Investigation of Title
Cases
Shiels v. Flynn
[1975] IR 298
Kenny J. 296
On the 26th April, 1921, William Shiels was registered as full owner (subject to equities) of part of the lands of Barnageeragh in the County of Dublin which were the subject matter of folio 2089 of the register of freeholders for the County of Dublin. Part IV of the Registration of Title Act, 1891, applied to them. He died intestate on the 30th March, 1931, and on the 16th September, 1931, letters of administration to his estate were granted to his son who is the plaintiff in these proceedings. There were four next-of-kin entitled to share in the estate. The death of William Shiels and the grant of letters of administration were noted on the folio, but the plaintiff was not registered as owner.
The plaintiff let the lands in conacre for many years and, on the 29th January, 1973, they were sold by public auction. In the conditions of sale it was stated that the plaintiff was selling the lands as personal representative of William Shiels. The purchaser was the defendant and he objected to the title on the ground that, as William Shiels died 43 years ago, a sale by the plaintiff as personal representative could not be in the due course of the administration of the estate; and the defendant required the plaintiff to have himself registered as full owner on the folio.
In correspondence the defendant’s solicitor maintained that the lands could not possibly be assets of the deceased and that it would be unsafe for the defendant to take a transfer from the personal representative as some of the next-of-kin could have become beneficially entitled to the lands. The plaintiff’s solicitor informed the defendant’s solicitor that the estate of William Shiels had not been administered and that the administration bond had had to be renewed each year. The defendant, who had purchased the lands with the intention of developing them, refused to accept this explanation and the plaintiff has now issued this summons under the Vendor and Purchaser Act, 1874, claiming a declaration that he has shown a good title.
Interesting questions as to whether the decision in Molyneux v. White 1was a correct statement of the law in Ireland and as to whether the rule in Re Tanqueray-Willaume and Landau 2 applies to leaseholds and to registered lands have been discussed. Sections 18 and 19 of the Administration of Estates Act, 1959, and ss. 50 and 51 of the Succession Act, 1965, have the effect that these questions do not now arise in relation to any person who died after 1959.
It seems to me, however, that the answer to the problem in this case is to be found in the Registration of Title Act, 1891. Part IV of the Act of 1891 applied to freehold registered land, that is to say, land which has 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.
Section 84, sub-s. 1. in Part IV of the Act of 1891 provided:
@”(1) Where any such land is vested in any person without right of survivorship to any other person. it shall, on his death, notwithstanding any testamentary disposition, devolve to and become vested in his personal representatives or representative from time to time as if it were a chattel real vesting in them or him.”#
Sub-section 3 of s. 84 provided:
@”(3) On the death either of a sole registered full owner or of the survivor of several registered full owners of any such land not being registered as tenants in common, the personal representatives of the sole owner or survivor shall alone be recognised by the registering authority as having any right in respect of the land, and shall have the same powers of dealing with the land, and any registered dispositions by them shall have the same effect, as if they were the registered owners of the land.”#
Section 5 of the Administration of Estates Act, 1959, provided that @”the enactments mentioned in column (2) of the Second Schedule to this Act are, as respects the estates of persons dying on or after the 1st day of June, 1959, repealed to the extent specified in column (3) of that Schedule.”# Sub-section 3 of s. 84 of the Act of 1891 is included in the second schedule to the Act of 1959 but, as William Shiels died before the 1st June, 1959, sub-s. 3 of s. 84 continued to apply to the administration of his estate. The Registration of Title Act, 1964, repealed the Act of 1891 but s. 113, sub-s. 2, of the Act of 1964 provides that the provisions of Part IV of the Act of 1891, in cases of death before the commencement of the Act of 1964, were to continue to apply to all land which was subject to the provisions of that Part immediately before such commencement. The whole of the Act of 1959 was repealed by the Succession Act, 1965, but s. 9, sub-s. 3, of the Act of 1965 provides:@”Except to the extent to which any provision of this Act expressly provides to the contrary, the provisions of this Act shall not apply to the estate of any person dying before the commencement of this Act.”# The result is that the Act of 1959 still applies to the estates of persons who died before the 1st January, 1967. except in the cases where express provision is made to the contrary by the Act of 1965.
It follows that s. 84, sub-s. 3, in Part IV of the Act of 1891 applies to this sale with the result that the personal representative in this case has the same power of dealing with the land as if he were the registered owner, and any registered disposition by him has the same effect as if he were the registered owner. Therefore, the plaintiff is able to show a good title to the lands if he can give clear possession, and a purchaser from him will be entitled to be registered on the folio.
Although William Shiels died in 1931, the provisions of s. 51 of the Act of 1965 are an additional protection to the purchaser against the type of claim which his counsel relied on in argument. Section 51 provides: @”(1) A purchaser from the personal representatives of a deceased person of any property, being the whole or any part of the estate of the deceased, shall be entitled to hold that property freed and discharged from any debts or liabilities of the deceased, except such as are charged otherwise than by the will of the deceased, and from all claims of the persons entitled to any share in the estate, and shall not be concerned to see to the application of the purchase money . . . (3) This section applies whether the deceased died before or after the commencement of this Act.”#
As there has been a discussion about the power of an administrator to give a good title to a purchaser of leaseholds and of land registered under the Act of 1891 when there has been an interval of more than 20 years between the death before 1959 of a testator or an intestate and the date of the sale, I think I should say that in my opinion the decisions in Re Whistler 3and in Venn and Furze’s Contract 4 did not represent the law in Ireland. Those cases decided that when an executor is selling leaseholds he can make good title to them without the concurrence of the beneficiaries and without proof that the debts and administration expenses have been paid when the sale is more than 20 years from the date of the death of the deceased. The subsequent decision in Verrell’s Contract 5 shows that some doubt existed whether they were correctly decided. I think that the law, in Ireland was correctly stated in Molyneux v. White. 6 In that case the Vice Chancellor and the Court of Appeal decided that an executor could not give a good title to a purchaser without proof that there were unpaid debts when a period of 37 years had passed between the date of death and the sale, because at the expiry of 20 years after the death there was a presumption that all the debts of the deceased had been paid.
The correctness of this view is reinforced by the decision of Cusack Smith M.R. in Bradley v. Flood 7 where, in the course of an exhaustive judgment dealing with the law before the passing of the Statutes of Distribution. the Master of the Rolls decided that an administrator was not bound to sell chattels real of his intestate in order to distribute the purchase money among the next-of-kin when there were no debts to be paid, and that the next-of-kin were entitled to require him to convey to them their shares in the estate in specie. One of the effects of the Act of 1959 and of the Act of 1965 is that in the case of persons who died on or after the 1st June, 1959, this is no longer the law.
Finbarr J. Crowley v John Flynn
High Court
13 May 1983
[1983] I.L.R.M. 513
(Barron J)
1
BARRON J
The contract for sale in this case is dated 7 August 1979. The questions raised in the summons relate to a leasehold interest in the property in sale which was vested in Maud Robb at the date of her death. She died on 15 May 1946 having by her last will dated 4 March 1943 bequeathed this interest to her executor and trustee George Robb upon trust for sale and to hold the proceeds of sale as to 2/16th’s for himself and as to 7/16th’s for her daughter Adelaide Maud McCourt and as to the remaining 7/16th’s for another daughter Rosalind Mabel Edith Webb. George Robb obtained a Grant of Probate on 11 July 1946. He died on 24 August 1978 and Letters of Administration de bonis non were obtained by the deceased’s two daughters on 20 March 1981.
The purchaser has refused to accept title from the administratices de bonis non . He contends that no power of sale has been shown to subsist because no reason has been given for the exercise of such power by personal representatives after the lapse of 33 years. He further contends that the delay has been such that an assent to the establishment of the will trusts should be inferred. The purchaser in support of his first contention relies upon in re Molyneux and White 15 LRI 383 which was affirmed at 15 LRI 383. In this case it was held that a delay of more than 20 years creates a presumption that all the testators’ debts have been paid and puts a purchaser on enquiry as to the purpose of the sale.
Against this contention, the vendor submits that an executor is always entitled to sell for the purpose of distribution of the assets amongst the beneficiaries and relies upon in re Norwood and Blake’s Contract [1917] 1 IR 472. He further submits that a purchaser would in any event be protected by the provisions of s. 51 of the Succession Act 1965. S. 51 sub-s. 1 of the Succession Act 1965 is as follows:
The purchaser from the personal representative of a deceased person of any property, being the whole or any part of the estate of the deceased, shall be entitled to hold *515 that property freed and discharged from any debts or liabilities of the deceased, except such as are charged otherwise and by the will of the deceased, and from all claims of the persons entitled to any share in the estate, and shall not be concerned to see to the application of the purchase money.
Where there has been a lapse of at least 20 years from the date of death, in re Molyneux and White is an authority for the proposition that a purchaser is put upon enquiry. In my view, this means that the vendor, selling as personal representative, must satisfy the purchaser that he has power to sell as such. In Somers v W [1979] IR 94, it was held by the Supreme Court that the definition of the word purchaser as being somebody who acquired in good faith put such person in notice of all matters which would have come to the knowledge of the purchaser’s solicitor if such enquiries had been made as ought reasonably to have been made in the particular sale. The word purchaser is defined in the Family Home Protection Act 1976 as follows:
the word purchaser means a grantee, lessee, assignee, mortgagee, chargeant, or other person who in good faith acquires an estate or interest in property.
The word purchaser is defined in the same terms in the Succession Act 1965 with the addition of the words ‘for valuable consideration’, which for the purpose of the present case add nothing to the definition. There is nothing in s. 51 of the Succession Act 1965 nor in s. 19 of the Administration of Estates Act 1959 which it replaces which suggests that a purchaser is never to be upon enquiry. It follows that, if more than 20 years has elapsed since the date of death of the testator, there is nothing in the section to negative the rule in re Molyneux and White so that a purchaser is still put on notice to enquire the reason for the sale and if he fails to make such enquiry is bound with notice of what he would have discovered.
The only evidence as to the reason for the delay in the present case is contained in a letter dated 11 June 1980. This letter suggests that administration of the estate of Maud Robb was deliberately postponed by the executor with the consent of the beneficiaries. However the letter also shows that rents were divided between the persons entitled under the will trusts. I do not consider that this resume of the facts is sufficiently clear to absolve the purchaser from further enquiry. It seems to me that such evidence of events from the death of the testatrix until the present time as there is shows no more than that the beneficiaries under the trust for sale received the rents in accordance with the shares to which they were entitled. This prima facie suggests that the trust for sale was being operated. If there is doubt on the facts, then the purchaser should not be forced to take a title dependent upon such doubt.
The present sale is not to provide for the payment of debts of the decreased. In so far as it is for the distribution of the assets among the beneficiaries, this is not something which the executor is required to do. His duty was to transfer the assets to the will trustee, albeit himself, and it was for him in this latter capacity to distribute the assets. On this basis, there is no ground either for the exercise of a power of sale by the personal representative.
The purchaser’s second submission is that an assent to the establishment of *516 the trust for sale should be inferred. Whether or not such inference can be drawn is dependent upon the facts. See George Attenborough & Son v Solomon [1913] AC 76, which enunciates this principle and Wise v Whitburn [1924] 1 Ch 460, a case in which the inference was drawn. Having regard to the lapse of time since the death of the testatrix and the facts which are known, it seems reasonable to infer that an assent was given to the establishment of the will trust. Even if I am wrong in this view as to the proper inference to be drawn from the delay and from the other evidence available, there would in my view be sufficient doubt as to this to make it unreasonable to require the purchaser to accept the title.
In the circumstances, I accept the contentions made on behalf of the purchaser and I will declare that a good title to the hereditaments has not been shown in accordance with the particulars and conditions of sale.
In re J. P. R., a Ward of Court
Supreme Court
15 December 1939
[1940] 74 I.L.T.R 11
Sullivan C.J., Murnaghan, Meredith, Geoghegan JJ.
By an agreement dated the 9th January, 1939, J. P. R., a Ward of Court acting by his Committee, contracted to sell to David D. McDonald the leasehold premises known as 5 Clare Street, Dublin, for the sum of £1,502. The agreement contained the following clauses, inter alia —
“6 If the purchaser shall make and insist on any objection or requisition as to title, conveyance or otherwise which the vendor shall be unable or unwilling to remove or comply with, such purchaser may be discharged from being purchaser by an order of the President of the High Court (Wards of Court), and notwithstanding intermediate negotiation and litigation such purchaser shall be entitled to a return of his deposit but shall not unless otherwise ordered by the President of the High Court (Wards of Court) be entitled to any interest, costs, expenses or damages in respect of his purchase
“7 The title to the said premises shall commence with the said lease dated 20th December, 1911 (a lease between Deborah E. Ball of the one part, and Augustine F Baker of the other part, for a term of 60 years commencing on the 1st July, 1911)
“15 Any question arising on requisitions or objections and any claim for compensation and any other question arising out of or connected with this contract of sale (not being a question affecting the existence or validity of the contract) shall be disposed of by an application to the President of the High Court …”
In his requisitions on title the purchaser asked that there should be handed over, on closing the sale, amongst other documents the original of a Deed of Assignment dated the 16th May, 1923, and made between one Hugh Baker of the one part, and the vendor of the other part, and the vendor’s answer to this requisition was “Yes; or evidence that the same was completed.” Subsequently, however, it appeared that this deed was not forthcoming, having been mislaid. The vendor, therefore, being unable to produce this document, offered a statutory declaration by a Mr. Frederick Koenigs, solicitor, an assistant in the firm of Messrs. Barrington & Son, the vendors’ solicitors, and who was personally in charge of the sale. Paragraphs 3 and 4 of the declaration were as follows.—
“3 In the course of preparing the title to be submitted to the purchaser of the said premises I handled in or about November, 1938, the original assignment dated the 16th of May, 1923, made between Hugh Baker of the one part, and the vendor of the other part, and I observed same was duly executed and stamped.
“4 I have temporarily inislaid the said assignment since, but believe it to be somewhere in my office, and it has not been pledged or lodged in any place to form a security of any kind whatsoever, and without having personally compared same I believe the copy submitted with the title of the said premises to be a true copy of the original.”
The vendor offered as proof of the contents of the original document a draft approved of by both parties to the deed, and as evidence of execution referred to a memorial from the Registry of Deeds and to that part of Mr. Koenig’s statutory declaration in which he stated that he had observed the deed was duly stamped and executed.
The purchaser refused to complete without the original deed, which he contended it was essential to have and requested that a further search be made for it. The document, however, was not forthcoming, and as the purchaser still refused to complete in its absence the vendor brought the matter before the President of the High Court on the *12 27th July, 1939, for directions under Clause 15 of the Conditions of Sale.
Maguire, P., in the course of his judgment, after setting out the facts, quoted the following from the judgment of the Master of the Rolls in Bryant v. Busk, 4 Russ 1, and said that he adopted those words:—
“Every vendor must necessarily be bound to furnish the purchaser with the means of asserting his title and defending his possession. The title deeds are the ordinary and primary means for that purpose. If the primary means do not exist there may be secondary means to the same end. There may be means of proving what were the contents of the deeds and that the deeds were duly executed and delivered”
His Lordship went on to say that he found the evidence in the present case sufficient, both as to the contents of the deed, and its execution. As to the statutory declaration, whilst it might have been more detailed, his Lordship took it to mean that Mr. Koenig’s had had the deed in his hands, and had seen that it had been duly executed. Apparently he had had the deed in his hands when it had been in the office of the vendor’s solicitors and subsequently it had been lost there. The purchaser might have been entitled to have had this more clearly stated, but this was what his Lordship interpreted the statutory declaration as having meant. He therefore ruled that the purchaser’s objection was unsustainable and that the purchaser must complete the transaction. Against this decision the purchaser appealed to the Supreme Court.
T. P. McCarthy, K.C. (with him Ashley Powell ) for the appellant:
The purchaser should not be required to complete the contract in the circumstances of this case. An essential document is not forthcoming, but there is no evidence, or the evidence tendered by the vendor is insufficient to show, that the deed has been lost. Until the loss is proved secondary evidence of the contents of the document cannot be offered. The expression of belief in the statutory declaration, so far from being evidence of loss, is evidence to the contrary. Nor does the declaration allege that any search, or advertisement, or any other means (if any) were adopted to trace the document. Even, however, if the loss had been proved the secondary evidence offered of the contents is insufficient. On the authorities secondary evidence in such a case must be clear and cogent, and must prove not only the contents, but that the document was properly stamped and duly executed. There is no evidence of any of these matters. There is tendered a draft approved of by both parties, but if that is to be taken as a copy then the original was never stamped, duly executed, or registered in the Registry of Deeds. To prove execution both, or at least one, of the attesting witnesses must be produced or else it must be shown that they are dead. The statutory declaration is silent as to the contents of the document, and the averment in paragraph 3 as to execution and stamping is nullified by the statement in paragraph 4 by Mr. Koenig’s that he did not personally compare the copy with the original. Nor does the declaration allege possession by the vendor. As to the memorial produced to prove the contents, this is not a case in which a memorial can be so used. In such cases there is required in addition evidence of possession by the vendor, a recitation of the missing document in some other document, and some evidence that the document has been acted on. Further, there has been mis-representation in this case by the vendor which entitles the purchaser to be discharged. The vendor must have known at the time of preparing the Conditions of Sale of the difficulty about producing the document. The following authorities were cited during the arguments.—Edwards v. Wickwar, L. R. 1 Eq 68; Bryant v. Busk, 4th Russ. 1; Moulton v. Edmunds, 1 De G. F. and J. 246; Re Halifax Commercial Banking Co. Ltd. and Wood, 79 L. T. R. 536; Sadlier v. Biggs, 4 H. L. C. 435; 10 Ir. Eq. 522; Moffett v. Lord Gough, 1 L. R. Ir. 331; Stamp Act, 1891; Williams’ Vendor and Purchaser, 3rd Edition, p. 758; Key and Elphinstone’s Conveyancing, Volume 1, 11th Edition, p. 373, Madden’s Registration of Deeds, 2nd Edition, p. 261 and p. 323.
R. G. Leonard, K.C (with him C. F. Matheson ) for the respondent.
This contract of sale only stipulated for a marketable title, and not for a specific series of documents, or any one document in particular. This is not a suit for specific performance. It is a vendor and purchaser summons, and as was provided by the agreement, any question that might arise was to have been brought before the President of the High Court for directions. The case before the President was tried on the basis of an admission that the document was actually lost and it is not competent for the purchaser’s counsel to open a ground of appeal inconsistent with this admission (Counsel for the appellant contested the *13 making of this admission, and the matter is referred to in the judgment of the Court).
The document cannot be found; that can only mean that it is in fact lost, and if that is so, secondary evidence becomes admissible. Bryant v. Busk, 4 Russell 1; and Moulton v. Edmunds, 1 De G. F. and J. 246, are not in point here. They were suits for specific performance. In each of those cases the vendor failed because he was unable to prove due execution of the missing documents. If secondary evidence is admissible, the question of the due stamping of the document is disposed of by Section 17 of the Stamp Act, 1891, the effect of which is to raise the presumption that a deed duly registered had been duly stamped. The existence of the memorial raises the presumption that the execution was in all respects in order (Domville v. Weir, High Court, Eire, Johnston, J., unreported)
At the conclusion of the argument the Court adjourned the case for the purpose of obtaining a report from the President of the High Court as to whether the case before him had been tried on the basis of an admission that the document was lost.
The judgment of the Court was delivered by Sullivan, C.J., in the course of which, after reciting the facts, his Lordship said that on the hearing of the appeal the order of the President had been challenged on two grounds, namely, (1) That the vendor had not established that the original assignment had been lost or had not been forthcoming and therefore was not entitled to prove its contents by secondary evidence. (2) That if the loss had been proved the evidence tendered by the vendor as secondary evidence of the contents of the assignment was insufficient for the purpose.
The first of these grounds had been objected to by counsel for the respondent, on the ground that counsel for the appellant had, at the hearing before the learned President, admitted that the loss of the original assignment had been proved. The appellants’ counsel had denied that such admission had been made.
This Court had been satisfied, after hearing counsel on each side, that the appellant had been entitled to succeed in this appeal upon the first ground, unless he were precluded from relying upon it by reason of the alleged admission, but that matter being in controversy between counsel, the Court had not been able to decide whether such admission had been made, and accordingly it had reserved judgment in order to ascertain the views of the President of the High Court. The learned President, having read his notes of the argument, had informed this Court that he had no note of any argument having been addressed to him on the question of the sufficiency of the evidence offered to prove the loss of the missing document, and that his recollection was that no argument had been opened directly on that point, but that he had no note of or recollection of an admission by counsel that the assignment had been lost.
In these circumstances, his Lordship went on to say, this Court considered that the appellant was entitled to rely upon the first ground of appeal, and as, in their Lordships’ opinion that ground had been established, this appeal would be allowed. It was therefore unnecessary to consider the second grounds of the appeal.
O’Flanagan v Ryan
Chancery Division.
21 December 1904
[1905] 39 I.L.T.R 87
Sir Andrew M. Porter Bart., M.R.
Summons under the Vendor and Purchaser Act, 1874, by the vendor, Patrick O’Flanagan, for a declaration that a good title had been shown in accordance with the particulars and conditions of sale. By indenture of lease, dated 11th Jan., 1884, the National Bank demised to James Ryan a house and premises at Thurles, Co. Tipperary, for the term of 60 years, at a rent of £45. The premises afterwards became vested in William Maher. William Maher died in 1890, having made his will, by which he bequeathed the premises to his wife, Kate Maher, in trust for herself and the children of their marriage, to be applied by her as she should deem most expedient. Probate of this will was, on 15th Mar., 1890, granted to Kate Maher, one of the executors named therein. By indenture of marriage settlement, dated 23rd Jan., 1891, between Kate Maher, Patrick Rahill, Patrick O’Flanagan, and Martin Rahill, it was witnessed that, in consideration of an intended marriage between Kate Maher and Patrick Rahill, the premises were assigned to Patrick O’Flanagan and Martin Rahill, as trustees, to hold the premises unto the trustees for the use of the said Kate Maher until the intended marriage, and thereafter, upon trust, to raise, by sale or mortgage, the sum of £1,000, to be invested in trust for the children of Kate Maher’s first marriage, in such shares as Kate Maher should appoint, and subject to such sum of £1,000, in trust, for Patrick Rahill, his executors, administrators and assigns. The premises, to which an ordinary licence was attached, were, by the trustees, put up for sale by auction under conditions of sale. Condition 6 set out that Mrs. Maher, on the occasion of her re-marriage with Patrick Rahill, to give effect to the trusts of the will of William Maher, vested the premises in the vendors, in trust, to raise, by sale or mortgage, the sum of £1,000 for the benefit of her children by her first marriage, and that the vendors were now selling the premises in pursuance of said trust for sale, and would convey same to the purchaser in their character as trustees, and should not be bound to obtain the concurrence of any other parties to such conveyance. The premises were, on 5th Nov., 1904, sold at the auction to Patrick Ryan for the sum of £700. The solicitor for Patrick Ryan wrote giving notice to the vendors that he declined to complete the sale and purchase of the premises on the ground that good title had not been shown by the vendors in accordance with the conditions of sale. The vendors offered to join Kate Rahill in conveying the premises to the purchaser.
Representation
Herbert Wilson, K.C., and Carrigan, for the vendors.
P. Fleming, K.C., and P. Lynch, for the purchaser.
Cases cited.—
Scott v. Alvarez, [1895] 1 Ch. 596, 2 Ch. 603;
Wood v. Richardson, 4 Beav. 174;
Corrall v. Cattell, 4 M. & W. 734;
Crockett v. Crockett, 2 Ph. 553;
Lambe v. Eames, 6 Ch. App. 597;
West of England Bank v. Murch, 23 Ch. D. 138;
M’Leod v. Drummond, 14 Ves. 360, 17 Ves. 167;
Scott v. Tyler, 2 Dick 727;
Watkins v. Cheek, 2 S. & S. 199;
Re Hally’s Trusts, 23 L. R. Ir. 130;
Pillgrem v. Pillgrem, 18 Ch. D. 93;
Scott v. Key, 35 Beav. 291;
Nevill v. Nevill, 7 Ch. App. 253.
Sir Andrew M. Porter, Bart., M.R.
The vendors make title under William Maher’s will. It is clear that by that will some trust was imposed on the widow. The words in this will are not like those in Hally’s Trusts, for there the widow took no interest, nor do they resemble those in Lambe v. Eames. They most resemble the words in Crockett v. Crockett. It is possible that the widow had an implied power of sale, but any such sale ought to be made in good faith. What took place on the occasion of the execution of the marriage settlement in 1891 was not a sale, but a delegation. William Maher’s widow had no right to delegate anything to a trustee. The transaction was apparently entered into for the benefit of the whole class, but in reality for her own benefit. The assigning away was not an act in a due course of administration, but was a complete breach of trust. Vendors claiming under that deed could give no valid discharge. The offer to join Mrs. Rahill in the conveyance is no more than an offer to get her to ratify a breach of trust. But it is argued that the purchaser is bound by conditions of sale, so as to be precluded from raising the objection, and Scott v. Alvarez is cited. But in that case there was a condition binding the purchaser to particular facts. There is no such binding condition in the present case. The only clause giving colour to the argument suggested is condition 6. It is argued that this condition fully states the facts and informs the vendor of the title to be made. This argument is founded on a fallacy. It is misleading to state that the marriage settlement was entered into “to give effect to the trusts of the will.” The purchaser is entitled to assume that he is getting a good title. On reading these conditions he would be entitled to assume that there was some provision enabling Mrs. Maher to vest the premises in trustees in the way stated. He would expect to find some *88 provision to appoint subsidiary trustees with power to give a receipt. The purchaser would have to face the probability that some of the children would raise a question of breach of trust of which he has full notice. The will gives no authority for what has been done. Good title has not been shown in accordance with the conditions of sale, and the deposit must be returned. As I decide that there was a breach of trust, Mrs. Rahill will be entitled to get a re-conveyance from the trustees of the marriage settlement.
Tempany v. Hynes
‘Higgins C.J.
1st June, 1976
I have read the judgment of Mr. Justice Kenny and I agree with it.
Henchy J.
The issue in this appeal is whether the defendant, as purchaser of the land, was entitled to repudiate the contract in the circumstances in which he purported to do so. If he was so entitledand the trial judge so heldhe has a good answer to the instant claim by the plaintiff, as vendor, for specific performance of the contract; in that event the dismiss of that claim in the High Court should stand, otherwise this appeal by the plaintiff should succeed.
The relevant circumstances are briefly these. The defendant entered into a written contract to purchase from the plaintiff a garage in Longford for £30,500. The property is registered property which is governed by the Registration of Title Act, 1964. The registered owner was Tractasales (Longford) Ltd. and the plaintiff contracted to sell as receiver of that company. In the present proceedings it has not been questioned that the plaintiff, as receiver, was entitled to stand in the shoes of the registered owner for the purpose of making title.
The defendant’s solicitor proceeded to investigate the title. Because of difficulties in the title (such as the discovery that the property was registered on three folios and not on two), the date for completion specified in the contract passed without the parties being ready to complete. Eventually, all the legal difficulties that had arisen were smoothed out, except for one it transpired that subsequent to the date of the contract two judgment mortgages had been entered on the folios as burdens affecting the interest of the registered owner. The plaintiff was advised that, in order to give a good title, it was not necessary for him to discharge those two post-contract judgment mortgages by paying the amounts due under them; but the defendant’s solicitor was reluctant to complete the sale on that basis.
After lengthy negotiations, a compromise was reached by the solicitors. It was agreed by them that the sale would be closed subject to the retention on joint deposit receipt of £4,500 out of the purchase money for a period of six weeks and that an application would be made during that period to the registrar of the Land Registry to register the defendant freed from the post-contract judgment mortgages. It was agreed that if that application were not successful within the six weeks, the £4,500 (which would have been adequate to discharge the amounts due to the judgment mortgagees) would be released to the defendant so that he could discharge those burdens by paying off the judgment mortgagees. In agreeing to that compromise the plaintiff was being eminently reasonable. In effect, he was saying to the defendant:”In order to give you a good title I am not bound to discharge the amounts due on foot of the post-contract judgment mortgages but, to allay any fears you may have on that score, I shall put to one side out of the purchase money £4,500 for six weeks so that my opinion may be put to the test in the Land Registry; if I am not proved right in that time, I shall surrender the £4,500 to you so that you may discharge the amounts due on the judgment mortgages.” It is no wonder that the defendant’s solicitor agreed to completion on that basis.
However, when the defendant and his solicitor arrived for the appointment with the plaintiff’s solicitor to close the sale, the defendant flatly repudiated the basis on which his solicitor had agreed to close. The defendant was prepared to close only if the £4,500 was delivered into his custody forthwith. The plaintiff, who was selling as receiver for a debenture holder, could not agree to that proposal. Although his solicitor strongly advised him to complete the sale on the agreed basis, the defendant adamantly refused to do so. With that impasse the sale broke down. Hence the present proceedings for specific performance.
One thing is clear about the defendant’s conduct between contracting to buy the property in February, 1974, and repudiating the contract in March, 1975: he came to regret the contract he had signed and decided to get out of it one way or another. He lived in Dublin, and he had bought this property with a view to developing it as a roadhouse and garage. But, as he frankly admitted in evidence, for family and other reasons he found the move to Longford undesirable; so from about September, 1974, he was resolved to repudiate the contract. The ground on which he eventually repudiated it in March, 1975, was only the particular pretext he fastened on for that purpose. However, his motives are irrelevant if the ground of repudiation was sound in law.
When a binding contract for the sale of land has been made, whether the purchase money has been paid or not, the law (at least in cases where the parties proceed to the stage of conveyance) treats the beneficial ownership as having passed to the purchaser from the time the contract was made: Gordon Hill Trust Ltd. v. Segall. 25 From then until the time of completion, regardless of whether the purchase money has been paid or not, the vendor, in whom the legal estate is still vested, is treated for certain purposes (such as the preservation of the property from damage by trespassers) as a trustee for the purchaser. But, coupled with this trusteeship, there is vested in the vendor a substantial interest in the property pending completion. Save where the contract provides otherwise, he is entitled to remain in possession until the purchase money is paid and, as such possessor, he has a common-law lien on the property for the purchase money; even if he parts with possession of the property, he has an equitable lien on it for the unpaid purchase money; and he is entitled to take and keep for his own use the rents and profits up to the date fixed for completion. It is clear, therefore, that between contract and completion the vendor has a beneficial interest in the property which is capable of being charged by a judgment mortgage: see Megarry and Wade on Real Property (4th ed., p. 575), Williams on Vendor and Purchaser (4th ed., pp. 545-7), Lewin on Trusts (16th ed., pp. 153-4) and Halsbury’s Laws of England (3rd ed., paras. 484-6).
Therefore, when a judgment mortgage is registered as a burden affecting the interest of a registered owner after an enforceable contract has been made to sell the land, what becomes affected thereby is the transient beneficial interest of the registered owner. Section 71, sub-s. 4, of the Registration of Title Act, 1964, stipulates26 that on registration of the judgment-mortgage affidavit, the charge thereby created on the interest of the judgment debtor shall be subject to the registered burdens, the burdens taking effect under s. 72 without registration, and “all unregistered rights subject to which the judgment debtor held that interest at the time of registration of the affidavit.” The latter category applies here, for a “right”is defined in s. 3, sub-s. 1, of the Act of 1964 as including “estate, interest, equity and power”thus covering the estate or interest of the purchaser. Since the judgment creditor (by registering his judgment as a judgment mortgage) could not acquire any greater estate or interest in the land than the registered owner had at the time of such registration, all that could pass to the judgment creditor here was the interest in the land which the registered owner had after the making of the contract to sell, namely, an interest which would pass out of existence once the sale had been completed, the purchase money paid and the purchaser registered as full owner. It follows, therefore, that if the defendant completes the purchase and becomes registered as full owner, the post-contract judgment mortgages will no longer affect the lands and he will be entitled to have them cancelled from the folios.
This conclusion is in line with that of Kennedy C.J. in In re Murphy and McCormack 27 and that of the majority of the Supreme Court in In re Strong.28 Those decisions were given under the Local Registration of Title (Ireland) Act, 1891, which is now repealed by the Act of 1964. In each of those cases the judgment mortgage had been registered after the execution of the deed of transfer and after payment of the full purchase money whereas, in this case, the judgment mortgage was registered before the deed of transfer had been executed or the full purchase money paid. My concurrence in the conclusion reached in those judgmentsthat the registered judgment mortgage could not affect the estate or interest of the registered transfereeis in no way affected by the latter difference, for the reasoning in those judgments leading to that conclusion applies with no less force to a case such as the present where the judgment mortgage was registered after the contract of sale but before the execution of the deed of transfer or the payment of the balance of the purchase money.
If a registered judgment mortgage could be classified as “a charge created on the land for valuable consideration” within the terms29 of s. 68, sub-s. 3, of the Act of 1964, it would be unaffected by the unregistered right of the purchaser for value; but a judgment mortgage is a process of execution and is not a charge created for valuable consideration: perKennedy C.J. in In re Murphy and McCormack 27 and per O’Byrne J. in In re Strong .28
The conclusion reached in those judgmentsthat the unregistered right of a purchaser for value from the registered owner is not subject to a judgment mortgage registered against the registered owner subsequent to the contract to sellwould now appear to have been given statutory recognition because s. 71, sub-s. 4(c), of the Act of 1964 provides that the registration of the judgment mortgage affidavit shall charge the interest of the judgment debtor subject to “all unregistered rights subject to which the judgment debtor held that interest at the time of registration of the affidavit.” In other words, in a case such as this, the unregistered “right” of the defendant as purchaser is superior to the interest of the registered owner which became charged by the post-contract judgment mortgages.
It follows, in my opinion, that (apart from the effect on pre-contract mortgages of the appointment of the plaintiff as receiver on foot of mortgage debentures, an effect which was not dealt with in the High Court and was only touched on in this appeal) the plaintiff was not bound, in order to make good title, to discharge the moneys due on foot of the post-contract judgment mortgages. Those mortgages took effect subject to the defendant’s equitable estate or interest in the land, they could affect only such beneficial estate or interest as the registered owner then had and that estate or interest could not survive the completion of the sale and the registration of the defendant as full owner. The defendant could then have the post-contract judgment mortgages cancelled from the folios.
As the defendant’s purported repudiation of the contract was ineffective to rescind it, I would allow the appeal and decree specific performance.
Kenny J.
Tractasales (Longford) Ltd. (the company) carried on a garage business and were the registered owners under the Registration of Title Act of the lands in folios 9792, 12146 and 12386 in the county of Longford. A first mortgage debenture was made on the 11th September, 1969, between the company and United Dominions Trust (Ireland) Ltd. (the debenture holders), and it recited that the company had requested the debenture holders to lend them £25,000 and that the debentures holders had agreed to make this advance with interest provided that the repayment was secured by a debenture.
By that instrument the company charged its property in the following terms:”the company hereby charges its undertakings and all its property assets and goodwill whatsoever and wheresoever both real and personal present and future including therein the uncalled capital of the company for the time being with the repayment to the debenture holder of all the principal and interest and other monies payable under this debenture so that the charge hereby created shall be a first charge on the property charged herein and so that it shall be a floating security only not hindering any sale or other dealings by the company in the ordinary course of its business with its property and assets comprised in the charge but that the company shall not be at liberty to create any mortgage or charge on any of its propertyor assets ranking in priority to or pari passu with this debenture without the previous consent in writing of the debenture holder provided always that the said charge above referred to so far as it relates to the property comprised in the schedule hereto shall be a specific charge thereon and not a floating charge as on the borrower’s other property.” The property described in the schedule was folio 9792. The completion of the debenture had been carried out rapidly because the company were in severe financial difficulties and the solicitor who prepared it had not been told that the company were registered as owners of the lands in folios 12146 and 12386.
The sum advanced under the debenture of the 11th September, 1969, was not sufficient to solve the company’s difficulties and they sought further help from the debenture holders who agreed to give it. By a second debenture made on the 1st June, 1971, and registered on folio 9792 only, the company charged its assets and undertaking with all further sums advanced so that the charge was to be a floating charge on all its assets but a specific charge on the property in folio 9792.
On the 26th July, 1971, the debenture holders appointed the plaintiff to be receiver of all the property charged by the two debentures. The plaintiff decided to sell all the property in one lot but he and his solicitors thought that the company were registered as owners of the lands in folios 9792 and 12146 and were not aware that part of the property was in folio 12386. Between the date of the appointment of the plaintiff as receiver and the public auction, two judgment mortgages were registered against the lands included in folios 9792 and one of them had also been registered in folios 12146 and 12386. The conditions of sale described the property as being that comprised in folios 9792 and 12146.
The special conditions provided that the plaintiff was selling the property as receiver in exercise of his power of sale conferred by the mortgage debentures of the 11th September, 1969, and the 1st June, 1971; the conditions also provided:”The vendor shall discharge all charges registered against the said folio on or before closing and shall pay all Land Registry fees for the cancellation of such charges.”
The closing date was 28th May, 1974, and, in the event of the sale not being closed on that date, interest at the rate of 18% was to be paid by the purchaser on the balance of the purchase money until completion. The defendant attended the auction on the 26th February, 1974, and purchased the property for £30,500; he paid £7,625 which was paid “as a deposit and in part payment of the purchase money” and he signed the contract attached to the conditions of sale.
On the 23rd November, 1971, Peter F. Doggett registered a judgment mortgage against the lands in folio 9792 and on the 26th March, 1973, Henry Smith registered a judgment mortgage against the lands comprised in the three folios. These two judgment mortgages were registered after the appointment of the receiver but before the contract for sale had been signed. On the 22nd May, 1974, Longford Arms Motor Works Ltd. registered a judgment mortgage on the three folios and on the 1st July, 1974, Foster Finance Ltd. registered a judgment mortgage on folios 12146 and 12386. The last two mortgages were registered after the contract had been signed.
The defendant had purchased the property because he thought that he could get finance to develop it. He was unable to do this and became determined that he would get out of the sale if he could. He raised questions about planning permission and, when these had been dealt with, he made searches in the Land Registry and on the 23rd January, 1975, he found out that part of the lands surrounding the garage was registered on folio 12386. The plaintiff had forgotten that the land certificate in relation to this had been handed over to him when he was appointed receiver and he had left it in his office in Longford. It was not deposited with him as security.
The defendant’s solicitor then required the discharge of the judgment mortgages which had been registered after the date of the contract, and negotiations in connection with this took place. The plaintiff’s solicitors had obtained releases of the two judgment mortgages registered before the contract and it was ultimately agreed between the solicitors that the sale should be closed on the 18th March, 1975, on an undertaking by the plaintiff’s solicitors that they would put £4,500 on deposit in the joint names of the solicitors which was to be held for six weeks. If, within that time, the plaintiff’s solicitors had not succeeded in having the two post-contract judgment mortgages removed from the folios, the sum was to be paid to the defendant’s solicitor. At this time the plaintiff’s solicitors believed that the two judgment mortgages registered before the contract had to be discharged out of the purchase money but that those registered after the contract would be removed by the registrar on registration of the transfer to the defendant. When the parties met at the Four Courts on the 18th March, the defendant refused to close the sale on these terms and insisted that the £4,500 should be paid to him immediately; this was a demand which the plaintiff’s solicitors could not accept.
The plaintiff decided to go on with his action for specific performance of the contractan action which he had begun on the 3rd December, 1974. The action was heard by the President of the High Court and he dismissed it because he thought that the title shown by the plaintiff might involve the defendant in litigation with the post-contract judgment mortgagees. The grounds for his decision were that folio 12386 was not included in the written contract for sale, that the debenture holders were not mortgagees of it by equitable deposit and had not registered either of their debentures against it and that the judgment mortgagees might succeed in a claim that their judgment mortgages were effective against it in priority to the claim of the debenture holders.
The first argument for the plaintiff was that when the contract for sale was signed on the 26th February, 1974, the company became a trustee for the defendant who became the owner of the entire beneficial interest in the lands and that the company did not own any estate or interest on which the two judgment mortgages of the 22nd May and the 1st July, 1974, could operate; it was submitted that those judgment mortgages would be removed from the folio on the registration of the transfer to the defendant.
A vendor who signs a contract with a purchaser for the sale of land becomes a trustee in the sense that he is bound to take reasonable care of the property until the sale is completed, but he becomes a trustee of the beneficial interest to the extent only to which the purchase price is paid. He is not a trustee of the beneficial interest merely because he signs a contract. This is made clear by Lord Cranworth in Rose v. Watson 30 where he said at pp. 683-4 of the report:”There can be no doubt, I apprehend, that when a purchaser has paid his purchase-money, though he has got no conveyance, the vendor becomes a trustee for him of the legal estate, and he is, in equity, considered as the owner of the estate. When, instead of paying the whole of his purchase-money, he pays a part of it, it would seem to follow, as a necessary corollary, that, to the extent to which he has paid his purchase-money, to that extent the vendor is a trustee for him; in other words, that he acquires a lien, exactly in the same way as if upon the payment of part of the purchase-money the vendor had executed a mortgage to him of the estate to that extent.” Until the whole of the purchase money is paid, the vendor has in my opinion a beneficial interest in the land which may be charged by a judgment mortgage.
Some judges and writers of standard text-books (Cheshire, and Megarry and Wade) who have dealt with this matter have stated that from the date of the signature of the contract (whether the whole or any part of the purchase money has been paid or not) the purchaser is the owner of the entire beneficial interest in the land. Thus in Shaw v. Foster 31 Lord Cairns said at p. 338 of the report:”. . . there cannot be the slightest doubt of the relation subsisting in the eye of a Court of Equity between the vendor and the purchaser. The vendor was a trustee of the property for the purchaser; the purchaser was the real beneficial owner in the eye of a Court of Equity of the property, subject only to this observation, that the vendor, whom I have called the trustee, was not a mere dormant trustee, he was a trustee having a personal and substantial interest in the property, a right to protect that interest, and an active right to assert that interest if anything should be done in derogation of it.” In Lysaght v. Edwards 32 Jessel M.R. said at p. 506 of the report:”the moment you have a valid contract for sale . . . and the beneficial ownership passes to the purchaser . . .” Both these statements are inconsistent with the clear principle stated by Lord Cranworth and are, I believe, incorrect. When a contract for sale has been signed, the vendor becomes a trustee of the beneficial interest to the extent that the purchase money has been paid.
This issue arose in Kissock and Currie’s Contract33 which was a decision of the Court of Appeal in Ireland, in which a judgment mortgage had been registered against a vendor between the date of the contract for sale by him and its completion. The sale was closed without any payment being made to the judgment mortgagee. A subsequent purchaser objected to the title because he maintained that the judgment mortgage was valid and this claim was upheld. Sir Ignatius O’Brien L.C. said at p. 388 of the report:”I think that, from the point of view of the judgment-creditor . . . his debtor had an interest in land after the date of contract for sale and until completion, capable of being affected by the judgment.” If this case was correctly decided, as I think it was, the principle underlying it disposes of the puzzling concept in some of the other cases that such a judgment mortgage is valid when registered but ceases to be effective when the sale is completed because then the vendor’s interest is deemed to have passed to the purchaser from the date of the contract. I prefer the principle stated by Lord Cranworth.
Counsel for the plaintiff relied on a passage in the judgment of O’Byrne J. in In re Strong 34 at pp. 401-402 of the report. It reads:”Under the general rules of law and equity, apart from the provisions of the Local Registration of Title (Ir.) Act, 1891, the position, as between a purchaser of lands, who has paid his purchase money but has not obtained a conveyance, and a judgment debtor [sic] who has registered his judgment as a mortgage affecting such lands, seems to be quite clear. Where a contract is entered into for the sale and purchase of lands the vendor becomes a trustee for the purchaser and the latter becomes owner in equity of the lands subject to certain rights of the vendor to secure payment of the balance of the purchase money and to regain possession of the lands should the contract not be completed.” The first sentence is dealing with the position of a purchaser who has paid the whole of the purchase money and has not got a conveyance when a judgment mortgage is registered against the vendor; the purchaser then takes the lands free of the judgment mortgage. The second sentence deals with the position after a contract for sale has been signed and no part, or part only, of the purchase price has been paid. The second sentence is, in my view, incorrect. The structure of the two sentences suggests that the second is explanatory of the first: it is not. It is re-stating the view of Lord Cairns and of Jessel M.R. which I do not accept and which is not consistent with what Lord Cranworth said.
At the date when the two post-contract judgment mortgages were registered on the folios, the deposit only had been paid and they therefore affected whatever beneficial interest the company had in the lands. Therefore, I reject the argument that, because a contract for sale had been signed, the vendor company had no beneficial interest in the lands which could be affected by the post-contract mortgages.
The next argument was based on the provisions35 of s. 71, sub-s. 4, of the Registration of Title Act, 1964; logically it should have been the first because, if correct, it disposes of the four judgment mortgages. This sub-section appears in a section dealing with the registration and effect of judgment mortgages on registered lands: nothing corresponding to sub-s. 4 of s. 71 is to be found in the Act of 1891. The plaintiff’s argument was that, when the receiver was appointed, there was an equitable assignment to the debenture holders of all the property which was subject to the floating charge, and that the result of this was that the claim of the debenture holders in relation to the lands in the three folios ranked before that of the judgment mortgagees.
The two mortgage debentures created a specific charge on the lands in folio 9792 and a floating charge over all the other assets, present and future, of the company; and the effect of the appointment of a receiver under a debenture is that there is an equitable assignment to the debenture holder of all the property which is subject to the floating charge: Robbie and Co. Ltd. v. Witney Warehouse Ltd. 36; Rother Iron Works Ltd. v. Canterbury Precision Engineers Ltd. 37 and Murphy v. The Revenue Commissioners .38The word “right” is defined by s. 3 of the Act of 1964 as including “estate, interest, equity and power.” The equitable assignment effected by the appointment of the receiver was, in my opinion, an unregistered right subject to which the company held the lands on which the debentures were not registered at the time of the registration of the affidavits creating the four judgment mortgages. A judgment mortgage is a process of execution and the judgment mortgagee is not a purchaser for valuable consideration: Eyrev. McDowell. 39 Counsel for the defendant said that the Court should not decide this issue in the absence of the judgment mortgagees; but when the defence is made that the title is too doubtful to be forced on a purchaser it is the duty of the Court to decide this question: Alexander v. Mills 40;In re Nichols and Von Joel’s Contract.41
In my opinion the claim of the debenture holders in relation to the lands in the three folios ranks before the rights of the four judgment mortgagees and the vendor has shown a good title to all of the lands in the three folios. When the transfer from the plaintiff and the company to the defendant, the mortgage debentures and the appointment of the receiver are produced to him, it will be the duty of the registrar of titles to cancel42the entries of the four judgment mortgages which appear on the folios without proof of the payment of any sum in respect of any of them.
Counsel for the defendant argued that specific performance was a discretionary remedy and that the Court should not interfere with the decision of Mr. Justice Finlay. The President refused specific performance only because he thought the title was too doubtful to be forced on a purchaser and, as his view on this matter was incorrect, the exercise of his discretion should in my opinion be set aside.43 It is right to say, however, that the effect of the appointment of the receiver does not seem to have been argued before him because he does not refer to it in his judgment.
The contract provides for the payment of interest at the rate of 18% from the date fixed for completion which was the 28th May, 1974. In March, 1975, the solicitors had agreed that one month’s interest only would be payable but the defendant repudiated the agreement which they had made and the plaintiff is not now bound by it. It would, however, be inequitable that interest should be payable from the date fixed for completion because the existence of the third folio had not been discovered on that date. In my opinion the order that the contract ought to be specifically performed should provide that interest at 18% should be payable from the 23rd January, 1975, when the parties became aware that part of the property of the company was registered on a third folio.
In my opinion, the appeal should be allowed and there should be an order that the contract ought to be specifically performed with the variation which I have suggested. There will be liberty to apply to the High Court.
In the Matter of a Contract dated May 14, 1913, for the Sale of certain Leasehold Hereditaments made between
Patrick M’Loughlin and Maria M’Grath
of the other part. And in the Matter of the Vendor and Purchaser Act, 1874
Court of Appeal
2 February 1914
[1914] 48 I.L.T.R 87
O’Brien L.C., Holmes, Cherry L.JJ.
Holmes, L.J.
I cannot see what estate, legal or equitable, this man had at the time of the sale.
Henry, K.C.
The test is whether he had power to compel the third party to join at the date of the sale. Specific performance could be enforced against the wife on the evidence before the Court. On no view of the case is the purchaser entitled to the order for auction fees.
Authorities cited.—Forrer v. Nash, 35 Beavan 167; In re Baker and Selmon’s Contract, [1907] 1 Ch. 238; Higgins v. Senior, 8 M. & W. 834; Fry on Specific Performance, p. 125.
Brown, K.C. (with him F. W. Price ), for the respondent.—Down to the date for completion and long after the issue of the summons in this case the vendor never made any title at all. In the first place, we say this is really an attempt to substitute one vendor for another. On the facts communicated to us, the wife was not a trustee. The original abstract showed that the wife had taken an absolute assignment from the husband. It recites the payment to the Bank, and then there is the conveyance from natural love and affection. Our second ground is this—The assignment of April 6, 1909, is an absolute assignment—it is not a mortgage. Therefore, that gave her the beneficial as well as the legal estate. In order to give a title to the vendor, a declaration of trust was necessary. Such a declaration must be in writing. Here the husband could not, therefore, compel the wife if she said no. The fact of the wife having concurred was not told to us until July 26, 1909. On their own showing the money which paid off the mortgage was hers. She was married on Feb. 15, 1909, and she pays off the husband’s mortgage on April 6. That is really a settlement by the husband on her. It is not a case in which the Court ought to force a title on the purchaser. Cited Halkett v. Earl of Dudley, [1907] 1 Ch. 590.
O’Brien, L.C.
We think the decision of Barton, J., was right, and we affirm his order, except as regards the auction fees.
O’Flanagan v Ryan
Chancery Division.
21 December 1904
[1905] 39 I.L.T.R 87
Sir Andrew M. Porter Bart., M.R.
Summons under the Vendor and Purchaser Act, 1874, by the vendor, Patrick O’Flanagan, for a declaration that a good title had been shown in accordance with the particulars and conditions of sale. By indenture of lease, dated 11th Jan., 1884, the National Bank demised to James Ryan a house and premises at Thurles, Co. Tipperary, for the term of 60 years, at a rent of £45. The premises afterwards became vested in William Maher. William Maher died in 1890, having made his will, by which he bequeathed the premises to his wife, Kate Maher, in trust for herself and the children of their marriage, to be applied by her as she should deem most expedient. Probate of this will was, on 15th Mar., 1890, granted to Kate Maher, one of the executors named therein. By indenture of marriage settlement, dated 23rd Jan., 1891, between Kate Maher, Patrick Rahill, Patrick O’Flanagan, and Martin Rahill, it was witnessed that, in consideration of an intended marriage between Kate Maher and Patrick Rahill, the premises were assigned to Patrick O’Flanagan and Martin Rahill, as trustees, to hold the premises unto the trustees for the use of the said Kate Maher until the intended marriage, and thereafter, upon trust, to raise, by sale or mortgage, the sum of £1,000, to be invested in trust for the children of Kate Maher’s first marriage, in such shares as Kate Maher should appoint, and subject to such sum of £1,000, in trust, for Patrick Rahill, his executors, administrators and assigns. The premises, to which an ordinary licence was attached, were, by the trustees, put up for sale by auction under conditions of sale. Condition 6 set out that Mrs. Maher, on the occasion of her re-marriage with Patrick Rahill, to give effect to the trusts of the will of William Maher, vested the premises in the vendors, in trust, to raise, by sale or mortgage, the sum of £1,000 for the benefit of her children by her first marriage, and that the vendors were now selling the premises in pursuance of said trust for sale, and would convey same to the purchaser in their character as trustees, and should not be bound to obtain the concurrence of any other parties to such conveyance. The premises were, on 5th Nov., 1904, sold at the auction to Patrick Ryan for the sum of £700. The solicitor for Patrick Ryan wrote giving notice to the vendors that he declined to complete the sale and purchase of the premises on the ground that good title had not been shown by the vendors in accordance with the conditions of sale. The vendors offered to join Kate Rahill in conveying the premises to the purchaser.
Representation
Herbert Wilson, K.C., and Carrigan, for the vendors.
P. Fleming, K.C., and P. Lynch, for the purchaser.
Cases cited.—
Scott v. Alvarez, [1895] 1 Ch. 596, 2 Ch. 603;
Wood v. Richardson, 4 Beav. 174;
Corrall v. Cattell, 4 M. & W. 734;
Crockett v. Crockett, 2 Ph. 553;
Lambe v. Eames, 6 Ch. App. 597;
West of England Bank v. Murch, 23 Ch. D. 138;
M’Leod v. Drummond, 14 Ves. 360, 17 Ves. 167;
Scott v. Tyler, 2 Dick 727;
Watkins v. Cheek, 2 S. & S. 199;
Re Hally’s Trusts, 23 L. R. Ir. 130;
Pillgrem v. Pillgrem, 18 Ch. D. 93;
Scott v. Key, 35 Beav. 291;
Nevill v. Nevill, 7 Ch. App. 253.
Sir Andrew M. Porter, Bart., M.R.
The vendors make title under William Maher’s will. It is clear that by that will some trust was imposed on the widow. The words in this will are not like those in Hally’s Trusts, for there the widow took no interest, nor do they resemble those in Lambe v. Eames. They most resemble the words in Crockett v. Crockett. It is possible that the widow had an implied power of sale, but any such sale ought to be made in good faith. What took place on the occasion of the execution of the marriage settlement in 1891 was not a sale, but a delegation. William Maher’s widow had no right to delegate anything to a trustee. The transaction was apparently entered into for the benefit of the whole class, but in reality for her own benefit. The assigning away was not an act in a due course of administration, but was a complete breach of trust. Vendors claiming under that deed could give no valid discharge. The offer to join Mrs. Rahill in the conveyance is no more than an offer to get her to ratify a breach of trust. But it is argued that the purchaser is bound by conditions of sale, so as to be precluded from raising the objection, and Scott v. Alvarez is cited. But in that case there was a condition binding the purchaser to particular facts. There is no such binding condition in the present case. The only clause giving colour to the argument suggested is condition 6. It is argued that this condition fully states the facts and informs the vendor of the title to be made. This argument is founded on a fallacy. It is misleading to state that the marriage settlement was entered into “to give effect to the trusts of the will.” The purchaser is entitled to assume that he is getting a good title. On reading these conditions he would be entitled to assume that there was some provision enabling Mrs. Maher to vest the premises in trustees in the way stated. He would expect to find some *88 provision to appoint subsidiary trustees with power to give a receipt. The purchaser would have to face the probability that some of the children would raise a question of breach of trust of which he has full notice. The will gives no authority for what has been done. Good title has not been shown in accordance with the conditions of sale, and the deposit must be returned. As I decide that there was a breach of trust, Mrs. Rahill will be entitled to get a re-conveyance from the trustees of the marriage settlement.
In re Kissock and Taylor’s Contract
High Court of Justice.
Chancery Division.
17 November 1915
[1916] 50 I.L.T.R 100
Barton J.
Barton, J.
The question for decision is whether the vendor has been guilty of wilful default. He derived title from a Miss Hall under a registered agreement to sell followed by a deed of assignment. Between the date of the registered agreement and that of the deed of assignment a judgment was registered as a mortgage against Miss Hall’s interest in the premises. With this blot on his title staring him in the face, the vendor agreed to sell the premises to the present purchaser, and fixed fourteen days for completion. The judgment-mortgagee asserted his claim, and it was held by this Court and by the Court of Appeal that the judgment-mortgage affected Miss Hall’s interest in the premises. This litigation delayed completion for nearly seven months. The vendor excuses himself on the ground that he was erroneously advised by counsel that the judgment mortgage did not affect Miss Hall’s interest in the premises. That explains why he resisted the judgment-mortgagee’s claim; but it does not justify his action in entering *102 into an agreement to sell the premises and in fixing fourteen days for completion with an ominous cloud overhanging his title. Reference was made to a passage in Cozens-Hardy, L.J.’s judgment in Bennett v. Stone (ubi sup.), at p. 526, but that was a very different case. In my opinion the vendor has been guilty of wilful default, and the purchaser is not bound to pay interest upon the purchase-money.
In The Matter of Fuller Co. Ltd (In Liquidation)
Austin OConnor v David McCarthy, David Walsh and John Field
1979 No 687P SP
High Court
15 October 1981
[1982] I.L.R.M. 201
COSTELLO J
delivered his judgment on 15 October 1981 saying: In September 1980 I gave judgment in a dispute that had arisen about the sale of premises in Skibereen owned by a company, Fuller and Co Ltd, which is now in liquidation. I decided that the company through its agent had entered into two separate binding contracts to sell this property. For the reasons which I set out in my judgment I granted an order for specific performance in favour of a Mr Walsh and a Mr OConnor and I declared that another purchaser, Mr John Field, was not entitled to an order for specific performance but to damages in lieu thereof. The matter was relisted before me on 8 October 1981 to consider the evidence and the issues of law which have been raised in these proceedings.
The claim for damages is brought under three separate Heads.
Under Head (1) it is said that the purchase price provided for in the contract of *202 sale was 31,000; that the value of the property on the date of my judgment had increased to 80,000; that Mr Field was therefore entitled to 49,000 under this heading.
Under Head (2) a claim for loss of profits was made. The claim is for 33,384 to the date of judgment and a sum of 55,640 for future loss of profits.
Under Head (3) it is said that the cost of purchasing and renovating the premises of Fuller would have been 40,276; that the present cost of acquiring a site and constructing a premises suitable for Mr Phelans needs is 106,558, and it is said that the claimant is entitled to the difference between these two sums, namely 66,282.
In the course of the case Mr Blayney on behalf of Mr Field accepted that the claimant was not entitled to damages based on loss of future profits as well as damages under Head (3) and reduced the claim to loss of profits to 33,384, that is to say the loss of profits to date of judgment. Even so, the claim is still for a startlingly substantial sum; namely, the sum of 148,666 lost, it is said, under a contract whose consideration was 31,000.
Turning firstly to Head (1), it is to be borne in mind that I refused the claimant relief by way of specific performance and that I am now awarding him damages in lieu of such an order. In Malhotra v Choudhury [1980] 1 Ch 52 the Court of Appeal had to consider, inter alia, whether damages which are awarded in substitution for a decree of specific performance are to be assessed by reference to the value of the premises at the date of the judgment or at the date of the defendants breach of contract and (2) whether the damages were to include such loss of profits as the plaintiff could prove as flowing from the failure of the defendant to deliver to him the premises the subject matter of the sale. As to (1), following the approach suggested in Wroth v Tyler [1974] Ch 33 the court held that
equity is following the law if in relation to an award of damages in substitution for an award for specific performance of a contract of sale of real property, it awards damages assessing the value of the realty at date of judgment and not at the date of breach.
In the instant case the date of my judgment was 8 September 1980 and counsel agree that I should assess damages in this case on the value of the property on that date and deduct from that figure the contract price. There agreement ends. There is wide disagreement as to the propertys make value in September 1980 and in addition Mr Butler on behalf of the liquidator of Fuller claims that there should be a discount on this sum by reason of the fact that the purchaser never in fact paid the purchase money to the vendor and has had the benefit of it since.
I have had widely divergent evidence as to the market value of the property in September 1980. Mr McCarthy who is an auctioneer practising in Skibbereen says it would have fetched 80,000 on the open market at that time. Mr Ryan, on the other hand, who practises as an auctioneer in Cork city, puts its value at 31,000 in September 1980 and was in no way nonplussed by the fact that this was the price at which it was sold three and a half years previously. Evidence of sales of other premises in the town which has been given was only of limited value. I agree with *203 Mr McCarthy that it would be unrealistic to calculate the price per square foot of such sales and to use the result as a basis for valuing the Fuller property. I also feel that the price paid for other premises is subject to the disability that the evidence related to retail shops and to premises which are not really comparable to that with which we are concerned in this case. I think I should approach this case by considering the nature and condition of the property, the subject matter of this application. Although there is a small shop premises attached to it the premises were basically used for storage purposes, but they comprise a large area which, if planning approval could be obtained, make them suitable for re-development. They were situated off the main thoroughfare and some distance from the roadway with an access by means of what was little more than a lane. The principal stone buildings were in good repair. So I have to decide what increase, if any, there would have been in the market between April 1977 and September 1980 for this particular premises. Mr McCarthy says that property values more than doubled in that period in the town and as Mr Field purchased the property at an undervalue he valued the market price in September 1980 at 80,000. Mr Ryan, however, makes the point that the number of potential purchasers for this type of property is limited and that it would not have increased in value at anything like the rate of other types of commercial property. I think there is something in this argument but I cannot accept the view that no increase in its value would have occurred in the relevant period. I am satisfied that property prices generally rose very considerably in the three and a half year period with which I am concerned and I conclude that the market price at the relevant date of this property would have been approximately 75% above the price which Mr Phelan paid for the property, that is to say approximately 55,000 and so Mr Phelan is entitled to 24,000 damages under Head (1), subject to a possible deduction to which I will now refer.
Mr Butler on behalf of the liquidator submits that damages under this Head should be reduced because the purchaser had not in fact paid the purchase price and has had the benefit of the sum of 31,000 during the relevant period. Mr Blayney disagrees and points out that the liquidator can cite no authority to justify the deduction claimed. I conclude that the deduction should not be allowed. The fundamental rule in contract cases is that the plaintiff is entitled to be placed, so far as money can do it, in the same position as he would have been in had the contract been performed. In the present case had the contract been performed Mr Phelan would have paid over his purchase money on the date provided for in the contract but would from that date have been entitled to the rents and profits. In the absence of evidence I cannot assume that the purchaser has received any financial advantage from the vendors wrongful repudiation of the contract and so it is unnecessary for me to make any finding on the point had such evidence been adduced.
I come then to the damages claimed under Head (2), namely damages for loss of profit. As a preliminary point Mr Butler urges that in principle claims under Head (1) and Head (2) are mutually exclusive as a purchaser cannot claim both for the loss of the enhanced value of the property and the loss of the profits he would have made had he acquired the property as such claims would result in double *204 compensation. I must confess that I found it difficult to follow the arguments advanced in support of this submission and I note that in fact in Malhotra v Choudhury the Court of Appeal allowed damages under both these Heads. I am not convinced therefore that as a matter of principle the claim for loss of profits should be disallowed.
The claim is advanced on the basis of the second rule relating to damages for breach of contract enunciated by Anderson B. in the well known case of Hadley v Baxendale (1854) 9 Exch 341. In the course of that judgment it was pointed out that damages payable by a contractbreaker should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things from such breach of contract itself, or such as may reasonably supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it. Mr Blayney does not suggest that the loss of profits which it is said Mr Field suffered arose naturally in the ordinary course of things, but he says there were special circumstances which were communicated to the vendors and that the loss of profits would ordinarily follow from the breach of contract under these special circumstances. He says that the special circumstances in this case were that Fullers premises were required for the expansion of the supermarket and bakery business which Mr Field carried on in Skibbereen and that it was in the contemplation of the parties to this contract that if that expansion was stopped by breach of a contract on the sellers part that Mr Field would suffer loss of profits.
Firstly, I will give my findings of fact on this claim. I am satisfied that in the month of April 1977 Mr Field wished to expand his business and that he bought Fullers premises for this purpose. He intended to reconstruct them so that they could be used for the bakery part of his business. He had two ovens in his existing premises and he intended to move them and purchase a third oven and use all three in the new premises. Thus he hoped to expand his bakery outlet by one third and expand the turnover of the supermarket business by utilising the space made available by the removal of the ovens. But did the company, that is to say, Fuller and company, know about these plans?
Fuller and company at the date of the sale was being managed by Mr OConnor with its directors consent. He is an accountant practising in the city of Dublin and was then the liquidator of Fullers parent company. The sale was negotiated by Mr Phelan, an apprentice in Mr OConnors office and by Mr Field personally. They spent some hours on a Friday afternoon in negotiation and then orally concluded a deal. Having done so they spent a social evening together with Mr Nathan, Mr Fields accountant. On the following Monday a memorandum of the agreement prepared by Mr McCarthy the auctioneer who negotiated the sale was signed by Mr McCarthy and Mr Field and Mr Phelan. I am satisfied that Mr Phelan must have known before the oral agreement was concluded that Mr Field was buying the property for the purpose of expanding his business. I am also satisfied that Mr Field did not at any time communicate to Mr Phelan any details about how he would utilise the property if he got it and in particular he did not specifically inform him at any time as to what his plans were relating to the purchase of the new oven and the removal of the old ones to the new premises.
In the light of these findings of fact I must now consider whether a claim for loss of profits is sustainable.
There are not many authorities on the point I am now considering. Diamond v Campbell-Jones [1961] 1 Ch 22 was a case in which the purchaser claimed damages arising from the wrongful repudiation of a contract of sale by the vendor. He contended that the proper measure of damage was the profit which it was reasonable to suppose he would have made had he converted the property into maisonettes and offices. His claim failed. It was held that the purchaser had not made known to the vendor the work of conversion which he proposed and that there were no special circumstances from which that knowledge could be imputed to the vendor. Accordingly damages were assessed on the basis of the difference between the contract price and the market value of the premises as unconverted at the date of the breach. A different result occurred in Cottrill v Steyning and Lettlehampton Building Society [1966] 1 WLR 753. In that case the purchaser had purchased property with a view to converting it into flats and building six dwelling houses. His plans were known to the vendors and the Court held that the market value of the property as converted was to be ascertained and damages assessed at that figure less expenses attributable to the building work and matters ancillary thereto. In Malhotra v Choudhury [1980] 1 Ch 52 it was held that the parties had contemplated that if there was a failure to sell the house the subject matter of the proceedings the plaintiff would suffer damage for loss to his medical practice and directed damages to be assessed accordingly.
Mr Blayney accepts as correct the statement in Anson on Contract (24th Ed. at 535) to the effect that liability under the second branch of the rule depends on a pruchaser establishing that there were special circumstances under which the contract was made and that these were known to the vendor. To my mind the mere fact that the purchaser in this case intended using the property he was buying for the expansion of an existing business did not constitute special circumstances within the meaning of the rule. Had he drawn up detailed plans for their reconstruction and told Mr Phelan of the new way it was proposed to use the property so that the special damaging consequences of a breach of contract would have been brought to his attention then the second branch of the rule might well fall to be applied. But this did not happen in the present case. I am satisfied that beyond a general statement that the property was to be used to expand an existing supermarket and bakery business Mr Phelan was not made aware of any other or special use to which the property would be put. Thus it seems to me that the vendors were not aware of any special circumstances in this case which would render them liable to recoup the claimant for any loss of profit he may have sustained. It becomes unnecessary for me therefore to make any finding on the evidence relating to the quantum of the alleged loss, or to consider the submission made on the vendors behalf that any knowledge which Mr Phelan may have had could not be imputed to Fuller and company.
The claim under Head (3) arises in this way. It is said that the cost of acquiring the Fuller premises and the cost of reconstructing them to make them suitable for Mr Fields purposes in 1977 would have been 40,276, 7,776.40 of which being the reconversion costs at 1977 prices. Mr Field now proposes to buy a site outside *206 the town (at a cost of 20,000) and build on it a premises suitable for his bakery business, at a cost of 81,588 at current prices. The total cost of acquiring the site and building on it will be 106,558 and the difference between the 1977 costs and the total of the current costs namely the sum of 66,282 is claimed under Head (3). It seems to me that if any damages can be claimed by reason of the increase in building costs which occurred in the relevant period, it cannot be based on the construction costs of an entirely new building as has been suggested in this case. Apart from this, however, it seems to me that the purchaser has not shown that there were any special circumstances in relation to the contract of sale which were brought to the attention of the vendors so as to justify the claim as now formulated. It was a fact known to Mr Phelan that the property was to be used for the expansion of Mr Fields business and Mr Phelan would have appreciated that it was probable that some work of reconstruction on them would be undertaken by the new owner. But if Mr Field had any details finalised at the time of the sale as to how the property was to be reconstructed these were not conveyed to Mr Phelan. So, it seems to me that as Mr Phelan was not informed of any detailed plans of reconstruction or how exactly the property was to be used by the purchaser he was not in the possession of knowledge of any special circumstances within the meaning of the rule so as to render Fuller liable under Head (3) of the claim.
In the result, the claim under Head (1) only succeeds and I will declare that Mr Field is entitled to 24,000 damages.
In re M’Clure, Deceased
The Vendor and Purchaser Act, 1874.
High Court of Justice.
Chancery Division.
21 February 1899
[1899] 33 I.L.T.R 49
Chatterton V.-Ch.
Summons under the Vendor and Purchaser Act, 1874, taken out by Sarah Garrett, the purchaser in this matter, for an order (1) that Sarah Garrett is not precluded by her contract from making or raising her objections or requisitions to the title of the vendor to sell and assign the farm of land and premises mentioned in the contract; (2) that the vendor has not shown a good title to the lands and premises by prescription or otherwise, and that the objections of Sarah Garrett to the title to the lands and premises have not been sufficiently answered by the vendor; and (3) that Sarah Garrett is entitled to a return of the deposit of £10 with interest.
Robert M’Clure, father of the vendor, was at the date of his death, on the 18th July, 1871, possessed of the lands in question as tenant from year to year under the Marquis of Downshire. Upon his death intestate Robert M’Clure left his widow and five children him surviving, and his widow continued in possession without taking out letters of administration until her death in 1879 intestate, whereupon Andrew J. M’Clure, one of the children and the vendor in this matter, entered into sole possession, and has so continued until the present time. By an agreement made between the landlord and Andrew J. M’Clure, and duly filed in the office of the Land Commission, the fair rent was fixed at £12 3s. 0d. on the 30th June, 1890. On the 4th Oct., 1897, letters of administration of the personal estate of Robert M’Clure, deceased, were granted to Andrew J. M’Clure, the vendor, as the lawful son and one of the next-of-kin of the deceased, and the schedule of assets of the said intestate, verified by the said Andrew J. M’Clure, included this farm of land. The farm was put up for sale by Andrew M’Clure, and the 6th condition of sale stated that “the vendor has been in the actual undisturbed possession and occupation of the lands and premises as tenant for upwards of twelve years, and the prescriptive title so acquired by him, and now vested in him, will be conveyed to the purchaser. The title prior to the said prescriptive period of twelve years shall not be investigated or inquired into by the purchaser, nor shall any objection or requisition in reference thereto be made. A statutory declaration by the vendor that he has been in the aforesaid undisturbed possession and enjoyment of the lands and premises offered for sale for the said period of twelve years, together with a copy of the order of the Irish Land Commission (dated the 24th March, 1890) fixing the fair rent of the said lands and premises in the name of the vendor, shall be handed to the purchaser, and no other document of title shall be asked for by the purchaser or given to him, and the right and title of the said Andrew J. M’Clure to execute the said assurance shall be admitted, and no investigation of the prior title of any description shall be given or required.” The lands were purchased by Sarah Garrett at £310, and a deposit of £10 was paid.
M’Ilroy for the purchaser.—The vendor having in his affidavit, made in 1897 for the purposes of the grant of administration, admitted that this farm formed portion of the assets of the intestate, cannot now say that he was in since 1878 in his personal capacity, and has acquired a title by twelve years’ possession under the Statute of Limitations. The administration relates back to the date of the death: Davies v. Williams, 34 C. D. 558; In re Johnson Sly v. Blake, 29 C. D. 970; *49 Eady v. Wood, 29 Ir. L. T. R. 70. Condition 6 is not binding, since it does not truthfully disclose all material facts: In re Marsh, 24 C. D. 11; Fry on Specific Performance, 543.
Chambers, contra. —The vendor having in 1891 acquired an absolute title not only is the remedy of the next-of-kin barred, but their right is extinguished, and the subsequent grant of administration cannot divest the vendor of the title gained under the statute: Sanders v. Sanders, 19 C. D., p. 379; In re Allison, 11 C. D. 284; Brassington v. Llewellyn, 27 L. J. Ex. 279; Rankin v. M’Murtry, 24 L. R. Ir. 290; Scott v. Nixon, 3 D. & W. 388.
Chatterton, V.-Ch.
Under the Statute of Limitations the vendor acquired an absolute title in 1891, and the question is as to the effect of the subsequent grant of administration to him. The taking out of administration cannot operate to divest the title already acquired by the vendor under the statute. On this ground the purchaser’s objection must fail.
Re Turpin and Ahearne’s Contract.
High Court of Justice.
Chancery Division.
26 July 1904
[1904] 38 I.L.T.R 225
Sir A. M. Porter, Bart, M.R.
The original lease of 1865 contained a covenant against alienation. No consent was given by the landlord to the assignment of 3rd Feb., 1875. Therefore, it is argued, no estate passed to Ahearne, and at the date of the marriage settlement Ahearne had nothing to settle. But, as I held in O’Connor v. Foley (1904, not reported) the assignment would have operated by way of estoppel as against Ahearne. The marriage settlement contains a reference to children, and, being a marriage settlement, it may be taken that it contained provisions as to children. One of the children is a minor. The vendor offered to deposit £500 in Court, but the purchaser could not assent to this, and the question now arises whether he is bound by the conditions of sale. Mr. O’Connor argued, not that there was a waiver of the conditions of sale but expressly, that condition 11 was not, under the circumstances, fair and explicit. Now, assuming that the vendor had lost all memory of the marriage settlement, there is nothing wrong in condition 11, provided it was fair and explicit. The authorities are numerous on the question of excluding prior investigation of title. In the National Provincial Bank v. Marsh the whole of the authorities are considered from the leading case of Hume v. Bentley down. In the present case not only inquiry but investigation is precluded, and, as no fraud is suggested, the conditions must stand, unless the doctrine in Marsh v. Granville prevails. That case is one in which the condition was held to be misleading. In my opinion the principle of that case applies to the present case. It is true there is no suggestion of dishonesty or fraud, but neither was there in Marsh’s Case. There was in this case a marriage settlement, which the vendor ought not to have forgotten. The vendor must be dealt with as if he knew, or at least the loss must fall on him and not on the purchaser. Supposing he had made a mortgage, could he be heard to say that he had forgotten all about it? If the vendor had wished to preclude all investigation, he could have done so by setting out fully the nature of the lease. The purchaser’s solicitor inquired whether there was a marriage settlement, and he was assured there was none. There was an omission on the vendor’s part to state a fact which was material, and which ought to have been disclosed. I therefore hold that condition 11 is not binding on the purchaser, and, accordingly, a good title has not been shown, and the deposit must be returned.
Northern Bank Ltd v Henry
[1981] IR 1
Judgment of Henchy J.delivered the 17th April 1980.
The contest in this case is between the plaintiff Bank and the wife ofone of its customers. The wife is the first-named defendant. Thehusband, who was the customer, is the second-named defendant. He hadgranted a legal mortgage of the family home to the third-nameddefendant, a building society, in 1969.
In 1974 the husband’s account with the Bank was heavily overdrawn andhis finances generally were in disarray. It was a source of urgent worryto the Bank. It badly needed a collateral security for its debt. Itneeded it quickly, for there were other creditors of his and chequesdrawn by him in favour of some of thosecreditors had been dishonoured by the Bank. The only substantial item ofproperty he appeared to have vas the family home, and it was mortgagedto the building society. However, in the eyes of the Bank, as a securityit was better than nothing. It required him to give a second mortgage onit. He agreed to do so.
The Bank doubtless felt it had to carry through the transaction swiftly.Advised by their legal department in Belfast, the Bank people took upthe documents of title and saw the investigation of title that had beencarried out when the mortgage to the building society was executed in1969. But they did no further investigation of the title, other than toget a Dublin firm of solicitors to have a negative sear carried out inthe Registry of Deeds. Having thereby established that no dealing withthe property had been registered since 1969, they did not go into thetitle further, although they knew it was the family home and that thehusband had ceased to use it as his address in his correspondence withthem. A competent solicitor acting for a normal purchaser of the housewould nothave been content to take the title on such a cursory investigation. Butall the Bank wanted was a second mortgage, and its advisers probablyfelt that if they took time to investigate the title fully they mightlose priority to another creditor. For that reason I do not wish tocriticise them for telescoping the investigation in the interests ofbusiness expediency. So, with the title thus summarily looked at, theygot the second mortgage executed.
As was later proved, the husband had no title whatsoever to the familyhome. If the Bank had pursued the matter by means of appropriaterequisitions on title, it would have discovered not only that it was thewife who was in occupation of the house, but that she was in the processof formulating against the husband a claim that she was beneficiallyentitled to it. The High Court has since made a declaration to thateffect and that decision stands unchallenged. What the Bank primarilyseeks to establish in the present proceedings is that as purchaser forvalue without notice of the wife’s title it should have priority overher. S. 3(1) of the Conveyancing Act, 1882, deprives it of that priorityif the wife’s entitlement “would have come to [the Bank’s]knowledge if such inquiries and inspections had been made as oughtreasonably to have been made”. Counsel for the wife argues thatthe Bank ought reasonably to have inquired as to who was in occupationand as to whether there was any litigation threatened or pendingaffecting the property, and that if it had done so it would have learnedof the wife’s claim. Accordingly, the argument goes, the Bank should notbe allowed to dislodge her from the family home which she admittedlyowned at the time the Bank got the second mortgage of it, because itsabstention from making the suggested inquiries fixed it withconstructive notice of the wife’s claim.
The answer depends on the scope of meaning that should be given theexpression “such inquiries and inspections as ought reasonably tohave been made” in s. 3(1)(i) of the Conveyancing Act, 1882.
In my judgment, the test of what inquiries and inspections oughtreasonably to have been made is anobjective test, depending not on what the particular purchaser thoughtproper to do in the particular circumstances, but on what a purchaser ofthe particular property ought reasonably to have done in order toacquire title to it. (“Purchaser” and “purchase”in this conte: have the meanings ascribed to them by s. 2 of theConveyancing Act, 1881, and thus include “mortgagee” and”mortgage”). In a particular case, a purchaser, looking onlyat his own interests, may justifiably and reasonably consider that inthe circumstances some of the normal inquiries and inspections may orshould be dispensed with. The special circumstances, thus narrowlyviewed, may justify the shortcut taken, or the purchaser may considerthat they do so. In either event, such a purchaser is not the purchaserenvisaged by s. 3(1)(i) of the Conveyancing Act, 1882. That provision,because it is laying down the circumstances in which a purchaser is notto be prejudicially affected by notice of any instrumental fact orthing, is setting as a standard of conduct that to be expected from areasonable purchaser. Reasonableness in that context must be judged byreference towhat should be done to acquire the estate or interest being purchased,rather than by the motive for or the purpose of the particular purchase.A purchaser cannot be held to be empowered to set his own standard ofreasonableness for the purpose of the subsection. He must expect to bejudged by what an ordinary purchaser, advised by a competent lawyer,would reasonably inquire about or inspect for the purpose of getting agood title. If his personal preference or the exigencies of thesituation impel him to lower the level of investigation of title belowthat, he is of course entitled to do so, but if he does so, he cannotclaim the immunity which s. 3(1)(i) reserves for a reasonable purchaser.And a reasonable purchaser is one who not only consults his own needs orpreferences but also has regard to whether the purchase mayprejudicially and unfairly affect the rights of third parties in theproperty. In particular, a reasonable purchaser would be expected tomake such inquiries and inspections as would normally disclose whetherthepurchase will fraudulently or unconscionably trench on the rights ofsuch third parties in the property.
In this case, the Bank made no inquiry as to who was in occupation ofthe house. I consider that a reasonable purchaser would have done so. Aminimum requirement for the proper investigation of a title is to seethat the purchaser will either get vacant possession on completion, or,if the contract or the needs of the purchaser do not so permit orrequire, get evidence of any estate or interest that will stand betweenhim and vacant possession. Considering the many ways, both at common lawand under statute, in which a person in occupation may have an estate orinterest adverse to that of the vendor, and which would not appear on aninvestigation of the vendor’s paper title, I consider that the Bank aspurchaser ought reasonably to have investigated this aspect of thetitle. Had the Bank done so, the fact of the wife’s possession of thehouse would have come to light, as well as her well-founded claim tobeneficial ownership of it.
Nor did the Bank make any inquiry as to whether any litigation wasthreatened or pending in respect of the property. I consider that thisalso was an inquiry which a purchaser ought reasonably to have made. TheBank knew that this was a “purchase” from the husband of thefamily home. Even if it was not a family home, it would be foolhardy fora purchaser not to inquire about pending or threatened litigation,particularly litigation stemming from statutory notices served understatutes such as the Housing Acts or the planning Acts, which mightfatally flaw the title. This house was known to the Bank to be thefamily home. Notwithstanding that this purchase took place before thepassing of the Family Home Protection Act, 1976(which makes a transaction of this kind void for want of the priorwritten consent of the wife), the Bank as purchaser ought reasonably tohave adverted to the fact that there were decisions showing that a wifewho had made payments towards the acquisition of the home or towards thepayment of the mortgage instalmentson it acquired a corresponding share in the beneficial ownership. As amatter of ordinary care, therefore, an inquiry as to threatened orpending claims was called for. There was in fact such an impending claimby the wife. By not inquiring about its existence the Bank became anunwitting party to an unconscionable, if not an actually fraudulent,effort by the husband to mortgage the family home behind his wife’s backat a time when he had no beneficial title to it. The Bank, by not makingthe normal inquiry as to threatened or impending litigation affectingthe property – indeed by making no requisitions on title whatsoever -facilitated the husband in nefariously concealing his wife’swell-founded claim to the ownership of the house. Because of that, theBank cannot be said to have shown the care to be expected from areasonable purchaser. It must be held, therefore, that knowledge of thewife’s claim would have been acquired by the Bank if it had made theinquiries that ought reasonably to have been made.
The interpretation given in this judgment to s. 3(1)(i) does not amountto the imposition of any novel or unfair duty of investigation of titleon purchasers. Well before the enactment of the Conveyancing Act, 1882,which aimed at setting statutory bounds to the existing doctrine ofconstructive notice, the Chancery judges had evolved this same test fordetermining whether a purchaser or mortgagee should have constructivenotice attributed to him.
Sir Edward Sugden (later Lord St. Leonards) summed up the pre-1882approach of the Chancery judges to the question of constructive noticeas follows (Sugden, Law of Vendors and Purchasers, l4th edn.,1862):
“The question upon constructive notice is not whether thepurchaser had the means of obtaining, and might, by prudent caution,have obtained the knowledge in question, but whether the not obtainingit was an act of gross or culpable negligence”.
Nineteenth century judges were prone to stigmatising actionablenegligence as “gross” or “culpable”. IndeedRolfe B. in Wilson v. Brett (l843) 11 M. & W. 113 said he”could see no difference between negligence and gross negligence,that it was the same thing with the addition of a vituperativeepithet”; and this incisive view was approved by Willes J. in Grill v. Iron Screw Collier Co. (1866) L.R. 1 C.P. 600). When,therefore, the pre-1882 Chancery judges applied the test of negligenceto determine whether a purchaser should be fixed with constructivenotice, they were doing no more than asking whether the purchaser’s lackof knowledge was consistent with the conduct to be expected from areasonable man in the circumstances.
S.(3)(l)(i) of the Conveyancing Act, 1882, in providing that a purchaseris not to be prejudicially affected by notice of any instrument, fact orthing unless “it is within his own knowledge, or would have cometo his knowledge if such inquiries and inspections had been made asought reasonably to have been made by him”, gave statutory stressto the existing judicial insistence that constructive notice could befound only when the lack of knowledge was due to such carelessinactivity as would not be expected in the circumstances from areasonable man. The default of a reasonable man is to be distinguishedfrom the default of a prudent man. The prudence of the worldly wise mayjustifiably persuade a purchaser that it would be unbusinesslike to stopand look more deeply into certain aspects of the title. But thereasonable man, in the eyes of the law, will be expected to look beyondthe impact of his decisions on his own affairs, and consider whetherthey may unfairly and prejudicially affect his “neighbour”,in the sense in which that word has been given juristic currency by LordAtkin in Donoghue v. Stevenson 1932 A.C. 562. In the presentcase, the Bank may have been justified as a matter of business prudencein taking the second mortgage from the husband, hurriedly and withoutany proper investigation of the title. But it would be impossible tohold that a purchaser in this situation, given competent legal adviceand having due regard to the prejudicial consequences to persons inproximity to him (such as the wife) that could result from a skimpedinvestigation of the title, would haveacted reasonably in thus taking a conveyance of the family home. Thetest for constructive notice is legal reasonableness, not businessprudence.
I would reject this appeal by the Bank, thus affirming the decision ofMcWilliam J. dismissing, on the ground of the Bank’s constructive noticeof the wife’s title, its claim to be given priority over her.
Judgment delivered 17th April 1980 KENNYJ.:
Thelma Henry and Harry Henry (the first and second-named defendants)were married in 1952. Her father had bought a house for them atMontbello, Blackrock, Co. Dublin and the conveyance of it was made toher only, Mr. Henry contributed nothing to the purchase price. Heprospered in the early 1960’s and they decided to sell the house atMontbello and to buy one in Sandycove Avenue We: which was held undertwo leases. The purchase money ofMontebello was not sufficient to pay for the house at Sandycove and sohe negotiated a mortgage from the First National Building Society(“the society”). The two sales and the mortgage to thebuilding society were carried out in l964. She gave him the amountrealised on the sale of Montebello so that he could complete thepurchase of the house at Sandycove. Her evidence was that she understoodthat that house was to be put in her name but her Testimony. Herevidence about this was very vague and I think it more probable that thesociety refused to make an advance to her but were prepared to make oneto him. I can take judicial notice of the fact that building societiesare most reluctant to make advances to persons who have not an incomewhich will make it possible for them to pay the instalments. The houseat Sandycove was assigned to him and he gave a mortgage on it to thesociety. The result was that her name was not mentioned in any of thedocuments of title. At a later date he applied to the society for abigger advance which they agreed to give and the mortgage of 1964 waspaid off and a new one given by him to them in1969. Again her name was not mentioned. The mortgage of the 16th ofJuly, 1969 was made by him to the society to secure an advance. It wasby demise for the terms for which the property at Sandycove was heldless the last ten days of each and the society were given all thedocuments of title by him. Requisitions on title were made by thesociety when the first mortgage in 1964 was about to be completed butnone were made in 1969.
Mr. Henry was a director of a firm of insurance brokers and also dealtextensively in shares. He had a number of accounts with different banks:one of these was with the plaintiffs. In April, 1972, Mr. Henry hadpermission to overdraw his account with the plaintiffs up to a limit of£3,000 and when he owed them £4,815, his limit was increasedto £6,500. He had purchased shares in public companies on a largescale and the rapid fall in prices beginning in 1972 caused him greatdifficulties. In September, 1972 his overdraft was £8,473 and whenit got to £9,753,he was warned by the plaintiffs that any chequesof his which put the overdraft above this wouldnot be paid. In October, 1972 the plaintiffs gave him a terra loan of£6,500 which was to be cleared in 3 years and warned him that hiscurrent account was to remain in credit. All his correspondence with theplaintiffs was from the house In Sandycove in his handwriting. InFebruary, 1973 be bad the full amount of the term loan outstanding andhis current account was £4,855 in debit. He continued to drawcheques on it and on the l4th of May, 1973 the plaintiffs marked anumber of his cheques “Refer to Drawer”. In May, 1973 heasked the plaintiffs to send all letters to him not to Sandycove but to71 Upper Leeson Street which was the address of the insurance brokers.He had deposit with the plaintiffs the share certificates relating tosecurities which he had purchased and in July, 1973, they threatened tosell them. He wrote to them offering a second mortgage on”my” house in Sandycove if they did not sell any of thesecurities for a period of two months. On 27th of July, 1973 Mr. Henrygave the plaintiffs a signed authority to the building society toforward the deeds of the property at Sandycove to his solicitors and onthesame day the plaintiffs wrote to Curneen O’Reilly & Co., Mr. Henry’ssolicitors, asking for their assistance in the completion of the secondmortgage. The solicitors got the title deeds from the society but inSeptember, 1973 they told the plaintiffs that the second mortgage”was not going ahead”. The society had consented to thesecond mortgage and the plaintiffs did not understand why it had notbeen completed. On the 18th of November, 1973 Curneen O’Reilly & Co.wrote to the plaintiffs that “they were unable to attend to thismatter further because of, pressure of work” and informing theplaintiffs that they were returning the documents to the society. On the31st of December, 1973 the plaintiffs got the deeds and the requisitionsmade in I964 from the society.
The plaintiffs sent the deeds to their legal department in Belfast withinstructions to prepare a second mortgage and a search was made in theRegistry of Deeds against Mr. Henry which did not disclose any acts byhim. The plaintiffs were not aware that in May, 1973 Mr. and Mrs. Henryhad separated, that she hadconsulted a firm of solicitors who advised her to take proceedingsagainst her husband for a declaration that she was the beneficial ownerof the house at Sandycove and for an order that he assign it to her. Shecontinued to live in the house at Sandycove and the plaintiffs’solicitors prepared the second mortgage which was by sub-demise for thewhole of the terms granted by the leases under which the property washeld less the last day. They did not make any inquiries or requisitionsof any kind and Mr. Henry executed the second mortgage to the plaintiffson the 22nd of January, 1974. On the same day Mrs. Henry beganproceedings against Mr. Henry for a declaration that she was thebeneficial owner of the house at Sandycove and for an order that hetransfer it to her. The plaintiffs first became aware of her claim onthe 17th of July, 1974 when her solicitors wrote to them. Mr. Henry didnot enter an appearance to the summons by his wife and on the 24th ofFebruary 1975, when I was a judge of the High Court, I made an orderdeclaring that he held the premises at Sandycove in trust for her andordering him to assign them to her, subject onlyto the mortgage to the society. The existence of the mortgage to theplaintiffs was not disclosed to me and I would not have made the order Idid without hearing them if I had been aware of it. The plaintiffs hadno notice of the application for judgment by the first-nameddefendant.
On 31st of July, 1975 the plaintiffs began these proceedings in whichthey claimed a declaration that under the second mortgage given to them,£22,650 was owing to them and was well charged on the estate andinterest of Mr. and Mrs. Henry and a declaration that their mortgageranked before her claim. Mr. Henry did not enter an appearance but hiswife contended that her interest was superior to that of the plaintiffsbecause they had constructive notice of her claim when the secondmortgage was executed. As all parties admit that the society’s mortgageof I969 ranks before the interest of the plaintiffs and of Mr. and Mrs.Henry, the society did not take any part in the action but submittedtheir rights to the Court.
It has not been suggested that the plaintiffs hadactual notice of Mrs. Henry’s interest and the whole debate has relatedto constructive notice. Neither Mr. Henry nor any solicitor or officialfrom the plaintiffs’ legal department in Belfast gave evidence at thehearing. The High Court Judge (Mr. Justice McWllliam) in the course ofhis judgment said:
“Two of the normal inquiries which would normally and, thereforeought reasonably to have been made are: “who is in the actualoccupation of the property?” and “is there any litigationpending or threatened in respect of the property?”. If theseinquiries had been made, the plaintiffs should have had notice of theposition or been given information which would have led to furtherinquiries as to it. As these inquiries were not made I hold that theplaintiffs are deemed to have notice of the interest of thewife”.
In the middle of the last century there were considerable differences ofopinion between judges in Ireland and England in relation to thedoctrine of constructive notice. Some judges wanted to extend it toprotect equitable interests: others wanted to restrictit to give certainty to titles. The law as to it is now stated in s. 3of the Conveyancing Act, 1882 but to understand this, it is necessary todeal with the pre-1882 position.
The most authoritative statement of the doctrine of constructive noticebefore the Act of 1882 is that of Lord Cranworth in Ware v. LordEgmont (1854) 4 De G McN&G 473:
“Where a person has actual notice of any matter of fact, there canbe no danger of doing injustice if he is held to be bound by all theconsequences of that which he knows to exist. But where he has notactual notice, he ought not to be treated as if he had notice, unlessthe circumstances are such as to enable the Court to say, not only thathe might have acquired it, but also that he ought to have acquired thenotice with which it is sought to effect him – that he would haveacquired it but for his gross negligence in the conduct of the businessin question”.
Before 1882 the question, where it was sought to affect a purchaser withconstructive notice, was notwhether he had the means of getting, and might by prudent conduct havegot, the knowledge in question, but whether his failure to obtain it wascaused by an act of gross or culpable negligence.
The relevant part of s. 3 of the Conveyancing Act, 1882 read:
“3(1) A purchaser shall not be prejudicially affected by notice ofany instrument, fact, or thing unless ”
a (i)it is within his own knowledge, or would have come to hisknowledge if such inquiries and inspections had been made as oughtreasonably to have been made by him; or
b (ii) in the same transaction with respect to which a question ofnotice to the purchaser arises, it has come to the knowledge of hiscounsel, as such or of his solicitor, or other agent, as such, or wouldhave come to the knowledge of his solicitor, or other agent, as such, ifsuch inquiries and inspections had been made as oughtreasonably to have been made by the solicitor or other agent
(3) A purchaser shall not by reason of anything in this section beaffected by notice in any case where he would not have been so affectedif this section had not been enacted”.
I confess that this section has always created considerable difficultiesfor me. Sub-s. 3 seems to have the effect that a purchaser after 1882 isnot affected by notice in any case where he would not have been regardedas having constructive notice before the Act of 1882 was passed. Thiswould suggest that the standard to be applied in determining whether apurchaser got constructive notice was that stated by Lord Cranworth inthe case which I have cited but the standard stated in s. 3 of the Actof 1882 is much wider than that of Lord Cranworth’s. The standard in s.3 is the prudent purchaser who has obtained competent legal advice whilethat stated by Lord Cranworth is that of gross negligence. Is then theeffect of s. 3 sub-s. 3 of the Act of 1882 to nullify the much widertest in s. 3 sub-s. 1? That — though it is the literal meaning— would be an absurdity and has never been suggested by any writersince the sectionwas passed.
None of the decided cases deals with the difficulty created by sub-s. 3of s. 3 of the Act of 1882 and so I turn to the recognised textbooks onthe subject. None of them refers to this difficulty but they areunanimous that a purchaser or mortgagee who omits to make such inquiriesand inspections as a prudent and reasonable purchaser or mortgageeacting on skilled advice would have made will be fixed with notice ofwhat he would have discovered if he had made the inquiries andinspections which ought reasonably to have been made by him.
In Wylie’s Irish Land Law (1975 edition) the question of constructivenotice is dealt with at pp. 103/101 and 6^3/644. At pp. 103/1O4 thispassage appears:
“The concept of constructive notice is really grounded upon thebasic principles of conveyancing. Here the guiding rule of thumb is caveat emptor. The onus is upon the purchaser to take propersteps to ensure that the transaction is carried out and its consequencesgo according to his plans. The risk is upon him if anything goes wrong.Upon this principle is based the concept of investigation of title whichis the purchaser’s responsibility. It is to this sort ofprocedure that s. 3(1) of the 1882 Act is referring when it speaks of”inquiries and inspections” which “ought reasonably tohave been made”. What these are in any particular case dependsupon the circumstances but in essence the general principle is what isregarded as the usual standard conveyancing procedures appropriate forsuch-a case If the purchaser does not carry these out he will be fixednevertheless with constructive notice of matters which carrying out suchprocedures would have brought to his notice ….. omissions tocarry out proper steps due to carelessness or negligence are also caughtby this rule”.
At pp. 643/644 this appears: “Furthermore, if the mortgagee failsto follow the usual conveyancing practice in connection with hismortgage, in particular, if he fail to make a proper investigation oftitle, he will again be fixed with constructive notice of what suchinvestigation would show”.
Section 3 of the Act of 1882 was repealed in England and replaced byalmost similar provisions in s. 199 of the Law of Property Act 1925. InMegarry and Wade’s “Law of Real Property” 4th edition (1975)the authorswrote at pp. 121/122:
“A purchaser accordingly has constructive notice of a fact ifhe”
(i) had actual notice that there was some incumbrance and a properinquiry would have revealed what it was
a (ii) deliberately abstained from Inquiry in an attempt to avoidhaving notice or
b (iii) omitted by carelessness or for any other reason to make aninquiry which a purchaser acting on skilled advice ought to make andwhich would have revealed the incumbrance”.
In Cheshires Modern Law of Real Property 12th edition (1976) under theheading of “constructive notice” notice the author writes(at p.64) that the test of constructive notice is what ought a prudentcareful man to do when he is purchasing an estate.
These passages are in accord with the remarks of Lindley M.R., a greatauthority on this subject, when giving the judgment of the Court ofAppeal in England in Bailey v. Barnes (1894) 1 Ch 25:
“Gross or culpable negligence in this passage (he was referring towhat Lord Cranworth had said in Ware v Lord Egmont (1854) 4 DeG McN&G 473) does notimport any breach of a legal duty for a purchaser of property is underno legal obligation to investigate his vendor’s title. But in dealingwith real property, as in other matters of business, regard is to be hadto the usual course of business; and a purchaser who wilfully departsfrom it in order to avoid acquiring a knowledge of his vendor’s title isnot allowed to derive any advantage from his wilful ignorance of defectswhich would have come to his knowledge if he had transacted his businessin an ordinary way. In the celebrated judgment of Vice Chancellor Wigramin Jones v. Smith ( 1 Hare 43) the cases of constructive noticeare reduced to two classes: the first comprises cases in which apurchaser has actual notice of some defect, inquiry into which woulddisclose others; and the second comprises cases in which a purchaser haspurposely abstained from making inquiries for fear he should discoversomething wrong. The Conveyancing Act, 1882 really does no more thanstate the law as it was but its negative form shows that a restrictionrather than an extension of the doctrine of notice wasintended by the Legislature”.
He then read s. 3 and went on to say:
“The expression “might reasonably” must mean might asa matter of prudence, having regard to what is usually done by men ofbusiness under similar circumstances”.
The test then is the prudent purchaser acting on skilled advice. Such apurchaser would certainly not abstain from inquiry in an attempt toavoid having notice. I propose therefore to adopt the standard of theprudent purchaser acting on skilled advice for no such man without legalqualifications would undertake the investigation of title to land.
As the husband Mr. Henry used moneys which belonged to Mrs. Henry in herown right to purchase the house at Sandycove, she had an equitableestate and interest in the house to the extent of that money and he wasa trustee for her. I do not think that it matters whether one calls herinterest “an estate” or “an interest”. Theeffect is the same. That estate arose in 1964 and was prior in point oftime to the plaintiffs’ interest in 1974. And so the plaintiffs wouldtake the interest which they acquired under their mortgage subject toMrs Henry’s equitable interest if they had constructive notice ofit.
The plaintiffs made no Inquiries about the title or other interests inthe property whatever when they took their mortgage. They relied on theanswers to the requisitions given to the building society in 1964.There was no evidence that they carried out any investigation of thetitle. They were prepared to take whatever interest in the property Mr.Henry had (to quote Mr. McCracken’s remark “warts andall”).
The standard to be applied is an objective one. The question is notwhether in the circumastances of the instant case the plaintiffs actedreasonably but whether a reasonable mortgagee would have acted in theway they did. As Mrs. Henry’s proceedings commenced on the 22nd ofJanuary, 1974, there must have been some correspondent in which thewife’s claim would have been asserted before that date and if thestandard requisition: “is there any litigation pending orthreatened affecting the property” had been made they would havediscovered that the wife was asserting the claim which she now makes.The fact that the solicitors who had acted for Mr. Henry on earliertransactions refused to act because of “pressure of work”created a difficulty for the plaintiffs but they could have insisted onMr. Henry coming to their office and answering thequestions himself. They did not in my opinion act as reasonablemortgagees would normally do atrt.
There was no discussion whatever as to whether the Bank acquired a legalinterest. I therefore do not express any opinion on the question whethertheir second mortgage by sub-demise given after a firs mortgage made inthe same way gave them a legal intere
In addition the onus of proving that the Bank were purchasers for valuewithout notice rests on then (Attorney General v. Biphosphated GuanoCo. 11 Ch. D. 327 at p. 337: In re Nisbet and Potts’Contract ( 1905 1 Ch. 391 at p. 4O2 and Heneghan v. Davitt 1933 I.R. 375 at p. 377 and at p. 379).
In my opinion, without taking into account the question of onus of proofthe evidence establishes that the plaintiffs had constructive notice ofMrs. Henry’s estate when they took their mortgage. When the burden ofproof is taken into account the plaintiffs have failed to establish thatthey took their mortgage without constructive notice of Mrs. Henry’srights.Counsel for the plaintiffs placed great reliance on the judgmentsdecision in Hunt v. Luck (1902) 1 Ch. 428, a decision of theCourt of Appeal in England. It is relevant only on the question whetherthe plaintiffs should have inspected the property and found out whetherit was occupied or not. I do not think that a mortgagee is bound toinspect the property on which he is taking a mortgage and the decisionis of no assistance on the ground on which I would decide thiscase.
The plaintiffs’ appeal accordingly fails and I would dismiss it.
Coffey v Brunel Construction Company
[1983] IR 36
Judge: HIGGINS, GRIFFIN J.
JUDGMENT delivered the 13th day of May 1983byO’ HIGGINSC.J. [HEDERHAN AGREEING]
In this case the Defendants have appealed against an Order made by Mr.Justice Barrington in the High Court that a Lis Pendens registered bythem against the interest of one Patrick Broughan in the lands comprisedin Folio 13847 County Cork be vacatfd. The facts are as follows.
On the 8th November 1979 the Plaintiffs agreed to purchase from PatrickBroughan, for the sum of £340,000, the lands comprised in Folio13847 of the Register for the County of Cork. Patrick Broughan wasregistered as full owner of these lands. The Plaintiffs duly paid thefull purchase money, and on the 7th December 1979 a Transfer wasexecuted by Patrick Broughan transferring his interest as registeredowner in the lands to thePlaintiffs. The Plaintiiffs were, in fact, purchasing this property onbehalf of a company named John A.wood Limited and, because it suited theinterests of this Company at the time, it was decided to delay theregistration of the Transfer. Th(c) instrument of transfer was not infact lodged for registration until the 25th February 1981. Earlier, onthe 9th May 1980, the Defendants commenced proceedings in the High Courtagainst Patrick Broughan seeking a declaration that he held the landscomprised in the Folio as trustee for them. On the same date theseproceedings were registered in the Land Registry as a Lis Pendensaffecting the interest of Patrick Broughan in folio 13847. Althoughinformed of the purchase and transfer of the lands to the Plaintiffs theDefendants declined to vacate the said Lis Pendens and accordingly theseproceedings were brought in the High Court seeking an Order of the Courtvacating the same. The Plaintiffs having succeeded in obtaining thisOrder in the High Court, this appeal has been brought by theDefendants.
The Defendants contend that the learned trial Judge was incorrect in theOrder he made and that the prior registration of the Lis Pendens had theeffect under the Registration of Title Act 1964,that,on the registration of the Transfer and of the Plaintiffs asregistered owners, the lands comprised in the Folio vested in thePlaintiffs subject to the Lis Pendens which was a registered burden.They rely in particular on two provisions of the Act. In the first placethey point be the provisions of Section 51 which deals with transfers bythe registered owner by means of an instrument of Transfer and which, insubsection (2), expressly provides that “until the transferee isregistered as owner of the land transferred, that instrument shall notoperate to transfer the land1.Accordingly they submit that the Transferexecuted by Patrick Broughan on the 7th December 1979 did not operate assuch to transfer or vest the lands in the Plaintiffs. They further saythat when the Plaintiffs were registered as owners the provisions ofSection 52(1)came into operation and while there was then vested in the Plaintiffs anestate in fee simple in the land, this was expressly made subject to”the burdens, if any, registered as affecting the land”, and theLis Pendens was such a burden. In my view, these submissions, whilecorrectly indicating the effect of the Sections relied on, do not meetthe true facts and issues which arise on this appeal.
Section 51(1) of the Act deals only with the effect of the instrument oftransfer and, as indicated, provides that until registration of thetransferee as owner, this instrument shall not operate to transfer theland. Here, however, the Plaintiffs have not to rely merely on thisinstrument. They had purchased the land pursuant to a contract and hadpaid over the full purchase money. There can be no doubt, therefore,that on the execution of the transfer by the registered owner which wasso executed on payment of the purchase money, the entire beneficialestate and interest in the lands passed to the Plaintiffs and theregisteredowner became a bare trustee for them. for them. The question, therefore,is whether the Plaintiffs’ rights, which arose prior to registration andprior to the registration of the Lis Pendens are to be made subject tothe Lis Pendens as a registered burden. In my view, this case is verysimilar to In re Strong 1940 I.R. 382, a decision of the formerSupreme Court. While In re Strong was decided under theprovisions of the Local, Registration of Title (Ireland) Act 1891 (theAct of 1891) and concerned a Judgment Mortgage which was registeredprior to the registration of a purchaser who had paid his full purchasemoney, it seems to me that the reasoning applies equally to the presentAct which is a consolidating measure and to a Lis Pendens registered asa burden prior to the registration of a transferee for value asregistered owner. I propose, therefore, to apply that reasoning to thepresent Act to the facts of this case.
In the first place, note should be taken of the provisions of Section 68of the Act. In subsection (1)of this Section it is provided that only the registered owner of the acharge thereon shall be entitled to transfer or to deal with the same.The Section goes on, in subsection (2), to provide as follows:
2 “(2) Nothing in this Act shall prevent a person from creatingany right in or over any registered land or registered charge, but allsuch rights-shall be subject to the provisions of this Act with respectto registered transfers of land or charges for valuableconsideration.
3 (3)An un-registered right in or over registered land (not being aburden to which the land is subject by virtue of Section 72) shall notaffect the registered owner of a charge created on the land for valuableconsideration.
The provisions of the Act with respect to registered transfers of landare contained in Section 52 which provides that on the registration of atransferee, there shall be vested in him an estate in fee simple in theland “subject to –
a (a)the burdens, if any, registered as affecting the land, and
(b) the burdens to which, though not so registered, the land issubject by virtue of Section 72, but shall be free from all other rightsincludingrights of the State”
These provisions of the Act are similar to those of Section 44(2) of the1891 Act which was in the following terms:
“(2)Nothing in this Act shall prevent a person from creating anyright in or over any registered land or registered charge, but any rightcreated or arising in relation to registered land after the firstregistration of the land shall not affect a registered transferee of theland or charge for valuable consideration, or the registered owner of acharge created in the land for valuable consideration unless that rightis either –
a (a)registered as a burden affecting the land, or
b (b)one of the burdens to which, though not registered, allregistered land is by this Act declared to be subject.”
In In re Strong O’Byrne J., who delivered the majority judgment of theCourt said at page 404, in relation to the meaning and effect of Section44(2) of the 1893 Act, as follows:
“The meaning and effect of subsection (2) of the foregoing Sectionseems to have been lost sight of in some of the earlier cases. It wasconsidered by this Court in Devoy v. Hanlon 1929 I.R. 246, andthe court (consisting .of Kennedy C.J., Fitzgibbon and Murnaghan JJ.)unanimously held that the Section recognised the creation of rights(including estates, interests, equities and powers see definition of”right” in Section 95) in the registered land, which do notappear upon the Register, and certain dicta in Pim v. Coyle 1907 1 I.R. 330, suggesting the contrary were disapproved of. Thereasons stated in the judgment seemed to be unanswerable, and no attemptwas made to question the decision.
Holding, then, that the decision in Devoy v. Hanlon correctlyexplains the effect of Section 44, it remains to be considered whetherthe interest of a person who has entered into a contract for thepurchase of registered land and has paid his purchase money is a ‘right’within the meaning of subsection (2) of the Section. Having regard tothe definition of ‘right’ contained in Section 95, it seems to me thatthe term was used in a very wide sense, and there is nothing in theSection to cut down or limit the general meaning. Such an interest mightreasonably be expected frequently to arise and the importance ofprotecting it cannot be questioned. It cannot fail, in my opinion, tohave been within the contemplation of the Legislature when the Sectionwas passed. It comes within the express terms of the Sectionand no good reason has been suggested for it from the operation of theSection.”
I think this reasoning applies with equal force to the provisions of thepresent Act which I have mentioned. It follows, therefore, in my view,that prior to the lodging of the instrument of transfer with the LandRegistry, there had been created by the registered owner, PatrickBroughan, pursuant to Section 68(2) a right in favour of the Plaintiffsvesting in them the full beneficial interest in the land.
The next question which arises is whether this right is superior to thatof the Defendants. The Plaintiffs’ right, arising from their contractand payment of purchase money would not survive against the rights of aregistered transferee of the lands but the Defendants are not such. Norwould it survive against a charge for valuable consideration, but a LisPendens is not such. The Lis Pendens is, however, a burden registered onthe Folio under Section 69 of the Act. In accordance with Section 74 aregisteredburden fits priority from tine date of its entry on the Register overlater registered burdens and always ranks over unregistered burdensirrespective of their date of creation (except such as come underSection 72). This priority applies, however, only between burdens assuch and what is or may be registered as a burden is set out in Section6.9. It is clear in this case, as it was in In re Strong, inrelation to the similar provisions of Section 45 of the 1891 Act, thatthe Plaintiffs’ rights arising from the Contract and the payment of thefull purchase money could not have been registered as a burden underSection 69. These rights are, therefore, not affected by any prioritygiven to such burdens under Section 74. The Defendants’ Lis Pendens as aregistered burden would be entitled to its due priority over otherburdens but not over the right of the Plaintiffs which arose earlier andwhich is not a “burden”.
What I have said is no more than an application to the Issues in thiscase of the reasoning containedin the judgment of O’Byrne J. in In re Strong. What is theconclusion? The Plaintiffs herein seek the rectification of the Registerby the vacation of the Lis Pendens. They do so on the grounds that atthe date hi its registration Patrick Broughan had no interest in thelands. On that date, which is the critical date, Patrick Broughan hadcreated in favour of the Plaintiffs a right which vested in them theentire beneficial estate in the lands. The provisions of Section 5l(2)to the effect that “until the transferee is registered as owner ofthe land, transferred, that instrument (the Transfer) shall not conferon the transferee any estate in the lands” deals only with the effect ofthe transfer and prevents any estate or interest being conveyed by theTransfer until registration. As O’Byrne J. said at page 407 in In reStrong in relation to the similar provisions of Section 44(2) ofthe 1891 Act:
“It would, in my opinion, be going beyond the provisions of theSection, and would be inconsistent with Section 44 subsection (2)hold that no unregistered right can be created in the registered land Itis not the transfer which is relied upon by the Appellant, but theContract for Purchase, coupled with the payment of the purchasemoney.”
I am, therefore, of the view that at the date of the registration of theLis Pendens Patrick Broughan had no estate or interest in the land-s.Accordingly, in my view, the registration of the Lis Pendens should bevacated.
I would dismiss this appeal.
Power v Allen
[2003] IEHC 612
Mr. Justice Murphy
Conveyancing practice in relation to registered land is, in theory, simpler than the procedure in relation to unregistered land. However it is based on the same principle of transferring a good title from vendor to purchaser. If any weak links in title are overlooked a purchaser solicitor may be negligent. SeePilkington v. Wood (1953) Ch770.
Defects in title can be classified under three convenient but overlapping categories.
First there are those defects which affect the ownership of the vendor. While this may be discovered on investigation of title, the vendor has a duty to disclose such defects. One of the examples given in the text book is where the vendors title depends on adverse possession and the proof of extinction of the earlier title cannot be proved.
Secondly, the inability of the vendor to convey free from encumbrances such as easements renders the title defective if not fully disclosed. Such defect binds the purchaser. In such case it may be in the vendors best interest to disclose matters (see Farrand on Contract and Conveyance, (4th ed. 1983 p. 65).
Finally, where the property sold is leasehold, any onerous or unusual covenant in the lease and the services of notices must be disclosed.
Lindley L.J. inScott and Alvarez’s Contract, Scott v. Alvarez (1895) 2 Ch. 603 at 613 referred to bad titles in the following terms:
“There are bad titles and bad titles; bad titles which are good holding titles, although they may be open to objections which are not serious, or bad titles in a conveyancer’s point of view, but good in a businessman’s point of view.”
A “holding title” is one which looks back to the origin of ownership, namely possession. The expression envisages, in Farrand’s view, at 91, a doubtful title or one suffering from a merely technical defects, under which there has been undisturbed possession. This becomes a “good holding title” if the possession is likely to continue to be undisturbed. Indeed possession can become not just a good holding title but a good title in its own right if sufficient evidence of the defeated ownership is forthcoming.
Indeed Jessel MR inLysaght v. Edwards (1876) 2 Ch D 499 at 507 held that ” … however bad the title may be the purchaser has a right to accept it … ” However, until a holding title (whether or not a “good holding title”) becomes a good title it will not be enforced on a reluctant purchaser under an open contract.
Where there are special conditions, as in this case, the purchaser takes subject to those conditions.
The investigation of title made on the purchasers” behalf by the purchasers” solicitor gives the purchaser protection within the ambit of the contract. If a defect in the vendor’s title is missed then the purchaser is entitled to a remedy, infrequently against the vendor for breach of covenant for title but, more commonly, against his solicitor for professional negligence.
The plaintiff, in any event, is under a common law duty to take all reasonable steps to mitigate any loss. However, a solicitor who has negligently investigated title cannot compel a plaintiff client to mitigate his damages by pursuing the alternative remedy under breach of covenant for title. In Pilkington v. Wood (1953) 2All E.R. 810 at p. 813G, Harman J. stated:
“I am of the opinion that the so-called duty to mitigate does not go so far as to oblige the injured party, even under an indemnity, to embark on a complicated and difficult piece of litigation against a third party. The damage to the plaintiff was done once and for all directly the avoidable conveyance to him was executed. This was the direct result of the negligent advice tendered by his solicitor, the defendant, that a good title had been shown, and, in my judgment, it is no part of the plaintiffs duty to embark on the proposed litigation to protect the defendant from the consequences of his own carelessness.”
Pilkington concerned an action for damages for the negligence of the defendant while acting as solicitor for the plaintiff in connection with the purchase by the plaintiff of certain freehold premises. The defendant failed to advise the plaintiff that there was a defect in the vendor’s title in that the premises had been part of trust property under a will of which the vendor was a trustee and the abstract of title showed that the vendor had purchased it, through intermediaries, from himself and the other trustees. Later, the plaintiff entered into a contract to sell the premises but, on finding the defect in the title, the purchaser refused to complete. The plaintiff thereupon brought an action for damages against the defendant.
The measure of the solicitor’s liability was the difference, at the time of the conveyance to him, between the value of the property with a good title and its value with the defect. Other items claimed which were not such as might reasonably be supposed to have been in the contemplation of the parties as liable to result from the solicitors negligence were too remote.
Even in the case of an open contract where parties have shaken hands on price they will still trust their solicitors to do everything necessary to protect them against traps and pitfalls that beset the completion of sales of real property: seeBlack v. Kavanagh (1974) 108I.L.T.R. 91 at pp. 94/96, per Gannon J. (see Farrell, Irish Law of Specific Performance, (1st ed. 1994) page 120 paragraph 5.19.)
The general duties of a solicitor are to act on his client’s behalf and to give legal advice to such client in accordance with his contract of retainer. Where a solicitor is acting for a number of clients with a similar interest, his retainer is with each individually. As in all relationships involving a duty of care, solicitors are bound to exercise a reasonable degree of care, skill and knowledge in all legal business that they undertake. See Jackson and Powell Professional Negligence, (4th ed., 1997), Chapter 4.
InRoche v. Peilow [1986] I.L.R.M. 189 Henchy J laid down the standard to be expected of a solicitor:
“The general duty owed by a solicitor to his client is to show him the degree of care to be expected in the circumstances from a reasonably careful and skilful solicitor. Usually the solicitor will be held to have discharged that duty if he follows a practice common among the members of his profession … But there is an important exception to that rule of conduct … and a person cannot be said to be acting reasonably if he automatically and mindlessly follows the practice of others when by taking thought he would have realised that the practice in question was fraught with peril for his client and was readily avoidable or remediable.” At pp. 196 and 197.
InKehoe v CJ Son [1992] I.L.R.M. 282 the plaintiffs were advised by their solicitor that they were purchasing a yearly tenancy which was “as good as freehold” since they had the legal right to acquire the freehold at a reduced sum. In fact, this was not possible without having the premises revalued, an exercise which involved considerable additional expense. The failure to advise as to the implications of purchasing the freehold was held to constitute negligence on the part of the managing clerk who was dealing with the matter.
InPilkington v. Wood [1953] Ch 770 the purchase price was treated as the market value at the date of breach resulting in a detective title. Damages were assessed as the difference between the market value with a good title and the value subject to a defect in title.
Where there is a defective purchase the valuation method may be the difference between the valuation of good and of defective title, the loss on resale or the cost of cure. In addition damages may be awarded for inconvenience. See Flentley and Leech,Solicitors Negligence (1st ed. 1999) paragraphs 8.72 to 8.81.
9.1 The contract between the parties was for an exchange of lands and a consideration of £3,500 payable by the plaintiffs. The closing date was the 1st September, 1991. There were three parcels one of which was to go to the second named plaintiff in respect of which, eventually, the full consideration was attributed.
The approach to the land was through an old road over an old prefabricated bridge and into the site which led to some eight cottages and two harbours. The distance from the main road to the pier on one of the harbours was approximately three miles. As the site, a deserted village was not lived in for upwards of 40 years, rights of way to it and through it were unclear and, to some extent, overgrown. Indeed the rights of way agreed on between the parties and mapped by Mr. Mannion, the engineer, appear to have passed over commonage of which the vendor was an owner in common. A problem arose with regard to how best to include these rights of way in the transfer to the plaintiff. The right of way seemed also to pass over third party land.
The contract for sale contained a number of special conditions. Reference has already been made to condition 7 thereof.
What transpired some ten years later after proceedings issued was the registration of the plots without the rights of way and the transfer of possessory title rather than absolute title. The contract required documents to enable the purchaser and his daughter to register themselves as absolute owners.
9.2 In the meantime the property was put up for sale in 1995 and attracted publicity nationally and, indeed, internationally. Indeed, as publicity continued the asking price increased. Unfortunately there were no bids at the auction nor, indeed, any queries to the defendant who continued to act for the plaintiffs.
It is not possible to describe the effect of difficulties in title. Neither is it possible to say whether price was a factor. Relationships with adjoining land owners, and the then recent Circuit Court proceedings may also have been a factor. It does not seem to the court that the delay in registering title caused any loss.
No doubt had there been a sale — even at a reduced price — much hardship could have been avoided in terms of the living conditions of both plaintiffs and the schooling of the second named plaintiff. It is to the credit of the plaintiff that these difficulties were overcome and that the second named plaintiffs succeeded, albeit after repeating her Leaving Certificate, to get the points which she required for university. I have every sympathy with a parent, on his own, attempting to fund education courses abroad to enable his daughter do better in a language. There may indeed, have been no other source of funds and it may not have been thought proper or possible to raise money on the security of the lands. But it does not seem to me, whatever the delay up to 1995, that these were attributable to the defendant. Even if this were not so, it is clear that the defendants did not know that this was a loss emanating from the delay in registering the transfers according to the contract. Indeed, it seems, that the agreement with Mr. O’Donnell regarding the water which was being dealt with shortly prior to the auction itself, constituted a further negotiation and caused confusion in the maps in relation to a contract which had already been executed.
9.3 Four years later a Mr. Derycker, who gave evidence to the court, expressed an interest in acquiring the lands for a sum of £850,000 subject to good title, as he had learned, he said, that there were some problems with regard to title which led to the land not being sold in 1995 by auction.
The correspondence between Mr. Derycker and Mr. Power had been fully opened and commented on. His letter of the 7th February, 2000 purports to be an offer, subject to title, for that sum. This is followed, some two months later, on 18th April, 2000 by a withdrawal of the offer. This is the basis on which the plaintiffs say is the measure of their loss because of the delay in registering their title and registering it without the rights of way and without absolute title.
Mr. Derycker, in his evidence to this court, says that he was willing to pay that sum for the property. He believed that he could build a substantial residence for himself, at least, if not develop the site further. If he had an assurance with regard to title — a certificate of title, for example — he would have then instructed a solicitor and a planning consultant. However the matter had not proceeded to that stage and he had not had the benefit of either legal or planning advice. Mr. Derycker came across as a confident and competent business man. It is clear from his evidence that he would not allow himself be bound into a contract where he could not develop the land (assuming that his solicitor was satisfied with title) as he had planned. This he had expressed in his letter of 22ndNovember, 1999. He would have taken such advice. The original asking price was £1,200,000. That was then reduced to £950,000. It was on this basis that he made an offer for £850,000.
Under cross examination he said that he would have had a solicitor before committing himself. He also said he would have had expected his acceptance to be subject to planning. It was the only property which he saw.
In his letter of the 7th February, 2000 he had stated: “and, of course, as you said if there is no good title we cannot buy it”. It never occurred to him to get an Irish solicitor to look at the documents. It was not up to him to sort out the paper mess. He had confidence in Mr. Power sorting it out. He said he would not be bound if there was no proper deed.
He said that Mr. Power did not tell him about the title problem (Ms. Bradley had reported back to him on 30th January, 2000 regarding problems of title). He said that he wrote the letter of the 18th April, 2000 to terminate the offer.
If the valuation were half of what he had offered to pay he would have felt foolish. He had made the bid on the basis of information available. To him it was a commitment and never his intention to change the price.
Mr. Derycker expressed himself as a decisive person who was committed with regard to the price he offered. That, however, was based on planning for what he wanted and, of course, title.
It does not seem to me that from a legal point of view that had title alone when resolved — and Mr. Fitzgibbon has told the court that it could be done as a routine part of conveyancing for which he would make no extra charge, it seems to this court that there was not an enforceable contract inherent in Mr. Derycker’s letter of the 7th February, 2000.
From Mr. Power’s point of view, given the history of delay, it must be assumed that he was concerned about Mr. Derycker’s requiring an assurance regarding title. One would have expected him to alert Mr. Flanagan, or indeed Ms. Bradley to the necessity of making good title if Mr. Power did not want, at that stage, to involve Mr. Allen anymore.
9.4 Whatever complication arose because of the exchange and the undertaking given by the solicitor for the vendor (who was also, of course, a purchaser) this did not justify the delays in and extent of the property registered. There was a contract in respect of rights of way. There was also an agreement with regard to the registration of absolute title. Neither of these particulars were known to Mr. Derycker who had not investigated nor, indeed, been told of difficulties in title.
It seems to this court that the delays cannot be justified: a contract with a closing date in January 1991 should have been registered, even allowing for the delays in registering a transfer by way of exchange, within a reasonable period from that date. It also seems clear that the statutory declaration and the maps should have been dealt with more expeditiously.
9.5 There is some dispute between the conveyancing experts with regard to how the matters could be resolved. Ms. Bradley believes that the grant of the right of way should be obtained and registered. Mr. Fitzgibbon, on the other hand, believes that a statutory declaration, in a more comprehensive form, should suffice. Both positions were justifiable. According to the contract there was to have been a grant. If the lands were to be developed commercially then one would prefer a grant. However land such as the subject matter of a contract abutting on commonage and having a pier to which there was some rough access for the public is not urban commercial land. The practical solution in the circumstances to avoid difficulties may be to proceed by way of statutory declaration. Whether that can be registered or not is another matter.
It does seem to me that the solicitor for the purchasers — the defendants in this case — should have advised the plaintiffs of the options as difficulties arose. It could very well have been a matter of walking away from a contract — as Mr. Fitzgibbon suggested — or making the best of what was available. It is clear that Mr. Power was concerned about adjoining owners when he bought Toombeola and was aware of resentment and obstruction which led to the Circuit Court proceedings.
The evidence of the defendant and of Ms. Helena McGrath was that the right of way granted could be registered but for a misunderstanding with the land registry.
Mr. Fitzgibbon’s evidence was that this was not necessary.
However, it appeared clear from the evidence that part of the right of way is over the commons and another part is over lands owned by a Mr. McDonagh.
Difficulties arose in relation to the public right of way which could have been resolved before the death of the vendor, Mr. O’Donnell on 12th July, 1999, by way of statutory declaration.
Though the delay was largely caused by the solicitors for the vendor, notwithstanding, the eighteen letters (including threats to report to the Law Society) the responsibility must be with the purchasers solicitor to register the transfers expeditiously even where there was no particular pressure to do so.
While it is unlikely that outstanding matters would have deterred prospective purchasers at the date of the auction on 26thJuly 1995 the same might not be said in 2000 when Mr. O’Donnell had died.
9.6 Mr. Power, having met Mr. Allen on 28th February 2000 after Mr. Power had received the report on title, on 31st January, 2000 then asked Mr. Allen on 13th March 2000 and 3rd April, 2000 to certify the title.
Mr. Derycker purported to make an offer on 7th February 2000 and indicated that he was not proceeding on 18th April 2000. On 29th May the short report on title was sent to Mr. Allen.
I accept the defendants evidence that had he been informed of that prospective sale he would have taken immediate steps to complete the outstanding matters and proceed by way of special conditions as were included in the draft contract of July, 1995.
I accept the defendants submissions that the letter of 8thFebruary, 2000 could not be enforced against. It is clear from his letter of 22nd November, 1999 and from his evidence to the court that he was concerned about planning permission.
9.7 I cannot accept the defendants argument in relation to the Statute of Frauds pleaded at paragraph 22 of the Defence.
Assurances had been given that registration would be completed and, indeed, were partly completed on 30th November, 2001 after pleadings issued on 8th January, 2001.
The issue regarding time is not that of the date of the contract but of discoverability. InDW Moore & Co Ltd v. Ferrier and Others(1988) I All E.R. 400, time ran from the date of a negligently drafted contract. That is not the case pleaded here. Damage became manifest at the time of the receipt by the plaintiff of the report on title in January 2000. (See Hegarty v. O’Loughran [1990] IR 148 andO’Donnell v. Kilsaran Concrete Limited and Another [2002] 1I.L.R.M. 551.
The plaintiffs were then aware of the deficiencies in their title.
9.8 The defendants were under an obligation to, and owed a care towards, the first named plaintiff under the contract of retainer to transfer a good saleable title as provided by the contract for sale.
That obligation extended to the second named plaintiff, who was a minor, for whom the defendant subsequently agreed to act.
The defendant was in breach of such duty of care in relation to
• – undue delay in procuring the registration of the several premises
• – failing to procure the registration of the rights of way and of absolute title as provided for in the contract and
• – failing to advise the plaintiffs of the progress and difficulties with regard to maps rights of way and statutory declarations.
9.10 A defence of contributory negligence had been raised. Even if it were established that Mr. Power had himself negotiated with Mr. O’Donnell after the contract was executed and marked maps which had been prepared by the engineer, the defendant ought to have advised of such variation being outside the contract of the title, difficulties that this would create and of the necessity of having the engineer produce a map.
9.11 The plaintiffs are in possession. Blaithin Power is a purchaser for value and it may be possible for Patrick Power to register the rights of way and absolute title on the basis of statutory declarations without the necessity of a grant from third parties.
Whatever investment was made by Mr. Power in repairing the bridge and the road: as seen from the more recent photographs taken by several witnesses with regard to the rights of way it is clear that the expected increase in value has been considerable. The value of the lands exchanged and the consideration in respect of Blaithin Power’s portion is but a tiny fraction of the asking price four years later in 1995 and even smaller in relation to the offer of £850,000 by Mr. Derycker in 2000. Evidence on valuation, having regard to the possible planning permission available, does not justify those valuations. However it is clear that the lands are, and remain, valuable and that the plaintiffs are in possession of the lands.
9.12 The court is not satisfied that the offer by Mr. Derycker is evidence of value of the property with title registered in conformity with the contract. There has been no satisfactory evidence of the value of the property as currently registered. Taking its present user there may be no significant difference.
The court does not accept, on the evidence, that there was an enforceable contract between Mr. Power and Mr. Derycker. Even if there had been steps taken to cure the defects enumerated by Ms. Bradley, Mr. Derycker still required some assurance regarding the building of a large dwelling. In any event Mr. Power did not appear to have accepted Mr. Derycker’s purported offer.
9.13 If is difficult to ascertain from the evidence what difference in value there is between the present registered title and that contracted for.
It would seem that the measure of damages is the cost of curing that difference. The underlying value of the land, on the evidence, has increased significantly even if there is some evidence of values decreasing marginally in the past year.
The plaintiffs are entitled to the costs of curing these defects which have not been quantified.
They are also entitled to the cost of investigation and report on title in the sum of £400 actually discharged by Mr. Power.
Damages particularised in paragraph 8 of the amended statement of claim were not notified to the defendants before proceedings issued and are, in any event too remote. There is insufficient evidence that they resulted from the breach.
The claims which overlap with claims in other litigation where there has been a full and final settlement cannot be entertained by the court.
Crowley v Flynn
[1983] ILRM 513
Mr. Justice Barron
13th day of May, 1983.
The contract for sale in this case is dated the 7th of August, 1979. Thequestions raised in the summons related to a leasehold interest in theproperty in sale which was vested in Maud Robb at the date of her death.She died on the 15th of May, 1946 having by her last will dated 4thMarch, 1943 bequeathed this interest to her executor and trustee GeorgeRobb upon trust for sale and to hold the proceeds of sale as to 2/16th’sfor himself and as to 7/16th’s for her daughter Adelaide Maud McCourtand as to the remaining 7/16th’s for another daughter Rosalind MabelEdith Webb. George Robb obtained a Grant of Probate on the 11th of July1946. He diedon the 24th of August, 1978 and Letters of Administration de bonis nonwere obtained by the deceased’s two daughters on the 20th of March,1981.
The purchaser has refused to accept title from the administratices debonis non. He contends that no power of sale has been shown to subsistbecause no reason has been given for the exercise of such power bypersonal representatives after the lapse of 33 years. He furthercontends that the delay has been such that an assent to theestablishment of the will trusts should be inferred. The purchaser insupport of his first contention relies upon in re Molyneux andwhite 13 L.R.I. 382 which was affirmed at 15 L.R.I. 383. In thiscase it was held that a delay of more than 20 years creates apresumption that all the testator’s debts have been paid and puts apurchaser on enquiry as to the purpose of the sale.
Against this contention, the vendor submits that an executor is alwaysentitled to sell for the purpose of distribution of the assets amongstthe beneficiaries and relies upon in to Norwood and Blake’scontract 1917, 1 I.R. 472. He further submits that apurchaser would in any event be protected by the provisions of section51 of the Succession Act 1965. Section 51 (1) of the Succession Act 1965is as follows:
“The purchaser from the personal, representative of a deceasedperson of any property, being the whole or any part of the estate of thedeceased, shall be entitled to hold that property freed and dischargedfrom any debts or liabilities of the deceased, except such as arecharged otherwise and by the will of the deceased, and from all claimsof the persons entitled to any share in the estate, and shall not beconcerned to see to the application of the purchase money”.
Where there has been a lapse of at least 20 years from the date ofdeath, in re Molyneux and White is an authority for theproposition that a purchaser is put upon enquiry. In my view, this meansthat the vendors, selling as personal representative, must satisfy thepurchaser that he has power to sell as such. In Somers .v. W. 1979 I.R. 94, it was held by the Supreme Court that the definition ofthe word purchaser as being somebody who acquired in good faith put suchperson on notice of all matters which would have come to the knowledgeof the purchaser’s solicitor if such enquiries had been made as oughtreasonably to have been made in the particular sale. The word purchaseris defined in the Family Home Protection Act 1976as follows:
“the word purchaser means a grantee, lessee, assignee, mortgagee,chargeant, or other person who in good faith acquires an estate orinterest in property”
The word purchaser is defined in the same terms in the Succession Act 1965with the addition of the words “for valuable consideration”,which for the purpose of the present case add nothing to the definition.There is nothing in section 51 of the Succession Act 1965nor in Section 19 of the Administration of Estates Act 1959which it replaces which suggests that a purchaser is never to be uponenquiry. It follows that, if more than 20 years has elapsed since thedate of death of the testator, there is nothing in the section tonegative the rule in re Molyneux and White so that a purchaseris still put on notice to enquire the reason for the sale and if hefails to make such enquiry is bound with notice of what he would havediscovered.
The only evidence as to the reason for the delay in the present case iscontained in a letter dated the 11th of June, 1980. This letter suggeststhat administration of the estate of Maud Robb was deliberatelypostponed by the executor withthe consent of the beneficiaries. However the letter also shows thatrents were divided between the persons entitled under the will trusts. Ido not consider that this resume of the facts is sufficiently clear toabsolve the purchaser from further enquiry. It seems to me that suchevidence of events from the death of the testatrix until the presenttime as there is shows no more than that the beneficiaries under thetrust for sale received the rents in accordance with the shares to whichthey were entitled. This prima facie suggests that the trust for salewas being operated. If there is doubt on the facts, then the purchasershould not be forced to take a title dependent upon such doubt.
The present sale is not to provide for the payment of debts of thedeceased. In so far as it is for the distribution of the assets amongthe beneficiaries, this is not something which the executor is requiredto do. His duty was to transfer the assets to the will trustee, albeithimself, and it was for him in this latter capacity to distribute theassets. On this basis, there is no ground either for the exercise of apowerof sale by the personal representative.
The purchaser’s second submission is that an assent to the establishmentof the trust for sale should be inferred. Whether or not such inferencecan be drawn is dependent upon the facts. See George Attenborough& Son .v. Solomon 1913 A.C. 76, which enunciates this principleand Wise .v. Whitburn 1924 1 Ch 460, a case in which theinference was drawn. Having regard to the lapse of time since the deathof the testatrix and the facts which are known, it seems reasonable toinfer that an assent was given to the establishment of the will trust.Even if I am wrong in this view as to the proper inference to be drawnfrom the delay and from the other evidence available, there would in myview be sufficient doubt as to this to make it unreasonable to requirethe purchaser to accept the title.
In the circumstances, I accept the contentions made on behalf of thepurchaser and I will declare that a good title to the hereditaments hasnot been shown in accordance with the particulars and conditions ofsale.
Northern Bank Ltd v Henry and Others
[1980] 4 JIC 1701, 1980 WJSC-SC 1545
Supreme Court (Ireland)
Henchy J., KENNY J.:, PARKE J.,
It has not been suggested that the plaintiffs had actual notice of Mrs. Henry’s interest and the whole debate has related to constructive notice. Neither Mr. Henry nor any solicitor or official from the plaintiffs’ legal department in Belfast gave evidence at the hearing. The High Court Judge (Mr. Justice McWllliam) in the course of his judgment said:
“Two of the normal inquiries which would normally and, therefore ought reasonably to have been made are: “who is in the actual occupation of the property?” and “is there any litigation pending or threatened in respect of the property?”. If these inquiries had been made, the plaintiffs should have had notice of the position or been given information which would have led to further inquiries as to it. As these inquiries were not made I hold that the plaintiffs are deemed to have notice of the interest of the wife”.
In the middle of the last century there were considerable differences of opinion between judges in Ireland and England in relation to the doctrine of constructive notice. Some judges wanted to extend it to protect equitable interests: others wanted to restrict it to give certainty to titles. The law as to it is now stated in s. 3 of the Conveyancing Act, 1882 but to understand this, it is necessary to deal with the pre-1882 position.
The most authoritative statement of the doctrine of constructive notice before the Act of 1882 is that of Lord Cranworth in Ware v. Lord Egmont (1854) 4 De G McN&G 473:
“Where a person has actual notice of any matter of fact, there can be no danger of doing injustice if he is held to be bound by all the consequences of that which he knows to exist. But where he has not actual notice, he ought not to be treated as if he had notice, unless the circumstances are such as to enable the Court to say, not only that he might have acquired it, but also that he ought to have acquired the notice with which it is sought to effect him – that he would have acquired it but for his gross negligence in the conduct of the business in question”.
Before 1882 the question, where it was sought to affect a purchaser with constructive notice, was not whether he had the means of getting, and might by prudent conduct have got, the knowledge in question, but whether his failure to obtain it was caused by an act of gross or culpable negligence.
The relevant part of s. 3 of the Conveyancing Act, 1882 read:
“3(1) A purchaser shall not be prejudicially affected by notice of any instrument, fact, or thing unless ”
a (i)it is within his own knowledge, or would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him; or
b (ii) in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his counsel, as such or of his solicitor, or other agent, as such, or would have come to the knowledge of his solicitor, or other agent, as such, if such inquiries and inspections had been made as ought reasonably to have been made by the solicitor or other agent
(3) A purchaser shall not by reason of anything in this section be affected by notice in any case where he would not have been so affected if this section had not been enacted”.
I confess that this section has always created considerable difficulties for me. Sub-s. 3 seems to have the effect that a purchaser after 1882 is not affected by notice in any case where he would not have been regarded as having constructive notice before the Act of 1882 was passed. This would suggest that the standard to be applied in determining whether a purchaser got constructive notice was that stated by Lord Cranworth in the case which I have cited but the standard stated in s. 3 of the Act of 1882 is much wider than that of Lord Cranworth’s. The standard in s. 3 is the prudent purchaser who has obtained competent legal advice while that stated by Lord Cranworth is that of gross negligence. Is then the effect of s. 3 sub-s. 3 of the Act of 1882 to nullify the much wider test in s. 3 sub-s. 1? That — though it is the literal meaning — would be an absurdity and has never been suggested by any writer since the section was passed.
None of the decided cases deals with the difficulty created by sub-s. 3 of s. 3 of the Act of 1882 and so I turn to the recognised textbooks on the subject. None of them refers to this difficulty but they are unanimous that a purchaser or mortgagee who omits to make such inquiries and inspections as a prudent and reasonable purchaser or mortgagee acting on skilled advice would have made will be fixed with notice of what he would have discovered if he had made the inquiries and inspections which ought reasonably to have been made by him.
In Wylie’s Irish Land Law (1975 edition) the question of constructive notice is dealt with at pp. 103/101 and 6^3/644. At pp. 103/1O4 this passage appears:
“The concept of constructive notice is really grounded upon the basic principles of conveyancing. Here the guiding rule of thumb is caveat emptor. The onus is upon the purchaser to take proper steps to ensure that the transaction is carried out and its consequences go according to his plans. The risk is upon him if anything goes wrong. Upon this principle is based the concept of investigation of title which is the purchaser’s responsibility. It is to this sort of procedure that s. 3(1) of the 1882 Act is referring when it speaks of “inquiries and inspections” which “ought reasonably to have been made”. What these are in any particular case depends upon the circumstances but in essence the general principle is what is regarded as the usual standard conveyancing procedures appropriate for such-a case If the purchaser does not carry these out he will be fixed nevertheless with constructive notice of matters which carrying out such procedures would have brought to his notice ….. omissions to carry out proper steps due to carelessness or negligence are also caught by this rule”.
At pp. 643/644 this appears: “Furthermore, if the mortgagee fails to follow the usual conveyancing practice in connection with his mortgage, in particular, if he fail to make a proper investigation of title, he will again be fixed with constructive notice of what such investigation would show”.
Section 3 of the Act of 1882 was repealed in England and replaced by almost similar provisions in s. 199 of the Law of Property Act 1925. In Megarry and Wade’s “Law of Real Property” 4th edition (1975) the authors wrote at pp. 121/122:
“A purchaser accordingly has constructive notice of a fact if he”
(i) had actual notice that there was some incumbrance and a proper inquiry would have revealed what it was
a (ii) deliberately abstained from Inquiry in an attempt to avoid having notice or
b (iii) omitted by carelessness or for any other reason to make an inquiry which a purchaser acting on skilled advice ought to make and which would have revealed the incumbrance”.
In Cheshires Modern Law of Real Property 12th edition (1976) under the heading of “constructive notice” notice the author writes (at p.64) that the test of constructive notice is what ought a prudent careful man to do when he is purchasing an estate.
These passages are in accord with the remarks of Lindley M.R., a great authority on this subject, when giving the judgment of the Court of Appeal in England in Bailey v. Barnes (1894) 1 Ch 25:
“Gross or culpable negligence in this passage (he was referring to what Lord Cranworth had said in Ware v Lord Egmont (1854) 4 De G McN&G 473) does not import any breach of a legal duty for a purchaser of property is under no legal obligation to investigate his vendor’s title. But in dealing with real property, as in other matters of business, regard is to be had to the usual course of business; and a purchaser who wilfully departs from it in order to avoid acquiring a knowledge of his vendor’s title is not allowed to derive any advantage from his wilful ignorance of defects which would have come to his knowledge if he had transacted his business in an ordinary way. In the celebrated judgment of Vice Chancellor Wigram in Jones v. Smith ( 1 Hare 43) the cases of constructive notice are reduced to two classes: the first comprises cases in which a purchaser has actual notice of some defect, inquiry into which would disclose others; and the second comprises cases in which a purchaser has purposely abstained from making inquiries for fear he should discover something wrong. The Conveyancing Act, 1882 really does no more than state the law as it was but its negative form shows that a restriction rather than an extension of the doctrine of notice was intended by the Legislature”.
He then read s. 3 and went on to say:
“The expression “might reasonably” must mean might as a matter of prudence, having regard to what is usually done by men of business under similar circumstances”.
The test then is the prudent purchaser acting on skilled advice. Such a purchaser would certainly not abstain from inquiry in an attempt to avoid having notice. I propose therefore to adopt the standard of the prudent purchaser acting on skilled advice for no such man without legal qualifications would undertake the investigation of title to land.
As the husband Mr. Henry used moneys which belonged to Mrs. Henry in her own right to purchase the house at Sandycove, she had an equitable estate and interest in the house to the extent of that money and he was a trustee for her. I do not think that it matters whether one calls her interest “an estate” or “an interest”. The effect is the same. That estate arose in 1964 and was prior in point of time to the plaintiffs’ interest in 1974. And so the plaintiffs would take the interest which they acquired under their mortgage subject to Mrs Henry’s equitable interest if they had constructive notice of it.
The plaintiffs made no Inquiries about the title or other interests in the property whatever when they took their mortgage. They relied on the answers to the requisitions given to the building society in 1964. There was no evidence that they carried out any investigation of the title. They were prepared to take whatever interest in the property Mr. Henry had (to quote Mr. McCracken’s remark “warts and all”).
The standard to be applied is an objective one. The question is not whether in the circumastances of the instant case the plaintiffs acted reasonably but whether a reasonable mortgagee would have acted in the way they did. As Mrs. Henry’s proceedings commenced on the 22nd of January, 1974, there must have been some correspondent in which the wife’s claim would have been asserted before that date and if the standard requisition: “is there any litigation pending or threatened affecting the property” had been made they would have discovered that the wife was asserting the claim which she now makes. The fact that the solicitors who had acted for Mr. Henry on earlier transactions refused to act because of “pressure of work” created a difficulty for the plaintiffs but they could have insisted on Mr. Henry coming to their office and answering the questions himself. They did not in my opinion act as reasonable mortgagees would normally do atrt.
There was no discussion whatever as to whether the Bank acquired a legal interest. I therefore do not express any opinion on the question whether their second mortgage by sub-demise given after a firs mortgage made in the same way gave them a legal intere
In addition the onus of proving that the Bank were purchasers for value without notice rests on then (Attorney General v. Biphosphated Guano Co. 11 Ch. D. 327 at p. 337: In re Nisbet and Potts’ Contract ( 1905 1 Ch. 391 at p. 4O2 and Heneghan v. Davitt 1933 I.R. 375 at p. 377 and at p. 379).
In my opinion, without taking into account the question of onus of proof the evidence establishes that the plaintiffs had constructive notice of Mrs. Henry’s estate when they took their mortgage. When the burden of proof is taken into account the plaintiffs have failed to establish that they took their mortgage without constructive notice of Mrs. Henry’s rights. Counsel for the plaintiffs placed great reliance on the judgments decision in Hunt v. Luck (1902) 1 Ch. 428, a decision of the Court of Appeal in England. It is relevant only on the question whether the plaintiffs should have inspected the property and found out whether it was occupied or not. I do not think that a mortgagee is bound to inspect the property on which he is taking a mortgage and the decision is of no assistance on the ground on which I would decide this case.
The plaintiffs’ appeal accordingly fails and I would dismiss it.
JUDGMENT OF PARKE J., delivered the 17th day of April 1980
I also agree that this appeal should be dismissed and I have little to add to the comprehensive judgments which have already been delivered, in which the facts and authorities have been so fully reviewed.
I would, however, like to make some observations upon what I consider to be the duty of a conveyancer who is investigating title on behalf of a purchaser or mortgagee.
This case provides a striking illustration of the necessity of assessing the extent of this duty by applying an objective test, rather than one which is subjective to the needs of a particular purchaser engaged in a particular transaction. In l974 the Bank were in urgent need of some kind of collateral security from Mr. Henry. He had only one thing to offer; a second mortgage on the house in Sundycove. In the circumstances the Bank were determined to take it, regardless of its quality, and they were anxious to get it as quickly as possible. They did not even wait to get the advice of a lawyer practising in this jurisdiction. They merely instructed the law agent in Belfast to complete the transaction with the least possible delay. In the situation in which they found themselves it could be said that from their own point of view they were both “prudent” and “reasonable”. This, however, in very far from saying that they were “reasonable and prudent purchasers” as the term is understood in the authorities on the doctrine of constructive notice or protected by Section 3 of the Conveyancing Act, 1882. To hold that they were would be to produce the unjust result that just because the Bank deliberately chose not to follow the ordinary and well established practise of a competent conveyancer, they could successfully defeat the unquestionable equitable right of Mrs Henry to be solo beneficial owner of the house, a right which ought to have become apparent if the title had been investigated in the normal way.
It is right to say that Mr. Barron, on behalf of the Bank, does not present his case in quite such an unpalatable way, but it seems to me that this is the inevitable consequence of his argument. Mr. Barron argues that a conveyancer’s duty is discharged if he examines the documents of title furnished to him; investigates any further documents and facts, the exister of which is disclosed by or way be inferred from, such title documents, and directs the proper searched and investigates any acts which may appear. He says that a conveyancer ought not to go outside the material furnished to him or that which is therein referred to and ought not further to make inquiries lest he inadvertently discovers something which might jeopardize his clients right to obtain a good title as a bona fide purchaser without notice.
I do not think that this statement fully exhausts the obligations of a competent and qualified conveyancer.
In my view such a conveyancer must also take account of any facts which are within his knowledge, even if not actually disclosed by the documents of title. He must then consider such legal principles as appear to apply to such facts. If the application of such principles raises a question in his mind as to the sufficiency of the title, it is his duty to resolve that question by raising the appropriate requisitions. It is, of course true that investigation of title shares a maxim with the art of cross-examination: do not ask on unnecessary question lest you receive a disconcerting reply. However, just as no cross-examination can be fully effective unless all the proper questions are asked, so, no investigation of title can be complete unless all the necessary questions are asked.
In the present case the Bank knew that the house in Sandycove was the Henrys’ matrimonial home. They had, at least, reason to suspect that Mr. Henry was no longer residing there. They did not know whether Mrs. Henry was still living in the house and they did not inquire.
Although the second Mortgage was granted prior to the enactment of the Family Homes Protection Act, l976, when
Having been alerted to the possible existence of such a claim, it is the duty of those investigating the title to dispose of it. It would not be right for me to attempt to suggest how this should have been done, because different conditions may apply to different case In the present case the standard requisition as to threaten litigation would have been sufficient because Mrs. Henry had already threatened proceedings. In other cases it might not. In some cases it might appear to the investigator that it was desirable to obtain evidence of the consent of the other spouse to sale. A requisition requiring vacant possession (on a sale) or evidence that there was no person in possession on any claim of right (on a mortgage) would have sufficed in the present case because Mrs. Henry was in possession but a spouse’s claim to an interest in the matrimonial home does not depend upon occupation, so this requisition might be ineffectual These matters are, however, largely academic, having regard to the provisions of the Family Homes Protection Act, 1976.
A conveyancer has not, of course, any duty to third parties, the existence of whom he may be unaware. His duty is exclusively to his own client.
He cannot, however, properly discharge that duty unless he can obtain for his client a title which will not be subsequently defeated by a third party whose right ought to have been discovered on proper investigation.
I would like to say that nothing in this judgment is intended to be, or should be interpreted as being a criticism of the staff of the Bank’s law department. I am sure that they are well qualified, competent and careful. I have no doubt that if this transaction had been presented to them in the normal way with a request fully to investigate the title of a proposed mortgagee they would either make all proper requisitions, or, perhaps, advised that the matter be referred to solicitors practising in this jurisdiction. In either event, I would think that the title would not have been accepted.
Tyndarius Ltd v O’Mahony & others
[2003] 3 JIC 0302,
Keane C.J.
Case History: Confirms [2002] IEHC 167The facts can be stated relatively shortly. The defendants had entered into a contract with the plaintiffs for the sale to them of a premises at 51/52 Thomas Street in Dublin. The contract refers to certain documents which clearly offered as the root of title to the property and they are set out in the schedule of documents, certain deeds of the 8th January 1912, and 10th March 1920 relating to the freehold interest and then documents relating to the leasehold interest and two other documents. Those were the only documents of title which were available to the purchaser at the time they signed the contract. However, it emerged before the sale could be closed. the defendants” solicitors wrote to the plaintiffs” solicitors informing them that the deed, and it was referred to in the singular at that stage, as a result of which they had acquired their interest in the property, had been mislaid and that they were not in a position to produce it. The defendants” solicitors indicated that that was a very unsatisfactory matter from their point of view. This was the actual deed under which the vendors had become entitled to the property and, of course, there was no special condition of any sort in the contract of sale which had been signed by the vendors referring to the missing documents and offering some other document, a statutory declaration or whatever it might be, in lieu thereof and requiring the purchasers to accept that as sufficient evidence of the title. There was nothing of that sort and the purchasers, not unexpectedly, reacted with considerable concern to this. The vendors in response offered two draft statutory declarations by persons concerned in the closing of the sale, including the solicitors and also indicated that they would if necessary; provide an indemnity bond of some sort. There were discussions between the solicitors in relation to this but it is quite clear that the solicitors for the purchasers were not at all happy with what was being offered and were not happy to proceed with the contract as matters then stood.
It was in that situation and against that background, that the vendors of the property served a completion notice on the 4th April 2000. They said in that, that they were ready, willing and able to complete the sale and required the purchasers forthwith to complete the purchase and said that if it was not complied with this notice, that the vendors would exercise their remedy under general condition 40 and 41 of the contract of sale, that would be a reference, inter alia, to their right to rescind the contract and offer it for resale. Again, not surprisingly, the purchasers” solicitors reacted somewhat angrily to that completion notice and said that the solicitors had no right to serve such a completion notice.
There was further correspondence and apparently, discussions between the parties, both of whom apparently took counsel’s advice at that stage. But in matters there rested until July 5th, when the plaintiffs wrote to the vendors as follows
“We refer to previous correspondence in respect of this matter. We wish to advise that we have obtained Senior Counsel’s opinion and confirm that your client is in breach of contract in this matter. As a result of this breach, our client is entitled to immediate return of its deposit together with interest and costs. We are hereby requesting your client return the deposit together with interest and provide written confirmation that it will discharge our clients” costs from investigating title in this matter within 7 days.”
That was responded to on the 11th July by a letter from the defendants solicitors” saying that the deeds, and it now appeared two deeds, had now been located and that they were attending to the stamping and registration of the deeds which they said should be completed within the week.
It is quite clear, in my view, that at the stage matters had reached on the 5th July, that the plaintiffs were perfectly entitled to write the letter which effectively amounted to a rescission of the contract. It is true that some delay had ensued. At least part of that time was taken up with discussions as to how the problem might be resolved and, of course, the standard form of condition in the conditions of sale expressly provides that that is not to prejudice the right of a party to rescind in accordance with the terms of the contract and obviously there must have been some further delay in obtaining counsel’s opinion in relation to the matter but certainly the delay was not of such a magnitude as to constitute any abandonment of the plaintiff’s position or put them in a position where they were now bound to accept a title which manifestly they were not obliged to accept. Of course, the position has changed for everybody, once the missing deeds had been found. At this stage, the plaintiffs, who presumably were interested in acquiring the property or they would never have signed the contract in the first place, wrote to the defendants, again a letter which is perfectly reasonable in all the circumstances, saying
“We would ask you to forward us copy deed of conveyance and deed of assignment which you forwarded us with your letter which shows the deeds duly dated, stamped, pd’d and registered. As soon as we receive such documentation we shall be in a position to take our clients full instructions shortly thereafter.”
That was a not unreasonable letter in the circumstances because the situation was clearly not due in any sense through any default of the plaintiffs. It was solely the defendants, having lost the deeds and having been unable to satisfy the plaintiff’s requirements in relation to the secondary evidence of the deeds, that had created this problem and the plaintiffs were obviously indicating that if all was now well, then their clients might be prepared to complete the sale as originally envisaged but that naturally, they would be taking their clients instructions.
That was responded to by a really somewhat remarkable letter, in the circumstances, on the 24th August from the defendants” solicitors where they say
“We acknowledge receipt of yours the 23rd inst. The position is that we have served a valid completion notice, and you failed to comply and your client’s deposit is therefore forfeited. We subsequently alerted you to the fact that the missing deeds, which were of concern to your client, had been located and copies were furnished to you, lest your clients wished to renegotiate for the purchase of the property. Our client’s agent is in active negotiations for the resale of the property and accordingly, if your client still desires requiring the property then they should make immediate contact with the selling agent.”
That was, of course, in terms an indication by the defendants” solicitors that not merely were they standing over their notice of completion and asserting a right to forfeit the deposit but they were saying, in effect, that if the plaintiff’s wish now to reactivate the contract, they would have to effectively outbid any other purchasers that might be in the market, in other words they were treating the contract as completely at an end, as they were putting the matter, in circumstances where it was the purchasers fault and he would have to suffer the loss of his deposit. That prompted a letter of the 28th August, in response, in which it is right to say that the plaintiff still evinced a wish, if at all possible, to complete the sale, now that the defendants might be in a position to show proper title, the lost deeds now having turned up and they said in that letter that and they repeated
“Your client has no entitlement whatsoever to forfeit our client’s deposit and we await your immediate response. We formally notify you that you should not release any monies pertaining to our client but should hold the deposit in the normal way. You might please note that if you fail to do this, we will immediately issue proceedings in respect of the property. In the circumstances, your client’s agent should refrain from making any attempt to resell this property.”
That was responded to on the 29th August by the defendants” solicitors who said
“We have already set out a position in this matter. Our query to you is quite simple and it is repeated. Is your client interested in acquiring the property or is the issue whether or not your client is entitled to his deposit back? Clearly you cannot have it both ways”.
Again, of course, there is the reference to the possible interest of the purchaser in entering into a new contract. That led finally to the end of these discussions between the solicitors because the plaintiff’s solicitors wrote back and said
“We would refer you to our letter of the 5th July 2000, wherein we advised you that your client is in breach of contract in respect of this matter. It is clearly evident that our client repudiated the contract on the 5th July 2000 and we now call upon you once again to return our client’s deposit immediately. You might refer to us immediately with details of the interest accrued to date in respect of the deposit and we shall advise in respect of our costs in respect of investigating title very shortly.”
That was not accepted by the defendants” solicitors. There was some further correspondence which really did not being the matter any further and it culminated on the 5th October then in the present proceedings being instituted.
From that summary of what transpired, it is quite clear that as I have said, it was as the result of the defendant’s having lost, what turned out to be the two deed’s relating to their property and their inability to satisfy the plaintiff’s that they were in a position to adduce sufficient reassurances either in the form of the secondary evidence of the contents of the deeds and an indemnity of an insurance company or whatever else, perhaps most particularly copies of the actual deeds, but in any event, material which might have enabled the purchaser to close safely. It was their failure to do that and then their service of a completion notice, in circumstances where they plainly were not in a position to complete the contract and make title to the property in accordance with the contract that led the purchasers, quite justifiably in my view, to call the contract off, to rescind it in effect and ask for their deposit back.
The subsequent correspondence that ensued, because the deed turned up very shortly thereafter, was merely a holding operation by the plaintiffs” solicitors, as far as I can see, with a view to ascertaining whether in fact, their clients would still be prepared to go ahead with the original contract now that the problem of the title deeds might have been solved. That of course, depended naturally on the plaintiffs” solicitors seeing the title deeds. The vendors were having none of that. They put the purchasers in the position that they could simply go back into the market and see if they could outbid anybody else who might be interested in the property and in my view, they were in no position in law to do that at that stage.
In the circumstances of this case, I have no doubt that the purchasers were perfectly entitled to rescind the contract in accordance with its terms, the vendor having failed to make title in accordance with its provisions and they were entitled to the return of their deposit with whatever interest had accrued.
I would accordingly dismiss the appeal and affirm the order of the High Court.
Peadar Nolan Ltd v O’Meara
[1985] 10 JIC 0202,
Miss Justice CarrollThe Plaintiffs have applied to the Court in respect of the following questions.
(1) Is the interest of the Defendant/vendor in the lands in sale freed and discharged from the charges specified in an indenture of conveyance dated the 17th of April, 1931 made between Caroline Jane Smyth and others of the first, second and third parts and Patrick Condron of the fourth part?
(2) Was the Plaintiff/purchaser out of time for raising objections and requisitions on title herein?
(3) Is the Defendant/vendor obliged to reply to the objections and requisitions on title raised by or on behalf of the Plaintiff/purchaser herein?
(4) Has the Defendant/vendor furnished title in accordance with a contract for sale dated the 17th of December, 1982 herein?
Section 9 of the Vendor and Purchaser Act 1874 provides as follows:-
“A vendor or purchaser of real or leasehold estate in England, or their representatives respectively may at any time or times and from time to time apply in a summary way to a Judge of the Court of Chancery in England in chambers, in respect of any requisitions or objections, or any claim for compensation, or any other question arising out of or connected with the contract, (not being a question affecting the existence or validity of the contract,) and the Judge shall make such order upon the application as to him shall appear just, and shall order how and by whom all or any of the costs of and incident to the application shall be borne and paid.
A vendor or purchaser of real or leasehold estate in Ireland or their representatives respectively may in like manner and for the same purpose apply to a Judge of the Court of Chancery in Ireland and the Judge shall make such order upon the application as to him shall appear just and shall order how and by whom all or any of the costs of and incident to the application should be borne and paid.”
There does not appear to be any case law dealing with the respective rights of a vendor or purchaser in a case where half the property has been conveyed with no objection being raised.
In this case the property was inadequately described in the particulars in that they did not disclose the existence of charges even though the property was indemnified against those charges. But the purchaser in fact received the earlier title documents disclosing the existence of those charges before furnishing requisitions for the first time and raised no objection.
To say that the property was inadequately described does not mean that the title is bad. The vendor is entitled in fee simple subject to the charges but indemnified therefrom.
The following factors appear to me to be relevant:
1. There is one contract to be closed in two phases, not two contracts.
2. The title to the unregistered portion is common to both moieties to be conveyed.
3. The contract calls for one set of requisitions. (The first set of requisitions which were furnished were answered without prejudice on the grounds that they were received out of time but nothing turns on this).
4. The purchaser in fact had the conveyance of 1931 disclosing the existence of the charges not just prior to closing the sale of the first moiety but prior to sending the requisitions.
5. The vendor is unable to rely on the rescission clause in the contract.
In my opinion the purchaser was not entitled to furnish a second set of requisitions in respect of the second phase of the contract. He could of course carry out searches and require the acts appearing thereon to be explained. By closing the sale in respect of the first moiety the purchaser accepted the title offered by the vendor and in my opinion is not entitled to raise objections in respect of the second moiety.
The answer to question 1 is as follows:
The interest of the vendor is subject to such of the charges mentioned in the conveyance dated the 17th April, 1931 as have not become merged or extinguished, indemnified against the same by the residue of the property comprised in the fee farm grant not conveyed by the said conveyance.
The answer to question 2 is as follows:
The contract called for one set of requisitions on title which were furnished on the 3rd March, 1983 and were answered without prejudice by the vendor. The purchaser was not entitled to furnish a second set of objections and requisitions on title.
The answer to question 3 is –
The vendor is not obliged to reply to the second set of objections and requisitions on title raised by the purchaser.
The answer to question 4 is –
The purchaser has accepted the title furnished by the vendor and accordingly the question of whether the title is in accordance with the contract does not arise.
Brennanstown Property Consultancy Services Ltd . v A.A.
[2017] IEHC 768
Mr. Justice Binchy
Conclusion on this Issue
55
It is apparent from the summary above that unless the general obligation to produce and deliver title documentation at completion is circumscribed by contract, a vendor must produce the same or alternatively must deliver a statutory acknowledgment. and undertaking for the production of same, in order that the vendor may deliver a good and marketable title to the purchaser Mr. Ó Dúlacháin does not appear to have disputed this general obligation, and relies upon the limitations that he submits are placed upon this general obligation in the special conditions of sale, and in particular Special Conditions Nos. 4.7, 9 and 13.2 thereof.
56
It is further apparent from the authorities referred to above and from Wylie that in cases where a vendor has clearly excluded the general obligation, then the court must consider whether or not that exclusion may be relied upon by the vendor if the effect of not delivering such documentation may result in a purchaser not obtaining a good and marketable title. Furthermore, insofar as there is any doubt as to the interpretation of the conditions of contract any ambiguity must operate for the benefit of the purchaser i.e. contra preferentum.
57
Before entering on a consideration of the applicable special conditions, I should first deal with the email from Arthur Cox upon which some reliance has been placed by the defendant. Mr. O’Donnell described this email as [“a good start”]. However, it is something of a mystery as to why this correspondence was not developed so as at least to set out, with specificity, the documentation that Arthur Cox were agreeing to lodge, on behalf of the co-purchaser, in the PRA, for the benefit of the plaintiffs. Not only that, notwithstanding that the subject property is jointly owned by the defendant and the co-purchaser, this email states that the documents are to be held to the order of Arthur Cox and they are to be returned to Arthur Cox or their client. While it is not surprising that a firm of solicitors would assert their client’s best interests, the fact is that the co-purchaser and the vendor have an equal entitlement to these documents, and furthermore upon completion of first registration in the PRA those documents will have very limited ongoing relevance. But in any case this email falls a long way short of a statutory acknowledgment for production of title documentation and in the circumstances really cannot be relied upon by the defendant as meeting any obligation that she may have to produce original title documentation, or a statutory acknowledgment and undertaking for production of same in lieu.
58
Turning then to the Special Conditions themselves, Special Condition 4.7 states that all documents of prior and/or intermediary title in the vendor’s possession shall be delivered to the purchaser at completion. Although this is stated to be without prejudice to the provisions of Special Condition 4.1, that condition is of little assistance one way or another. Special Condition 4.7 does not identify those of the documents of prior and/or intermediary title that are in the possession of the vendor, and those that are not, and nor is this stated anywhere else in the contract. While it clearly obliges the defendant, at completion, to deliver those documents of prior title that are in her possession, this condition does not in my view relieve the defendant of the usual obligation of a vendor to produce and deliver good title, by producing either the original documents of title or a statutory acknowledgement and undertaking instead. Had this condition been intended to relieve her of the need to produce and deliver the originals of specific documents it should have said so in simple terms, and identified the documents concerned.
59
The next condition of relevance is Special Condition No. 9. This is quoted in full at para. 14 above. The first part of this condition merely serves to confirm General Condition No. 6 of the Conditions of Sale which is that the purchaser is on notice of the documents described in the Document Schedule, and the contents of the same. The second part of that condition precludes the plaintiffs from raising any requisitions or making any objections in relation to the same, the execution of the same or any other matter pertaining thereto. It requires the plaintiffs to accept that the vendor has a good and marketable title to the property. While this clearly curtails requisitions and objections on title as regards the documents identified in the documents schedule, it does not exempt the defendant from her general obligation to deliver good title to the property, and in particular does not identify any documents the originals of which will not be delivered. While the documents schedule very clearly refers to a number of documents as being certified copies, nowhere in the contract is it stated that only those certified copies will be delivered at completion, and that the usual statutory acknowledgement and undertaking for production of such of the original documents as are not being delivered at completion, will not be provided.
60
Finally, in this regard there is Special Condition No. 13.2. This deals with the obligation of the purchaser to register title in the PRA. By this condition the defendant makes it clear that she will not be providing assistance to the plaintiffs with their application for registration of the subject property in the PRA “whether in relation to the production of any documents that may be required to effect such registration or otherwise”. If the deeds were required only for the purpose of effecting registration in the PRA, then the plaintiffs would be precluded by this condition from insisting on production of the same. However, in the case of unregistered title, delivery of the title documents themselves has always formed part of the delivery of title. In the case of freehold land, this previously entailed the delivery of a root of title going back at least twenty years, together with the delivery of any intervening deeds between the root of title and the deed to the purchaser. That period of twenty years has now been reduced to fifteen years pursuant to s. 56 of the Act of 2009. In this case the root of title is stated to be the 1958 deed of conveyance referred to at Item 18 of the Documents Schedule. While, in due course, these documents will for almost all practicable purposes become redundant following upon the registration of the title in the PRA, pending such registration the plaintiffs require either delivery of all original documents of title from 1 st August, 1958 onwards, or a statutory acknowledgment and undertaking to produce the same in order to be able to deal with the interest in the subject property being acquired from the defendant, either to sell that interest onwards or to pledge the same as collateral. This obligation has not been excluded anywhere in the contract. This might be of less practical relevance were the consideration less than €lm, because in such a case, the solicitors for the purchaser could (if they considered it appropriate to do so) certify title to the registrar of titles who would then usually register the title in the PRA without further investigation. However, in cases where the consideration is in excess of €lm, the registrar of titles will conduct a full investigation of title and, as Mr. O’Donnell said, will look for production of original documents of title.
61
Although it may well have been the intention of the defendant’s solicitors to exclude the obligation to produce and deliver the originals of certain documents of title (or a statutory acknowledgment and undertaking in respect of same), this was not done expressly, and insofar as there is any ambiguity in the special conditions, I am obliged to resolve that ambiguity in the plaintiffs’ favour. Accordingly, the plaintiffs are entitled to a declaration in the terms of para. 4(a) of the general indorsement of claim of the plenary summons.
62
In arriving at this conclusion I have given consideration as to the possible effect of s. 58(5) of the Act of 2009 referred to above. It has not been proven, and indeed it was not even asserted on behalf of the defendant, that she is unable to furnish an acknowledgement of the right to production and delivery of copies of documents of title. Moreover, it must the case that even if she is unable to procure such an acknowledgement, she must be in a position to obtain the deeds themselves in circumstances where, as Mr. Ó Dúlacháin submitted, a co-owner has a legal entitlement vis-à-vis another co-owner to require the latter to produce title documentation for the use of the former. It seems to me that before the defendant could invoke this subsection, she would have had to have requested an acknowledgement and undertaking from the co-purchaser, and that request would have to have been refused. Far from that being the case here, Messrs. Arthur Cox have indicated a willingness on the part of the co-purchaser to lodge documents of title in the PRA, even though this has not been developed to the point of an actual acknowledgement and undertaking and the specific documents have not been identified.
63
Finally, on this issue I would like to make one general observation. This relates to the documents schedule in contracts for sale. Historically, the documents schedule, in the case of unregistered title, usually identified just one or possibly two documents: the root of title and the deed to the vendor. Intervening title was then the subject of a full investigation of title post execution of the contract for sale. However, for some considerable time now it has been the practice to list most, if not all, of the documents in the possession of the vendor. But nobody would suggest that the itemisation of documents in the document schedule is intended to be a list of closing requirements. Furthermore, the manner in which conveyancers described the documents in the documents schedule (i.e. original, copy, certified copy, or no description at all) varies with some conveyancers paying more attention to the detail of this than others. Therefore, the description of a document in the documents schedule as a copy or a certified copy cannot, by itself, be taken to mean that the original of that document (or an acknowledgment and undertaking to produce the same) will not be delivered at completion. Where a vendor has only copies or certified copies of documents in his or her possession, and intends to deliver only such copies at completion, the special conditions should be drawn in such a manner as to make this clear and unambiguous.
Family Law Declarations
64
The requirement to deliver the family law declarations referred to in para. 4(b) of the general indorsement of claim must also be considered in the light of the provisions of the contract. Firstly however, it should be observed that the parties are agreed that at no time has the subject property been a family home within the meaning of the Family Home Protection Act 1976 and therefore there is no question that any deed of conveyance already on title is voidable by reason of the provisions of that act (as amended). Nor can any deed of assurance to the plaintiffs be at risk under this heading.
65
Secondly, there was also agreement that as regards the defendant herself, matters have progressed to the point where the declaration that she will deliver at completion in relation to the disposal by her of the subject property to the plaintiffs is agreed. Furthermore, Mr. O’Donnell accepted in evidence that in circumstances where the conveyance to the defendant was executed pursuant to an order of the Court and where A.A. had withdrawn any claim that she might have in relation to the subject property (save as regards the balance of the proceeds of sale over and above those to be retained by the defendant for her own use and benefit), there is no need for any family law declarations as regards the 2014 deed. Accordingly, the controversy under this heading is limited to the 2008 deed.
66
That conveyance was of course entered into between B.A. and his then spouse A.A.. Clearly A.A. cannot have any objection to that conveyance and nor can the defendant. In the submission of the defendant there is therefore no person who could claim an interest in the subject property under what I will loosely refer to as family law legislation and in the particular circumstances of this case there is no need for such a declaration as regards the 2008 deed. Mr. O’Donnell’s position on this was that while he acknowledged that the possibility of anybody successfully laying claim to an interest in the subject property under family law legislation is remote, he said that fact can be stranger than fiction. He said that while a family law declaration does not of itself prevent a person from advancing a claim under the family law legislation, by obtaining a family law declaration in relation to each deed of conveyance on title, a purchaser of property becomes a bona fide purchaser for value for the purpose of the family law legislation, and to that extent at least is afforded some measure of protection against a claim from a person claiming an interest under the family law legislation.
67
Mr. O’Donnell also said that in this case, if it is not possible to obtain a declaration from B.A. himself (who would of course be the appropriate declarant for the purposes of the 2008 deed), as a practitioner he would in the circumstances be willing to accept a declaration from the defendant that sets out, to the best of her knowledge, the marital or relationship status of B.A. at the time of the 2008 deed.
68
I think it is fair to say that on the evidence even the plaintiffs acknowledge that the risk of any claim coming forward under the family law legislation so as to impugn the title to be acquired by the plaintiffs is highly remote. And the risk of such a claim succeeding if it did come forward is even remoter still. In any event however, it is necessary to consider whether or not the requirement for the delivery of such a declaration has been excluded by the terms of the contract. In the submissions of the defendant it has been excluded by Special Condition 9. However, the plaintiffs submit that this special condition does not operate so as to exclude the normal requirement to deliver such a declaration as regards any deed of conveyance on title. The plaintiffs point to Special Condition 4.8 of the Contract which expressly excludes any requisition in relation to an earlier family law declaration on title by reason of an apparent error on the face of the declaration. Accordingly, it is submitted that if the defendant had intended to exclude the need to furnish a family law declaration in relation to the 2008 deed, she would and should have done so expressly.
69
As I have said however, the defendant relies upon Special Condition No. 9. That condition refers to the documents identified in the documents schedule and clearly states that no objection or requisition or inquiry shall be made by the purchaser in respect of the said documentation or the execution or stamping thereof or any other matter pertaining thereto and the purchaser shall conclusively accept and assume that the vendor has good and marketable title to the property. This special condition could not be more clear. The fact that it is expressed in general terms and relates to every document referred to in the documents schedule does not make it any less clear. The fact that there is another special condition identifying specifically one of the documents referred to in the documents schedule and expressly precluding a requisition in relation to that document, does not mean and cannot mean that the clearly stated general prohibition on the raising of requisitions in relation to all documents referred to in the documents schedule does not apply, or is in some way unenforceable. All it means is that through an abundance of caution the solicitors for the defendant inserted what might be regarded as a redundant special condition in relation to an earlier deed of conveyance.
70
The plaintiffs expressly agreed not to raise requisitions or make objections in relation to any of the documents referred to in the documents schedule. Moreover, by the same condition they accepted that the defendant has a good and marketable title to the subject property. And while it may not be relevant to say so, this condition was agreed to after the plaintiffs’ solicitors had an opportunity to see the draft contract for sale and copies of all the title documentation, and to enter into correspondence with the solicitors for the defendant in regard to the same, in advance of execution of the contract. In other words this was not a situation in which the purchasers signed a contract at auction without the benefit of legal advice, or without their solicitors having an opportunity to review the contracts and title properly, although even if it were I doubt if it could make any difference.
Conclusion on this Issue
71
The requirement for delivery family law declarations at completion of a conveyancing transaction may be traced back to the Family Home Protection Act 1976. What was once a relatively simple declaration, has now become more complex and convoluted with the passing into law of so much family law legislation in the intervening period. The declaration is required, as Mr. O’Donnell said, in order to ensure that a purchaser may be regarded as a bona fide purchaser by being able to demonstrate that he/she has conducted all reasonable inquiries to eliminate the possibility that a third party may have a sustainable claim (in the context of family law legislation) to the property in sale, such as would undermine the title being taken by the purchaser; There are now very many different versions of what may be described as standard form declarations, but the precise terms of a declaration in any given case requires particular consideration. This consideration is, in the first instance at least, conducted through the means of the requisitions on title. However, special condition No. 9 clearly operates so as to preclude any requisitions or objections being raised in relation to the documents identified in the documents schedule. While it may be argued that the plaintiffs could insist on the delivery of a family law declaration independently of the requisitions on title, in order to obtain a good and marketable title, the plaintiffs have accepted by special condition 9 of the contract that the defendant has good and marketable title to the subject property. I think it would by flying in the face of the true and clear meaning of special condition 9 to require the defendant to deliver any family law declarations other than those described in the documents schedule, and one from the defendant herself. In the circumstances that plaintiffs are not entitled to the relief claimed at para. 4(b) of the general indorsement of claim.
The “Claim” of the Overseas Trustee
72
As I have said above, the reliefs claimed at para. 4(c) and (d) of the general indorsement of claim are no longer relevant, by reason of developments subsequent to the issue of these proceedings. However, another issue of concern to the plaintiffs surfaced when they were furnished with a letter from A.A.’s solicitors dated 30 th May, 2016 by way of an exhibit to an affidavit sworn by Mr. Hugh Millar of Crowley Millar Solicitors on 7 th December, 2016. Although Messrs. Crowley Millar must have had this letter from the end of May or early June 2016, they chose not to disclose it to Matheson until Mr. Millar’s affidavit of 7 th December, 2016.
73
As already indicated, this letter puts beyond any doubt that A.A. is not maintaining any claim of any kind in relation to the subject property, and it would have been helpful to disclose this letter earlier from the point of view of disposing of that issue with finality. But perhaps the reason it was not disclosed earlier (and I am only surmising that this is so) is that the same letter states that “the [overseas] trustee in bankruptcy is making a claim for the property in [overseas] proceedings against our client”. So the plaintiffs are now on notice, for the first time, of possible litigation being advanced by the overseas trustee which may affect the subject property, albeit the proceedings suggested by this letter would be against A.A.. In replies to requisitions on title delivered by the defendant’s solicitors on 7 th October, 2015, it is stated at Requisition 14.5 that there is no litigation pending or threatened in relation to the subject property. Of course on that date the defendant’s solicitors were unaware of any possible claim by the overseas trustee.
74
It does not appear as though any effort has been made to explore this issue further. For example, Messrs. McCarthy Johnston might have been asked to produce a copy of the proceedings being brought by the overseas trustee against A.A.. Alternatively, the overseas trustee could have been approached directly (by the solicitors for either of the parties) to inquire if he is indeed maintaining a claim against A.A. that might impact upon the title of the defendant to the subject property. But it appears that no such enquiries have been undertaken, perhaps out of fear that to do so would be encourage the overseas trustee in some way.
75
Careful consideration of what is said in the McCarthy Johnston letter of 30 th May, 2016 would not suggest that any claim is being made that could impact upon the title of the defendant to the subject property. If what is stated accurately reflects events overseas, then at most there is a claim by the oversees trustee against A.A.. It is very difficult to see how the outcome of any such proceedings could impact upon title to a property which was conveyed to A.A. by her husband, but which was subsequently, by an order of the High Court in this jurisdiction, and affirmed by the Supreme Court, conveyed to the defendant. Moreover the overseas trustee had some knowledge of the proceedings in the Supreme Court that gave rise to its judgment in 2015, and even though he may not have been a notice party, one might have expected him to take the opportunity to mention at least any claims that he might wish to make in relation to assets with which those proceedings were concerned, including the subject property. So it seems like a very remote prospect indeed that there is anything that the overseas trustee could do that would impact in any negative way on the title of the defendant to the subject property. However, subject to what I say below, it is beyond the Court within these proceedings, in which the overseas trustee has no involvement at all, to make any declaration to this effect.
Conclusion on this Issue
76
In my view, it is entirely reasonable for solicitors acting on behalf of the purchasers of a property, who have been put on notice of litigation that may affect that property, to require some evidence that whatever proceedings are in being or contemplated will not affect the title their clients have agreed to buy. While Mr. Ó Dúlacháin argued that this opens up the possibility of threats being made by persons who have no interest in a property with a view to preventing the completion of property transactions, I cannot agree with that submission. On the particular facts of this case, the existence of proceedings have been indicated by a person who has previously been on the title to the subject property, and the proceedings are described as being brought against that person by a trustee in bankruptcy in the estate of the person who, along with the co-purchaser, originally purchased the subject property. There is a sufficient nexus between the parties concerned and the subject property to require the vendor to produce proof to the reasonable satisfaction of the purchasers that these proceedings, if they are in fact in being, cannot impact upon the title to the subject property. A simple letter from the overseas trustee will suffice; if he is unwilling to provide such a letter then I am willing to allow the parties liberty to re-enter this application, insofar as it relates to this issue, and on notice to the overseas trustee, so as to permit him to explain his position, failing which I would be willing to give a declaration sufficient to deal with the issue.