Requisitions I
Cases
Guckian v. Brennan
[1981] IR 478
Gannon J. 478
H.C.
Gannon J.
3rd March 1980
The plaintiffs are a husband and wife who are joint owners of a dwellinghouse at No. 251 Grangemore, Raheny, Dublin 5, comprising a plot of ground of 9 perches in the townland of Grange and Barony of Coolock. That property is the subject matter of folio 19851 of the register of leasehold interests for the county of Dublin. The leasehold interest was created by a lease dated the 28th April, 1972, by which Merchant Banking Ltd. demised the property to Edward Parsons for the term of 250 years from the 29th September, 1969, at the yearly rent of £20. Edward Parsons was registered as full owner on the 21st August, 1972, subject to a charge (since released) and to the provisions of ss. 12 and 45 of the Land Act, 1965. Those provisions prohibit or restrict the alienation of land, or of any part of it. On the 18th August, 1978, the plaintiffs became registered as full owners of the property (subject to those statutory provisions and to a charge in favour of First National Building Society) by virtue of a transfer from Edward Parsons. On the 7th December, 1979, the plaintiffs entered into an agreement to sell the property to the defendants.
In the course of an investigation of the title the defendants required the plaintiffs to furnish evidence that the assignment to them by Edward Parsons, the registered owner and original lessee, was unaffected by s. 3 of the Family Home Protection Act, 1976. That, I understand, was the purport of requisition 63 (7) of the requisitions on title as submitted in lieu of a more precise additional sub-paragraph in requisition No. 52. The plaintiffs’ reply to requisition 63 (7) was:”Not necessary. The vendor has been registered as full owner of the property in the Land Registry and the register is conclusive.” The defendants are dissatisfied with that reply. On this issue the plaintiffs applied to the Court by a special summons under the provisions of s. 9 of the Vendor and Purchaser Act, 1874, for a declaration that requisition 63 (7) has been sufficiently answered and that a good title can be shown.
The necessity for a requisition of this nature is a consequence of the passing on the 12th July, 1976, of the Act of 1976. As the plaintiffs are joint owners, the defendants are not concerned with the possible effect of the Act of 1976 on their contract with the plaintiffs, or on the intended instrument of transfer to them. But the defendants apprehend that the plaintiffs could not make good title on this sale if the assurance by Parsons to the plaintiffs was affected by the Act of 1976 so as to have been avoided or invalidated under s. 3 of that Act. Because their title is registered under the provisions of the Registration of Title Act, 1964, the plaintiffs consider that the defendants’ enquiry is unnecessary and that it is precluded by ss. 31 and 55 of the Act of 1964.
Section 5 of the Act of 1964 repealed the Local Registration of Title (Ireland) Act, 1891, and the Registration of Title Act, 1942. However, the Act of 1964 did not depart from the purpose or scheme of those Acts but re-enacted their basic sections. Section 31, sub-s. 1, of the Act of 1964 (which corresponds to s. 34 of the Act of 1891) provides:
“(1) The register shall be conclusive evidence of the title of the owner to the land as appearing on the register and of any right, privilege, appurtenance or burden as appearing thereon; and such title shall not, in the absence of actual fraud, be in any way affected in consequence of such owner having notice of any deed, document, or matter relating to the land; but nothing in this Act shall interfere with the jurisdiction of any court of competent jurisdiction based on the ground of actual fraud or mistake, and the court may upon such ground make an order directing the register to be rectified in such manner and on such terms as it thinks just.”
Sub-section 2 of s. 31 is not pertinent to these proceedings. Section 51 of the Act of 1964 provides for the mode of transfer of ownership and states when the transfer shall take effect.
Section 55, sub-s. 1, of that Act, states:
“(1) On the registration of a transferee of a leasehold interest as full owner with an absolute title, the instrument of transfer shall operate as a conveyance by deed within the meaning of the Conveyancing Acts, and there shall vest in the registered transferee the leasehold interest so transferred, together with all implied or express rights, privileges and appurtenances attached to it, subject to
(a) the burdens, if any, registered as affecting the interest,
(b) the burdens to which, though not registered, the interest is subject by virtue of section 72, and
(c) all implied and express covenants, obligations and liabilities incident to the interest transferred, but free from all other rights, including rights of the State.”
The question which concerns both the plaintiffs and the defendants is whether such interest of a spouse (who is not an owner) as may arise under the Family Home Protection Act, 1976, is a burden which comes within s. 55, sub-s. 1 (b), of the Act of 1964 or falls within the phrase “all other rights,” free from which the full ownership with an absolute title may be registered. Such last-mentioned rights may affect the registered ownership by virtue of s. 55,sub-s. 2, in any case in which the registration is effected pursuant to a transfer made without valuable consideration.
The unregistered burdens which affect the registered transferee of a leasehold interest are set out in s. 72, sub-s. 1, of the Act of 1964, which states:”(1) Subject to subsection (2), all registered land shall be subject to such of the following burdens as for the time being affect the land, whether those burdens are or are not registered, namely . . .” Of the 17 classifications which follow only those at paragraphs (j) and (q) were referred to in the course of this hearing. These read as follows:
“(j) the rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where, upon enquiry made of such person, the rights are not disclosed . . .
(q) burdens to which section 59 or 73 applies.”
Section 72, sub-s. 3, provides:”(3) Where the existence of any such burdens is proved to the satisfaction of the Registrar, he may, with the consent of the registered owner or applicant for registration, or in pursuance of an order of the court, enter notice thereof on the register.” As s. 72, sub-s. 2, deals only with paragraphs (a), (b) and (c) of sub-s. 1 of that section, it is unnecessary to consider it. As s. 73 deals with mines and minerals it is not pertinent in these proceedings.
However, s. 59 is of importance, as it provides:
“(1) Nothing in this Act shall affect the provisions of any enactment by which the alienation, assignment, subdivision or sub-letting of any land is prohibited or in any way restricted.
(2) It shall be the duty of the Registrar to note upon the register in the prescribed manner the prohibitive or restrictive provisions of any such enactment; but such provisions shall be, though not registered, burdens on the land under section 72.”
Section 3 of the Family Home Protection Act, 1976 (in cases to which that Act applies) contains provisions by which the alienation of any land is restricted and may be prohibited. Sub-section 1 of s. 3 provides:
“(1) Where a spouse, without the prior consent in writing of the other spouse, purports to convey any interest in the family home to any person except the other spouse, then, subject to subsections (2) and (3) and section 4, the purported conveyance shall be void.”
The expression “family home” is defined in s. 2, sub-s. 1, of the Act of 1976 as follows:”In this Act ‘family home’ means, primarily, a dwelling in which a married couple ordinarily reside. The expression comprises, in addition, a dwelling in which a spouse whose protection is in issue ordinarily resides or, if that spouse has left the other spouse, ordinarily resided before so leaving.” The word “dwelling” is defined in s. 2, sub-s. 2, in terms which include any portion of ground “attached to and usually occupied with” the dwelling. Having occupation of the property as a dwelling is, therefore, an essential qualification for a spouse who seeks to rely on the provisions in the Act of 1976 which restrict alienation of the property.
Section 13 of the Act of 1976 states:
“Section 59 (2) of the Registration of Title Act, 1964 (which refers to noting upon the register provisions of any enactment restricting dealings in land) shall not apply to the provisions of this Act.”
The reason why the defendants consider that the reply to their requisition is inadequate is that the property is now a family home within the meaning of the Act of 1976, and may have been a family home at the time of the transfer to the plaintiffs and their registration as owners on the 18th August, 1978. The defendants apprehend that Parsons may have been a married man so that, if the previous written consent of his wife had not been obtained, the transfer by him to the plaintiffs would have been in contravention of s. 3, sub-s. 1, of the Act of 1976 and, therefore, void as a conveyance. The defendants say that s. 31 of the Act of 1964 affords no protection in those circumstances. The plaintiffs claim that they were purchasers for valuable consideration and that they paid the full value of the property to Parsons and that, as there was no fraud involved, they were under no obligation to make enquiry of Parsons; and they rely on s. 3, sub-s. 3, of the Act of 1976. For the plaintiffs, Mr. Garland submits that such right as a spouse (who is not an owner) may have by virtue of the Act of 1976 is in the nature of a personal right only, that it is founded upon occupation, and that it is only enforceable against the spouse in whom title is vested and remains so enforceable in the event of s. 3 of the Act of 1976 applying to a purported transfer. He argues that, where one spouse is in occupation of property of which the other spouse is sole owner, the spouse without title has not the sort of right which constitutes a burden under s. 72, sub-s. 1 (j), of the Act of 1964. He further contends that s. 13 of the Act of 1976 expressly precludes s. 59 of the Act of 1964 from applying in a manner which would bring the provisions of the Act of 1976 within s. 72, sub-s. 1 (q), of the Act of 1964.
For the defendants, Mr. Brady submits that the registered owner can not transfer the property free from the burdens mentioned in s. 55, sub-s. 1 (a)and (b), of the Act of 1964nor from the terms of the lease, as indicated in paragraph (c) of that sub-section. He says that the registration of ownership is subject to those burdens and that the conclusiveness of the register as evidence of title, as provided in s. 31 of the Act of 1964, is also subject to those burdens. Paragraph (b) of s. 55, sub-s. 1, of that Act refers to s. 72 as specifying the burdens to which the interest of the owner is subject, whether they be registered or not, and paragraph (q) of s. 72, sub-s. 1, includes the burdens to which s. 59 applies. Mr. Brady submits that, whether the right of a spouse, not being an owner, to occupation of leasehold registered land be a personal right or not, the restrictions on alienation in protection of that right contained in s. 3, sub-s. 1, of the Act of 1976 are a burden within s. 59 of the Act of 1964. He argues that s. 13 of the Act of 1976 merely relieves the Registrar of Titles of the duty of noting on the register the restrictive provisions of that Act, but that, nevertheless, that section brings them to his attention. He also contends that upon the transfer from Parsons the plaintiffs, in relation to s. 3 of the Act of 1976, were obliged to make enquiry as to whether or not Parsons had a spouse whose consent would be required; and he says that the definitions in the Act of 1976 and the provisions in s. 3, sub-ss. 5, 6, and 7, thereof preclude them from relying on the absence of notice.
These arguments raise far-reaching questions of increasing significance in conveyancing practice and counsel have been unable to find precedents in reported Irish cases. Whether a wife residing with her husband could be said to be in actual occupation of the house in which they live was considered in the House of Lords in National Provincial Bank Ltd. v. Ainsworth. 1 That was a case under s. 70, sub-s. 1, of the Land Registration Act, 1925, of which paragraph (g) corresponds with paragraph (j) of s. 72, sub-s. 1, of the Act of 1964. The reasoning in the opinions delivered in that case is compelling in support of the view that the right is a non-transmissible personal one and that it is not a proprietary one. The following is an extract from the opinion of Lord Cohen at p. 1228 of the report; it refers to s. 70, sub-s. 1 (g), of the Act of 1925 but it is equally appropriate to s. 72, sub-s. 1 (j), of the Act of 1964:
“As Russell L.J. in the court below pointed out it is the rights of a person in occupation which constitute the over-riding interest not the mere fact of occupation, and I agree with Russell L.J. that section 70 is dealing in all its parts with rights in reference to land which have the quality of being capable of enduring through different ownerships of the land according to normal conceptions of title to real property. The right on which the respondent must rely is a personal right as against her husband and is not of the quality to which Russell L.J. refers. In my opinion, therefore, it does not constitute an over-riding interest within section 70 (1) (g).”
The definitions in s. 2 of the Act of 1976 may well have been drawn to confer on a spouse a more acceptable legal concept of interest in the family property than that to be found in the opinion of Lord Hodson in Ainsworth’s Case 1 at p. 1220 of the report. But the Act of 1976 does not create, nor invest a married person with, any right affecting land or property in the nature of an interest in land which could fall within any of the classifications of burdens within s. 72, sub-s. 1, of the Act of 1964. Such right as is conferred is a right which affects the instrument of transfer and its validity. If that instrument is invalid, the transfer is ineffective; but the spouse for whose benefit the transfer is rendered ineffective obtains no estate or interest which can affect the ownership or title to the property described in the transfer. If the instrument of transfer be invalid, there can be no transmission of ownership. The purpose of the Act of 1976, and the nature of the right conferred on a non-consenting spouse who is not the owner of the property intended to be alienated, have been set out in the recent judgment of the Supreme Court in Nestor v. Murphy. 2 In reference to s. 3, sub-s. 1, of the Act of 1976, Mr. Justice Henchy in the course of his judgment said at p. 328 of the report:
“The basic purpose of the sub-section is to protect the family home by giving a right of avoidance to the spouse who was not a party to the transaction. It ensures that protection by requiring, for the validity of the contract to dispose and of the actual disposition, that the non-disposing spouse should have given a prior consent in writing. The point and purpose of imposing the sanction of voidness is to enforce the right of the non-disposing spouse to veto the disposition by the other spouse of an interest in the family home. The sub-section cannot have been intended by Parliament to apply when both spouses join in the ‘conveyance’. In such event no protection is needed for one spouse against an unfair and unnotified alienation by the other of an interest in the family home. The provisions of s. 3, sub-s. 1, are directed against unilateral alienation by one spouse. When both spouses join in the ‘conveyance,’ the evil at which the sub-section is directed does not exist.”
From this it is clear that a purported instrument of transfer to which s. 3,sub-s. 1, of the Act of 1976 applies is incapable of conferring any title to or interest in a property which is, or had been, a family home. But it is also clear from this statement that the circumstances which cause s. 3, sub-s. 1, of the Act of 1976 to apply depend on factors which do not relate to title, ownership, or conveyancing practices, and may arise in relation to some periods of ownership and not to others. The registered property may be a family home only if and when a married couple ordinarily reside in it, and it is then only that the restrictive provisions of s. 3 of the Act of 1976 would apply. These circumstances may change during the course of differing periods of registered ownership; over successive periods some registered owners may not be married, some may be married couples who may be joint owners. The right of a spouse under s. 3 of the Act of 1976 is not a burden within s. 72, sub-s. 1 (j), of the Act of 1964.
It should be noted that s. 72 of the Act of 1964 does not create burdens: it merely classifies burdens which are created aliunde. This is of importance in relation to paragraph (q) of s. 72, sub-s. 1, of the Act of 1964. That paragraph includes within s. 72, sub-s. 1, as burdens which though unregistered will affect the registered ownership, those burdens which are created by s. 59 or by section 73. In s. 59 the creation of the burden is effected in sub-s. 2, and in s. 73 the creation of the burden is effected in sub-section 3. Sub-section 1 of s. 59 of the Act of 1964 takes in the provisions of s. 3, sub-s. 1, of the Act of 1976 in all cases where that Act applies and, but for sub-s. 2 of s. 59, those provisions would not fall within either paragraph (a) or paragraph (b) of s. 55, sub-s. 1, of the Act of 1964. Likewise, the restrictions and prohibitions contained in the Land Acts of 1923, 1939, 1946 and 1965 come within the ambit of sub-s. 1 of s. 59 and are created burdens within s. 72, sub-s. 1 (q), by s. 59, sub-s. 2, of the Act of 1964 without the aid of any specific sections in the Land Acts.
But the Act of 1976 has a specific section which appears to have misled the defendants; that section is s. 13 of the Act of 1976. Notwithstanding the parenthesis contained in s. 13 of the Act of 1976, the non-application of s. 59, sub-s. 2, of the Act of 1964 there expressed comprises the entire of that sub-section. Sub-section 2 of s. 59 has two distinct provisions and s. 13 of the Act of 1976 does not state that it excludes only one of them. Sub-section 2 of s. 59 imposes a duty on the registrar and it creates burdens; if it were intended that s. 13 of the Act of 1976 should do no more than relieve the registrar of the duty, then s. 13 would have said so in clear terms.
That s. 13 of the Act of 1976 was intended to take the provisions of thatAct out of the scope of s. 59, sub-s. 2, and s. 72 of the Act of 1964 is understandable when the provisions1 of s. 3, sub-ss. 3 and 5-7, of the Act of 1976 are considered. In Somers v. W. 3 the effect of these sub-sections has been pointed out by the Supreme Court as increasing the burden of imputed notice to a purchaser. In the course of his judgment Mr. Justice Henchy said at p. 108 of the report:
“The question whether a purchaser has acted in good faith necessarily depends on the extent of his knowledge of the relevant circumstances. In earlier times the tendency was to judge a purchaser solely by the facts that had actually come to his knowledge. In the course of time it came to be held in the Court of Chancery that it would be unconscionable for the purchaser to take his stand on the facts that had come to his notice to the exclusion of those which ordinary prudence or circumspection or skill should have called to his attention. When the facts at his command beckoned him to look and inquire further, and he refrained from doing so, equity fixed him with constructive notice of what he would have ascertained if he had pursued the further investigation which a person of reasonable care and skill would have felt proper to make in the circumstances. He would not be allowed to say ‘I acted in good faith, in ignorance of those facts, of which I learned only after I took the conveyance,’ if those facts were such as a reasonable man in the circumstances would have brought within his knowledge.
When the Supreme Court of Judicature Act (Ireland), 1877, brought the rules of equity into play in all courts, the equitable doctrine of notice was given supremacy. Further, it was given statutory expression in s. 3 of the Conveyancing Act, 1882. For the purposes of this case the relevant parts of that section are contained in sub-s. 1 which states:'(1) A purchaser shall not be prejudicially affected by notice of any instrument, fact, or thing unless
(i) It is within his own knowledge, or would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him; or
(ii) In the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his counsel, as such, or of his solicitor, or other agent, as such, or would have come to the knowledge of his solicitor, or other agent, as such, if such inquiries and inspections had been made as ought reasonably to have been made by the solicitor or other agent.'”
That s. 3 of the Act of 1976 is to be operated within this doctrine of notice is emphasised by the fact that sub-s. 7 of that section amends s. 3 of the Act of 1882 by deleting from it the above italicised words, thus extending the reach of constructive notice.
But the purpose of the registration of title under the scheme formerly provided by the Acts of 1891 and 1942, and now by the Act of 1964, is to avoid the application of the equitable doctrine of constructive or imputed notice: see In re Walsh. 4 It is provided at s. 31, sub-s. 1, of the Act of 1964 (which I have already quoted) that the register shall be conclusive evidence of the title of the owner to the land as appearing on the register and of any burden on it as appearing thereon and that, in the absence of fraud, that title shall not be affected in any way in consequence of the owner having notice of any deed, document, or matter relating to the land. Sections 55 and 72 of the Act of 1964 prescribe the manner of giving notice of interests adversely affecting ownership of the property transmitted to new ownership. There are provisions for rectification of the register and s. 97, sub-s. 1, of the Act of 1964 enables any person entitled to any right in, to, or over registered land or a registered charge, on producing an affidavit in a prescribed form of his right, to lodge a caution with the registrar to the effect that no dealing with the land or charge is to be had on the part of the registered owner until notice has been served on that person.
If s. 13 of the Act of 1976 had been omitted from that Act, the provisions of s. 59, sub-s. 2, of the Act of 1964 would apply to each transfer of registered land when the circumstances required the application of ss. 2 and 3 of the Act of 1976, and would cease to apply to the same lands when such circumstances ceased to exist. In that situation the doctrine of constructive notice, in its strictest application under s. 3, sub-ss. 3, 6 and 7, of the Act of 1976, would apply in some circumstances, but not in others, to the same registered title. That would defeat the purpose of the Act of 1964 and make its provisions highly impractical. In my opinion s. 13 of the Act of 1976 says and means that in relation to registered land the provisions of that Act which are restrictive of alienation are not burdens created by s. 59 of the Act of 1964 and do not come within s. 72, sub-s. 1 (q), of that Act.
In the result I am of opinion that on every sale of registered land where circumstances may indicate that it would be prudent for an intending purchaser to make enquiries such as are indicated in the Family Home Protection Act, 1976, those enquiries should be made in relation to the particular intended contract of sale and the intended instrument of transfer to the intending purchaser; but it is my opinion that beyond that the intending purchaser need not and should not go. That is to say, the provisions of s. 31, sub-s. 1, of the Registration of Title Act, 1964, afford a sufficient protection of the vendor and the intending purchaser in relation to all prior transactions affecting the registered ownership as appearing on the title. The duty of ensuring that any instrument of transfer is valid and effective, so as to enable a transmission of ownership to be duly registered, falls upon the registrar at the time of the registration. Thereafter, in the absence of fraud, the register affords conclusive evidence of the validity of the title.
Accordingly, I think it appropriate in this case to make the order sought and to declare that the requisition referred to has been sufficiently answered by the plaintiffs as vendors.
Kiely -v- Delaney & Anor
[2008] IEHC 69 (14 March 2008)
Judgment by: Mac Menamin J.
Status of Judgment: Approved
JUDGMENT of Mr. Justice John MacMenamin delivered the 14th day of March, 2008.
1. By agreement in writing following an action dated 28th May, 2002, made between the plaintiff (‘Ms. Kiely’) as vendor and a Mr. James Gallagher in trust for the defendants (‘the Delaneys’) as purchasers, Ms. Kiely agreed to sell, and the Delaneys agreed to purchase, all that and those lands at Bettydoyle, Ballyboughal, in the County of Dublin, being land comprised from Folio number DN 3399 of the Register of Freeholders. The agreed purchase price of the lands in question was €88,000. It was a term of the agreement that the sale would be completed by 25th June, 2002.
2. The said land was acquired by Ms. Kiely from her predecessor in title Desmond Byrne, now deceased, on the 26th of September, 2000. She had previously rented the land from Desmond Byrne. It was stated in the Folio that the land benefited from an appurtenant right of way leading from a nearby road to the boundary of the lands.
3. Until the Delaney’s solicitors, Messrs McGowans raised requisitions on title regarding this right of way, Ms. Kiely states that she believed that the land comprised in the folio benefited from the right of way. Ms. Kiely says she accessed the land thereby from the time she went into possession of the land as a tenant, and continued to do so up to the date of sale by auction. It appears from correspondence that Ms. Kiely was permitted to tarmacadam or gravel the path along the right of way.
4. The importance of this right of way is shown by the fact that it permitted access to the land in question from a main road. It is clearly of considerable importance as an amenity to the land.
5. It is asserted in affidavit sworn on behalf of the plaintiff that Mr Gallagher, a friend of the Delaneys who acted on their behalf at the auction, was informed by Thomas Potterton, Auctioneer, that the land could be accessed by the right of way. After the auction, Mr Gallagher says he specifically discussed the question of access both with the auctioneer and Mr Laurence Tierney, Ms. Kiely’s solicitor. There is an apparent conflict of evidence as to whether he was shown both the folio and the file plan. This issue is dealt with later in this judgment. On the basis that access was by right of way as described on the folio, Mr Gallagher signed the sale agreement on behalf of the Delaneys.
6. As matters transpired, Ms. Kiely’s predecessor, Desmond Byrne, on 21st May, 1998, had sold a plot of land which was then comprised in the same folio as the subject lands of the sale. Critically, this included a narrow strip of land which intervened between the boundary of the subject lands, and the right of way. While not creating a land lock, it unfortunately affected access. That plot of land now comprises Folio 123918F County Dublin. The registered owners thereof are Sean and Bernadette Boylan who are not parties to these proceedings.
7. In the 1998 sale to the Boylans, Desmond Byrne did not expressly except or reserve a grant of right of way for all purposes over the strip of land in that Instrument of Transfer. The original Folio, DN 3399 was not amended to reflect the transfer. It continued to describe the lands as previously comprised in the Folio, and so described at the auction, as benefiting from the appurtenant right of way.
Chronology
8. While the contract was signed after auction on 28th May, 2002, it was only on 5th July of that year that Mr Tierney, the vendor’s solicitor, wrote enclosing the file plan, which he had “now belatedly received”. This was five weeks after the auction. In the course of that letter, Mr Tierney described the right of way as depicted in yellow. But at that point he did not mention the essential problem. On 8th of July, 2002, Messrs. McGowans, the Delaneys’ solicitor replied, pointing out that the right of way did not extend to the subject lands. On 12th July, McGowans sent a draft declaration as to user of the right of way for completion by Ms. Kiely as vendor. On 15th August, 2002, McGowans wrote to say that the declaration which had by then come to hand referred only to the right of way as far as a gap, that is to say did not go as far as the boundary to the subject lands.
9. On 3rd September, 2002, McGowans wrote saying that the Delaneys would require a right to pass and re-pass over the Boylans’ lands in order to gain access to the lands. Despite the fact that correspondence was initiated in July 2002, it was only on 13th December, 2002, that Ms. Kiely’s solicitor acknowledged the problem which had obviously existed all along in relation to the gap in the right of way. On 20th December, 2002, McGowans wrote requesting that an approach to the Boylans be made. She was met with a request she says was unreasonable to persuade a third party to grant a right of way to the Boylan’s at another unspecified location. There is no evidence on which to make a judgment as to whether Ms. Keily’s position on this particular issue was reasonable or unreasonable.
10. The negotiations with the Boylan’s broke down on 7th March, 2003, Ms. Kiely’s solicitor wrote again. He again acknowledged the absence of the right of way and offered to refund the deposit of €8,500. On 14th April, 2003, the Delaney’s solicitor served a completion notice. On 24th April, 2003, by then some eleven months after the contract, McGowans, relying Condition 33 (b) of the contract (quoted later) said that the purchaser would proceed, but would be claiming €25,000 in compensation. They asked Ms. Kiely’s solicitor to propose three arbitrators if this sum was unacceptable. By letter of 15th May, 2003, Ms. Kiely’s solicitor offered €5,000 compensation and said they would take their client’s instructions in relation to an arbitrator. The financial offer was subsequently rejected. In the light of subsequent events it is most regrettable that matters were not either resolved by sensible negotiation. If this proved impossible, then the arbitration should have proceeded then.
11. Subsequently, the vendor/plaintiff, Ms Kiely, changed her solicitor. From 24th July 2003 onwards, McGowans were in correspondence with Messrs. Kilrane & Company, Ms. Kiely’s present solicitors.
12. At some time during the course of 2003, Judge John Buckley, a former distinguished Judge of the Circuit Court and an acknowledged expert in this aspect of law, was appointed as an arbitrator by the parties. Lengthy but one sided correspondence took place on procedure.
13. On 13th October, 2003, the arbitrator wrote to Kilrane & Company complaining about their delay and the fact that they had not replied to his previous correspondence. He felt constrained to write further reminders on 21st October, 2003 and 6th November, 2003. Ultimately, by letter on 30th January, 2004, the arbitrator fixed the 22nd February as the date of the arbitration. A copy of the letter was furnished by McGowans to Kilrane & Company on the same date. Further correspondence took place between McGowans and the arbitrator on 30th January, 2004, setting in train procedures for the arbitration itself. Even as of 30th January, 2004 the thrust of the correspondence between the arbitrator and Messrs. Kilrane & Company was quite explicit. Ms. Kiely had been dilatory in making arrangements for the arbitration. It was unclear as to whether Ms. Kiely, intended to defend the arbitration at all. This conduct was regrettable. The blame for it can only be laid at Ms. Kiely’s door.
14. It is noteworthy, and unexplained, that between September and November 2003, the arbitrator sent Ms. Kiely’s solicitor no less than seven letters without eliciting even a response. Further correspondence took place into January and February 2004. (The arbitration had been postponed) Only on 26th May, 2004, by now two years after the contract, Messrs. Kilrane & Company furnished the arbitrator with any substantive response, to the effect that they had received instructions from Ms Phelan to defend the arbitration proceedings and to put in a defence.
15. There was yet a further delay in June and July 2004. On 31st July, 2004, the arbitrator sent another letter to Messrs. Kilrane stating that he was surprised to learn (as they had stated in correspondence) that they did not have a copy of the points of claim. The arbitrator furnished a copy of these on 25th August, 2004. Remarkably, on 6th September, 2004, Messrs. Kilrane again contacted the arbitrator with the same request, and in he turn forwarded yet a further copy of the points of claim. On 8th September, 2004, Messrs. Kilrane stated that their barrister was preparing points of defence. These were eventually received at the end of the month of September, 2004.
16. On 26th November, 2004, the arbitrator wrote to Messrs. Kilrane stating that he would be available to conduct a hearing on each Monday or Tuesday during the month of January, 2004. Messrs. McGowans, acting on behalf of the Delaneys, contacted Messrs. Kilrane on 7th January, 2005, suggesting three alternative dates in January or February, 2005. There was no response. Messrs. McGowans sent repeated reminders. On 24th January, 2005, Messrs. McGowans requested the arbitrator to fix a date. Repeated efforts were made to identify and fix a date. Ultimately, it was decided that 22nd February, 2005, would be a convenient date for the hearing. This was apparently postponed yet again, at the request of Messrs. Kilrane until the morning of the 8th March. Then a request was made by Mr Kilrane by a phone call to the arbitrator, requesting that the commencement of the arbitration be put back to the afternoon, apparently because of counsel’s unavailability in the morning. The arbitrator pointed out that the arbitration had been fixed for 8th March instead of 22nd February because of the unavailability of Counsel from the earlier date. Ultimately, the arbitrator indicated that he proposed to proceed with the arbitration hearing at 10.30am on 8th March.
17. Six days before the date of the arbitration hearing, on 2nd March, 2005, Messrs. Kilrane wrote, stating that they wished specifically to put Messrs. McGowans, the Delaneys’ solicitors, on notice that their client would now contend that the lands the subject matter of these proceedings, actually did enjoy the benefit of the right of way via the laneway at the northern boundary of the lands which currently was used to gain access to the lands; that at all material times this was used, and continue to be used, to gain access to the lands. Messrs. Kilranes indicated an intention to call evidence of this at the hearing of the arbitration on the day the plaintiff was said to be ill. The arbitration yet again was postponed. Tentative dates of 12th April or 26th April were suggested. Ultimately, a date of 26th April, 2005 was proposed. On 20th of April, 2005, six days before the next date of the arbitration Messrs. Kilrane sent a lengthy letter to McGowan & Company. They then asserted that, despite the fact that the right of way as marked stopped slightly short of their client’s property, the “reality on the ground” was that the right of way continued on into their client’s property and had been exercised as a right of way and was the only means of access to the property. They contended that no-one had ever raised any objection in relation to this and that this continued to be the situation. They stated that their client was prepared to give a statutory declaration verifying this. Thus, within a period of two months two different positions had been adopted by the vendor as to the gap in the right of way. And the arbitration had been postponed or adjourned twice, by reason of a letter written on a date close to the date fixed.
18. At this point and for the first time, Messrs. Kilrane asserted that General Condition 18 of the Conditions of Sale was applicable.
19. This provides:
“If the purchasers shall make and insist on any objection or requisition as to the title, the Assurance to him or any other matter relating or incidental to the Sale which the Vendor shall, on the grounds of unreasonable delay or expense or other reasonable ground, be unable or unwilling to remove or comply with, the Vendor shall be at liberty (notwithstanding any intermediate negotiation or litigation or attempts to remove or comply with the same) by giving to the purchasers or his solicitor not less than five working days notice to rescind the Sale. In that case unless the objection or requisition in question shall in the meantime have been withdrawn, the Sale shall be rescinded at the expiration of such notice”.
20. Three years after the auction, therefore, Messrs. Kilranes now asserted that as their client was unable and unwilling to comply with the requisition on title as to the right of way. They were requiring McGowans as solicitors for the purchasers, not later than 29th April, 2005, being a date in excess of five working days from the date of receipt of the letter, to withdraw the requisition and objection raised in relation to the right of way. They said that unless this objection and requisition was withdrawn, the sale would be regarded as rescinded by their client and the deposit would be returned.
21. Messrs. McGowans replied, noting that the defence in the arbitration did not refer to General Condition 18, and enquiring whether it was the intention to apply to the arbitrator to amend the defence. They requested confirmation that the arbitrator was to have jurisdiction to deal with any such issue.
22. Further delays took place, again attended by yet more reminders from the arbitrator. On 17th May, 2005, he stated that if there was no response from Messrs. Kilranes by close of business on 23rd of May, he would have to consider calling a further meeting of the arbitration. It appears there had been an inconclusive meeting earlier but what transpired is not in evidence.
23. On 10th June, 2005, Messrs. Kilranes wrote to McGowans stating that they had discussed the matter with their client and that their instructions were to rescind the contract and return the deposit in the sum of €8,500. The arbitrator indicated that he would refrain from proceeding with the arbitration unless there was a response to the issues raised in correspondence as to his jurisdiction.. Messrs. Kilranes did not so inform him.
24. On 21st June, 2005, the vendor’s solicitors wrote that their client had rescinded the contract pursuant to General Condition 18 and that if this was not accepted, that Court proceedings should be initiated. Yet further correspondence took place between the arbitrator, Messrs. Kilranes and McGowans, on the specific question as to whether or not the former had jurisdiction to deal with the question of Condition 18. This included a proposal made on 27th June, 2005, by the arbitrator, that he states a special case for the High Court pursuant to the Arbitration Acts for a decision on the issue. This offer was not availed of. More correspondence dealt, inter alia, with considerations on relevant legal authorities, cited in correspondence, and the legal situation pertaining to the impasse.
25. A letter of 28th June, 2005 from Messrs. McGowans, set out their understanding of the legal position on a number of issues then arising: one such issue was as to the circumstances in which a vendor might rescind. Messrs. McGowans pointed out that Ms. Kiely had consistently and for a period exceeding three years, adopted an approach to this matter both in correspondence and following the emergence of the difficulty that was fundamentally at odds with the position now being adopted. As a result of this, their client had engaged in a lengthy, stressful and costly process in which Ms. Kiely had also participated. Thus they said to purport to rescind at that point was unreasonable, arbitrary and capricious, particularly in circumstances where the purchasers were not insisting that the vendor remedy the defect on title at all, but merely required compensation for the error and the resulting loss of value relative to this bargain.
26. Throughout the months of July, August and September, 2005, further efforts were made to establish a hearing date for the arbitration.
27. On 27th September, 2005, Messrs. Kilranes wrote to McGowans stating that they had received an authority from a further firm of solicitors, Messrs. Greg O’Neill & Company, who, they said, were now acting for Ms. Kiely and indicating that they may not have any further instructions. There was no change of solicitor.
28. Ultimately, on 30th November, 2005, Messrs. Kilranes issued the special summons herein and requested McGowans to confirm that they had instructions to receive service thereof. The summons does not appear to have been served with any speed as on 13th December, 2005, Messrs. McGowans wrote a letter to Kilranes indicating they intended to issue Circuit Court proceedings to deal with the matter as expeditiously as possible. Ultimately, on 14th December, 2005, the special summons herein was served.
Findings on evidence
29. A number of points arise from the course of events described at length. First, I am satisfied that Ms. Kiely engaged in what can only be seen as procrastination, delay and excuses in an effort to avoid the arbitration taking place. With the benefit of hindsight, it is difficult to avoid the conclusion that not only was the correspondence (and its absence) discourteous to the arbitrator, it was misleading. The correspondence unfortunately does not allow for any conclusion other than that there was an effort to frustrate the arbitration taking place by any expedient available. This can only be laid at Ms. Kiely’s door. She was instructing her solicitor who was acting on her instructions.
30. Second, a point which also emerges is that, on 13th December, 2002, Ms. Kiely’s then solicitor was prepared to acknowledge that a problem existed. But even from that point onwards, her stance was that any difficulty was inconsequential. As of 27th September, 2004, the defence received by the arbitrator again included a denial that any error had been made by the vendor in the contract of sale.
31. Third, as pointed out earlier, the vendor’s position shifted on at least two if not three occasions between the time of the auction and the bringing of the summons herein.
32. Fourth, Ms. Kiely’s conduct and delay led the Delaneys to act to their detriment. By any standard the issue could have and should have been resolved satisfactorily when the problem first came to light. This could have been done promptly by negotiation or arbitration. The policy was simply one of avoidance of any conclusion. All these events took place when the property market in Ireland was extremely active and when prices were escalating.
33. Fifth, in conjunction with the conduct which I consider was most regrettable, Ms. Kiely was guilty of delay of the most substantial kind before first raising the issue of the contractual conditions some three years after the auction. I consider this delay was substantial and blameworthy.
Consideration
34. On the particular facts which arise in this case I would have concluded that Ms. Kiely, is by her conduct and delay, estopped from relying on Condition 18 by reason of such conduct and delay – if estoppel could be relied upon in a contractual situation such as this. The position here stands entirely outside anything that might have been reasonably contemplated within the terms of condition 18 itself. A court would in equity not countenance or permit the vendor to avail of a right of rescission in such circumstances.
35. In the circumstances, however, the issues are best seen within the context of reasonableness, as it is defined in the authorities to which reference is made later.
36. While Ms. Kiely now seeks to rely on Condition 18 of the contract, the Delaneys in turn, rely on Condition 33 of the Conditions of Sale. This condition provides:
“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 the Non-Title Information Sheet or in the course of any representation response where negotiations leading to the Sale and whether 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 . . . as a result of an error made by or 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 section 16 (a) nor in relation to any error in a location or similar plan furnished for identification only.
(c) Nothing in this 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”.
These provisions will now be considered.
The Law
37. The right of rescission sought by Ms. Kiely as vendor is a restriction on the purchaser’s rights. A court must be alert to ensure that it is not abused. Thus, a number of qualifications to such right of rescission have been identified in relevant case law. The vendor must exercise such right in a reasonable manner or, as is more usually put, must not invoke it without reasonable cause. He or she must not act capriciously or arbitrarily and may have to convince the Court that the objection or requisition which has led to the invocation of a right of rescission is one which will cause substantial expense or involvement in litigation if there is to be compliance with it. Thus, such right may not be used as a method of extracting the vendor from a contract with a purchaser in order to accept a higher offer from a third party. The findings and conclusions made on the estoppel issue are relevant and applicable here also.
38. The Courts will refuse to allow a vendor to invoke the right where he was guilty of “recklessness” in entering into the contract. This is to be distinguished from fraud or dishonesty. It generally consists of an indifference towards the purchaser as regards whether they will obtain the title contracted to be sold. Thus, a vendor must not induce a purchaser to enter into a contract by making some misrepresentation to where there was little ground for believing such was true and then purport to exercise a right of rescission when the purchaser raises an objection or requisition about the same matter. Other circumstances are not here material.
Has the right of rescission been exercised in a reasonable manner?
39. In the light of the findings earlier in this judgment the conclusion here is self evident. It is clear that a vendor may not invoke the right of a rescission without reasonable cause, and must not act capriciously or arbitrarily. She may have to persuade a court that the right is one which will cause him substantial expense or involve him in litigation if he is to comply with or remove it. (See Wiley: Irish Conveyancing Law 2nd edition, paras. 15.27 to 15.35). There is no such evidence.
40. In Selkirk v. Romar Investments Limited [1963] 1 W.L.R. 1415, Viscount Radcliffe observed that: “The vendor must not act arbitrarily, capriciously or unreasonably”, and that “He must not use the power of rescission to get out of a sale ‘brevi manu’ since by doing so he makes a nullity of the whole elaborate and protracted transaction”. The Judge in that case observed that the vendor’s solicitor “On receiving the relevant requisitions, showed no arbitrary or highhanded temper in replying to them but, on the contrary, made a serious attempt to meet them and to allay the [purchaser’s] misgivings. In Smith v. Wallace (1895) 1 Ch. 385, Romer J. observed that the vendor, in exercising his contractual right of rescission, “was bound to exercise the [right] fairly, and to determine promptly whether he would emphasise the power or not” (emphasis added). In Lyons v. Murphy [1986] I.R. 666, Murphy J. decided the issue as to whether the vendor was entitled to exercise the right of rescission on the basis of whether or not there had been reasonable conduct on his part stating “it could hardly be suggested that a purchaser who insists upon a right to be compensated for damage to property in which he is interested is acting unreasonably”. (at p. 681)
41. He added:
“Under the terms of the contract for sale and in accordance with established legal principles the purchaser is entitled to be paid a substantial sum by the vendor by way of compensation for the vendor’s wrongdoing. Whilst in my view it is entirely understandable that the vendor should wish to escape this liability, I could not accept that it would be reasonable for a vendor to invoke a rescission clause so as to escape a liability which was caused by and indeed consisted of his or her wilful default.”
42. On this basis, Murphy J. concluded that the rescission clause had not been validly invoked, and in so doing made it clear that a court is entitled to have regard to the question of reasonableness, not merely of the vendor, but of both parties. He also made clear that the question of reasonableness is one to be judged on the basis of the post-contract conduct of the parties. This latter point is also of particular relevance to the findings made. The vendor’s conduct was not reasonable here. I will adopt and apply the dictum of Murphy J.
43. In Williams & Anor. v. Kennedy (the Supreme Court, Unreported, 19th July, 1993) Finlay C.J. observed that one of the four principles identified as governing the invocation by the vendor of Condition 18 is that “it must be shown … that he has acted reasonably, not arbitrarily, not capriciously”. I again apply this principle.
44. In the context of this case it is necessary only to refer to the unfortunate sequence of events described earlier in the chronology, starting from and including the auction onwards. As I have already found, the conduct of the vendor was, by silence, misleading in that the purchaser was misled more than once into concluding that a meaningful arbitration process was going to take place. Unreasonable too in the manner in which Ms. Kiely, on a number of occasions postponed the process of arbitration or hearings taking place; or put matters on a long finger by excuses, or by seeking to adjourn the arbitration date, once it was fixed. This procrastination and avoidance endured for a period from 28th May, 2002 until December, 2005, more than three and a half years.
45. As pointed out above, this must be seen in the context where the vendor, more than once, changed her stance as to whether or not a problem existed at all and if so, what she proposed should be done. These changes of stance took place at widely spaced intervals. The purported invocation of Condition 18, so late in the day, created yet another obstacle to the arbitration.
46. This sequence of events occurred also against a background where property prices were rising sharply. If the vendor was seeking to exercise her right to rescind in a reasonable fashion, this should have been done promptly and without delay, one of the indicia identified by Romer J. in Smith v. Wallace. Furthermore, when the vendor eventually purported to exercise her right of rescission she did not offer to reimburse the purchaser’s costs incurred in the interim period which had been incurred by reason of the fact that the purchasers had (they might have thought) embarked upon a joint arbitration process. There is no indication in the negotiation other than that the purchasers bear this expense. The unreasonableness of the vendor is, in the circumstances, the more remarkable, having regard to the fact that the purchasers did not insist on the right of way being included in the conveyance (which could not be achieved in any case) but instead merely insisted upon compensation in the form of an abatement of the purchase price. Consequently, the purchaser was merely asking to purchase what the vendor could actually sell.
47. The fact that this case proceeded to hearing in the High Court, with all its attendant cost and expense, must be seen in light of the fact that at a point earlier identified in negotiations, the only issue between Ms. Kiely and the Delaneys was whether the abatement or compensation should be €5,000 or €25,000. It would hardly require imagination to envisage that there should have been some sensible middle ground which might have been arrived at, although obviously, the court cannot be apprised of any without prejudice negotiations. On more than one occasion during the course of the hearing the parties were urged to negotiate. Unfortunately, they were unable to avail of these opportunities.
48. I conclude, therefore, that the vendor was not entitled to rescind on the basis of her capricious, arbitrary and unreasonable conduct and the delay which has taken place.
49. I am fortified in my conclusion by a further aspect of Ms. Kiely’s conduct, already briefly touched upon.
50. Although it is true that a vendor can rescind under General Condition 18, notwithstanding the fact that there has been intermediate negotiation or litigation, Wiley points out that ‘negotiation’ is not the same as ‘dispute’ so that the vendor is not protected by the provision if he instead denies that any defect exists which should justify the objection or requisition. Clearly, and on more than one occasion this was the position here. The defence ultimately delivered in the arbitration proceedings on 27th September, 2004, two years and three months after the auction, pleaded, inter alia, that the claimants (i.e. the Delaneys in these proceedings) were deemed to purchase the property in sale with the full knowledge of all rights of way that might affect same (and) to have inspected the property and:
“Further or in the alternative the respondent claims that no error was made by or on her behalf in relation to the sale of the property.”
This defence was delivered on behalf of Ms Kiely after months of involvement in an arbitration process predicated on the basis that the defect did exist. In addition to the defence, on 2nd March, 2005, immediately prior to the next date fixed for the arbitration hearing, the purchaser’s solicitors received a letter from the vendor’s solicitors again reiterating that the respondent would contend that the lands the subject matter of the proceedings has the benefit of a right of way via the laneway at the northern boundary of the lands and that it was intended to call evidence of this at the hearing of the arbitration.
51. The effect of both this letter and the specific point of defence were to make it clear that the vendor was then asserting that the right of way did indeed exist and that she actually required the purchasers to complete the contract on that basis. Indeed, it apparently was pointed out during an inconclusive hearing of the arbitration by counsel for the vendor that the vendor was asserting the existence of a right of way and that the arbitrator had no jurisdiction to determine this issue. This stance is hardly consistent with averments contained in affidavits sworn on behalf of Ms. Kiely that –
“as soon as Ms. Kiely became aware of the defect in title she acknowledged that defect in the title and did not as alleged seek to deny it. She did so in open letter sent by her solicitor, Mr. Lawrence Tierney, to the defendant’s solicitors dated 13th December, 2002 and dated 7th March, 2003”
Nor is it consistent with an averment that –
“in agreeing to refer the matter to arbitration Ms. Kiely was again acknowledging that there was a defect in the title and was prepared to attempt to resolve the matter by way of arbitration having failed to negotiate a resolution with the defendant.”
(See affidavit of Ms. Kiely’s solicitor, sworn 21st June, 2006)
52. In Gardom v. Lee (1865) 6 H&C 651, a contract for sale included a condition permitting the vendors in the event of the purchaser making any requisitions or objections, either to answer them or to rescind the contract, returning the deposit without interest. A further condition provided that the vendor’s right of rescission should not be waived or affected or prejudiced by any negotiation as to any objections or requisitions or an attempt to obviate or comply with same. The purchaser became aware that the vendor had no power of sale. He pointed this out suggesting the contract be rescinded. The vendor asserted his power of sale and called on the purchaser to complete the purchase. The purchaser then incurred expense in investigating the title, the result of which was that his concerns were upheld. Thereupon, the purchaser purported to exercise his right to rescind. The court held that the vendor had lost his right to rescind, essentially by reason of having insisted that the purchaser were mistaken and that the contract should be performed.
53. In the course of his judgment, Pollock C.B. observed:
“There was no negotiation or attempt to obviate any objection, but a dispute, the vendees saying that the vendor had no power to sell, the vendor saying that he had.”
He continued:
“The vendor should either have obviated the objection when called upon, or at once have rescinded the contract. But they did neither and much too long a period elapsed before they expressed any intention to rescind”
54. In Gardom, a period of just under one year had elapsed between the objection and the communication of the decision to rescind. The comparable period in this case is thirty-three months, a period which speaks for itself.
55. I am satisfied that on the basis of the conduct in this regard also, Ms. Kiely lost her power to rescind.
Imprudence or recklessness?
56. A further circumstance disentitling a vendor to rescind is whether the vendor was guilty of recklessness (see Selkirk v. Romar Investments). There would appear to be some uncertainty as to whether the appropriate test is imprudence or recklessness. It cannot be denied that these are different criteria (see Baines v. Tweddle (1959) Ch. 679; Merrett v. Schuster (1920) Ch. 240; In re Jackson and Haydens Contract (1906) Ch. 412; Kennedy v. Wrenn [1981] I.L.R.M. 81, Costello J.). It is noteworthy that in Williams v. Kennedy, a case in 1993 and referred to earlier, Finlay C.J. adopted the traditional test of recklessness.
57. In this context, however, it is necessary to examine carefully the evidence as to the conduct of Ms. Kiely and her then solicitor.
58. Mr. William Devine, an eminent conveyancing solicitor, swore an affidavit in the proceedings admitted without objection. He states that where lands in sale do not abut a public highway, and they are not sold subject to any express restriction relating to access, it is the duty of the vendor to satisfy himself that they have the benefit of a right of way and that any restriction on the exercise of that right of way is notified to potential purchasers.
59. Mr. Devine points out that the manner in which this issue can be dealt with is to inspect the file plan, which takes approximately six to eight weeks following a request being made for it. There is little practical reality to any purchaser procuring such a plan from the Land Registry in advance of an auction. This was an additional reason why the vendor’s solicitor should have ensured that a copy of the file plan was taken up prior to the auction. It would not be sufficient for the vendor’s solicitor to rely on the entries on the folio for the purpose of confirming the existence of a right of way appurtenant to the lands because it is well known that such entries are often not updated and are often out of date and inaccurate. Mr. Devine also avers that it would be insufficient for a vendor’s solicitor to rely on assurances from his client that the lands had been in fact accessed over a particular route, particularly where the period of such user is less than twenty years. It will remain incumbent on the vendor’s solicitor in such circumstance to ascertain by consulting the file plan or the instrument creating the easement, whether a registered or express easement exists and that for the vendor’s solicitor to advise a prospective purchaser that the lands benefit from an express or registered right of way in circumstances where the file plan disclosed to the contrary would invariably amount to carelessness.
60. No response in evidence has been provided to this affidavit as part of the case. Consequently, the point must be approached on the basis of having gone evidentially uncontested. Whether or not the purchaser’s solicitor might have discovered the problem for himself is not to the point. The question here is whether the vendor may avail of a contractual provision for rescission. It is the conduct of the vendor or her agents that is in issue. I do not consider that mere imprudence on the part of a purchaser could excuse conduct on the part of the vendor to induce the vendor’s agents in making a positive statement to induce bids which apparently happened at auction. This must be seen in the context of the fact that it was a point then raised by the purchaser’s representative. The obligations of Ms. Kiely’s then solicitor must be seen in the light of the fact that there appears very considerable doubt in the light of correspondence as to whether Ms. Kiely’s solicitors then had in fact then requisitioned the file plan. It is difficult to reconcile averments by affidavit to the effect that the file plan had been obtained prior to auction, and the subsequent correspondence already referred to on 2nd July, 2002 where Ms. Kiely/vendor’s then solicitor wrote that he had “again requested the Land Registry to furnish [him] with a map showing the right of way duly coloured”. In a further letter on 5th July, 2002, he wrote that he had “now belatedly received the map from the Land Registry”. In an averment in the grounding affidavit sworn on behalf of the vendor, it is said that the purchaser’s representative, Mr. Gallagher, discussed the question of access to the lands after the auction with the auctioneer and Laurence Tierney, Ms. Kiely’s solicitor at the time and “was shown the folio and file plan and informed that access was by right of way as described on the folio”. This conflict must be seen in the light of the fact that the deponent in this affidavit, Ms. Kiely’s present solicitor was not present at the time of the auction and is acting on instructions and received information. Neither Ms. Kiely nor Mr. Shields nor the auctioneer swore any affidavits in the proceedings. No notice to cross-examine was served.
61. In the present case, the vendor furnished prospective purchasers with a copy of the folio and folio map. There is conflict as to the special file plan. The folio stated that there was a right of way. The folio map appeared to depict a right of way to the northern end of the lands. In the circumstances, any prospective purchaser inspecting the documentation furnished by the vendor could be expected to assume that the entry relating to the right of way was accurate. This belief would have been bolstered by confirmation by the auctioneer that access to the lands was “via a laneway to the northern end of the lands”.
62. The map prepared by the auctioneers depicts the lands that were transferred out of the folio and now comprised in a different folio. An examination of the manner in which they were depicted suggests, as was the position, that they might once have formed part of folio 3399. The right of way as depicted on this map runs only as far as a point close to the boundary of the lands for sale. All these facts, combined with the statement on folio 3399 that two parts thereof had been transferred out of the folio, should at the minimum, I consider, have alerted the vendor’s solicitors to the possibility that the right of way no longer served the plot in sale without an easement.
63. I do not consider that the authorities fully establish that ordinary imprudence on the part of a vendor’s solicitor would be sufficient to prevent rescission. But what occurred here must be seen as a preparedness on the part of the vendor’s solicitor to take a calculated risk when there were significant warning signs to the contrary. I think this fell well short of what would be considered ordinary prudent conveyancing practice. This was compounded by the statements made by the auctioneer prior to bidding. All these circumstances, taken together, justify a finding of a very high degree of imprudence sufficient on the facts to constitute a bar to rescission.
Reliance on General Condition 18
64. For completeness, a further question which may arise (if necessary) is whether Ms. Kiely would in law be entitled to rely on General Condition 18 (recited earlier) to avoid completion of the contract at an abated price by reason of her own default.
65. A number of additional observations are relevant here. The first is that the defendant purchasers opted first for compensation under condition 33. A misrepresentation by Ms. Kiely and her agents of what she had to sell was “an error” within the definition of that term given in General Condition 33(a) of the contract. I consider that that is compensable by condition 33(b).
66. Furthermore, there has been a finding that the conduct of the vendor prior to reliance on the condition has been unreasonable, capricious and has put the purchaser to additional expense. Ms. Kiely only sought to rely on General Condition 18 only on 20th April, 2005, some thirty-three months after the purchasers pointed out the error and almost a month after the first hearing date of the arbitration. There was extreme indecision and unjustifiable delay. General Condition 18 may not be relied upon by a vendor who on the facts first denied the existence of the difficulty affecting the sale on which the purchaser is insisting. Ms. Kiely repeatedly denied that there was a problem with the promised right of way.
67. In the instant case it is possible to summarise the position of the parties thus. Ms. Kiely said:
“Even though the problem originates with my own error and even though the purchasers say they will take the land even with the defect, subject only to an abatement in price that will limit what they have to pay to that which they still have to give me, nevertheless I may use my own error to get out of the contract entirely.”
68. The Delaneys say:
“Even though the problem is the vendor’s mistake, we are still willing to proceed with the bargain and we will not insist in the impossible or on what it would cost or take too long to achieve. We are still willing to buy the land at, in general, the agreed price, subject only to an abatement to ensure we will only pay for that which, as it transpires, the vendor can give us.”
69. In re Terry & White’s Contract (1886) 32 Ch. 14 is of little assistance to Ms. Kiely, because, the case turned on the fact that the contract excluded any right to compensation so that the resolution sought by the purchaser was impermissible. It is noteworthy that in that case the condition provided inter alia:
“No error, misstatement or misrepresentation shall annul the sale, nor shall any compensation be allowed in respect thereof.”
This quite clearly is at variance with the provisions of the conditions in the instant case. Furthermore, the observations of the judges in that case are, in their general tenor, supportive of purchasers who might make the same claim in similar cases where there was no exclusion of compensation.
70. On the very different facts of this case and the findings thereon outlined earlier, I do not consider that the authority cited by counsel for the vendor of Ashburner v. Sewell (1891) 3 Ch. 409 is of assistance, even if it still constitutes a persuasive authority. The facts, here as described earlier are so different as to render it of no value to Ms. Kiely. It is doubtful whether it is in any case decisive of the issue which might arise in this case, that is an apparent conflict between Condition 18 and Condition 33.
71. While the decision in Ashburner is stated to be reliant on the decision of the Court of Appeal in Mawson v. Fletcher (1870-1) 6 Law Reports Ch. App. 91, Mawson is not an authority for preferring a clause giving a vendor a right of rescission over a clause giving a purchaser a right to compensation and excluding the vendor’s right to rescind from cases where compensation is taken. The court held that the defect, if any, was not a misdescription within the meaning of the compensation clause and that therefore the vendor having acted bona fide, was entitled to invoke his statutory right of rescission. The rationale for the decision was that the defect, if any, did not come within clause 14 (the provision for compensation).
72. Ashburner v. Sewell has seldom been followed. The decision does not appear to address the conflict between conditions that might arise where, as here, they may both apply to the same error and from the provision in the compensation clause against annulment for error save with the purchaser’s limited option. I do not think that the assessment of the contract outlined in that judgment can be said to be reliant upon objective reasonableness.
73. In fact clause 18 and clause 33 as they now are, are reconcilable, even where they do apply to the same errors but only by recognising that to treat a claim for compensation as “insistence” within the meaning of clause 18 might be to create a direct contradiction between the clauses. Clause 18 says the vendor may rescind and clause 33 says she may not, so that in respect of errors within clause 33 a claim of compensation must take the case out of clause 18 by removing the element of “insistence” required for it to apply. One cannot give the concept of insistence a meaning which produces a direct contradiction between the clauses. I consider that clause 18 is designed to protect a vendor from the trap of being obliged to give what he or she cannot reasonably give. That trap is removed where a purchaser can and does opt for compensation. I do not consider that Ms. Kiely had a right to rescind under clause 18 for the reasons outlined earlier and where the Delaneys sought compensation, and indeed had done so and progressed the claim almost to hearing before Ms. Kiely made any effort to rescind.
74. Condition 18 is not an unfettered licence to avoid a contract in reliance of one’s own error. Because of the plaintiff’s conduct and delay, her solicitor’s very substantial imprudence to the initial and subsequent denials that there was any misdescription, and because of the capriciousness and unreasonableness in seeking to rely on condition 18 at such a late stage, I do not consider reliance on Condition 18 is available to the plaintiff either for the reasons outlined above. I consider that the plaintiff’s claim fails under this heading also.
75. In the light of the foregoing, I must decline the relief sought in the summons herein on the various grounds identified in this judgment. The Court will hold that the sale has not been rescinded by the plaintiff in accordance with Condition 18 of the contract the question to be determined in the vendor and purchasers summons herein.
Hopkins v. Geoghegan
[1931] IR 135
Johnston J. 135
This is an application by Mr. Francis V. Cornwall that he should be given liberty to rescind two contracts entered into by him to purchase two large houses in Mountjoy Square, which were on July 9th, 1929, ordered to be sold in this action.
The auction took place on August 29th last, when Mr. Cornwall was declared the purchaser of Lot 2 (No. 29 Mountjoy Square) for the sum of £520, and on that date he signed the agreement attached to the conditions of sale and paid £130 as a deposit. Subsequently he agreed to purchase Lot 1 (No. 28) for the sum of £400, and an order was made on September 10th accepting that offer and confirming the sale “subject to the said conditions of sale in so far as the same are still applicable.”Of the purchase money £100 was to be lodged forthwith and the balance of £300 on or before October 10th. The fifth condition provided that the Examiner of the Court would, after the sale, certify the result, and the 2nd day of September was set out as the time when the certificate would be settled. As a matter of fact it was not signed and filed until September 5th. Condition six contains this provision: “The vendor is, within five days after such certificate has become binding, to deliver to each purchaser . . . an abstract of title . . . subject to the stipulations contained in these conditions; and each purchaser is within six days after the actual delivery of the abstract to deliver at the office of P. J. Magee, Solicitor, at 24 Lower Ormond Quay, Dublin, a statement in writing of his objections and requisitions (if any) . . . and upon the expiration of such last-mentioned timeand in this respect time is to be deemed of the essence of the contract the title is to be considered as approved of and accepted by such purchaser, subject only to such objections and requisitions (if any).” The seventh condition provided that the purchaser was to lodge in Court the balance of the purchase money “under a lodgment schedule signed by the Examiner of the Court for that purpose, to be supplied free of cost by the said P. J. Magee”; and if not so paid the purchaser was to pay interest on the same at the rate of five per cent. from October 2nd until the same was “actually paid.” “Upon payment of the purchase money in manner aforesaid the purchaser is to be entitled to possession, or to the rents and profits, as from the 2nd day of October, 1930, down to which time all outgoings are to be paid by the vendor.” The stipulation in the sixth condition that time was to be of the essence of the contract was only of a limited applicability. In view of the course of the negotiations and the conduct of the parties, I must treat the contractat any rate for the purpose of the present application as one as to which time was not of the essence. The purchaser, on account of his subsequent conduct and the notices served by him, cannot deny that that was so.
The premises are and were, I am told, in a very dilapidated condition, a fact which, I suppose, accounts for the very moderate price at which they have been sold. The twelfth condition provides that “the premises are believed and shall be taken to be correctly described in the particulars as to quantity or otherwise, and are sold subject to existing tenancies referred to in the particulars, and to all ground rent, taxes, rights of way and other easements, if any, charged or subsisting thereon, and to the present condition of the premises as to repair or otherwise.”
A close examination of the dates of the subsequent proceedings becomes necessary in view of the purchaser’s claim that he is entitled to rescind the contract, in order that I may ascertain who is responsible for whatever delay has taken place. In regard to No. 29 Mountjoy Square, the contract was signed on August 29th, but the result of the sale was not certified until September 5th, and the abstract of title was received by Mr. Draper on behalf of the purchaser on September 9th. Only one abstract, however, was sent in regard to both lots, and the investigation of the title proceeded on the basis that the two lots were to be regarded as one. I think, therefore, that on the strict construction of the conditionsin so far as they applied at all Mr. Magee had until September 15th for furnishing the abstract, that is, five days from the confirmation of the purchase of the last lot. So that in furnishing the abstract the vendor was six days ahead of the time limited. The purchaser then had six days from “the actual delivery of the abstract” in which to deliver his requisitions on the title. The purchaser’s solicitor says that on September 16th he wrote to the vendor’s solicitor sending his requisitions and reserving the right to make further requisitions. If this letter was sent by post, it would not in the ordinary course be delivered until the 17th, which would be eight days from the “actual delivery”of the abstract. No point on that score, however, was made by the vendor, and if there was a departure by the purchaser from the terms of condition six, it was undoubtedly waived by the vendor. That condition fixes no further limit in respect of the investigations, and on September 25th the purchaser’s solicitor received the vendor’s replies to his eighteen requisitions. With every desire to be fair to the purchaser, I cannot say that nine days was an unreasonable time for the vendor’s solicitor to have taken. Further requisitions arising upon the vendor’s replies were sent by the purchaser on September 29th, and these dealt with fouror rather threematters that I must refer to in detail later. The vendor sent further replies the next day, that is, on September 30th, in respect of which the purchaser’s solicitor wrote on October 3rd, and Mr. Magee wrote a letter in reply on October 7th.
Now at this point I feel bound to say that, apart from the merits of the points that were in controversy between the parties, there was no default and no delay on the part of the vendor’s solicitor. He replied to the purchaser’s solicitor with reasonable promptitude. His views as to the controverted matters may be right or they may be wrong, but in the case of a Court sale such as this is, that was a matter that could have been expeditiously and cheaply decided by the Court on the application of either party. It must be recollected that as the sale of both houses had been treated by the parties as one transaction, the force of condition seven providing that October 2nd should be the closing day was gone. The order of the Court of September 10th had fixed October 10th as the date for the lodgment of the balance of the purchase money in respect of No. 28, but had done nothing more. That date may be regarded by implication as the new closing day or it may not I decide nothing as to that pointbut the matter of importance is that on October 7th, when the vendor’s final replies were sent, that date had not arrived. The purchaser then on October 8th caused a perfectly proper letter to be sent to Mr. Magee. He repeated the matters that were at issue between them and he said: “Unless I now have satisfactory replies and you conform with my legitimate requirements in regard thereto on behalf of the vendor, I must only bring this matter before the Court to obtain its ruling thereon.” It is important to note that there is no complaint in that letter of any default or delay on the part of the vendor, and I think that the vendor’s solicitor was entitled to assume that the purchaser was going to bring these questions before the Court for decision, a course which, in my opinion, was the proper course to have pursued. There would have been no difficulty in having these matters decided at once, as the Michaelmas Sittings began on October 10th.
The purchaser, however, did nothing to have the matter decided by the Court, but proceeded on October 17th, in a letter written on that date, to adopt another course. In that letter he first of all made a complaint as to the state of repair of the premisesapparently as a groundwork for the new procedure that he was adoptingand then he added: “Unless I receive satisfactory replies to the purchaser’s outstanding requisitions, together with privity for lodgment of the deposit on purchase of No. 28 and copy of the Examiner’s certificate within seven days from this date, the purchaser will repudiate his contracts for the purchase of both 28 and 29 Mountjoy Square.” On the 24th October he wrote purporting to rescind the contracts and stating that he was taking the necessary steps to obtain repayment of the deposit. It will be noticed that this letter was written a day too soon, as seven days had been given in which to carry out the requirements of the previous letter. The present notice of motion, which is dated November 4th, asks that the purchaser “be at liberty to rescind his contracts,” and that the deposit should be returned.
The procedure that has been adopted by the purchaser is most unusual, if not entirely unprecedented. His two offers were accepted, and he became a purchaser from the Court upon conditions of sale that were perfectly clear and explicit. He then proceeded to take the matter into his own hands by serving a notice purporting to rescind the contract without any reference to the not unimportant fact that the sale was under the control of the Court. I cannot, of course, entirely absolve the vendor from blame, but I think that the real default or delay was caused when the purchaser, having given notice on October 8th, as clearly as words could give it, that he would bring the difficulty before the Court, failed to do what he had said he was going to do, and adopted another and, as I think, an entirely misconceivedcourse.
Even if this had been a sale out of Court, I doubt if the purchaser would under the circumstances be entitled to rescind. The following statement correctly sets out the law and practice as to this question: “Where time is not made of the essence of a contract by the contract itself, although a day for performing it is named, of course neither party can strictly make it so after the contract; but if either party is guilty of delay, a distinct notice written by the other that he shall consider the contract at an end if it be not completed within a reasonable time to be named, would be treated in equity as binding on the party to whom it is given”: Sugden’s Vendors and Purchasers (13th ed.), p. 227. It was decided by Fry J. in Green v. Sevin (1)(where this passage from Lord St. Leonard’s book is quoted with approval), in Taylor v. Brown (2), and in numerous other cases that, under such circumstances, if any unnecessary delay is created by one party, the other has a right to limit a reasonable time within which the contract is to be perfected. I doubt very much if on October 17th the vendor could have been regarded as having been guilty of unnecessary delay, having regard to the terms of the purchaser’s letter of October 8th; and I am quite certain that seven days was not a reasonable time to have limited for the completion of the contract. There is the further point which the vendor would be entitled to rely uponthat having given seven days for the purpose of completion, the purchaser proceeded to send a notice purporting to rescind the contract before that period had expired. There is, therefore, no ground, from whatever point of view the matter is regarded, for the present application.
The parties, however, are entitled to get directions from the Court as to the controverted requisitions and the replies thereto. For the purpose of avoiding further expense and delay, perhaps I should indicate in very general terms what I conceive to be the law in regard to these matters. If either party is not satisfied with this expression of opinion, he will, of course, have the right to bring these requisitions before me for a formal decision. Requisition four asks as follows: “Have any notices to repair been served or any claim in respect of repairs been made which have not been complied with?” The vendor replied that he relied upon condition twelve, which stipulated that the premises were sold subject to “the present condition of the premises as to repair or otherwise.” Ultimately the vendor gave the following information: “In a letter written by the landlord’s solicitors to the vendor’s solicitor, they complained of dilapidations, but gave no particulars. That is the only notice vendor is aware of. However, condition twelve covers the questions of repair or non-repair.” It was decided in Lord v.Stephens (3) that deterioration arising as a result of delay in completing the purchase is not a ground for rescinding the contract, though it may be the subject of compensation. In the recent case of Lockharts v. Bernard Rosen & Co. (4) it was decided by Astbury J. that where a purchaser buys leasehold premises which are in a bad state of repair to his knowledge, subject to the premises being taken in their then condition, he must take them even though the head landlord has served a notice calling upon the tenant to repair. In that case the landlord’s consent was necessary to the assignment, and he refused to give his consent unless the premises were put in a proper state of repair. The vendor accordingly repaired them at a cost of £225, and it was held that he had done so as trustee for the purchaser, who must recoup him that amount. This is a very striking decision, and very strongly in favour of the vendor’s attitude in regard to this requisition.
The seventh requisition raised a point as to the payment of income tax: “A certificate from the revenue commissioners that no arrears of income tax are outstanding must be produced before closing, and handed over on completion.” The reply was: “If such certificate can be obtained it will. But the landlord is liable for the income tax, the rent exceeding the valuation. This certificate is procurable at purchaser’s expense.” The purchaser, in a further requisition, reiterated his original demand and stated that the expense must be borne by the vendor. This is a ridiculous dispute, and has already involved each party in a great deal more expense than would have been incurred in the procuring of the certificate in the first instance. I must, however, decide the point, and my opinion is that the purchaser is wrong. The production of a certificate from the Revenue Authorities if required by the purchaser is an expense which according to sect. 3, sub-sect. 6, of the Conveyancing Act, 1881, must be borne by him, as the contract of sale contains no provision to the contrary (sect. 3, sub-sect. 9). Income tax under Schedule A is in no sense a charge upon property. It is a tax payable by a person in respect of property. “Income tax,”said Lord Macnaghten in London County Council v. Attorney-General (1), “if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else. It is one tax, not a collection of taxes essentially distinct. There is no difference in kind between the duties of income tax assessed under Schedule D and those assessed under Schedule A or any of the other schedules of charge . . . In every case the tax is a tax on income whatever may be the standard by which the income is measured.” Lord Davey said (p. 45): “The truth is that the income tax is intended to be a tax upon a person’s income or annual profits, and although (for conceivable and no doubt good reasons) it is imposed in respect of the annual value of land, that arrangement is but the means or machinery devised by the Legislature for getting at the profits.” It seems to me that sect. 6, sub-sect. 1, of the Finance Act, 1928, is not very happily phrased in the light of this explanation of what income tax under Schedule A really is; but sub-sect. 2 makes the matter clear, for it provides that when a certificate of due payment has been issued, “where the property charged or chargeable has been sold for valuable consideration,” the tax certified as having been paid “shall not be recoverable by distress from the occupier of the property charged or upon the premises in respect of whichthe assessment is made.” This requisition is clearly not conversant with any defect of title; it is a requisition in respect of what was called in Hatton v. Russell (2) a defect of conveyance. The expense of such a certificate comes within the authority of cases like In re Wright & Thompson’s Contract (3), and must be borne by the purchaser.The fourteenth requisition was as follows: “The appropriate ‘Particulars delivered’ stamp must be impressed on the assignment before closing.” The stamp denoting “Particulars delivered”the “P.D. stamp”has had a chequered history. For the purpose of increment value duty, which was created and imposed for the first time by the Finance Act, 1910, sect. 4 of that Act provided that certain elaborate particulars should be delivered to the Commissioners of Inland Revenue whenever any sale or leasing of land should take place. These particulars were recorded and retainedin Ireland, by the Commissioner of Valuationfor future use, and the document carrying out the transaction was required to be impressed with a stamp either denoting that the increment value duty had been paid or that”all particulars have been delivered to the Commissioners, which, in their opinion, are necessary for the purpose of enabling them to assess the duty.” Increment value duty was abolished in 1920, and by the Finance Act of that year the major part of the Act of 1910 was repealed. The provisions of the Act, however, as to the necessity for delivering particulars in the case of transfers and leases of land was retained; and sect. 4 of the Act of 1910 was amended by the Fourth Schedule to the Act of 1920 by the elimination of all references to increment value duty and the retention of the provisions as to the delivery of particulars and the stamping of the instrument of transfer or lease with a stamp denoting that such particulars had been delivered. When the transaction has been completed, the “Particulars Delivered” form is sent by the Stamp Office to the Commissioner of Valuation, and the transferor or lessor is freed from the liability for the statutory penalty for not stamping. Sect. 4 was left, as a result of this partial repeal, in an extraordinarily mutilated condition. It was repealed in its entirety by sect. 38 of 13 & 14 Geo. 5, c. 14, as regards England and Northern Ireland, the repeal taking place as from July 18th, 1923; but the necessity for the delivery of particulars, in all cases to which sect. 4 applies, remains in the Irish Free State. The vendor’s reply to the requisition”this is for the purchaser”was wrong; the particulars must be delivered by the transferor or lessor, and failure to do so renders him liable to a penalty. I have, however, no doubt that, notwithstanding the mistake on the part of the vendor’s solicitor, the matter would have been rectified before the transaction had been carried through.
Counsel for the purchaser, in the course of his argument, asked me to assess compensation in favour of his client in the event of my refusing to permit the contract to be rescinded. The degree of care that must be exercised by a vendor in possession, pending the carrying through of a sale of landed property, is indicated in Clarke v. Ramuz (1), a case in which compensation was awarded. At present, on the evidence before me, I could not possibly come to the conclusion that the vendor can be regarded as responsible for whatever loss has taken place;but it may be that further evidence can be brought forward, and I shall not shut out the purchaser if he is advised to make a specific application for compensation. In the meantime, the sale should be closed at the earliest moment.
The application therefore must be refused, and the purchaser must pay the vendor’s costs.
Noreen Meagher v Thomas Blount and Dermot Blount
1982 No. E24
Circuit Court (South Eastern Circuit)
16 December 1982
[1984] I.L.R.M. 671
JUDGE SHERIDAN
delivered his judgment on 16 December 1983 saying: By an agreement dated 1 December 1981, and made between the plaintiff and the defendants the defendants agreed to purchase ALL THAT AND THOSE the dwelling house and premises known as Ceoltra situate at Doneraile, Tramore, County Waterford, the property of the late Nora McGowan, deceased, held in fee simple free of rent for the sum of £35,000. The closing date was originally 6 January 1982, then it became 29 January 1982, and subsequently 2 February 1982. The sale had not yet been closed but Mr Ryan, counsel for the defendants has undertaken to the court that the sale will be closed as, apparently, all matters are now in order to the satisfaction of both parties relating to the matters which gave rise to such difficulty from the date of the contract up to the date of the hearing of the action. The court is therefore only concerned with the claims for interest and, of course, the costs of the proceedings.
It is clear from the evidence that the title to the property is fundamentally sound and this was always the position and the two areas of disagreement concerned are (a) the position of the premises under planning legislation and (b) the certificate in respect of Capital Acquisition Tax.
The contract was prepared by the solicitor for the plaintiff and was in the ordinary form as approved by the Incorporated Law Society. The only material difference in the contract was special condition 3 which provided that the sale was subject to the purchasers obtaining loan sanction from the Commercial Banking Company Ltd. This special condition was inserted by the defefndant’s solicitors, as appears from their letter of 24 November 1981, which reads in so far as it affects the special condition as follows. ‘We have also inserted a condition making the contract subject to our clients obtaining loan approval from the Commercial Banking Company Ltd’ and further by way of post-script ‘We have now received confirmation from our clients that the Commercial Banking Company Ltd will make loan facilities available to them’. It is perhaps of some marginal significance that the amount of the loan agreed by the Commercial Banking Company Ltd represented less than half the purchase price in respect of the premises.
The premises had been occupied by Miss McGowan since the year 1964 and part of the documents of title produced at the hearing was a conveyance of 2 October 1964.
This conveyance is central to the main core of the case as Miss McGowan’s conveyance almost to the day coincided with the coming into operation of the Planning Act 1963 which came into operation on 1 October 1964. It appears that certainly in that year and, possibly prior to the conveyance Miss McGowan had adapted the premises, which then comprised after adaptation, a four bedroom bungalow together with two two bedroom flat units adjoining the main bungalow. This fact was known from the outset by the purchasers as the letter of 24 November 1981, asks the vendor’s solicitors to confirm at this stage that planning permission was obtained for the conversion of the two bedroom flat units. The Commercial Bank in their letter of facility dated 20 November 1981, made no request for any such confirmation and the only reference to title in their letter of facility is at paragraph 3 (a) which reads under the heading ‘security’‘A legal mortgage over the investment property Ceoltra, Doneraile, Tramore, County Waterford, described in clause 2 as being purchased for not less than £33,000 plus expenses. It is a condition of the bank’s loan that the property is being purchased with vacant possession of the entire’. Further on in the document at paragraph 6 it is provided ‘Subject to there being no developments in the meantime which would be likely, in our opinion, to have adverse effect upon your financial position or future prospects the loan will be available upon completion of the security requirements and will be subject to re-negotiation if not drawn down within two months of the date of your acceptance of this offer’.
Mr Meagher, in the course of his evidence, stated that the parties very quickly went off at a tangent and I am bound to say that it became clear early on that both sides were adopting entrenched positions. I am also bound to say that whatever the legal implications may be, a little less rigidity on both sides would probably have brought this matter to a much speedier conclusion.
One matter central to the plaintiff’s case as presented by Mr Reidy was the failure of the defendants to incorporate into the agreement any special condition relating to planning permission. Mr Reidy contends and indeed the correspondence amply justifies the contention that the defendant’s solicitors were alive to the presence of the two self-contained flats as they mentioned these in their letter aforementioned of 24 November 1981, and mention is also made in the bank’s letter of intent to grant the facility. It is stated that if this matter was of any importance in the mind of the purchasers it should have been the subject of a special condition and Mr Reidy contends that the only reference to planning permission is contained in clause 17 (2) of the agreement which reads as follows. ‘Unless the special conditions contain a provision to the contrary, the vendor warrants that planning permission has been obtained for any development (other than exempt development as defined in the said Act of 1963 or any amendment thereof or any Statutory Instrument made thereunder or development of trifling materiality) that has taken place in the property since the 1 October 1964’.
*674
Mr Reidy contends that the defendants attempted during the course of the long correspondence and dispute to raise what was merely a warranty to the status of a condition and I must say that particularly as the solicitors for the defendants were alive to the question of planning permission it is strange that such a step was not taken initially by them. If it had been so taken the matter would have been clear beyond doubt.
Mr Reidy in the course of the case has placed considerable reliance on a number of passages from Mr Wylies book on Irish Conveyancing Law . The consultant editor for the Republic of Ireland is stated to be Kenny J and it is clear that the work is an extremely authoritative text book. At page 262 the author deals with the position prior to the passing of the 1976 Act which removed the five year limit for enforcement and brought the parties back to the date of the passing of the 1963 Act and its coming into force on 1 October 1964. The old s. 17 which provided that the vendor warrants that planning permission has been obtained for any development other than exempted development which has taken place in the property within five years immediately prior to the sale was designed to reverse the caveat emptor principle under which no such warranty would have been regarded as being given by the vendor. The author deals with the position with regard to ss. 26 and 27 of the 1976 Act and states as follows in relation to the old form:
This may have been sufficient when the five year time limit applied to enforcement action under the 1963 Act, but the new methods of enforcement introduced by ss. 26 and 27 of the 1976 Act were not so limited. Thus the danger of such enforcement seemed to require the purchaser to make enquiries as to whether any unauthorised use has existed since 1964 which in practice means requiring a statutory declaration from a person fully able to speak with authority as to the fact that the existing use has continued since before 1964, which as time goes on will be often difficult to procure or production of planning permission for the use in question. It should also be emphasised that it seems clear that such enquiries should be made, and satisfactory replies should be received prior to the contract for sale. If the unauthorised use without permission since 1964 is not revealed until after the contract, e.g. in response to the requisitions on title, the purchaser would seem to have no protection in the absence of special conditions covering this specific point.
In my view, care must be taken with this passage as the author did not have the current 1978 Conditions of Sale of the Society in mind which covers the entire period from 1 October 1964, to the date of each individual contract and which reverses the caveat emptor principle for the entire period and gives a warranty and therefore protection to the purchaser.
The question is as to whether the purchaser is obliged to rely on the warranty and sue for damages for breach if the warranty is broken or whether if he is put on enquiry by any matters disclosed in relation to any particular premises, he is entitled to raise the matter by way of requisition. One thing is perfectly clear in this matter, namely, that the ordinary objections and requisitions on title (1979 edition) of the Incorporated Law Society contains a considerable number of detailed requisitions under the Planning Acts together with paragraph 62 which requires that the requisitions in relation to the Planning Acts must be vouched.
In the present case difficulty arose as a result of the requirements of the defendants under paragraph 62 (c) of the requisitions which states ‘Evidence of the user of the premises at 1 October 1964, and of the use since that date must be by statutory declaration by a competent independent person and the statutory declaration of the vendor’.
Up to recent times the plaintiff, through her solicitors, refused to comply with this requisition.
The requisitions were answered on 21 January 1982, and in relation to paragraph 62 (c) the reply of the plaintiff’s solicitors was ‘noted’.
It should perhaps be mentioned that requisition 53 enquired as follows. ‘Has there been in relation to the property any development (including a concluding change of use) within the meaning of the Acts on or after 1 October 1964, which was answered ‘not to vendor’s knowledge’.
It is clear that the conversion of a bungalow or part thereof into two separate and self-contained flats would be a development within the meaning of the planning code and if it had taken place since 1 October 1964, a retention order would certainly be required.
After the requisitions were answered the defendant’s solicitors wrote to the plaintiff’s solicitors on 3 February 1982, as follows:
We refer to previous correspondence in this matter and to Miss Cahill’s recent telephone conversations with your Mr Meagher. Our position with regard to the planning requisitions is as follows:
If there has been no development (including change of use) of the property since 1 October 1964, then the situation is dealt with by requisition 62 (c) of the Law Society’s Requisitions. This provides that evidence of user of the premises at 1 October 1964, and of its use since that date must be given by a statutory declaration by a competent independent person and a statutory declaration of the vendor.
We would require a statutory declaration from the vendor stating that she is familiar with the property and that it has been used as a multiple dwelling at 1 October 1964, and that no change of use or development has taken place since then. We also require a statutory declaration from a competent independent person stating the same facts. A neighbour or local auctioneer who is familiar with the property should be able to give this declaration or alternatively we will accept a declaration from the vendor’s solicitor in which he states that he is familiar with the property and setting out the same facts .
You will appreciate that we do not wish to be awkward on this particular point but that we must have a clarification of the facts as this particular question of change of use is a thorny one and we are aware that it has recently given rise to litigation suit against the firm of Dublin solicitors who dealt with some flat property.
We would also point out that we asked for confirmation that planning permission was obtained for the conversion of the two bedroom flat units in our letter of 24 November 1981, and we wish to draw your attention to the matter at that stage.
The plaintiff’s solicitors replied on 5 February 1982, as follows:
We refer to your letter of the 3rd inst. and note what you say.
Regarding the question of planning permission we are satisfied that the property in question was never anything but a private residence. This should be a perfectly obvious fact. Furthermore, the late Miss McGowan purchased the property prior to October 1964 (the conveyance to her is dated 2 October 1964). We have checked with her former solicitors who has confirmed that he was never aware of any difficulties involving the user of the house and the vendor and ourselves never had any notice of any such thing either.
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This is an executor’s sale of a private residence. We have no intention of seeking an independent declaration as specified in Requisition 62 (c) to confirm this. The vendor herself, however, will, without prejudice give such a declaration to facilitate you.
This correspondence consisted of a joinder of issue between the two parties and it is perhaps unfortunate through inadvertence that the defendant’s solicitors expression of their willingness to accept the plaintiff’s solicitor’s declaration was ignored in the letter of 5 February 1982. I have come to the conclusion that notwithstanding the passage relied upon in Mr Wylies textbook by Mr Reidy it would be asking a great deal to try and persuade the court not to give effect to the ordinary requisition used every day in transactions between vendors and purchasers and prepared with care by the Incorporated Law Society. It is true that the protection given to the purchaser is that of a warranty but I must ask myself the question should a purchaser buy a possible law suit when he can like every other purchaser rely on the ordinary requisitions so as to protect his position.
I do not read any great significance into the word ‘noted’ although invited to do so by Mr Ryan in relation to Requisition 62 but, without more, I have come to the conclusion that the requisition, as modified in particular by the letter of 3 February 1982, was proper and should have been answered by the plaintiff’s solicitors.
I must then look to see if any other factor emerged between that time and the issue of the proceedings of 7 September 1982. The position was maintained by the plaintiff’s solicitors by their letter of 25 February 1982, in the following terms:
We wish to repeat that we are not prepared to advise our client to sign the declaration which you sent to us as we consider it unreasonable to expect her to be positive about the circumstances that existed some eighteen years ago. As we have said, our client is prepared to say that to the best of her knowledge, her aunt was in possession of the house in question in the summer of 1964 and that she had altered the premises to their present state before the 1st of October 1964.
We repeat, however, that our client is not obliged to give any declaration but we are doing this to facilitate you strictly without prejudice.
Subsequently Mr Peter S. Carroll on 2 June 1982, submitted plans for the retention of the two self-contained units at Doneraile Walk, Tramore and stated in the course of his letter to the Waterford County Council the following:
I believe the building was commenced in July, 1964, and completed early in 1965.
While I appreciate the need for this information in order for the application to be properly dealt with my client has asked me to request of you that a decision be taken on the application as soon as is ever possible as the closing of the sale of the property being held up pending clarification of the matter of planning permission.
The Waterford Corporation in an undated letter which I am told was sent in July 1982, replied as follows: ‘I refer to your application in connection with the retention of building at Doneraile Walk, Tramore, and I am to advise you that on the basis of the information supplied as to the date when construction *677 commenced permission to retain the structure does not appear to be necessary and accordingly the council are not making a formal decision on the application’. I had thought for a considerable time that this letter might have been sufficient to satisfy the purchaser’s solicitors but when taken in conjunction with Mr Carroll’s letter it does not afford an effective substitute for the satatutory declarations required.
It therefore follows that at the time of the issue of the proceedings herein a valid requisition on title with relation to the planning permission remained outstanding and it is only in recent times that the statutory declarations satisfactory to both parties have in fact been furnished.
With regard to the other matter in relation to the certificate of discharge of capital acquisition tax the matter is much simpler.
I consider it clear and indeed I think this is largely accepted by Mr Meagher in evidence that this certificate is necessary. It forms part and parcel of the documents by any purchaser in dealing with a purchase from a personal representative of a deceased and reference is made in correspondence to s. 48 of the Act which provides that a certificate may be obtained from the Revenue Commissioners in respect of any individual property of deceased’s estate stating that no liability will attach to that property. Whilst the matter was in contention for a considerable period the problem was solved on 27 May 1982, by the offer by the plaintiff’s solicitors of an undertaking to pay the tax when assessed and to furnish the relevant certificate as soon as possible. In their letter of 12 August 1982, the defendant’s solicitors state ‘We would obviously prefer if we were furnished with the actual certificate rather than undertaking on closing but as it appears the matter will not be resolved within the near future it appears we will have to accept an undertaking together with evidence that the matter is progressing with the Revenue Commissioners’.
In my opinion and indeed I think it was accepted during the course of the case that the plaintiff’s solicitors’ undertaking was amply sufficient to get over the problem and if this was the only matter outstanding at the time of the defendant’s solicitors’ letter the sale would then have been ripe for closing.
Clause 4 of the general conditions of sale provide as follows:
The purchase shall be completed and the balance of the purchase money paid by the purchaser on or before the closing date which shall be the date stated in the memorandum or if no date is therein specified, the first working day after the expiration of five weeks from the date hereof. Completion shall take place at the office of the vendor’s solicitor. If by reason of any default on the part of the purchaser the purchase shall not be completed on or before the closing date or such later date as the parties shall have agreed, the purchaser shall pay the interest to the vendor at the rate specified in the memorandum and the balance of the purchase money remaining unpaid from the closing date up to the date of actual completion, or the vendor may allege (notwithstanding the provisions hereinafter in Clause 6 contained) to take the rents and profits less the outgoings of the property for such period in lieu of interest (such rents, profits and outgoings being if necessary apportioned for this purpose).
Under this clause the vendor has to show that there is default on the part of the purchaser and it is satisfactory matter that some modern authority exists in relation to this problem, namely, Northern Bank Ltd and Others v John B. Duffy a *678 decision of Costello J reported at [1981] ILRM 308. In his judgment Costello J differentiated between default and breach of contract and adopted a large passage in the case of Bayley/Worthington and Cohen’s Contract [1909] 1 Ch 648 as follows:
Default must, I think, involve either not doing what you ought or doing what you ought not, having regard to your relations with the other parties concerned in the transaction; in other words, it involves the breach of some duty you owe to another or others. It refers to personal conduct and is not the same thing as breach of contract. If A contracts that B shall do something by a certain day and B does not do it by the day named A commits a breach of contract; but if the question arises whether the delay be due to A’s default, A’s personal conduct has to be considered, and the question will be whether he has committed some breach of his duty towards B. So, in contracts for the sale of real estate providing for completion at a certain date, and containing provisions as to what is to happen if completion be delayed beyond that date by or without the default, or wilful default, of either party, the conduct of that party has to be considered; and if he has been guilty of no breach of duty he will not, I think, be in default within the meaning of the contract. Of course the duties of each party towards the other must be determined by all the circumstances, including the nature of the contract and its provisions; and in determining these duties the complexities of the English law of real property must be borne in mind. The duties of, at any rate, the vendor under a contract for sale of real estate cannot be gauged by the standard applicable to other contracts, for example the sale of goods. Thus the vendor is not in every case bound to know of a defect in his title, but he is bound to remove any such defect if it be pointed out and it is in his power to remove it. If he proceeds with diligence to remove it when pointed out, he will not be guilty of default merely because completion has to be delayed pending such removal. If, however, he refuse to remove such defect when pointed out, I think he will be guilty of default, for his duty to the purchaser is to comply with or remove all proper requisitions or objections as to title. On the other hand, though the purchaser is entitled to make all proper requisitions or objections as to title, and to refuse to complete until they have been complied with or removed, he owes a duty to the vendor not to refuse to complete on the ground that some untenable requisition or objection made by him has not been complied with or removed; and if he refuse to complete on any such ground he is, I think, guilty of default. There may, of course, be cases in which there is a bona fide dispute as to what is a proper requisition or objection, and the only way of settling such dispute may be by application to the court. If the court decide that an objection or requisition is untenable, it in effect decides that it ought not to have been insisted on, and consequently that the purchaser was in default in refusing to complete till it was complied with or removed. If, on the other hand, the court decide that the requisition or objection was good, it in effect decides that the vendor was in default in not complying with or removing it, if it was in his power so to do. The honest belief of either party in the validity of his own view will not prevent such party being in default, though it may prevent such default being a wilful default within the meaning of the contract in question.
There is no provision in the contract for the payment of interest by the vendor to the purchaser and my only enquiry is to ascertain whether or not the purchaser should pay interest. On the findings that I have arrived at in the course of this case it is manifest that the purchasers were not in default and could not be at fault in the circumstances until the proper statute declaration was given as required by Requisition 62 (c). It follows, therefore, that the defendants were not in default on the date of the issue of the proceedings, namely, 7 September 1982, and whilst it is agreed that the sale is now to be closed and Mr Ryan has undertaken on behalf of his client so to do I cannot *679 give any relief to the plaintiff by way of interest. I propose to hear counsel generally as to the disposal of the action and the question of costs.
O’Donnell and Ross Todd’s Contract
High Court of Justice.
Chancery Division.
10 June 1904
[1904] 38 I.L.T.R 173
Kenny J. sitting for the Master of the Rolls
Kenny, J.
It is plain that Welsh had the legal estate in the tenancy, and on his death it vested in his executors, and the executors could be sued on their legal liability as executors. The landlord, instead of or in addition to suing Swan, could have got a judgment against Welsh or his executors. It is admitted that no notice of intention to sell was served on the landlord, but after the sale it appears that notice of the name of the purchaser was served on the landlord and he made no objection. But the landlord says he will require all arrears of rent to be paid before he accepts the purchaser. If the holding is subject to the Ulster custom there can be no valid transfer unless with the consent of the landlord. Such has not been given, and the purchaser is entitled to secure that the landlord shall give his consent. Supposing that the holding is not under the Ulster custom, what is the effect of s. 16 of the Act of 1896 ? Under s. 16 the tenant or mortgagee may redeem by paying two years’ rent, but the balance may be recovered by the landlord as a debt. That is, it removes the rent as a burden upon the property, it cannot be the subject of a distress, but the persons legally liable are still to remain liable for the debt, as if the section had not been enacted. A surety would still be liable for the arrears where the tenant had redeemed by paying two years’ rent. The same follows as to a mortgagee. S. 16 of the Act of 1896 does not cut down the meaning of arrears of rent, mentioned in s. 1 (9) of the Act of 1881, to two years’ rent. The landlord may say that the arrears beyond two years’ are still due to him, and may require them to be paid before he consents to a sale. Having regard to the fact that the landlord cannot be bound to accept a purchaser, I think the requisitions are reasonable, and must be complied with by the vendors, who must pay the costs of this summons.
Representation
Cunnane v Shannon Foynes Port Company, unreported, Supreme Court, July 8, 2002 JUDGMENT OF MR JUSTICE FRANCIS D MURPHY DELIVERED THE 8th DAY OF JULY, 2002 [Nem Diss.]
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1. The above named defendant/respondent (Shannon) is the owner in fee simple of the premises known as Aras Ide, Foynes in the County of Limerick (the premises) being the lands comprised in folio 23676F of the Register of Freeholders, County Limerick. By contract dated the 11th May, 2001, Shannon agreed with the Foynes Aviation and Maritime Museum Ltd. (the purchasers) for the sale to them of the premises for the sum of £250,000. The closing date for the sale was two months from the date of the agreement, agreed to be, the 13th July, 2001. The premises were valued by DeCourcy’s, Auctioneers and Valuers, in a sum of £210,000. The sale of the premises is governed by section 15 (2) of the Harbours Act 1996 which provides as follows:
“(2) The consideration for which any land is sold by a company shall, in so far as is
practicable, not be less than its open market value.”
2. The above named plaintiff/appellant (Mr. Cunnane) is a solicitor who carries on practice in part of the premises. It appears that he currently occupies four rooms therein (and previously two) which he has occupied as tenant thereof since the 1st November, 1993. Mr. Cunnane instituted proceedings against Shannon by way of plenary summons issued on the 15th June, 2001. In the summons Mr. Cunnane claimed as series of declarations and injunctions. The relief most material to the present application is that contained in paragraphs 3 and 4 in the following terms:-
“3 A declaration that the plaintiff’s business occupation, as lessee of part of the premises known as Aras Ide, Foynes in the County of Limerick (being all of the property comprised in folio 3644F, now closed off to property number 1 in folio 23676F, of the Register of Freeholders County Limerick) and, in particular, as the lessee of the constituent building immediately adjacent to the constituent building known as the Harbour Office occupied by the defendant, vests in the plaintiff sufficient interest in the market value of the premises to entitle the plaintiff to treat with the defendant in any sale or proposed sale of the premises occupied by the plaintiff and to have such bids as the plaintiff may make taken into account in determining the open market value of the premises further to the aforesaid statutory duty.
4 The declaration that any purported sale or proposed sale of the premises or part of the premises comprised of the said folio 3644F now closed off to property number 1 on folio 23676F of the Register of Freeholders County Limerick (and any contract entered into or conveyance made thereunder) which is made by the defendant without reference to the plaintiff’s interest in the open market value of the premises is null and void.”
3. Mr. Cunnane presented a requisition to the Land Registry for the registration of the said proceedings as a lis pendens in respect of folio 23676F and the Registry duly issued a certificate that such lis pendens was in existence as at the 2nd July, 2001. The statement of claim was delivered on the 29th November, 2001. The defence delivered on the 24th January, 2002, and the case was listed for hearing – over a period of three days – commencing on the 26th June, 2002.
4. By notice of motion dated the 19th July, 2001, Shannon applied for an order vacating the lis pendens and for an order striking out the proceedings pursuant to the Rules of the Superior Court or pursuant to the inherent jurisdiction of the Court on the grounds that the proceedings constitute an abuse of process.
5. By order dated the 31st July, 2001, McCracken J. ordered that the lis pendens be vacated for the reasons set out in an ex tempore judgment of the same date. It does not appear that the application to strike out the proceedings was pursued.
6. As McCracken J. pointed out, the relevant Irish legislation provides no definition of a lis pendens. Shannon relied on the UK decision in Calgary & Edmonton Land Co. Ltd. v. Dobinson [1974] 1 Ch. 102 in which Megarry J. defined or described the analogous system of registration under the Land Charges Act 1972 (at p. 107G) in the following terms:-
“What is registrable as a pending land action is an action or proceeding which claims some propriety right in the land, and not an action merely claiming that the owner should be restrained from exercising his powers of disposition. Accordingly, on authority both ancient and modern, and on principle, I hold that the defendant’s proceedings in the Companies Court do not constitute a “pending land action” within the Land Charges Act 1972.”
7. In that case the plaintiff company was in liquidation and the liquidator thereof proposed to sell part of its lands. The defendant was a creditor and contributory of the company. He sought to restrain the liquidator from disposing of any of the assets of the plaintiff company at what he, the defendant, contended was an under value. The defendant accordingly issued a summons in the Companies Court seeking an order restraining the liquidator from disposing of any of the company’s land until appropriate arrangements were made to obtain the highest price obtainable. The defendant then procured the registration of the pending action against the property of the company. The proceedings before Megarry J. related to the application by the plaintiff company – through the liquidator – to have the registration vacated.
8. Throughout the nineteenth century the system of the registration of pending litigation and the effect of such registration was similar in both England and Ireland. The registration of pending legislation was governed in England by the Judgments Act, 1839 and here by the Judgments (Ireland) Act, 1844. The relevant provisions were virtually identical in their terms.
9. The Act of 1844, s.10 provides as follows:-
“No lis pendens shall bind or affect a purchaser or mortgagee without express notice thereof, unless and until a memorandum or minute containing the name and the usual or last known place of abode, and the title, trade or profession, of the person whose estate shall be intended to be affected thereby, and the court of equity, and the title of the cause or information, and the day when the bill or information was filed, shall be left with such officer so to be appointed as aforesaid, who shall forthwith enter the same particulars in a book as aforesaid, in alphabetical order, by the name of the person whose estate is intended to be affected by such lis pendens, ….”
10. That provision (and the comparable legislation in England) recognises that some category of pending litigation is capable of affecting “a purchaser or mortgagee” and expressly limits the circumstances in which it could have that effect to cases where the purchaser or mortgagee either had express notice of the pending litigation or where a memorandum or minute in relation thereto had been registered in accordance with the provision of the Act. The particular section is not particularly informative as to the effect of pending litigation or the categories of litigation which can and should be registered so as to affect those purchasers who do not have express notice thereof.
11. The meaning and effect of the doctrine of lis pendens and the nature of the rights protected by the Judgments Act, was considered in a number of cases which were reviewed by Kenny J. in Giles v. Brady [1974] IR 462. That learned judge considered in particular the decision of the Court of Appeal in Chancery in Bellamy .v. Sabine 1 DeG & J 566. Having described it as an authority of the highest standing, he went on to quote extensively from the judgment of Lord Cranworth and in particular the following statement:-
“What ought to be said is, that, pendente lite, neither party to the litigation can alienate the property in dispute so as to affect his opponent.”
12. How that principle was applicable in the case before Kenny J. was explained in the following terms at p. 467:-
1″The plaintiff has paid some of the deposit; if he succeeds in his claim for its recovery, he will have a purchaser’s lien on the land for it. This is the type of right which the doctrine of lis pendens protects, and so the suit affects the second defendant’s estate.”
13. It was on that basis he held that the lis was registrable.
14. The decision in the Calgary case concerned the meaning of the expression “pending land action” in s.17(1) of the UK Land Charges Act, 1972, rather than any definition of a lis pendens as that term was used in the Judgments Acts. The essence of the case made by the defendant/creditor was that the statutory term “pending land action” was more extensive than the earlier legislation. As the legislative term was defined as meaning “any action or proceeding pending in court relating to land” the case for an extended meaning was certainly arguable. Counsel for each party accepted that some limitation had to be placed on the words “relating to land”. They agreed that, for example, that an action to restrain a nuisance alleged to emanate from a defendant’s land did not relate to “those lands in such a way as to fall within the statutory definition”. The question was, as Megarry J. pointed out, how restricted the interpretation should be. Counsel for the plaintiff formulated the restriction in terms of proprietary claims being made against the owner of land and counsel for the defendant said that the test had nothing to do with proprietary claims and that an issue as to whether land was capable of being alienated by the defendant, having regard to the claim made against it, would be captured by the provision.
15. Megarry J. concluded at p. 107 that registration was limited in the following manner:-
“The rights made registrable under the Land Charges Act 1972, as under the Land Charges Act 1925, are in general substantive rights in the land. Those with specified rights or claims to the land or any interest in it must register those rights or claims (and so give warning to purchasers) or else suffer the consequences of failure to register. What is protected is some substantive right adverse to the owner, rather than a mere fetter on the owner’s rights of dispossession. That being so, it is not surprising that an expression as wide and general in its literal meaning as “any action or proceeding pending in court relating to land or any interest in or charge on land” should be given a narrower meaning more in conformity with the generality of rights registrable under the Act.”
16. Mr James O’Reilly, SC, for Mr Cunnane submitted that the decision in the Calgary case did not represent a correct statement of the law in this jurisdiction. To the extent that Megarry J was interpreting an entirely different legislative provision and giving a narrower interpretation to a term capable of a broader one, there is no direct parallel in this jurisdiction. Furthermore, counsel for the plaintiff submitted that the decision in the Calgary case was distinguished by the Court of Appeal in Whittingham .v. Whittingham [1979] Fam. 9. In that case the issue was whether proceedings under the Matrimonial Causes Act 1973 for a property transfer order in respect of particular property was registrable as a “pending land action” into the Land Charges Act 1972. The Court of Appeal affirmed the decision of the High Court that it was so registrable. The Court of Appeal, at p. 23, expressly upheld the conclusion by Megarry J. in the Calgary case but questioned the test proposed by him to this extent:-
“If Megarry J intended to lay down the principle that in order to be registrable there must be a claim to an existing interest in the land, then I venture to think he came to a wrong conclusion in that regard.”
17. I confess that I had not understood Megarry J. to exclude from registration proceedings relating to a claim on or to premises which claims were not then in existence. If that was so, I agree, it should not represent the law in this jurisdiction. Whether a plaintiff must have an existing estate or interest in the property in respect of which the proceedings are instituted so as to render them registrable was considered by my colleague Mr. Justice Geoghegan in AS .v. GS [1994] 1 IR 407. In that case the issue was whether proceedings for a property adjustment order in judicial separation proceedings were registrable as a lis pendens. Mr. Justice Geoghegan, following the decision of the UK Court of Appeal in Perez-Adamson .v. Perez-Rivaz [1987] Fam. 89, held that they were. He explained the position and set out his conclusion (at p. 412) in the following terms:-
“Although the Court of Appeal [in Perez-Adamson] partly relied on the wording of the Act of 1972, it seems clear that the English legislation referred to was nothing more than a replacement of the Judgments Act, 1839, which was the English equivalent of the Act of 1844 in Ireland and did not, in any relevant or significant way, alter the nature of a lis pendens, the circumstances in which it could be registered and the effect of registration. Nicholls L.J. raises what is the real problem about (sic.) regarding an application for a property adjustment order as a registerable (sic.) lis pendens. At the time of the institution of the proceedings the applicant spouse has no estate or interest in the property sought to be transferred. She or he has merely a claim to it. Is that sufficient? Nicholls L.J. points out that in Whittingham .v. Whittingham [1979] Fam. 9, the English Court of Appeal decided that it was sufficient. With some hesitation I have also come to the conclusion that an application for a property adjustment order relating to specific property is a registerable (sic.) lis.”
18. It would seem to me that what the authorities in both jurisdictions establish is that to be registrable as a lis pendens an action must claim an interest in land but that the interest claimed need not be in existence at the date on which the proceedings are instituted. If no such interest is claimed the proceedings are not registrable.
19. It would seem to me that the decisions in both jurisdictions – namely, Calgary, and Giles, Whittingham, and AS v. GS – while not expressed in identical terms, reach the same conclusion: to be registrable as a lis pendens an action must claim an interest in land but the interest claimed need not be in existence at the date on which the proceedings are instituted. If no such interest is claimed the proceedings are not registrable. Furthermore, those with specified claims to the land must register those rights or claims (and so give warning to purchasers) or else suffer the consequences of failure to register.
20. In the present case Mr. Cunnane in his statement of claim has alleged is that Shannon proposes in breach of its statutory duty in that behalf, to sell the premises at an undervalue. Questions may arise as to the locus standi of Mr. Cunnane to make that case but, assuming that issue to be resolved in his favour, he would then argue as he has done in the affidavit sworn by him on the 19th July, 2001, that:-
“There is an open market available to the defendant (Shannon) for the sale of this premises either in whole or in lots and that market has not been resorted to nor tested by the defendant (Shannon). I am a customer in that market and I am interested in purchasing the premises either in whole or in lots and I will bid and negotiate in relation to the same when given an opportunity.”
21. Mr. Cunnane does not claim to have an option to purchase the premises or a right of first refusal thereon. Assuming, for present purposes only, that sale of the premises at “its open market value” requires that they placed on the market so that members of the public may bid for it, his only role in the matter in such an event would be as a potential and probable bidder. He claims no right in the property but asserts that Shannon have a duty to ascertain and obtain the market value of the premises and that this would involve affording an opportunity to Mr. Cunnane and other interested parties – including the other tenants of the premises – to bid for the premises. Mr. Cunnane’s only possible claim against the premises is that in the event of their being offered for sale by public auction or tender he might be the highest bidder therefor and so obtain ownership. As matters stand he has no proprietary interest in the premises but, more than that, he has no claim to or against the premises. If he succeeded fully in the proceedings he might have the possibility of becoming the owner but the successful outcome of the action would not of itself give him any estate whatever in the premises. What the authorities establish is that where a plaintiff does not at the commencement of proceedings have a proprietary interest in the premises in respect of which a claim is made does not, as has been already pointed out, mean that the litigation is not registrable but where the claim if successful would not result in an existing interest in or right against the premises – as is the case here – there is no basis on which the lis falls within the Judgments Act of 1844.
22. Accordingly I would dismiss the appeal.
Dan Morrissey [Irl] Ltd v Morrissey
[2008] I.E.H.C. 50, Clarke J
1. Introduction
1.1 These proceedings concern the ownership of certain registered lands in County Laois together with an alleged entitlement on the part of the plaintiffs to a right of way across certain other adjacent lands. The proceedings have been in being since 2001, and have progressed to the stage where a notice of trial has been served. Notwithstanding the fact that the proceedings involve a claim to own lands in respect of which the defendant is the registered owner, and also involve a claim to a right of way over other lands of which the defendant is also the registered owner, no lis pendens was filed in respect of the proceedings until recent times.
1.2 However, it would appear that on the 24th of August, 2007 a lis pendens was registered in the Central Office of this Court, in circumstances which it will be necessary to describe in more detail in due course. The defendants now seek to have the lis pendens concerned vacated. This judgment is directed to that application. The grounds on which this application is based are quite unusual. This Court has, not infrequently, to deal with applications which seek to vacate a lis pendens. The normal basis upon which such applications are brought is to the effect that the underlying proceedings are not bona fide maintained. In other words it is asserted that the proceedings are bound to fail at least insofar as they relate to any claim in respect of an interest in the lands in dispute.
1.3 However, in this case no attempt was made to suggest that the plaintiffs’ claim in respect of the ownership of the lands concerned could be described as failing bona fides. Rather it is the circumstances and manner in which a lis pendens was filed at an advanced stage of the proceedings, that gives rise to the defendants’ complaint. With that in mind it is appropriate to turn to the circumstances surrounding the filing of the lis pendens concerned and the manner in which it was filed.
2. The Facts
2.1 On the basis of the evidence put before the court on the hearing of this application, it would seem that it is contended on the part of the plaintiffs that, in a conversation in relation to the lands in December 2006, it was intimated on behalf of the defendants that at least some of the relevant lands had been charged in favour of the defendants’ bankers as part of a reorganisation of the defendants’ financing. It is said on behalf of the plaintiffs that it was in those circumstances, and being concerned that lands in respect of which a claim is made in the proceedings might be the subject of a charge in favour of a bank who might take without notice, that the lis pendens was filed. It is said that up to that time the plaintiffs had no particular reason to be concerned and had not, therefore, filed any lis pendens. It should, in fairness to the defendants, be pointed out that it has now been averred to on affidavit that the bank concerned were, at all material times, aware of the proceedings.
2.2 It appears to be common case that the lis pendens was filed without any advance notification or warning to the defendants. There is, of course, nothing in itself unusual about that course of action. In many cases a lis pendens will be filed immediately upon the issue of proceedings so as to protect the interests of the plaintiff by putting any potential third parties on notice of the existence of the proceedings. In such circumstances it is rarely the case that the defendant will be put on notice of the intention to file a lis pendens although it may well be that the defendant will be on notice of the intention to commence proceedings, and in that context, it is possible that the defendant may also be formally notified of the intention to file a lis pendens.
2.3 In any event it is clear that a lis pendens was filed, in the ordinary way, in the Central Office. It is also the case that that lis pendens was not registered as a burden against any of the folios which comprised the lands which are the subject of these proceedings both in respect of the claim to ownership and in relation to the claim for a right of way. Against the background of those facts it is necessary to turn to the legal principles applicable.
3. The Legal Principles
3.1 The jurisdiction of this Court to vacate a lis pendens, notwithstanding the opposition of a plaintiff, has been clear, at least since the decision of the Supreme Court in Flynn v. Buckley & Anor [1980] 1 I.R. 423. In this Court in Flynn v. Buckley, McWilliam J., [1979] 1 I.R. 8, had concluded that he had jurisdiction to vacate a lis pendens notwithstanding the opposition of the plaintiff and in circumstances where he was satisfied that the proceedings were not being bona fide pursued. On appeal O’Higgins C.J., (speaking for the Supreme Court) determined that McWilliam J. was correct in holding that the court had jurisdiction to make the order sought in the absence of the plaintiff’s consent. On the facts of the case, O’Higgins C.J. disagreed with McWilliam J. as to whether it could be said that the proceedings were being prosecuted bona fide and thus the appeal was allowed. However, it is clear that the court does have a jurisdiction to vacate a lis pendens where proceedings are not being bona fide pursued.
3.2 However, it is clear from the judgments of both McWilliam J. and O’Higgins C.J., that the focus in that case was as to whether the underlying claim in respect of the lands was bona fide made. No authority was cited to me, nor am I aware of any authority, in which a jurisdiction to vacate a lis pendens has been asserted to be based on the circumstances in which the lis pendens was filed rather than the underlying circumstances giving rise to the cause of action in the first place. Given that no challenge is made in this application to the bona fides of the underlying claim, it seems to me that this application can only succeed if the court has a wider jurisdiction to vacate a lis pendens notwithstanding the opposition of a plaintiff, than has heretofore been identified. It is, therefore, necessary for me to consider that legal issue from first principles.
3.3 It is important to recollect that, historically, any purchaser of lands was fixed with the consequences of a cause of action that was in being in respect of the lands in question as of the time of purchase. As pointed out by Kenny J. in Giles v. Brady [1974] 1 I.R. 462 at p 467, the original doctrine of notice must have worked considerable hardship because a purchaser or mortgagee who had bought property in ignorance of a suit might find that the land was liable for claims established in an action which had been started many years before and of which he was unaware. It is clear that it was in that context that the original legislation governing lis pendens, that is the Judgment (Ireland) Act, 1844 (“the 1844 Act”), was passed, which provided that a purchaser would not be bound by the result of litigation pending at the time of his purchase unless notice of the existence of the relevant litigation had been registered in accordance with the terms of the 1844 Act. Thus a party was entitled to search the relevant register, and if finding no relevant registration, was entitled to assume that there was no litigation pending in respect of the land, and could thus purchase free from the consequences of the litigation concerned.
3.4 The registration of a lis pendens in accordance with the relevant legislation was thus simply a means of notifying any potentially interested parties as to the existence of the litigation. The registration of the lis pendens was done as of right provided that the proceedings were actually in being and could, in my view, be maintained as of right, subject only to the jurisdiction identified in Giles v. Brady to vacate where the proceedings were not bona fide.
3.5 It is important to note the purpose of the registration of a lis pendens. The lis pendens is designed to bring to the attention of third parties who may be interested in acquiring the property, or a charge over it, the fact that there are proceedings in being in relation to the property which might affect their interests. Provided that there is a set of genuine proceedings in being which could have an effect on property then, on what basis could it reasonably be said that a party is not entitled to register a lis pendens.
3.6 It is, of course, the case that defendants or other relevant parties may agree to provide a plaintiff with some alternative form of protection whether by way of undertaking or otherwise. It may well be that there is considerable merit in adopting such a course of action by agreement to the mutual benefit of all. However, the fact that a plaintiff may agree to such a course of action does not deprive the plaintiff of an entitlement to register a lis pendens subject only to maintaining a bona fide claim. It is important to recollect that the registration of a lis pendens is, therefore, in an entirely different category to the grant of an interlocutory injunction. A court from whom an interlocutory injunction is sought must have regard not only to whether a plaintiff has made out a stateable case, and thus has established that there is a fair issue to tried, but also to the established principles concerning the balance of convenience. The court must, of course, also have regard to whether damages might be an adequate remedy, but in respect of a claim to property such a consideration is unlikely, in most cases, to be of significance. However, it is clear that even in the case of a claim to property, a court asked to grant an interlocutory injunction pending trial, which would have an effect on the property concerned, will have to have regard to a range of factors and not just the question of whether there is stateable claim. Indeed it might well be that a plaintiff who allowed proceedings to go on for some considerable time without seeking an interlocutory injunction would be faced with quite a difficulty in moving for an interlocutory injunction, at a stage close to trial, unless he could point to some significant change in circumstances which justified him in so doing. However, such factors are, in my view, of no relevance in relation to the registration of a lis pendens.
3.7 A party is entitled to register a lis pendens immediately upon the issuing of appropriate proceedings without notice to anyone. It does not seem to me that such a right can be lost by delay in registering a lis pendens. Neither does it seem to me that such a right can be, in any way, dependant on notifying the defendant.
3.8 The whole point of registering a lis pendens is to protect the plaintiff’s interests. The plaintiff is entitled to protect those interests in all circumstances subject only to having a bona fide claim to protect. For all of those reasons it does not seem to me that the fact that a lis pendens was not registered at an early stage, or that it was somewhat belatedly registered without notice to the defendant, is of any materiality to the entitlement, as of right, of a plaintiff to put the public on notice of the existence of the proceedings concerned.
4. Application to the Fact of this Case
4.1 I am not, therefore, satisfied that the absence of notice to the defendants or the belated stage at which the lis pendens in this case was registered are matters which can effect the validity of the lis pendens or ground a jurisdiction to vacate same.
4.2 The other leg of the defendants’ argument pointed to the fact that it is open to the plaintiff to register a lis pendens as a burden on any relevant folio. It is pointed out that the claim in these proceedings relates to part only of certain folios being, so far as the claim to ownership is concerned, referable to a portion only of one folio and being, so far as the other folios which are mentioned in the proceedings are concerned, related only to a claim to a right of way.
4.3 There is no doubt that the relevant provisions of the Land Registry Rules (rule 56) provide that, where the existence of a lis pendens is to be registered as a burden on the folio concerned, but where the action which underlies the lis pendens relates only to part of the folio concerned, the portion of the lands which are the subject of the relevant litigation must be specified. It is, thus, a matter of complaint on the part of the defendants that the absence of registration by the plaintiff of the lis pendens as a burden on the relevant folios leads a person conducting a search in relation to the defendants in a position where it will not be clear from the public record as to the extent of the plaintiffs’ claims. Such a third party will, it is said, have the existence of the proceedings disclosed by the registration of the lis pendens in the first place, but will not have the extent of those proceedings disclosed by virtue of the absence of a registration of the lis pendens as a burden on the relevant portions of the applicable folios.
4.4 However, it does not seem to me that this is a material consideration. Provided that there is a bona fide claim, then a plaintiff is entitled to register a lis pendens and is under no obligation to engage in any other form of registration. The fact that a plaintiff may choose to also register the lis pendens as a burden on relevant folios does not take away from the entitlement to register the original lis pendens in the Central Office. Again it should be emphasised that the only thing that the registration of a lis pendens does is to bring to the attention of interested third parties the fact that there are proceedings in being which affect land. Should such third parties require to be satisfied as to the entitlement of the defendant to deal with its lands in any particular manner, then such third parties are entitled to enquire as to the extent of the proceedings concerned so as to satisfy themselves that the proceedings could have no possible effect on any transaction which might be proposed. That is a matter between the defendant and the third party concerned. The plaintiff is entitled to bring his proceedings before the court and specify them in whatever way is set out in the pleadings. If the proceedings are bona fide and affect land, he entitled to register a lis pendens so as to bring to the notice of any interested third party the existence of those proceedings. The extent to which the existence of those proceedings might affect decisions which a third party might make is a matter for that third party.
5. Conclusions
5.1 I am not, therefore, satisfied that this Court has any jurisdiction to vacate a lis pendens by virtue of the manner in which the lis pendens is filed, having regard to whether the defendant is put on notice or the timing of the registration of the lis pendens. Subject only to the overriding requirement that the lis which is said to be pending must be bona fide, it seem to me that a plaintiff is entitled to register the lis pendens as of right and at any time that he chooses. It is not, in my view, appropriate for the court to exercise any discretion which might to be analogous to the considerations which a court would apply in granting an interlocutory court order. A lis pendens can be registered without reference to the court. Such registration clearly does not, therefore, involve the exercise by the court of any consideration or discretion as to whether the lis pendens should be registered. Likewise, it does not seem to me that the court has any general discretion to order the vacation of a lis pendens save in circumstances where it can be determined that the underlying proceedings are not bona fide.
5.2 Given that the registration of a lis pendens is, in my view, an entitlement of a plaintiff who has a bona fide claim in respect of land, then it follows that that entitlement is not circumscribed by whether or not the plaintiff may also have an entitlement to register a lis pendens as a burden on an appropriate folio and by considerations of whether such a registration (or appropriate undertakings or the like) could afford such plaintiff an equivalent degree of protection. He is free to accept such alternative protection if he wishes. He is equally entitled to rely upon his right to register a lis pendens if he so wishes.
5.3 In those circumstances it does not seem to me that the defendant has established any entitlement to have the lis pendens in this case vacated.
Allen v Murphy
Supreme Court of Judicature.
Court of Appeal.
25 July 1917
[1918] 52 I.L.T.R 1
Sir Ignatius J. O’Brien Bart., L.C., Ronan, Molony L.JJ.
Sir Ignatius J. O’Brien, Bart., L.C.
From the point of view of the purchaser and that of the profession, the question involved in this case is of some importance. It appears that at the time the last document to be treated as a renewal was executed—viz., March 14, 1913—the lessor was not absolute owner of the reversion expectant on the determination of the lease for 999 years, but was only tenant for life, her children being the persons entitled in remainder. She continued, notwithstanding the expiration of the renewal of 1866, to receive the rents, and after the term of 30 years had come to an end, 19 years were allowed to elapse before any document which could be construed as a renewal came into existence. It is admitted that Mrs. McKeague, as tenant for life, was entitled to grant a renewal; but the purchaser takes up the position that the document of 1913 cannot operate as a valid renewal so as to bind the lessor. He states his objection in the first set of requisitions as follows:—“The right to call for a renewal of the lease of 1805 of the premises in Earl Place should have been exercised before the expiration of the term of 29 years, and all the renewals were out of time. The purchaser waives objection in respect of the renewal of August 20, 1834, but he requires to be satisfied that Florence McKeague, the lessor in the renewal of 1913, *1 was at that date absolutely entitled to the reversion, free from all incumbrances.” The answer of the vendor was—“See statement herewith obtained by vendor when obtaining the last renewal of 1913. The covenant is to renew at the end of every 30 years until the expiration of 999 years. Time is not stated to be of the essence of the contract.” In the second set of requisitions the purchaser said—“The statement above that the lessor in the renewal was a trustee and equitable tenant for life, and could not bind the persons beneficially entitled in remainder. As to the time for applying for a renewal, see Lewis v. Stephenson, 67 L. J. Q. B. 296. A deed confirming the renewal should be executed by the persons entitled in remainder, and searches against them will be necessary.” The vendor replied—“The option to renew in Lewis v. Stephenson is clearly distinguishable from the covenant in the present case. The renewal of 1913 was not out of time, and vendor will not obtain any such deed of confirmation.” On that answer the issue has been knit. The purchaser is a willing purchaser, and the only question he raises is one of pure law. It may be well before coming to the Irish authorities to deal with the case of Lewis v. Stephenson. In that case the lessee, who was held to have the right to a second lease for three years, made his application for renewal before the expiration of the first term of three years. Bruce, J., in his judgment, says:—“As to the period within which the option is to be exercised when nothing is specified, I think I am doing no violence to the ordinary canons of construction when I say I think that must be taken to mean within a reasonable time before the expiration of the original lease; and as, in the present case, the defendant applied for a renewal in the month of March, and the original tenancy did not expire until June 24, I think the application for renewal was in time.” That case proceeded on the hypothesis that the application for the renewal should have been made before the expiration of the first term of three years. But if the case is an authority for the proposition that where no time is specified the application for renewal must be made before the expiration of the lease, I dissent from that general proposition. If the application in that case had to be made before the expiration of the lease, time might be regarded as of the essence of the contract, and the decision might fall within the cases in the Court of Appeal in this country, but clearly the lessee was not bound to apply for renewal before the expiration of the lease. Once that decision disappears as inapplicable this case becomes very simple. Mr. Poole’s argument has been that the lapse of 19 years after the expiration of the lease was an unreasonable time, and that in the circumstances the document of 1913 purporting to be a renewal, although it may have some operative effect during the lifetime of the grantor, could have no operation against the remainderman. Let us take the case where there is not a limited but an absolute owner. The only person who has any real interest in getting a renewal, where there is no renewal fine, is the tenant. The landlord continues to receive the rents. If a renewal is made, 10, 20 or 30 years after the expiration of the lease, is it to be presumed that it is not effective? If title in all such cases was to be challenged, the only practical result would be that in every case where renewal was taken out after the expiration of the lease, there would have to be a Chancery suit to determine whether an unreasonable period had elapsed; and the document might be inoperative whether the period was 12 years or 12 months. It has been suggested that the vendor in this case was estopped from obtaining a renewal. In Fry, on Specific Performance, 5th Ed., p. 541, par. 1105, this matter is dealt with thus:—“But where no time has been originally limited within which a tenant’s option to have a lease must be exercised, and the landlord has never called upon the tenant to declare his option, mere lapse of time will not preclude the tenant or his assign or legal personal representative from exercising it.” That is the ordinary law with regard to the simple case of an option for a lease; but where the option is given by a contract of a peculiar character, such as that contained in the document of 1805, and after the expiration of the term the owner grants a renewal under the original contract, I do not see how any question as to its validity can arise. If that be the law, as I conceive it to be, in the case of an absolute owner, I fail to discover that it can be different in the case of a renewal granted by a limited owner, apart from time being of the essence of the contract. This argument is self-contradictory. If a particular time is of the essence of the contract, the point as to a reasonable time does not arise; and if only the question of a reasonable time is to be considered, time as of the essence of the contract is altogether out of the case. I have decided this case on the ordinary principles of a Court of Equity applicable to cases where time is not of the essence of the contract, and also, having regard to the principles of equity in specific performance suits, where an option to renew a lease is given. Mr. Justice Barton said this case was ruled by McDermott v. Caldwell, Ir. R. 10 Eq. 504, and that was a *2 convenient way for him to deal with the question. I am not ruling whether that case was rightly or wrongly decided. It could, indeed, be supported without reference to the Tenantry Act at all. I think the comment of Walker, L.J., on that case, in Hussey v. Domville, [1900] 1 I. R. 417, at page 444, is well founded. He says—“In my opinion there is no authority for the proposition that the Tenantry Act can be resorted to for the purpose of supplying any argument, either directly or by analogy, in support of the enforcement of a covenant for limited renewal, such as exists in the present case. The case of McDermott v. Caldwell may be subject to different considerations from the present, and I express no opinion on it.” In Hussey v. Domville, [1900] 1 I. R. 417, the Court of Appeal held that time was of the essence of the contract, and that there was no equity to relieve the lessee from his own neglect. In that case there was a specified time—viz., six months from the death of the cestui que vie, within which the lessee had to nominate a new life. Therefore, the case came within the general proposition stated in Furlong, and cited by FitzGibbon, L.J., in his judgment. In Furlong’s “Law of Landlord and Tenant,” Vol. I., Book 2, c. 4, s. 35, p. 289, of the second edition, it is stated that—“If a lease merely contains a covenant for one or more renewals, or to renew from time to time, during a limited period, it is incumbent on the tenant to observe with strictness the terms of the covenant, as a Court of Equity will not relieve against the legal consequences of his negligence, unless a strict performance be prevented by the default or misconduct of the landlord, or by ignorance not wilful, or by unavoidable accident.” All the authorities cited in support of that proposition are cases where a specified time was fixed for applying for the lease, and where time was of the essence of the contract. Whether or not Hussey v. Domville overruled McDermott v. Caldwell does not affect the present case. For the reasons given, I am of opinion, although my conclusion is based on different grounds, that the decision of Mr. Justice Barton was correct.
Ronan, L.J., concurred.
Molony, L.J.
I agree. There is no time fixed within which the lease is to be renewed, and we are asked to say that the lease of March 14, 1913, was inoperative because it was not obtained until 19 years after the expiration of the previous lease, notwithstanding that the lessee remained in possession, paid the rent, observed the conditions, and was never asked or required to accept a renewal. It is admitted that Florence McKeague, as tenant for life, was entitled to grant a renewal, but that such right could only be exercised by her either ( a ) before the expiration of the lease of 1866, or ( b ) within a reasonable time after the expiration of that lease. As regards ( a ), the case of Lewis v. Stephenson has been relied upon. In that case Bruce, J., said, although it was in no way necessary for the decision, that the application should be made before the expiration of the lease; but if he meant to say that the renewal could not be applied for afterwards, I cannot accept his view. As regards ( b ), it is clear that in the present case we have no time limit, no renewal fine, and nothing to cause any loss to the landlord by reason of the delay. The lessor did not herself consider 19 years an unreasonable time, or she would not have granted the renewal in 1913. Had she thought that the lease should have been renewed earlier, it would have been easy for her to have served a notice requiring the lessee to take out a renewal within a limited period. If the lessor in 1913 had been an absolute owner, the case would be unarguable, but I am unable to see that there is any material difference in the circumstances of the present case by reason of the lessor being only tenant for life. I do not think it necessary to go into the facts of McDermott v. Caldwell further than to say that I think the decision in that case was right, and can be supported without in any way relying on the equity of the Tenantry Act (19 & 20 Geo. 3, c. 30). I think that the requisition was sufficiently answered, and that the ruling of Mr. Justice Barton was right, and ought to be affirmed.
In re Ward and Jordan’s Contract
Chancery Division.
3 December 1901
[1901] 35 I.L.T.R 249
Summons under the Vendor and Purchaser Act, 1874. The vendor, Eliz. Ward, the owner of a licence granted to her in 1898 for certain licensed premises in Warrenpoint, put up said premises and licence for sale by public auction on 2nd Oct., 1901, and Thomas Jordan, as the highest bidder, was declared the purchaser. On 6th March, 1900, the vendor was convicted by the magistrates of an offence against the Licensing Acts, to wit, that she did on 18th Feb., 1900, permit drunkenness and riotous conduct to take place on her licensed premises, and the conviction was by order of the magistrates endorsed on the licence. Neither in the particulars nor at or previously to the sale was the fact of this endorsement disclosed to Thomas Jordan,-the purchaser, as the solicitor for the vendor thought it immaterial. The purchaser by requisition 4 contended that the concealment of this fact by the vendor was such a material circumstance as to entitle the purchaser to refuse to complete the sale. The vendor in his answers to requisitions denied that there was any concealment, and said that the non-disclosure of the conviction and endorsement was not such a material circumstance as to entitle the purchaser to refuse to complete. The purchaser then took this summons to have it declared that the objection No. 4 in the requisitions had not been sufficiently answered, and that the contract was not binding on the purchaser, and for a return of the deposit.
Porter, M.R.
The question for the Court is whether the fact of one conviction being endorsed on the vendor’s licence is a material fact, for it is settled that the non-disclosure of a material circumstance would entitle the purchaser to relief. It is clear that fraudulent concealment is out of the case. The solicitor for the vendor knew of the endorsement of the conviction, but thinking it immaterial did not disclose it. Ss. 30 and 31 of the Licensing Act, 1872, have been relied on by the purchaser. S. 30 clearly does not apply to the present case, because there is only one conviction. Under s. 31 there must be two convictions against one person licensed since 1872 (and the vendor is such a person), before the premises can become affected. As there is only the one conviction against the vendor, the premises are not affected in the purchaser’s hands. Condition 13 of the Conditions of Sale provides that the vendor should hand to the purchaser the original licence certificate duly endorsed. It was the vendor’s interest in the licence that was sold. At the hearing in Chamber I thought that the endorsement of the conviction was one step towards forfeiture, but it is clear that the purchaser cannot be personally affected, nor are the premises affected by the one conviction. I, therefore, hold that the objections by the purchaser have been sufficiently answered, and that the contract is binding on him. The purchaser must pay the costs, except the costs of the hearing in Chamber, which are to be borne by the parties respectively.
Galdan Properties Ltd (In Liquidation), In Re
1986 No. 191
Supreme Court
11 March 1988
[1988] I.L.R.M. 559
(Finlay CJ, Hederman and McCarthy JJ)
11 March 1988
Subject: Legal profession
McCARTHY J
(Finlay CJ and Hederman J concurring) delivered his judgment on 11 March 1988 saying: Galdan Properties Ltd (Galdan) were the owners of the Cat and Cage licensed premises in Drumcondra, Dublin, which were mortgaged to the Industrial Credit Company Ltd (I.C.C.). Haughtons is a firm of solicitors practising in Dun Laoghaire and Wicklow; on 17 November 1983 they were instructed by Galdan, then trading, to prepare particulars and conditions of sale for an intended auction. The title deeds were in possession of I.C.C. as mortgagees but had been obtained from I.C.C. by Haughtons on 16 November on foot of an accountable receipt to hold the said documents in trust for the said I.C.C. and not to do any act which would enable the property dealt with by it to be mortgaged or assigned without the I.C.C’s consent or its lien thereon to be in any way postponed or prejudiced. Haughtons did the work required in preparing the conditions of sale and attending what proved to be an abortive auction held on 28 November when the property was withdrawn at £681,000. Haughtons’ charges amounted to £8,414 including VAT. On 8 February 1984 a provisional liquidator was appointed to Galdan and it is in the course of the consequent liquidation that this matter comes before this Court. The solicitors to the liquidation, Messrs A & L Goodbody, by letter of 8 February requested the return of the title deeds and, after a threat of legal proceedings, they were returned to I.C.C. with an accompanying letter of 12 March, stating inter alia:
the documents are sent to you on the strict understanding as advised to the liquidator’s solicitors that our lien is preserved and to that end that you will not part with possession of the above documents without either obtaining our written consent to do so or alternatively until an order of the Court is made determining our right to hold them in relation to our claimed lien therein. We wish to make it clear that our claim to a lien upon the documents is exercised as a claim to be entitled to hold the documents in priority to any right of the Company and the Liquidator to obtain possession of them, and it is not sought to suggest that we should rank in priority to your Company in respect of the amount due by the Company on foot of the mortgage.
By notice of motion dated 24 April 1986, the Official Liquidator applied to the court for a determination of the following questions:—
1. Whether the claim of Haughtons solicitors as creditors in the liquidation of Galdan Properties Ltd in a total sum of £8,414 is an unsecured claim, or alternatively whether the said claim enjoys any, and if so what, priority.
2. An order providing for the costs of this application.
In the High Court, Carroll J ruled that no lien in favour of Haughtons was created in the circumstances of the case and that, therefore, the solicitors’ fees were not secured in the liquidation. From that judgment and order, Haughtons appeal.
1. A Solicitor’s Lien
A solicitor holds a general or retaining lien; in that respect it differs from *562 the ordinary lien derived from possession of the article to which value had been added and to which there attaches a lien for payment of the charges in respect of that added value. A solicitor’s lien attaches to all documents and other personal property in his possession as such solicitor and relates to all outstanding charges, as solicitor, not merely those in respect of the particular documents over which the lien is claimed. The lien entitles the solicitor to retain the documents, or other personal property till payment of the full amount of his bill, subject to taxation if required and if the bill is still liable to taxation. A general lien is not limited to solicitors; it has been applied to bankers, factors, stockbrokers, warehouse keepers and insurance brokers but such liens are discouraged because general liens are a great inconvenience to the generality of traders because they give a particular advantage to certain individuals who claim to themselves a special privilege against the body of creditors at large instead of coming with them for an equal share of the insolvent estate. (Rushforth v Hadfield (1805 6 East 519 at p. 528).
2. The case for the Solicitors
As I understand the argument, it is based upon the circumstances that Galdan authorised release of the documents by I.C.C. to Haughtons thereby impliedly authorising the creation of a lien subject to the rights of I.C.C; that the lien arose as a result of the professional work carried out and attached to the title deeds, subject to the terms of the accountable receipt; and finally, that I.C.C. took back the title deeds with notice of the claim of lien and then got paid the amount of their charge, whereupon I.C.C. held as agent for Haughtons.
Counsel for the liquidator whose duty it is to accumulate as large as possible a fund for the general body of creditors, sought to identify three facts that were, he said, inconsistent with the lien claimed:
1. The title deeds were held by I.C.C. as legal mortgagee from Galdan; the rights of the solicitor, Haughtons, could be no greater than that of the client, Galdan; the client, at all relevant times, had no right to possession of the title deeds, an essential ingredient in the solicitors’ claim to a lien.
2. The undertaking in the accountable receipt created an express trust; possession as a trustee is absolutely inconsistent with a lien by a solicitor.
3. The unilateral statement in the letter to I.C.C. did not have any consequence in the creation of a ‘notional or constructive lien after possession had been yielded’.
I would like to express appreciation to counsel for both parties for the clarity and comprehensive nature of their arguments and the authorities cited.
3. Conclusion
I am satisfied, not without regret, that the claim of lien fails. In my view, a lien, general or otherwise, ordinarily only arises by operation of law in *563 circumstances appropriate to create such a lien. This is so whether or not the lien be that of a solicitor or a broker or a craftsman; a lien may be waived even in advance but, in the absence of any such agreement, implied or otherwise, a lien is not created by unilateral act but, rather by operation of law.
Halsbury — Laws of England — volume 1.813; volume 28. 520 and 523; volume 44.235;
Pelly v Wathen (1849) 7 Hare 351;
Re: Walker; Meredith v Walker (1893) 68 LT 517;
Young v English (1843) 7 Beav 10;
In re Llewelyn (1891) 3 Ch 145;
Re: Gough; Lloyd v Gough 770 LT 725;
In re Clarke; ex p. Newland LR (1876) 7 Ch D 575;
The Gaupen (1975) wn 138;
Caldwell v Sumpters (a firm) and another [1972] 1 All ER 567.
It is true that Haughtons did the work, did so at Galdan’s request and were entitled to be paid their proper charges at a time when they had possession of the title deeds. Their problem is that their possession was a highly qualified one. Quite apart from the very rigorous requirement on a solicitor to comply to the letter with an undertaking of the kind given to I.C.C, their possession of the title deeds was entirely conditional and, expressly, as trustees for I.C.C. No doubt I.C.C. knew the purpose for which Haughtons held the deeds and, in a sense, did benefit from the work being done, but Haughtons did not hold the deeds in any sense as agent or trustee for Galdan; in no sense did the case resemble the facts in Caldwell v Sumpters [1972] 1 All ER 567 where the original solicitors who had established their lien handed over their deeds to new solicitors with a unilateral reservation. For these reasons it seems to me the liquidator’s second proposition is correct in fact and sound in law. In the Caldwell case the new solicitors received the deeds as agents for the original solicitors and the unilateral reservation was upheld; here, I.C.C received the title deeds, not as agents or trustees for Haughtons, but as of right as the body entitled to possession.
It is not necessary to express a view on the issue of the retention of some equitable right, including a priority in liquidation, if, through force of circumstance, the owner of a lien had to part with possession of the subject matter, but, at first sight, it would seem entirely equitable that he should not lose whatever priority or other rights he might have from such possession by the mere physical parting. The problem here is that there never was a lien. It may seem unjust that the solicitors who, with the knowledge of all concerned carried out extensive professional work, should lose their priority or security and, probably, in the circumstances, remain unpaid; it is not to be overlooked, however, that in a liquidation involving the significant sum shown by the bid at the abortive auction, many other creditors who have *564 supplied services or goods to the company in liquidation are in a similar plight.
I would dismiss the appeal.
Kelleher & Anor -v- O’Connor
practicing as Don O’Connor & Company [2010] IEHC 313 (16 July 2010)
Clarke J.
Status of Judgment: Approved
Neutral Citation Number: [2010] IEHC 313
THE HIGH COURT
2004 18539 P
1. Introduction
1.1 In 2001 the plaintiffs (“the Kellehers”,“Mr. Kelleher” and “Mrs. Kelleher”) were interested in buying a restaurant premises at No. 1 Parkwest, Mallow in Cork. Their purpose was to buy same as an investment with the intention being to let it to a restaurant operator. In that regard, they retained the defendant (“Mr. O’Connor”) to act as their solicitor.
1.2 There can be little doubt but that the purchase has turned out to be unsuccessful. The Kellehers say that Mr. O’Connor was negligent in the way in which he handled the transaction on their behalf and bring these proceedings for damages arising out of that alleged negligence.
1.3 The problem with the restaurant stemmed from its status under the Food Hygiene Regulations 1950 as amended (“the Food Hygiene Regulations”). There is no doubt that the restaurant encountered significant difficulties with the authorities in relation to that status. It is said that Mr. O’Connor’s handling of the transaction, insofar as it related to dealing with questions under the Food Hygiene Regulations, was negligent. Some further reliance is placed on behalf of the Kellehers on planning issues and the user covenant in the relevant lease.
1.4 Against that general background, it is necessary to turn first to the facts.
2. The Facts
2.1 Mr. Kelleher is involved in the IT business. Mrs. Kelleher, prior to the events which I am about to describe, helped part-time in that business.
2.2 In 2001, the Kellehers saw a restaurant known as “Pat’s Chat” for sale. The restaurant was located in one of a series of shop type units which were built on the same campus as the Tesco Store in Mallow. In that context, the Kellehers approached the auctioneer, Mr. Michael O’Donovan, who had carriage of the sale on behalf of the owner, a Ms. Patricia Piggott. At that time, the evidence establishes that the restaurant being run by Ms. Piggott provided a full, if simple, lunch menu with, for example, Roast Beef, Bacon or the like. The Kellehers went to the restaurant themselves to see how it worked.
2.3 The Kellehers entered into negotiations with Mr. O’Donovan and agreed a purchase price of IR£120,000.00. The Kellehers then instructed Mr. O’Connor to act as their solicitor.
2.4 Mr. Kelleher gave uncontradicted evidence, which I accept, that when initially instructing Mr. O’Connor, he asked Mr. O’Connor to make sure that everything under the Food Hygiene Regulations was in order, and that the restaurant was in compliance.
2.5 A contract, dated the 7th July, 2001, was ultimately signed, which provided for a closing date of the 3rd August, 2001. On the Kellehers case it is said that there was a subsidiary agreement to the effect that the premises would be taken over directly by the Kellehers as a going concern. It will be necessary to return to this issue in due course.
2.6 However, in any event, Mr. Kelleher went to the premises some two weeks or so before the anticipated closing date but found that it had already been closed from a date, apparently, around the 13th July. Thereafter, the sale closed in the ordinary way.
2.7 Prior to that closing a potential tenant who wished to rent the premises for use of a restaurant had been identified. A tenancy agreement was entered into providing for a term of four years and eleven months, and a rent of IR£250.00 per week. The intention of the tenant concerned was to open an Indian Restaurant. However, at or around the time when the restaurant was due to open, problems with the Health Authority emerged, which meant that the restaurant did not, in fact, open. Not surprisingly the tenant concerned ultimately left. The Kellehers had discussions with officials from the Health Authority which resulted in alterations being carried out to the premises, which in turn resulted in the premises being registered with limitations for the purposes of the Food Hygiene Regulations. It will also be necessary to return to the detail of the dealings by officials from the Health Authority in relation to the premises in due course. Thereafter, the restaurant operated for a period through tenants at a lower rent but was ultimately run by Mrs. Kelleher herself, which position continues to this day. As a result of the limited certification of the premises, to which I have referred, the number of covers permitted was reduced to 24 (it would appear that, in practice, prior to the sale, the seating was 40). In addition, significant limitations were imposed as to the type of food which could be served. Initially all that was permitted was cold food. Subsequently a limited entitlement to serve certain types of hot food was permitted.
2.8 Against that general background, two other aspects of the sequence of events need to be commented on.
2.9 First, it is now clear (although it would not have been clear at the time of the sale or the completion of same) that concerns had been expressed to the previous owner, Ms. Piggott, by Health Authority officials, some months prior to the sale which is central to these proceedings. A detailed letter setting out the concerns of the Health Authority had been written. It is clear, therefore, that problems concerning the restaurant had emerged and were already in being, known to Ms. Piggott, but not disclosed to the Kellehers, prior to the events which give rise to these proceedings.
2.10 On the other hand, it would seem that up to the time when Ms. Piggott closed her restaurant (and, therefore, at the time of the contract for sale), the restaurant was properly registered for the purposes of the Food Hygiene Regulations and did not have any limitation on its ability to trade such as came into place in the circumstances which I have already described. Strictly speaking, therefore, the restaurant was, at the time of the contract, registered and does not appear to have been operating outside the terms of its registration in any material respect. It was, however, clear that trouble was coming down the tracks.
2.11 So far as the conduct of the conveyancing process is concerned, a number of facts need to be noted. First, it should be said that Mr. O’Connor did not conduct any pre-contract requisition exercise relating to food hygiene matters. This is an issue to which it will be necessary to return. Second, Mr. O’Connor raised requisitions in the standard form recommended by the Law Society, which included requisitions specific to the Food Hygiene Regulations (Requisition 32). I will refer in more detail to those requisitions and the replies thereto in due course. However, for present purposes it should be noted that the reply to Requisition 32.1.b suggested that there was no evidence available of registration under the provisions of the Food Hygiene Regulations 1950, as amended, while the reply to Requisition 32.2.a suggested that no notice had been served by the Health Authority and that the vendor or her agents had no information of an intention to serve any such notice.
2.12 In general terms it is suggested that those replies ought to have led Mr. O’Connor to conduct further inquiries.
2.13 Against that background, it is next necessary to turn to the issues in the proceedings.
3. The Issues
3.1 The conveyancing issues raised on behalf of the Kellehers suggest that Mr. O’Connor was negligent in four respects:-
A. It is said that he was negligent in failing to raise the food hygiene issues as a pre-contract set of requisitions;
B. It is said that, in the light of the requisition replies to which I have referred, Mr. O’Connor should have engaged in further inquiries;
C. It is said that, because of the specific request made by Mr. Kelleher to Mr. O’Connor concerning the Food Hygiene Regulation regime, at the time when Mr. O’Connor was initially instructed, there was an added obligation on Mr. O’Connor to conduct inquiries (or, perhaps, to advise Mr. Kelleher to conduct inquiries) into the food hygiene situation; and,
D. It is said that Mr. O’Connor was negligent in allowing the premises to shut up for business prior to the closing of the transaction.
3.2 In addition, although these were not central issues in the case, it is said that Mr. O’Connor was also negligent in allowing the sale to go through in circumstances where it is said that use as a restaurant was both in breach of the planning permission in respect of which the unit operated and in respect of a user covenant in the lease under which Ms. Piggott, and through her the Kellehers, held the property.
3.3 The position of Mr. O’Connor in respect of each of those items needs also to be noted.
3.4 While not admitting negligence, I did not understand counsel for Mr. O’Connor to contest the evidence tendered on behalf of the Kellehers to the effect that the recommended and accepted practice for solicitors dealing with the purchase of restaurants was to raise food hygiene matters as a pre-contract matter. Likewise, I did not understand counsel for Mr. O’Connor to contest the expert evidence that Mr. O’Connor should have followed up on the reply to requisitions which asserted that no evidence of registration was available.
3.5 However, under both of those headings, it was suggested on behalf of Mr. O’Connor that there was no causal link between any such inaction and any adverse consequences for the Kellehers.
3.6 So far as the third item is concerned, Mr. O’Connor’s position was that there was no evidence to suggest that the ordinary practice of competent solicitors involved making direct inquiries of the Health Board or its officials concerning food hygiene matters. In those circumstances, it is argued that Mr. O’Connor fulfilled any duty of care which he might have by raising the appropriate requisitions.
3.7 So far as the fourth item is concerned, there was some debate about the precise instructions which Mr. O’Connor was bound by, but of greater relevance is the contention made on behalf of Mr. O’Connor to the effect that there was again no causal link between the fact of the closure of the premises by Ms. Piggott in advance of it being handed over to the Kellehers and any of the difficulties which the Kellehers subsequently encountered.
3.8 So far as the allegation that operating the premises as a restaurant is in breach of planning permission is concerned, it is suggested that, on a proper analysis of the relevant planning regulations, a restaurant is a permitted use. So far as the user covenants in the lease are concerned, attention is drawn on behalf of Mr. O’Connor to the fact that no action has been taken by the landlords, notwithstanding the fact that the premises have been in use as a restaurant of one type or another for a very considerable period of time such that, it is said, there could be no question of any adverse consequences now arising.
3.9 Finally I should record that there were serious issues in relation to damages with significant controversy both as to fact and principle.
3.10 I propose dealing with the issues in the order in which I have addressed them, and in that context it is appropriate to turn, first, to the requisitions including the question of whether same should have been raised pre-contract.
4. The Requisitions
4.1 In relation to the issues concerning requisitions I had the benefit of the evidence of Ms. Áine Hynes. Ms. Hynes is an experienced conveyancing solicitor who has also acted as both a lecturer and a tutor in the Law Society since 2000. She is co-author of the Law Society’s Complex Conveyancing Manual. I have no hesitation in accepting Ms. Hynes’ expertise in these matters.
4.2 I also accept Ms. Hynes evidence that it is standard proper conveyancing practice for a solicitor to raise food hygiene matters as a pre-contract requisition. The logic of this position is clear. The reason for raising certain matters pre-contract is that issues might emerge as a result of such inquiries, which might lead either to a recommendation or advice to the relevant purchaser client not to enter into a contract at all or to only enter into a contract provided that appropriate conditions are included to protect the interests of that purchaser client. While there may be problems which, emerging post-contract and in the course of investigation of title, can be adequately dealt with, it is also the case that a contractually bound purchaser may encounter difficulty in dealing adequately with issues which emerge post-contract and which have not been the subject of appropriate conditions. It is for that reason that queries relating to certain matters are recommended to be raised pre-contract. As indicated, I am satisfied that food hygiene queries come into that category.
4.3 However, it seems to me that counsel for Mr. O’Connor was correct when he argued that there was no reason to believe that the replies which were ultimately given to Requisition 32, would have been any different had they been raised pre-contract as opposed to, as it turned out they were, post-contract. Therefore, nothing seems to me to turn on the specific question of the time when these requisitions were raised. Whether Mr. O’Connor’s response to those replies was appropriate is the next issue to which I will have to turn. However, the conveyancing process in this case, as it happens, was not influenced by the timing of the raising of requisitions. This is not a case where it can be said that the fact that a party had entered into a contract of a particular type placed them at a disadvantage, which disadvantage could have been avoided had pre-contract requisitions been engaged in. In such a case the timing of the raising of requisitions might well be crucial for there would be a causal link between that timing and the consequences. A party stuck with an unfavourable contract because certain matters were not identified pre-contract, will clearly be able to establish a causal link between whatever problems they are stuck with as a result of that unfavourable contract and the fact that requisitions were not raised at the appropriate time. However, that is not the case here. Nothing actually changed because of the timing of the raising of the requisitions in this case. That leads to the question of Mr. O’Connor’s response to the requisitions as were actually raised.
4.4 In this regard I also accept the evidence of Ms. Hynes that the reply to Requisition 32.1.b gives rise to a necessity for further inquiry. Requisition 32 reads as follows:-
“32. FOOD HYGIENE REGULATIONS
1.a. Is the use of the property one which requires to be registered with the Local Health Authority pursuant to the Food Hygiene Regulations 1950 as amended.
b. If so furnish now evidence of such registration.
c. Furnish evidence of compliance with any conditions of undertakings attached to such registration.
2.a. Has any notice been served by the Health Authority or has the Vendor or his gents any information of an intention to serve any such notice.
b. If any such notices have been received furnish now full copies thereof stating whether same have been complied with either in full or in part.
c. With regard to any such notices furnish details of any undertakings given in respect thereof.”
4.5 Requisition 32.1.a. was replied to as follows:-
“Yes. Purchaser must Register with the Local Health Authority.”
However, Requisition 32.1.b. was simply replied to by:-
“None available.”
As pointed out by Ms. Hynes, it is difficult to see how that answer could have been considered to have been correct or adequate. It was correctly accepted by the vendor in response to Requisition 32.1.a. that the premises needed to be registered. However, under 32.1.b., it was suggested that there was no evidence available of registration. That could only mean one of two things. Either the premises had not been registered, in which case it had been operating illegally – a matter that would undoubtedly be of the very greatest concern to any potential purchaser. Alternatively, the premises had been registered but the vendor was declining to make available evidence of that registration. In those circumstances, as Ms. Hynes pointed out, a serious question arises as to why the vendor is not in a position to make evidence of registration available.
4.6 I am, therefore, satisfied that Mr. O’Connor was also negligent under this heading. However, a question of causation also arises here just as it did under the last heading. The question which arises is as to what action Mr. O’Connor should have taken. It seems to me that there were two ways in which Mr. O’Connor could have pursued the matter. He could have insisted that the vendor’s solicitor actually provide the relevant information. Alternatively, he could have sought to check the Register himself. However, the problem with the Kellehers case is that, in either eventuality, nothing untoward would ultimately have shown up. The fact is that the premises were registered. There was no limitation on the Register. The original Register was produced in court. It is a relatively sparse document containing basic details of the proprietor and the premises and also including, where relevant, the fact that there may be a limitation on the certification of the premises concerned. At the material time, that is to say at the time of the sale (whether pre-contract or investigation of title), these premises were registered and had no limitation. Therefore, had Mr. O’Connor insisted on evidence of registration being produced, the vendor’s solicitor could easily have produced such evidence which would not have revealed anything untoward. Likewise, if Mr. O’Connor had sought to investigate the registration himself, he would have come up with the same answer. The premises were registered and no limitation was placed on that registration so far as the Register was concerned.
4.7 Again, I agree with counsel for Mr. O’Connor that there is no causal link, therefore, between the undoubted negligence in failing to pursue evidence of registration and any adverse consequences for the Kellehers, for if Mr. O’Connor had pursued evidence of registration, he would simply have identified that the restaurant had indeed proper and unlimited registration.
4.8 I should now move to the fourth question which is as to whether anything flows from the fact that the premises was closed by Ms. Piggott in mid July and was, thus, not continuing to operate as of the date of sale. I turn to that question and will, thereafter, return to question three.
5. The Closure of the Premises
5.1 In relation to the operation of the Food Hygiene Registration system at the relevant time, I had the benefit of the evidence of Ms. Sarah O’Malley who was the authorised officer relevant to the district in which the restaurant was situate for most of the period with which I am concerned. Ms. O’Malley gave evidence that in circumstances where there was a simple transfer of proprietorship and where the new proprietor intended to carry on more or less the same business as the existing proprietor, then it is possible to effect a change in registration by substituting the name of the new proprietor as she put it “on the proviso that the nature and extent of the business does not change”. However, in this case Ms. Piggott had closed the business and such a “seamless” transition was not practicable. In those circumstances it appears that it would have been necessary for any new proprietor (whether the Kellehers or a tenant operating from them) to have given 28 days notice to enable a new registration to take place.
5.2 However, it does not seem to me on the facts of this case that a seamless direct transfer of proprietorship would have been open. What the Kellehers intended was to let the premises to a tenant who intended to make a significant alteration in the nature of the business. As pointed out by Ms. O’Malley it is only where the existing business continues largely unaltered that a simple transfer of proprietorship can occur. That would not have been open on the facts of this case.
5.3 Likewise, it is clear that the Health Authority had already expressed serious reservations in writing to Ms. Piggott about her business continuing to operate in the way in which it was at the relevant time. It is clear that that was a problem that was not going to go away. Even if it had been possible to effect a seamless change of proprietorship, it is clear that the problem about the existing business would have emerged sooner rather than later in any event. While a simple transfer of proprietorship might have been administratively easier, it would not have gotten over the problem that there was a serious issue coming quickly down the road about this restaurant in any event. In those circumstances, it does not seem to me that any connection exists between the fact that Ms. Piggott was allowed to close her restaurant and the ultimate problems which emerged. A simple change of proprietorship would not have been available in any event. Even if it was, the problems which ultimately caused significant difficulties for the Kellehers were going to happen anyway and would have happened quite soon.
5.4 That leads to the third question which concerns the inquiries which it is said Mr. O’Connor should have carried out on behalf of the Kellehers. I turn to that issue.
6. The Extent of the Inquiries
6.1 While it is normally logical to consider questions of negligence before questions of causation, for reasons which I hope will become apparent, I propose considering the issues under this heading in the reverse order.
6.2 The reason for taking that approach stems from asking the question as to the circumstances in which it might have been possible for the Kellehers to avoid the problems which ultimately beset them. In order to have avoided those problems, it is necessary that the Kellehers would have to have found out about them before the sale closed. That the problems were there in the background is clear from the evidence given by the Health Authority officials to the effect that serious concerns had already been expressed about whether the building was up to being used at the level which Ms. Piggott was employing. It is clear that many of difficulties that had already been identified were not capable of resolution. The site is completely built on. There was no room for extension. One of the most significant complaints was that the kitchen was too small for the kind of business being done. The only way the kitchen could be extended was by eating into the seating area. Likewise, many of the facilities which the Health Authority felt would need to be in place in order to allow for a more elaborate menu to be provided, were just not capable of being provided within the confines of the building. The problems were not soluble. It follows that the only way in which the Kellehers could have been relieved of the difficulties which they ultimately encountered was if the fact that there were problems and the fact that such problems were likely to be insoluble (in the sense that there were no remedial works that could be carried out to allow a more elaborate business than that ultimately permitted to be carried on) was identified prior to closing. In order, therefore, for there to be a causal connection between any negligence on the part of Mr. O’Connor and the undoubted consequences which the Kellehers suffered, it is necessary that that negligence should be such as would lead to the inference that, had it not been for that negligence, the Kellehers would have become aware of the relevant problems in advance of closing and could, therefore, have legitimately pulled out of the contract.
6.3 In substance, it seems to me that that question comes down to one of analysing whether there were any steps which should have been taken by Mr. O’Connor which would have led to direct contact, either by him or by the Kellehers, with relevant officials of the Health Authority. On the evidence of the Health Authority officials it seems clear that those officials would not have disclosed the letter which they had written to Ms. Piggott, for that letter would have been regarded as a confidential matter between the Health Authority and Ms. Piggott. However, it is equally clear on the evidence of the Health Authority officials that, had they been consulted at any material time prior to the Kellehers taking over the premises, the substance of their concerns relating to the restaurant business then being carried on would have been discussed with the Kellehers or Mr. O’Connor. Indeed, it would appear that it is common practice (and a very sensible one at that) for Health Authority officials to discuss, in advance, with proprietors, the requirements which they are likely to impose so that the relevant proprietor can adjust any proposals in a way that meets any concerns of the Health Authority. There can be no doubt, therefore, that had contact been made, prior to closing, with the Health Authority officials concerned, then the problem and its extent, together with the difficulties in solving it in any way other than the partial solution that was ultimately achieved, would have been identified. The question which arises, therefore, is as to whether there was any negligent act on the part of Mr. O’Connor which resulted in contact not taking place but where, had Mr. O’Connor not acted in a negligent fashion, it would be appropriate to infer that contact with its resulting information would have ensued.
6.4 The evidence does not support the view that it is common or recommended practice for solicitors, acting on behalf of purchasers of restaurant premises, to make direct contact with Health Authority officials to discuss the registration status of a restaurant property. That seems to me to be an entirely understandable position. The details of the requirements which the Health Authority might have, the practicality of complying with those requirements, solutions to problems and the like, are matters which, in an ordinary case, are much more likely to be effectively dealt with directly between the relevant proprietor and Health Authority officials. A solicitor’s obligation is to ensure that proper registration is in place and that no adverse notices have been served or are contemplated. Those are the sort of legal matters which are properly within the remit of a solicitor. Practical questions about how the restaurant is actually going to operate are more properly matters to be dealt with between a proprietor and Health Authority officials.
6.5 I am not, therefore, satisfied that there is any basis for suggesting that a solicitor will ordinarily be negligent in not making inquiries himself. The question does, however, arise as to whether, in those circumstances, and in the light of all the other circumstances of this case, it was negligent of Mr. O’Connor not to advise the Kellehers to make contact with the Health Authority officials themselves.
6.6 In this regard, it seems to me that the following facts need to be taken into account.
6.7 First, the Kellehers were, to Mr. O’Connor’s knowledge, not restaurateurs and had no experience in the restaurant business. They were purchasing the property for the purposes of investment and intended to let it out to a tenant. Second, Mr. Kelleher specifically asked Mr. O’Connor to make sure that all was right in relation to the Food Hygiene Regulations. Third, as is pointed out in the Complex Conveyancing Manual to which I have already referred, compliance with the Food Hygiene Regulations is a matter of considerable importance to those purchasing restaurant businesses. For example, para. 10.4 of the Manual makes clear that a solicitor should advise a client acquiring a food business of the implications of owning a food business and as to the consequences of failing to operate the business in compliance with legislation. Given the Kellehers lack of knowledge of the business, given the importance of the matter, and given the specific request made by Mr. Kelleher in relation to the question of compliance, it seems to me that it was incumbent on Mr. O’Connor, in the circumstances of this case, either to make contact with the Health Authority himself, or, perhaps more realistically, to advise Mr. Kelleher so to do. I am satisfied that, in this regard, Mr. O’Connor was negligent in failing to either take the steps himself or advise Mr. Kelleher to take them. For the reasons already analysed, I am satisfied that there is a causal connection between that item of negligence, and that item only, with the adverse consequences for the Kellehers which form the basis of the claim in these proceedings.
6.8 Before turning to the question of damages, I should also deal with the questions arising in relation to planning and the user covenant in the lease.
7. Planning Conditions and Lease Covenants
7.1 So far as planning is concerned, it seems to me that counsel for Mr. O’Connor is correct in the manner in which he has analysed the relevant Planning Regulations. The planning permission itself makes specific reference to the use of retail units being as per class 1 of Part IV of the Third Schedule of the Local Government (Planning and Development) Regulations, 1977. That class is defined as use as a shop for any purpose with certain immaterial exceptions. Shop is defined in the Regulations in s. 9 in the following terms:-
“means a structure used for the carrying on of any retail trade or retail business wherein the primary purpose is the selling of goods by retail and includes a structure used for the purposes of a hairdresser, undertaker or ticket agency or for the reception of goods to be washed, cleaned or repaired, or for any other purpose appropriate to a shopping area, but does not include a structure used as a funfair, garage, petrol filling station, office, or hotel or premises (other than a restaurant) licensed for the sale of intoxicating liquor for consumption on the premises.”
It is clear from that definition that a shop includes a restaurant, for in excluding, ordinarily, licensed premises, the definition makes clear that a restaurant licensed for the sale of intoxicating liquor is included. It seems to me, therefore, that the planning permission in this case expressly allows for use as a restaurant. There is no merit in that point whatsoever.
7.2 I now turn to the user clause. The permitted use is as a shop. There might be some question as to whether the planning definition of a shop applied so that user as a restaurant was included. However, more importantly the premises has operated as a restaurant for a very considerable period of time without any action. It would be difficult to see how a landlord would not now be estopped from accepting that a restaurant was included within the definition of shop. In those circumstances, it does not seem to me that any case can be made on the user clause either.
8. Conclusions on Liability
8.1 For the reasons which I have analysed, it follows that there is only one item of negligence which I am satisfied occurred and which had a causal link with the adverse consequences for the Kellehers. That was a failure to either inquire of the Health Authority or, perhaps more realistically, to advise the Kellehers themselves to inquire of the Health Authority, concerning the food hygiene status of the premises. However, there is one further consequence of that finding. It follows that had it not been for that negligence the Kellehers would have discovered the problem coming down the road in respect of the restaurant. For the reasons which I have already analysed, most of those problems were not soluble. In the light of those problems and the fact that they could only be solved in part and with consequences for the both the scale and type of operation of the restaurant concerned, the Kellehers would have only had two choices. They could have pulled out of the sale. It seems to me clear from the judgment of Costello J. in Geryani v. O’Callaghan (Unreported, High Court, Costello J., 25th January, 1995) that, had the problem been identified, such a course of action could have been adopted. The alternative would have been to try and renegotiate the sale or, alternatively accept the limitations imposed. On the evidence, I am satisfied that the Kellehers would not have gone ahead with the sale in all the circumstances. It follows that this is a “no transaction” case, such as I had to analyse in ACC v. Johnston (Unreported, High Court, Clarke J., 1st June, 2010). Before going on to address the question of the calculation of the amount of damages to which the Kellehers are entitled, it is necessary to say something about the legal position in respect of the calculation of damages in such cases.
9. The Law on Damages
9.1 It is important to start with the fundamental proposition that, in almost all cases, the principal function of the award of damages is to seek to put the party concerned back into the position in which they would have been had the relevant wrongdoing not occurred. The differences which are identified in the authorities concerning the proper approach to the calculation of damages for a tort, on the one hand or, a breach of contract, on the other hand, stem from that fundamental proposition. In the case of a tort, the court has to attempt to put the plaintiff back into the position in which that plaintiff would have been had the tort not occurred at all. It is the pre-incident position that the court must look at as a starting point. On the other hand, the wrongdoing which a party sued successfully for breach of contract is liable for, is the failure of that party to comply with its contractual obligations. The position which the court must look at as a starting point is, therefore, the position that should have obtained post-incident in the sense that the court is looking at what would have been the situation had the contract been complied with in accordance with its terms. The court is not, therefore, concerned directly with the position of the aggrieved party pre-contract, but rather what the position of that party post-contract would and should have been had the contract been complied with.
9.2 However, it is important in making that distinction to note that it is necessary to analyse the contractual obligations which have been breached before going on to ascertain the proper approach to the calculation of damages. As pointed out in ACC v. Johnston, a solicitor does not contract with her client that she will procure for that client a successful conclusion of a conveyancing transaction. Rather, the solicitor contracts with her client that she will carry out a proper professional job on the conveyancing transaction. Depending on the circumstances, that obligation might lead to the solicitor advising the relevant client not to proceed at all, or only to proceed provided certain assurances or terms can be imposed or the like.
9.3 While it is true to say that a solicitor can be sued in breach of contract or in negligence, it does not seem to me that it is likely, at least in the majority of cases, that there will be any practical difference between the approach to damages in either case. If the proper conduct of the conveyancing transaction by the solicitor concerned ought to have led the relevant client not to go ahead with the transaction at all, then the proper approach of the court to the assessment of damages in such a case is to look at what would have happened had there been no completed transaction.
9.4 Counsel for the Kellehers sought to argue that having a restaurant as an investment which could be let at a rent was a foreseeable consequence of the transaction. It was undoubtedly foreseeable, from the point of view of Mr. O’Connor, in that he knew that such was their purpose. However, Mr. O’Connor did not contract to get the Kellehers a restaurant which was suitable to be let. Rather he contracted with them that he would carry out the conveyancing task entrusted to him in a proper fashion. Mr. O’Connor was not, therefore, in breach of contract in failing to deliver an easily lettable restaurant with no problems on the food hygiene front. There was nothing he could have done to procure that. No breach of contract on his part led to that. Rather, for the reasons which I have analysed, Mr. O’Connor was negligent in allowing the transaction to complete at all. This case must, therefore, be approached on the basis of it being a “no transaction” case. If Mr. O’Connor had not been negligent, then this transaction would not have gone ahead, the Kellehers would not have spent any money, and they would not have had the impaired asset which the restaurant ultimately turned out to be.
9.5 In that regard, I should comment on the decision of Vos J. in Joyce v. Bowman Law Ltd. [2010] EWHC 251 (Ch). In that case the defendant was firm of licensed conveyancers. A contract for the purchase of property by the relevant plaintiff was discovered to contain a seller’s option, whose importance had not been appreciated by the firm of licensed conveyancers concerned. The plaintiff’s claim involved an assertion that he had intended to demolish the cottage built on the property and replace it with a new house. He sought to recover the profit that he would have made had he been able to carry out that development. It was, therefore, a loss of bargain case to that extent.
9.6 It is true that, on the facts of the case, the court did approach the calculation of damages on that basis. However, it is clear from a careful analysis of the judgment that counsel for the plaintiff conceded, and the court accepted, that it was necessary to make an appropriate reduction in the damages by reference to the risk that, had the problem with the option been properly identified by the licensed conveyancers concerned, it might not have been possible to remove or suitably ameliorate the option by renegotiating the terms of the contract.
9.7 What Joyce v. Bowman Law makes clear is that there may be intermediate cases in between what I might term a pure “no transaction” case, on the one hand, and a case where it is clear that, in the absence of negligence, a proper and complete conveyance could have taken place. It might perhaps be useful to term such a case as a “completed transaction” case. It is important to note why that is the case. In order to analyse the consequences of negligence on the part of a solicitor (and this analysis applies equally to a breach of contract on the part of the solicitor stemming from the same facts), it is necessary to look at what would have happened had the solicitor not been negligent. In some cases it may be clear that, had the solicitor not been negligent, no transaction would have taken place. At the other end of the spectrum, it may be clear that had the solicitor not been negligent, the solicitor’s client might have obtained good title to the relevant property. For example, if, due to an error in drafting the relevant deed of assurance, the deed does not actually pass title to the solicitor’s purchaser client, then it may well be possible to argue that, had the deed been properly drafted, the client would have obtained proper title. In many such cases it might well, of course, be possible to rectify matters so that title could still be procured with the only damages flowing being whatever costs might be associated with remedying the matter. However, it is possible to envisage circumstances where, for example by virtue of intervening events, it is no longer possible to remedy matters. In those circumstances, the proper approach to the calculation of damages is to look at what would have happened had the conveyancing transaction been properly conducted. On the hypothesis with which I am dealing the purchaser client would have obtained proper title to the property and in such a case it is appropriate to assess damages on that basis.
9.8 However, there may well be intermediate cases where it is not possible to say for certain what would have happened. Joyce v. Bowman Law is one such case. There was an adverse clause in the contract. The licensed conveyancer should have noticed it, advised his client about it, and, almost certainly, raised it with the vendor. What would have happened next was not absolutely clear. The vendor might not have been willing to renegotiate the terms of the contract, in which case there might well have been “no transaction”. On the other hand, the vendor might have been willing to renegotiate the term. In those circumstances there would have been a “completed transaction”. In intermediate cases the court is faced with the situation where there is a hypothetical event which never occurred precisely because the conveyancer concerned was negligent, but where the court has to make some assessment as to the likelihood or otherwise of the conveyancer having been able to successfully deal with the problem had it been identified at the time. In those circumstances the proper approach of the court, for reasons similar to those identified in Phillip v. Ryan [2004] 4 IR 241, is to assess the possibilities, form a view as to the likelihood or otherwise of each of them occurring and award damages, having regard to the proper calculation on a “no transaction” basis, the proper calculation on a “completed transaction” basis and the likelihood or otherwise of either of those eventualities having proved to be the case in the hypothetical circumstances that the problem had been identified and an attempt had been made to negotiate a solution to it.
9.9 Joyce v. Bowman Law was an intermediate case. For those reasons it was entirely appropriate for the court to assess damages on the basis of a completed transaction but reduced appropriately for a weighting derived from the risk that it would not have been possible to secure a successful conclusion even had the problem been identified. In one sense such a case may be viewed as one of a loss of opportunity. The consequence of the solicitor’s negligence was that there was no opportunity to seek to negotiate a solution to the adverse option clause. There was no certainty that, even had the problem been identified, it would have been possible to achieve that end. However, it was possible. The client lost the chance of doing it due to the licensed conveyancer’s negligence. The measure of those damages was properly viewed as being a reduced version of the full loss of bargain for there was no certainty that the bargain could have been gained, but the relevant plaintiff had lost the opportunity of seeking to gain the bargain concerned.
9.10 I am, therefore, satisfied that the overall approach which the court should adopt in cases of solicitors negligence in the conveyancing field is to first identify whether, on the evidence, it is proper to regard the case as a “no transaction” case where in the absence of solicitors negligence the transaction simply would not have gone ahead, a “completed transaction” case, where in the absence of solicitors negligence a successful conclusion to the transaction would have occurred or an intermediate case. Where there is no significant difference in the calculation of the damages under either heading, it may not make much difference. Where, however, as was undoubtedly the case in Joyce v. Bowman Law (or in other such cases where there is a loss of bargain involved or the relevant property is of particular value to the purchaser), there is a significant difference in the proper approach as and between the two cases, the court, in an intermediate case, must take a view on how likely it was that the problem concerned could have been solved and asses damages somewhere between the “no transaction” value and the “completed transaction” value, having regard to the likelihood that a successful conclusion could have been reached in the event that the solicitor concerned had not been negligent.
9.11 However, it seems to me that this case is firmly in the no transaction camp. There was nothing Mr. O’Connor could have done to have solved the Food Hygiene Regulation problems. All he could have done was identify them, and saved the Kellehers the problem of buying into a problematic restaurant.
9.12 It follows that it is necessary to assess damages in this case on the basis that, had Mr. O’Connor not been negligent, no transaction would have taken place, the Kellehers would not have paid out any money but equally would not have been left with the restaurant. I, therefore, proceed to consider the proper calculation of those damages.
10. The Calculation of Damages
10.1 It is fair to say that the basis on which the Kellehers put forward their claim for damages was, at the commencement of the case, somewhat unclear. For logistical reasons the case took place in two parts. At the end of the first three days hearing, I gave directions that further details of the basis on which the Kellehers wished to put forward their claim to damages should be furnished. Ultimately, the Kellehers formulated their claim on the basis of suggesting that there was a capital loss resultant from the reduction in value of the property by virtue of the impaired food hygiene registration status, losses attributable to the alterations which had to be carried out to secure the limited registration which was ultimately obtained, and losses in rent in the intervening period.
10.2 However, on the other hand, counsel for Mr. O’Connor suggested that the proper basis to look at the damages was to look at the value of the asset obtained by the Kellehers and compare it with what they had, in fact, paid for it.
10.3 I am satisfied that the approach suggested by counsel for Mr. O’Connor is an appropriate starting point. For the reasons which I have already sought analyse, what would have happened, had Mr. O’Connor not been negligent, was that the Kellehers would not have paid for the property, but equally, would not have had the property. The simplest way of looking at such a situation is to compare the value of the property actually obtained with the price paid. There was a conflict of evidence concerning that valuation. Two valuers were called on behalf of the Kellehers and one on behalf of Mr. O’Connor. Two of those valuers (including the valuer called on behalf of Mr. O’Connor) came in with relatively modest figures for the difference between the price paid and the then actual value of the property, warts and all. In addition, it was not clear as to what exactly was being valued. In my view, the proper comparator was the value of the property as it stood after purchase and without any additional works carried out. The third valuer, who was assessing the difference at a different time, and, in truth, on something of a different basis, did not seem to me to approach the task on a realistic basis.
10.4 Insofar as there were any differences between the two valuers who placed a modest amount on the difference concerned, their views were not based on a detailed analysis of comparators, but, rather, on an estimate based on their experience. The competing views are not, therefore, capable of detailed analysis. All in all, I have come to the view that the property, as it stood after purchase, was worth IR£15,000 less than the price paid for it.
10.5 The next question concerns whether that is an appropriate basis for assessing damages. A party faced with having acquired an impaired asset as a result of negligence is faced with a number of choices. The relevant party can, obviously, dispose of the asset and sue the negligent party for the difference between the price paid for it and what they can secure for it, given its impairment. There may, of course, in all the circumstances of any particular case, be reasons for not taking that course of action. It may not be easy to dispose of the asset. There will, in any event, be costs associated with its disposal. A party is, however, obliged to act reasonably. If the party decides to keep the impaired asset, for whatever reason, then it seems to me that, unless it can be demonstrated that there was some good reason for keeping it, rather than selling it, then it is difficult to see how the negligent defendant can be fixed with any knock-on consequences that would not have occurred had the asset been disposed of.
10.6 On the facts of this case, if the Kellehers had disposed of the asset, it would have cost them the IR£15,000 loss, which, I estimate, they would have suffered on a sale, together with the costs of sale (auctioneering and legal) which, having regard to a property worth of the order of IR£100,000, might have come to some IR£5,000 inclusive of VAT. If, therefore, the Kellehers had cut their losses at that stage, those total losses would have come to something of the order of IR£20,000. The actions taken by them need to be viewed against that background.
10.7 First, significant sums were spent on altering the premises in order to satisfy the requirements of the Health Authority officials. However, there was no evidence that any proper analysis was carried out prior to incurring that expenditure. Some expenditure related to what might reasonably be called betterment or improvement in the premises. In the course of the hearing, it was agreed that a sum of a little over IR£26,000 was actually expended on items necessarily required to meet the requirements of the Health Authority officials. There does not seem to have been any basis for suggesting that that money was well spent. All of the evidence supported the view that the price paid for the property was the market rate for a restaurant which was permitted to carry on business in the way in which Ms. Piggott had been carrying on business. For the reasons which I have sought to analyse, I am satisfied that the premises, with its impaired position, was worth some IR£15,000 less. The expenditure of a significant sum to meet the Health Authority official’s concerns would not seem to have added that amount to the value of the property. Indeed, it would seem that the net position after that expenditure was a loss. The property, even after that expenditure, was still partially impaired. No evidence was given to suggest that, viewed from the perspective of the time, things looked differently. Rather, the Kellehers just seem to have gone ahead, spent the money, tried initially to let the property, and subsequently ran it themselves. They were, of course, entitled to take that course of action. However, having taken it, without any real analysis as to whether that course of action was going to increase their losses, it does not seem to me that it is open to the Kellehers to now seek to place the much greater losses which have flown from that decision on Mr. O’Connor.
10.8 As identified in many of the cases, not least, County Personnel (Employment Agency Limited) v. Alan R. Pulver & Company (A Firm) [1987] 1 WLR 916, the starting point for the assessment of damages is that same should be considered as of the date of the wrong. However, given the overall requirement to attempt to put the wronged party back in the position in which that party would have been, had the wrong not been committed, it may, in appropriate cases, be necessary to take a different approach. The starting point indicates, therefore, that the proper measure of damages in this case ought to be, as of 2001, IR£20,000. Had the Kellehers simply sold the property, then they would have been IR£20,000 worse off at that time.
10.9 For the reasons which I have sought to analyse, I am not satisfied that there is any legitimate basis for taking a different approach to the date of calculation of damages on the facts of this case. Had it appeared to the Kellehers, on the basis of a proper analysis of their situation in 2001, that persevering with the impaired asset was likely to be a better course of action than selling it (or even that there was not much to choose between the two), then there might well be some justification for taking such an approach. It should be emphasised that parties who have to make judgements as to their actions as a result of being placed in a difficult position due to the wrongdoing of others, cannot be judged unduly harshly if, with the benefit of hindsight, their judgements turn out not to be right. However, no evidential basis was put forward for there being any good reason for persevering with the impaired asset in this case, rather than selling it. Certainly, there was no evidence that it looked to be a more advantageous way of minimising loss, viewed from the perspective of 2001, and without the benefit of hindsight. In those circumstances, I am satisfied that the proper way to assess damages is to look at them in the manner in which counsel for Mr. O’Connor argued, and that the basic loss is to be viewed as IR£20,000, as of 2001.
10.10. That leads to the question of interest. Counsel for Mr. O’Connor argued that, in the light of the way in which the case was presented, interest should not be allowed. In that regard, I do have to comment on the evidence of the Kellehers’ accountant, Mr. Gerard Piggott. In the course of the proceedings, a claim was, as I have pointed out, maintained by the Kellehers in relation to the loss of rent on the property. For the reasons which I have sought to analyse, I am not satisfied that approaching the question of damages on that basis is correct. However, the claim was maintained and evidence was produced in relation to it. The results of running of the business, when it was taken over by Mrs. Kelleher personally, were, of course, relevant to such a claim. Accounts for each of the relevant years, prepared by the Kellehers’ accountant, were supplied. On analysis, in the course of the evidence, it became absolutely clear that those accounts were wrong and misleading. Each of the accounts contained a purported significant sum in relation to rent, in circumstances where no rent was paid. I have to confess that I found the evidence of the Kellehers’ accountant in this regard to be highly unsatisfactory. When pressed on the question of why he had prepared incorrect accounts, his answer was to state that Mrs. Kelleher knew the true position and that the accounts would only be misleading if they were produced to a third party. He also stated that the accounts had been properly adjusted when being submitted as part of the Kellehers’ tax returns. Why, however, a qualified accountant should produce accounts which he knows would be misleading when seen by any third party, I fail to understand. Indeed, I had even more difficulty in comprehending why the relevant accountant did not seem to see that there was a problem.
10.11 Be that as it may, it is also fair to say that the precise formulation of the Kellehers’ claim lacked precision until a very late stage in the case. However, it does not seem to me that it is appropriate to penalise the Kellehers, themselves, for any of the above matters. It does, therefore, seem to me to be appropriate to award interest.
10.12 I should also add that I am not satisfied that this is an appropriate case for general damages. There can be no doubt but that the Kellehers had a difficult time in having to deal with this property. However, if they had taken the sensible course of simply selling it as soon as they discovered the problem, then all of those difficulties could have been avoided. For the reasons which I have already sought to analyse, I am not satisfied that there was any good reason not to sell the property. Indeed, even without the benefit of hindsight, it would seem that it was always likely to be a much more beneficial way of minimising losses.
11. Conclusions
11.1 On the basis of that analysis, I am satisfied that the proper measure of damages in this case is IR£20,000 converted to Euro and with interest at the Courts Act rate from 2001 to date. On the basis of evidence tendered at the hearing, I am satisfied that, as IR£10,000 converted to Euro with the relevant interest comes to the sum of €21,839, it follows that IR£20,000 converts to €43,678.
11.2 There will, therefore, be judgment in favour of the Kellehers in the sum of €43,678 for damages for negligence and for breach of contract.
Rafferty v Crowley
[1983] 6 JIC 2403, 1983 WJSC-HC 3442, [1984] ILRM 350
Mr. Justice Murphy
JUDGMENT of Mr. Justice Murphy delivered the 24th day of June 1983
Whilst this matter comes before the Court by way of a summons under the Vendor and Purchaser Act 1874 in relation to problems arising on the sale of premises at 35, Donore Road in the City of Dublin from the Plaintiff to the Defendant, the purpose of these proceedings is to secure the decision of this Court for the benefit of the legal profession and through it all persons having dealings with building societies as to the proper interpretation of section 80 of the Building Societies Act 1976. That section provides as follows:-
“A society shall not make a loan on the security of any freehold or leasehold estate which is subject to a prior mortgage unless the prior mortgage is in favour of the society making the loan.”
In the present proceedings the Plaintiff has asserted that a charge to secure an apportioned part of a leasehold rent does not constitute “a prior mortgage” within the meaning of that section. That assertion is disputed by the Defendant. If the Plaintiff’s contention herein does not succeed this could have very far-reaching effects for building societies and their many clients.
How the particular problem arises in the present case is as follows. By an Indenture of Lease dated the 19th day of May 1904 (the 1904 Lease) Kate McElroy and others demised to Edward Lynch and another a plot of land measuring some 186 feet by 93 feet situate in the Parish of St. Catherine and City of Dublin being the lands more particularly described on the map endorsed thereon to hold the same unto the lessees from the 25th March 1904 for the term of 500 years subject to the yearly rent of £17/10s and subject also to the covenants therein contained including, in particular, a covenant to erect at least ten good and substantial private dwellinghouses on the demised premises. There were, in addition, the usual covenants to repair and insure.
There were subsequently erected on the demised premises eleven dwellinghouses later and now known as numbers 15, 17, 19, 21, 23, 25, 27, 29, 31, 33 and 35 Donore Road in the City of Dublin. One of those premises, that is to say, number 35 Donore Road was by an Indenture of Assignment dated the 17th day of October 1962 assigned by John R. Molony to James Desmond Farrell and Veronica Farrell for the residue of the term of years granted by the 1904 lease and subject of course to the covenants and conditions therein contained. However, the assignment contained in accordance with the well established conveyancing practice a provision to the effect that the assignees should be:-
“Subject to the yearly rent of £17/10s but primarily liable to the yearly rent of £1/11/10d portion thereof and indemnified against the remainder of the rent by “the other premises demised by the lease and not hereby assigned and subject also to the covenants, conditions and stipulations (other than the covenant for the payment of the said entire rent of £17/10s) in the lease contained and on the part of the lessees to be observed and performed so far as the same now relate to the premises hereby assigned and that the purchasers hereby covenant with the vendor that they the purchasers and the survivor of them and their assigns and the executors administrators and assigns of such survivor will henceforth during the continuance of the said term pay the said yearly apportioned rent of £1/11/10d and observe and perform the covenants on the part of the lessees and conditions therein contained and will indemnify and keep indemnified the vendor and the estate of Herbert C. Crozier deceased against all actions and proceedings costs damages expenses claims and demands whatsoever by reason or on account of the non-payment of the said rent or any part thereof or the breach or non-performance or non-observance of the said covenants and conditions or any of them and that the vendor hereby covenants with the purchasers that he will henceforth pay the remainder of the said yearly rent reserved by the said lease and will perform and observe all the covenants and conditions binding on the lessee contained in such lease so far as the same are applicable to such part of the hereditaments demised by such lease as are not hereby assigned and will keep the purchasers and their executors administrators and assigns indemnified against all actions and claims brought or made by reason of any breach of the covenants by the vendor herein contained AND IT IS HEREBY AGREED that all moneys which shall become payable by either the vendor or the purchasers or the respective executors administrators or assigns under the respective covenants of indemnity hereinbefore contained shall be a charge on that part of the hereditaments demised by the said lease which upon the execution of these presents shall belong to him and such money shall be recoverable by sale or otherwise accordingly”.
In its terms and effect therefore, this clearly constitutes a charge on the premises No. 35, Donore Road in respect of the apportioned rent of £1.11.0d.
By an assignment dated the 25th day of November 1976 made between James Desmond Farrell and Veronica Farrell aforesaid of the one part and the Plaintiff herein (under her then name of Ann Teresa Corcoran) of the other part the premises 35, Donore Road in the City of Dublin were assigned to the Plaintiff for the then unexpired residue of the said term of 500 years granted by the 1904 lease and subject to the said yearly rent of £17.50 but primarily liable to the said yearly rent of £1.59p a portion thereof and indemnified against the remainder of the said rent by the other premises demised by the 1904 lease. This assignment repeated – unnecessarily or so it would seem to me – the cross covenants and charges contained in the 1962 assignment.
It was successfully argued in Provincial Building Society .v. Brown and Ministry of Finance for Northern Ireland 1950 N.I.R. 163 that the essential characteristics of a mortgage within the meaning of what was then section 13 of the Building Societies Act 1894 included first the granting of an estate by the mortgagor to the mortgagee to secure the loan, secondly the right to redeem and thirdly the right to foreclose. It was accordingly held that a charge in the form of a land purchase annuity payable to the Ministry of Finance for Northern Ireland was not “a prior mortgage” within the meaning of section 13 aforesaid. However, subsequent to that decision – and perhaps as a result of it – the Legislature in the United Kingdom when enacting the Building Societies Act 1962 and the Oireachtas here in enacting the Building Societies Act 1976introduced a definition of the word “mortgage” so as to include expressly a “charge”.
Reading section 80 of the 1976 Act and extending the word “mortgage” to include a charge as required by the interpretation section how can it be said that it does not include or extend to the 1962 charge?
Counsel on behalf of the vendor Plaintiff has sought to adopt a schematic or teleological approach to the Act and in particular section 80 thereof. She says that the purpose of the Act, and in particular Part VI thereof, is to ensure that advances made by building societies are fully and properly secured for the benefit of the society and its members. That being the intent of the Act – or so the argument goes – no purpose would be served and no benefit would be achieved by preventing or prohibiting a society from lending on the security of part of the lands comprised in and demised by a lease where the owner of that part (or his predecessor) had charged it with the payment of the rent apportioned to that part as such a charge does not reduce, in any way, the value of the leasehold interest. Again, it is pointed out that the 1976 Act expressly recognises the right of a building society to advance money on the security of leasehold property. Every person holding any part of lands demised by a lease is on risk for the payment of the entire of the rent thereby reserved. Accordingly, the mutual covenants and cross-charges benefit rather than prejudice the holders of any part of leashold land and through him any person holding a mortgage or charge on such lands. Accordingly, there is nothing to be gained and no purpose served by interpreting the words “a prior mortgage” in section 80 so as to include cross-charges of this nature.
Whilst I have every sympathy with the case made by the Plaintiff and indeed I believe that it would be in the public interest generally to uphold this construction of section 80 of the 1976 Act I do not believe that the accepted canons of construction would permit me to support that view. Re
Reference was made to the decision of the Supreme Court in Nestor .v. Murphy 1979 I.R. 326 as an example of a case in which the schematic approach might be adopted. However, it appears clearly from the judgment of Henchy, J., that the approach was justified so as to avoid “a pointless absurdity”. Again, Henchy, J., pursued “the pattern and purpose” of the legislation then under consideration where he was satisfied that by doing otherwise “would not only be unnecessary for the attainment of that aim but would enable contracts to be unfairly or dishonestly repudiated by parties who entered into them freely, willingly and with full knowledge.” It would appear that the schematic approach is justified where – in the words of Lord Reid in Luke .v. The Inland Revenue Commissioners 1963 A.C. 557 at 577 –
“To apply the words literally is to defeat the obvious “intention of the legislation and to produce a wholly unreasonable result.”
It is clear that by section 80 the Legislature set its face against a building society making a loan on the security of a property which was subject to any prior mortgage. It would have been a relatively easy task to restrict the operation of the section to cases where the prior mortgage or charge exceeded specified amounts or perhaps a particular percentage of the value of the property in question. Alternatively, what could have been done was to exclude the various categories of prior charge as was done by section 32 of the United Kingdom Building Societies Act 1962. If that precedent did not commend itself to the draftsman he could have adopted the formula used in section 99 of the Companies Act 1963which, having provided for the registration of (among other things) a charge on land wherever situate or any interest therein, goes on to provide:-
“but not including a charge for any rent or other periodical sum issuing out of land”.
In fact it does not require reference to examples or precedents confidently to infer that the Legislature in enacting section 80 in its existing form was conscious of the fact that it could have exempt from the scope of the prohibition certain prior mortgages or charges and deliberately chose not to do so. In these circumstance it seems to me that I am precluded from interpreting section 80 so as to achieve an effect – however desirable – not intended by the Oireachtas.
The conclusion which I have reached is supported to some extent by the decision of Pennyquick, V.C., In A bbotspark Estate 1972 3 A.E.R. 148. In that case the Court had approved of what is known as a management scheme under the Leasehold Reform Act 1967 which imposed certain liabilities in respect of moneys on the owners of leasehold property and these liabilities by virtue of the Leasehold Reform Act 1967 constituted a charge on the property. In those circumstances the learned Judge commented (at page 150) as follows:-
“This is an extremely serious position from the point of view of owners of the enfranchised properties. So far as I can see, on the material which has been put before me by Counsel who have been thoroughly into “the matter, there is no answer to the point, that is to say, if the charge under para. 3(b) of the scheme (the liability of the lessees) is not in some way postponed to any future building society mortgage, then a building society would be prohibited by section 32 from making an advance on the property.”
It appears, therefore, that, whilst the particular point was not the subject matter of controversy before the Court, the learned Judge was satisfied that the liability of the lessees by becoming a statutory charge on their property constituted a prior mortgage or charge within the United Kingdom equivalent of section 80 of the Building Societies Act 1976.
Like Vice-Chance11or Pennyquick I regard this as a very serious matter. There must be many building estates in which rents, small in themselves, are reduced still further by apportionment amongst individual assignees who have properly and correctly charged their respective interests with payment of the apportioned rent only to find themselves now precluded from obtaining an advance from a building society as a result of the charge so created. This would be an awsome consequence for the property holder and clearly a matter of the greatest possible concern to the building societies.
In the case of Nash .v. Halifax Building, Society and another1979 2 A.E.R. 19 Browne-Wilkinson, J., concluded that an advance made in breach of section 32 of the United Kingdom Building Societies Act 1962 was not irrecoverable as the section was enacted for the protection and benefit of a society and its members. If that decision is followed here it will obviously be a considerable comfort to the building societies in relation to loans already made but clearly, the directors of building societies would incur serious responsibilities if they choose to make loans on unauthorised securities.
Having regard to the far reaching effects which this decision may have in an area of the greatest social and economic significance I will direct the Registrar of the Courts to forward a copy of the judgment herein to the Minister for the Environment and to the Registrar of Building Societies in case it is felt that consideration should be given to making some amendment to this important legislation in the light of the conclusions expressed above.
Abraham v Oakley Park Developments Ltd
[2019] IECA 87
Ms. Justice Costello
Legal Principles
29
The former deputy registrar of titles, Mr Deeney, stated in his book “Registration of Deeds and Title in Ireland (2014)”, having noted that boundaries shown on Land Registry maps are not conclusive
‘this means that, in any case where the boundary is not stated to be conclusive or defined, evidence other than the Register or Registry map is admissible to determine the correct boundary and extent of the land’ (para 12.07)
30
It was accepted by both parties that the primary source of the boundary line between any two adjoining properties is the original deed whereby ownership is divided. In this case the relevant sub division is that between the parent folio and folio 7062F in 1981. That deed was not adduced in evidence. A considerable amount of time was spent construing the sub division of folio 26791F and the creation of folio 34848F but the disputed boundary is not to be found in the sub division of folio KE26791F so this had limited bearing on the dispute in this particular case. The key issue was to determine the correct boundary between the two parcels of land and this had to be done in the absence of the deed giving rise to the sub division.
31
The court was referred to a number of English authorities on the construction of deeds in boundary disputes. In Cameron v Boggiano [2012] EWCA Civ 157, Mummery LJ reaffirmed the established distinction between the construction of transfers and/or transfer plans that are clear and unambiguous and those which are not. If the transfer and/or transfer plan is clear and unambiguous, a mismatch between a clear plan and the actual physical features on the ground is not in itself a reason to disregard the title documents and determine the position of the disputed boundary by reference to the topographical features alone. On the other hand, the approach to construction and to the use of extrinsic evidence of topographical features is different when the title documents and plans are not sufficiently clear about the position of the boundaries. In that case, if the document is insufficiently clear to the reasonable layman with the plan in his hand to determine the position of the boundary, the court is entitled to seek assistance on the construction of the plan and title documents by taking account of the topographical features at the relevant date (para 63) At para 67 of the judgment he stated:-
‘it is not a case of substituting the physical features on the ground for the boundaries shown on the plan. It is a matter of sticking with the plan in the hand and, because it is insufficiently clear on the matter of boundaries, to use the topography at the crucial date to inform and to make sense of where the boundaries [are] of what is being transacted’
32
The court was referred to Fisher v. Winch [1939] KB 666, a case concerning a boundary dispute. Sir Wilfrid Greene M.R. gave the decision of the Court of Appeal. He said that the initial question should be:-
‘what, on the true construction of the conveyances to the parties, is the boundary of their respective land. If an examination of those conveyances coupled with any evidence that is admissible for the purpose of construing them shows what the boundary is, there is no room at all for the operation of that presumption’
33
At p.672 of the report he considered the evidence adduced in relation to Ordnance Survey maps. He continued:-
‘The effect of that evidence is that where there is a hedge or a fence running along a parcel, that is the boundary which is taken by the Ordnance Survey for the purpose of delimiting the parcels which are shown on those maps. Of course, the fact that the boundary is shown in a particular place on an ordnance map is in itself no evidence of what the true boundary is as between the parties, but where the party’s title is derived from a document which refers to the ordnance map, it is necessary to look at the ordnance map and ascertain where the boundary shown on that map is truly positioned….
[T]here it can be no question on Mr Emery’s evidence and the other evidence in the case as to those fences and hedges, that the boundary referred to on the ordnance Survey map is the centre line of the hedge and the fence. That being so, when the conveyance is looked at, the boundaries on which are traced by reference to the ordnance survey, the acreage of which is fixed by reference to the ordnance survey, it is established beyond possibility of question what the boundary is’.(emphasis added)
34
This is authority for the proposition that where there is a hedge or fence running along a parcel that is the boundary which is taken by the Ordnance Survey for the purpose of delimiting the parcels which are shown on the maps. The fact that the boundary is shown in a particular place on the map is itself no evidence of what the true boundary is as between the parties. However, where, as in this case, a party’s title is derived from a document which refers to the ordnance map it was necessary for the court to look at the ordnance map and ascertain where the boundary shown on the map is truly positioned. The boundaries appearing on the OS map are plotted by reference to the physical boundaries existing at the time the map was produced. If a conveyance follows the line of the plotted physical boundaries as appearing on the OS map, it necessarily follows that the boundaries follow the physical boundaries as they existed when the map was produced. The precise line of the boundaries must refer back to the actual physical boundary that existed at the date the map was prepared. In order to establish where the boundary shown on the map is truly positioned, it was permissible for the court to have regard to the admissible evidence of the expert employed in the Ordnance Survey as to the practice of making up maps and evidence as to the actual line of the old fences and hedges. What evidence will be relevant and admissible will vary from case to case but the exercise is to ascertain where the boundary is truly positioned.
35
The court was referred to one Irish authority on point, McCoy v McGill [2008] IEHC 301, where Hedigan J reviewed the authorities in relation to the construction of deeds and maps in the context of boundary disputes. At para 8 of his judgment he held as follows:-
‘From the above cases I deduce the following principles applicable herein. In relation to determining boundaries:-
(a) The primary source for defining a boundary line is the deeds in the chain of title.
(b) The plan attached (if there is one), is usually for the purposes of identification only. It cannot normally be relied upon as delineating precise boundaries.
(c) If necessary the deeds will have to be supplemented by such inferences as may be drawn from topographical features which existed or probably did when the conveyance was executed.
In relation to rules of construction of a deed:-
(a) The court must give effect to the intention of the parties as expressed in the deed.
(b) To determine this, the court must determine what is meant by the words actually used rather than what the court might conjecture they actually meant. The court should only do so where absolutely necessary to avoid defeating the object which the parties clearly had intended.
In relation to the role of a map:-
(a) A map or plan may be the determining matter where the parcels provide that the map is to determine the nature and extent of the land in question.
(b) A map may be an essential part of the grant where it is worded such as to make it so and where there can be no certainty without it.
(c) Any conflict between dimensions set out in figures on a plan by which the property is conveyed or transferred and those calculated by scaling off the plan, may be resolved by reference to topographical features which existed when the conveyances or transfer was executed.
36
In so far as this appeal is concerned, this means that, if necessary, deeds may be supplemented by such inferences as may be drawn from topographical features which existed or probably existed when the conveyance was executed and where there is a conflict between dimensions set out in figures on a plan by which the property is conveyed or transferred and those calculated by scaling off the plan, the conflict may be resolved by reference to topographical features which existed when the conveyance or transfer was executed.
37
The question of the consideration of extrinsic evidence to construe a deed or plan attached to a deed is addressed in Wylie and Wood, Irish Conveyancing Law and in Emmet and Farrand on Title (19th Edition). Wylie and Woods state at para. 17.79 that the general rule is that extrinsic evidence is not admissible to add to, vary or contradict the terms of the deed but notes that there are several exceptions to the rule, including to resolve a latent ambiguity. Emmet and Farrand state in para 17.011:-
‘extrinsic evidence (including aerial photographs) was similarly held admissible where the critical parcels clause had described the premises being sold in general terms followed by a precise statement of area (553.4 square acres or thereabouts) and reference to a plan “for the purposes of identification only” but that stated area was significantly less than the area taking the boundary to be the obvious feature (a dividing wall) already erected on the ground at the time and shown as such on the plan: Taylor v Lambert [2012] EWCA Civ 3. The statement of area was dismissed as a solicitor’s mistake in scaling up from a demolished piggery wall shown on the original conveyance of the undivided property without any double checking but also because it could not by itself identify a boundary (para 47) Lloyd LJ also supported the decision (at paras 40 and 41) by an objective test: what would a reasonable layman in the pOSItion of the intending purchaser at the relevant time have thought he was buying under the crucial parcels clause? His answer (at para 41) was: “the reasonable layman, looking at the land as it stood, with the terms of the document in his hand, could not be expected to think he was buying an area of land defined by this invisible and irregular boundary, rather than one which ran as far as the boundary wall on the south”…
Accordingly, in practice, the situation on the ground may be decisive with an ordinary suburban property with existing fences but not with a plot on a building estate unless there is something on the land that would indicate to the objective observer where the boundary lies.’ (emphasis added)
38
It follows from these authorities that the first issue for a court construing the meaning of a conveyance or transfer is to decide whether or not the transfer and/or the transfer plan is clear and unambiguous. If the court concludes that it is not, then the court may go on to consider admissible extrinsic evidence to assist in the construction of the title documents and plans.
Grounds of appeal
39
The appellant’s case is that it acquired part of the lands comprised in folio 26791F. It claims that the disputed area was never at any time contained within folio 7062F. It says that its deed of transfer is clear and unambiguous both as to the description and as to the map, which was certified by Mr Mealy. Its case is based upon areas not boundaries and the map in the Land Registry reflects the area of land to which it is entitled. That plan includes the disputed area of land and therefore it correctly forms part of the lands comprised in folio 34848F and conversely was never part of the lands comprised in 7062F.
40
Counsel alleged that the trial judge made the following errors in his decision:
(i) He had regard to the special conditions in the contract of sale by Mr and Mrs Brady to the appellant. This was incorrect by matter of law as the contract merged with the transfer.
(ii) He failed to attribute due weight to the fact that in preparing the map for the contract and the transfer, Mr Mealy was the agent of Mr and Mrs Brady, the vendor, and therefore the vendor was bound by the map.
(iii) The trial judge ought not to have placed any reliance on the absence of pre contract enquiries as to boundaries by the appellant as there is no duty in law on a purchaser to inspect the boundaries.
(iv) The trial judge failed to have regard to the fact that the sale by Mr and Mrs Brady to the appellant was by auction by reference to a contract map that certified the area in sale and not by private treaty.
(v) The learned trial judge failed to have regard to the fact that Mr and Mrs Brady transferred the land to the appellant as beneficial owners and therefore incorporated implied covenants to title in respect of the lands comprised in the transfer.
(vi) The trial judge failed to have regard to the rule Nemo dat quod non habet Rule: as Mr and Mrs Brady had transferred the lands comprised in folio 24848F to the appellant, they could not transfer any part of those lands to the respondents in 2008.
(vii) The trial judge erred in law in having regard to the comparatively greater significance of the boundary line for the respondents than for the appellant.
(viii) The trial judge erred in law in taking account of the maps presented by the appellant for planning applications.
(ix) The trial judge ought to have preferred the evidence of the appellant’s expert over that of the respondents’ expert.
(x) The trial judge erred in having regard to the provisions of s. 72(1)(j) of the Registration of Title Act, 1964 as Mr and Mrs Brady was the vendor to the appellant and therefore s. 72(1)(j) could not apply in the circumstances.
(xi) The error in this case was not a minor error and so s.85 of the Act of 1964 could not apply and the trial judge erred in relying on the section.
Was the transfer clear and unambiguous?
41
The first matter to be considered is whether or not the deed of transfer of 2000 is clear and unambiguous both as to description and as to the map. If it is, then extrinsic evidence may not be admitted to construe the transfer and the trial judge ought not to have taken account of the physical evidence and other matters to which he had regard in reaching his conclusions.
42
The description of the parcels is not clear and unambiguous. It transfers part of the lands comprised in folio 26791F. It does not include any of the lands in folio 6709F. Other than this limitation, further detail is required in order to be precise as to the lands comprised in the transfer.
43
The transfer goes on to provide that the lands have an area of 2.057 hectares or 5.079 acres. The extent of the land transferred cannot of itself determine the precise boundaries of the lands transferred. Only if all but one of the boundaries is conclusively fixed can the remaining boundary be established by reference to the area of the land. This is a simple matter of logic. This does not apply to folio 34848F. The land comprised in folio 34848F is a field marked on rural place map. Such maps are subject to a margin of error +/- 2 metres and are not suitable to define boundaries conclusively. Further, in Taylor v Lambert, Lloyd LJ held that the area could not by itself identify a boundary.
44
The Transfer continues ‘ and more particularly delineated on the map annexed hereto and thereon surrounded by a red verge line’ Counsel for the appellant was correct to emphasise the fact that the map is annexed to the transfer, not for information purposes but to delineate the lands being transferred. Thus, the map is incorporated into the deed. There are thus two descriptions of the land transferred; the words describing the parcel and the map. If the verbal description is unclear it may be rendered certain by the map. See Wylie and Woods para. 18.66. The appellant argued that where the parties chose to use a map to mark the boundary they will be held to what the maps show. But that begs the question, what does the map show? Does the map in this case make the boundaries of the lands which are not clearly described in the parcels, clear and unambiguous?
45
The answer to this question is no. The map is delineated on the Ordnance Survey map scale 1:2500 which was marked with various field boundaries. As has already been pointed out, these maps are not sufficiently accurate to enable boundaries to be fixed precisely. Rural Place maps are subject to a margin of error. They are plotted by reference to the physical boundaries that existed at the time the map was prepared. The boundaries on the OSI maps are intended to reflect the physical boundaries but do not necessarily determine where the boundary shown on the map is truly positioned. In those circumstances the map cannot render the transfer clear and unambiguous and the court must have recourse to extrinsic evidence to establish the true position of the boundary between the parcels as was held in Fisher v Winch.
46
If the document is insufficiently clear to the reasonable layman with the plan in his hand to determine the position of the boundary, then the court is entitled to seek assistance on the construction of the plan by taking account of the topographical features at the relevant date. In this case the evidence of Mr Mealy, the architect employed to certify the extent of the lands in sale, was that he went to the field with a copy of the map and
‘I could see no visual difference between what is now the disputed area and where the boundary is… I was happy that what was on the Ordinance Survey Map was consistent with what I found on the field.’
This was the evidence of the witness called on behalf of the appellant and, to my mind, it satisfies the test to show that the map, and by extension the transfer, was not clear and unambiguous as to the boundaries of the land transferred and now comprised in folio 34848F.
47
On foot of the transfer the appellant was registered as full owner of folio 34848F. the Register is conclusive as to title (subject to certain qualifications which do not arise here). However, s. 85 of the Act of 1964 (as amended) provides that the description of the land in the Register or on the maps is not conclusive as to the boundaries or extent of the land. This means that the boundaries to the appellant’s folio 3848F are not conclusive and the area is not conclusive. It equally means that the boundaries and area of a folio 7062F are likewise not conclusive. It follows that the fact that the appellant has been registered as the owner of folio 34848F which includes a map outlining the lands comprised in the folio is not determinative of the dispute in this case. It does not resolve the lack of clarity as to the boundaries I have discussed.
48
For these reasons it was both permissible and necessary to have regard to extrinsic evidence in order to construe the deed of transfer of 2000. But a true construction of the transfer alone would not ascertain the true position of the boundary between folio 6709F and the lands transferred by the deed of transfer of 2000 and now comprised in folio 34848F. Folio 7062F was created nearly twenty years before the transfer to the appellant of part of the lands comprised in folio 26791F. As was accepted by counsel for the appellant, that deed of transfer could not transfer any part of the lands comprised in folio 7062F. Therefore, it is necessary to consider the evidence as to the true boundaries of that folio also and not confine the enquiry into the boundary of folio 34848F.
49
In my judgment the trial judge acted correctly in admitting and considering extrinsic evidence in determining where the true position of the boundary between the two parcels lies. It is not a case of permitting the facts on the ground to supersede the clear provisions of the deed. It is the unclear, imprecise provisions of the deed which are to be construed with the assistance of extrinsic evidence..
50
The following relevant facts were either established in evidence or found as a fact by the trial judge:-
(i) Mr Mealy certified the area based upon the map, he did not survey or certify the boundaries of the 5 acre field in sale.
(ii) There are discrepancies between the physical boundaries and the map attached to folio 34848F relative to the boundary between the folios 34848F and folio 7602F.
(iii) Mr Mealy’s map was drawn on an Ordnance Survey map which showed a boundary to the 5 acre field. There was never any other boundary line between the 5 acre field and the curtilage of the cottage other than that marked by the steel and wire fence which was replaced by the timber and post fence and the line of trees. The line of the boundary was not altered from the time Mr Brady Snr. acquired the parent folio which predated the subdivision of the parcel which gave rise to the boundary between the holdings.
(iv) When folio 7062F was opened the map was based on the then up to date Ordnance Survey map and recorded the plan outlined in blue in map 1A prepared by Mr Kestell. After the resurveying of Ireland using ITM coordinated reference system and the subsequent digitisation of Land Registry maps, a new folio plan was attached to folio 7062F as outlined in red in map 1A. There is a clear and significant discrepancy between the two maps. This is the result of a remapping exercise, not a resurveying exercise or an exchange of land between adjoining landowners. The registered owners were not notified of this change.
(v) The original map attached to folio 7062F is closely aligned to the line of the post holes and timber fence, the line of the physical boundary that existed until August 2013.
(vi) The copper beech tree is included in the curtilage of the original map attached to folio 6702F whereas the Land Registry revised map excludes the copper beech tree from the curtilage.
(vii) The evidence in the High Court is that Mr and Mrs Brady sold the ‘5 acre field’ to the north of their cottage and garden to the appellant. They were selling the field and the appellant was buying the field.
(viii) There was no evidence to suggest that Mr and Mrs Brady intended to sell or the appellant intended to buy lands outside the field and inside the garden of the cottage.
(ix) At all times the owners of the cottage and surrounding lands treated the boundary to the lands as that demarked by the fences.
(x) At all times up until August 2013, the appellant treated the boundary as the physical boundary. In its applications for planning permission to develop the 5 acre field it accepted this boundary. When it was developing out the planning permission, it erected its own fence following in the existing physical boundary.
(xi) The appellant was fully aware of the fact that the respondents demolished the cottage and replaced it with their existing family home and a shed which, according to the boundaries on the map attached to their folio 34848f encroached upon its land, yet for five years it sat on its hands and did nothing.
These are all matters to which the trial judge was entitled to have regard when determining the precise location of the correct boundary between the two folios. There was ample admissible evidence before him to conclude that the location of the true boundary was as he determined.
51
In fairness to the parties, it should be pointed out, as counsel for the appellant accepted, the relevant map showed the sold lands to be bounded along the public highway by a redline which appear dot run to the median line of the public highway. The presumption is that the person owning the land adjoining a public (or Private) toad owns the soil of one half of the road, so that an assurance of the land is presumed to include this soil. This may well have contributed to any misunderstanding or erroneous assumptions as to the extent or locus of the lands purchased.
52
The appellant argued that the rectification of the Land Registry map sought by the respondents and acceded to by the trial judge was greater than was permissible under s.85 of the Act of 1964. The appellant relied upon the decision of Laffoy J. in Boyle v. Connaughton to support its argument that ta discrepancy of 61.7 square meters was covered by section 85. The trial judge rejected this argument and, in my opinion, he was correct to do so. The boundaries at issue in Boyle were in a housing development in Castleknock between tow plots, not a boundary between a residential plot and a 5 acre field in a rural setting in Kildare. Secondly, the boundaries were drawn on rural place maps to a scale of 1:2500, which are not suitable for determining legal boundaries. The trial judge found as a fact that the maximum discrepancy between the line on the land Registry map attached to folio 34848F and the physical true boundary was 1.5m. The OSI maps have margin of error of up to 2 metres due to the manner in which they are produced and the scale. Thirdly, it is possible on the fact in this case that if the PRA had not digitised its maps and the map attached to folio 7602F had not thereby shifted as I have described that in fact no issue may have arisen between the parties.
53
The appellant argued that the respondents were not entitled to rectify the transfer of 2000 but that argument is not relevant to the case actually made. The respondents sought the correction of the maps in the Land Registry, not rectification of any deed.
54
The doctrine of nemo dat quod non habet was not relevant to the issue in the case. The issue was whether any part of Mr and Mrs Brady’s back garden was ever transferred to the appellant in 2000, not whether, having transferred it to the appellant in 2000, they could not transfer it to the respondents in 2008. For the same reason the fact that Mr and Mrs Brady transferred part of folio 26791F to the appellant as beneficial owner, with implied covenants as to title, is irrelevant if, as was held by the trial judge, the disputed land was never part of folio 26791F and was part of folio 7062F.
55
For these reasons I would refuse the appeal and affirm the decision of the High Court. There was a formal appeal against the quantum of the award of damages bur it was contingent on a successful outcome of the appeal on the boundary issue. As that appeal has not succeeded I would affirm the award of damages for trespass and intimidation.
Errors in the judgment
56
The appellant was correct in identifying certain errors of law in the judgment of the trial judge. Having affirmed his decision as correct as a matter of law on the facts of this case, I feel I should set out where in my view he erred lest silence on the part of this Court be considered an endorsement of those errors. In determining where the true boundary between the two properties lay he had regard to certain matters which were not relevant to that assessment.
57
He ought not to have considered the relative ratio of the size of the disputed sliver of land to each of the parties’ property and the comparatively greater significance of the boundary line for the respondents as compared to the appellant. The task is to construe the deeds, not to assess the equities as between the parties so he ought not to have considered these factors, even in the peripheral way that he did.
58
Second, ordinarily there is no contractual duty on a purchaser to satisfy himself as to the boundaries of the land in sale and the special condition in this case did not impose one. He may run certain risks if he fails to do so bur he is not thereby in breach of any obligation owed to the vendor or any other party. From the perspective of the parties to the contract he is bound by the caveat emptor rule. The General Conditions specified that the vendor ‘shall not be required to define exact boundaries, fences, ditches, hedges or walls or specify which (if any) of same are party in nature’. So if a purchaser fails to satisfy himself as to the boundaries of the lands in sale he does so at his own peril. But that is not a relevant matter to take into account when determining objectively the precise line of the boundary between adjoining properties.
59
Third, Mr and Mrs Brady were selling part of their land to the appellant in 2000, therefore they could not be said to be persons in actual occupation of the land they themselves were disposing of within the meaning of s.72(1)(j) of the Act of 1964 merely because they remained in occupation of the balance of their land which they did not sell. Insofar as the trial judge had regard to this section. In the circumstances of this case, that was not correct.
Doran v Delaney
[1998] 2 IR 61, [1998] 2 ILRM 1, [1998] 2 IR 61 (Digest), [1998] 3 JIC 0901
[1998] IESC 66
Court: Supreme Court (Ireland)
Judge: Keane J.,
BARRON J.The Applicable Law
In the course of his speech in Hedley Byrne & Company v. Heller& Partners, the case which, as applied in a number of decisionsin this jurisdiction, is authority for the proposition that liabilityfor negligent misstatements can arise in our law, even in the absence ofa contractual relationship, Lord Devlin said:
“I think, therefore, that there is ample authority to justifyyour lordships in saying now that the categories of specialrelationship,which may give rise to a duty to take care in word as well as in deedare not limited to contractual relationships or to relationships offiduciary duty, but include also relationships which in the words ofLord Shaw in Nocton v. Lord Ashburton [1914] AC at p. 972 are”equivalent to contract” that is, where there is anassumption of responsibility in circumstances in which, but for theabsence of consideration, there would be a contract. Where there is anexpress undertaking, an express warranty as distinct from mererepresentation, there can be little difficulty. The difficulty arises indiscerning those cases in which the undertaking is to be implied. Inthis respect the absence of consideration is not relevant. Paying forinformation or advice is very good evidence that it has been relied onand that the informer or adviser knows that it is. Where there is noconsideration, it will be necessary to exercise greater care indistinguishing social and professional relationships and between thosewhich are of a contractual character and those which are not. It mayoften be material to consider whether the adviser is acting purely outof good nature or whether he is getting his reward in some indirectform.”
The latter part of that passage is of assistance in determining thenature of the duty of care, if any, which a vendor’s solicitor owes tothe purchaser in circumstances such as arose in the present case. Whilethere was no contractual relationship between the vendors”solicitors and the purchasers, that would not of itself negate theexistence of a duty of care. Moreover, in determining whether such aduty of care arose in the particular circumstances, it is a materialfactor that statements such as Replies to Requisitions are made by asolicitor acting as such and not in some casual social context. Again,while the primary duty of the solicitor acting for the vendor incircumstances such as arose here, is, under common law and by virtue ofcontract, to protect his own client, that obligation is perfectlyconsistent with the existence of a duty of care in certain circumstancesto the purchaser.
It is also clear that the transmission by a solicitor to a third partyof information which turns out to be inaccurate and upon which the thirdparty relied to his detriment does not, of itself, afford a cause ofaction in negligence to the injured third party. The factors necessaryto give rise to liability were set out by Lord Jauncey in the passage sofrequently referred to in the present case in Midland Bank plc v.Cameron Tong Peterkin and Duncan as follows:
“In my opinion four factors are relevant to a determination ofthe question whether in a particular case a solicitor, while acting fora client, also owed a duty of care to a third party.
(1) The solicitor must assume responsibility for advice orinformation furnished to the third party.
(2) The solicitor must let it be known to the third partyexpressly or impliedly that he claims, by reason of his calling, to havethe requisite skill or knowledge to give the advice or furnish theinformation;
(3) The third party must have relied on that information as amatter for which the solicitor has assumed personalresponsibility;
(4) The solicitor must have been aware that the third party waslikely so to rely.”
It is clear that, at least in cases where those four factors arepresent, a solicitor may be held liable in negligence to a third partyunder the more general principle laid down in Hedley Byrne &Company Limited v. Heller &Partners Limited. An example of a case in which they were clearlymet is the New Zealand decision of Allied Finance and InvestmentsLimited v. Haddow & Company to which we were alsoreferred.
In that case, the plaintiffs, a money lending company, lent a personmoney on the security of a yacht which the plaintiffs understood that hewas buying. Before the loan was made, the plaintiffs” solicitorsforwarded to the borrower’s solicitors an instrument by way of securityand asked them for a certain certificate. The borrower’s solicitorsreturned the instrument signed by him and certified interalia “that the instrument by way of security is fullybinding on RKH”. In fact, and to the knowledge of RKH’ssolicitors, the yacht was being purchased by a company of which he was adirector and controlling shareholder. When the yacht was seized by theunpaid seller and H became bankrupt, the plaintiffs sued his solicitorsfor the balance of their loan. The New Zealand Court of Appeal held thatthe solicitors were liable, Cooke J. saying:
“The relationship between two solicitors acting for theirrespective clients does not normally of itself impose a duty of care onone solicitor to the client of the other. Normally the relationship isnot sufficiently proximate. Each solicitor is entitledto expect that the other party will look to his own solicitor for adviceand protection…”
“But surely the result of the established principle isdifferent when on request a solicitor gives a certificate on which theother party must naturally be expected to act. That is a classic duty ofcare situation, now that it is accepted that the likelihood of economicloss only does not automatically rule out a duty. The proximity isalmost as close as it could be short of contract…”
The fact that the vendors in this case have been found to be liable tothe plaintiffs for misrepresenations made directly by themselves to theplaintiffs or (as the learned trial judge found) in the form ofstatements transmitted in good faith by their solicitors is not arelevant consideration in determining whether the solicitors themselveswere in breach of a duty of care which they owed to the plaintiffs. Adifferent view was taken in England in Gran Gelato v. Richcliff(Group) Limited [1992] Ch 560, but was not accepted in a subsequentEnglish decision of McCullagh v. Lane Fox & PartnersLimited. I would adopt the view taken by Coleman J. in the lattercase that, in general, the fact that there will be a duplication ofremedy should not negate the existence of liability.
Finally, it should always be borne in mind, in considering whether aparticular statement amounts to a negligent misstatement, that theomission of significantly relevant facts may be sufficient to convert aliterally accurate statement into a misstatement.
Conclusions
There are many occasions when, in furnishing replies to objections orrequisitions in a contract for the sale of land, the solicitor for thevendor cannot be said to assume any responsibility for information beingtransmitted to the purchaser’s solicitor. Typically in the course ofsuch a contract the solicitor or counsel for the purchaser may raise anobjection or requisition to the effect that, for example, a particularestate has not been got in or appropriate words of limitation have notbeen used in a deed forming part of the proffered title. The vendor’ssolicitor or counsel, in reply, may refer to some other documentfurnished or some legal principle as meeting the difficulty. In suchcases, it cannot be said that the vendor’s solicitor or counsel, indrafting the reply, is assuming responsibility for information beingfurnished in the sense in which that expression is used in MidlandBank plc v. Cameron Tong Peterkin and Duncan. The solicitors andcounsel on either side are dealing with the same set of documents anddoing no more than expressing their professional opinion on matters oftitle.
Similarly, there are many circumstances in which the vendor’s solicitorin drafting a reply could be described as transmitting information butcould not reasonably be regarded as assuming any particularresponsibility for that information. Thus, in the present case, thestandard Requisition 11 asked whether any notice, certificate or orderhad been served on the vendor under a long series of listed statutes or”under any other Act…” The answer was a terse”no”. The purchasers” solicitor from his ownexperience would be well aware that the most that could be inferred fromsuch a reply was that the vendor’s solicitor’s clients had so instructedher. It would be wholly unreal to suppose that the vendor’s solicitorwas accepting any responsibility for the accuracy of the informationbeing furnished.
But that is not to say that there are no circumstances in which thevendor’s solicitor will not assume at least some degree ofresponsibility for the information being furnished to the purchaser’ssolicitors. Specifically, in a case such as the present, where thevendor’s solicitor is asked whether there is any litigation pending orwhether any adverse claim has been made to the property and is aware ofhis or her own knowledge of threats of litigation and adverse claimshaving been made, he or she assumes at least some responsibility for theinformation given in reply and cannot be exonerated from responsibilitysolely on the ground that he or she is simply transmitting the vendor’sinstructions. Whether he or she can be regarded as so relievedfromresponsibility must depend upon the circumstances of the particular caseand whether it was reasonable, in those circumstances, for the vendor’ssolicitor simply to transmit what he or she was told without furtherenquiry.
It is also clear that, in such a situation, the vendor’s solicitor inassessing the instructions he or she is given, determining whetherfurther enquiries should be made and deciding on the information towhich the vendor’s solicitors are entitled is acting in a professionalcapacity and must be assumed to be applying the skill and knowledge tobe expected of a solicitor in such circumstances.
I would, accordingly, take the view, differing with respect from thelearned trial judge, that the first two requirements indicated in Midland Bank v. Cameron Tong Peterkin & Duncan before aduty of care can arise as between a solicitor and a third party are metin this case.
As to the third and fourth requirements – that the plaintiffs wererelying upon the Reply and that the vendors” solicitors must havebeen aware that they were likely so to rely – the context in which thereply was given is crucial. The contract for sale had expressly providedthat the site was being sold with the benefit of a specified planningpermission. Not merely were the vendors” solicitors aware of this:they were also aware that there was no physical boundary between thesite and Mrs. McKimm’s land and that she had threatened to instituteproceedings if the vendors continued to gain access tothe land from the main road, on the ground that they would betrespassing on the triangular area. They were also aware that she hadclaimed through her solicitors that the map on which the planningpermission was based erroneously included the triangular area and that,accordingly, the planning permission was invalid. They were also awareof the ???find – named??? plaintiff’s concerns as to theboundary in question, since he had unsuccessfully sought to have theboundary staked out or an ordnance survey map incorporated in thecontract. In these circumstances, they must have known that, whether ornot their reply accurately reflected the vendors” instructions tothem, it would unquestionably be relied on by the plaintiffs. In theevent, of course, it was relied on, since the plaintiffs closed the salewholly unaware of the fact that the vendors had been embroiled in adispute concerning this very boundary which, as the learned trial judgefound, had led to their selling on the property to the plaintiffs andthe Reply to the Requisition, however else it may be viewed, certainlygave not the slightest hint of any trouble as to the boundary to theplaintiffs.
I conclude, accordingly, that the vendors” solicitors owed a dutyof care to the plaintiffs when they replied to Requisition 13.8. Itremains to be considered whether they were in breach of that duty. Inthe circumstances of this case, I am satisfied that they were. There aremany instances in which a solicitor acting in a transaction such as thiswould be perfectly entitled to convey without comment the informationfurnished to him by his client, butthis was not one of them. It is not a question of the vendors”solicitors having to query the veracity of the instructions beingfurnished to them by their own client: even if those instructions wereperfectly correct, it could have meant that the dispute had been settledon terms that the vendors acknowledged the title of Mrs. McKimm to thetriangular area. In failing to ascertain the terms on which the disputehad been settled and conveying that information to the plaintiffs, theywere in breach of their duty of care to them. On one view – that urgedon behalf of the plaintiffs – they had, in any event, not accuratelytransmitted the vendors” instructions, since those merelyindicated that the dispute had been settled: they did not indicate, asthe Reply to the Requisition on one reading did, that no claim to thetriangular portion was at the date of the reply being made by Mrs.McKimm. At the very least, however, the reply, because of the manner inwhich it was framed did not convey all the information to which theplaintiffs were entitled and, as I have already said, a partialstatement in such circumstances may be equivalent to a misstatement ormisrepresentation. It is right to say that no one in this case hassuggested that the vendors” solicitors deliberately intended tomislead the plaintiffs or their solicitor: unfortunately, however, theyhad, in all the circumstances insufficient regard to the duty which theyclearly owed to the plaintiffs. Had they got in touch with Cunningham& Co, it would have transpired that Mrs. McKimm had not abandonedher claim to the 54 square metres and that her claim waswellfounded in law. The plaintiffs would then clearly have been in aposition to rescind the contract and recover their deposit because ofthe vendors” misrepresentations.
I would allow the appeal and vary the order of the learned trial judgeby finding the fourth and fifth named defendants liable in damages fornegligence to the plaintiffs. The action should then be remitted to theHigh Court for the assessment of damages.