property of similar character in a similar area.
Other alternative though less precise valuations would be the sum one would reasonably expect a residing relative to contribute to a household in respect of the right to reside excluding contributions in respect of other household expenses.
To value the right in terms of the cost of acquiring other alternative accommodation suitable to the individual concerned is to stray away from measuring the money’s worth of the right of residence and to enter into the area of compensatory assessment. In that regard there are a whole range of options available with significant variations in rent levels depending on whether the private, public or social housing markets are assessed and it raises further questions as to the application thereto of taxation provisions such as Section 142A of the Income Tax Act 1967as inserted by Section 5 of the Finance Act 1982and presently providing for a tax allowance in respect of the first £1,500.00 of rent paid by a widowed person over 55 years of age.
In many respects the objective valuation of the right of residence is the method signposted by statute. There are dangers in any formula that the actual values may throw up an unrealistically high valuation of the right, given the limited nature and extent of the right granted and the implied intention of the legislature to be read into Section 81 of the 1964 Act that the valuation should not unduly force a sale of the property so as to destroy the other interests therein. To that extent any valuation needs to be tempered with caution.
In so far as the Court has to arrive at a valuation, that valuation should be measured as a periodic sum. The periodic sum should not be capitalised. It is only in circumstances where such periodic sums are not being paid or that the property is being disposed of that the lien becomes a lien secured or enforceable by way of additional security in the form of a capitalised sum if necessary. To capitalise the money’s worth of the right is akin to giving the beneficiary the equivalent of the statutory rights of a tenant for life. To capitalise assumes the ability of the owner of the property to pay or raise a capital sum or in the alternative becomes punitive on the owner in that the cost of sale of the premises has to be borne and the additional cost of repurchasing another property at some later date.
As I understand the Defendant’s submissions, they are, in part, to be summarised as follows. The Court ought to ignore the Defendant’s conduct. It ought to ignore the Testator’s intention. It ought to enable the Defendant benefit by excluding the Plaintiff and thereby place the burden of providing for the Plaintiff’s residence either on the appropriate statutory authority or on the Plaintiff herself.
Counsel for the Plaintiff submits that the proper approach is to value the actual loss to date and into the future to capitalise the sum that it will cost the Plaintiff to provide for alternative accommodation.
I have had ample time to consider this case. I view any conduct which in this era of homelessness puts a person out of their home as being reprehensible. In this case, the Plaintiff’s father made provision for her – as indeed, he did for the entire members of his family, including his son-in-law, the Defendant’s father. The provision by the deceased might appear modest. It was not. It made provision for one of the most basic requirements that any human being years to attain. That is a roof over their heads for life, and a security that same would be available until the end of their days – that is a right of residence for life.
In my view the right granted is an unrestricted right. The right is not abandoned by an absence of a day, or a week, or indeed a number of years. The right cannot be varied to suit the whim of the owner. Its nature and content must be viewed by the Court from the right granted in the ensuing conduct of all concerned, including the common recognition of the right and the common use that right has conferred upon the Plaintiff and other members of the family since the death of the deceased Testator.
The right may voluntarily be abandoned expressly and freely, or indeed by effluxion of time. However, a Court would have to require strong cogent evidence from a party seeking to defeat such a right. Whilst the right remains a burden on a Folio and in the absence of express agreement parol or written to disclose an intention to abandon.
In this case, I am satisfied that there was duress on the part of the Defendant. That there was no abandonment by the Plaintiff and that it would be unjust to permit the Defendant to profit by his conduct.
I do not consider that this is a proper case to permit the abandonment of the right of residence. Both parties are of modest means. To suggest that the Plaintiff ought to be burden on the local authority or, indeed, that she might avail of taxation relief is to ignore the reality of the circumstances of the case.
I consider the suggestion of valuing the right of residence unreal. Where I have to value same, I take the view that it would have to be on an actuarial basis, having regard to the Defendant’s conduct and his inability to pay. In addition, I take the view that the fact that a secured right of residence would otherwise become an unsecured right with no certainty that periodic payments would or could be made.
In my view the Defendant has not the means nor the intention to make proper provision for the Plaintiff’s right of residence. In addition, the Defendant seeks to obtain Court approval to defeat a dead man’s well considered intention to properly provide for his children, including the Plaintiff in this case. He who comes to equity must come with clean hands.
In these circumstances, I propose to grant the Plaintiff the injunctive reliefs she seeks.
I also propose to award damages. I accept the Plaintiff has suffered great distress, inconvenience and upset. Because of the limited means of the Defendant, I will allow a figure of £7,500.00 damages for the interference with the right of residence to date. In so doing I wish to make clear that this is not to be taken as expressing my view as to the appropriate measure of damages for interference with a person’s right of residence. It is, in my view, an act which warrants substantial damages in most cases.
In the circumstances, I dismiss the Defendant’s Counterclaim. I award the Plaintiff her costs of the action.
Irish Life and Permanent Plc v Dunne
[2016] 1 IR 92, [2015] 2 ILRM 192,
Court: Supreme Court (Ireland)
Judge: Mr. Justice Clarke
- The 2009 Act
6.1
The starting point for a discussion of the issues which arise under this heading has to be the decision in Start Mortgages. That case was concerned with the effect of the repeal, on the 1st December, 2009, of s.62(7) of the 1964 Act by the coming into force of the 2009 Act,
6.2
It should be noted that, in respect of proceedings commenced after the 31st July, 2013, the situation has been changed by virtue of the Land and Conveyancing Law Reform Act 2013. However, the potential problem identified in Start Mortgages arises in respect of mortgages created before the 1st December, 2009, and where proceedings were commenced before the 31st July, 2013.
6.3
The effect of the decision in Start Mortgages is that, if the principal monies secured by a charge on registered land have not become due before the 1st December, 2009, the mortgagee was found not to be entitled to maintain a claim for possession of the charged property as a result of the repeal of s.62(7) of the 1964 Act with effect from that date. The rationale of the decision is that a mortgagee could only acquire a right to apply for an order under s.62(7) when the principal monies secured by the relevant mortgage had become due and, if that had not happened before the repeal of s.62( 7), s.27 of the Interpretation Act 2005 was of no assistance to the mortgagee in negating the effect of the repeal.
6.4
Two questions potentially arise. One is of a broad nature and concerns the question of whether it might be said that the right of a mortgagee to obtain possession of lands, the subject of a registered charge, is acquired or accrued as soon as the charge is created even though reliance could not be placed on that vested right to actually seek an order for possession until such time as the principal monies had become due.
6.5
However, a narrower question arises in the circumstances of the Dunphy case. Irish Life and Permanent argue that, on the facts as found by the trial judge, the principal monies were due as of the 1st December, 2009. On that basis it is said that, on any view of when rights may have been vested, the right to obtain possession on the facts of this case had clearly arisen prior to the repeal of s.62(7) of the 1964 Act.
6.6
In the course of their written submissions, Irish Life and Permanent suggested that in each case the appropriate test was as to whether, having regard to the provisions of the relevant mortgage and/or loan and to the facts insofar as they are relevant to the operation of those provisions, the payment of the principal money secured by the charge is due. It seems to me that counsel for Irish Life and Permanent was correct in suggesting that the test was as thus described. In order for the power to seek an order for possession under s.62(7) of the 1964 Act to have arisen, what was required was that the principal monies were due. It follows that the question which any court invited to apply the jurisdiction arising under that section must ask itself is as to whether, as a matter of law, it can properly be said that the principal monies had become due. The first port of call for determining whether those monies had become due is to identify the terms of the contract between the lender and the borrower as to when the entire principal sum can be said to fall due. Terms in that regard can, and do in practice, differ. It may be that, on a proper interpretation of the contractual documents in one case, a demand for payment following some form of default may be necessary. It might, however, be the case that, in other circumstances and in the light of the terms contained in a particular mortgage deed, the full sum may become due without demand in certain, specified circumstances.
6.7
The first question which the Court must, therefore, address is as to the terms of the loan and/or mortgage in question and what they say, when properly interpreted, about the circumstances in which the principal sum can be said to be due.
6.8
The relevant provisions of the mortgage in this case provide as follows:
‘ 6.4 At any time after the Total Debt has become immediately payable permanent tsb may without any previous notice to or concurrence on the part of the Mortgagor:
(a) enter into possession of the property or any part thereof or into receipt of the rent or profits of the property or any part thereof’
‘ 7. The Total Debt shall become immediately payable to permanent tsb:
7.1 if the Mortgagor defaults in the making of two Monthly Repayments or for two months in the payment of any other moneys payable under the Mortgage…’
‘ 20.8 No failure to exercise and no delay in exercising on the part of permanent tsb any right power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right power or privilege preclude any other or further exercise of any power or right or privilege.’
6.9
The contractual terms between the parties in this case are, therefore, clear. It is provided that the ‘total debt is immediately payable’ where a default amounting to two months’ repayments has occurred. That provision is automatic in its effect. It does not require any letter of demand or other action on the part of the lender in order for the total sum to become due. To the extent that such a term might be regarded as harsh, it should be again be emphasised that, in the absence of any statutory provision either preventing certain types of clauses from being effective or conferring any jurisdiction on the Court to consider the merits of a particular clause, lending contracts are no different to any other form of contract, and simply mean what they say. Thus, the provisions to be found in what the Court understands to be Irish Life and Permanent’s standard form documentation mean that the entire principal owed under a mortgage loan becomes due automatically as soon as the borrower falls into arrears in respect of two monthly repayments.
6.10
As noted earlier, the first question is as to what the contractual arrangements between the parties provide as to the circumstances in which the principal sum can be said to become due. Thereafter, the Court will have to consider whether, on the facts, those circumstances can be said to exist. It was not disputed, on the facts of Mr. Dunphy’s case, that he was in arrears for more than two months prior to the 1st December, 2009. It follows that, prima facie, the full principal sum had become due while s.62(7) of the 1964 Act remained in force. In that context it is, however, necessary to address the reason why it was argued on behalf of Mr. Dunphy that, in the particular circumstances of his case, it could not be said that the principal sum had become or, at least, remained due as of the 1st December, 2009.
6.11
It was argued on behalf of Mr. Dunphy that the demand made by Irish Life and Permanent was ‘flawed’ as it ‘fails to Demand the Principal sum.’ Reference was made to the letter of demand issued by Irish Life and Permanent, which is exhibited to an affidavit filed on behalf of Irish Life and Permanent in these proceedings. That letter, which is dated 4th November, 2008, sets out in its heading the amount of €5,286.85 arrears, and states:-
‘ As a result of the arrears stated above and the terms of your mortgage, the Bank is now entitled to recover possession of the mortgaged premises.
Accordingly, unless the above mentioned arrears are discharged within 21 days of today’s date or, alternatively, vacant possession of the above premises is given to the Bank within 21 days; we will issue proceedings without further notice against you for a Court Order for the recovery of possession of the premises so that the property may be sold and the proceeds of sale applied towards the redemption of your mortgage. In the event of there being any shortfall, you will be sued for the recovery of the outstanding balance.
Please, therefore, ensure that the required payment is made within the specified period of 21 days, as otherwise you will automatically be involved in legal proceedings for ejectment and the consequent costs.’
6.12
In substance, the argument made on behalf of Mr. Dunphy is that, in some way, that letter and subsequent correspondence amounts either to a waiver or could be said to be inconsistent with a statement that the full principal is due. It must be recalled that the sort of situation which arose in this case is not at all unusual. A party may fall into arrears of repayment on foot of any type of loan. The lender may not be particularly minded to enforce the entirety of the loan and may be entirely amenable to the loan being ‘put back on track’ by appropriate measures being adopted to address any arrears.
6.13
At the oral hearing, counsel on behalf of Mr. Dunphy placed particular reliance on clause 2.8 of the relevant mortgage deed. That clause provides that, if Irish Life and Permanent made a concession to the mortgagor by allowing a suspension or postponement of any payments, then in the event of subsequent default in payment of interest or otherwise, the concession would cease to operate and become void and the mortgagor would ‘on request’ be obliged to fulfil his obligations. On that basis, it was argued that arrangements had been entered into between the parties which, even if they were breached, required a further request or action on the part of Irish Life and Permanent to, as it were, reactivate the entitlement of the lender to become entitled to payment of the full principal sum. In the absence of any such request or demand it was argued, therefore, that, on the relevant date, the full principal sum was not due and that the consequences identified in Start Mortgages, therefore, followed.
6.14
The sequence of correspondence between the parties appears to have been as follows:-
- By letter dated 4th November, 2008 from Irish Life and Permanent, Mr. Dunphy was informed that he was in arrears and that the lender was entitled to recover possession. He was told that unless the arrears were discharged within 21 days or vacant possession given, proceedings would be issued seeking possession.
- There was no response to that letter.
- On 15th December, 2008 Irish Life and Permanent’s solicitors wrote to Mr. Dunphy serving the ejectment civil bill on title to him.
- Mr. Dunphy wrote on 17th December, 2008 to Irish Life and Permanent’s solicitors, effectively acknowledging that he owed €5,900 but stating that he had applied for a first time buyer’s tax allowance, which would cover the arrears. He indicated that he had contacted Irish Life and Permanent and that he would endeavour to make the repayments.
- Apparently no repayments were made, and Irish Life and Permanent went ahead with the proceedings in the Circuit Court.
6.15
I can well envisage that, if a lender were to make a statement along the lines of ‘if you do not restore this account to order within (say) three months we will have no option but to initiate proceedings’ and if the borrower were to restore the account to order within that time, the lender might be faced with a cogent plea of estoppel if, notwithstanding that the loan had been restored to order in a manner specified by the lender, the former breach of the terms of the loan were to be relied on to suggest that the entire sum remained due.
6.16
However, in this instance, Mr. Dunphy did not restore the account to order in any manner which Irish Life and Permanent might be suggested to have bound itself to accept. In those circumstances, it is suggested on behalf of Mr. Dunphy that, when he had failed to regularise his account, a further demand or ‘request’ would have been required to create a situation where the full principal became due again.
6.17
In my view, such is not an appropriate way to characterise the events. Rather, as a result of the contractual arrangements between the parties and the events which happened, the entire principal had already become due before the relevant correspondence between the parties started. That situation arose because of Mr. Dunphy’s arrears exceeding the amount which triggered, under the terms of the mortgage loan, the full amount becoming due. No demand was required.
6.18
It is not, in my view, appropriate to characterise the correspondence in this case as amounting to any waiver on the part of Irish Life and Permanent or a suspension or postponement of any payments. Rather, that correspondence simply provided an indication that, provided certain conditions were met (i.e. payment within 21 days), Irish Life and Permanent would not seek to enforce its rights. As indicated earlier, a different situation might well have arisen had Mr. Dunphy complied with the relevant terms in a timely fashion. However, he did not. To the extent that any legal entitlement might have been available to Mr. Dunphy to prevent Irish Life and Permanent from exercising what might otherwise be said to be their legal entitlement to seek possession, that entitlement was clearly and entirely conditional on the account being restored in the manner contemplated by the correspondence. In substance, the height of what it might be said Irish Life and Permanent had committed themselves to in that correspondence was a conditional agreement not to proceed to exercise their entitlement to seek possession provided that the arrears were cleared within 21 days. In circumstances where those terms were clearly not met, it seems to me that the conditional offer not to press ahead with an application for possession simply drops out of the picture and has no effect on the pre-existing entitlement of Irish Life and Permanent to the entire principal sum. It should be emphasised that a breach of a formally negotiated restructuring of a loan might give rise to a different analysis.
6.19
In those circumstances, I am satisfied that the principal sum was due as of the 1st December, 2009 and that, therefore, the repeal of s.62(7) of the 1964 Act has no effect on this case.
6.20
One further issue which arose in the course of discussion between counsel and the Court at the oral hearing should at least be recorded at this stage. The issue concerns the time at which a right to seek possession can be said to be vested for the purposes of s.27 of the Interpretation Act 2005. That legislation preserves rights ‘acquired, accrued or incurred’ even after the legislation giving rise to such rights has been repealed. The underlying rationale behind the decision in Start Mortgages was that the right to possession conferred by s.62(7) of the 1964 Act only became vested in that sense when there were arrears or other circumstances which, in accordance with the terms of the contractual arrangements between the parties, entitled a lender to actually seek an order for possession by bringing appropriate proceedings. It is arising out of that analysis that the question of whether the right thus characterised had become vested prior to the 1st December, 2009, has up to now been considered.
6.21
However, there may be an alternative view as to the time at which it might be said that the relevant right becomes vested. On that alternative view, the right to seek possession, although contingent on some act of default or the like triggering the circumstances in which it can actually be exercised, is nonetheless acquired or accrued as soon as the mortgage is put in place and the relevant charge registered on the folio in question. On that view, it would follow that the right to seek possession at some stage in the future in the event of, for example, default, remained vested and in place at all material times after the mortgage deed had been entered into even in cases where no immediate entitlement to exercise that right existed because of the absence of a triggering event.
6.22
Because I have concluded that, as a matter of fact, the full principal sum was due in Mr. Dunphy’s case on the 1st December, 2009, that point does not, strictly speaking, need to be decided. Furthermore, it was not a point which was clearly urged on behalf of Irish Life and Permanent. In those circumstances, it does not seem to me to be appropriate to reach a final view on that important question in this case, but I should not, for the avoidance of doubt, be taken as a expressing a view one way or the other on that question. I would leave its resolution to a case in which it turned out to be decisive.
6.23
For like reasons it does not seem to me to be necessary to address the issue raised in the case stated in this case which concerns whether Irish Life and Permanent would have had a contractual right to possession even if it were to have been held that the lender did not have an entitlement to rely on s.62(7) of the 1964 Act.
6.24
I would, therefore, answer question (ii) in the case stated in the Dunphy case in the affirmative on the basis that, for the reasons set out in this judgment, I am satisfied that the entire principal sum was due on the 1st December, 2009, and that, on any view of the meaning of the terms ‘acquired’ or ‘accrued’, a right to bring an application under s.62(7) of the 1964 Act was clearly vested as of that date and thus not affected by the repeal of the section. I would, for the reasons which I have also set out, leave to a case in which the issue turned out to be decisive, any further consideration of the definition of the point in time when a right to possession of registered land on foot of a registered charge can be said to have been ‘acquired’ or ‘accrued’ for the purposes of s.27 of the 2005 Act.
6.25
In the light of that answer to question (ii) I do not consider it necessary to answer question (iii).
- Conclusions
7.1
For the reasons set out in this judgment I would answer question (i) in both cases stated in the affirmative and to the effect that the trial judge in the High Court had a jurisdiction to state a case in both proceedings.
7.2
So far as questions (ii) and (iii) in the Dunnes’ case are concerned, I would answer those questions by indicating that, where a breach of the Code involves a failure by a lender to abide by the moratorium referred to in the Code, but in no other circumstances, non-compliance with the Code affects, as a matter of law, a relevant lender’s entitlement to obtain an order for possession. I would further clarify that it is a matter for the relevant lender to establish by appropriate evidence in any application before the Court that compliance with that aspect of the Code has occurred.
7.3
So far as question (ii) in the Dunphy case is concerned, I would answer that question in the affirmative on the basis that I am satisfied that the entire principal sum was due on the 1st December, 2009, and that, on any view of the meaning of the terms ‘acquired’ or ‘accrued’, a right to bring an application under s.62(7) of the 1964 Act was clearly vested as of that date. I have also included in this judgment some comments on the question of the proper application of s.27 of the 2005 Act to the repeal of s.62(7) of the 1964 Act.
7.4
Finally in the light of the answer which I propose should be given to question (ii), I do not consider it necessary to answer question (iii) in the Dunphy case.
Irwin v Deasy
[2012] 1 ILRM 12
[2011] IESC 15
Jurisdiction: Ireland
Court: Supreme Court (Ireland)
Judge: Mr Justice Finnegan
Registration of Title Act 1974 section 71(4)
The relief available to a judgment mortgagee is provided for in section 71(4) of the Registration of Title Act 1964-
“The creditor shall have such rights and remedies for the enforcement of the charge as may be conferred on him by order of the court.”
Thus a wide discretion is conferred upon the court.
It is submitted on behalf of the appellant that the discretion conferred on the court by section 71(4) encompasses a power for the court to treat a judgment mortgagee of registered land as having the rights of a judgment mortgagee of unregistered land and the rights formerly enjoyed by a judgment mortgagee of registered land under the Local Registration of Title (Ireland) Act 1891. Had this been the intention of the Legislature it could have expressed that intention in clear terms by re-stating in the 1964 Act section 21(2) of the 1891 Act but it did not do so. The 1964 Act clearly distinguishes between a charge created by a registered owner, which has the effect of a mortgage, and a judgment mortgage which has not that effect: see section 62(6) as to the effect of a charge created by a registered owner and section 71(4) as to the effect of a judgment mortgage. The change effected in the position of a judgment mortgagee by section 71(4) of the 1964 Act from that under section 62(6) of the 1891 Act is such that I am satisfied that it was the legislative intention to differentiate between the positions of a judgment mortgage of registered land and a judgment mortgage of unregistered land.
The explanation for not assimilating the position of a judgment mortgagee of registered and unregistered land becomes apparent, in my view, when the Act of 1964 is placed in context. The Act of 1891 section 22 made registration compulsory where the land had been at any time sold and conveyed to or vested in a purchaser under any of the provisions of the Purchase of Land (Ireland) Acts and was subject to any charge in respect of an annuity or rent charge for the repayment of an advance made in respect of the purchase money. Otherwise registration under the Act was voluntary. Section 95 of the Act defined Purchase of Land (Ireland) Acts as meaning the Irish Church Act 1869, the Landlord and Tenant (Ireland) Act 1870, the Landlord and Tenant (Ireland) Act 1872, the Land Law (Ireland) Act 1881, the Tramways and Public Companies (Ireland) Act 1883, the Purchase of Land (Ireland) Act 1885, the Land Law (Ireland) Act 1887, the Purchase of Land (Ireland) Amendment Acts 1888 and 1889 and any Act amending any of the said Acts. The following Acts also made registration compulsory:-
Small Dwellings Acquisition Act 1899
Fisheries Act 1939
Tuberculosis (Establishment of Sanitaria) Act 1945
Forestry Act 1936
State Property Act 1954
Forestry Act 1956
Derelict Sites Act 1961
Local Government (Sanitary Services) Act 1964
Landlord and Tenant (Ground Rents) Act (No. 20) Act 1978
By virtue of these Acts a great deal of the land in the State by 1964 had become registered or would in the future become registered. Part III of the Act of 1964 provides for compulsory registration. Sections 23 and 24 of the Act provide as follows:-
2 “23(1) The registration of the ownership of freehold land shall be compulsory in the following cases:-
(a) where the land has been, or is deemed to have been, at any time sold and conveyed to or vested in any person under any of the provisions of the Land Purchase Acts or the Labourers Acts 1883 to 1962;
(b) where the land is acquired, after the commencement of this Act, by a statutory authority;
(c) in any case to which subsection (2) of section 24 applies.
(2) The registration of the ownership of a leasehold interest shall be compulsory in the following cases:-
(a) where the interest is acquired after the commencement of this Act, by a statutory authority;
(b) in any case to which subsection(2) of section 24 applies.
(3) The provisions of this Act in relation to registration of ownership do not apply to an estate or interest in reversion, remainder or expectancy.
2 24(1) The Minister for Justice may by order provide that this section shall apply to any county or county borough or any portion thereof on or after a specified day not being earlier than six months after the making of the order.
(2) In an area to which this section applies the registration of ownership shall, if not already compulsory, become compulsory
(a) in the case of freehold land, upon conveyance on sale;
(b) in the case of a leasehold interest, on the grant or assignment on sale of such an interest.
(4) In this part “conveyance on sale” and “assignment on sale” mean an instrument made on sale for money or monies worth by virtue of which there is conferred or completed a title in respect of which an application for registration as owner may be made, and include a conveyance or assignment by way of exchange where money is paid for equality of exchange and also include any contract, agreement, condition or covenant affecting the property comprised in the conveyance or assignment and entered into or made as part of or in association with such conveyance or assignment.”
Fitzgerald, Land Registry Practice at para 1.2 states:-
“When the Registration of Title Act 1964 was passed and brought into operation in 1967, it was clearly the stated policy of the Act that registration of title be extended to all land in the State by compulsory methods. Accordingly Part III of the act contained provisions for the general extension of compulsory registration to all land. It was envisaged that the system of registration of title would replace the registration of deeds and result ultimately in closing the Registry of Deeds.”
By S.I. No. 87 of 1969 compulsory registration was extended to counties Carlow, Laois and Meath. However the extension of compulsory registration did not proceed as expeditiously as the Legislature might have anticipated. Fitzgerald attributes this to lack of resources for the updating of ordnance maps and staffing limitations imposed by economic restrictions. He anticipated that the pace of compulsory registration would quicken as technology advanced. This has indeed taken place. Compulsory registration was extended to Longford, Westmeath and Roscommon from the 1 st April 2006, to Clare, Kilkenny, Louth, Sligo. Wexford and Wicklow from the 1st October 2008 and to remaining counties other than Cork and Dublin from the 1 st January 2010. By S.I. No. 516 of 2010 compulsory registration will extend to the counties and cities of Cork and Dublin from the 1 st June 2011.
According to the Property Registration Authority 93% of the total land mass of the State and almost 88% of the legal titles are now registered in the Land Registry. For this reason, if for no other, it would be inappropriate to construe section 71(4) of the 1964 Act so as to assimilate the position of a judgment mortgagee of registered land with one of unregistered land.
In any event I am satisfied that the provisions of section 71(4) are clear and unambiguous and must be given effect.
Decision
I am satisfied the learned trial judge was correct in holding that she did not have jurisdiction under sections 3 and 4 of the Partition Act 1868 to make an order for sale in lieu of partition at the suit of the appellant, a judgment mortgagee of registered land. Further I am satisfied that section 71(4) of the Registration of Title Act 1964 does not confer upon the court power to make an order for partition or an order for sale in lieu of partition at the suit of a judgment mortgagee of registered land: had it been the intention of the legislature to confer that power upon the court it would have done so in clear terms.
I would dismiss the appeal and affirm the order of the High Court.
Bank of Ireland v Smyth
[1993] ILRM 790
Court: High Court (Ireland)
Judge: Mr. Justice Geoghegan
Judgment of Mr. Justice Geoghegan delivered the 26th day of March 1993.
This is a claim for possession by the Plaintiff of the house and lands comprised in numbers 1, 2 and 3 of Folio 9173F of the Register of Freeholders, County Tipperary, pursuant to Section 62(7) of the Registration of Title Act 1964.The Plaintiff is registered as owner of a Charge purported to have been created by Instrument of Charge. The first named Defendant is the registered owner of the property and the second named Defendant is his wife.
The Defendants between them have defended this Action on a number of quite separate grounds of defence. Three of these grounds were rejected by this Court when they were raised on an application for a non-suit at the end of the Plaintiff’s case. The first was that there was non-compliance with Order 9, Rule 9 of the Rules of the Superior Courts in that at the time the proceedings were instituted the first named Defendant’s mother was allegedly in possession or in receipt of rents and profits within the meaning of the Rule because she enjoyed a right of residence and a right of support charged on the property. I ruled against the first named Defendant on the grounds that:-
(a) Having regard to Section 81 of the Registration of Title Act, 1964,the mother’s right of residence was a lien for money’s worth. The entitlement to that right or to the right of support did not constitute her a person in possession or in receipt of rents and profits within the meaning of the Rule. As to whether a county Registrer executing an Order for Possession could require the mother, if she were still alive, to vacate is quite another matter and did not fall to be determined in this Action.
(b) The mother is, at any rate, now dead. I took the view that even if the mother ought to have been served with the Summons under the Rules, I should not dismiss the Action for failure to do so, but on the contrary should dispense with the requirement having regard to the fact that she is now deceased. If and insofar as service on the mother was required therefore I dispensed with that requirement.
The second ground of application for non-suit was a related ground. It was submitted that the Action ought to be dismissed or struck out for failure to comply with Order 9, Rule 14 of the Rules of the Superior Courts. I considered that having regard to paragraph 10 of the first affidavit of Mr. David Dowley, Manager of the relevant branch of the Plaintiff bank, there was sufficient compliance with the Rule. I also took the view that even if there was not strict compliance nobody was prejudiced and that it would be wrong to non-suit the Plaintiff on this account.
The third ground of application for non-suit was that the evidence seemed to indicate that the Consent of the second named Defendant to the Charge under the Family Home Protection Act, 1976was signed after the Instrument of Charge had been signed by the first named Defendant. However, when on my request Mr. Dowley, the Manager at the time of the transaction was recalled, he stated that he could not really remember which document was signed first but that he was satisfied he would have complied with the guidelines which had come from headquarters and which had been put in evidence. I refused the non-suit on the grounds that this defence had not been pleaded. Before doing so, I indicated that I would favourably entertain an application for an adjournment by the second named Defendant to amend her defence, provided that her Counsel could assure me that her client would be testifying that she signed the Consent after the husband signed the Charge. The invitation was not taken up. Even if the absence of prior consent had been pleaded, I would take the view that, as a matter of reasonable inference from the evidence, the Instrument of Charge could not have been treated as having been unconditionally signed, sealed and delivered by the first named Defendant prior to the signature of his wife on the form of Consent under the Family Home Protection Act, 1976.Pending the wife’s signature, the Deed of Charge would have been considered as signed and sealed but not yet delivered or alternatively delivered as an escrow. This view is in line with the judgment of Mr. Justice O’Hanlon in Bank of Ireland v. Hanrahan delivered 10th February 1987 where in the analagous situation of an Equitable Mortgage by deposit of title deeds, the Learned Judge decided that even though the document had been handed to the bank prior to the signing of the Spouse’s Consent, the mortgage was valid as not having been intended to take effect until the Consent was signed.
Following on the refusal of the non-suit the only witness who gave evidence was the second named Defendant. At the close of the Defendants” case two substantive grounds of defence were argued. The first was that the Consent of the second named Defendant was not a true Consent in that she was not advised to obtain independent legal advice and that she did not have a proper understanding of what she was signing. It was submitted that the Charge was void, both because on the evidence the plea of non est factum in relation to the Consent had been sustained and because in signing the Consent, the second named Defendant was allegedly entering into a improvident transaction without the benefit of independent legal advice and without a proper understanding of the transaction involved.
The second substantive ground of defence was based on the judgment of Mrs. Justice Denham in First National Building Society v. Ring 1992 1 I.R. 375, a case involving the exercise of discretion under Section 4 of the Partition Act, 1868. By analogy with Denham J.’s interpretation of the Section in the Partition Act, it has been argued that upon the wording of Section 62(7) of the Registration of Title Act, 1964, I have a discretion as to whether I order possession in this case or not. I will now discuss each of these substantive defences separately.
To determine the Consent issue it is necessary to analyse carefully the provisions of Section 3 of the Family Home Protection Act, 1976.Section 3, subject to four statutory exceptions, renders void a purported conveyance by a spouse of any interest in the family home, unless either there is a prior Consent in writing by the other spouse or a Court Order dispensing with such Consent. Of the four statutory exceptions, the only one which would be relevant to this case is the exception under subsection (3) (a) of a conveyance to a purchaser for full value. “Conveyance” is defined in Section 1 of the Act as including (inter alia) a “mortgage”. “Mortgage” is in turn defined as including (inter alia) “a Charge on registered land”. Accordingly the Charge in this case is a “conveyance” within the meaning of the 1976 Act.
The expression “full value” is defined in subsection (5) as meaning “such value as amounts or approximates to the value of that for which it is given”. In the context of a mortgage or a Charge there has always been some doubt as to the meaning of “full value”. But this question does not arise for decision in this case in that the Plaintiff is relying on the existence of a valid Consent and not on any suggestion that it is a purchaser for value. This was a proper approach for the Plaintiff to take because on the particular facts of the case, if the Consent is invalid on any of the grounds contended for by Counsel for the respective Defendants, the Plaintiff had or ought to have had knowledge of the vitiating elements and therefore could not be a “purchaser” within the artificial definition of that expression in the 1976 Act. In order to be a “purchaser” within the meaning of the Act, the Plaintiff would have had to be a chargant acquiring “in good faith” the interest in the property (see Section 3(6) of the Act). The Supreme Court in Somers v. W.has held that the words “in good faith” import the equitable doctrine of notice. Since the bank in this case had full notice of all the factors alleged by the Defendants to vitiate the Consent, it follows that if the Consent is invalid by reason of any of those factors, the bank is not a “purchaser”. Accordingly the escape route of the statutory exception in favour of a “purchaser for value” is not available to the bank. It is only necessary to consider therefore was the Consent invalid?
Counsel for the second named Defendant, Ms. Kennedy submits that a Consent by a wife under the Family Home Act, 1976,to a mortgage or Charge in favour of the bank is not valid unless the wife understands the nature and consequences of the transaction. She cannot normally be said to have such understanding unless:-
(1) She is told of the amount of the loan involved, and if the security is to cover future advances that she is informed of that.
(2) She is explained the re-payment terms.
(3) She is explained the consequences of non-payment and in particular that possession of her family home may be recovered by the bank and may be sold.
(4) She is recommended to obtain independent legal advice.
In making this submission Ms. Kennedy relies heavily on Barclay Bank v. O’Brien 1992 4 All E.R. 983. That was a case before the Court of Appeal in England in which a wife joined in a Charge over the matrimonial home jointly owned by her and her husband as security for a personal guarantee by her husband in favour of the bank. Scott L.J. delivered the principal judgment and I believe that the views expressed by him represent Irish law particularly having regard to the line of Irish cases dealing with voluntary deeds. I do not find it necessary to quote at length from the judgment because the head-note accurately sets out what the Court held. The relevant part of the head-note reads as follows:-
“Held – as a matter of policy married women who provided security for their husbands” debts and others in an analagous position such as elderly parents on whom pressure might be brought to bear by adult children, were to be treated as a specially protected class of sureties so that where the relationship between the surety and the debtor was one in which influence by the debtor over the surety and reliance by the surety on the debtor were natural and probable features of the relationship, the security given by the surety would in certain circumstances be unenforcable notwithstanding that the creditor might have had no knowledge of and not have been responsible for the vitiating feature of the transaction. The circumstances in which equity would hold that the security given by a surety in that protected class was unenforceable were:- “
2 (i) if the relationship between the debtor and the surety and the consequent likelihood of influence and reliance was known to the creditor,
3 (ii) if the surety’s consent to the transaction was procured by undue influence or material misrepresentation on the part of the debtor or the surety lacked an adequate understanding of the nature and effect of the transaction,
4 (iii) if the creditor, whether by leaving it to the debtor to deal with the surety or otherwise, failed to take reasonable steps to try and ensure that the surety entered into the transaction with an adequate understanding of its nature and effect and that the surety’s consent to the transaction was a true and informed consent. Accordingly although each case within the protected class depended on its own facts, as a general rule a creditor who took security from a married woman for her husband’s debts ought to take reasonable steps, such as advising her to take independent advice or, if she declined to do so, offering a fair explanation of the security document before she signed it, to see that she understood the transaction she was entering into…….”.
In my opinion Ms. Kennedy’s reliance on this case is fully justified. I do not think that any valid distinction can be drawn between that case and the present case on the grounds either that the second named Defendant is not a co-owner of the family home or on the grounds that the liability of the husband being secured was a primary liability and not a guarantor liability. The rights of a spouse conferred by the 1976 Act are very important quasi propriety rights even if they are not ownership rights.
Applying Scott L.J.’s criteria, it is obvious that Mr. Dowley was well aware of the husband and wife relationship with the consequent inherent likelihood of influence and reliance. He was equally well aware that the wife’s understanding of the transaction depended essentially on what he told her. He should have realised that what he told her and what he advised her were inadequate. He did not take adequate steps to ensure that the second named Defendant fully understood the transaction. In particular he did not advise her to take independent advice.
It is only fair to say at this juncture, that I reject the second named Defendant’s evidence that Mr. Dowley did not use the expression “family home” but merely referred to the property generally. Mr. Dowley is certain that he did refer to the family home and I believe him. Having regard to the fact that this was the first legal Charge with which Mr. Dowley was involved after the 1976 Act was enacted, I think it highly unlikely that he would not have explained in a general way the purpose of the Consent as referred to in the guidelines. However I do not think that the second named Defendant was deliberately giving false evidence. I suspect that she was engaging in some wishful thinking and she had no clear memory as to what exactly was said at the discussion with Mr. Dowley. It may well be that in Mrs. Smyth’s mind she thought that as there was a first Charge on her home in favour of ACC because of a loan of £8,000,00 from ACC to build the house, the bank would be unable to sell or take possession of the home. At one point in her evidence Mrs. Smyth spoke of the house as being owned by the ACC. But if these matters were in her mind Mr. Dowley could not reasonably have been expected to be aware of them. But the bank via Mr. Dowley did not adequately explain to Mrs. Smyth the potential liabilities secured by the Charge and above all did not explain to her that in the event of default the property including the matrimonial home could be sold by or at the instance of the bank or that an Order for Possession could be sought by the bank. These are vital matters of which Mrs. Smyth should have been made aware before she signed the Consent. Furthermore she was not recommended to obtain independent advice. I am reasonably satisfied that Mr. Dowley did tell Mrs. Smyth that she would be signing a Consent to a mortgage of the family home but having regard to Barclays Bank v. O’Brien, I do not consider that that was sufficient. Accordingly, in my view, while there was a document purporting to be a Consent in writing there was in fact no Consent within the meaning of the 1976 Act. In coming to that conclusion I prefer to rely on the equitable principles referred to by Lord Justice Scott rather than the doctrine of non est factum which would not apply in this case in my view. The Charge is therefore void and for the reasons indicated the bank is not a “purchaser” within the meaning of the Act. That is sufficient to dispose of this Action but in case the matter goes further I think I should indicate my views on the other substantive of ground of defence.
It is submitted on behalf of the Defendants that as a matter of discretion I ought to refuse the application for possession. It is suggested that the wording of Section 62(7) of the Registration of Title Act 1964gives the Court this discretion and that the judgment of Mrs. Justice Denham in First National Building Society v. Ring 1992 1 I.R. 375 supports the view that I should exercise it against the Plaintiff. I disagree. I do not think that First National Building Society v. Ring has any relevance to this case. The decision of Denham J. turned on an interpretation of Section 4 of the Partition Act, 1868. But the wording of that Section is totally different from the wording of Section 62(7) of the Registration of Title Act, 1964.The words “may, if it so thinks proper” in subsection (7) of Section 62 mean no more in my view than that the Court is to apply equitable principles in considering the application for possession. This means that the Court must be satisfied that the application is made bona fide with a view to realising the security. But Mr. Dowley establishes this essential proof in paragraph 11 of his first affidavit and it is not disputed in either a replying affidavit or the pleadings or at the hearing. It had been held in Northern Banking Company Limited v Devlin [1924] 1 I.R. 90 that even though the Registration of Title Act, 1891 conferred on a registered owner of a Charge the rights of a legal mortgagee under the Conveyancing Act, 1881 nevertheless a registered owner of a Charge unlike a legal mortgagee could not obtain an Order for Possession for the purposes of a sale out of Court because the legal mortgagee’s right to possession arose by virtue of his estate in the land at common law and not by virtue of the Conveyancing Act, 1881. This yawning gap in the rights of a legal chargeant was heavily criticised by Glover in his Registration of Land in Ireland which was published in 1933. The position was corrected by Section 13 of the Registration of Title Act, 1942which is in identical terms to Section 62(7) of the Registration of Title Act 1964.The historical background to the subsection therefore re-enforces me in the interpretation which I give to it. I do not believe that the Oireachtas intended a wide discretion which could take sympathetic factors into account. If, therefore, I had been of the view that the Consent of the second named Defendant was a valid Consent for the purposes of the 1976 Act I would have made the Order for Possession. But as I have held that there was in fact no valid Consent I must refuse the application.