Proving Title
Cases
Rattigan v. Regan
[1929] IR 342
Supreme Court
KENNEDY C.J. :
14. March 1929
I have had the advantage of reading the judgment about to be delivered by Mr. Justice FitzGibbon. I concur with it in every way.
FITZGIBBON J. :
This action was instituted on the 12th of April, 1926, to enforce specific performance of an agreement dated October 9th, 1925, by which the defendant agreed to purchase from the plaintiff a farm named Oakfield, in the County of Roscommon.
The farm, which contained 67a. 2r. 18p., had been purchased in the year 1919 for £700 by the plaintiff’s brother, Joseph, who was registered on the 17th of July, 1919, as owner in fee-simple, subject to equities and to a land purchase annuity of £29 9s. 6d. On the 28th of December, 1923, Joseph assigned the farm to the plaintiff by an instrument, in which the only consideration stated is natural love and affection, and on the 10th of March, 1924, the plaintiff was registered as owner in fee-simple of the farm. On the 9th of October, 1925, the farm was advertised for sale by public auction, to be held at the Court-house, Strokestown, and the particulars described it as the property of the plaintiff, and as “all that and those part of the lands of Oakfield, containing 67a. 2r. 18p., or thereabouts, statute measure, subject to an annuity of £29 9s. 6d., as described in Folio No. 13287 Land Registry, County Roscommon.”The defendant attended the auction, having instructed his then solicitor, Mr. Callery, to bid on his behalf, and the farm was knocked down to him at the price of £1,315. He then signed the memorandum of purchase annexed to the conditions of sale, paid £394 10s. by way of deposit, and the memorandum was signed by the plaintiff, and countersigned by the auctioneer. The agreement provided that the sale should be completed on November 9th, 1925, at the office of Mr. Gaynor, the plaintiff’s solicitor; the title was to commence with the copy folio; no other deeds were to be furnished, save a declaration that Joseph Rattigan, by whom the lands had been assigned to the plaintiff, had purchased the lands from Mrs. Hague and others, in whom they had been vested by fiat of the Land Commission, dated January 20th, 1916; the lands were sold subject to equities; and the vendor was not to be required to discharge equities. On the 21st of October, 1925, Mr. Gaynor furnished to the purchaser’s then solicitor copies of the conditions of sale, the folio, and the purchase agreement, and on the 24th of October Mr. Callery furnished requisitions on title, the third of which was the inception of this litigation:”Please furnish a copy of the transferJoseph Rattigan to Peter Rattigan. Was the transfer for valuable consideration? Was Joseph Rattigan competent to transfer, and was the deal in good faith? If the transfer was not for valuable consideration Joseph Rattigan must join in transfer to purchaser.” To which Mr. Gaynor replied on November 3rd: “Copy herewith. I cannot agree to any alteration in the conditions of sale, but will do all I can to facilitate you.” Mr. Callery returned the requisitions on November 7th, with observations on the vendor’s replies, and a draft assignment for approval, stating that if everything was in order arrangements might be made for closing at the end of the week. On December 11th he wrote again, complaining of delay, and on December 17th Mr. Gaynor replied, enclosing two affidavits, one by himself and one by Thomas Lyons, by way of reply to the purchaser’s third requisition. Lyons had witnessed and Mr. Gaynor had prepared the instrument of transfer from Joseph Rattigan to the vendor; the former gave a full description of the way in which Joseph went about the execution of the transfer, and of his condition; and Mr. Gaynor’s declaration was that he had prepared the transfer, that in his opinion it was executed in good faith, and that Joseph Rattigan knew what he was doing, and was competent to dispose of his property.
These two affidavits were a complete and satisfactory reply to the purchaser’s requisition, if it were a proper requisition in the circumstances. The supplemental requisitions, numbered 3A to 3H, were wholly unsustainable, and the purchaser was not entitled to insist upon any of them.
A correspondence then commenced, from which it would appear that the vendor, to satisfy the purchaser’s unjustifiable demand, endeavoured to obtain the execution of the instrument of transfer by Joseph Rattigan, but the latter was then, in February, 1926, mentally incapacitated, and was ultimately committed as of unsound mind in December, 1926.
Proceedings to enforce specific performance were commenced on April 20th, 1926, and, after Mr. Callery had obtained an extension of time for filing a defence, which was not done until October 6th, 1926, the defendant appears to have changed his solicitor. His instructions to his new adviser, Mr. Staunton, seem to have been incomplete, and he neglected to make provision for the payment of Mr. Callery’s costs incurred on his behalf, with the result that a long delay ensued, and Mr. Staunton was not in a position to proceed until the end of March, 1927. It appears that three notices of trial were served: on November 29th, December 4th, and December 9th, 1927, and the action came on for hearing on March 6th, 1928.
The defence pleaded by the purchaser was that, prior to the execution of the transfer of December 28th, 1923, Joseph Rattigan had become of weak mind, and incapable of managing his affairs; that the transfer was fraudulent and void, and that it had been made by the grantor while of unsound mind to the knowledge of the grantee; that the grantor and grantee were represented by the same solicitor, and that the solicitor had not protected the grantee in the transaction.
Evidence was given at the trial by Mr. Gaynor, the solicitor who had acted in the transaction between Joseph Rattigan and his brother, the plaintiff. He proved that his client in the matter was Joseph, for whom he had also acted in the original purchase of Oakfield; that Joseph was perfectly competent and sensible, and knew what he was doing; that the instructions for the transfer were given by Joseph in person, and that he was present, and attested the transfer from Joseph to the plaintiff on December 28th, 1923. The absence of consideration in the assignment was explained by evidence that it was part of a larger transactiona family settlement of the assets of John Rattigan, the father of Joseph and the plaintiff. John had died in 1917, leaving a farm called Cullia, registered land, with a house. He also left his widow and three children, Joseph, Peter, and Bridget, living on the farm: there was no house on Oakfield, the farm which had been purchased by Joseph in his own name, and it was worked together with the original farm of Cullia. The sister Bridget died in 1922, leaving infant children, and Mary, the widow, died in 1923. What the precise arrangement which underlay the transfer of Oakfield was is not quite clear, and will be the subject of investigation elsewhere; but, from the evidence of Mr. Gaynor and the plaintiff, it would seem probable that Joseph was to get Cullia as his share, or part of his share, of his father’s assets; and that Oakfield, which had been purchased out of the profits of Cullia, was to be transferred to Peter for distribution among the next-of-kin of John Rattigan. These arrangements, whatever they may have been, and the circumstance that they have not been completed in consequence of the supervening incapacity of Joseph Rattigan, cannot affect the defendant, who had no notice of them, and was dealing in good faith with a full registered owner of the land. The allegations in the defence that Joseph Rattigan was of unsound mind, or mentally incapacitated, in December, 1923, have totally failed in proof; notice, if the defendant had any, that Joseph was of weak mind in October, 1925, was not notice that Joseph was of weak mind in October, 1925, was not notice that he was incapable two years previously, and any shadow of suspicion which might have been entertained by a bona fide purchaser should have been dispelled by the affidavits of Mr. Gaynor and Thomas Lyons. There is abundant evidence that Joseph was perfectly normal until at least a year after the execution of the transfer to the plaintiff; the defendant does not suggest that he ever knew anything of his own knowledge against Joseph’s capacity, and that his objection, not made till after the purchase, was founded upon some rumour, which may have been of very recent origin, as Joseph was admittedly incompetent in February, 1926, and had probably been showing signs of mental weakness for a year or more before that date. Dr. Dowd, who was examined on behalf of the defendant to prove the defence, had known Joseph from his school-days, met him frequently on the road, but “the only positive proof of insanity he could give in his case was in February, 1926.” “He did not seem to recognise me when I passed”; “on some occasions he was unshaven”; “on one occasion I met him carrying a graip.”As it appears that the witness was driving in a motor car, which went by “in the ordinary way,” in the opposite direction when Joseph, walking by the side of the road, failed to recognise him, one is not surprised that the witness admitted to the Court”that there was nothing strange in his not knowing or speaking to me when I whisked by in a motor car.” That a working farmer in Roscommon should occasionally be unshaven, or that on one occasion out of several he should be carrying a graip, is rather evidence of normality than the reverse. The witness stated that the particular type of insanity from which Joseph suffered might be of sudden origin or of slow growth, that it might come on in a month or six weeks, but that “a period of three years would be a remarkably slow growth.”
The learned Judge has refrained from “deciding whether there was a question of fraud or not, or whether at the time of the conveyance Joseph was of unsound mind,” although these were the two allegations upon which the defendant based his claim to resist a decree for specific performance; and sub-sequently, by leave given at the trial, his claim to rescind the contract, and to demand a return of his deposit.
The defendant never put forward the case that he had notice of, or reasonable ground to suspect, the incapacity of Joseph, and he tendered no evidence which would have supported such a case if he had made it. He came into Court to prove that the assignment under which the vendor held the lands was fraudulent and void, and he has completely failed to impeach it. He is bound to accept a registered transfer of the lands from Peter Rattigan as a complete fulfilment of the plaintiff’s contract of sale; and then, under sect. 36 of the Local Registration of Title Act, he will get, as he would have got in December, 1925, if he had not refused to take it, an unimpeachable title as a purchaser for value without notice of the lands of Oakfield, as soon as the transfer to him has been entered in the Local Registry of Title.
The plaintiff is entitled to the decree for which he asks; the long delay has been accounted for, to a large extent, by the defendant’s own conduct in changing his solicitors after the proceedings had been commenced.
As it has been admitted by the plaintiff in the course of these proceedings, and the entry in Mr. Gaynor’s day-book made at the time of the transfer to the plaintiff shows, that the conveyance of Oakfield to the plaintiff was only part of a larger transaction, which has not been completed owing to the incapacity of Joseph Rattigan and the non-receipt of the purchase money of Oakfield; and that the purchase money, when received, will be held upon trust for distribution as assets of the late John Rattigan, the plaintiff has offered, and we have decided, that the purchase money should be paid into Court, to abide the result of such application as may be made; and that notice should be served by the plaintiff upon the General Solicitor and the solicitor on record for Joseph Rattigan in the proceedings at present pending before the Chief Justice.
MURNAGHAN J. :
I also share the view that the judgment which is the subject-matter of this appeal should be reversed, and that an order should be made directing the defendant specifically to perform his agreement.
My view is based on the fact that the contract is for the sale of land registered under the Local Registration of Title Act, 1891. If the land, the subject-matter of the contract, were outside the provisions of that Act different considerations would apply.
The vendor’s title depends upon a voluntary transfer from one brother of the vendor to himself; this brother appears to me to have been shown to have been mentally below the average, and in less than two years after the transfer he was confined in a mental home, and was committed as being destitute, and without means: in these circumstances, under the general rules of equity; the gift could scarcely stand good; and, at all events, no purchaser would, in my opinion, be forced to complete a purchase which might involve a law-suit. It has been suggested that the transfer was not, as it purports to be, voluntary, but was part of a family arrangement, involving an exchange oflands: if this were the case, under the general law, as I understand it, it should have been shown what the real consideration in respect of which the transfer was made was, and that the consideration had been paid or given.
But, in the case of registered land, the Local Registration of Title Act contains special provisions altering the rules of law and equity otherwise applicable. Under sect. 36 a purchaser for valuable consideration from a voluntary transferee, who has been entered on the register, acquires a perfect title. It has not been shown t hat there is any caution or inhibition on the folio which will prevent the purchaser from being registered. He is no party to any fraud or unfair dealing, if in fact there has been such. He is not affected by notice in respect of transactions in which he has had no part. The defendant cannot, in my opinion, show any ground for believing that he will not get what he contracted for, viz., a good registered title to the lands, in which he will by such registration, under a purchase for value from a registered transferee, acquire a statutory title.
O’Dwyer and O’Dwyer v Boyd
unreported, Supreme Court, July 4, 2002
JUDGMENT of MR. JUSTICE GEOGHEGAN delivered the 4th day of July 2002 [Nem Diss.]
1. This is an appeal from an order of the High Court (O’Neill J.) granting a stay of these specific performance proceedings instituted by the plaintiffs/appellants against the defendant/respondent so as to enable certain matters to be referred to arbitration in accordance with the terms of a contract of sale.
2. The contract of sale was dated the 21st of August, 1998 and was in a standard Law Society form. That standard form included “General Conditions of Sale” which by virtue of paragraph 2 of the special conditions were to be incorporated in the contract. Condition 51 of the general conditions prescribed that all differences and disputes between the vendor and the purchaser in relation to certain listed matters were to be referred to arbitration. One of these matters specified at Condition 51(d) was:
“any issue on foot of Condition 33, including the applicability of said condition, and the amount of compensation payable thereunder”.
3. Condition 33 reads as follows:
“33. (a) In this condition ‘error’ includes any omission, non-disclosure, discrepancy, difference, inaccuracy, misstatement or misrepresentation made in the Memorandum, the Particulars or the Conditions or in the course of any representation, response or negotiations leading to the sale, and further in respect of measurements, quantities, descriptions or otherwise.
(b) The Purchaser shall be entitled to be compensated by the Vendor for any loss suffered by the Purchaser in his bargain relative to the sale as a result of an error made on behalf of the Vendor provided however that no compensation shall be payable for loss of trifling materiality unless attributable to recklessness or fraud on the part of the Vendor nor in respect of any matter of which the Purchaser shall be deemed to have had notice under Condition 16(a) nor in relation to any error in a location or similar plan furnished for identification only.
(c) Nothing in the Memorandum, the particulars or the conditions shall:
(i) entitle the Vendor to require the Purchaser to accept property which differs substantially from the property agreed to be sold whether in quantity, (quality) tenure or otherwise, if the Purchaser would be prejudiced materially by reason of any such difference.
or
(ii) affect the right of the Purchaser to rescind or repudiate the sale where compensation for a claim attributable to a material error made by or on behalf of the Vendor cannot be reasonably assessed.
(d) Save as aforesaid, no error shall annul the sale or entitle the Vendor or the Purchaser (as the case may be) to be discharged therefrom.”
4. The completion date in the contract of sale was the 30th of November, 1998 but the sale was not completed on that date, mainly because the defendant/respondent was not in a position to give vacant possession to the plaintiffs/appellants of a small area of ground containing a large slurry tank with a capacity for 400 tons of cattle excrement. There had been considerable correspondence and discussions in relation to this slurry tank area. It is neither necessary nor desirable to go into the details of these discussions at this stage. It is sufficient to state that when the time came for completion of the contract the respondent maintained and has maintained ever since that he did not own this slurry tank area and was not in a position to give title to it. The appellants do not believe this for reasons which emerge from the documentation before this court but which are not relevant to the issues on this appeal. It is clear, therefore, that this is a most unusual case in that instead of a vendor insisting that he is in a position to make title and a purchaser disputing this, the exact opposite has happened. The vendor is satisfied he cannot make title but the purchasers do not believe him. For reasons which I will explain, this disbelief on the part of the purchasers would seem to me to be irrelevant to the issues on the appeal even if, in the event, the appellant’s scepticism was proved to be well-founded.
5. The case of the respondent is that the slurry tank area was included in the contract through an error and that therefore it is a case coming within Condition 33. As is clear from Condition 51(d) cited above any issue on foot of Condition 33 “including the applicability of said condition” (my emphasis) falls within the arbitration clause. The appellants want all issues to be dealt with in the specific performance suit and certainly do not want the specific performance suit to be stayed and they, of course, dispute that there was any “error”. But because the applicability of the condition itself is an arbitrable issue, the fact that the appellants dispute the existence of the “error” must be regarded as irrelevant. It is for this reason that on the wording of Condition 51(d) cited above the dispute relating to the slurry tank would seem clearly to fall within that condition.
6. I now turn to the history of the specific performance suit and how the question of a stay arose. On the 11th of April, 2000 the appellants served notice of motion for judgment in default of defence which came on for hearing on the 8th of May, 2000. The motion was listed before McCracken J. and at that stage there was before the court the appellants’ affidavit and exhibits but no affidavit filed on behalf of the respondent. Counsel for the respondent requested a three week adjournment which was opposed. The learned High Court judge, in the event, granted an adjournment of one week. Apparently, it had been indicated that the respondent might want to bring a motion to have the proceedings stayed so that there be a reference to arbitration under the contract. McCracken J. gave liberty to serve short notice of motion for the same date as the resumed hearing of the motion for judgment. On the 11th of May, 2000 a notice of motion was served seeking a stay of the specific performance proceedings under s. 5 of the Arbitration Act, 1980. Subsection (1) of that section reads:
“5.-(1) If any party to an arbitration agreement, or any person claiming through or under him, commences any proceedings in any court against any other party to such agreement, or any person claiming through or under him, in respect of any matter agreed to be referred to arbitration, any party to the proceedings may at any time after an appearance has been entered, and before delivering any pleadings or taking any other step in the proceedings, apply to the court to stay the proceedings, and the court, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings.”
7. Subsection (2) of section 5 is not relevant to this case. From the terms of subsection (1) it is clear that provided that the application for the stay has been made at the right time the court has only very limited discretion to refuse. By “right time” I mean of course that the application must be made “before delivering any pleadings or taking any other step in the proceedings”. After that the court would have no jurisdiction to grant the stay. As will emerge when I refer to the appellants’ notice of appeal the question of whether the respondent had taken a step in the proceedings before applying for the stay is an important issue on this appeal.
8. The resumed hearing of the motion for judgment and the hearing of the new motion seeking the stay came before O’Neill J. The hearing of the motion seeking the stay was then adjourned for six weeks and when it came up for hearing again on the 3rd of July, 2000 there was a further adjournment because by that time the respondent had filed two affidavits and the second had not been given in advance to the appellants. The ultimate hearing of the motion grounded on a number of affidavits took place on the 3rd of October, 2000 and the order now appealed against granting the stay was made by O’Neill J.
9. The appellants have served an elaborate notice of appeal which I will shortly summarise. But before I do so and by way of slight digression, I would, at this point, compliment the appellants who are unrepresented on the way they presented their appeal both in terms of the books of documents and their oral submissions. Although naturally they do not have a full understanding of the legal issues involved, they are quite close to such an understanding and in the manner that they have presented their appeal they have certainly assisted me in coming to grips with what the real issues are.
10. The appellants have included every conceivable point that could be made on their behalf in the notice of appeal but it emerged from the hearing that in reality the substantial grounds of appeal can be reduced to two. These are:
1. The matters in dispute do not fall within Condition 51? This is really the second ground of appeal in the notice of appeal though there is overlap from other grounds. The appellants’ argument is that their litigation directed towards obtaining title and vacant possession is a specific performance suit in which they are also claiming damages and that the scope of their action goes well beyond so called “error” in description which they deny existed. They say that the arbitration effectively deprives them of their specific performance suit.
2. If the appellants are wrong about that, the High Court still had no jurisdiction to grant the stay because the respondent had taken a step in the proceedings within the meaning of section 5 of the Arbitration Act, 1980. This ground of appeal is essentially contained in paragraph 5 of the notice of appeal.
11. The other grounds of appeal are not really stateable in law though it is very understandable that the appellants would have regarded them as relevant. Ground No. 1 refers to section 26 of the Arbitration Act, 1954. That section reads as follows:
“26.- Unless a contrary intention is expressed therein, every arbitration agreement shall, where such a provision is applicable to the reference, be deemed to contain a provision that the arbitrator or umpire shall have the same power as the court to order specific performance of any contract other than a contract relating to land or any interest in land.”
12. The appellants seem to take the view that because of this section issues in their specific performance suit cannot be referred to arbitration. That is a misreading of the section. If the matter substantially in dispute in this case goes to arbitration, the arbitrator will, in the first instance, be concerned with whether Condition 33 applies at all. My impression is that the appellants would obviously like that issue to be decided by a court and not by an arbitrator, but they have signed a contract which says that that issue does have to go to an arbitrator. All the provisions of the Arbitration Acts will apply to any such arbitration including of course, if difficult legal questions arise, the power of the arbitrator to state a case to the High Court. But Condition 51 of the general conditions incorporated in the contract which the appellant signed incontrovertibly provides that the applicability of Condition 33 is itself to be arbitrated on as distinct from the issues under Condition 33. If the arbitrator came to the conclusion that Condition 33 was applicable then he or she would go on to determine whether there should be an abatement of the purchase price. In the meantime this specific performance suit does not disappear. It is simply stayed pending the outcome of the arbitration. There is no question of the arbitrator granting a specific performance order and, therefore, there is no question of any contravention of section 26 of the Arbitration Act, 1954. If and in so far as there are issues outstanding after any abatement of purchase price has been determined they will come to be determined by the court if necessary.
13. Ground 4 in the notice of appeal seems to suggest that a referral to arbitration would in some way adversely affect the title of the appellants. There does not seem to be any reality in this ground of appeal but at any rate it is not a ground on which the stay can be refused.
14. The matters of public law and public policy referred to in ground 6 of the notice of appeal are not relevant to the contractual rights of the parties and especially the contractual procedures which is what this appeal is all about.
15. The course of an arbitration would not be affected by the disputes relating to the discharge from the pipe as referred to in ground 7 in the notice of appeal. At the hearing, counsel for the respondent offered that as part of an overall settlement her client would join in any proceedings against the adjoining owner Mr. O’Grady. If there are issues arising out of the complaints referred to in ground 7 of the notice of appeal these can ultimately be dealt with in such proceedings and/or in these proceedings whether or not the matters are referred to arbitration.
16. Ground 8 refers to alleged procedural and evidential defects.
17. Ground 9 seems to refer to the manner in which affidavits etc. were presented to the court. As the Chief Justice explained to the appellants at the hearing of the appeal, there is nothing unusual about affidavits not being opened publicly in court. In crowded motion lists it is frequently the case that a judge may quietly read the affidavits himself or herself or may indicate that they will be read in his or her chambers. None of the matters referred to in grounds 8 and 9 amount to unfair procedures or unlawful procedures or affect the validity or correctness of the High Court decision. If and in so far as there was any procedural defect at any stage in the filing of documents etc. it is quite clear that all documents which were relevant were before O’Neill J. when he made his order.
18. I return therefore to the only two arguable grounds of appeal which I set out above. Dealing with the first of these two grounds, I would refer to the statement of claim. Paragraph A of the prayer contained in the statement of claim seeks two alternative orders namely, an order for specific performance of the original contract of the 21st of August, 1998 “or alternatively an order for specific performance of the contract with such abatement of the purchase price as the court may think fit.” Although, therefore, the appellants believe there was no “error” with regard to the slurry tank area and that the respondent does have title to give them, it is perfectly clear that they are making a fallback claim for abatement of the purchase price if they are proved wrong. For the reasons which I have already explained it is enough that one party to the agreement alleges that the discrepancy was an error for the matter to be referred to arbitration because even if the suggestion that it was an error is heavily in dispute it is for the arbitrator to determine that dispute because it is for the arbitrator to decide whether Condition 33 applies or not.
19. At present the appellants are not talking of rescission. The respondent, at one stage, did purport to rescind following a twenty-eight day notice but counsel for the respondent has acknowledged that her client was not entitled lawfully to rescind the agreement. Therefore, as things stand at the moment neither party is rescinding or purporting to rescind and I do not intend by this judgment to express any view as to what if any future rights in that regard there might be.
20. Although it may not be strictly relevant to this ground of appeal, I think that it is a suitable point at which to clear up a possible misconception which the appellants may be harbouring. An order for specific performance is not an order declaring any matters of title. It is simply an adjudication by the court that a particular contract has been entered into between the parties and that that being so it ought to be performed. However, it may prove impossible to perform because of title problems. In that event the court would normally refer the matter to the Examiner of the High Court to determine the title question. This does not entirely prevent the issues from being litigated in court because if there was an issue between the parties to the contract or indeed involving a third party such as in this case, the adjoining owner, the Examiner might well refer it back to the judge to have it determined in open court, and at any rate there may be an appeal to the court from the findings of the Examiner. But an order for specific performance as such will not solve the appellants’ problem. As I have already indicated, the structure of the statement of claim would seem to suggest that the appellants may not have been entirely unaware of this given that there is an alternative claim for abatement of purchase price. In so far therefore as the respondent is claiming that a portion of property was erroneously included in the contract and will only perform on that basis with appropriate abatement of purchase price if necessary, the matter would correctly be referred to arbitration and subject to the second substantial ground of appeal the stay would be appropriate.
Moving now to the second substantial ground of appeal that is to say that the court had no jurisdiction to order the stay because the respondent had taken a step in the proceedings, it is only fair to say that although many relevant and useful cases have been cited none of them are quite on all fours with what happened in this case.
21. Before reviewing the case law, I think it useful to refer first to textbook passages on which the appellants have particularly relied. The passage most favourable to the appellants’ point of view is probably that contained in Halsbury’s Laws of England, 4th edition, reissue, Volume 2 at paragraph 627. The passage in question reads as follows:
“The applicant must have taken no step in the proceedings after acknowledgment of service. A step in the proceedings is an act which both invokes the jurisdiction of the court and which demonstrates the applicant’s election to allow the action to proceed. An applicant may take what would otherwise be a step if he makes it clear that that act is done without prejudice to his right to apply for a stay. Steps in the proceedings have been held to include: the filing of an affidavit in opposition to a summons for summary judgment, service of a defence, and an application to the court for leave to serve interrogatories, or for a stay pending the giving of security for costs, or for an extension of time for serving a defence, or for an order of discovery, or for an order for further and better particulars. The following have been held not to be steps: acts preliminary to the issue of proceedings, a request in correspondence for an extension of time for serving a defence, the filing of affidavits in answer to an application by the plaintiff for the appointment of a receiver, transferring a summons into counsel’s list, applying to strike out a defective statement of claim, resisting an application for an interlocutory injunction by putting in evidence and appearing in court, and applying for a stay on grounds other than that the dispute was subject to an arbitration payment.”
22. In a footnote to that passage there is a very general statement in the following terms:
“Any act which does not involve the court does not invoke its jurisdiction: … as a general rule any application to the court, or filing of pleadings or documents, does invoke its jurisdiction and does amount to a step in the proceedings: … under certain circumstances, however, such actions may not amount to steps.”
23. The appellants also relied on a passage in the Law and Practice of Commercial Arbitration in England, second edition, Mustill and Boyd. The passage appears at p. 472 and with reference to what is a “step in the proceedings” reads as follows:
“The reported cases are difficult to reconcile, and they give no clear guidance on the nature of a step in the proceedings. It appears, however, that two requirements must be satisfied. First, the conduct of the applicant must be such as to demonstrate an election to abandon his right to stay, in favour of allowing the action to proceed. Second, the act in question must have the effect of invoking the jurisdiction of the court.”
24. To arrive at a a true understanding of the correct principles to be applied it is necessary to review the actual decided cases. At this stage I should make it clear that although I will be reviewing the cases I will be doing so in the context of one aspect only of this case. In ground 5 in the notice of appeal the appellants rely on three distinct alleged “steps”. Two of these are in my view unstateable for the reasons which I will be indicating. Serious consideration has only to be given to the third.
25. Associated with the contract of sale there had been a tenancy agreement between the respondent and the appellants. In 1999 the respondent purported to terminate that tenancy agreement and issued ejectment proceedings against the appellants in the District Court. The appellants claim that the issuing of the District Court ejectment proceedings constituted a “step”. This argument cannot be sustained since clearly the alleged “step” was not a “step” in these specific performance proceedings brought in the High Court but rather the institution of different litigation in a different court.
26. The second alleged “step” is the imposing on the appellants the necessity to make an application to the High Court for liberty to serve out of the jurisdiction in South Africa because the respondent would not nominate their Dublin solicitors to accept service. While it was very understandable that the appellants should be highly aggrieved by this behaviour on the part of the respondent it cannot be said to constitute a “step”. The behaviour complained of was not part of the proceedings itself.
27. The third “step” alleged by the appellants is undoubtedly arguable and requires serious consideration. This relates to the application to McCracken J. for an adjournment of the motion for judgment. After carefully considering the decided cases which I am about to review, I have come to the conclusion nevertheless that that was not a “step” within the meaning of the Arbitration Act, 1980. By merely applying for an adjournment the respondent was not indicating to the court one way or the other whether he intended to participate further in the proceedings and indeed the question of reference to arbitration was raised. The adjournment was in my view nothing more than a holding operation.
28. The leading English case on the question of what constituted a “step” was for many years Ford’s Hotel Co. Limited v. Bartlett [1896] AC 1. Quite apart from any persuasive value which the case may have, it is of importance in Ireland in that it was relied on and effectively followed by Finlay P. in O’Flynn v. An Bord Gais Éireann [1982] ILRM 324, a case to which I will be referring in more detail in due course. In the Ford’s Hotel case a defendant had taken out a summons and had obtained an order for further time for delivering a defence. This was held to be a “step” in the proceedings within the meaning of the similar provision contained in the Arbitration Act, 1889. In the O’Flynn case as will be seen, Finlay P. approved the following passage from the speech of Lord Halsbury:
“The intention of the legislature in giving effect to the contract of the parties, and saying that one of them should be entitled to make an application to insist that the matter should be referred according to the original agreement, was that they should at once, and before any further proceedings were taken, specify the terminus a quo, and that if an application to stay proceedings was made under those circumstances, then that the court should enforce the contractual obligation to go to arbitration. My Lords, that seems to be a very wise provision: that costs should not be thrown away in beginning to litigate.”
29. Three of the five Law Lords delivered opinions and there is some slight discrepancy between them as to whether it was the application for the extension of time or the actual making of the order for the extension of time or a combination of both which constituted the “step” but nothing turns on that for the purposes of this appeal. In this case the respondent never made any application to the court for an extension of time to deliver a defence or indeed any other application other than for an adjournment which must necessarily be noncommittal. But it was not entirely noncommittal in that short service was allowed for the bringing of a motion to stay the proceedings.
30. For a “step” to be constituted it may not be essential that the parties seeking the stay has himself or herself made some application to the court. In the English case of Pitchers, Limited v. Plaza Queensbury Limited [1940] 1 All ER 151 it was held that opposition to a summons for leave to sign final judgment before the Master was a “step”. However, the case is somewhat unusual in that as was pointed out in the judgment of Slesser L.J. that was not a case where an application for a stay was made at the same time as leave to sign judgment was opposed. At the stage when the matter was before the Master there was no application to stay on the grounds of arbitration. That only first arose on appeal to the judge. But again the facts are far removed from this case where all that was asked for was a straightforward adjournment.
31. The next case of importance is the Irish case of O’Flynn already cited. I referred to the fact that Finlay P. in that case approved of the interpretation of the relevant section by Lord Halsbury in the Ford’s Hotel case but he went on to make the following observation.
“…it seems clear that the step which should be held fatal to a party seeking to refer a matter to arbitration is a step which involves costs, in other words a step which invoked the jurisdiction of the court at his instance or which institutes some matter whether by way of motion or otherwise in the court. In the case of the Brighton Marine Palace and Pier Limited v. Woodhouse [1893] 2 Ch. 486 it was held that an agreement reached by letter between the parties for the extension of time for a defence was not the taking of a step by the defendant which could debar him from obtaining a staying order under the Acts. In the course of the judgment of North J. in that case he points out that it was not a proceeding in the action but rather in a sense outside the court.”
32. In one sense an application for an adjournment is the invoking of the court’s jurisdiction but that is not sufficient for it to constitute a “step”, it is a totally neutral act in the context of whether it is an intention to refer to arbitration or proceed with litigation.
33. Finally I would refer to the modern English case of Turner & Goudy v. McConnell and Anor. [1985] 1 WLR 898. In that case, a Court of Appeal consisting of Dillon L.J. and Mustill J. (as he then was and who was one of the co-authors of the work cited earlier) held that the defendants had taken a step in the proceedings by filing an affidavit showing cause why summary judgment should not be entered against them and by appearing before the Master thereby causing judgment to be deferred by an adjournment; and that therefore it was too late to apply for a stay under the Arbitration Act, 1950. The judgment of the court was delivered by Dillon L.J., and he succinctly explains the reasoning behind the court’s decision in the following passage towards the end of his judgment at p. 903:
“In the present case the defendants were required under Order 14 to show cause why judgment should not be entered against them. They had to do that by affidavit or otherwise. They did it by filing the affidavit, which I have mentioned, which put forth at length the reasons why they contended that judgment should not be entered against them. Their position that they were opposing the application was maintained by the presence of the solicitor for the defendants before the Master on the 3rd of May and it was because of the contentions put forth in the affidavit, and not withdrawn, that the Master necessarily adjourned the proceedings to a more appropriate date.
They have therefore, in my judgment, taken a step in the action by filing the affidavit to show cause why judgment should not be entered against them and by appearing before the Master on the 3rd of May with the consequence that judgment was deferred by the adjournment and, in my judgment, it is too late for them in June to decide that they want a reply for a stay for arbitration.”
34. It is clear from that passage that the circumstances of that case were also entirely different from the circumstances of this case where the respondent did nothing except to apply for an adjournment.
35. The appellants in different connections have referred the court to a number of other authorities which I do not propose to review as I do not think they are relevant. At this stage I would just summarise the legal position in which the appellants find themselves.
36. They are faced with an application for a stay which was for the reasons which I have indicated made in time and is not defeated by any step taken by the respondent. The matters to be arbitrated upon allegedly fall within Condition 33. As there is a dispute as to whether they do in fact fall within Condition 33 that matter must itself be resolved by the arbitrator because that is what Condition 51 says. If the appellants satisfy the arbitrator that there was no “error” and that the respondent is in a position to perform the contract exactly as intended by the written terms thereof, there will be a finding by the arbitrator of non-applicability of clause 33. The stay can then be lifted and the specific performance suit can proceed accordingly. If on the other hand the arbitrator finds that there was an “error” or “errors” as a consequence of which the respondent is legally unable to perform the contract in the exact manner prescribed by its terms then the arbitrator will assess an appropriate sum by way of abatement of price and after that the respondent cannot be forced to perform the contract except in the modified form with the abatement of price. As to whether in that event the appellants would be entitled to rescind is not a matter that can be considered at this stage by this court.
37. I would dismiss the appeal.
Re Anderson
Chancery Division.
18 February 1897
[1897] 31 I.L.T.R 175
Madden J.
Madden, J.
Under the provisions of the Land Purchase Acts, though Thomas Anderson was owner in fee, the estate was a graft upon the antecedent interest. These cases are provided for by the Local Registration of Title Act, by which the alternative is given either to clear the title, or, if from any cause or complication it is undesirable or impossible to do so, to register the title subject to equities, and the registered owner becomes owner subject to equities. This latter course has been adopted in a larger proportion of cases than was contemplated. At the time of the grant Thomas Anderson had in him the legal estate acquired by his purchase under the Land Purchase Acts, and he was personal representative of the owner of the tenancy, the equities affecting which were reserved. Now the Registrar of Titles has properly brought the case before me for consideration, having regard to the fact that nearly twenty years had elapsed between the death of Mary Anderson and the grant of administration to Thomas Anderson, and the question is whether, under these circumstances, the purchaser, Joseph Anderson, is entitled to be registered as owner discharged from equities. In my opinion he is so entitled. Of the number of cases referred to by Mr. Barnhill some are conversant with different facts and circumstances. The case of In re Tanqueray-Willaume and Landau, 20 Ch. D. 465, was considered by the Vice-Chancellor and the Court of Appeal in In re Molyneux and White, 15 L. R. (Ir.) 383, relative to an executor selling real estate under a charge of debts, and it was there held that debts might be paid up to 20 years. But this limit has no effect in the case of executors selling chattels virtute officii —see In re Venn and Furze’s Contract (1894), 2 Ch. 101. As to the legal position of an administrator, so far as regards the sale of chattels, he has a legal position, and rights similar to those of an executor, though he derives his title under letters of administration and not under a will. I am far from saying that if letters of administration had been granted at the time of the death of the intestate, and one or more of the next-of-kin had been in possession of the holding for the length of time, I should have without enquiry registered the purchaser as owner in fee discharged from equities. Now I must assume that at the date of the granting of administration in 1896 there were active duties to be done by the administrator appointed by the Court, and among them was that of realising and dealing with the assets of the intestate. There is nothing in this case to displace the usual rule that a purchaser of leaseholds may safely accept the title of the executor, and I decree that Joseph Anderson is entitled to be registered as owner discharged from equities.
Jackson v Stokes
[2008] I.E.H.C. 276
1. This action was commenced by originating Summary Summons of the 9th July, 2007. By it the plaintiffs seek to recover the sum of €38,465.96 together with interest pursuant to statute. It is alleged that sum is money due for interest accrued on foot of a contract for sale made between the parties and in particular so due because the closing date in respect of such contract was the 2nd April, 2007 whereas closing occurred on the 24th May, 2007, interest being payable thereunder at a daily rate of €739.73 from such agreed date. Ultimately, when the matter came before the Master on a motion for summary judgment dated 5th November, 2007 it was put into the Judges List for hearing. The defendant sought to have the matter remitted for plenary hearing. In as much as it was agreed between the parties that no evidence beyond that which appeared on the affidavits sworn for the purpose of the motion was relevant and the matter could be disposed of on that evidence the hearing was, by consent, treated as the trial (on affidavit).
2. I think that the first issue which arises is to determine the agreed closing date. This was the 29th October, 2006 but it is not in dispute that this was initially changed to the 2nd April, 2007, on perusal of Mr. Jackson’s affidavit and that of Mr. Stokes. It would appear from a letter sent by Messrs. Denis McSweeney (solicitors for the defendant purchaser) on the 9th October, 2006 that this change was agreed consequent upon a letter of 6th October, 2006 from Messrs. Collins on behalf of the plaintiffs. In his replying affidavit sworn on the 15th January, 2008, Mr. Stokes, at para. 5 therein, says that his solicitors requested a changed closing date of the 16th April, 2007; it is not clear whether or not it is suggested that this change was sought in writing but, in any event, there is nothing before me to indicate that it was. However, Mr. Stokes contends that a letter of 21st March from Messrs. Collins is to be read as confirming his assertion in as much as it refers to the closing “which is due to take place on 16th April next”. In a later letter, of 26th March 2006, to Messrs. McSweeney from Messrs. Collins reference is made to “your conversation with David Ensor of our offices suggesting a closing date of 16th April next”. Further, by that letter certain difficulties on the part of the plaintiffs in the event that the closing date was as late as the 16th April were mooted and it was stated “we would appreciate if you could get your clients instructions in this matter and facilitate our clients by completing on the morning of the 11th April”: thus a further change was sought but there is no suggestion it was agreed.
3. It is accordingly clear that the closing date was the 16th April, 2007.
4. The contract was, to put the matter shortly, in accordance with the general conditions of sale published by the Law Society with, as is usual, of course, certain special conditions. Such general conditions at Clause 40 contemplate what are commonly known as “completion notices” and Clause 40(a) is to the effect that:-
“If the sale be not completed on or before the closing date, either party may on or after that date (unless the sale shall first have been rescinded or become void) give to the other party notice to complete the sale in accordance with this condition, but such notice shall be effective only if the party giving it shall then either be able, ready and willing to complete the sale or is not so able ready or willing by reason of the default or misconduct of the party.”
And Clause 40(b)
“Upon service of such notice the party upon whom it shall have been served shall complete the sale within a period of 28 days after the date of such service… and in respect of such period time shall be of the essence of the contract without prejudice to any intermediate right of rescission by either party.”
5. It seems clear in the present case that there was no obligation on the part of the defendant purchaser to close the sale before the 16th April, 2007 and, of course, time was not of the essence in respect of that date. The notice was accordingly served prior to the time agreed for closure and demanded closure 28 days thereafter i.e. 28 days from the 3rd April 2007, (excluding the day of service). Prima facie, accordingly, there was no breach of contract on the part of the defendant purchaser merely because the sale was not closed until 25th May following if that date was within a “reasonable time” of the 16th April. The notice was bad and is accordingly not relevant.
6. Interest is payable from the original or any subsequently agreed closing date, whether or not time is of the essence in respect of such date. Interest is not, of course, payable if closing does not take place on the ultimately agreed date because of the vendor if the purchaser is not himself in default or incapacity to close is not the due purchasers default. The benefit, of course, of a vendors completion notice in the event that a closing date has passed without closure and without default by the vendor is that finality is brought into the date for closing thereby disposing of any difficulties pertaining to any issue of closure only within a reasonable time of the agreed closing date (e.g. difficulties as to whether or not there is a breach giving rise to the remedies which flow therefrom, including forfeiture of a deposit and a claim for damages or for specific performance) but the vendor here does not have the benefit of such notice.
7. In any event, even if there was no obligation to complete the contract on a date agreed where time is not of the essence (i.e. here on 16th April, 2007) one of the consequences which that entails is a liability for interest subject to the qualifications referred to above and as I have said. It seems to me that it must be axiomatic that a party could not be liable for interest if a contract is not closed unless the vendor is able, ready and willing to so close on the date agreed. In this case it is contended on the part of the purchaser that the vendors, through no fault of his, were not so able, ready and willing to close on 16th April or prior thereto. I think whether or not such party was in a position to close is evidenced by the fact that, ultimately, on the 24th May, they were not in position t do so, and, in any event, at no time prior thereto.
8. In particular, it is contended on behalf of the purchaser that there were extant several encumbrances upon the plaintiff’s title to the lands in sale. It appears that a negative search was available which disclosed these encumbrances. These consisted of four mortgages respectively dated the 24th April, 1992, the 14th August, 1981, the 14th March, 1982 and the 17th May, 1991. It appears that the amounts due thereunder had been discharged prior to the contract of sale as evidenced by the fact that Messrs. Collins in reply to requisitions on title said that there were no encumbrances. The plaintiffs say that in truth there were no encumbrances, which was why they replied as they did and that they had no duty to furnish any vacate, release or other document to the purchasers on closing. That necessarily means the plaintiffs are contending that a good title can be furnished even though encumbrances still exist on the title, provided that the amounts secured thereunder are discharged, that it is a matter for any purchaser, if he so wishes, to ice the cake, so to speak, (quite unnecessarily from his point of view) and seek such vacate, release or other documents sufficient to remove them. I cannot believe that this is the law. Presumably as a minimum proof of the fact of payment would have been required even on the plaintiff’s contention. As a minimum one would need to look at the mortgages to decide whether, say, they secured not merely a fixed capital sum with interest or, say, they secured not merely a fixed capital sum with interest or, say, indebtness to any of the financial institutions concerned in order to satisfy oneself that there were no liabilities. Much has been made of conveyancing practice to accept a title as good which was subject, prima facie, to encumbrances, on the basis of an assertion that the money secured thereby had been discharged. Of course the acceptance of an undertaking to furnish any relevant document or to produce evidence of discharge, by a vendor’s solicitor, equally in accordance with common conveyancing practice, by the purchaser’s solicitor would be proper but that is not the end of the matter, here.
9. One is accordingly thrown back on principle and as a matter of principle it seems to me that a party entitled to a good marketable title is entitled to just that and that the fact of the existence of encumbrances (whether or not any amount secured thereby has been paid) means that the title is not such. I should say, in the context of the present case, that undertakings were accepted, ultimately, in respect of the encumbrances. It is suggested that the sale might have been closed at an earlier stage if the defendants had been willing to accept such undertakings but I see no evidence to that effect and, even it were to be so, a party who waives its strict legal rights as in the present case does not thereby, in my view, acknowledge the proposition that its contentions are ill founded in law. This must be particularly the case here given the fact that as of the 31st August, the plaintiffs knew what was required of them. An undertaking is simply not the same thing as, say, a deed.
10. Undertakings pertaining to discharge of encumbrances are, of course, a commonplace since a three way closing will rarely occur. In the present case there was no reference to undertakings, it appears, at any time before the date of attempted closure on 24th May, 2007. It seems that the only reference to the encumbrances arose in correspondence between the solicitors, with special reference to a letter of 31st August, 2006. By that letter Messrs. Denis McSweeney indicate that they had apparently received the negative search from which the fact of the existence of the mortgages appeared. I do not have a copy of that search but the purchaser’s solicitor thereby sought confirmation “that the originals of all mortgages will be handed over on closing with vacate/receipt endorsed thereon or alternatively a deed of release in respect of same duly registered”. The vendor was accordingly on notice from that day as to the purchaser’s requirements in respect of the encumbrances and prima facie, one would have thought that their requirements might reasonably have been capable of being met since it appears that on the relevant date the amounts due had, as a fact, been discharged and they were legitimate demands.
11. The purchasers contend that whatever may be conveyancing practice in terms of the acceptance of undertakings pertaining to encumbrances they have a free standing right to a perfected title and are not to be placed in a position of having to accept undertakings which do not, of themselves, give them title, merely the assurance that they will obtain title in the future or one which they must take steps themselves to achieve. This bald, freestanding position is unexceptional and unassailable whatever grace might be extended by purchasers to vendors. Presumably a mortgagee would in some circumstances be willing to take an undertaking from the vendor’s solicitors to pay any amount due out of the proceeds of sale and, even prior to closure, to, say, deliver original mortgage deeds or execute deeds of release or otherwise act as might be necessary to divest themselves of the interest which they might have by virtue of the encumbrances. There might be other cases where what one might call a three way closing would be necessary.
12. Dublin Laundry Company Limited (in liquidation) v. Malachy Clarke, [1998] I.L.R.M. 29, strongly relied upon by the plaintiffs, was a case where the issues were decided in the context of the service of a completion notice and it is of some assistance in the present context. In it the liquidator (selling on behalf of the company) did not, at the time service of the completion notice, have releases in respect of certain equitable mortgages, but could have had them at any time up to and including the date of expiration: this did not render the notice bad. Certainly, of course, whether there is a completion or not the vendor should be in a position to produce good marketable title on the closing date (i.e. whether that date is agreed or fixed by completion notice or, time not being of the essence, any later relevant date).
13. Of potential relevance also in the present case is the position pertaining to the provision of a certificate under the Family Home Protection Act, which, apparently, had not been executed on the date the completion notice was served: Costello J. held inter alia that this document could have been obtained without any difficulty if the sale had been completed – the fact that it had fallen through (giving rise to the action) forestalling the need to produce it. The relevance of the certificate was in the context of the defendant’s submission that it was not in existence at the time of service of the completion notice. In any event, it is clear from the report that the property was not a dwelling house and the vendors were a company; presumably, accordingly such certificate was merely a document certifying to the former effect and was not such consent as is required from a spouse pursuant to s. 3 of the Family Home Protection Act, to which I will turn below. It is thus no authority for the proposition, for example, that a party is ready willing and able to close if he does not have an appropriate consent, where that is required.
14. It is not in dispute is that there was at the time at which closing was sought to be made no separate free standing prior consent on the part of the second named plaintiff wife as contemplated by s. 3 of the Family Home Protection Act to the grant or assurance in respect of a portion of the lands in sale (the remainder being in the joint names of the plaintiffs). It is suggested that the absence of a prior written consent would be a de minimus error but I do not think that if a consent was required it could fall into that category since any disposition without a consent, where that was requisite (as here) would be void.
15. It is contended, however, that the execution of the contract itself constitutes a consent to the ultimate grant. I am told by counsel that there is no authority upon this point and presumably this is because whether or not a document is a consent for the purpose of the Act is purely a matter of interpretation of such documents in the ordinary course. The face is the first page of the contract contains a standard form provision, capable of being signed by a spouse, consenting to the sale of the property described in the particulars, pertaining to the contract. This was not executed. No such consent is of course necessary where property is jointly held by a husband and wife and even though the property was held under separate titles it is one lot. Consent was required only in respect of the disposition of part of it. Notwithstanding the fact that the separate portion directed to the Family Home Protection Act (pertaining to parts of the property in sale) was not executed the operative part of the contract is described as being between the plaintiffs and the defendant:-
“Whereby it is agreed that the vendor shall sell and the purchaser shall purchase in accordance with the annexed special and general conditions of sale the property described in the within particulars at the purchase price mentioned below”.
16. It seems that while conveyancing practice contemplates a separate consent to the assurance (whether endorsed on it or otherwise) directed towards the Family Home Protection Act be executed it is hard to conceive how there would be a want of consent to the disposition of part of the property in sale in the current, or perhaps, in any, case where the document is explicitly described as a memorandum of agreement pertaining to the sale of specified property and where both spouses are party thereto. The alternative proposition is that where two persons are parties to a contract, even in a case where part of the lands in sale (as one lot) are held solely by one of them (they being spouses) participation in the contract expressed be in respect of the entirety of the lands, does not be betoken consent for all purposes. I cannot believe that this is the case. I therefore am of the view that there was a prior consent to the deed produced as executed by the vendors on 24th May. Whilst the point is irrelevant having regard to my conclusion it seems to me that it would be hard to conceive how an undertaking to produce the consent, unless it existed, could fulfil the duty of the vendor to complete the sale having regard to its fundamental nature. Thus, even if I am wrong in my conclusions in respect of the question of encumbrances, and in particular, the insufficiency of undertakings, an undertaking to afterwards produce a consent unexecuted prior to the sale would never be sufficient. I do not think that the decision of Costello J. in The Dublin Laundry Company Limited case is authority to the contrary since what was contemplated there were a statutory declaration and a certificate under the Family Home Protection Act to prove that the property was not a family home rather than a prior written consent by a spouse.
17. A number of other decisions were brought to my attention. In Quadrangle Development and Construction Company Limited v. Genor, [1974] 1 WLR 68 the plaintiff failed to complete in accordance with a completion notice of a type which appears to be analogous to that here and the defendant sought to rescind the contract and forfeit the deposit; it is authority only for the proposition that when a completion notice is served both parties are bound thereby. In Re The Post-Master General and Colgan’s Contract, [1906] 1 I.R. 287 the vendor was held not to be entitled to close a sale with the Post-Master General because he was not in a position to give vacant possession of the property on completion in as much as there was in existence a tenancy originally conceived to be quarterly (at the time of the contract) but ultimately held to be yearly whereby an attempt to secure possession, for the purpose of giving vacant possession to the purchaser, by serving three months notice to quit was ineffective. The questions of “default” and “wilful” were addressed but it seems hard to conceive, on any view of the matter, that the purchaser had an obligation to close the contract whilst the tenancy was outstanding. In Allied Irish Banks v. Finnegan, (Unreported, Supreme Court, Blayney J., 16th February, 1996) the issue concerned the efficacy of a consent of a spouse to the creation of an encumbrance: on its face it was valid but it was asserted that it was no true consent: obviously this has no relevance here. In Tyndarius Limited v. O’ Malley and Others (Unreported, High Court, T.C. Smyth J., 11th January, 2002), a completion notice was served by the vendor but it was contended that it was invalid because the vendor was not ready and willing at the time of its service to fulfil his own outstanding obligations and this was indeed held to be so.
18. In so far as reference was made to conveyancing practice in Patel v. Daybells (a firm) [2001] All E.R. 398 (July) an issue arose as to whether or not a purchaser’s solicitor was negligent by accepting an undertaking from the vendor’s solicitor to redeem the vendor’s mortgage out of the proceeds of sale and it was held that there was no negligence in doing so having regard to the fact that the approach in question complied with normal conveyancing practice, in circumstances where the practice did not expose a client to a “foreseeable and avoidable risk” or could not be defended on rational grounds (i.e. there were circumstances where the application of the practice would not exclude liability). It is mentioned here for the purpose of stressing the nature of an undertaking described inter alia as:-
“…between the solicitor who gives the undertaking and the purchaser, the undertaking is unconditional and unqualified. Moreover it is backed by the summary procedure available for its enforcement, and by the Solicitors Indemnity Fund (or the equivalent arrangements which have now replaced it) and the Compensation Fund.”
In Domb and Another v. Isoz, [1980] 1 All E.R. 942 an issue arose as to whether or not a contract for sale was binding on the defendant vendor and while the issue of undertakings was not germaine to the judgment, a portion of the judgment of Templeman L.J. made reference to the nature of conveyancing transactions and in this connection inter alia he stated that:-
“Binding and enforceable undertakings between professional men play an essential part at different stages.”
No one doubts these principles.
19. I was also referred to Glenkerrin Homes v. Dunlaoghaire Rathdown County Council, (Unreported, High Court, Clarke J., 26th April, 2007). There is no suggestion in this however, or any other authority opened to me, that there is an obligation to accept undertakings in substitution for ones strict rights, desirable though this is in many circumstances and in the present case might be. In Glenkerrin reference was made inter alia to the provision of letters from a local authority confirming compliance with financial contribution conditions of planning permissions. These, he held, have achieved a status “which might be described as a quasi document of title” and that there was an entitlement to their provision in the context of legitimate expectation. I cannot see how this bears on the nature of an undertaking or that it establishes any general principle that undertakings are, and there is a degree of repetition here on my part, a substitute for fulfilment of substantive obligations. I do not think there could, by the way, be any question of legitimate expectation that an undertaking would be accepted or, even if it be normal conveyancing practice, one could assume that undertakings would be accepted and to purport to complete or offer to complete on the basis of them. In this case by letter of 31st August, 2006 the purchasers made their position abundantly clear as to there requirements, requirements which were never disputed and which, I have held, in any event, were perfectly proper.
20. In summary I am accordingly satisfied, that the plaintiffs were not able, ready and willing to close, on the 16th April or, indeed, on the 24th May by reason of the absence of appropriate vacates or releases of the encumbrances, that there is no obligation to accept undertakings in lieu of one’s strict rights and that their failure to close, was not due to any fault on the part of the purchaser and that interest is not payable. No demand was made by the purchaser for anything to which he was not, in strictness, entitled. The completion notice is irrelevant. The vendor seems at all times, and ultimately at closing to have been unwilling to close on the basis required by law, even if he was able or ready because he possessed the capacity to perfect the title but did not and of course he must not only be able and ready but also willing. I dismiss this action.
Patrick Roche and James Roche v Philip Leacy
[2012] IEHC 96
JUDGMENT of Miss Justice Laffoy delivered on the 29th day of February, 2012.
1. Factual background
1.1 These proceedings arise out of an agreement for sale dated 25th September, 2007, made between the plaintiffs, as vendors, of the one part,and the defendant, as purchaser, of the other part (the contract) whereby the plaintiffs agreed to sell to the defendant certain lands at Ballyrea, County Wexford, containing 28.309 acres statute measure, being part of the lands registered on Folio 23035 of the Register of Freeholders, County Wexford at the price of €620,000. A deposit of €62,000 was paid by the defendant to the plaintiffs on the execution of the contract. The contract incorporated the Law Society of Ireland General Conditions of Sale 2001 (revised) edition. Although this is not expressly stated in the contract, it is implicit that the plaintiffs were selling as personal representatives of their father, James Roche, who died testate on 19th July, 1998 and probate of whose will was granted to them on 10th December, 1998. The said James Roche had devised and bequeathed his residuary estate, which included the lands registered on Folio 23035, to his widow for life, with the remainder to the first named plaintiff absolutely, although prior to the sale there was a family dispute, the details of which are irrelevant for present purposes, as part of the resolution of which the lands registered on Folio 23035 were put up for sale. The lands the subject of the contract comprised one of four lots which were put up for sale by the plaintiffs, as such personal representatives, at the same time.
1.2 Following the execution of the contract, there was a dispute between the defendant and the plaintiffs as to the extent of the land included in the contract. Proceedings by way of vendor and purchaser summons in this Court were initiated by the defendant. The dispute was resolved and the proceedings were compromised at the beginning of November 2008, when the boundaries of the land to be transferred to the defendant were agreed and the purchase price was reduced by €85,000, in consequence of which the purchase price payable by the defendant was €535,000.
1.3 Following the compromise, correspondence recommenced between the defendant’s solicitors and the plaintiffs’ solicitors on title issues in relation to the completion of the sale. An engrossed deed of transfer was furnished by the defendant’s solicitors to the plaintiffs’ solicitors, together with various documents for re-execution and re-dating with their covering letter dated 26th November, 2008 and the plaintiffs’ solicitors responded on 3rd December, 2008. The transaction seemed to be progressing towards completion and it was the evidence of Mr. Michael Cullen, the principal in the firm Lombard & Cullen, the solicitors acting for the plaintiffs, that he anticipated completing around 16th December, 2008. However, by letter dated 16th December, 2008, which he received on that day, the defendant’s solicitors raised the fact that a lis pendens had appeared on a judgment search which they had carried out. The lis pendens had been registered in the Central Office of the High Court on 10th November, 2008 and it related to family law proceedings in the Circuit Court between Ann Roche (Mrs. Roche), the wife of the first plaintiff, as applicant, and the first named plaintiff, as respondent, which were entitled to the benefit of the in camera rule, but the existence of which Mrs. Roche made public by the registration of the lis pendens. In the letter of 16th December, 2008 the defendant’s solicitors stated that they would require the lis pendens “to be released” and indicated that the “release” required an application to the Master of the High Court. It was also stated in that letter that the defendant’s solicitors were in funds to complete the transaction, that they had a bank draft for the balance of the purchase monies available as of 15th December, 2008. They requested that the sale be completed immediately and threatened the service of a notice to complete. Mr. Cullen’s evidence that he first knew of the registration of the lis pendens was when he received the letter of 16th December, 2008, although he was acting for the first named plaintiff in the family law proceedings and he had entered an appearance to those proceedings in the Circuit Court in September 2008.
1.4 In any event, the steps taken by the plaintiffs’ solicitors to address the existence of the lis pendens with a view to completing the sale and their interaction with the defendant’s solicitors were as follows:
• By letter dated 17th December, 2008 the plaintiffs’ solicitors informed the defendant’s solicitors that they had been in touch with the solicitors for Mrs. Roche and had suggested that funds be retained, presumably by the plaintiffs’ solicitors out of the proceeds of sale, pending the resolution of the family law proceedings and that, in consideration of the funds being retained on agreed terms, the lis pendens be vacated by Mrs. Roche’s solicitors. In addition, it was suggested to the defendant’s solicitors that, having regard to the fact that they were in funds and that they had the closing documents, the sale be completed on the plaintiffs’ solicitors undertaking, which they gave in the letter, to hold the entire purchase monies in trust for the defendant’s solicitors and the defendant in an interest bearing account until such time as the lis pendens would be removed and evidence of that furnished to the defendant’s solicitors. The Christmas vacation then intervened and the plaintiffs’ solicitors made very little progress with Mrs. Roche’s solicitors until approximately mid-January 2009.
• There was no response whatsoever from the defendant’s solicitors to the letter of 17th December, 2008. The next step taken by them was to serve a notice to complete on 28th January, 2009 on the plaintiffs’ solicitors by registered post. That notice called on the plaintiffs to complete the sale in accordance with general condition 40 of the contract and stated that, in default of completion, the defendant would rely on general condition 40 and all other rights and remedies available to him. Issues arose at the hearing as to the validity of that notice to which I will return later.
• The response of the plaintiffs’ solicitors was contained in a letter of 5th February, 2009. Two points were made in that letter which require to be recorded. The first was that the defendant would be adequately protected by the undertaking given by the plaintiffs’ solicitors in their letter of 17th December, 2008 and that there was no reason why the sale could not be completed. Further, it was denied that the defendant had any entitlement to seek payment of interest charges from the plaintiffs. Secondly, it was stated that, in any event, the plaintiffs’ solicitors had reached agreement with the solicitors for Mrs. Roche and that they had given certain undertakings on the first plaintiff’s behalf. They enclosed a copy of a letter dated 4th February, 2009 from Mrs. Roche’s solicitors, Redmond and Co., which stated:
“We confirm that our client will be relying on your undertaking and on that basis an application will be made to remove the lis pendens as a matter of urgency”.
• The defendant’s solicitors replied by letter dated 10th February, 2009. They took the position that the lis pendens was still in existence and that the plaintiffs were not in a position to give “a clear unencumbered title to our client”. The defendant was not contractually obliged “to rely on any letter from a third party Solicitor not connected with the transaction”. In the circumstances, the defendant would not complete the transaction due to the plaintiffs’ failure “to furnish clear title”.
• There followed four successive letters from the plaintiffs’ solicitors to the defendant’s solicitors which elicited no response. The first was dated 12th February, 2009 and it reiterated that steps were being taken to remove the lis pendens by arrangement with Mrs. Roche’s solicitors. The second was dated 18th February, 2009 and it updated the defendant’s solicitors on the situation, stating that they had ascertained that the application to vacate the lis pendens required to be made to the County Registrar in Wexford by virtue of s. 34 of the Courts and Court Officers Act 1995 (the Act of 1995). It continued:
“We have therefore, in conjunction with Redmond & Co., Solicitors for the Applicant for registration of the lis pendens, filed an Ex-Parte Application for next Monday at which time an order will be made for the removal of the lis pendens.”
The third was a letter of 24th February, 2009 in which it was stated:
“The County Registrar ordered at her court on the 23rd of February that the lis pendens herein be vacated. We have sent a draft Order to the County Registrar for execution/amendment and we will be filing this in the Central Office in due course.”
Service of a completion notice was threatened, if the defendant’s solicitors did not confirm by return that they were in funds to complete the purchase. The fourth was a letter dated 2nd March, 2009, which was sent by fax and which referred to the previous correspondence and to telephone calls to the offices of the defendant’s solicitors on 25th, 26th and 27th February to which they had received no adequate response. A notice to complete, which was also dated 2nd March, 2009, was enclosed with that letter. That notice has no bearing on the issues the Court has to determine.
• By letter dated 4th March, 2009 from the defendant’s solicitors, which was received by the plaintiffs’ solicitors on the same day, the defendant’s solicitors referred to the notice to complete which they had served pursuant to condition 40 of the general conditions of sale on 28th January, 2009, which it was acknowledged had been received by the plaintiffs’ solicitors on 29th January, 2009, and stated that the twenty eight day period stipulated therein had expired on 2nd March, 2009. They further stated that, as the plaintiffs had not furnished “clear unencumbered title” to the property in sale, the contract was rescinded. They requested immediate return of the deposit of €62,000. They threatened that, if the deposit was not returned within five working days from the date of the letter, the defendant would be seeking interest thereon at the rate stipulated in the contract, namely 12% per annum.
1.5 The order of the County Registrar vacating the lis pendens was perfected on 6th March, 2009. It recorded that an order was made on 23rd February, 2009, on an ex parte application by Mrs. Roche, that the lis pendens registered by her in the Central Office of the High Court on 10th November, 2008 be vacated. The relevant form to procure a memorandum of vacate to be subscribed pursuant to s. 21 of the Judgments Registry (Ireland) Act 1871 (the Act of 1871) was signed on behalf of the County Registrar on 16th March, 2009. It was lodged in the Central Office and it was recorded there as having been received on 25th March, 2009. However, the defendant’s solicitors persisted in their refusal to complete, having procured a judgment search which had been carried out on their behalf by Lawlink on 23rd March, 2009, which disclosed the existence of the lis pendens in the Central Office against the first named plaintiff.
1.6 While I consider that the issues which arise in these proceedings fall to be determined primarily by reference to the facts which I have outlined above, which are reflected in contemporaneous documentation, the factual basis of one of the issues raised on behalf of the plaintiffs turns on the oral evidence of the defendant and his solicitor. It was submitted on behalf of the plaintiffs that the defendant was neither ready, willing nor able to complete the purchase at the time the notice to complete was served on his behalf on 28th January, 2009 and that the notice was served in the hope of trumping the plaintiffs’ efforts to have the lis pendens removed. The evidence of Mrs. Maeve Breen, of the firm of M. T. O’Donoghue & Co., the defendant’s solicitors, was that the defendant told her on 30th January, 2009 that he was not going to go ahead with the transaction and that his instructions to her were that he did not want to complete the purchase. The evidence of the defendant was that he decided in December 2008 that he did not want to go ahead with the purchase, but he emphasised that he was an honest man and that he would have completed the purchase if he had been advised that there was a clean title furnished within the twenty eight day period of the notice to complete. The defendant expressed extreme frustration and annoyance with the course of the transaction. However, it emerged at the hearing that he had purchased the land at auction before seeking the advice of a solicitor. Although the first dispute in relation to the extent of the land included in the sale was resolved by agreement, the defendant continued to harbour a grievance against the auctioneer who conducted the sale, the plaintiffs’ solicitors and the purchaser of another lot, although strangely not against the plaintiffs. Around the time the defendant’s defence and counterclaim was delivered in these proceedings in January 2010, the defendant distributed five hundred leaflets in Gorey, County Wexford alleging “underhand work” by those parties in connection with the auction. Notwithstanding that very inappropriate behaviour, I do not think it would be correct to infer that the defendant was not “willing” to complete the purchase, in the sense in which that expression is used in paragraph (a) of condition 40 of the general conditions of sale, when the notice to complete was served on 28th January, 2009.
1.7 These proceedings were initiated by plenary summons which issued on 11th May, 2009.
2. The case as pleaded and the response thereto
2.1 In their statement of claim delivered on 7th August, 2009, the plaintiffs, having pleaded, inter alia, the contract and variation of the terms thereof, the defendants’ requirement that the lis pendens be vacated, the fact that the County Registrar made an order on 23rd February, 2009 vacating it and that by letter of 24th February, 2009 the defendant was called upon to complete the purchase and refused to do so, it was alleged that the defendant, in continuing to refuse to complete, was in breach of contract, as a consequence of which the plaintiffs had suffered loss, damage and expense which was ongoing. The primary relief sought by the plaintiffs was specific performance. They also claimed alternative and ancillary reliefs, including interest at the contract rate.
2.2 The defendant’s defence and counterclaim was delivered on 8th January, 2010. The defendant pleaded the service of the notice to complete dated 28th January, 2009 and that the time limited therein expired on 2nd March, 2009, at which time the lis pendens had not been vacated and then still appeared on the folio and was still on the folio. It is of particular significance that that plea was factually incorrect. The lis pendens was never registered as a burden on Folio 23035, County Wexford, nor was there ever an application to the Property Registration Authority to register the lis pendens as a burden on the folio. It was pleaded that, in accordance with his rights under the contract, the defendant had duly rescinded the contract and had required return of his deposit. It was denied that the defendant had wrongfully refused to complete the contract at any time. In the counterclaim, it was pleaded that the defendant had drawn down the monies to complete the purchase on two occasions from his lending institution and on both occasions the plaintiffs had not been ready, willing and able to complete in accordance with the contract, in consequence of which the defendant had to refund the monies to the lending institution and, in so doing, he had suffered loss and damage, the particulars of which were given as expenses, bank charges and legal fees amounting to €30,000. The defendant counterclaimed for the return of the deposit of €62,000 together with interest thereon from 16th November, 2007 and damages for breach of contract.
2.3 In their reply and defence to counterclaim delivered on 12th July, 2010, the plaintiffs joined issue on all of the matters pleaded by the defendant, save insofar as they comprised admissions. I consider that it is not necessary to address the specific pleas made by the plaintiffs save in relation to one matter. It was denied that the contract had been rescinded and that denial was based on the proposition that the “purported” completion notice dated 28th January, 2009 was invalid on two grounds: that it was not addressed to the plaintiffs; and that it failed to specify the appropriate time for completion and/or was not delivered to the plaintiffs’ solicitors until 29th January, 2009.
3. The issues
3.1 The various arguments advanced on behalf of the parties can, in my view, be subsumed into the following two issues:
(a) whether the notice to complete dated 28th January, 2009 issued by the defendant’s solicitors was a valid notice to complete in accordance with condition 40 of the general conditions of sale in the contract; and
(b) if it was, whether the plaintiffs had complied with their contractual obligations in relation to the title to the lands the subject of the contract by 2nd March, 2009.
4. Validity of notice to complete
4.1 I have outlined the two grounds on which the plaintiffs pleaded that the notice to complete was not a valid notice to complete at para. 2.3 above.
4.2 As regards the first ground, that the notice to complete was not addressed to the plaintiffs, as counsel for the defendant pointed out a similar point was dealt with in the High Court by Finnegan P. in Haldane v. Rooney [2004] 3 I.R. 581. Finnegan P. stated (at p. 590):
“Finally, objection is taken to the notice upon the basis that condition 40(a) requires the completion notice to be given to the other party, whereas the notice in this case was addressed to and served upon the plaintiffs’ solicitor. Condition 49(b) provides that a notice may be given or served by directing it to the intended recipient and delivering it by hand or sending by pre-paid-post to the office of the solicitor representing the intended recipient in the sale. This leaves, however, the issue as to whether completion notices, required by condition 40 to be given to the other party, must be addressed to that party and not to his solicitor. There is no denial of the plaintiffs’ solicitor’s general authority to act in the transaction and in these circumstances the general rule is that notice to a solicitor is actual notice to his client: Espin v. Pemberton (1859) 3 DeG. & J. 547. Further, the notice to complete was sent under cover of a letter addressed to the plaintiffs’ solicitor which clearly set out that solicitor’s clients were the plaintiffs. I am satisfied that it is appropriate to read the letter together with the notice and, doing so, I am satisfied that this complies with the requirements of condition 40.”
Similarly, I am satisfied that it is appropriate to read the letter dated 28th January, 2009 to the plaintiffs’ solicitors, which identifies their clients as the plaintiffs, together with the notice to complete of the same date, which was stated to be enclosed by way of service. While in format the notice was only addressed to the plaintiffs’ solicitors at the end, it stated expressly in clear and unequivocal terms that the purchaser, namely, the defendant, was thereby giving notice to the vendors, namely, the plaintiffs, to complete the sale in accordance with general condition 40 of the contract. That is all that was required, in my view. Accordingly, I am satisfied that the manner in which the notice was given complied with the requirements of general condition 40.
4.3 In relation to the second ground of objection, that the notice failed to specify the appropriate time, that can also be readily disposed of by reference to the decision of Finnegan P. in Haldane v. Rooney. Paragraph (a) of condition 40 of the general conditions of sale in the contract provided that either party might give the other party “notice to complete the sale in accordance with this condition”. Paragraph (b) provided that upon service of such notice the party on whom it was served should “complete the sale within a period of twenty-eight days after the date of such service (as defined in Condition 49 and excluding the date of service)”. The notice to complete dated 28th January, 2009 gave notice to the plaintiffs “to complete the sale in accordance with General Condition 40 of the Contract”. It further stipulated that the plaintiffs were required to complete the transaction “within a period of twenty-eight days after the date of service hereof”. It was not expressly provided that the date of service was excluded from the calculation of the twenty-eight day period. However, in my view, that was clearly implicit, as it was made clear that the notice was being served in accordance with general condition 40. Apart from that, as Finnegan P. pointed out in Haldane v. Rooney at p. 590, the general rule of construction which applies where a period is allowed within which an act must be done is that the first day is excluded: Goldsmiths’ Company v West Metropolitan Railway [1904] 1 K.B. 1.
4.4. Accordingly, in my view, the notice to complete served by the defendant was not invalid on either of the grounds alleged. As I have stated earlier, I am satisfied that on 28th January, 2009 the defendant was “willing” to complete, in the sense in which para. (a) of general condition 40 requires the party serving notice under that condition to be “able, ready and willing to complete”. Having regard to the evidence, which I am of the view was strong on this point, I consider that it is appropriate to find that the defendant was able to complete on that date, in the sense that he could have drawn down the finance from his lending institution for the purposes of completing at any time up to 2nd March, 2009.
5. The plaintiffs’ compliance with contractual obligations in relation to title
5.1 Having regard to the nature of the title to the land the subject of the contract, it is possible to state with absolute confidence that, if the defendant had completed the purchase of the lands the subject of the contract on the 1st or 2nd March, 2009, the defendant would have acquired title to the lands free from all claims by Mrs. Roche as the applicant in the proceedings in the Circuit Court the subject of the lis pendens which had been registered by her. The crucial factors were that the property the subject of the contract was registered land and, notwithstanding what was pleaded in the defence, the lis pendens was not registered as a burden on the relevant folio.
5.2 The system of registration of lis pendens was introduced in this jurisdiction in the Judgments (Ireland) Act 1844 at a time when the title to all of the land in Ireland was unregistered title. Section 10 of that Act provided that no lis pendens could bind or affect a purchaser or a mortgagee who had no express notice of it, unless and until a memorandum containing the requisite details concerning the suit was registered in court, latterly meaning in the Central Office of the High Court. Under s. 5 of the Judgment Mortgage (Ireland) Act 1850 it was provided that no lis pendens should bind or affect a purchaser or a mortgagee without express notice thereof unless relevant memorandum had been registered in the Central Office within five years before the execution of the conveyance to the purchaser. Section 2 of the Lis Pendens Act 1867, which was held by the Supreme Court in Flynn v. Buckley [1980] I.R. 423 as having applied to Ireland, was the provision which empowered the court in which the litigation was pending to vacate the lis pendens, without the consent of the party who registered it “upon the determination of the lis pendens, or during the pendency thereof, where the court shall be satisfied that the litigation is not prosecuted bona fide”. Finally, s. 21 of the Act of 1871 remedied a lacuna, in that it made provision for the registration of a vacate in what is now the Central Office, the object being to cancel the registration in the Central Office, which would appear on a judgment search. All of those provisions affected land the title to which was unregistered. There are corresponding provisions to be found now in Part XII of the Land and Conveyancing Law Reform Act 2009, which operate prospectively, including a provision which recognises that since the Act of 1995 a County Registrar has power to vacate a lis pendens on the application of the person who originally registered it (s. 126).
5.3 The position in relation to registered land is different, as is stated in the following passage in McAllister on Registration of Title (at p. 215):
“As regards registered land, the lis pendens, in order to affect a purchaser must be registered as a burden on the register of the lands affected, and not in the Registry of Judgments. Its re-registration every five years is unnecessary. So long as the lis pendens remains undischarged it remains on the register and binds any purchaser.”
Similarly, in Fitzgerald on Land Registry Practice (2nd Ed.) it is stated (at p. 210) that to affect registered land a lis pendens must be registered as a burden on the folio.
5.4 An analysis of the statutory basis of the foregoing propositions in relation to registered land must start with s. 69 of the Registration of Title Act 1964 (the Act of 1964). By virtue of subs. (1)(i) of that section a lis pendens may be registered as affecting registered land. The effect of a transfer of freehold land is set out in s. 52(1) of the Act of 1964 which provides:
“On the registration of a transferee of freehold land as full owner with an absolute title, the instrument of transfer shall operate as a conveyance by deed . . . and there shall be vested in the registered transferee an estate in fee simple in the land transferred. . . subject to –
(a) the burdens, if any, registered as affecting the land, and
(b) the burdens to which, though not so registered, the land is subject by virtue of section 72,
but shall be free from all other rights, including rights of the State.”
While unregistered rights may be created over registered land, s. 68(2) of the Act of 1964, provides that all such rights shall be subject to the provisions of the Act of 1964 with respect to registered transfers of land or charges for valuable consideration. This is consistent with subs. (2) of s. 52, which provides that where the transfer is made “without valuable consideration” it shall be subject to all unregistered rights subject to which the transferor had held the lands transferred.
5.5 Applying the foregoing provisions to the contractual position of the defendant, if he had completed the purchase on, say, 1st March, 2009, at that time no lis pendens in relation to the proceedings brought by Mrs. Roche, or indeed any proceedings, was registered as a s. 69 burden against the lands the subject of the contract on Folio 23035, County Wexford. It is true that the defendant was on notice that Mrs. Roche had registered a lis pendens against the first named plaintiff in the Central Office some months previously, although how the lis could have affected the part of the lands registered on Folio 23035 the subject of the contract was not clear. Even if it did affect the lands the subject of the contract, the defendant’s solicitors had been furnished with a copy of the letter of 4th February, 2009 from Redmond & Co., who identified Mrs. Roche as their client, which stated that an application would be made to remove the lis pendens as a matter of urgency. Further, the defendant’s solicitors had been informed by the plaintiff’s solicitors in the letter of 18th February, 2009 that, in conjunction with Redmond & Co., as solicitors for the applicant, that is to say, Mrs. Roche, they had filed an ex parte application for the following Monday for the removal of the lis pendens. Finally, by the letter dated 24th February, 2009 the defendant’s solicitors were informed that the County Registrar had made the order in Court on 23rd February, 2009 that the lis pendens be vacated and that they would be filing the order of the County Registrar in the Central Office in due course. The order of the County Registrar was effective from the moment it was pronounced in court. Mr. Cullen who conveyed the information that the order had been made, as a solicitor, is an officer of the Court. Irrespective of the fact that the vacation of the lis pendens had not been noted on the index in the Central Office, in my view, the defendant was no longer on notice that there was a lis pendens affecting the property, because he had been informed that it had been vacated. If he had completed the purchase on 1st March, 2009, in my view, he would have obtained good marketable title to the lands the subject of the contract free from any rights of Mrs. Roche.
5.6 Moreover, that situation could not have changed after completion but before his registration on the relevant folio. Staying with the hypothetical situation in which the defendant had completed the purchase on 1st March, 2009, if Mrs. Roche were to change her mind and subsequently decide to register a lis pendens as a burden in the Land Registry as against Folio 23035 before the transfer from the plaintiffs, as personal representatives of James Roche, deceased, in favour of the defendant was registered by the Property Registration Authority and the defendant was registered on the relevant folio as full owner with absolute title so as to get the benefit of s. 52(1) of the Act of 1964, on the authority of the decision of the Supreme Court in Coffey v. Brunell Construction [1983] I.R. 36, the defendant would have been able to procure an order directing the cancellation of the burden so registered. Therefore, the defendant would not have been at any risk of his title being subject to a claim by Mrs. Roche in completing the purchase on 1st March, 2009.
5.7 It was the contention of counsel for the defendant, referring to Wylie on Irish Conveyancing Law (3rd Ed.) at para. 14.06, that the duty of the plaintiffs to show good title was a duty which had two aspects, i.e. to show good title, in the sense of stating all matters essential to the title contracted to be sold, and to make good title, in the sense of proving by proper evidence those matters. Counsel also referred to the Irish authority cited by Wylie as demonstrating that distinction: Higgins v. Irish Land Commission [1960] I.R. 277. In that case, Teevan J. was hearing an appeal from the Taxing Master’s taxation of costs. The costs issue arose in circumstances where the Land Commission had been given leave to resume the holding of John Higgins and the compensation payable to Mr. Higgins was fixed at IR£408, and the order also provided that he make good title to the tenancy. There was a provision that the Land Commission would pay, inter alia, the costs of “showing title”.
5.8 In order to illustrate what the case was about, it is necessary to consider the title position in some detail. It had been found by an Examiner of Title in the Land Commission that Mr. Higgins was entitled to the land as personal representative of Mary Higgins, deceased. The title was traced from Patrick Higgins, who died in 1928. His widow, Mary Higgins, inherited under his will, which was proved in 1928. Mary Higgins died in 1940, having devised the land to her daughter, Margaret Higgins. Margaret Higgins died in 1952 intestate, but at that stage the will of Mary Higgins had not been proved. In fact, the existence of the will was obviously unknown and letters of administration intestate to the estate of Mary Higgins were granted to Mr. Higgins in 1956, after the death of Margaret Higgins. When the existence of the will of Mary Higgins was discovered, the grant of letters of administration intestate to her estate had to be revoked, which happened, and a grant of letters of administration with the will of Mary Higgins annexed were granted to Mr. Higgins, which was the evidence of his title. However, to get to that stage, he had to extract a grant of letters of administration intestate to the estate of Margaret Higgins.
5.9 The issue with which Teevan J. was concerned was whether Mr. Higgins was entitled to recover from the Land Commission the costs of extracting the grant of administration with the will of Mary Higgins annexed to replace the revoked grant and also the costs of extracting the grant of administration intestate to the estate of Margaret Higgins. An argument advanced on behalf of Mr. Higgins was that, on acquisition of lands under the Land Clauses Consolidation Act, the owners had been allowed costs against the acquiring authorities for work done in perfecting good holding titles to the requirements of the acquiring authorities, such as extracting grants of representation, which the owners would otherwise not have extracted and which were not requisite for other purposes. In the passage from the judgment of Teevan J. relied on by counsel for the defendant, he stated (at p. 279):
“A distinction is very clearly made in the resumption order between making title and showing title, a distinction which would be readily discerned by conveyancers. Whether I am correct in stating the existence of such a general discernment or not, I accept the judgment of Farwell L.J. in In re Elementary Education Acts, 1870 and 1873 [[1909] 1 ch. 55] at p. 59: – ‘The production of the probate would be evidence of the title, the procuring of probate would be the making of the title’. For ‘production’ and ‘procuring’ may be substituted, without change of significance, ‘showing’ and ‘making title’ respectively. This does not conflict with the Irish decisions cited in relation to costs under the Lands Clauses Consolidation Act.”
Teevan J. decided that the resumption order had been framed so as to shut out all costs incurred in procuring a good title and that it was confined to costs of submitting the evidence of title and on that basis he upheld the decision of the Taxing Master which disallowed the costs of extracting the two grants in issue. Frankly, I cannot see how that decision is of any relevance to the issues before the Court.
5.10 Counsel for the defendant submitted that, in order to “show” that they had a clear unencumbered title to the property the subject of the contract, the plaintiffs should have furnished to the defendant’s solicitors either the written consent of Mrs. Roche to the vacating of the lis pendens or, alternatively, a copy of the perfected order of the County Registrar. The response of counsel for the plaintiffs to that proposition was that what the defendant’s solicitors had expressly sought in their letter of 16th December, 2008, namely, the “release” of the lis pendens, had been procured and the defendant’s solicitors had been informed of that fact in their letter of 24th February, 2009. It was further submitted by counsel for the plaintiffs that the defendant had gone “to ground” in early 2009 and that the defendant’s solicitors had not indicated at any time what evidence they required of the release of the lis pendens.
5.11 In my view, the position as at, say, 1st March, 2009 was that an order had been made vacating the lis pendens registered by Mrs. Roche and it had been made on her application. The perfection of the order was a formality which remained to be completed, as was the lodging of the memorandum in the Central Office and the recording of the vacation of the lis pendens in the register of judgments. As regards the clearing of the lis pendens off the index in the Central Office, s. 21 of the Act of 1871 referred to at para. 5.2 above provides:
“. . . the said registrar shall, upon the lodgment with him of a certificate that any lis pendens which may have been registered in the said office has been duly vacated by an order of the Court in which lis pendens may be, signed by the proper officer in that behalf, and which certificate such officer is hereby authorised and required to give, cause a memorandum of such vacate to be subscribed to the entry of the registry of such lis pendens specifying the date of such order, and shall sign such memorandum and upon every search made in the said office subsequently to the entry of such memorandum as aforesaid whereupon such lis pendens shall appear the entry of such memorandum shall be stated.”
In short, the County Registrar having made the order vacating the lis pendens on 23rd February, 2009, the entry of the memorandum of such vacate in the Central Office in accordance with s. 21 was mandatory. The written consent of Mrs. Roche was not necessary to perfect the plaintiffs’ title. The perfected order of the County Registrar could be obtained at any time.
5.12 In summary, the lis pendens had never been registered as a burden on the folio against the lands the subject of the sale on Folio 23035. It had been vacated by order of the County Registrar which inevitably would have been noted in the Register of Judgments in the Central Office. Therefore, the plaintiffs were in a position to furnish title to the defendant free from any claims by Mrs. Roche and the defendant’s solicitors had been so informed. Accordingly, the defendant was not entitled to rescind the contract, as he purported to do in the letter of 4th March, 2009 from the defendant’s solicitors to the plaintiffs’ solicitors. The contract still subsists and the plaintiffs are entitled to enforce it against the defendant.
5.13 In reaching the foregoing conclusion, I have not attached weight to some of the submissions made on behalf of the plaintiffs as demonstrating the plaintiffs’ entitlement to an order for specific performance. I have not attached weight to the fact that the plaintiffs were selling as personal representatives of James Roche, deceased, or to the submission that the outcome of any action pursued by Mrs. Roche against the first plaintiff could only attach to the proceeds of the sale of the lands the subject of the contract, as the defendant had a contractual right to insist on completion. Nor have I attached weight to the undertaking proffered by the plaintiffs’ solicitors to the defendant in the letter of 17th December, 2008, and the submission that the defendant should have completed the purchase in reliance on it. While there may be some merit in those submissions, in my view, it is not necessary to resort to them.
6. Order
6.1 Subject to hearing further submissions from the parties as to the appropriate form of order to be made, I would propose making an order against the defendant for specific performance of the contract.
6.2 The defendant’s counterclaim will be dismissed.
O’Dwyer v. Boyd
[2002] IESC 54 (4th July, 2002)
JUDGMENT of MR. JUSTICE GEOGHEGAN delivered the 4th day of July 2002 [Nem Diss.]
1. This is an appeal from an order of the High Court (O’Neill J.) granting a stay of these specific performance proceedings instituted by the plaintiffs/appellants against the defendant/respondent so as to enable certain matters to be referred to arbitration in accordance with the terms of a contract of sale.
2. The contract of sale was dated the 21st of August, 1998 and was in a standard Law Society form. That standard form included “General Conditions of Sale” which by virtue of paragraph 2 of the special conditions were to be incorporated in the contract. Condition 51 of the general conditions prescribed that all differences and disputes between the vendor and the purchaser in relation to certain listed matters were to be referred to arbitration. One of these matters specified at Condition 51(d) was:
“any issue on foot of Condition 33, including the applicability of said condition, and the amount of compensation payable thereunder”.
3. Condition 33 reads as follows:
“33. (a) In this condition ‘error’ includes any omission, non-disclosure, discrepancy, difference, inaccuracy, misstatement or misrepresentation made in the Memorandum, the Particulars or the Conditions or in the course of any representation, response or negotiations leading to the sale, and further in respect of measurements, quantities, descriptions or otherwise.
(b) The Purchaser shall be entitled to be compensated by the Vendor for any loss suffered by the Purchaser in his bargain relative to the sale as a result of an error made on behalf of the Vendor provided however that no compensation shall be payable for loss of trifling materiality unless attributable to recklessness or fraud on the part of the Vendor nor in respect of any matter of which the Purchaser shall be deemed to have had notice under Condition 16(a) nor in relation to any error in a location or similar plan furnished for identification only.
(c) Nothing in the Memorandum, the particulars or the conditions shall:
(i) entitle the Vendor to require the Purchaser to accept property which differs substantially from the property agreed to be sold whether in quantity, (quality) tenure or otherwise, if the Purchaser would be prejudiced materially by reason of any such difference.
or
(ii) affect the right of the Purchaser to rescind or repudiate the sale where compensation for a claim attributable to a material error made by or on behalf of the Vendor cannot be reasonably assessed.
(d) Save as aforesaid, no error shall annul the sale or entitle the Vendor or the Purchaser (as the case may be) to be discharged therefrom.”
4. The completion date in the contract of sale was the 30th of November, 1998 but the sale was not completed on that date, mainly because the defendant/respondent was not in a position to give vacant possession to the plaintiffs/appellants of a small area of ground containing a large slurry tank with a capacity for 400 tons of cattle excrement. There had been considerable correspondence and discussions in relation to this slurry tank area. It is neither necessary nor desirable to go into the details of these discussions at this stage. It is sufficient to state that when the time came for completion of the contract the respondent maintained and has maintained ever since that he did not own this slurry tank area and was not in a position to give title to it. The appellants do not believe this for reasons which emerge from the documentation before this court but which are not relevant to the issues on this appeal. It is clear, therefore, that this is a most unusual case in that instead of a vendor insisting that he is in a position to make title and a purchaser disputing this, the exact opposite has happened. The vendor is satisfied he cannot make title but the purchasers do not believe him. For reasons which I will explain, this disbelief on the part of the purchasers would seem to me to be irrelevant to the issues on the appeal even if, in the event, the appellant’s scepticism was proved to be well-founded.
5. The case of the respondent is that the slurry tank area was included in the contract through an error and that therefore it is a case coming within Condition 33. As is clear from Condition 51(d) cited above any issue on foot of Condition 33 “including the applicability of said condition” (my emphasis) falls within the arbitration clause. The appellants want all issues to be dealt with in the specific performance suit and certainly do not want the specific performance suit to be stayed and they, of course, dispute that there was any “error”. But because the applicability of the condition itself is an arbitrable issue, the fact that the appellants dispute the existence of the “error” must be regarded as irrelevant. It is for this reason that on the wording of Condition 51(d) cited above the dispute relating to the slurry tank would seem clearly to fall within that condition.
6. I now turn to the history of the specific performance suit and how the question of a stay arose. On the 11th of April, 2000 the appellants served notice of motion for judgment in default of defence which came on for hearing on the 8th of May, 2000. The motion was listed before McCracken J. and at that stage there was before the court the appellants’ affidavit and exhibits but no affidavit filed on behalf of the respondent. Counsel for the respondent requested a three week adjournment which was opposed. The learned High Court judge, in the event, granted an adjournment of one week. Apparently, it had been indicated that the respondent might want to bring a motion to have the proceedings stayed so that there be a reference to arbitration under the contract. McCracken J. gave liberty to serve short notice of motion for the same date as the resumed hearing of the motion for judgment. On the 11th of May, 2000 a notice of motion was served seeking a stay of the specific performance proceedings under s. 5 of the Arbitration Act, 1980. Subsection (1) of that section reads:
“5.-(1) If any party to an arbitration agreement, or any person claiming through or under him, commences any proceedings in any court against any other party to such agreement, or any person claiming through or under him, in respect of any matter agreed to be referred to arbitration, any party to the proceedings may at any time after an appearance has been entered, and before delivering any pleadings or taking any other step in the proceedings, apply to the court to stay the proceedings, and the court, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings.”
7. Subsection (2) of section 5 is not relevant to this case. From the terms of subsection (1) it is clear that provided that the application for the stay has been made at the right time the court has only very limited discretion to refuse. By “right time” I mean of course that the application must be made “before delivering any pleadings or taking any other step in the proceedings”. After that the court would have no jurisdiction to grant the stay. As will emerge when I refer to the appellants’ notice of appeal the question of whether the respondent had taken a step in the proceedings before applying for the stay is an important issue on this appeal.
8. The resumed hearing of the motion for judgment and the hearing of the new motion seeking the stay came before O’Neill J. The hearing of the motion seeking the stay was then adjourned for six weeks and when it came up for hearing again on the 3rd of July, 2000 there was a further adjournment because by that time the respondent had filed two affidavits and the second had not been given in advance to the appellants. The ultimate hearing of the motion grounded on a number of affidavits took place on the 3rd of October, 2000 and the order now appealed against granting the stay was made by O’Neill J.
9. The appellants have served an elaborate notice of appeal which I will shortly summarise. But before I do so and by way of slight digression, I would, at this point, compliment the appellants who are unrepresented on the way they presented their appeal both in terms of the books of documents and their oral submissions. Although naturally they do not have a full understanding of the legal issues involved, they are quite close to such an understanding and in the manner that they have presented their appeal they have certainly assisted me in coming to grips with what the real issues are.
10. The appellants have included every conceivable point that could be made on their behalf in the notice of appeal but it emerged from the hearing that in reality the substantial grounds of appeal can be reduced to two. These are:
1. The matters in dispute do not fall within Condition 51? This is really the second ground of appeal in the notice of appeal though there is overlap from other grounds. The appellants’ argument is that their litigation directed towards obtaining title and vacant possession is a specific performance suit in which they are also claiming damages and that the scope of their action goes well beyond so called “error” in description which they deny existed. They say that the arbitration effectively deprives them of their specific performance suit.
2. If the appellants are wrong about that, the High Court still had no jurisdiction to grant the stay because the respondent had taken a step in the proceedings within the meaning of section 5 of the Arbitration Act, 1980. This ground of appeal is essentially contained in paragraph 5 of the notice of appeal.
11. The other grounds of appeal are not really stateable in law though it is very understandable that the appellants would have regarded them as relevant. Ground No. 1 refers to section 26 of the Arbitration Act, 1954. That section reads as follows:
“26.- Unless a contrary intention is expressed therein, every arbitration agreement shall, where such a provision is applicable to the reference, be deemed to contain a provision that the arbitrator or umpire shall have the same power as the court to order specific performance of any contract other than a contract relating to land or any interest in land.”
12. The appellants seem to take the view that because of this section issues in their specific performance suit cannot be referred to arbitration. That is a misreading of the section. If the matter substantially in dispute in this case goes to arbitration, the arbitrator will, in the first instance, be concerned with whether Condition 33 applies at all. My impression is that the appellants would obviously like that issue to be decided by a court and not by an arbitrator, but they have signed a contract which says that that issue does have to go to an arbitrator. All the provisions of the Arbitration Acts will apply to any such arbitration including of course, if difficult legal questions arise, the power of the arbitrator to state a case to the High Court. But Condition 51 of the general conditions incorporated in the contract which the appellant signed incontrovertibly provides that the applicability of Condition 33 is itself to be arbitrated on as distinct from the issues under Condition 33. If the arbitrator came to the conclusion that Condition 33 was applicable then he or she would go on to determine whether there should be an abatement of the purchase price. In the meantime this specific performance suit does not disappear. It is simply stayed pending the outcome of the arbitration. There is no question of the arbitrator granting a specific performance order and, therefore, there is no question of any contravention of section 26 of the Arbitration Act, 1954. If and in so far as there are issues outstanding after any abatement of purchase price has been determined they will come to be determined by the court if necessary.
13. Ground 4 in the notice of appeal seems to suggest that a referral to arbitration would in some way adversely affect the title of the appellants. There does not seem to be any reality in this ground of appeal but at any rate it is not a ground on which the stay can be refused.
14. The matters of public law and public policy referred to in ground 6 of the notice of appeal are not relevant to the contractual rights of the parties and especially the contractual procedures which is what this appeal is all about.
15. The course of an arbitration would not be affected by the disputes relating to the discharge from the pipe as referred to in ground 7 in the notice of appeal. At the hearing, counsel for the respondent offered that as part of an overall settlement her client would join in any proceedings against the adjoining owner Mr. O’Grady. If there are issues arising out of the complaints referred to in ground 7 of the notice of appeal these can ultimately be dealt with in such proceedings and/or in these proceedings whether or not the matters are referred to arbitration.
16. Ground 8 refers to alleged procedural and evidential defects.
17. Ground 9 seems to refer to the manner in which affidavits etc. were presented to the court. As the Chief Justice explained to the appellants at the hearing of the appeal, there is nothing unusual about affidavits not being opened publicly in court. In crowded motion lists it is frequently the case that a judge may quietly read the affidavits himself or herself or may indicate that they will be read in his or her chambers. None of the matters referred to in grounds 8 and 9 amount to unfair procedures or unlawful procedures or affect the validity or correctness of the High Court decision. If and in so far as there was any procedural defect at any stage in the filing of documents etc. it is quite clear that all documents which were relevant were before O’Neill J. when he made his order.
18. I return therefore to the only two arguable grounds of appeal which I set out above. Dealing with the first of these two grounds, I would refer to the statement of claim. Paragraph A of the prayer contained in the statement of claim seeks two alternative orders namely, an order for specific performance of the original contract of the 21st of August, 1998 “or alternatively an order for specific performance of the contract with such abatement of the purchase price as the court may think fit.” Although, therefore, the appellants believe there was no “error” with regard to the slurry tank area and that the respondent does have title to give them, it is perfectly clear that they are making a fallback claim for abatement of the purchase price if they are proved wrong. For the reasons which I have already explained it is enough that one party to the agreement alleges that the discrepancy was an error for the matter to be referred to arbitration because even if the suggestion that it was an error is heavily in dispute it is for the arbitrator to determine that dispute because it is for the arbitrator to decide whether Condition 33 applies or not.
19. At present the appellants are not talking of rescission. The respondent, at one stage, did purport to rescind following a twenty-eight day notice but counsel for the respondent has acknowledged that her client was not entitled lawfully to rescind the agreement. Therefore, as things stand at the moment neither party is rescinding or purporting to rescind and I do not intend by this judgment to express any view as to what if any future rights in that regard there might be.
20. Although it may not be strictly relevant to this ground of appeal, I think that it is a suitable point at which to clear up a possible misconception which the appellants may be harbouring. An order for specific performance is not an order declaring any matters of title. It is simply an adjudication by the court that a particular contract has been entered into between the parties and that that being so it ought to be performed. However, it may prove impossible to perform because of title problems. In that event the court would normally refer the matter to the Examiner of the High Court to determine the title question. This does not entirely prevent the issues from being litigated in court because if there was an issue between the parties to the contract or indeed involving a third party such as in this case, the adjoining owner, the Examiner might well refer it back to the judge to have it determined in open court, and at any rate there may be an appeal to the court from the findings of the Examiner. But an order for specific performance as such will not solve the appellants’ problem. As I have already indicated, the structure of the statement of claim would seem to suggest that the appellants may not have been entirely unaware of this given that there is an alternative claim for abatement of purchase price. In so far therefore as the respondent is claiming that a portion of property was erroneously included in the contract and will only perform on that basis with appropriate abatement of purchase price if necessary, the matter would correctly be referred to arbitration and subject to the second substantial ground of appeal the stay would be appropriate.
Moving now to the second substantial ground of appeal that is to say that the court had no jurisdiction to order the stay because the respondent had taken a step in the proceedings, it is only fair to say that although many relevant and useful cases have been cited none of them are quite on all fours with what happened in this case.
21. Before reviewing the case law, I think it useful to refer first to textbook passages on which the appellants have particularly relied. The passage most favourable to the appellants’ point of view is probably that contained in Halsbury’s Laws of England, 4th edition, reissue, Volume 2 at paragraph 627. The passage in question reads as follows:
“The applicant must have taken no step in the proceedings after acknowledgment of service. A step in the proceedings is an act which both invokes the jurisdiction of the court and which demonstrates the applicant’s election to allow the action to proceed. An applicant may take what would otherwise be a step if he makes it clear that that act is done without prejudice to his right to apply for a stay. Steps in the proceedings have been held to include: the filing of an affidavit in opposition to a summons for summary judgment, service of a defence, and an application to the court for leave to serve interrogatories, or for a stay pending the giving of security for costs, or for an extension of time for serving a defence, or for an order of discovery, or for an order for further and better particulars. The following have been held not to be steps: acts preliminary to the issue of proceedings, a request in correspondence for an extension of time for serving a defence, the filing of affidavits in answer to an application by the plaintiff for the appointment of a receiver, transferring a summons into counsel’s list, applying to strike out a defective statement of claim, resisting an application for an interlocutory injunction by putting in evidence and appearing in court, and applying for a stay on grounds other than that the dispute was subject to an arbitration payment.”
22. In a footnote to that passage there is a very general statement in the following terms:
“Any act which does not involve the court does not invoke its jurisdiction: … as a general rule any application to the court, or filing of pleadings or documents, does invoke its jurisdiction and does amount to a step in the proceedings: … under certain circumstances, however, such actions may not amount to steps.”
23. The appellants also relied on a passage in the Law and Practice of Commercial Arbitration in England, second edition, Mustill and Boyd. The passage appears at p. 472 and with reference to what is a “step in the proceedings” reads as follows:
“The reported cases are difficult to reconcile, and they give no clear guidance on the nature of a step in the proceedings. It appears, however, that two requirements must be satisfied. First, the conduct of the applicant must be such as to demonstrate an election to abandon his right to stay, in favour of allowing the action to proceed. Second, the act in question must have the effect of invoking the jurisdiction of the court.”
24. To arrive at a a true understanding of the correct principles to be applied it is necessary to review the actual decided cases. At this stage I should make it clear that although I will be reviewing the cases I will be doing so in the context of one aspect only of this case. In ground 5 in the notice of appeal the appellants rely on three distinct alleged “steps”. Two of these are in my view unstateable for the reasons which I will be indicating. Serious consideration has only to be given to the third.
25. Associated with the contract of sale there had been a tenancy agreement between the respondent and the appellants. In 1999 the respondent purported to terminate that tenancy agreement and issued ejectment proceedings against the appellants in the District Court. The appellants claim that the issuing of the District Court ejectment proceedings constituted a “step”. This argument cannot be sustained since clearly the alleged “step” was not a “step” in these specific performance proceedings brought in the High Court but rather the institution of different litigation in a different court.
26. The second alleged “step” is the imposing on the appellants the necessity to make an application to the High Court for liberty to serve out of the jurisdiction in South Africa because the respondent would not nominate their Dublin solicitors to accept service. While it was very understandable that the appellants should be highly aggrieved by this behaviour on the part of the respondent it cannot be said to constitute a “step”. The behaviour complained of was not part of the proceedings itself.
27. The third “step” alleged by the appellants is undoubtedly arguable and requires serious consideration. This relates to the application to McCracken J. for an adjournment of the motion for judgment. After carefully considering the decided cases which I am about to review, I have come to the conclusion nevertheless that that was not a “step” within the meaning of the Arbitration Act, 1980. By merely applying for an adjournment the respondent was not indicating to the court one way or the other whether he intended to participate further in the proceedings and indeed the question of reference to arbitration was raised. The adjournment was in my view nothing more than a holding operation.
28. The leading English case on the question of what constituted a “step” was for many years Ford’s Hotel Co. Limited v. Bartlett [1896] AC 1. Quite apart from any persuasive value which the case may have, it is of importance in Ireland in that it was relied on and effectively followed by Finlay P. in O’Flynn v. An Bord Gais Éireann [1982] ILRM 324, a case to which I will be referring in more detail in due course. In the Ford’s Hotel case a defendant had taken out a summons and had obtained an order for further time for delivering a defence. This was held to be a “step” in the proceedings within the meaning of the similar provision contained in the Arbitration Act, 1889. In the O’Flynn case as will be seen, Finlay P. approved the following passage from the speech of Lord Halsbury:
“The intention of the legislature in giving effect to the contract of the parties, and saying that one of them should be entitled to make an application to insist that the matter should be referred according to the original agreement, was that they should at once, and before any further proceedings were taken, specify the terminus a quo, and that if an application to stay proceedings was made under those circumstances, then that the court should enforce the contractual obligation to go to arbitration. My Lords, that seems to be a very wise provision: that costs should not be thrown away in beginning to litigate.”
29. Three of the five Law Lords delivered opinions and there is some slight discrepancy between them as to whether it was the application for the extension of time or the actual making of the order for the extension of time or a combination of both which constituted the “step” but nothing turns on that for the purposes of this appeal. In this case the respondent never made any application to the court for an extension of time to deliver a defence or indeed any other application other than for an adjournment which must necessarily be noncommittal. But it was not entirely noncommittal in that short service was allowed for the bringing of a motion to stay the proceedings.
30. For a “step” to be constituted it may not be essential that the parties seeking the stay has himself or herself made some application to the court. In the English case of Pitchers, Limited v. Plaza Queensbury Limited [1940] 1 All ER 151 it was held that opposition to a summons for leave to sign final judgment before the Master was a “step”. However, the case is somewhat unusual in that as was pointed out in the judgment of Slesser L.J. that was not a case where an application for a stay was made at the same time as leave to sign judgment was opposed. At the stage when the matter was before the Master there was no application to stay on the grounds of arbitration. That only first arose on appeal to the judge. But again the facts are far removed from this case where all that was asked for was a straightforward adjournment.
31. The next case of importance is the Irish case of O’Flynn already cited. I referred to the fact that Finlay P. in that case approved of the interpretation of the relevant section by Lord Halsbury in the Ford’s Hotel case but he went on to make the following observation.
“…it seems clear that the step which should be held fatal to a party seeking to refer a matter to arbitration is a step which involves costs, in other words a step which invoked the jurisdiction of the court at his instance or which institutes some matter whether by way of motion or otherwise in the court. In the case of the Brighton Marine Palace and Pier Limited v. Woodhouse [1893] 2 Ch. 486 it was held that an agreement reached by letter between the parties for the extension of time for a defence was not the taking of a step by the defendant which could debar him from obtaining a staying order under the Acts. In the course of the judgment of North J. in that case he points out that it was not a proceeding in the action but rather in a sense outside the court.”
32. In one sense an application for an adjournment is the invoking of the court’s jurisdiction but that is not sufficient for it to constitute a “step”, it is a totally neutral act in the context of whether it is an intention to refer to arbitration or proceed with litigation.
33. Finally I would refer to the modern English case of Turner & Goudy v. McConnell and Anor. [1985] 1 WLR 898. In that case, a Court of Appeal consisting of Dillon L.J. and Mustill J. (as he then was and who was one of the co-authors of the work cited earlier) held that the defendants had taken a step in the proceedings by filing an affidavit showing cause why summary judgment should not be entered against them and by appearing before the Master thereby causing judgment to be deferred by an adjournment; and that therefore it was too late to apply for a stay under the Arbitration Act, 1950. The judgment of the court was delivered by Dillon L.J., and he succinctly explains the reasoning behind the court’s decision in the following passage towards the end of his judgment at p. 903:
“In the present case the defendants were required under Order 14 to show cause why judgment should not be entered against them. They had to do that by affidavit or otherwise. They did it by filing the affidavit, which I have mentioned, which put forth at length the reasons why they contended that judgment should not be entered against them. Their position that they were opposing the application was maintained by the presence of the solicitor for the defendants before the Master on the 3rd of May and it was because of the contentions put forth in the affidavit, and not withdrawn, that the Master necessarily adjourned the proceedings to a more appropriate date.
They have therefore, in my judgment, taken a step in the action by filing the affidavit to show cause why judgment should not be entered against them and by appearing before the Master on the 3rd of May with the consequence that judgment was deferred by the adjournment and, in my judgment, it is too late for them in June to decide that they want a reply for a stay for arbitration.”
34. It is clear from that passage that the circumstances of that case were also entirely different from the circumstances of this case where the respondent did nothing except to apply for an adjournment.
35. The appellants in different connections have referred the court to a number of other authorities which I do not propose to review as I do not think they are relevant. At this stage I would just summarise the legal position in which the appellants find themselves.
36. They are faced with an application for a stay which was for the reasons which I have indicated made in time and is not defeated by any step taken by the respondent. The matters to be arbitrated upon allegedly fall within Condition 33. As there is a dispute as to whether they do in fact fall within Condition 33 that matter must itself be resolved by the arbitrator because that is what Condition 51 says. If the appellants satisfy the arbitrator that there was no “error” and that the respondent is in a position to perform the contract exactly as intended by the written terms thereof, there will be a finding by the arbitrator of non-applicability of clause 33. The stay can then be lifted and the specific performance suit can proceed accordingly. If on the other hand the arbitrator finds that there was an “error” or “errors” as a consequence of which the respondent is legally unable to perform the contract in the exact manner prescribed by its terms then the arbitrator will assess an appropriate sum by way of abatement of price and after that the respondent cannot be forced to perform the contract except in the modified form with the abatement of price. As to whether in that event the appellants would be entitled to rescind is not a matter that can be considered at this stage by this court.
37. I would dismiss the appeal.
In the Matter of the Estate of Thomas W. Ward.
Land Commission.
12 November 1908
[1909] 43 I.L.T.R 113
Wylie J.
Nov. 12, 1908
L
Wylie, J.
I hold that, in the absence of evidence of the period of vesting of portions which is provided in the lost settlement, there is a presumption that the settlement contained a proviso that the portions vested at the usual period for the vesting of portions—viz., in the case of sons at twenty-one. I disallow this claim.
State (Leonard) v District Justice of the District Court area of Swords
High Court.
4 April 1938
[1938] 72 I.L.T.R 97
Hanna J.
Hanna, J.—This application comes before me in a very unsatisfactory condition. Conflicting evidence was given in the District Court and to a certain extent the evidence before me is conflicting. The conviction in this case took place so long ago that, when the High Court, on the first hearing of the present proceedings, referred to the District Justice for further information, the District Justice had to reply that he had no recollection of the case owing to the lapse of time. The District Justice has no note of his judgment and the only matter before this Court, from which I can ascertain what were his findings, consists of comments made by Mr. Greene in his affidavit upon points which he states that the Justice decided.
These proceedings arise out of a prosecution brought against Mrs. Margaret Leonard, under Sect. 25 of the Malicious Damage Act, 1861, for breaking down a fence, the property of Joseph Fulham. Mrs. Leonard’s defence was that she had destroyed the fence acting under the authority of a Mr. Gaffney; the real question in issue was between Gaffney and Fulham, as to whether or not Gaffney had what is known to the common law as “a bona fide claim of title.” I think that Mr. Black is right in drawing a distinction between a bona fide belief in one’s title and a “bona fide claim of title.” I should consider a “bona fide claim of title” to be a claim which the District Justice thinks has a real substratum which a Court of law could consider. In this case it was the duty of the Justice first to try whether or not there was a bona fide claim of title before him. If he decided that there was it was his duty to stay his hand; if not, it was his duty to try the case. This is one of the few cases where a District Justice has power to determine his own jurisdiction. The present case is similar to R. (Kealy) v. Louth Justices, 35 Ir. L. T. R. 43; the Justice had evidence before him on which to decide whether the claim was a bona fide one, and, where there has been a conflict of evidence, it is not for this Court to disturb the findings of the District Court.
I am satisfied that Mrs. Leonard had a bona fide belief in her claim, but that is not sufficient. The land in question formed part of property known as Wade’s Estate. On the same date as Fannin conveyed part of the property to Gaffney, portion of the adjoining land was conveyed to O’Brien. The Justice had evidence before him that Fulham had been in possession of the lands in question here for 19 years. I cannot say whether or not this evidence was uncontradicted. He also had evidence that Fulham had, at some time, made a letting of this land to a Mr. Kelly. These two facts alone are very strong evidence of title; they are quite consistent with the documentary title shown by Gaffney and referred to in Mr. Greene’s affidavit, for Fulham might well have established a “squatter’s title.” I think that, on the evidence before him, the Justice was entitled to hold that the claim put forward by Gaffney through Mrs. Leonard was not a bona fide claim, although I should not call it a frivolous or vexatious claim.
The decision of this Court in Reilly v. District Justice of Clones (supra) is exactly in line with this; the question there was, did the District Justice consider whether or not he should state a case? In R. (Moore) v. O’Hanrahan (supra), all that the Court had to decide was as to the sufficiency of a conveyance. Here there has been a conflict of evidence and, where there is such a conflict, it is for the Justice to decide whether he has jurisdiction.
The plaintiff has chosen a most inept means for seeking redress; she could have had the case reheard on appeal to the Circuit Court, with an opportunity of bringing full evidence before the Court, and with full argument. She still has the right to test the question by ejectment proceedings. The case is obviously within the Circuit Court jurisdiction, and on this ground alone I should have been inclined to exercise the *99 discretion vested in the Court by refusing the application.
I allow the cause shown and discharge the conditional order.
In re Hogan and Marnell’s Contract.
[1919] IR 425
Powell J.
[Having stated the above facts, proceeded.] I confess that when I read the will and codicils it appeared to me at first that the residuary gift in the codicil operated as a revocation of the residuary gift in the will according to the decision in Hardwickev. Douglas (2) of Lord Brougham and Lord Lyndhurst, Lord Cottenham dissenting.
Mr. Wilson does not contest the authority of this case, although I think he prefers the reasons in the dissenting judgment of Lord Cottenham to those of the majority of the Court; and certainly they seem to support to some extent the very ingenious point which he has raised, and which, as put by him, does not appear to be concluded by the decision of the majority of the Court in Hardwicke v. Douglas (1). He relies upon republication of the will by the codicil, which gives the words of the will the same force and operation as they would have had if the will had been executed at the time of the republication, subject, of course, to the limitation that the intention of the testator is not defeated thereby. He refers to a very long and learned judgment of Lord Justice Ronan in Grealy v. Sampson (2), in which the learned Lord Justice and Lord Justice Molony in the case before them held that a codicil operated as a republication of the will, and that accordingly, in the absence of a contrary intention, the language of the will must, be construed as of the date of the codicil.
Lord Justice Ronan examined all the authorities on this subject with great care, and seems to disagree with the part of the judgment of the Lord Chancellor in Mountcashell v. Smyth (3)in which it was held that certain dates in the will must be incorporated with the provisions in the codicil. He refers to a great number of cases, amongst others, In re Champion (4), in which Mr. Justice North said: “It is settled by authority that the effect of such a phrase as ‘I confirm my will in other respects’ is a republication of a will, and when under the old law a testator had made a will which would merely pass the property he had at the date of it, and then by a codicil he confirmed and republished his will, the effect was to bring down the date of the will to the date of the codicil, and to make the devise in the will operate in the same way in which it would have operated if the words of the will had been contained in the codicil of later date”; and this judgment was affirmed by the Court of Appeal. He refers to In re Fraser (5), in which Lord Justice Stirling, in delivering the judgment of the Court of Appeal (Vaughan-William, Stirling, and Cozens-Hardy L.JJ.), states the effect of republication, which he calls “confirmation,” thus:”The effect of this [confirmation] is to bring the will down to the date of the codicil, and effect the same dispositions of the testator’s estate as if the testator had at that date made a new will containing the same dispositions as the original will, but with the alterations introduced by the various codicils.” He also refers to In re Whiting (1),in which Mr. Justice Joyce says:”The effect of these last words, ‘In all other respects I confirm my said will,’ is now at all events well settled. The case of In re Fraser (2) decides that the effect of confirming a will as altered by a codicil is that the codicil is a republication of the will. There is no doubt about that.” It is sufficient to refer to these cases, out of very many more, which were discussed by Lord Justice Ronan.
Mr. Wilson applies this principle to the present case. He points out that in the earlier part of the will there is a good residuary clause for conversion; then there are specific legacies payable out of this residue to Margaret and Annie Delaney of £1500, the income payable to each for life, with executory limitations, including power of appointment in the events mentioned, with provision that if the moneys produced by the sale, &c., together with the moneys possessed at the time of the death of the testator, were not sufficient, the legacies were to abate rateably. He refers to the provision that the trustees should stand possessed of any moneys, &c., that might remain after setting apart debts and sums therein before mentioned upon trust to divide same into two equal shares, and to add one of such shares to the share of each of the two daughters, the additional shares to be subject to the same trusts, and he says that this is a disposition of a second residue, or a residue of a residue; then comes the codicil revoking the two specific legacies of £1500, revoking the limitations in respect of these legacies, and declaring that the legatees are to be entitled to £2000 each absolutely, instead of the £1500 each. So far there would prima facie remain unrevoked the gift of the ultimate residue or residue of the residue to be held for Margaret and Annie upon the original trust applicable to the bequest of the legacies of £1500 to these two daughters.
Then comes the bequest of the residue in the codicil to Margaret, Annie, and Mary, who is introduced for the first time. Mr. Wilson points out that as there is no revocation in terms of the disposition of the ultimate residue in the will, which will is brought down to the date of the codicil, and as that codicil in all other respects save those mentioned confirms the will, this disposition of the residue in the codicil must be read with the bequest of the ultimate residue in the will so brought down to that date, and that therefore, in the events that have happened, the estate is not vested in Mary, as alleged by the vendor, because there is a husband of Margaret, and there may be children of the marriage.
Mr. Swayne contends that this is not so, that it is clear on construing, the will according to the intention of the testator that the bequest in the will of the ultimate residue is revoked by the bequest of the residue in the codicil.
It is better in the view which I take as to what I should do on this application that I should not discuss this argument in detail, but I may be permitted to say that I think Mr. Swayne has given very sound reasons for his contention, although I cannot say that the question of construction is so plain and obvious that the purchaser runs no risk of future litigation in respect of it. There is a class of case in which, where a whole current of authority has settled what the legal effect of a certain construction of a written document is to be, and when there can be only one reasonable construction of such a document, and when that construction clearly shows that the vendor has a good title, the Court will not hesitate so to decide on a vendor and purchaser summons; but in my opinion the present is not that class of case. Here the authorities are prima facie against the vendor. Mr. Swayne is too good a lawyer not to have appreciated this difficulty, and he suggested that I might turn this summons into one asking for a decision as to the construction of this will and codicil, the persons interested receiving notice of the application. This would be a very inconvenient course. I doubt if I would have power to do it, and it would not save the vendor any expense, because, whatever the result might be of that application, I would feel obliged at the end to give the purchaser the costs of the present application
On the other hand, if I were to decide now against the vendor without more, it might be taken to be a blot upon the title, which might be injurious to the vendor. I am, therefore, prepared to adopt the course taken by Lord Justice Neville and by the Court of Appeal in In re Nichol’s and Von Joel’s Contract (1),which is, I think, also all authority which compels me to hold that I ought not to accede to the vendor’s application on this summary procedure.
[The learned Judge referred to the head-note and judgments in that case.]
I am prepared now to hold that the question involved here is a question which ought to be decided upon a construction summons so as to bind everybody, but I am prepared to allow the present application to stand over so as to allow the vendor to take out a construction summons. If the question is then decided in favour of the vendor, I can make all order on this summons that the vendor has shown a good title, and that will relieve the vendor from any consequences which might result from all order now made declaring that she had not shown a good title.
In the Matter of the Estate of Thomas W. Ward.
.
12 November 1908
[1909] 43 I.L.T.R 113
Wylie J.
Wylie, J.
I hold that, in the absence of evidence of the period of vesting of portions which is provided in the lost settlement, there is a presumption that the settlement contained a proviso that the portions vested at the usual period for the vesting of portions—viz., in the case of sons at twenty-one. I disallow this claim.
Nally v. Nally and Others.
[1953] IR 19
Kingsmill Moore J.
……
At the hearing in the Circuit Court the plaintiff tendered an unstamped copy of the deed of the 6th March, 1926, as evidence of the contents thereof and through her counsel gave an undertaking to have the copy stamped as an original. The Circuit Court Judge, having regard to the undertaking given, received the copy tendered and, having been satisfied that it was a true copy of the original, granted the plaintiff the declaration sought and directed that she be registered as full owner of the lands in her capacity as personal representative of Robert Nally, deceased. From this decision the defendants appealed to the High Court on the ground inter alia that the Circuit Court Judge had wrongly admitted the said copy of the deed of the 6th March, 1926, as evidence to prove the contents of the original. Subsequent to the hearing before the Circuit Court Judge the plaintiff caused the said copy of the deed to be stamped as an original by the Revenue Commissioners, and, on the hearing of the appeal, she tendered the stamped copy in evidence.
K. M. Kenny , Senior Counsel (with him P. O’Malley ), for the appellants:
When an original deed has been lost or destroyed and is shown to have been unstamped when last seen, the Court should presume that it remained unstamped. It is admitted by the respondent in this case that the deed of the 6th March, 1926, was never stamped. We submit that in these circumstances secondary evidence is not admissible to prove the contents of the unstamped original. The objection here is related not only to the question of the stamping of the said deed; it is an objection to the admissibility of secondary evidence. The learned Circuit Court Judge was wrong in accepting an undertaking to stamp: such an undertaking should be accepted only where the document tendered is an original. It is submitted that the fact that the respondent has, in the meantime, had the copy stamped as an original does not now render
KINGSMILL MOORE J. :
The main question which I have to decide on this appeal is whether a copy (stamped as an original) of an original deed, which is shown to have been lost and never to have been stamped as required by law, is receivable in evidence to prove the contents of such original. There does not appear to be any Irish authority on this important point of evidence but I find that the matter was dealt with, though perhaps obliquely, in the case of London and County Banking Companyv. Ratcliffe (5).
In that case, as appears from a passage in the judgment of Lord Blackburn at page 730 of the report, the Lords Justices of the English Court of Appeal permitted to be read, as evidence of the contents of the original, a copy, duly stamped as an original, of a memorandum which had been destroyed while still unstamped. It would appear, therefore, that it was the practice of the English Court of Appeal to receive such documents in evidence, and I propose to adopt and follow that practice in the present case.
I hold, accordingly, that the stamped copy of the deed of the 6th March, 1926, which the plaintiff has tendered in evidence, is admissible to prove the contents of the lost original. I am satisfied on the evidence adduced before me that the original deed was properly executed by all the parties and that the contents thereof were as shown by the copy produced. In these circumstances the order of the learned Circuit Court Judge will stand affirmed. The parties will bear their own costs of the Court below; the plaintiff will have her costs of this appeal.
Ashe v. Hogan.
[1920] IR 159
VENDOR AND PURCHASER SUMMONS for a declaration that the purchaser’s requisitions had been sufficiently answered, and that a good title had been made according to the particulars and conditions of sale. The property sold consisted of licensed premises, situated in Patrick Street, Fermoy, and were described in the particulars of sale as held under a lease dated 8th January, 1800, for the term of 999 years at the yearly rent of £8, reducible to £4 provided that the covenants in the lease were complied with. The lease contained a covenant by the lessee not to assign the premises without the landlord’s written consent, and also a covenant not to sell wine, spirits, &c., on the premises without the like consent, with a condition of re-entry in the event of a breach of the last-mentioned covenant. There was no right of re-entry on the breach of the covenant against alienation. The particulars of sale described the premises as held under the above-mentioned lease at the rent of £8, but stated that for many years the reduced rent of £4 had been accepted by the landlord. No mention was made of the covenants against alienation and user as a public-house, either in the particulars or conditions of sale. The conditions of sale stated that the premises were sold subject to all the conditions and covenants in the lease, and stipulated that the root of title should be an assignment of the said lease dated the 15th June, 1839. An abstract was duly furnished, tracing the title from the date of the said assignment, and disclosed several assignments of the said leasehold premises, the first of them being made in the year 1862 to a predecessor in title of the vendor. None of these assignments had been made with the consent of the lessor for the time being. The purchaser’s first requisition on the abstract was that the vendor should at his own expense procure the consent of the lessor to the assignment to the purchaser. To this requisition the following reply was made:””The purchaser is precluded by the conditions of sale from making this requisition.” There was also a requisition requiring the vendor to procure the consent of the lessor to the user of the premises as licensed premises. The reply was that they had been used as such for many years, and that the lessor was aware of this, and accepted payment of the rent. It was admitted that the landlord’s consent could not be obtained.
We admit that the landlord’s consent cannot be obtained; but the vendor has a good title under the Statute of Limitations, even though there is a covenant against assignment in the lease without the consent of the lessor. If a vendor contracts to give title from a certain instrument and fails, but can give good possessory title from a later date, the latter will be forced on a purchaser: In re Atkinson and Horsell’s Contract (1). Here we can give a statutory declaration of forty years’ possession, and consequently a better title than we contracted to give, for it will be subject to no covenants except to pay rent. As to the covenant not to use as a public-house, this has been absolutely waived, for there has been fifty years’ user as such to the knowledge of the landlord: Hepworth v. Pickles (2); Downie v. Somerson (3). The covenant against alienation provided no remedy by forfeiture, except by action on the covenant, and this lag only against assigns. The vendor is not an assign, for the prior occupier’s title was not transferred in 1839, but extinguished: Tichborne v. Weir (4).This was followed in O’Connor v. Foley (5); Nisbet and Potts’ Contract (6). Where an assignment is void because made without the lessor’s consent the grantee who becomes the occupier is not an assignee of the lessee’s interest: Clifford v. O’Reilly (7).Therefore the landlord has no right of action against the vendor, and the vendor can convey free from the covenant.
Norwood K.C. (with him Hungerford ), for the purchaser:”
The vendor has completely thrown over his own conditions of sale and his title as offered to us in his abstract of title. Now for the first time we are asked to accept a possessory title, which is not as valuable as that for which we contracted. The vendor is estopped from denying that he is bound by the restrictive covenants in the lease; he has accepted the benefit of a reduced rent, and has sold the premises as held by him under the lease; the landlord’s consent to the assignment is therefore necessary.
Even assuming that the vendor’s title is solely a possessory one, as the disability to assign arises under the statute 23 & 24 Vict. c. 154, s. 10, it attaches to the lands even in the possession of a person who has acquired them under the Statute of Limitations: see O’Connor v. Foley (1), where the effect of the statutory disability to assign under 7 Geo. 4, c. 29, was fully considered. This statutory prohibition is independent of contract, and is not affected by the case of Tichborne v. Weir (2). In the present case the lease contained no power of re-entry in the case of alienation without consent; the assignment of 1839, with which the title begins, passed the leasehold interest; the next assignment in point of time was made in 1862, and the statutory disability to assign attached to it. We submit that O’Connor v. Foley (1) governs this case. Tichborne v. Weir (2) was a case of an affirmative covenant, and the occupier was merely an equitable mortgagee who had gone into possession. Restrictive covenants are of a totally distinct character, and attach to the lands in whosoever’s possession they may be: see Tulk v. Moxhay (3); In re Nisbet and Potts’ Contract in the Court of Appeal (4). Clifford v. O’Reilly (5) does not affect the question, because in that case the assignor had only been in possession for five years.
Finally, this is not the class of case where a purchaser can, in the circumstances, be compelled to accept a title different from the one contracted for.
O’CONNOR M.R. :”
Before the case came into Court the vendor did not recede from the position he took up that the purchaser was precluded by the conditions from requiring that the lessor’s consent to the conveyance should be procured. The learned counsel for the vendor saw, however, that that position was not tenable, and he presented an entirely new view of the title. His case was this:
that, owing to the covenant against assignment contained in the lease, there could not be an assignment of the leasehold interest without the consent of the lessor, and that as that consent had not been given to the assignment to the vendor’s predecessor in title dated 15th June, 1839, or any subsequent assignment, the vendor did not derive his title from conveyances of the leasehold estate, but from the fact that he and his predecessors had been in possession for a period which gave him title under the Statute of Limitations. He further contended that the estate to which the vendor so became entitled was not the leasehold estate demised by the lease, and that the vendor was free from the restrictive covenant against alienation He relied upon the decision of Tichborne v. Weir (1). It therefore becomes necessary to see what the decision in that case was. The action was brought by a lessor against the defendant as assignee of the lease for damages for breach of a covenant to repair contained in the lease. The defence set up was that the defendant, whose title to possession was under the Statute of Limitations, was not an assignee of the leasehold estate, and therefore not liable on the covenant. The Court of Appeal ruled in favour of that contention, holding that the effect of the statute was not to transfer the estate of the person whose title was barred to the person who got title by possession, but simply to extinguish it. This was the decision of the Court, notwithstanding expressions to the contrary contained in the judgments of very eminent Judges to the effect that the statute operated as a statutory conveyance. It is now argued that the logical consequence of the decision in Tichborne v.Weir (1) is that the lessor, who has been in no default, is deprived of his right of action on foot of every covenant in the lease against the person whose title is protected by the lease. This seems a startling conclusion, but still it is one to which we are logically driven, and it may be said that the lessor is in no worse position than if he found that the person in possession was not an assignee of the lease, but was a sub-lessee, who had got a sub-lease from the lessee, who had reserved to himself only a nominal reversion. In such case the sub-lessee, not being in privity with the lessor, could not be sued on a covenant contained in the lease.
Tichborne v. Weir (1) has been fully discussed in our Courts in O’Connor v. Foley (2). There the immediate question was whether a person who had acquired title against a lessee under the Statute of Limitations was bound by a covenant against alienation contained in the lease, the very same question which meets us in the present case. The action was tried by my learned predecessor Sir Andrew Porter, and he followed Tichborne v. Weir (1), holding that the person in possession under the statute was not bound by the covenants in the lease, and was consequently free to assign without the consent of the lessor. There were other questions involved, but for my present purpose I need not go into them. An appeal was taken to the Court of Appeal, consisting of FitzGibbon, Walker, and Holmes L.JJ. FitzGibbon L.J., while accepting the judgment in Tichborne v. Weir (1), showed that it did not apply to the facts of O’Connor v. Foley (2). He pointed out that the English Court expressly conceded that the doctrine did not apply when the tenant had estopped himself from denying that he was assignee. Walker L.J. accepted the judgment with the same qualification, but Holmes L.J. thought that the current of authority in Ireland prevented its acceptance. Both FitzGibbon and Walker L.JJ. held that the party in possession by virtue of the statute had estopped himself from denying that he was an assignee of the lease. The fact which in their opinion raised the estoppel was the service on the lessor of a notice to fix a fair rent under the Land Law (Ireland) Acts. Is there any estoppel in the present case? In my opinion there is. The rent reserved by the lease is £8, but there is a proviso therein that on fulfilment of the covenants by the lessee he should not be chargeable with more than £4 as the yearly rent of the premises. Taking advantage of that proviso, the vendor and his predecessors have paid the reduced rent, and it has been accepted by the lessor. In my opinion this raises an estoppel. I think that a person taking advantage of a clause in a lease and deriving benefit under it must accept the burdens. For this reason I am of opinion that the vendor is bound by the covenant against alienation in the lease, and cannot give a valid assignment to the purchaser without the lessor’s consent.
But there is the other element in the case. There is a covenant by the lessee against user of the leasehold premises for the sale of wine, spirits, beer, &c. The property was put up for sale as a public-house in the occupation of a tenant who paid a rent of £24 8s., a rent presumably enhanced by the fact that it issued out of licensed premises. The purchaser required the vendor to procure the consent of the lessor to the user of the premises as a public-house. The reply was that they had been used as such for many years, and that the lessor was aware of the fact, and accepted payment of the rent. That answer may have been sufficient as to the past, but the purchaser wanted assurance as to the future. Consent to what had been previously done did not necessarily cover its continuance. A lessor might extend a favour to an old tenant, and might refuse it to a new. Ultimately the vendor fell back on the conditions of sale; but I can find nothing in them to preclude the purchaser from making the objection. No doubt condition 4 binds the purchaser to admit the performance of the covenants, but that was only down to the date of sale. Condition No. 8, however, affects the purchaser with notice of all the covenants in the lease, and special reliance was placed on it; but I think that as the property was sold as licensed premises”a description which would convey to the mind of any purchaser that he would be entitled to use them as licensed premises”it was incumbent on the vendor to procure the consent of the lessor to such user in the future in the absence of an express provision, such as is generally found in conditions of sale, that the purchaser should himself procure the consent. In any case, the circumstances are such that the Court, in the exercise of the discretion vested in it in actions for specific performance, ought to refuse to give equitable relief.
But here again the vendor shelters himself behind the doctrine of Tichborne v. Weir (1). In my opinion, it has no application to the right of a lessor to restrain the breach of a negative covenant restricting the user of the demised premises. Tichborne v.Weir (1) was, as I have already shown, a personal action for breach of covenant to repair. FitzGibbon L.J., in O’Connor v.Foley (2), was very careful to emphasize that point in order to distinguish it from other forms of action which are open to a lessor. There is, for instance, the remedy for the enforcement of negative covenants, which is not, properly speaking, an action on the covenant, but one for the enforcement of an equitable obligation on the owner of lands which had been conveyed to a previous owner, subject to a covenant or condition restricting the modes of user, which in equity runs with the land, and which can be enforced against the owner (even though his title is a possessory one: In re Nisbet and Potts’ Contract (1)), unless he has the defence of purchaser for value without notice. I refer to the class of action of which Tulk v. Moxhay (2), a well-recognized authority, is the leading example. In the present case the purchaser would find himself exposed to the liability of being restrained by injunction from allowing the premises to be used as a public-house”the very purpose for which the purchase was made; and even if he were able to show that he was not an assignee of the lease, there would be no defence. This disposes of the vendor’s case; but, although it is not necessary for my decision, I think it advisable to make some observations on counsel’s argument for the vendor, which involved the general proposition that a vendor who has failed to show title according to his contract may show that he has a good title under the Statute of Limitations, and force such title upon a purchaser. There is, no doubt, authority for this, but I do not think that it has gone so far as to establish as a universal proposition that when a vendor has contracted to make title in the usual way by conveyances, devises, or descent he can force on a purchaser a title depending entirely on possession. This might place a purchaser in a singularly disadvantageous position. Very frequently a purchaser has to get an advance from his banker or a private lender on the security of the property purchased to enable him to complete the purchase. A banker or private lender might be very ready to lend on the security of a title deduced in the ordinary way, but might absolutely refuse to lend on the security of a mere possessory title. The question is so important that it is well to see how far the authorities go. Scott v. Nixon (3) is the first and leading authority. That was a judgment creditor’s suit for the administration of the real and personal estate of a testator who, by his will, had devised specific lands to his eldest son, and devised the residue of his real estate to his younger sons. Subsequently to the date of the will the testator acquired other lands. As the law then stood the will, speaking from its date, did not operate on these lands, and they descended on the testator’s heir-at-law. The younger sons, however, went into possession, not merely of the residuary real estate disposed of by the will, but of the subsequently acquired lands as well. They acquired a title to the latter under the 3 & 4 Wm. 4, c. 27. In the suit the heir of the testator was made a defendant, and a decree for sale of the subsequently acquired lands was made. Subsequent to the sale the heir died, and the suit was not revived against the next heir. The purchaser took exception to the title on the ground that the younger children of the testator did not get title under the will, and that as the heir was not before the Court a good legal title could not be given. The answer to this was that they had a good legal title under the 3 & 4 Wm. 4, c. 27, and that the purchaser was bound to take a title under the statute on proper evidence. The case came before Lord St. Leonards on appeal. A perusal of his judgment shows that in his opinion there was no substance in the purchaser’s objection, because whether title was in the younger children claiming under the statute, or in the heir-at-law by descent, the purchaser would get a good title in equity, as the suit was by a judgment creditor entitled to sell every part of testator’s estate, and all parties, including the heir-at-law, were bound by the decree for sale. Lord St. Leonards found as a fact that the younger children had become entitled under the statute, and that they could give good title, and that the purchaser was bound to accept it. He ends his considered judgment by saying: “A better equitable title there could not be; but the purchaser is not bound to take an equitable title. My opinion, however, is that the title has been by the operation of the statute clothed with the legal estate, and therefore that he is bound to take it.” From this it will be seen that the case was a very special one, and can scarcely be cited as authority for the general proposition that a vendor who has contracted to make title according to conditions of sale can disregard the special contract and make title under the Statute of Limitations. In Games v. Bonner (1) the Court of Appeal appear to have accepted Scott v. Nixon (2) as authority for the general proposition that a purchaser is bound to accept a title under the statute, although that was not the title he contracted for. But the question was not in the forefront of the case, and does not appear to have been the subject of argument.
There has been a valuable comment on both these cases by Farwell J. in In re Nisbet and Potts’ Contract (3). There it was held that a title acquired by adverse possession is not paramount to and does not destroy the equitable right of persons entitled to the benefit of prior restrictive covenants to enforce them against the land. Farwell J. in his judgment deals with the rights of a purchaser to whom a title depending on the Statute of Limitations is of offered. He shows that he is still entitled and indeed bound in his own interest to have the title investigated for the full period of forty years, and he quotes the decision of Lord Campbell in Moultin v.Edmonds (4), where he held that there was nothing in the Statute of Limitations abridging the period of sixty years then allowed for the investigation of title, and showed the necessity there was for any person taking a possessory title to make a full investigation covering the whole period. Then Farwell J. goes on to say: “It is true that there are cases in which a title depending on the Statute of Limitations has been forced on a purchaser, but they are cases in which a particular objection, apparent on the face of the title as shown, has been held to be covered by possession for the statutory period. Thus, in Games v. Bonner (1) an estate tail suggested as an objection to the title was held to be statute-barred, and in Scott v. Nixon (2) the possible claim of the heir-at-law of the testator was disposed of in a similar way. But the Court in these cases adjudicated upon the existence of the suggested title; it did not compel the purchaser to take a leap in the dark.” From this we may conclude that although Farwell J. recognized that a purchaser may be forced to take a possessory title, it must be in a case which admits of indubitable evidence, and leaves the purchaser subject to no risk. It is also to be observed that in the two cases in which possessory titles were forced on purchasers, the titles were investigated by the Court and proved by evidence contained in affidavits, the most secure method of investigation which a purchaser could have. But in the present case there does not appear to be any evidence beyond a mere allegation of uninterrupted possession. I may add that in the case of the sale of a leasehold estate, I do not see how a vendor who has contracted to sell it can carry out his contract by offering a title under the Statute of Limitations on the doctrine of Tichborne v. Weir (1); the leasehold estate is not vested in him. He cannot then convey it, The most he can convey is the right to hold possession of the lands during the residue of the term. From one point of view that may be a more beneficial estate, because it does not carry with it the personal obligations which the assignee of a leasehold estate assumes; but, on the other hand, not being in privity with the lessor, he does not get the benefits which pass to an assignee of a leasehold estate. For instance, he cannot sue on the lessor’s covenants for title and quiet enjoyment which, when not expressed, are implied in leases by the Landlord and Tenant Act, 1860. I give this merely as an example, because there are other rights against lessors which assignees of leases may enforce.
For the above reasons I must hold that the vendor has not sufficiently answered the requisitions of the purchaser, and has not made out good title in accordance with the particulars and conditions of sale; and I direct that the vendor pay to the purchaser the costs of the application, and also the costs of the investigation of the title, also the sum of £181 5s. paid by the purchaser as a deposit, with interest at 4 per cent. from the date of the deposit, and the further sum of £36 5s. paid by the purchaser for auctioneers’ fees.
In re Commins and Hanafy’s Contract
and the Vendor and Purchaser Act, 1874.
Supreme Court of Judicature.
Court of Appeal.
17 January 1905
[1905] 39 I.L.T.R 85
Lord Ashbourne C., FitzGibbon, Walker, Holmes L. JJ.
Lord Ashbourne, C.
If I thought there was any element of fraud in the sale of this farm, or that the vendor had schemed to entrap the purchaser into a worthless bargain, I would be much impressed by the argument put forward on behalf of the respondent, but I am not satisfied that the vendor was guilty of any conduct amounting or approaching to fraud. The letter of the Doyles to the auctioneer, which, I presume, was procured at her instigation, showed a desire that the sale should be peaceful and effective. The vendor was mortgagee in possession, and as such had some title. It is true that her title could have been bettered, but the conditions of sale, particularly the clause as to recision of the contract, were drawn to meet the contingency of a purchaser making requisitions with that object. I think in the present case the vendor was entitled to avail herself of that clause. We will allow the appeal with costs. The deposit (of course without any sum for interest) can be retained by the vendor as security for her costs, which must be taxed without delay.
FitzGibbon, L.J.
I concur. The vendor’s affidavit shows that before Jan. 1, 1894, Doyle’s family had arranged some modus vivendi between themselves and Commins, under which they were satisfied that the latter should be taken as tenant by the landlord; and from that date Commins was peacefully recognised as tenant. In these circumstances it was impossible that Commins could have a good title without representation being raised to Doyle, and his estate being administered. This being so, was it honest for Mrs. Commins to try to sell the farm? I can see nothing dishonest in her conduct. She had probably a good enough “holding” title, although she would not be able, as things stand, to force it on an unwilling purchaser, because no warning was given in the particulars and conditions of sale as to the risk of claims being advanced by the members of Doyle’s family. The vendor, bond fide, did her best afterwards to satisfy the fears of the purchaser on that score, and having failed, she was entitled to rescind. This case is distinguishable from Bowman v. Hyland, for there the vendor had no title at all, and also from Greaves v. Wilson, 25 Beav. 290, where a vendor refused to comply with a requisition with which he could have complied, and with which he was bound to comply under the contract of sale.
Walker, L.J.
I concur. This is not a case where the vendor has no title, nor is there any trace of dishonest conduct,
Holmes, L.J.
I concur.