Requisitions II
Cases
Tyrrell v. Imperial Tobacco Co.
[1926] IR 285
Supreme Court.
KENNEDY C.J. :
26 Feb. 1926
This is an appeal from a judgment and order of Johnston J. made upon an originating summons taken out under the Vendor and Purchaser Act, 1874, at the instance of the vendor, in the matter of a contract for sale, dated the 18th November, 1924, and entered into between Michael Tyrrell, as vendor, and the Imperial Tobacco Company (of Great Britain and Ireland), Limited, as purchasers. The vendor sought a declaration and ruling of the Judge that the purchasers’ requisitions on the vendor’s title had been sufficiently answered, and that the vendor had deduced good title to the premises comprised in the contract in compliance with the provisions thereof. Johnston J. declared that the requisitions of the purchasers in respect of the title of the premises comprised in the contract for sale had not been sufficiently answered by the vendor, and that a good title to the premises had not been shown. The vendor now appeals against that decision.
The property, the subject of the contract for sale, consists of two plots or pieces of ground situate at Marrowbone Lane, in the City of Dublin, one of which plots has been used for a number of years as a dairy yard for the purposes of the business of a dairyman. The contract for sale is in very simple terms. It is in the form of a note addressed to “Michael Fitzpatrick, Land Agent and Valuer, 114 Thomas Street, Dublin,” and reads as follows:
“I, Michael Tyrrell, of 45 Arran Street, East, in the City of Dublin, Dairyman, undertake and agree with the Imperial Tobacco Company as follows:
That in consideration of the said Imperial Tobacco Company, Limited, paying me the sum of £1,500Fifteen hundred poundsfor my interest in lease of dairy yard, which I at present occupy at No. 57 Marrowbone Lane, and which I hold under balance of lease dated the 4th September, 1840, for 99 years at the yearly rent of £4, also of plot of ground adjoining 57 Marrowbone Lane, and let to me from year to year, under agreement dated 25th February, 1914, at the yearly rent of £4, subject to six months’ notice ending on any gale day.
I further agree with the Imperial Tobacco Company, Limited, that I will give them up clear and peaceable possession of my holdings as defined above on the 1st day of May, 1925.
I am also to have leave to remove, at my own expense, cow-sheds, stables, troughs, etc., as now in use by me on said premises. Purchase money to be paid on I giving up possession.
Dated this 18th day of November, 1924.
(Signed)
MICHAEL TYRRELL.”
It appears that in the year 1923, the Imperial Tobacco Company purchased from the Dublin Distillers Company premises in Marrowbone Lane, in the City of Dublin, for the purposes of a factory for their W. D. & H. O. Wills’ Branch. Portions of the premises purchased were subject to several tenancies, and, amongst others, they acquired the plots of ground mentioned in the contract which I have read, subject to the lease and yearly tenancy of Michael Tyrrell. In the course of the development of their scheme, the company found it necessary to get in the tenants’ interests, and they instructedMr. Michael Fitzpatrick, an estate agent to negotiate with the tenants for the purchase of their holdings. After some trouble, Mr. Fitzpatrick came to terms with the appellant, Michael Tyrrell, and induced him to enter into the contract for sale with which we are dealing. Fitzpatrick dealt with Michael Tyrrell as the person then apparently in full possession and enjoyment of the property, and carrying on the business which had been carried on there for many years. Moreover, the Tobacco Company had gleaned from the papers on their purchase from the Distillers Company that the leasehold plot had been assigned to one Michael Tyrrell by a deed of the 25th October, 1892. It did not occur to the Tobacco Company or their advisers that there might be two Michael Tyrrells, and they dealt with the man in possession as the full owner without enquiry. It turned out, however, during the investigation of the title that the assignee in the deed of 1892 had died in the year 1918, leaving his son and namesake, the present vendor, and five other children. No grant of administration had ever been taken out to the estate of Michael Tyrrell (who appears to have died intestate), but the son, Michael, took up and carried on, and, it is said, improved and developed, the business of dairyman with (as it is said) the concurrence of the other children and for their benefit.
On the 28th July, 1925, whether on the advice of his own solicitor or upon the requirement of the purchasers is not now material, the vendor, Michael Tyrrell, extracted a grant of administration intestate of the personal estate of his father, which grant was issued out of the Principal Registry of the High Court of Justice. The grant bears on its face a certificate, as follows:
“And it is hereby certified that an affidavit for Inland Revenue has been delivered wherein it is shown that the gross value of the personal estate of the said deceased within the United Kingdom (exclusive of what the deceased may have been possessed of, or entitled to as a trustee and not beneficially) amounts to £280 10s. for the purpose of estate duty.
And that it appears by a receipt signed by an Inland Revenue Officer on said affidavit that £1 17s. 7d. for estate duty and interest thereon has been paid.”
The purchasers object that, having regard to the amount of the agreed purchase money, they cannot accept title under that grant. This objection is the only question outstanding between the parties raised for determination upon the originating summons.
The case was presented as raising purely a stamp point, the contention of the purchasers being that “a purchaser is entitled to have every document of title properly stamped,”and that the grant of administration under which the vendor is selling “is primâ facie not properly stamped.” (I quote Mr. Price.)
It is well settled that a purchaser of land is entitled to have all instruments and documents which constitute the muniments of title to the property sold, and which are liable to stamp duty, properly stamped at the vendor’s expense: Whiting to Loomes (1). This rule springs from the statutory prohibition against the admission in evidence of instruments which are insufficiently stamped. A vendor can relieve himself of this obligation by express stipulation in respect of a certain limited class of documents which would not include the grant in the present case. The question therefore is whether the grant of administration under which the vendor, Michael Tyrrell, is making title, is an instrument chargeable with stamp duty, and, if so, whether it is duly stamped in accordance with the law in force at its date.
Formerly, probates and letters of administration were instruments unquestionably chargeable with stamp duty. See, for instance, the statute 43 Geo. 3, c. 21 (repealed by 52 Geo. 3, c. 126), sect. 33 whereof was stated by Mr. Price to be the earliest enactment of the inadmissibility in evidence of insufficiently stamped documents. It was stated in argument that the statute which now applies is 56 Geo. 3, c. 56, sect. 33, but erroneously, as that enactment was repealed by the statute 33 & 34 Vict. c. 99 (the Inland Revenue Repeal Act, 1870), and there were substituted for it sects. 16 and 17 of the Stamp Act, 1870 (33 & 34 Vict. c. 97), afterwards amended by sect. 44 of 44 Vict. c. 12. These several sections were in turn repealed, and their place taken by sect. 14 of the Stamp Act, 1891 (54 & 55 Vict. c. 39), which is the enactment now in force prohibiting the giving in evidence of instruments, which are not duly stamped in accordance with the law in force at the time of original execution.
The chargeability of probates and letters of administration with stamp duty representing the death duties of that time continued certainly to the passing of the Customs and Inland Revenue Act, 1881 (44 Vict. c. 12). Prior to the passing of that Act, a plaintiff whose title to sue depended on a probate or letters of administration must have produced a duly stamped grant. For example, if an administrator brought an action to recover money, even an unliquidated claim, he should produce a grant bearing an ad valorem stamp covering the amount to be recovered. There are a number of cases in the books on this point, e.g., Hunt v. Stevens (2); Carr v. Roberts (3); Attorney-Generalv. Brunning (4); Lacy v. Rhys (5); and an Irish case to which Murnaghan J. has referred us, Cormack v. Barragry (6).
The first three of these cases were the cases cited to us in argument for the purchasers as governing the present state of the law. They were, however, decided before the passing of the Customs and Inland Revenue Act, 1881. No similar decision of a date subsequent to that Act was quoted to us. Yet that Act made a vital alteration in the law as to the stamping of grants, an alteration which was continued by the Finance Act, 1894, in respect of estate duty.
It was enacted by sect. 27 of the Customs and Inland Revenue Act, 1881, that “the duties imposed by the Customs and Inland Revenue Act, 1880, upon probates of wills and letters of administration in England and Ireland shall not be payable upon probates or letters of administration granted on and after the 1st June, 1881; and on and after that day in substitution for such duties . . . there shall, save as is hereinafter expressly provided, be charged and paid on the affidavit to be required and received from the person applying for the probate or letters of administration . . . the stamp duties hereinafter specified . . .”
The system of charging duties on the affidavit, in lieu of the former system of charging them on the probate or letters of administration, has continued down to the present time.
By sect. 30 of the same Act it is provided that no probate or letters of administration shall be granted unless the same bear a certificate in writing under the hand of the proper officer of the Court, showing that the affidavit for the Commissioners of Inland Revenue has been delivered, and that such affidavit, if liable to stamp duty, was duly stamped, and stating the amount of the gross value of the estate and effects shown by the account.
The effect of that Act was therefore to substitute the affidavit for the probate or letters of administration as the instrument chargeable with stamp duty. Thereafter, the grant was not chargeable, but it might not issue unless it bore a certificate showing that the affidavit was duly stamped. We have been particularly pressed with sect. 26, sub-sect. 3, of the Act of 1881, which is as follows:
“As respects the duties imposed on affidavits in substitution for the duties on probates or letters of administration, the several provisions now in force in relation to the last-mentioned duties shall, so far as the same are consistent with the provisions of this Act, be deemed to be applicable to the said duties hereby imposed, and in the application thereof a probate or letters of administration having thereon such a certificate as is hereinafter mentioned shall for all purposes be deemed to have been duly stamped in respect of the value stated in the certificate.”
The last clause has been relied on by counsel for the purchasers, but the meaning of it is, in my opinion, not, as the argument suggests, a contradiction of the effect of sect. 27, but that, for all purposes for which a grant bearing stamp duty was then required by law, a grant bearing a certificate should thereafter suffice. An instance of such a purpose will be found in the provisions as to re-sealing in sects. 94 and 95 of 20 & 21 Vict. c. 79.
I now come to the Finance Act, 1894, which imposes estate duty, the duty with reference to which the present stamp point has been raised. Estate duty is a duty imposed upon property, or rather the value of property, passing on a death. It is not confined to property passing to the executor or administrator, or to property in respect of which probate or letters of administration may be granted. It is a stamp duty (sect. 6 (1)) which is collected on an Inland Revenue affidavit in the case of property passing to an executor as such, and upon an account in the case of property not so passing to the executor or administrator (sect. 6 (7)). But it is not a mere stamp duty, for it is made a debt due by the executor or person accountable: sect. 6, sub-sects. 2, 4, and 7: In re Kingdon and Wilson (1).Sect. 8 contains particular provisions as to collection of the duty. It enacts that the existing law and practice relating to the duties then leviable on death shall, so far as applicable, apply for the purposes of the collection, recovery, and repayment of estate duty, and by sub-sect. (16) that “the estate duty may be collected by means of stamps or such other means as the Commissioners prescribe.” The practice is, it appears, to collect the fixed duty of thirty shillings and fifty shillings by means of stamps, and in other cases to collect the duty in money, the rate being indicated by a stamp on the affidavit or account.
Sect. 16 deals with the case of small estates. The vendor’s grant is shown by the certificate upon it to have been obtained upon proof of payment on the Inland Revenue affidavit of the fixed duty for an estate not exceeding £300 in gross value. The section incorporates sect. 35 of the Customs and Inland Revenue Act, 1881, which provides that, in the event of an estate upon which such fixed duty has been paid, turning out subsequently to be of greater value than £300, a sum equal to the stamp duty payable on the true value shall be a debt due from the person acting in the administration. It does not, however, avoid the original grant, or require its recall.
There is nothing in the Act of 1894 which makes the probate or letters of administration an instrument chargeable with stamp duty, nor which brings a grant within the operation of sect. 14 of the Stamp Act, 1891.
It is remarkable that counsel for the purchasers have been unable to refer us to any case after the date of the Customs and Inland Revenue Act, 1881, bearing upon their contention, for New York Breweries Company, Ltd., v. Attorney-General (2)(notwithstanding the argument at page 67) is not a decision
on the question raised here. I have myself found a passing reference to the point in an obiter dictum of Hawkins J. in Attorney-General v. Smith and Cocks (1). Murnaghan J. has also referred us to an Irish case, of a date shortly before the Finance Act, 1894, In re Nunn’s Estate (2), where the question was raised before Monroe J. but not decided.
In my opinion, a grant of probate or letters of administration is not an instrument chargeable with stamp duty under the law as it stands at present, and, therefore, is not an instrument which can be refused in evidence on the ground of insufficiency of stamping.
An argument has also been addressed to us on the ground that the purchasers are affected with notice that insufficient duty has been, or rather may have been, paid upon the property passing on the death of Michael Tyrrell, deceased. In my opinion, this is not a sound objection. Michael Tyrrell bought this leasehold property thirty-four years ago for the sum of £60. The lease had then about forty-seven years to run. A further twenty-six years of the term was spent when he died in 1918, and we heard nothing of any enhancement of values in Marrowbone Lane during that time. There can be no doubt, however, that the advent of the Imperial Tobacco Company in the year 1923 and the special necessities of that Company caused an upward move in the market value of tenants’ interests in this area. The fallacy of the argument advanced is the losing sight of the fact that the value upon which estate duty is leviable under the Finance Act, 1894, is the “principal value,” defined by the Act as “the price which, in the opinion of the Commissioners, such property would fetch if sold in the open market at the time of the death. of the deceased.” The death took place in the year 1918; the special circumstances leading to enhancement of values commenced in 1923. Moreover, the vendor claims that a large part of the price actually agreed upon is not price, properly speaking, but compensation for disturbance of business. The facts have been put fully before the Revenue Commissioners by the vendor’s solicitor. It is not for us to say whether the Commissioners may or may not, on a re-consideration of the case, require further duty to be paid. There is no suggestion of any fraud on the Revenue. In these circumstances, in my opinion, the purchasers have no notice of anythingfor there is nothingwhich throws any doubt on the vendor’s good title to complete the sale as personal representative of Michael Tyrrell, deceased, acting under the letters of administration granted to him under the seal of the Court.
I find no justification whatever for the austerity of tone in correspondence adopted by the purchasers’ solicitors towards the vendor’s solicitor, who seems to me to have acted with propriety and good faith in the transaction.
In my opinion, the declaration asked for by the vendor should be made, and the appeal allowed, with costs here and below.
FITZGIBBON J. :I have read the judgment which has been delivered by the Chief Justice, and I concur.
MURNAGHAN J. :
The point at argument in this case is whether a grant of letters of administration of the personal estate of Michael Tyrrell, who died on 3rd December, 1918, should be held to be insufficiently stamped, and accordingly defective evidence of the vendor’s title. The grant was issued on 28th July, 1925, to the vendor, Michael Tyrrell, a son of the deceased; and the grant, in accordance with the practice, certifies that an affidavit for Inland Revenue has been delivered, wherein it is shown that the gross value of the personal estate of the said deceased within the United Kingdom (exclusive of what the deceased may have been possessed of or entitled to as a trustee and not beneficially) amounts to £280 10s. for the purposes of estate dutythe duty paid, with interest, amounting to £1 17s. 7d.
The deceased was in possession of a dairy shop at 45 East Arran Street, in addition to two plots used as a dairy yard. These two plots, which are the subject-matter of the sale, were held by the deceased under the following title:One plot was held for the unexpired residue of a term of 99 years from 29th September, 1840, subject to a yearly rent of £4, and was acquired by the deceased under an indenture dated 25th October, 1892, for a consideration of £60. The other plot was held as a yearly tenancy under an agreement dated 25th February, 1914, subject to £4 per year.
The Imperial Tobacco Co., Ltd., had acquired land for the purpose of building a factory, and they had become the owners of these two plots, subject to the lease and agreement above mentioned. They negotiated, through Mr. Edward J. Fitzpatrick, with the vendor for the purchase of the residue of the leasehold term and of the yearly tenancy, and agreed to pay £1,500. The contract was signed on 18th November, 1924, and 1st May, 1925, was fixed as the date for completion, at which date the entire purchase money was to be paid.
On 6th June, 1925, Mr. Fitzpatrick got from Michael Tyrrell the original lease of 4th September, 1840, and the assignment of 25th October, 1892, and also the original yearly agreement. On 16th June, 1925, the company’s solicitors became aware that the vendor was not the Michael Tyrrell named as assignee in the assignment, or tenant in the yearly letting; and, as the result ofcommunications through Mr. Fitzpatrick, Mr. Michael Buckley was instructed by the vendor to act for him. Correspondence then ensued between the solicitors; and, in order to obtain the necessary grant of administration, an affidavit of assets for Inland Revenue was verified on 11th July, 1925. The value placed upon the residue of the leasehold interest was £20, and a value of £20 was placed upon the yearly tenancy. Requisitions on the title were delivered on 16th July, and answers were sent on 30th July, together with a copy of the grant. Upon perusing the copy of the grant, the company’s solicitors took up the position, as stated in their letter of 30th July, “that the grant was insufficiently stamped to cover the consideration being paid for the surrenders, and we must accordingly ask you to have the grant amended or a certificate from the Revenue authorities to the effect that there is no outstanding claim for duty affecting the premises.” Probate duty and duty on letters of administration were formerly payable upon the value of the property; and in Cormack v. Barragry (1) the Court undertook the task of ascertaining whether the probate was stamped to the full value of the assets. Under the statutes applicable, probate duty was payable upon the value of the assets at the date of the affidavit or account to lead to the grant, so that property which had an enhanced value at the date of the application for the grant was to be valued at the enhanced value: see Partington v. Attorney-General (2), referred to in the judgment of Mr. Justice Johnston. But estate duty is now, under sect. 7, sub-sect. 5, of the Finance Act, 1894, payable upon the principal value, i.e. the price which, in the opinion of the Inland Revenue Commissioners, the property would fetch if sold in the open market at the time of the death of the deceased. This section, to my mind, disposes of any suggestion that duty is to be paid either upon the consideration of a sale subsequent to the death of the deceased, or upon any enhanced value which has accrued since the death. There is no doubt that property in the locality of the premises for sale has much increased in value owing to the building by the defendants of a new factory. The vendor’s solicitor did not at first seek to distinguish the value as of the date of death from the consideration money; he rather attempted to explain the sum of £1,500, which was in fact the consideration for the purchase, as being in the main compensation money for removal. Subsequently he insisted that the sale should be completed, and he said that he would lodge a corrective affidavit after the purchase had been completed. At the request of the Revenue authorities, he filled and sent in the particulars required in Form 77. A summons was taken out by the vendor, dated 22nd September, 1925, on the hearing of which Mr. Justice Johnston decided that good title had not been shown.
The case has been argued on behalf of the purchasers as being purely a stamp point, viz., that the letters of administration cannot be given in evidence, inasmuch as the document is insufficiently stamped. Two questions are involved: 1, whether there is any prohibition against an insufficiently stamped letters of administration being given in evidence; 2, whether the particular grant is insufficiently stamped?
The Acts dealing with stamp duties are a maze of intricate legislation: so far as I have been able to follow the course of legislation, the position is this. In England the rejection of documents for insufficient stamping goes back to 9 & 10 Wm. 3, c. 25. In relation to duties on probates and letters of administration, after certain tentative legislation, the duties were imposed in England under 55 Geo. 3, c. 184, and in Ireland under 56 Geo. 3, c. 56. By this latter Act certain duties were imposed for and in respect of the several instruments, articles, matters, and things mentioned, enumerated, and described in the Schedule to the Act. The Third Part of the Schedule contains a scale of duties on probates of wills and letters of administration, on inventories to be exhibited in the Ecclesiastical Courts in Ireland, and upon certain legacies and successions. The stamp duty was collected upon an account annexed to the affidavit prescribed to lead to the grant, which was forwarded by the Registrar of the Court to the stamp office. Upon payment of the duty, the officer at the stamp office was to give, on parchment or vellum, stamped with the appropriate stamp for the amount mentioned in the account, a receipt, together with a certificate of lodgment of the affidavit. Sect. 33 of this Act makes any record, deed, instrument, writing, or printing for which the vellum, parchment, or paper on which the same is written is liable to stamp duty, inadmissible in evidence if insufficiently stamped.
In 1842 the stamp duties in England and Ireland were assimilated by 5 & 6 Vict. c. 82. This Act repealed the Irish scale of duties under 56 Geo. 3, c. 56, already referred to, as well as the Act itself, and substituted the Schedule of 55 Geo. 3, c. 184, including the Third Part of the Schedule dealing with the duties on probates and letters of administration. Sect. 9 of this Act directed certain stamps to be prepared, and also that the grants should be stamped with the appropriate stamp representing the duty paid. Sect. 10 re-enacted the powers and provisions of the Acts repealed for the purpose of recovering the duties thereby enacted so far as applicable. This Act was a temporary Act, but was made perpetual by sect. 20 of 16 & 17 Vict. c. 59. 33 & 34 Vict. c. 99, which repealed this Act of 5 & 6 Vict. c. 82, expressly saved so much of the Act as related to the collection of the duties mentioned in the Third Part of the Schedule to 55 Geo. 3, c. 184.
It has not been argued whether the prohibition against receiving in evidence an insufficiently stamped probate or letters of administration depended upon sect. 33 of 56 Geo. 3, c. 56, as revived by sect. 10 of 5 & 6 Vict. c. 82, or whether the general prohibition contained in the Common Law Procedure Act, 1856, and repeated in the Stamp Act, 1870 (33 & 34 Vict. c. 97), sect. 16, sub-sect. 1, and in the Stamp Act of 1891 (54 & 55 Vict. c. 39), sect. 14, is the applicable provision. In Cormack v. Barragry (1), above referred to, where a probate bore stamp duty on assets under £600, and there was evidence that the assets included a farm of the value of £1,500, the probate was rejected by the Court as being insufficiently stamped.
By the Customs and Inland Revenue Act, 1881 (44 Vict. c. 12), sect. 27, instead of the stamp duty on probates and letters of administration, a duty was charged upon the affidavit to be required and received from the person applying for the probate or letters of administration. Under sect. 30 the probate or letters of administration granted by the Court must bear a certificate in writing under the hand of the officer of the Court, showing that the affidavit for the Commissioners of Inland Revenue has been delivered, and that such affidavit was duly stamped, and stating the amount of the gross value of the estate and effects as shown by the account.
Sect. 26, sub-sect. 3, reads as follows:”As respects the duties imposed on affidavits in substitution for the duties on probates and letters of administration, the several provisions now in force in relation to the last-mentioned duties shall, so far as the same are consistent with the provisions of this Act, be deemed to be applicable to the said duties hereby imposed, and in the application thereof a probate or letters of administration having thereon such a certificate as is hereinafter mentioned shall for all purposes be deemed to have been duly stamped in respect of the value stated in the certificate.” The language of this sub-section, to my mind, indicates that the probate or letters of administration still require to be stamped, but that the document is to be deemed to be stamped up to the value stated in the certificate. The Legislature has in effect imposed the duty upon the transaction rather than upon any particular instrument. I can find no authority upon this point; but the obiter dicta of Hawkins J. in Attorney-General v. Smith (2) and Monroe J. in Nunn’s Estate (3) indicate the same view as that which must, in my opinion, be gathered from the words of this section. Estate duty, which is now under the Finance Act, 1894, imposed instead of probate duty and duty upon letters of administration, although differing from these duties in many respects, is collected under the provisions of the Customs and Inland Revenue Act, 1881, and previously existing procedure so far as applicable.
The remaining question, whether the duty paid is insufficient, depends upon the statutory provisions applicable to estate duty.
By sect. 6 of the Finance Act, 1894, estate duty is a stamp duty; but the Commissioners of Inland Revenue have power to determine how the duty shall be collected and paid. By sect. 8, sub-sect. 7, estate duty is to be collected in the first instance, calculated at the appropriate rate according to the value of the estate as set forth in the Inland Revenue affidavit or account delivered; but if afterwards it appears that for any reason too little duty has been paid, an additional duty shall, unless a certificate of discharge has been delivered under the Act, be payable, and be treated as duty in arrear. The definition of principal value in sect. 7, sub-sect. 5, as being an amount to be determined by the Commissioners, does not leave it within the jurisdiction of the Court to determine the value: and yet the Court is asked to reject a grant as being insufficiently stamped, although the Court has no power to determine what may be the value upon which duty should be paid. It might, perhaps, be sufficient to say that, as no proof has been given of any determination by the Commissioners of the principal value differing from the amount represented by the certificate upon the grant, there is nothing upon which the Court can act to come to the conclusion that there has been insufficient stamping. But, in my opinion, sect. 8, sub-sect. 7, directing duty to be paid upon the value stated in the affidavit in the first instance, was expressly inserted in the Act to meet the difficulties which would be caused if objection could be taken to the stamping of probates or letters of administration so as to make them inadmissible in evidence.
Upon the facts of the present case, premises which were purchased in 1892 for £60 may very reasonably have been regarded in 1918 as value for no more than £20, after twenty-six years had run out of a term which, when purchased, had forty-seven years to run. But this principal value can be determined only by the Commissioners, and I have no jurisdiction to come to any conclusion upon the point.
In my opinion, the purchasers’ requisition has been sufficiently answered, and the decision of Mr. Justice Johnston should be reversed.
R. v R
[1979] I.L.R.M. 1
(McMahon J)
These proceedings are brought by the wife who is the plaintiff by a special summons claiming an order under s. 12, Married Women Status Act 1957 declaring that *2 she is entitled to the sole beneficial interest in the family home or alternatively determining the extent of her beneficial interest in the premises.
The parties were married in March 1968. They had been going together for some years before marriage. The husband is a machine operator in a Dublin firm. The wife was aged 18 on marriage and the husband was some years older than his wife.
For the first year of their marriage the parties lived in a mobile home which the husband had acquired. He then bought a home in a County Dublin village by means of a mortgage. He obtained some of the money for the deposit of £500 by the sale of the mobile home and some by borrowing from a credit union. The house was purchased in the husband’s name.
There were no children of the marriage. The parties separated and the marriage broke up in September 1973. The family home has been sold with the wife’s consent and the nett proceeds are held by the husband’s solicitor pending the outcome of these proceedings. The wife has resumed employment and has not made any claim on the husband for maintenance.
Before the marriage the wife held various jobs and she continued to work after marriage. The records of the Department of Social Welfare which have been proved show that between July 1968 and July 1973 the wife was employed for a total of 166 weeks, that is, an average of 33 weeks per year. The wife claims that the money she earned was spent on her own necessaries and on meeting the expenses of the household and in that way her earnings helped her husband to meet the mortgage repayments on the house and she is therefore entitled to a beneficial interest in the proceeds of the sale. The husband swore an affidavit in which he said that after they were married his wife worked for short periods only and all the money which she earned was spent on herself on make-up, buying clothes and having her hair done. Faced with the records of the wife’s employment from the Department of Social Welfare the husband retreated somewhat from this extreme position but still alleged that most of the wife’s earnings were spent on herself. The wife’s evidence was given with moderation and carefully and in general I accept it. The husband is clearly mistaken in his recollection of the periods for which the wife was employed and I do not think that his allegations of extravagance on her part were substantiated.
The family home cost £3,500. It is situated in a new housing estate adjoining a County Dublin village which would in estate agents’ language be described as a dormitory suburb. The husband’s job involved night work and he therefore required a car to get to work. The wife’s earnings helped the husband to live in this County Dublin village and to run the car and at the same time the couple were able to enjoy a reasonable but not extravagant standard of living. Had the wife not been earning the husband would not have been able to keep up the mortgage repayments and run a car and maintain their standard of living. The wife spent some of her earnings on providing food and other requisites for the household and some was spent on herself for clothes and having her hair done but so far as the money was spent on the wife’s needs it seems to me that these were expenses which the husband would have been bound to meet if she was not able to pay for them herself. I can see no distinction between money paid *3 for necessaries for herself and in my view both kinds of expenditure come within the principle enunciated by Kenny J in C. v C. [1976] IR 254 namely that the wife’s contribution which will give her a claim to a beneficial interest in the matrimonial home may take the form of paying the expenses of the household so that her husband has the money which makes it possible for him to pay the mortgage instalments. In either case there is a saving to the husband and if that enables him pro tanto to meet the mortgage repayments the wife should be regarded as contributing towards those repayments.
The husband got the benefit of the appropriate tax reliefs as a married man in his assessment to income tax and the wife’s earnings were subject to deduction of tax at the rate of 35p in the pound. The fairest approach in my view is to assume that their respective contributions to the family purse and therefore to the mortgage repayments were in the same proportion as their respective gross earnings before tax. On that basis I calculate the husband’s gross earnings during the period the parties lived together at £10,000 and the wife’s gross earnings £1,800. I therefore hold that the nett proceeds of the sale of the house should belong to the husband and the wife in the proportion of 100 to 18.
Doreen McC. v Michael McC.
1982 No. 52
Supreme Court
29 March 1984
[1986] I.L.R.M. 1
(Henchy J, Griffin and Hederman JJ)
HENCHY J
(Griffin and Hederman JJ concurring) delivered his judgment on 29 March 1984 saying: In these proceedings the wife as plaintiff is claiming against the husband as defendant that she is entitled to a share in the family home in Cork. The marriage has broken down and the wife has instituted these proceedings for the purpose of asserting a number of claims. In this appeal, however, the only question is whether Costello J was correct in holding that the wife’s claim to a share in the family home in Cork was unfounded.
In 1972 the husband and wife were living in Dublin. He was employed by an insurance company. In that year he was transferred to Cork. That meant that he had to sell the family home in Dublin. This he did. It realised £5,000, but out of that sum there had to be paid £3,200 in discharge of a mortgage on the house. That left £1,800. It seems to be agreed that because the wife had in effect contributed one-third of the purchase price of that house, she was entitled to *2 one-third of the £1,800. However, she never got any part of the £600 she was entitled to. She allowed her husband to use it.
The husband proceeded to buy a family home in Cork. It cost £9,000. Because he was in the employment of an insurance company, he was able to get his employers to take a mortgage for the full amount of the purchase money. Thus he did not have to lay out any part of the purchase money. He merely had to pay the instalments due under the mortgage.
As to the £1,800 left over from the sale of the Dublin home, the wife allowed the husband to use it in full. He spent it in furnishing and fitting-out the Cork home. Costello J held that, because the wife was entitled to one-third of the £1,800, she became entitled to a one-third share in the furniture and fittings (including carpets) in the Cork home. Counsel for the wife contends that that was not a correct conclusion. He says that the proper conclusion to be drawn from the use of the wife’s money in furnishing and fitting-out the Cork home is that it gave her a one-third share in the house itself.
Since the decision of Kenny J in C v C [1976] IR 254, it has been judicially accepted that where the matrimonial home has been purchased in the name of the husband, and the wife has, either directly or indirectly, made contributions towards the purchase price or towards the discharge of mortgage instalments, the husband will be held to be a trustee for the wife of a share in the house roughly corresponding with the proportion of the purchase money represented by the wife’s total contribution. Such a trust will be inferred when the wife’s contribution is of such a size and kind as will justify the conclusion that the acquisition of the house was achieved by the joint efforts of the spouses.
When the wife’s contribution has been indirect (such as by contributing, by means of her earnings, to a general family fund) the courts will, in the absence of any express or implied agreement to the contrary, infer a trust in favour of the wife, on the ground that she has to that extent relieved the husband of the financial burden he incurred in purchasing the house.
In the present case it has been contended on behalf of the wife that, in allowing the husband to use her one-third of the £1,800, which he spent on furniture and fittings for the house in Cork, he should be held to be a trustee for her of a one-eighteenth share in the house (one-eighteenth being the proportion between the wife’s £600 and the £10,800 spent by the husband on acquiring the house and furnishing it). This contention rests on the submission that the wife’s £600 went into a family fund and that to that extent it eased the financial liability incurred by the husband in purchasing the house.
I am unable to accede to this proposition. The wife’s £600 was in no way applied to the purchase of the house. The full purchase price was provided by the husband’s employers, who got a mortgage on the house. The employers collected the mortgage payments by means of deductions from his salary. So it could not be said that the £600 or any part of it relieved the husband of any share of the financial burden he incurred in purchasing the house.
The true position, it seems to me, was that found by Costello J, namely that the £600 was applied by the husband, not in acquiring the house, but as part of the £1,800 he spent on furniture and fittings. The expenditure thus by the *3 husband of the £600 could not be said to have given the wife any beneficial interest in the house. All she got was, as was held in the High Court, a one-third share in the furniture and fittings (including carpets).
Containercare v Wycherley
[1982] IR 143
Containercare (Ireland) Limited Plaintiff v. Geoffrey Wycherley and Elizabeth Wycherley Defendants
[
Carroll J.
This case raises an important point concerning judgment mortgages and raises the question whether they are affected by the Family Home Protection Act, 1976. The plaintiff is a judgment creditor of the first defendant. The second defendant is the wife of the first defendant. They were married on the 21st May, 1966. There are two children of the marriage and they are now aged 12 and 10 years. In the early years of their marriage the defendants lived in rented accommodation.
On the 29th May, 1973, the defendants jointly entered into a proposal for a lease and also a building contract for the dwellinghouse, the subject matter of this action, for £8,950; a deposit of £865 was paid. A lease, dated the 26th July, 1973, was granted to both defendants and they took as joint tenants. A mortgage with the Irish Permanent Building Society was entered into jointly by them on the 22nd March, 1974, for the principal sum of £7,800, which was repayable by monthly instalments of £82.68 for a period of 20 years. Interestwas charged at the rate of 111/4% p.a. and the deed provided for variation of the rate of interest. In October, 1981, the principal sum outstanding was £7,115.56 and the current monthly instalment was £112.43; interest was charged at the rate of 161/4%. The defendants have lived in the premises since 1973. The premises are a family home within the meaning of the Act of 1976.
The plaintiff sued the first defendant in the year 1978 in the High Court. That action was compromised and on the 12th January, 1979, judgment was entered for the plaintiff in the sum of £6,000 and costs by consent. The plaintiff, having waived costs, registered the judgment as a judgment mortgage in the Registry of Deeds on the 1st March, 1979, against the interest of the first defendant in the premises, the lands concerned being unregistered.
The second defendant, while aware that her husband was being sued by the plamintiff, was not aware of the amount of the judgment. Neither was she aware that any judgment mortgage was registered until she was served as a defendant in these proceedings. The plaintiff did not obtain the consent of the second defendant to the registration of the judgment mortgage. The difference between the amount of the mortgage (£7,800) and the cost of the dwellinghouse (£8,950) is £1,150, of which the second defendant paid £860.
I am satisfied on the evidence that, whatever may have been the contribution of the defendants to the initial outlay on the premises, both of them agreed that the premises would be demised to them in their two names. In cross-examination the second defendant said that it was decided to put the premises in both names because both were earning. They decided that that was the right way to do it. There was no further agreement about eventual ownership.
Up to December, 1977, the first defendant paid all the mortgage repayments, with the exception of one payment of £200 which was paid by the second defendant and arrears of £355 which were also paid by her. The second defendant contributed all her earnings to the household budget. The second defendant has been employed and has supported the family since December, 1977. She has paid all the mortgage repayments since then, including the arrears. The amount of the contribution to his family’s expenses made by the first defendant since then appears, from his wife’s evidence, to have been very small. As he has chosen not to appear in this action, her evidence has gone uncontradicted.
The plaintiff claims a declaration that the judgment mortgage is well charged against the interest of the first defendant in the premises. It was submitted on behalf of the plaintiff that the first defendant’s interest amounts to one undivided moiety as tenant in common, the registration of the judgment mortgage having severed the joint tenancy created by the lease.
The second defendant claims that the judgment mortgage, having been registered without her prior consent in writing, is void under the provisions of s. 3, sub-s. 1, of the Act of 1976. She further claims that her interest in the family home is greater than one half and that no relief should be granted to the plaintiff which would interfere with her beneficial interest in the property, including her right to remain with her family in quiet possession and enjoyment thereof, and she claims, if necessary, orders under s. 5, sub-s. 2, and under ss. 7 and 8 of the Act of 1976. It was further submitted on her behalf that, if the judgment mortgage was well charged, then, because the interest of the first defendant was inalienable in his hands without her prior consent in writing, the interest captured by the judgment mortgage could not be greater. The plaintiff, as judgment creditor, was in the position of a volunteer and took subject to all rights, legal and equitable, affecting the interest of the first defendant in the premises.
The relevant provisions of the Act of 1976 are as follows. Section 1, which is the definition section, provides that “conveyance” includes “a mortgage, lease, assent, transfer, disclaimer, release and any other disposition of property otherwise than by a will or a donatio mortis causa and also includes an enforceable agreement (whether conditional or unconditional) to make any such conveyance, and ‘convey’ shall be construed accordingly.” It also provides that “mortgage” includes “an equitable mortgage, a charge on registered land and a chattel mortgage” and that cognate words shall be construed accordingly.
Section 3, sub-s. 1, of the Act of 1976 provides:
“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.”
Sub-sections 2 and 3 and s. 4 do not apply in the context of this case.
Section 5, sub-s. 2, provides:
“Where it appears to the court, on the application of a spouse, that the other spouse has deprived the applicant spouse or a dependent child of the family of his residence in the family home by conduct that resulted in the loss of any interest therein or rendered it unsuitable for habitation as a family home, the court may order the other spouse or any other person to pay to the applicant spouse such amount as the court considers proper to compensate the applicant spouse and any such child for their loss or make such other order directed to the other spouse or to any other person as may appear to the court to be just and equitable.”
Section 7, sub-s. 1, provides:
“Where a mortgagee or lessor of the family home brings an action against a spouse in which he claims possession or sale of the home by virtue of the mortgage or lease in relation to the non-payment by that spouse of sums due thereunder, and it appears to the court
(a) that the other spouse is capable of paying to the mortgagee or lessor the arrears (other than arrears of principal or interest or rent that do not constitute part of the periodical payments due under the mortgage or lease) of money due under the mortgage or lease within a reasonable time, and future periodical payments falling due under the mortgage or lease, and that the other spouse desires to pay such arrears and periodical payments; and
(b) that it would in all the circumstances, having regard to the terms of the mortgage or lease, the interests of the mortgagee or lessor and the respective interests of the spouses, be just and equitable to do so,
the court may adjourn the proceedings for such period and on such terms as appear to the court to be just and equitable.”
The first question to be decided is whether or not the Act of 1976 applies to a judgment mortgage. Section 3, sub-s. 1, of that Act renders void certain conveyances, in the wide meaning of that term as defined by s. 1, sub-s. 1, but it only refers to a conveyance by a spouse of an interest in the family home to a third party without the prior consent in writing of the other spouse.
A judgment mortgage is a process of execution under the provisions of the Judgment Mortgage (Ireland) Act, 1850, as amended by the Judgment Mortgage (Ireland) Act, 1858. Section 6 of the Act of 1850 provides that a judgment may be registered as a mortgage against a judgment debtor who “is seised or possessed at law or in equity of any lands, tenements, or hereditaments, of any nature or tenure, or has any disposing power over any such lands, tenements, or hereditaments, which he may without the assent of any other person exercise for his own benefit.” Section 7 of the Act of 1850 provides that registration of an affidavit of judgment in the Registry of Deeds operates “to transfer to and vest in the creditor . . . all the lands, tenements, and hereditaments mentioned therein, for all the estate and interest of which the debtor mentioned in such affidavit shall at the time of such registration be seised or possessed at law or in equity, or might at such time create by virtue of any disposing power which he might then without the assent of any other person exercise for his own benefit” but subject to redemption on payment of the money owing on the judgment.
A judgment mortgage, if registered against a family home, is not a disposition by a spouse purporting to convey an interest in the family home. It is a unilateral act by a judgment creditor and the creation of the judgment mortgage is effected by the registration in the Registry of Deeds (in the case of unregistered land) of the affidavit of judgment which has already been filed in court. The Act of 1976 does not require that the disposition affected by the Act be in writing. This is evident from the fact that equitable mortgages are captured under the definition of the word “mortgage.” But the Act of 1976 does require that the disposition should be made by the spouse of the person whose consent is required. Therefore, I am of opinion that s. 3, sub-s. 1, of the Act of 1976 cannot refer to a judgment mortgage because it cannot be construed as a conveyance by a spouse.
It then becomes necessary to consider what relief (if any) is available to the second defendant under the terms of the Act of 1976. The provisions of s. 5, sub-s. 2, cannot be invoked as there has not yet been any deprivation of residence in the family home. The jurisdiction of the court to make an order under this sub-section arises where one spouse has deprived the applicant spouse, or a dependent child of the family, of his residence in the family home; this point also arose in Curran v. Curran. 1
The provisions of s. 7 of the Act of 1976 are drawn in such a way that the section clearly refers only to those mortgages which provide for the repayment of principal and interest by periodic payments. To enable the court to act under this section, two elements must be present. First, it must appear to the court that the applicant spouse is capable of and willing to pay arrears of periodical payments due and future periodical payments falling due and, secondly, that it would in all the circumstances, having regard to the terms of the mortgage, the interests of the mortgagee and the respective interests of the spouses, be just and equitable to do so. It does not appear to me that there is any way in which this section can be applied to judgment mortgages, as the concept of the repayment of principal and interest by periodical payments does not apply to a judgment mortgage..
Section 8 of the Act of 1976 can only be applied where an order has been made under s. 7 and, therefore, it does not arise. It follows that no relief is available to the second defendant under the Act of 1976.
The next question to be determined is the extent of the second defendant’s interest in the premises. This is not a case where property is assured to a husband alone and the wife seeks a declaration that she is entitled either to the entire thereof or to a definite share by reason of payments made by her towards the purchase or in repayment of mortgage instalments. If the premises had been demised to the first defendant only, the Court would have had to determine, first, the proportions in which each of the defendants contributed to the purchase money other than the portion raised by mortgage and, secondly, the proportions in which each of them contributed, directly or indirectly, to the repayments of the mortgage. The principles of law applicable in such a case are set out in the judgment of the President of the High Court in W. v. W. 8 In this case a decision was made by the defendants that the premises would be taken in their joint names and a joint tenancy was created. This is evidence of an agreement or arrangement which is inconsistent with moneys paid by the first defendant being appropriated to a proportionate share of the premises for his benefit, and with moneys paid directly or indirectly by the second defendant being appropriated to a proportionate share for her benefit.
Regardless of the proportion of the amount paid by each defendant towards the purchase of the premises or in repayment of mortgage instalments, I hold that each of them was equally entitled to the premises when the joint tenancy was severed by the registration of the judgment mortgage on the 1st March, 1979. The alteration in the circumstances which was effected by the registration of the judgment mortgage was sufficient to change the character of the agreement between the defendants. Their agreement related to a joint tenancy. The severance of that joint tenancy was not done with the consent, express or implied, of the second defendant. The severance was due to the action of the first defendant in becoming liable under the judgment and in failing to discharge his liability on foot of that judgment. Therefore, the severance of the joint tenancy had the effect of putting an end to the agreement between the defendants in regard to a joint tenancy. Thereafter, they were entitled as tenants in common; so that any payments made by the second defendant in redemption of the mortgage after the registration of the judgment mortgage on the 1st March, 1979, enured for her benefit, since there is no presumption of advancement by a wife to her husband.
In order to ascertain the percentage interest of the husband in the premises, it will be necessary to determine the market value of the premises on the 1st March, 1979, and the amount of principal then owing on foot of the mortgage, together with the arrears of interest (if any). If these two figures are known it will be possible to determine the percentage interest of the first defendant in the premises. For example, if the market value of the premises was then £22,500 and the unpaid balance of the mortgage was £7,500, the amount of the interest of the first defendant in the house on the 1st March 1979 would be 331/3%, which would represent one moiety of the equity of redemption. In the absence of rebutting evidence by the first defendant, I hold that his contributions to the household expenses after the 1st March, 1979, were too small to be taken into account. Therefore, the second defendant is entitled to claim that all the mortgage repayments made since the 1st March, 1979, have been made for her benefit and that the percentage increase in the equity of redemption belongs to her. For example, if the unpaid balance of the mortgage is now £7,100 and the present market value of the house is £28,400, then 75% of the value of the house would represent the value of the equity of redemption. Therefore while the value of the first defendant’s interest would remain at 331/3%, the value of the second defendant’s interest would be increased to 412/3%.
Therefore, I will direct an issue to be tried to determine the market value of the premises on the 1st March, 1979, and the amount due on foot of the mortgage on that date.
It is further claimed on behalf of the second defendant that she has an overriding interest and right to remain in the house, even if the judgment mortgage is well charged. Since I have held that s. 5, sub-s. 1, and s. 7 of the Act of 1976 do not apply, the only remaining basis for this claim is the argument that, if the first defendant cannot alienate the premises without the consent of the second defendant, neither can the plaintiff who, as a judgment mortgagee, is merely a volunteer. The validity of this point depends on whether the right of a spouse to refuse to consent to a disposition of the family home by the other spouse (and the corresponding limitation on the power of the other spouse to make a disposition without such consent) are personal rights and obligations or are rights and limitations affecting the property.
The question of notice does not arise. The judgment mortgagee, being a volunteer, takes subject to all rights affecting the judgment debtor’s interest, whether the judgment mortgagee had notice of them or not.
The purpose of s. 3, sub-s. 1, of the Act of 1976 was discussed by Mr. Justice Henchy in Nestor v. Murphy 9 where, at p. 328 of the report, he said:
“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.”
He then said: “The provisions of s. 3, sub-s. 1, are directed against unilateral alienation by one spouse.”
The nature of the right conferred on a spouse by the Act of 1976 was also considered by Mr. Justice Gannon in Guckian v. Brennan 7 in relation to registered land. At p. 485 of the report he said:
“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.”
Likewise, I am of opinion that the Act of 1976 does not confer on the spouse whose consent is required any right or interest in the land where the land is unregistered. Neither does it limit in any way the estate or interest which is vested in the other spouse who seeks such consent; the estate or interest of the latter will vest automatically in the judgment mortgagee on the creation of a judgment mortgage which affects that estate.
The effect of the Act of 1976 is to impose a “sanction of voidness” on a disposition by which a spouse alienates the property without consent. But where the estate or interest of a spouse is vested by operation of law in a judgment mortgagee, that judgment mortgagee takes free from any obligation
to obtain the consent of the other spouse to a disposition by the judgment mortgagee.
[
In the Matter of the Married Woman’s Status Act, 1957
And In the Matter of
K. v K.
The High Court
30 November 1978
[1978 113sp]
[1980] 114 I.L.T.R 50
Finlay P.
Finlay P.:
This is a special summons brought by the wife against the husband claiming orders with regard to the custody of the infants; an order for maintenance and declarations pursuant to the provisions of the Married Womens Status Act, 1957.
At the conclusion of the hearing I dealt with the issues of custody and access and made an order for maintenance. I also dealt, by the consent of the parties, with the disposition of two sums of money constituting the proceeds of payments made by the Royal Insurance Company in respect of damage and loss resulting from a fire in the family home which occurred in April, 1977.
I reserved judgment on the plaintiff’s claims pursuant to the Married Womens Status Act,
These claims are for a declaration that the plaintiff is entitled to a beneficial share in three properties all held or formerly held in the sole name of the defendant.
They are:—
1. The family home situated in the City of Dublin;
2. The leasehold interest in a lock-up shop in Dublin to which I will refer as the jewellery show lease; and
3. The leasehold interest in a second lock-up shop in the City of Dublin to which I will refer as the hardware shop lease.
I intend to deal separately with the family home and with the leasehold interest in the two shops.
The Family Home
I find the facts proved before me concerning this claim to be as follows. The parties were married in September, 1968, and immediately purchased the family home for the sum of £4,500. This was financed in the following manner. £1,000 cash was provided by the defendant, a further £1,000 cash was obtained by the defendnat from the Credit Union of the firm by whom he was then and still is employed and £2,500 was raised by the defendant by mortgage with the Royal Liver Friendly Society. The house was as I have mentioned purchased in the sole name of the defendant.
The plaintiff did not make any contribution to the original purchase of the house but at the commencement of the marriage worked for a small wage in a supermarket out of which, I am satisfied, she contributed towards the maintenance of the home and the repayment of the mortgage. The defendant out of his earnings also contributed to the general household and home expenses including the repayment of the mortgage and serviced the Credit Union debt of £1,000.
In the spring of 1970 the plaintiff and the defendant commenced a retail jewellery business. This was owned and run by a limited liability company in which 50% of the shares were issued to the plaintiff and 50% were issued to the defendant.
The defendant, who was not represented at the hearing before me, has contended that this issue of shares was a mistake on the part of the solicitor who was engaged in the formation of the company and that he the defendant intended his wife to own 20% only of the shares in the company. No attempt was ever made to correct or amend this mistake, if mistake it was, and I am satisfied that the defendant is now estopped from contending that he and the plaintiff were other than equal partners in the company and in the business it ran. *51
Both parties took an active part in the running of the business up to early, 1977, when the marriage unfortunately broke down. The plaintiff was more or less whole time engaged in retail selling and the defendant whilst still working at a regular job did the buying from the wholesalers and arranged finance and other aspects of the business. Neither party received any specific amount by way of dividend, drawing or salary, but the profits earned were applied to the general cost of the maintenance of the family including the repayment of the mortgage and discharge of other outgoings in the house and the general maintenance and equipping of the house.
The wages earned during this period by the defendant in his ordinary or regular employment were in effect used by him to repay loans which he had obtained to start the business and to create savings which were eventually to a large extent used for the purpose of the business.
There was a considerable conflict of evidence before me as to the precise profits earned by this business. The plaintiff contended that they were, by the end of 1976, as high as £10,000 per year, and the defendant asserted, on the other hand, that they never exceeded £5,000 per year. The only documents produced which dould assist to resolve this conflict were the stubs of bank lodgment books used in connection with the business and I am satisfied having regard to them that the defendant’s estimate is probably significantly more accurate than that of the plaintiff but even on that estimate it is clear that this business was a success and during the period, 1970, to 1977, in my view, probably contributed, on average, twice as much to the total family budget as did the defendant’s earnings in his regular job.
Unfortunately in December, 1976, the jewellery shop was robbed and the business suffered a loss in the region of £10,000 against which it was not insured. From that loss it never recovered and wholly ceased to trade in the summer of 1977.
I have no precise estimate of the present value of the family home proved before me but the defendant believes that it is worth £20,000. It was agreed by the parties that the amount presently outstanding on the mortgage by way of principal is approximately £1,500 and that the monthly repayments of principal and interest are £15.
The legal consequences of these facts as I have found them are I am satisfied as follows:
Firstly, it is clear that the plaintiff has, to a minor extent, through her earnings between 1968 and 1970 and to a much greater extent through her participation in and ownership of half the retail jewellery business contributed to the repayment of the mortgage and to the other overhead expenses involved in the maintenance and keeping of this house and is therefore entitled to a beneficial share by way of resulting trust in the house in accordance with the principles laid down by Mr. Justice Kenny in C. v. C. [1976] I.R. 254.
With regard to the proportion of that share, my findings are as follows. The defendant must be credited with the entire cash contribution to the original purchase price of £1,000 which came from his savings. He must also in my view be credited with the further £1,000 obtained from the Credit Union of his firm which was serviced solely out of his earnings. These two sums represent approximately 44% of the total cost of the acquisition of the house. With regard to the other 56%, consisting of the sum of £2,500 obtained on mortgage from the Royal Liver Friendly Society, I conclude both in the period from, 1968 to 1970, by virtue of her contributions from her earnings as working in the supermarket and in the period from, 1970 on by virtue of her half share in the business and her active participation working in it, the plaintiff has contributed one half. The total contribution of the plaintiff to the acquisition of the family home is therefore on my calculation 28% and the defendant has contributed the balance of 72%.
In reaching this decision I have carefully considered as to whether it is correct to credit each of the parties with one half of the entire sum of £2,500 notwithstanding the fact that the sum of £1,500 remains outstanding on the mortgage. I have decided that this is the only just and equitable manner in which to calculate contributions and therefore the beneficial share arising from the principles which are applicable. Were I to conclude otherwise, it seems to me, upon the arising of differences between a husband and wife either of the parties could gain an unfair advantage in anticipation of a claim under the Married Women’s Status Act of 1957 by simply paying off a portion of a mortgage. Furthermore, when the approach is as was laid down by Mr. Justice *52 Kenny in C. v. C. [1976] I.R. 254 that must be considered is the original cost of acquisition, and not the present day value, it would be inconsistent, in my view, to have regard only to so much of the amount of a mortgage as had been repaid at the time the dispute arises, bearing in mind that, in most cases as has obviously occurred in this, the amount outstanding on the mortgage represents a very small proportion indeed of the total present value of the premises. If these premises were ever to be sold and the shares of the parties realised they would be, of course, shares in a sum calculated after the discharge of the amounts, if any, then outstanding on the mortgage.
Shop leases
The jewellery retail business with which I have already dealt in this judgment was commenced and at all times run in a lock-up shop of which the defendant, in his own name, obtained a twenty-one year lease. The lease was never put into the name of the company nor was there any declaration of trust on the part of the lessee, who was the defendant, acknowledging that he held it to the use of the company. There is no suggestion that any fine was paid on the granting of this lease and therefore the monies which, in effect, were paid for the leasehold interest as it now stands consisted of the rent payable each year. That lease was, by agreement between the parties, sold for the balance of the term thereof for a sum of £3,750.
The parties had set up in a lock-up shop immediately adjoining that in which they carried on the retail jewellery business a hardware and educational publishing and school book business sometime before 1976. That business was also set up through the agency of a limited liability company in which each of the two parties, the husband and wife, had 50% of the shares. That business, apparently, never prospered, and ceased to trade at about the same time as the jewellery business. Again in this case, the defendant took a lease of the lock-up shop obtaining it without a fine. The rent of that lease was paid out of such profits or income as the company running the educational and publishing business had and/or out of the profits of the jewellery business. There is some dispute, on the evidence before me, as to whether the plaintiff took an active part in the hardware business but I am satisfied she did to the extent that the two businesses were immediately adjoining, that her main continued presence was in the jewellery shop and that somebody was employed in the educational and hardware business but that she kept a general eye on both. The defendant, subject to the commitments of his regular job, also took an active part in that business. The unexpired term of this lease was, by agreement between the parties, sold for the sum of £5,750 and though that sale was not, at the date of the hearing before, me finally completed, there were undertakings between the solicitors involved for the retention of the balance of the purchase money.
From the sale of both these leases certain immediate payments become due, the first being in each case arrears of rent due, so as to keep the leases free from any forfeiture, and also bank loans which were advanced upon the security of the leases. I am really concerned with the claim under the Married Womens Status Act, 1957, to a share in the nett balance of the proceeds of the sale of these two leases.
As a matter of law I have come to the conclusion that the real cost of the acquisition of the interest which has now been sold in each of these leases consisted of the payment of the rent and observance of the other covenants during the currency of the lease, up to the present, making it a valuable asset. In the absence of the payment, in either case, of a fine upon the obtaining of the lease, I cannot see that any other cash contribution to the acquisition of the leasehold interest can arise.
Having regard to the view, already expreseed by me, that the defendant is estopped from asserting any interest other than an equal partnership of 50% each in the two limited liability companies concerned who ran the businesses out of whose income or profits these rents were discharged I am forced to the conclusion that the plaintiff is entitled to a 50% beneficial interest in the proceeds of these two leases with the defendant who is also entitled, of course, to 50%. I therefore make that the appropriate declaration pursuant to the Married Womens Status Act, 1957, in respect of the leases.
I had not before me any detailed evidence with regard to the method by which the *53 furniture and other equipment in the house was provided and I am not, in my view, in a position to make any declaration in favour of the plaintiff concerning that furniture. Much of it was destroyed in the fire in April, 1977, and an agreement has been reached between the parties that the insurance money in respect of that will be expended upon the replacement of that furniture. In my view the plaintiff has failed to discharge any onus of proof showing that she has a particular beneficial share in that furniture. The furniture cannot, in my view, however, be sold by the defendant since to do so would be to deprive his wife and children of a home but must remain his property for at present at least in the family home.
The only other matter which arises in the case is not directly for my decision, but a matter on which, I feel, I should comment, is that, in the evidence, it appeared that the defendant removed from the jewellery shop when the parties became separated, £6,500 worth approximately of jewellery stock. The plaintiff would appear to have removed something up to £2,000 worth of the same stock. In my view neither of these parties has any beneficial interest in this jewellery which was removed from the jewellery shop. It is the property of the limited liability company which is insolvent and in my view should be made available for the creditors of that company.
FG v PG
1979 No. 8346P
High Court
31 July 1981
[1982] I.L.R.M. 155
31 July 1981
FINLAY P
delivered his judgment on 31 July 1981 saying: This is a claim brought on plenary summons by the plaintiff who is the wife against the defendant who is the husband seeking a declaration that she is entitled to a share in certain premises consisting of a house situate in the County of Dublin (which I will hereinafter refer to as the Dublin house) which is held in the sole name of the defendant.
The facts out of which the claim arises I find after hearing oral evidence to be as follows.
The parties were married in the year 1958, neither of them having at that time any relevant capital assets. After the marriage they lived in various rented accommodation for some years and during this period the plaintiff was wholly occupied with her duties as a housewife and also as a mother and did not earn in any outside occupation. There were three children of the marriage.
In the year 1964 the defendant purchased in his sole name the Dublin house for the sum of 2,450. The purchase price was provided in the following manner. The defendant was at that time employed by a firm with a pension scheme to which he had contributed. By terminating his employment he became entitled to *156 a refund of a sum of 150 out of that pension fund. This together with a sum of 50 which notwithstanding a conflict on the evidence I am satisfied he borrowed from a bank against his security he used as a deposit on the house of 200. The balance of the price of the house of 2,250 was raised by him as a mortgage from the Irish Permanent Building Society.
Shortly after the purchase of this house, the defendant emigrated to America leaving the plaintiff and the three children of the marriage living in the Dublin house.
The plaintiff and their three children joined the defendant in America in early 1966.
During the intervening period the mortgage repayments on the house were met out of funds contributed by the defendant from his earnings in America and during this period the plaintiff again was wholly occupied with her duties as a mother and a housewife.
After the plaintiff and her children went to America the house was let and for all practical purposes has from then until now been let to a number of successive tenants, the arrangements and the organisation of the letting and the collection of the rents being organised by the plaintiffs sister who is in Ireland. From the income derived from such lettings, firstly, the mortgage repayments had been met, secondly, the maintenance and other outgoings on the house had been met and in later years, I am satisfied, the house was used for the purpose of raising a loan in a Dublin bank the servicing of which was also provided from the rental income.
Approximately a year after the arrival of the plaintiff in America she obtained employment and with minor interruptions continued to earn in outside employment and to contribute to a joint family fund until 1978 when the parties separated and obtained a civil divorce under American law.
I had been informed by counsel that amongst the property provisions made in those proceedings the plaintiff was declared entitled to the Dublin house but it has been conceded on her behalf that this order cannot properly be proved before me and that no submission is being made to me that I am in any way bound by it.
In the years 1967 to 1978 the plaintiff and the defendant out of the joint family fund and with the aid of borrowings which included, I am satisfied, borrowings from the bank in Ireland to which I have already referred, indulged in a series of property purchases and sales some of which were for the purpose of providing accommodation for the family and some of which were plainly speculative and with a view to investment. All of these properties were apparently purchased in the joint names of the plaintiff and the defendant and were of course situated in America.
During those years, the parties were not, I am satisfied, at any time affluent and considerable difficulty was consistently encountered in meeting the overall family expenses and the cost of the upbringing and education of the children.
In the evidence adduced before me, there was a serious conflict as to the extent to which each of the parties contributed to the family finances. The plaintiff strenuously asserted that the defendant due to a drink problem was an *157 erratic and inadequate earner and had a consistently high level of personal expenditure.
The defendant denied this and contended on the other hand that the plaintiff was over-stating her earnings and significantly under-stating the extent to which she expended those earnings on her personal wants as distinct from contributing them to a general family fund.
I received in evidence a number of accounts prepared by accountants on behalf of both parties for income tax purposes between the years 1971 and 1978. Having considered these accounts and having considered all the other evidence I heard concerning the earnings of both the parties, I have come to the conclusion that in the years 1967 to 1978 taking them together and averaging out the different years the plaintiff contributed approximately 40% to the general family pool of finance by her earnings and the defendant contributed approximately 60%.
On these facts, the submissions made on behalf of the parties may thus be summarised.
On behalf of the plaintiff it is contended that notwithstanding that the Dublin house was in a sense largely self-servicing as to mortgage repayments that it could never have been retained having regard to the general family finances were it not for the contributions made by her to the family fund. She had given evidence which I accepted that the overall family plan prior to the unfortunate break-up of this marriage was that the entire family would eventually return to Ireland and that for this purpose the retention of the Dublin house was an integral part of that plan. Relying upon the decision in Nixon v Nixon [1969] 3 All ER counsel on behalf of the plaintiff contended that the fact that no monies were ever remitted from the family pool to which the plaintiff by her earnings contributed for the purpose of discharging the mortgage repayments on the Dublin house was irrelevant and that, I must consider, the Dublin house and the various American properties as all being part of family assets the retention and acquisition of which was achieved by the joint family fund created by the earnings of both the plaintiff and the defendant.
On behalf of the defendant, on the other hand, it was contended that since at no stage was any money provided or earned by the plaintiff ever directly or indirectly used to purchase the house in Dublin and since the original deposit and first years mortgage repayments were provided by the defendant alone and all subsequent repayments were provided from the letting of the house itself that the plaintiff could not have any conceivable interest in the house. It was also submitted that the plaintiff had already received a share of the jointly owned property in America and therefore had no claim to the Dublin house.
After careful consideration, I am satisfied that the principles laid down in Nixon v Nixon constitute a persuasive precedent which I should follow and that applying them to the facts of this case as I find them that in general the contention made on behalf of the plaintiff is correct.
I have no doubt that had the plaintiff not earned in the years 1967 to 1978 and had she not contributed her earnings to the extent that she did to the general *158 family pool that there was no way in which the defendant could during those years have avoided disposing of the Dublin house so as to service and finance the general expenses of the family and the property deals in which he was engaged in America. She has, therefore, in my view constituted to the acquisition of the equity of redemption in the Dublin house just as clearly as if the monies earned by her had been remitted to discharge the mortgage repayments.
Bearing in mind, the earlier sole contribution by the defendant towards the acquisition of that equity of redemption which lasted up to 1967 and relating that to my finding that from 1967 to 1978 the plaintiff contributed 40% of the general family pool, I have reached a conclusion that the beneficial share to which the plaintiff is entitled in this house is 30%. I accordingly so declare and grant an ancilliary injunction restraining the defendant from disposing of the Dublin house otherwise than by agreement with the plaintiff or with the liberty of the court.
W v W
1977 No. 564Sp
High Court
9 March 1981
[1981] I.L.R.M. 202
FINLAY P
delivered his judgment on 9 March 1981 saying: This is an issue arising in certain proceedings brought by the plaintiff, who is the wife, against the defendant, who is the husband, pursuant to the provisions of the Guardianship of Infants Act, 1964, the Family Law (Maintenance of Spouses and Children) Act, 1976, and by order, the Married Womens Status Act, 1957.
The issue with which this judgment is concerned is solely confined to a claim made by the wife to be entitled to a beneficial interest in a farm of land registered on a folio in the name of the husband.
Upon this issue evidence was given by the wife and by an agricultural expert on her behalf but no evidence was given by or on behalf of the husband. [At this point the Judge recited the facts of the case and then continued] … I am solely concerned with the claim of the wife for an interest in the main holdings of land.
This claim was presented to me by counsel on behalf of the wife in two alternative and in a sense concurrent forms. It is firstly submitted that insofar as the transfer of the lands originally made to the husband was subject to encumbrances that on the evidence I should hold that the wife had contributed over the years both by her industry, by the bringing into the farm of her own personal savings on marriage and her share in the monies received by way of gift on the wedding; by bringing in her original bloodstock and working with them thus making income for the farm and by her actual work at the ordinary dairy portion of the farm to the general farm income out of which I should assume on the evidence those encumbrances were discharged and that that those facts gave her an interest arising from that transaction in the farm. A similar submission was made in regard to the evidence adduced by the wife that upon the building of the modern milk-parlour a further mortgage was raised on the farm and subsequently discharged and the sums of money brought in by her.
In addition and as I have said not only as an alternative but as a concurrent submission it is claimed on behalf of the wife that since she consistently worked on the farm both in relation to the dairying end of it and in relation to the bloodstock end of it that that work added to the general fund or income from the farm in each year and that insofar as that was used for the purpose of making improvements to the farm in particular represented by improvements in the buildings and yards etc., that that was a contribution by her towards the acquisition of the entity which now constitutes the farm as improved and that as such would give her a claim to an equitable interest in the farm.
In considering this claim on the facts as I have found them I have in particular been referred to and carefully considered the following decisions.
C v C [1976] IR 254
Heavey v Heavey (1977) ILTR 1
McGill v S. [1979] IR 238
From these three decisions, the two former of which are decisions of Kenny J whilst a High Court judge and the third of which is a decision of Gannon J and from the judicial decisions quoted with approval in them, I am satisfied that the following broad propositions of law arise which are applicable to the facts of this case.
1. Where a wife contributes by money to the purchase of a property by her husband in his sole name in the absence of evidence of some inconsistent agreement or arrangement the court will decide that the wife is entitled to an equitable interest in that property approximately proportionate to the extent of her contribution as against the total value of the property at the time the contribution was made.
2. Where a husband makes a contribution to the purchase of property in his wife’s sole name he will be presumed by a rebuttable presumption to have intended to advance his wife and will have no claim to an equitable estate in the property unless that presumption is rebutted. If it is, he would have a claim similar to that indicated in respect of the wife with which I have already dealt.
3. Where a wife contributes either directly towards the repayment of mortgage instalments or contributes to a general family fund thus releasing her husband from an obligation which he otherwise would have discharge liabilities out of that fund and permitting him to repay mortgage instalments she will in the absence of proof of an inconsistent agreement or arrangement be entitled to an equitable share in the property which had been mortgaged and in respect of which the mortgage was redeemed approximately proportionate to her contribution to the mortgage repayments: to the value of the mortgage thus redeemed and to the total value of the property at the relevant time. It is not expressly stated in the decisions to which I have referred but I assume that the fundamental principle underlying this rule of law is that the redemption of any form of charge or mortgage on property in truth consists of the acquisition by the owner or mortgagor of an estate in the property with which he had parted at the time of the creating of the mortgage or charge and that there can be no distinction in principle between a contribution made to the acquisition of that interest and a *205 contribution made to the acquisition of an interest in property by an original purchase.
4. Where a husband contributes either directly or indirectly in the manner which I have already outlined to the repayment of mortgage charges on property which is in the legal ownership of his wife subject to the presumption of advancement and in the event of a rebuttal of that presumption he would have a like claim to an equitable estate in the property.
5. Where a wife expends monies or carries out work in the improvement of a property which has been originally acquired by and the legal ownership in which is soley vested in ther husband she will have no claim in respect of such contribution unless she established by evidence that from the circumstances surrounding the making of it she was lead to believe (or of course that it was specifically agreed) that she would be recompensed for it. Even where such a right to recompense is established either by an expressed agreement or by circumstance in which the wife making the contribution was lead to such belief it is a right to recompense in monies only and cannot and does not constitute a right to claim equitable share in the estate of the property concerned.
6. A husband making contributions in like manner to property originally acquired by and solely owned as to the legal estate by his wife may again subject to a rebuttal of a presumption of advancement which would arise have a like claim to compensation in similar circumstances but would not have a claim to any equitable estate in the property. Applying these principles of law which I believe to be the relevant principles to be derived from the decisions to which I have referred to the facts as so far found by me in this case I am satisfied that the following conclusions and consequences arise.
Whilst the evidence of the wife concerning the encumbrances effecting the property when it was first transferred to her husband, was explicably without detail, it has not been contradicted by any evidence adduced on behalf of her husband nor was she in fact cross-examined about it. I must therefore conclude that such encumbrances did exist and were discharged after the transfer of the farm to the husband. A precisely similar conclusion arises with regard to her evidence as to the raising of a charge and its subsequent redemption at the time of the construction of the modern milking-parlour.
I will therefore direct that a further issue be tried before me as to: (1) the extent of the encumbrances subject to which the lands were transferred to the husband and the time at which they were finally redeemed together with the value of the lands at the date of transfer and at the date of the eventual redemption of these charges; (2) the amount of the charges raised by way of mortgage on the lands at the time of the construction of the milking parlour the value of the lands at the time that mortgage was created; the date on which they were eventually redeemed and the method by which they were redeemed and the value of the lands at the date at which they were redeemed.
In this context I intend of course to deal not only with legal mortgages but with any form of charge raised on the land whether secured by the equitable deposit of title deeds or othrewise.
Since the husband did not give evidence before me on the issues so far tried *206 and since he did not produce, at this or any other stage in the proceedings, any documentary evidence other than certain farm accounts which are irrelevant to this question I will direct that he make discovery of all documents relevant to the issue now still to be tried and I will give liberty to the wife if she is so advised to serve interrogatories on the husband concerning the transactions to which I have referred.
I am needless to say, concerned with the cost of the proceedings which have already been maintained between the husband and wife in this case and with the thought of imposing upon the parties further expense and costs. It seems to me that both discovery and interrogatories should be capable of being properly achieved without formality and that it might be possible for the parties upon full examination of the documentary proofs available to reach agreement on the extent of the share to which as a consequence the wife is entitled in these lands. If such an agreement cannot be reached I will, of course, re-enter the matter for further hearing at a suitable time.
To assist the parties in reaching an agreement which might avoid expense I feel I should indicate that it would be my intention from the evidence I have already heard to hold that the contribution of the wife during the two relevant periods in which prima facie charges on these lands were being redeemed would be approximately 50% which takes into account both her work, the monies brought in by her and in particular the results of her dealing in bloodstock. The proportion or share to which she should be entitled to be declared an equitable owner in these lands would therefore be half of the proportion represented by the amount of the charge redeemed and the value of the lands at the relevant time which would in effect be a combination of the value of the lands at the time of the raising of a mortgage and the value of the lands at the time when it was finally redeemed. This statement of my intention on the evidence already heard by me may assist the parties to reach an agreement as to a share in respect of which the wife is entitled to claim in these lands. Insofar as the wife has claimed an equitable estate in these lands solely derived from her contribution to improvements I must on the authorities hold that it is not sustainable in law.
In the Matter of the Married Women’s Status Act 1957
M. v M.
High Court
19 October 1978
[1980] 114 I.L.T.R 46
Finlay P.
This is a special summons brought by the husband, who is the plaintiff, against his wife, who is the defendant, claiming certain relief in respect of the infants named in the title and a declaration that he, the plaintiff, was beneficially entitled to certain premises in the city of Dublin or alternatively to a share therein. Having heard the evidence I have already ruled on the questions of custody and access in relation to the infants concerned but reserved my judgment on the issue which arose under the Married Women’s Status Act with regard to the premises situate in the city of Dublin.
The facts on which this decision must rest are not in any significant dispute and may be summarised as I have found them to be as follows.
The plaintiff and the defendant were married in New York, U.S.A. in 1960 both of them being Irish but both having been at that time for some period living and working in New York. Upon her marriage the defendant ceased to work.
Four children were born of the marriage in the years 1961, 1962, 1966 and 1967 respectively. The family lived in New York until the year 1968 and during the entire of that time the plaintiff was in good steady and relatively well-paid employment and was the sole support of the family. The defendant appears to have had, by way of separate property, approximately £2,000 of stock in dollars which had been issued to her by way of profit-sharing bonus while she was employed, prior to her marriage, and had no other separate assets.
Some time prior to 1965 the defendant’s father, who lived and worked in Ireland, purchased a house in Dublin as a bed and breakfast house jointly in the name of himself and the defendant, the defendant contributing the value of the stock which she sold towards its purchase, that value being approximately £2,000.
That premises was sold in the end of 1965 or beginning of 1966 and the proceeds of the sale, which was between £5,000 and £6,000 was apparently lodged in a bank account jointly in the name of the defendant and of her father.
The defendant’s father was subsequently killed in a motor accident in June, 1966, and by his Will left the entire of his property jointly to the defendant and her mother. The net property, which included the joint bank account apparently, consisted of a sum of £7,300.
In 1968 as a result of a proposal made, I am satisfied, by the defendant’s family, it was decided that the plaintiff and the defendant and their children should move to Ireland and should purchase, jointly with the defendant’s sister, a public house, and that the family should liver here and make a living out of running that public house. The total purchase price of the public house was £32,000 and the cost of renovating and altering it was a further £4,000 making an all-in cost of £36,000.
The purchase was financed in the following way. The £7,300 left by the defendant’s father was put in as the share of the defendant and to that was added a further sum of £1,700 supplied from the plaintiff’s earnings making a total contribution on their behalf of £9,000. *47 The defendant’s sister contributed a further £9,000 and there was raised, by way of loan from the bank an additional £18,000.
In pursuance of this arrangement and of this purchase the parties and their children returned to Ireland in 1968 and commenced to work the public house. After a relatively short time, apparently due to differences of opinion, largely between the plaintiff and his sister-in-law who was the partner in the project, it was decided to try and buy out the interest of the sister-in-law and this was done by raising a further loan from the bank.
At that stage it was clear that the profits from the public house were not sufficient to service the total amount of loans now outstanding on the premises and, after discussion, the plaintiff returned, on his own, without his wife or children, to New York and resumed employment there. From that time until early this year the plaintiff has, I am satisfied, transmitted sums varying from an initial payment which was as high as 700 to 800 dollars a month to a final payment between 300 and 350 dollars a month to his wife for the support of herself and the children. The main purpose of this payment in the first instance, at least, was to try and service the loans which existed on the public house.
In 1972 it had become clear that the public house could not be run at a profit and it was sold for a total figure of £39,000 which, after payment of the outstanding loans arising on it, left a net balance of approximately £4,000 only.
Due to the fact that the plaintiff left all financial and commercial transactions, I am satisfied, entirely in the hands of his wife, and due to the fact that the defendant was not represented at the hearing before me, and did not have available any of the documents connected with the transactions with which I am concerned, I have been unable to ascertain what the precise legal title to the public house was, in whose name it was purchased or in what shares. The defendant was under the impression, without being certain, that a company was formed or was to be formed and that she, possibly her mother, certainly her husband and at one stage her sister were to be shareholders in that company. I am, however, satisfied that the legal format for the transactions does not affect the issues which arise before me.
After the sale of the public house which occurred in the month of June, 1972, the defendant and her four children moved into residence with her sister who owned a small hotel in Dublin and from that time up to relatively recently have lived in that hotel obtaining, in effect, free board and lodging.
In August, 1972, the defendant purchased the premises the subject-matter of the present claim which consisted of a terraced house on the north side of Dublin with nine rooms in it. The purchase price was £8,500 and renovations were carried out to it at a cost of approximately a further £4,000 so as to convert it into a number of bed/sittingrooms. The purpose of the purchase, undoubtedly, was to provide a source of income and not a family home. This purchase was financed in the following way. A loan of the deposit was obtained by the defendant from her sister in the sum of £2,225. The balance of the purchase price was obtained on loan from a bank in the sum of something over £6,000 and the sum of £4,000 necessary to alter it into bed/sittingrooms was provided out of the net balance left over from the sale of the public house. For a considerable time after the purchase of these premises the net rents arising from the letting of the separate rooms in them was applied by the defendant towards the payment off, firstly, of the loan to the bank, and, when that had been cleared, of the loan obtained from her sister, and both these loans are now cleared and the premises stand free of mortgage or debt. At present they yield an income which averages over the year between £40 and £50 per week. From the date of the purchase of these premises, however, as I have already mentioned, up to very recently, the plaintiff continued to send over a very high proportion of what he was earning in New York coming to figures varying from 700 dollars a month to 350 dollars a month towards the maintenance of his wife and children and the defendant admitted that the result of this was to permit her to discharge the loans occurring on the premises and without that maintenance she would have had to apply portion, at least, of the rent over the period towards the upkeep of herself and her children. The children have been well and, in a sense, expensively educated. Even though the family have obtained since 1972, in effect, free board and lodging in the family hotel referred to, the cast of maintaining and rearing the family must have been relatively substantial. *48
The plaintiff indicated an intention to return to Ireland and re-join his family in 1977 irrespective of what the financial consequences of that might have been and then tragically discovered that his wife had decided to leave him and set up house with another person. He has now returned and is living in accommodation owned by his wife’s family with his four children and in company with his mother-in-law and with a family servant who has been with him and his family for practically all their married life.
On these facts certain legal issues arose. They are in my view as follows:
Firstly I had to consider as to whether the presumption of advancement applied to this case and as to whether the contributions made by the husband direct or indirect towards the purchase, in the first instance, of the public house and thereafter of the premises the subject-matter of the claim in this action must be presumed to have been a figt or advancement by him to his wife. On the evidence heard by me I am quite satisfied that it was not a gift or advancement to his wife but rather that it was intended as, in both instances, the acquisition of property as a source of income and revenue for the maintenance of the entire family. I am, therefore, satisfied that the presumption of advancement has been rebutted. I am also satisfied that I should apply, in this case, the principles laid down by Mr. Justice Kenny in the case of C. v. C. [1976] I.R. 254 in so far as they are applicable to the somewhat different facts. In so doing I have come to the conclusion that the following are the inferences with regard to the beneficial ownership in this property which I should make.
The original cash contribution of the plaintiff and the defendant to the purchase of the premises consisting of a public house were as to £7,300 a contribution from the defendant, and as to £1,700 a contribution from the plaintiff. The proportion of these taken to the nearest complete per cent would appear to be 81% against 19%. Since the premises, when eventually sold, carried a heavier mortgage debt than when originally purchased the net equity was, in fact, reduced in value. It therefore seems to me that the £4,000 representing the net proceeds of the sale of those premises must be credited as having been in the beneficial ownership of the plaintiff and the defendant in these percentages, that is to say, 19% being the property of the plaintiff and 81% being the property of the defendant. The total cost of the acquisition and renovation of the premises, the subject-matter of this claim, would appear to have been £12,500. Of that, on the calculation I have just made, £3,240 represented the beneficial contribution of the defendant and £760 represented the beneficial contribution of the plaintiff.
The balance of the acquisition cost were the loans raised on the premises. I, on the evidence, must take the view that these loans were ultimately equally discharged by the contributions of the plaintiff and of the defendant. It is quite clear to me, on the evidence, that the plaintiff’s contributions from his salary and working in New York to the family income made a clear indirect contribution towards the clearing of these loans. At the same time the arrangements made by the defendant with her own family, and in particular with her sister, which provided free board and lodging for herself and her children together with what I am satisfied, on the evidence, was an active participation by her in the running and letting of the premises constituted a contribution on her part towards the reduction of the loans. It is not possible for me to make any precise calculation as to the shares in which these contributions were made but I take the view that, having regard to the relationships of the parties and the financial arrangements between them, the equitable conclusion is that they contributed equally to the clearing of these amounts of loans off the property and to the consequential enlargement of the equity in it. This would lead to the conclusion that the plaintiff contributed, during that period, a further sum of £4,250 towards the acquisition of the property free from debt and that the defendant contributed a like sum.
Of the total acquisition and alteration cost of the premises consisting of £12,500 therefore, it seems to me that the plaintiff must be deemed to have contributed £5,010 and that the defendant must be deemed to have contributed £7,490. Again reducing the proportions thus arising to the nearest percentage figure I am satisfied that the true percentage of the *49 beneficial ownership in these premises is as to 60% to the defendant and 40% to the plaintiff.
I accordingly declare the plaintiff entitled to the beneficial ownership in 40% of the premises the subject-matter of the claim herein.
H. and L. v S
1979 No. 312 Sp
High Court
10 July 1979
[1979] I.L.R.M. 105
(McWilliam J)
McWILLIAM J
The plaintiffs purchased from S. (hereinafter called the husband) a dwellinghouse which had originally been held by him as a weekly tenant under an agreement in writing dated 6 June 1968. The husband had been married to the defendant on 25 October 1965. They first resided in England but, after some time, returned to Ireland, and, immediately after the execution of the agreement of 1968, went into occupation of the dwelling and continued to reside there with their two children until May 1973, when the defendant left the dwelling with the children under circumstances which she alleges involved assaults and mental abuse by her husband and general distress caused by his behaviour. In October 1973, she went to America with the children and took up residence with her brother and obtained some not very well remunerated employment as a bookkeeper. The defendant alleges that the husband had a drink problem, working only intermittently and changing his employment frequently. She states that, between 1970 and 1973, he did not work at all whereas she had regular seasonal work. She alleges that she paid most of the rent during this period although in 1970 the husband made a considerable amount of money from a musical composition. The defendant did not give her American address to the husband but he was able to write to her through members of her family and the two carried on a desultory correspondence up to and including May of this year.
The husband continued to reside in the dwelling and appears to have made enquiries about purchasing it from the landlords at the end of 1977. By letter of 1 January 1978, the landlords agreed to sell it to him for the sum of £6,000 but stated that the offer was subject to review at the end of the year. In the autumn of that year the husband obtained an offer of employment in England and, not wishing to reside any longer in the dwelling and not having funds with which to purchase it, entered into negotiations with the plaintiffs who agreed to pay him the sum of £9,000 for the dwelling when he had obtained the landlord’s interest. This having been arranged, the husband entered into an agreement dated *107 23 October 1978, with the landlords for the purchase of the landlords’ interest for the sum of £6,000 and, on the same day, entered into an agreement with the plaintiffs for the sale to them of the dwelling for the sum of £9,000. The landlords conveyed the dwelling to the husband by indenture of 1 November 1978, and the husband conveyed the dwelling to the plaintiffs on the following day.
The same firm of solicitors acted for the husband and the plaintiffs and they advised the parties that the dwelling was not a family home within the meaning of the Family Home Protection Act, 1976. A statutory declaration prepared by the solicitors and made by the husband contained the following paragraph:
The above premises are not a Family Home within the meaning of the Family Home Protection Act 1976, by virtue of the fact that my wife has not resided with me at the above premises since May 1973 when she left me taking with her our two children and went to America. She has not contacted me since that time. I had held the premises under agreement dated 6 June 1968 from Associated Properties Ltd as a weekly tenant. On or about 20 September 1978, I agreed to purchase the premises from Associated Properties Ltd for the sum of £6,000.
The plaintiffs took possession of the dwelling and did repairs and decorations at a cost of approximately £650 and then entered into a contract to re-sell the dwelling for the sum of £12,000 on 2 March 1979. On this sale the purchaser challenged the validity of the opinion of the solicitors for the purchasers and of the statutory declaration made by the husband.
These proceedings were commenced by the husband who claimed a declaration that the plaintiffs are purchasers for full value within the meaning of s. 3 of the Act of 1976, or, alternatively, an order dispensing with the consent of the defendant to a sale to the plaintiffs.
The husband died suddenly and unexpectedly on 25 May last and, on the application of the plaintiffs, I substituted them as plaintiffs to save the expenses of instituting further proceedings. Owing, apparently, to the unusual circumstances of the death of the husband, no representation can yet be raised to his estate.
I am satisfied that, although the defendant had left Ireland before the passing of the Act of 1976, the dwelling was a family home within the meaning of the Act and that it remained a family home at the time of the transactions with which I am concerned. While not being admitted, this has not been contested and no claim has been made for a declaration that the dwelling is not a family home.
The valuers called to give evidence on both sides have established to my satisfaction that the price of £9,000 was approximately the full value of the dwelling in October 1978, in the condition in which it then was.
S. 3 of the Act of 1976, in so far as is relevant to these proceedings, provides as follows:
(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 sub-ss. (2) and (3) and s. 4, the purported conveyance shall be void.
(3) No conveyance shall be void by reason only of sub-s. (1) — (a) if it is made to a purchaser for full value.
(6) In this section, ‘purchaser’ means a grantee, lessee, assignee, mortgagee, chargeant or other person who in good faith acquires an estate or interest in property.
(7) For the purposes of this section, s. 3 of the Conveyancing Act 1882, shall be read as if the words ‘as such’ wherever they appear in paragraph (ii) of subsection (1) of that section were omitted.
*108
S. 3 of the Conveyancing Act 1882, in so far as is relevant to these proceedings provides as follows:
(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.
The words ‘as such’ having been deleted from clause (ii) by s. 3 of the Act of 1976, it is immaterial in which capacity the solicitor who acted for both parties obtained or failed to obtain notice of the true position.
I have been referred to the judgments in Somers v W [1979] IR 94. On the first aspect of this case I quote the following passages from the judgment of Henchy J with reference to the obligation of a purchaser of a family home. He said:
He must ascertain if the property, because of its present or past use, is a family home within the meaning of the Act of 1976. If it is, he must find out if it is a sale by a spouse, and, if so, whether the conveyance should be preceded by the consent in writing of the other spouse, so as to prevent its being rendered void under s. 3. If that other spouse omits or refuses to consent, the purchaser should require the vendor to apply to the court for an order under s. 4 of the Act of 1976 dispensing with the consent. If the purchaser takes a conveyance without compliance with the requirement as to consent, he carries the onus of proving that the conveyance comes under one of the exceptions in sub-s. (2) and (3). If, as in the present instance, the purchaser’s case is that the wife’s prior consent did not arise because he was a purchaser for full value without notice, he must show that the consideration amounted or approximated to the full value of the property and also that he, or his agent, made such inquiries or inspections as ought reasonably to have been made. If such inquiries or inspections have not been made, but would, if made, have disclosed that the vendor should have obtained either his wife’s prior consent in writing or a court order dispensing with that consent, the conveyance will be no less void than if the purchaser had actual knowledge that the wife’s prior consent in writing required to be sought and he had taken the conveyance in disregard of that requirement.
In the present case the statutory declaration of the husband showed that the dwelling had been a family home in May 1973, and no inquiries were made to locate the defendant although, notwithstanding the inaccurate statement in the declaration, it is clear that there was little difficulty in getting in touch with her, a fact which was clearly established at the time of the third sale even though there was then a postal strike in operation. The suggestion of desertion made in the declaration would not avoid the necessity for obtaining the consent required by s. 3 even if the suggestion were well founded unless an order of the court were first obtained under s. 4. Indeed, in this connection, no inquiries appear to have been made with regard to the circumstances under which the defendant left the family home.
This being so, I am satisfied that the inquiries which ought reasonably to have been made were not made and that, if they had ben made, the defendant would have been located and her consent either given or refused. Accordingly, although I have considerable sympathy for the plaintiffs, I must refuse to make the *109 declaration that they are purchasers for full value within the meaning of the section.
It is clear from the judgments in Somers v W. that an application for an order dispensing with the consent of the defendant to the sale to the plaintiffs should have been made before the execution of the conveyance to the plaintiffs. This is accepted on behalf of the plaintiffs but it is argued that, if an order is made dispensing with the consent of the defendant, the agreement for sale can then be enforced by the plaintiffs against the personal representatives of the husband. But, as was pointed out by Griffin J in Somers v W. this is not correct because, under s. 1(1) of the 1976 Act, the word ‘conveyance’ includes an enforceable agreement to make a conveyance and the word ‘convey’ is to be construed accordingly. Therefore the contract is also void and there is not, at the moment, any person who is in a position to enter into a new contract or execute a new conveyance to the plaintiffs. In any event, on the facts before me at present, I am of opinion that the defendant had a proprietary interest in the dwelling and that this, combined with her needs and resources and the needs of her children, impels me to the conclusion that it is not unreasonable for the defendant to withhold her consent and would not have been unreasonable for her to do so if she had been asked for it at the proper time.
I must, therefore, also refuse to make an order dispensing with the consent of the defendant to a sale to the purchasers.
In The Matter of the Vendor and Purchaser Act, 1974
Reynolds v Waters
Liam Reynolds and Josephine Reynolds v Derek Waters
1981 No 1123 Sp.Ct.6
High Court
1 March 1982
[1982] I.L.R.M. 335
(Costello J)
COSTELLO J
delivered his judgment on 1 March 1982 saying: The purchaser of a dwellinghouse will now invariably inquire before executing an assurance whether it is a family home as specially defined in the Family Home Protection Act, 1976. If he finds that it is he will require the vendor to obtain the written consent of the non-disposing spouse to the assurance or require him to apply to the court for an order dispensing with consent. But if he is told that it is not and is informed of facts which, if true, establish this to be the case, what should the purchaser do? Should he accept from the vendor a statutory declaration which verifies these facts and close the sale, or is he entitled to have the vendors word corroborated by means of a second statutory declaration and to insist on the purchaser applying to the court for a declaration that the dwelling is not a family home in the absence of such corroborative evidence? That is the point which is raised in these proceedings.
The contract in this case was dated 13 July 1981. Condition 4 of the contract provided that the purchase price was to be paid on or before the closing date (28 August 1981) and that if by reason of any default on the part of the purchaser the purchase shall not be completed on or before the closing date the purchaser shall pay interest to the vendor at the rate specified in the memorandum on the balance of the purchase money remaining unpaid from the closing date to the date of actual completion. Completion did not take place until 20 October 1981. These proceedings relate to a sum of 2,736.34 which is held in a joint account in the names of the parties solicitors and represents the interest payable if the purchaser was in default within the meaning of condition 4.
The requisitions were sent to the vendors solicitors on the 4 July 1981 (i.e. before the contract was actually executed). The form used was that approved by the Incorporated Law Society of Ireland. Requisition 52 referred to the Family Home Protection Act, 1976 and the vendor was asked is there on the property any family home as defined in the Act. The reply (dated 27 August 1981) was it is not, meaning thereby that there was no family home as defined by the Act on the property. The purchasers requisition under sub-paragraph (c) of Requisition 52 stated:
If the answer to (a) is in the negative, please state the grounds relied upon, and furnish now draft statutory declaration for approval verifying these grounds.
The reply to this was:
the vendor will on completion furnish statutory declaration verifying that he has been separated from his wife who deserted him prior to his taking up residence in the premises in sale, and that his wife from whom he is now divorced has never resided in the premises.
When sending the replies on 28 August 1981 a draft statutory declaration was enclosed. A request to close the sale on the following day was also made. This letter (and request) was replied to on the same day by the purchasers solicitors who stated that they were not prepared to accept the statutory declaration and required either the consent of the vendors wife to the proposed sale or alternatively a joint declaration from the vendor and his wife that the premises were not a family home and setting out the reasons. It was also pointed out that the statutory declaration had not exhibited the marriage certificate nor the divorce decree but at the hearing counsel on the purchasers behalf accepted that even if these documents had been available the sale would not have been closed in the absence of the wifes consent or the joint declaration which had been requested.
By letter of 31 August 1981 the vendors solicitors stated that they were not prepared to furnish a consent from the vendors wife to the proposed sale and maintained that the declaration of the vendor was completely adequate evidence under the Family Home Protection Act and that the property was not a family home within the meaning of the Act. They informed the purchasers solicitor however that without prejudice to the contention that the purchaser was liable under the contract for interest from the closing date an application was being made to the High Court for an order dispensing with the wifes consent on the grounds that the premises were not a family home. By order of the High Court on 9 October 1981 a declaration that the premises were not a family home was made. On 16 October 1981 the purchasers solicitor attended at the office of the defendants solicitor to close the sale but because certain acts appeared on the searches (namely an undischarged mortgage) which at that time could not be explained the sale was not closed. It was, however, closed on 20 October on the basis of several written undertakings given by the vendors solicitors which are not relevant to the point raised in these proceedings.
The draft declaration which it was proposed the vendor would make was a full one. It stated that the vendor was the owner in fee simple of the premises which he had obtained by way of a gift from his father on 5 October 1976; that prior to the coming into operation of the Family Home Protection Act, 1976 the vendor had resided in Canada and that he had married there, but that his wife had deserted him whilst he was still resident in Canada; that she was not co-habitating with him when he received the gift from his father in October 1976; that at no time since then had his wife ever co-habitated with him either at the premises the subject matter of the sale or elsewhere; that she had never lived or resided at any time in the premises the subject matter of the sale; that he had never remarried; and in consequence the property does not constitute a family home within the meaning of the Family Home Protection Act, 1976.
There is no doubt that if the facts as stated in the draft declaration were true then the premises never constituted a family home within the meaning of the Act. So I have to decide whether the purchaser should have accepted the vendors statutory declaration or whether he acted reasonably in requiring that it be corroborated. If his actions were reasonable he was not in default within the meaning of condition 4 and he is not obliged to pay interest.
I have considerable sympathy with the purchasers solicitors in this case. The 1976 Act has, in practice, given rise to many conveyancing problems and purchasers solicitors have not only to satisfy themselves that the assurance is one which their clients can safely execute but try to guard against the difficulties which may arise when the property is re-sold. But I think that in this case the purchasers legal advisers were excessively cautious and that the vendors solicitor was correct in his view that the purchasers requirements were unreasonably demanding. The case made on the purchasers behalf was that he was not bound to accept the vendors statutory declaration because the vendors financial interest in the transaction calls in question his trustworthiness and justifies a request for corroboration. I cannot agree. There is no general principle to the effect that a prudent purchaser should not accept the uncorroborated statutory declaration of a vendor merely because the vendor is gaining financially from the transaction. And it seems to me that if (a) the purchasers solicitor has made all proper inquiries (by, for example, utilising requisition 52 of the Law Societys Requisitions); and (b) has been informed of facts which, if true, establish that the dwelling is not a family home and that these facts will be verified by statutory declaration; and (c) neither the purchaser or his solicitor has any reason to doubt the accuracy or the veracity of the statements in the proposed statutory declaration; then it is not reasonable for the purchasers solicitor to insist on corroboration of the vendors declaration and in its absence to call on the vendor to obtain a declaration from the court. By accepting the draft declaration in such circumatsnces he will have done all that he can reasonably be required to do. Should it subsequently transpire that due to carelessness or fraud he had been misinformed and that the premises were in fact a family home, then the purchaser would have acquired the property in good faith and if full value was paid for it the conveyance will be protected by s.3(3)(a) of the Act. As in the present case neither the purchaser or his solicitor had reason to doubt the accuracy or truth of the facts in the draft statutory declaration and, as proper inquiries had been made, I think the purchaser should have accepted the vendors statutory declaration and closed the sale as requested.
It is possible that the high degree of caution which the purchasers legal advisers adopted in this case resulted from a misunderstanding of the judgment of the Supreme Court in Somers v Weir [1979] IR 94. These judgments throw light on a number of aspects of the 1976 Act which had been obscure. They show that once it is established that a dwelling to be sold is a family home and that the non-disposing spouse has omitted or refused to consent to its sale, then the purchaser must require the vendor to apply to the court under s. 4 of the Act for an order dispensing with consent, and that such application must be made before the conveyance is executed. But Somers Case was not concerned with a vendor who informs the purchaser of facts which, if true, establish that the dwelling is not a family home and is no authority for the proposition that in such circumstances the purchaser may properly require the vendor to apply to the court for a declaration that the dwelling is not a family home. The Supreme Court also made clear that the equitable doctrine of constructive notice applies to s. 3(3)(a) of the Act and that if a purchaser wishes to establish that he has pur *339 chased the premises in good faith he must show that he has made all inquiries that he ought reasonably to have made before executing the conveyance. In holding that the purchasers solicitors ought to have made further inquiries before closing the sale on the faith of a statutory declaration which he himself had drafted following totally inadequate inquiries, the court did not decide that a prudent purchaser can never rely on a vendors uncorroborated statutory declaration.
So, for the reasons which I have given, it seems to me that the purchasers requirements in this case were unreasonable and that he was in default within the meaning of condition 4 and must pay interest up to the date of closing. In the light of this finding I do not think it is necessary for me to consider whether, as was urged in the alternative by the vendors counsel, sufficient corroboration had in fact been submitted by the vendors solicitors,
Somers v W
[1979] IR 105
Henchy J.
14th February 1979
This case raises an important conveyancing point under the Family Home Protection Act, 1976. One of the primary objects of this Act is to limit the power of a spouse to alienate the family home without the prior consent in writing of the other spouse. By s. 2, sub-s. 1, the family home is defined2 as meaning not only a dwelling in which the couple ordinarily reside but also a dwelling in which the spouse whose protection is in issue ordinarily resides or, if that spouse has left the other spouse, ordinarily resided before so leaving.
Section 3 provides that 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 other than the other spouse then, subject to four specified exceptions, the purported conveyance shall be void. The only one of those exceptions that we are here concerned with is the proviso in s. 3, sub-s. 3, that the prohibition is not to apply if the conveyance is made to “a purchaser for full value.” That exception gives rise to the issue in this case which is whether the plaintiff, who was the purchaser of the leasehold interest of the defendant’s husband in the family home, was a purchaser for full value within the meaning of the Act of 1976.
The dwelling in question was called “the contract premises” in the judgment of Mr. Justice Doyle, and I shall also employ that description. Before the marriage, the defendant’s husband took a lease of the contract premises in his own name in March, 1961. When the husband and the defendant married in July, 1961, those premises became the family home. There were children of the marriage. Unfortunately it turned out an unhappy marriage. The husband is not a party to these proceedings, so we do not know his side of the story. The defendant says that, for stated reasons, she was compelled to leave the contract premises with her children in October, 1973. After she left, she got a tenancy from the Dublin Corporation, first in other premises and then, in June, 1976, at her present address where she has been living since then with her children. She never resumed marital relations with her husband.
On leaving the family home, the defendant went for advice to the centre at Coolock run by F.L.A.C. (i.e., Free Legal Aid Centres), which is the group which supplies free legal aid for those who are in need of legal aid and cannot afford to pay a solicitor. She wished to have custody of the children and to be free of interference by the husband. On the 20th November, 1974, a written separation agreement was executed whereby it was agreed that the defendant and her husband would live separately without interference from each other; that the defendant would have custody of the children subject to stated access by her husband; and that the defendant would keep her husband indemnified against all debts and liabilities which she would contract or incur. The agreement made no provision for any payments by the husband for the maintenance of the defendant and her children; and it was silent as to the family home.
As a result, the defendant’s husband retained the family home while incurring no financial commitments to the defendant or his children whereas the defendant, who had to go out to work as a cleaner in a factory, had to struggle to pay the rent of her Corporation house and bring up her children out of her slender wages and the sums she received in the way of social security payments. Whatever the rights or wrongs of the collapse of the marriage, the defendant finished up unfairly and excessively burdened with the problems of life.
On the 2nd August, 1976, the defendant’s husband entered into a written agreement to sell his leasehold interest in the contract premises for £6,400 to the plaintiff. The Family Home Protection Act, 1976, had come into operation only a few weeks earlier (12th July, 1976). Both the husband’s solicitor and the plaintiff’s solicitor were aware that the Act of 1976 had come into force.
[The judge here referred to the letters3 of the 10th and 11th August, 1976, and continued] At this time the husband was abroad temporarily so just then his solicitor could not get the defendant’s address from him-but he was back in Dublin by the 16th August, 1976. The plaintiff’s solicitor did not wait for the husband to return from abroad or for the F.L.A.C. centre to reopen after the summer holidays. Instead, he prepared a statutory declaration, to be made by the husband, stating that the defendant had not relied on the contract premises as her family home since the execution of the separation agreement and that she “by virtue of said separation agreement has now no interest therein.” Considering that the plaintiff’s solicitor had never seen the separation agreement, which made no reference to the contract premises, this averment was a wild and inaccurate leap in the dark. Without any real inquiry as to the facts and without any inspection of the separation agreement, words which expressed the opposite of the truth were put into the husband’s mouth. The defendant’s husband executed the statutory declaration thus prepared by the purchaser’s solicitor, and the sale was closed on the 17th August, 1976, with the execution of the assignment on that date. The husband had a balance of some £3,400 out of the purchase price after paying off the mortgage and discharging the costs of the sale.
There the matter might have rested, with the husband walking off with the proceeds of the sale, were it not for the fact that the plaintiff, having spent some money on improving the contract premises, agreed to resell those premises in April, 1977, for £10,800. The new purchaser (or, rather, the building society which was financing the new purchaser) required proof that the provisions of s. 3 of the Family Home Protection Act, 1976, had not been breached. The plaintiff’s solicitor discovered the defendant’s address and wrote to her asking her to give her retrospective consent in writing to the assignment of the 17th August, 1976. The defendant refused, claiming that she was entitled to a proprietary interest in the contract premises. It was in that impasse that the plaintiff instituted the present proceedings in which she seeks an order under s. 4 of the Act of 1976 dispensing with the defendant’s consent in writing to the assignment of the 17th August, 1976. In the High Court the judge, holding that the wife’s consent was not necessary to that assignment, granted the order sought. It is against that decision that this appeal has been taken.
Section 3, sub-s. 3 (a), of the Act of 1976 allows a conveyance to escape being void under that section if it is made to a purchaser for full value. It is common ground that the plaintiff paid the full value for the contract premises in 1976; but was she “a purchaser” as defined by s. 3, sub-s. 6, that is to say, was she an assignee “who in good faith acquires an estate or interest in property?” This is the nub of the case; for the contest is whether she, through her solicitor, acted in good faith in taking the assignment without the prior consent of the defendant. On that issue, the onus of proof rests on the plaintiff: see sub-s. 4 of section 3.
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.
It is not in contention that the plaintiff did not know, personally or through her solicitor, that the defendant had a prima facie valid proprietary interest in the contract premises which the husband was selling. But ought the plaintiff reasonably, through her solicitor, to have ascertained that fact? If she ought, the position is the same as if she actually knew of the claim, in which case she could not be said to have purchased in good faith and the assignment would have to be declared void.
Let us first see what was the extent of the plaintiff’s actual knowledge. Through her solicitor (for his knowledge is to be imputed to her) she knew (or was told) that the contract premises were the family home, that the defendant’s husband was the vendor, that his marriage had broken up, that there had been a separation agreement, that the vendor’s wife was living in a Dublin Corporation house and was no longer claiming that the contract premises were the family home. It was further stated by the vendor’s solicitor that the vendor, at the time the title was being investigated, was abroad and that his wife’s address was not available. It was against the background of that information that the plaintiff’s solicitor decided to close the sale on getting a statutory declaration from the vendor. This statutory declaration, which was drafted by the plaintiff’s solicitor, was inaccurate in fact and unfounded in law. It declared that the separation agreement had been entered into in or about October, 1973 (it was executed in November, 1974) and that by virtue of it the defendant had no interest in the contract premises although the separation agreement did not make any reference whatsoever to those premises.
Furthermore, as we know from the defendant’s evidence in the High Court, she has a valid prima facie claim4 to a proprietary interest in the contract premises on the ground that she made an initial down-payment of £25 for them; that for the first five months of the marriage, when she was still working, she pooled her wages with her husband’s; and that at one stage she obtained from her mother and made available to the husband £150 which he used to pay off arrears of rent.
In those circumstances should the plaintiff, as purchaser, be fixed with constructive notice of the contents of the separation agreement and of the existence of the defendant’s claim? The answer must be “Yes.” The contract for sale was executed on the 2nd August and the title had been investigated and the sale completed by the 17th August, 1976. Expedition of that order is to be commended, but not at the expense of due investigation of title. When the plaintiff’s solicitor asked to be supplied with the separation agreement and was told that it could not be supplied because the F.L.A.C. centre was closed for the annual holidays, he should not have allowed himself to be fobbed off with that excuse. It is not unusual for sales to be held up for reasons such as this in the month of August at the peak of the holiday season. Considering the dire risk of a void conveyance, it was foolhardy to close the sale without seeing the separation agreement. Had it come to hand it would have shown itself to be worthless as a document of title, and to be no basis for the statutory declaration on which the sale was completed; but it would have given the defendant’s then address as a Dublin Corporation tenant so that it would have been possible, through the Corporation, to have traced her to her address at the time of the sale.
In any event, there was never any real difficulty in ascertaining the defendant’s address, and discovering whether she was prepared to give her prior consent in writing to the sale. The defendant’s husband may have been abroad at some stage, but he was back in Dublin by the 16th August, 1978 (when he executed the statutory declaration) and he well knew the defendant’s address. It was folly to close the sale in those circumstances without insisting on the prior consent in writing of the defendant. No sooner was the sale closed than her husband went to the defendant and offered to give her the proceeds of the sale if she would take him back; feeling that she was well rid of him, she refused. But she should have been given the opportunity, before the sale, of withholding her consent unless her claim to an interest in the contract premises was satisfied. If the plaintiff’s solicitor had insisted on compliance with his requisition that the defendant’s consent should be endorsed on the assignment, the defendant’s husband would have had no valid reason for refusing to ask her to do so. The inescapable conclusion is that the true facts, both as to the contents of the separation agreement and as to the existence and nature of the defendant’s claim, would have come to the plaintiff’s knowledge if (to use the words of the Act of 1882)”such inquiries and inspections had been made as ought reasonably to have been made.” Therefore, the plaintiff must be held to have purchased with notice of those facts, so that the property she acquired (or purported to acquire) was not acquired in good faith.
The trial judge considered that to hold that the inquiries made by the plaintiff’s solicitor were inadequate would add a new dimension to the practice of conveyancing; but that new dimension has been added by s. 3 of the Act of 1976. As a result of that section, a purchaser investigating title must now scrutinise matters that hitherto were not matters of title at all. He must ascertain if the property, because of its present or past use, is a family home within the meaning of the Act of 1976. If it is, he must find out if it is a sale by a spouse and, if so, whether the conveyance should be preceded by the consent in writing of the other spouse so as to prevent its being rendered void under section 3. If that other spouse omits or refuses to consent, the purchaser should require the vendor to apply to the court for an order under s. 4 of the Act of 1976 dispensing with the consent. Where a family home is being purchased from a husband (the converse will be the case if the wife is the vendor), it may, by virtue of the Act, be subject to an inhibition enabling the wife to block a valid sale unless her prior consent in writing is obtained. This inhibition arises for enforcement not only when the wife has acquired (e.g., by payment of rent, rates, mortgage payments or other outgoings) a proprietary interest in the family home but also when the needs of the wife and of the dependent children (as defined) so require in the circumstances.
If the purchaser takes a conveyance without compliance with the requirement as to consent, he carries the onus of proving that the conveyance comes under one of the exemptions in sub-sections 2 and 3. If, as in the present instance, the purchaser’s case is that the wife’s prior consent did not arise because he was a purchaser for full value without notice, he must show that the consideration amounted or approximated to the full value of the property and also that he, or his agent, made such inquiries or inspections as ought reasonably to have been made. If such inquiries or inspections have not been made but would, if made, have disclosed that the vendor should have obtained either his wife’s prior consent in writing or a court order dispensing with that consent, the conveyance will be no less void than if the purchaser had actual knowledge that the wife’s prior consent in writing required to be sought and he had taken the conveyance in disregard of that requirement.
In this case, the inquiries and inspections which ought reasonably to have been made as a matter of common prudence were not made. Instead, a statement which was unwarranted by any document and which falsely swept aside the defendant’s rights was presented to her husband for execution as a statutory declaration and, on the basis of that statutory declaration, the sale by him went through behind his wife’s back. It was a transaction of the precise kind that s. 3 of the Act of 1976 was designed to make void. Unfamiliarity with the Act of 1976 seems to have misled both the solicitor for the plaintiff and the solicitor for the defendant’s husband.
Finally, a word as to the form of the present proceedings. The plaintiff moved by a special summons in which she asked for an order under s. 4 of the Act of 1976 dispensing with the defendant’s prior consent to the sale. This, in my opinion, was not the correct order to seek. If the plaintiff could be said to have been “a purchaser for full value,” the proper order to seek would have been an order declaring the validity of the assignment which had been made without the defendant’s prior consent in writing. An order under s. 4 of the Act of 1976 is intended to cover the position before conveyance when the spouse omits or refuses to consent. When the conveyance has been executed without the consent, it is either valid without that consent or it is void ab initio; in either event an order under s. 4 would be inappropriate.
I would allow this appeal and rule that the assignment to the plaintiff is void.
Griffin J.
I agree with the judgment delivered by Mr. Justice Henchy. However, I would like to add a few observations of my own.
The long title of the Family Home Protection Act, 1976, is:””An Act to provide for the protection of the family home and for related matters.” The main purpose of the Act is to ensure that the family home, or any interest in it, cannot be sold or in any way disposed of by the owner over the head of his or her spouse. Although the Act applies to both spouses and, therefore, protects the husband where the wife is the legal owner, for all practical purposes the Act is designed to protect the wife and the dependent children (as defined in s. 1 of the Act) of the family, since in Ireland the legal title to a house is rarely vested in the wife alone.
In respect of any attempted alienation of the family home, the protection afforded by the Act is given by s. 3 and is in the widest terms. Under that section, as applied to this case, the defendant’s husband, who has the legal title, cannot convey any interest in the family home to any person except his wife, the defendant, without the prior consent in writing of the defendant and, if he attempts to do so, the purported conveyance is void unless it is within the exceptions in s. 3 of the Act of 1976. “Conveyance” is defined as including a mortgage, lease, assent, transfer, disclaimer, release and any other disposition of property otherwise than by will or a donatio mortis causa and includes an enforceable agreement to make any such conveyance.
Therefore, the prohibition covers every conceivable type of disposition of the family home by the defendant’s husband. If, therefore, the husband intends to sell the family home, or to raise a mortgage on the security of it, unless the exceptions in s. 3 apply, he cannot do so without first discussing the matter with the defendant and obtaining her prior consent in writing. Indeed, as the definition of “conveyance” includes an enforceable agreement to make a conveyance, the section would appear to have been designed to ensure that the defendant’s consent in writing should be obtained, where necessary, even before the contract for sale is made. As the defendant’s husband not only entered into the contract for sale but executed an assignment of the premises to the plaintiff without obtaining the written consent of the defendant, it is not necessary for the purposes of this case to decide whether the failure to obtain the written consent of the defendant before the contract for sale was made avoided the entire transaction, as the purported assignment was void in any event.
Both solicitors who acted in the purported sale by the husband to the plaintiff either overlooked, or misinterpreted, the provisions in s. 2, sub-s. 1, of the Act of 1976 whereby “family home” not only means a dwelling in which a married couple ordinarily reside but also comprises a dwelling in which a spouse whose protection is in issue (the defendant), and who has left the other spouse, ordinarily resided before so leaving. There is no doubt that, at all material times, the premises in question were the family home of the defendant and her husband, and that the prior consent in writing of the defendant to the sale was necessary.
Therefore, the transaction is void unless the plaintiff can establish (and the onus is on her) that she was a purchaser for full value who acted in good faith within the meaning of that expression as explained in the judgment of Mr. Justice Henchy. If the appropriate inquiries had been made by the plaintiff’s solicitor, he would have ascertained that, prima facie at least, the defendant had a valid claim to a proprietary interest in the premises by reason of investments made by her in the house in paying the deposit and mortgage
repayments etc. out of her own monies. As the appropriate inquiries were not made, and as the plaintiff was not an assignee who for full value and in good faith acquired an estate or interest in the premises, the consent of the defendant was necessary and, accordingly, the purported assignment without it was void.
I should like to emphasise that the protection of the Act of 1976 is not confined to a wife who has made financial contributions to the family home. Once the dwelling is a family home within the meaning of the Act, the wife is protected and her consent to the alienation may be required even though she may have left her husband and no longer resides there, provided that, before leaving, she ordinarily resided there. Once the consent of the wife is required, there is no way of dispensing with it except by application to the court under s. 4 of the Act. Any such application must be made before a conveyance takes place. The court has no jurisdiction to dispense with the consent where the application is not made until after the conveyance is executed.
Where an application to dispense with the consent is made in proper time, the court may dispense with the consent pursuant to s. 4, sub-s. 1, of the Act. But it is provided by sub-s. 2 of s. 4 that the court shall not dispense with the consent unless it considers that it is unreasonable for the wife (or husband) to withhold consent, taking into account all the circumstances, including the respective needs and resources of the husband and wife and of any dependent children of the family, and the suitability of any alternative accommodation offered to the spouse whose consent is required, having regard to the respective degrees of security of tenure in the family home and in the alternative accommodation. The onus of proving that the withholding of the consent is unreasonable in all the particular circumstances is fairly and squarely on the spouse who seeks the order dispensing with the consent.
In the circumstances of this case, if the defendant’s husband had brought an application to the court in proper time seeking an order dispensing with the consent of the defendant, in my view the husband could not have discharged the onus of proving that the defendant was unreasonable in withholding her consent. I would allow this appeal.
Parke J.
I agree with the judgments already delivered. I would allow the appeal.
McMahon v O’Loughlin
unreported, High Court, Murphy J., June 9, 2005; [2005] I.E.H.C. 1961. Claim
On 19th April, 2002 by agreement in writing the plaintiff agreed to purchase and the defendant agreed to sell certain lands and premises being a petrol filling station and dwelling house comprised in folios 55139F and 16018F in the County of Galway, at an agreed purchase price of £450,000 or €571,382. The closing date was 28 days from the signing of the agreement by the vendor. In the following months of May and June the defendant requested the plaintiff to sign a supply agreement with a third party, Irish Shell Limited (Shell). It was claimed that on or about 5th July, 2002 the defendant’s agents indicated that the defendant would not complete the contract unless the plaintiff entered into an agreement with Shell. On 10th July, 2002 the defendant purported to rescind the contract and return the deposit paid by the plaintiff.
The plaintiff claimed to be ready, willing and able to purchase the lands and called upon the defendant to comply with the terms of the contract of 19th April, 2002. The defendant failed to do so. The plaintiff claimed, inter alia, specific performance of the contract of 19th April, 2002 and damages for breach of contract in lieu of or in addition to specific performance.
2. Defence
The defendant denied that there was any concluded enforceable agreement. The premises were a family home within the meaning of s. 2 of the Family Home Protection Act, 1976. The prior consent of the defendant’s spouse, Eileen O’Loughlin, was not obtained nor furnished. The defendant contended that the contract of 19th April, 2002 was void.
If there had been an agreement, which was denied, it was subject to a pre-condition that no contracts existed or should have been deemed to exist until the contracts for sale had been signed and exchanged between the parties and the deposit paid. The defendant denied any such exchange.
The defendant claimed that in the course of the negotiations between the parties the plaintiff was furnished with a sales agreement dated 1st September, 1999 made between Shell as the supplier and the defendant as the buyer and that the plaintiff confirmed to the defendant that he was prepared to purchase the premises and to be bound by the said agreements. It was a collateral agreement between the parties that the premises would be purchased subject to the plaintiff taking over the agreements then enforced between the defendant and Irish Shell Limited and that the plaintiff had agreed to execute such documentation as might be required but refused to do so.
In fact, the evidence showed, and it was common case that a sales agreement of 1st September, 1999 and an undated loan agreement was not furnished to the plaintiff before the execution of the contract of 19th April, 2002. What was furnished to the plaintiff by the defendant’s agent was a letter of 17th April, 1998 from Shell to the defendant. That letter comprised an offer which was accepted subject to the terms and conditions as outlined therein by the defendant.
In his defence, the defendant denied that he had wrongfully rescinded the contract of 19th April, 2002 if it was ever valid or effective. The defendant further denied that he was in breach of his contractual obligations or that his conduct had caused the plaintiff to suffer loss and damage. If the plaintiff had suffered any loss or damage the same was not by reason of any wrongful act of the defendant as alleged.
3. The contract
The memorandum of agreement of 19th April, 2002, on its face, appears to be preceded by the consent in writing signed by the vendor’s spouse.
An additional special condition was inserted at the behest of the plaintiff purchaser’s solicitor as follows:
4. The goodwill of the business carried on, and the property in sale is included in the price. The vendor shall be responsible for and undertakes to pay all debts and liabilities and to observe and perform all obligations regarding the conduct of the business prior to completion. The vendor further warrants and certifies that there are no employees whose employment requires to be continued by the purchaser and the purchaser shall be indemnified in relation to any claims from staff, current or past. The purchaser shall not assume responsibility for any contracts, agreements or obligations of a continuing or ongoing nature.
The memorandum was executed by the plaintiff purchaser subject to that special condition among others. There was no mention of the agreements between the defendant and Shell.
4. Agreement with Irish Shell Limited
4.1 The defendant had a series of ten-year sales agreements and a loan agreement with Shell.
4.2 The brochure, prepared by Casey Auctioneers on behalf of the defendant, as vendor, showed a photograph of the premises with the canopy marked “Shell”, the pumps and other fixtures and fittings with the same distinctive colours. Under the heading of “description” the brochure highlighted in red the following: “There is an agreement with Irish Shell to April, 2008”.
4.3 Mr. Peter Casey of Casey Auctioneers furnished to the plaintiff a copy of the letter from Shell to the defendant dated 17th April, 1998, together with copies of the accounts before the execution of the memorandum of agreement of 19th April, 2002.
That letter contained the following material paragraphs:
“Irish Shell Limited, in return for a ten-year sales agreement between Patrick O’Loughlin and Irish Shell, are pleased to detail the following offer as a means of enhancing the future sales volume of this site.
(1) Equipment.
We will supply the following equipment on a free-loan basis:
Retail visual image – level 3
Canopy
2 MS pumps
Tank gauges
Interceptor
Tank – 20,000 litre
The total value of this equipment is IR£63,000.
This equipment will be provided on a free loan basis subject to the terms and conditions of the CAPITAL FREE LOAN AGREEMENT, a copy of which is attached. The equipment will remain the property of Irish Shell Limited and you will be responsible for its maintenance over the period of the agreement.
(2) Direct dealer support budget (DDSB).
Irish Shell Limited believes the proposed development will result in increased sales of Shell products to O’Loughlins under the terms of the sales agreement and will enhance and promote the image of the Shell retain network.
Irish Shell Limited is pleased to make a contribution of IR£62,000 in recognition of the foregoing.
In return Irish Shell will require the following:
A. An exclusive 10-year sales agreement to commence on the date of the first delivery subsequent to the completion of the development.
B. All bulk fuels and lubricants to be purchased directly from Irish Shell Limited.
C. (Further requirements relating to payment, safety, opening hours and credit cards).
This offer is subject to the approval being granted by the Board of Directors of Irish Shell Limited.
Thank you for allowing us the opportunity to put this offer to you. Please confirm your acceptance by completing the following:
I accept the above offer subject to the terms and conditions as outlined above.
Signed by the defendant
Irish Shell Limited are pleased to have your station as a member of the Shell retail network.
Yours,
John Hartnett
Dealer Area Manager”
It was common case that the acceptance was signed by the defendant.
There was no evidence that a copy of the subsequent sales agreement nor the loan agreement was given to the plaintiff until 21st June, 2002, almost two months after the execution of the memorandum of agreement of 19th April, 2002.
4.4 The agreement of 1st September, 1999 (the sales agreement) recited the contemplation, consideration and agreement that only Shell motor fuels shall be delivered to or sold from the premises and to that end had agreed to enter into the sales agreement. The operative part of the agreement was commencing from 1st September, 1999 for a period of ten years the supplier would supply and the buyer would purchase only Shell brands of motor fuel, as defined subject to the terms and conditions thereof.
Paragraph 8 related to transfer to a third party in the following terms:
“8(a) The buyer shall not transfer this agreement to a third party save on a disposition whether by way of management agreement, licence, lease or assignment or otherwise of the buyer’s business in or of the premises or such part thereof as is used for the sale of motor fuel and automotive lubricants and then not without the prior consent in writing of the buyer whose consent shall not be unreasonably withheld.
(b) The buyer shall not make any such disposition of the whole or any part of the business in or the premises of the buyer used for the sale of motor fuel or other products of the supplier to a third party without first having:
(i) produced to the supplier the written agreement of such third party to be as fully bound by the terms of these presents as though he had been party hereto of the other part.
(ii) and obtained the consent of the supplier to accept such written agreement and to be bound to such third party together with or in the place of the buyer for the purposes of this agreement.
(c) In the case of a proposed assignment the supplier is unwilling for any reason to accept such a third party together with or in the place of the buyer for the purposes of this agreement the supplier shall have the option to purchase or to introduce a purchaser to purchase at a price not less than the price offered by the third party the property which the third party has offered to buy; or where no price has been offered at a price the equivalent of the open market value of the property proposed to be assigned as determined by an arbitrator appointed by agreement of the supplier and the buyer or in default by the president or other chief officer for the time being of the Irish Institute of Auctioneers and Valuers and pursuant to the provisions of the Arbitration Act, 1954 a amended or extended or other corresponding statute for the time being in force.
(d) In the event of such disposition as aforesaid the buyer’s obligations hereunder shall cease (if they cease at all) when and only when the provisions of this clause have been fulfilled in their entirety.
(e) The buyer shall not cease to carry on or share his said business or cease to occupy or share the occupation of the buyer’s premises save pursuant to a disposition such as hereinbefore mentioned.
(f) As part of the consideration of the obligations undertaken by the supplier hereunder the buyer hereby undertakes that the buyer will on or within three months prior to the expiry of this agreement give to the supplier no less favourable an opportunity than that given to trade competitors of the supplier to enter into a further or new sales agreement with the buyer and in the meantime to refrain from undertaking any obligation or do any act as a result of which the bargaining position of any of the trade competitors of the suppliers could become more favourable than that of the supplier for the purpose of negotiating with the buyer a new supply agreement or a renewal of these presents.”
4.5 An undated loan agreement provided that Irish Shell Limited would loan to the defendant, as user, for use at the premises the various items of equipment specified in the Schedule with effect the date of delivery thereof to the premises until the agreement should be terminated. It was agreed that the value of the equipment was IR£63,000. It was provided that the Shell might determine the agreement by summary notice if the defendant, as user, properly determines any supply agreement entered into with the company or commits any breach of the provisions of the agreement, among other events. On the termination of the ten years or if the agreement were terminated and the defendant were unable to return the equipment then he should, in lieu of returning same, pay to Shell a sum equal to so many tenth parts of the value of the equipment as there were years and parts of a year unexpired of the said period of ten years.
The Schedule to that agreement referred to the following equipment:
RVI level 3
1 x New canopy
3 x Gilbarco pumps
1 x Galaxy ECO tank gauge and printer
1 x 20,000 l. tank
This list would appear to correspond to the type of equipment mentioned in the letter of 17th April, 1998 other than the latter includes an interceptor.
5. Pre-contract correspondence
5.1 On 14th February, 2002, Mr. Peter Casey of Casey Auctioneers had written to Mr. McDonald of V.P. Shields and Son, the plaintiff/purchaser’s solicitors, subject to contract/contract denied, saying that subject to contract, agreement had been reached on the sale of the above property and gave details thereof. He stressed that all negotiations had been of an exploratory nature only and that no contracts existed until the contracts of sale had been signed and exchanged between parties and the full amount of the deposit was paid and accepted.
5.2 On 19th February, 2002 the vendor’s then solicitor enclosed contract for sale in duplicate together with the original file plan of the three folios. On 25th February, 2002 the purchaser’s solicitor wrote to the vendor’s solicitor saying, inter alia, the following:
“The contracts are framed on the basis of straightforward property sale, whilst we will take our client’s instructions in the matter, we wonder whether it is wholly appropriate given the subject matter involved.”
5.3 The following day, 26th February, 2002, the purchaser’s solicitor wrote again in relation to further pre-contract queries, inter alia, insofar as is relevant as follows:
“4. We understand that the property includes both commercial and residential property, you might confirm whether your client has received an indication of an apportionment in respect of the same in order that it may be agreed with prior to the contracts being signed.
5. Given the way the contracts are framed, we presume that the goodwill of the business carried on at the property is not proposed to be sold. You might confirm as this may impact on the VAT position.
6. Given the situation as detailed at 5 above, please confirm that there are no staff who will require to be taken over by our clients and that there are no continuing contracts or agreements of any nature, in respect of which your client anticipates our client to assume a continuing obligation or liability.
9. Please confirm whether the residential property is (sic) forming part of the property in sale is the Family Home of the vendor or any party.”
5.4 On 8th March, 2002, Mr. Casey of Casey Auctioneers wrote to the purchaser’s solicitor with a list of furniture and fittings plus details of tanks and pumps associated with the filling station. That included the following items:
Forecourt equipment (owned by Patrick O’Loughlin – unless stated)
Tanks
Pumps:
1 x AGRO diesel
1 x white diesel
1 x road diesel – double pump – (property of Shell)
2 x quads for Unleaded – (property of Shell)
1 x quad for Super and Unleaded – (property of Shell)
Provision for vapour recovery
Canopy:
outer portion 2
inner portion – (property of Shell)
Interceptor
Airline unit
5.5 The letter of 26th February, 2002, from the purchaser’s solicitor was repeated on 26th March, 2002.
5.6 The repeated letter was replied to on 28th March, 2002. The vendor’s solicitor said that the information in relation to query 4 had already been given to the purchaser. In relation to query 5 it was said that the property was being sold as a going concern and was a matter between a prospective purchaser and an auctioneer and not a question on title. In relation to paragraph 6 confirming that there were no staff and no continuing contracts the vendor’s solicitor replied as follows:
“(6) The purchaser knows full well that Paddy O’Loughlin is self-employed and is a sole operator in this business and again my client cannot understand how these questions are being asked when your client knows full well the situation.”
In relation to the query on the family home the reply was as follows:
“(9) The residential property is the family home of the vendor and the vendor’s spouse will sign the contract.”
5.7 The purchaser’s solicitors, on 16th April, 2002, returned the contract, duly signed, together with the balance deposit subject strictly to the vendor accepting the amendments to the special conditions by the addition of special conditions 4 (already referred to above) and another not relevant to the present proceedings.
5.8 On 30th April, 2002 the purchaser’s solicitors returned the contracts in duplicate, referred to point 9 of the vendor’s solicitor’s letter of 28th March, 2002 in relation to the vendor’s spouse signing the contract, requested that the vendor re-sign the contract after his wife had executed the consent.
6. Requisitions on title
The purchaser’s solicitor made the standard form requisition on title in relation to premises as follows:
1. If any fixtures, fitting or chattels included in the sale are the subject of any lease, rental, hire purchase agreement or chattel mortgage furnish now the agreement and on closing prove payment to date or (as the case may be) discharge thereof.
That requisition dated 30th April, 2002 was replied to by the then solicitor for the vendor on 2nd May, 2002 as: “No”. On 9th May, 2002 the purchaser’s solicitor made a rejoinder as follows:
1.1. Your answer is no. Can we presume that you intend to say that None of the fixtures, fitting or chattels included in the sale or subject to any agreement specified in the sub-clause?
There was no reply to that rejoinder.
7. Post contract correspondence
7.1 On 14th May, 2002 the purchaser’s solicitor advised that the purchaser should be in funds to close the transaction before the end of the week and ask for a response to the rejoinders of 9th May. That letter continued:
“With regard to the question of the supply agreement between your client and Shell, our client is not prepared to sign any agreement in respect of supply to the property. Given the correspondence between ourselves prior to the signing of the contracts, and special condition 4 thereof, we do not see that our client has any obligation to sign such agreement.”
7.2 By letter of 27th May, 2002 the purchaser’s solicitor referred to his previous letter of 14th and to a subsequent telephone conversation which purported to introduce discussions between the purchaser and the vendor’s auctioneer amending or altering the terms of the contract which existed between the respective clients.
7.3 The defendant vendor’s solicitor replied the following day on 28th May, 2002, inter alia, as follows:
“The reality of this matter is that your Mr. McMahon was aware at all times about this solus agreement. It was on the brochure in large print stating ‘There is an agreement with Irish Shell to April, 2008′. He subsequently demanded and was furnished with a copy of the document and returned to the auctioneer and indicated that he was happy with it and on foot of that negotiations were entered into. To attempt to state that a special condition in the contract refers to this document is simply not correct. That part of the special condition refers to and is in the context of employees. In fact in my last conversation with your Mr. McDonald he stated that he was unaware of the solus agreement and never saw it.
The fact of the matter, as your client well knows being an oil dealer himself, is that Irish Shell will not, as matters stand, allow my client complete this sale. Your client knows this and in fact I understand he had discussions with the Irish Shell representative.
It is not a question of my client refusing to complete the sale, he is, in the circumstances, being left with no choice but to return the deposit to you.”
7.4 Further correspondence followed. On 21st June, 2002 the solicitor for the vendor wrote to the purchaser’s solicitor enclosing copy documentation given to the purchaser, the original of which was signed by the defendant. This would appear to have been the letter from Irish Shell dated 17th April, 1998. A copy of the sales agreement and a copy of the loan agreement referred to in the documentation was also included in that letter of 21st June.
7.5 On 10th July, 2002 the solicitor for the vendor returned the deposit of €50,394.76 to the plaintiff’s solicitor which was returned by the latter on 12th July, 2002.
8. Evidence on behalf of the Plaintiffs
8.1 The plaintiff gave evidence of negotiating with Casey Auctioneers and of seeing the two page letter of agreement with Irish Shell dated 17th April, 1998, referred to in the brochure. He said he was not interested and asked the auctioneer for a copy of the solus agreement before he paid the booking deposit in early February. He had got the two pages from the auctioneer five days after paying the deposit.
Mr. McMahon believed that that letter was not a big issue or a problem for him as there was no mention of it in the contract and he did not feel himself bound. When he was about to close the sale, a week before the defendant asked him to meet the representative of Irish Shell Limited. He said he wanted to supply his own fuel. He said he did not see the Shell sales agreement until July or August. If he had been bound by that agreement he would have approached the sale in a different way and paid less.
He had shown the two page letter of 17th April, 1998, to his solicitor. He did not hear that there was any agreement in place. His own solus agreement provided for termination. He presumed that the defendant was going to terminate his solus agreement.
In cross-examination he said that his father owned a petrol station since the early 1970s and had an agreement with Esso of which he was aware but did not know “how deep it went”. He could not remember what it would cost to get out of such an agreement and did not know if the Shell agreement would bind him. Mr. Casey did not discuss a solus agreement but did discuss the agreement with Shell. He did not remember if he had asked Mr. Casey whether he could get out of it or that Mr. Casey had replied that there was no way of getting out of it. He did look for the agreement and was shown the letter which he said did not bind him. He did not remember fixtures and fittings being the property of Shell in the letter of Mr. Casey dated 8th March, 2002. That agreement was with Mr. O’Loughlin. However, it did cross his mind that it might bind. He did not think that he had said to Mr. Casey that while he did not like it, he would take it, referring to the Shell agreement. In relation to the meeting with Mr. Hartnett of Irish Shell he said that he was not interested in the agreement with Shell and that it had never been raised. He assumed that Mr. O’Loughlin, the defendant, would buy out the agreement. He did not remember the appointment with Mr. Hartnett for 8th May, 2002.
8.2 At all material times the plaintiff was advised by his brother-in-law, Mr. Duncan McDonald, a Scottish solicitor who worked with V.P. Shiels and Son, solicitors for the plaintiff.
In his evidence Mr. McDonald said that he was aware of the agreement of 17th April, 1998 when it was given to him on 20th February, 2002. There was no mention of a solus agreement. It was his opinion that the letter, as it stood, did not run with the property.
He drafted a special condition regarding the continuing obligations. The purpose of his letter of 16th April, 2002 was to flush out any matters of which the purchaser should be aware. There was no reference by the vendor’s solicitor to the Irish Shell agreement.
It was only when he was told by his client a few days before closing which had been fixed for the week of 14th to 20th May, 2002, that it was indicated that he would have to sign the Shell agreement.
It was not until 21st June, 2002, when he got a copy of the solus agreement and the loan agreement.
In cross-examination he said that he was aware of the restriction on conveyancing documentation including the contract of sale for a solicitor who had no practising certificate. He was admitted as a solicitor in this jurisdiction in 2004.
In relation to the letter of 17th April, 1998, as it stood, he believed it did not attach as it was not registered. The purchaser had no notice of the agreement. He did not request whether there was a formal agreement or not. He asked, by way of pre-contract enquiries, whether there was any binding agreement.
He did not accept that paragraph 6 of his letter of 26th February, 2002, relating to employment contracts with a general enquiry regarding contracts agreement or obligations for continuing or ongoing nature should be interpreted as a “eiusdem generis”.
He did not make any enquiries in relation to the letter from the auctioneer of 8th March, 2002 in relation to the equipment. He gave the client the list but did not make him aware nor refer to anything.
He agreed that requisitions were raised to get information and if the reply were wrong or incorrect he would raise a concern and seek clarification by way of rejoinder. He agreed that it would be a matter of concern if the vendor and purchaser were not on the same wavelength. If it was material he would make enquiries regarding the items in the sale. He did not get a copy of the free loan agreement nor think of getting a copy.
He was satisfied with the reply to the requisition relating to fixtures and fittings on the premises. He would consider the items which were the property of Shell not to have been included.
He believed that the reference to subsisting obligations regarding the staff and agreements of any nature to have been distinct and not conjunctive. The latter would have covered any sales agreements.
He believed that where there was no ambiguity in the contract that there was no question of the parties not being ad idem.
He agreed that all negotiations were on an exploratory basis subject to the exchange of contracts.
The witness said he would have expected the vendor’s solicitor to have responded differently. He did not assume the Shell items would remain. He had taken the view that the vendor could buy out the Shell agreement and was satisfied with the rejoinder on requisition by following it up with a letter of 9th May, 2002:
“Can we presume that you intend to say none of the fittings … are subject to any agreement”.
8.3 Peter White, manager of Emo Oil had spent five of the forty years with Emo dealing with such agreements. A loan agreement was repayable whereas a development grant was not. An oil company would give a letter of freedom on paying for the product and writing off the loan.
He referred to clause 8 of the solus agreement and said that in such circumstances of termination of the agreement that the oil company would re-brand and the owner would get the fittings on repayment. He had never rejected any new owner. An application would be made at least one month before the proposed transfer. In his experience he never removed pumps nor canopies but did remove logos. He agreed in cross-examination that a purchaser would be tied in relation to the site unless by mutual agreement they could declare the contract null and void. A vendor could also get out of the agreement before he sells. He agreed that a solus agreement could devalue the premises.
8.4 Mr. Ken Carney, auctioneer with nine years’ experience in Kinvara, believed that over the four years since the contract there was an increase of 10% per annum. In relation to a severance, he believed that the petrol filling station was then worth £300,000 while the house was worth £150,000 (€380,000 and €190,000). The present value would be an approximate 20% increase.
On re-examination he agreed that he would assume an easement by a right of way over the petrol station in relation to the house; that, though he had not examined the planning file, the absence of separate planning permission would devalue the house.
8.5 Mr. Tom O’Brien, Consultant Engineer, gave evidence in relation to the severance of the residential from the business premises. He considered access, septic tanks, services and agreement between the parties regarding delineation. He said that he would be astonished if the planning authorities refused and disagreed with the report of Mr. McNeala, the vendor’s engineer.
Under cross-examination he said that planning permission should be applied for a separate entrance and a septic tank or otherwise leeway should be granted. He agreed that the requirement was a minimum of 0.5 acres and that the house was on approximately 0.3 acres of a total site of 0.71 acres.
He had not sunk any boreholes in relation to the percolation area of the septic tank nor did he know if the percolation area required by the 1998 planning permission had been installed.
9. Application for direction.
9.1 Mr. Brady S.C., counsel for the defendant, at the end of the plaintiff’s case, applied on behalf of the defendant for a direction and indicated that, if refused, he would go into evidence.
The first ground for such a direction was that the contracts had, in fact, not been exchanged.
Secondly, it was accepted that the evidence would be that there was no prior consent by the defendant’s spouse.
Mr. Brady relied on Kelly v. Irish Nursery and Landscape Co. Ltd. [1983] I.R. 221 where the High Court (McWilliam J.) had dismissed an action by the plaintiff purchaser in which he claimed specific performance of an alleged contract for the sale by the defendants of their land. The plaintiff’s solicitors had accepted the defendants’ conditions but endeavoured to obtain the defendants’ consent to some alterations in the terms of the proposed contract. The defendants’ solicitor insisted on certain changes in the proposed terms. The duplicate contract documents were executed by the defendants. The plaintiff’s solicitor stated the plaintiff’s refusal to accept one of the proposed terms. The defendant’s solicitor then wrote returning the deposit money and saying that the defendants had decided not to proceed with the transaction.
The Supreme Court disallowed the appeal as there was no enforceable contract for the sale of the defendants’ land as no exchange of contracts had taken place. Kenny J., in reviewing the facts, held that there existed a contract signed by both parties but never exchanged. The court did not agree that the document was too uncertain to be enforced as an agreement to sell.
“Subject to any special stipulation agreed between the parties, the general law in Ireland as to the necessity of exchanging contracts is that it is not necessary for the vendor and purchaser to exchange contracts to make an agreement enforceable at law: see pages 20, 49 and 337-338 of Wiley’s Irish Conveyancing Law. In England, however, it is settled by the decision of the Court of Appeal in Eccles v. Bryant & Pollock that where there is an arrangement for the sale of land ‘subject to contracts’, a binding contract comes into existence only where there is a mutual exchange of contracts: see also Wynn v Bull and Chillingworth v. Esche (at 228).”
In that case, as in the present, there was an express condition on the correspondents that no contract would come into existence until contracts were exchanged between the solicitors. Accordingly, the plaintiff’s appeal was dismissed and the order of Mr. Justice McWilliam in the High Court affirmed.
Mr. Dwyer S.C. argued that it was the vendor’s solicitors who had failed, notwithstanding their statement in the letter of 28th March, 2002, that the vendor’s spouse would sign the contract and the purchaser’s solicitor’s reminder on 30th April, 2002, that, given the requirements for prior “consent” that they would require the vendor to re-sign the contract after his spouse’s execution [of the consent]. Mr. Dwyer referred to AIB v. O’Neill where the charge over the farm and dwelling, though not signed by the wife, was valid against the farm. He also referred to s. 3 of the Family Home Protection Act, 1976.
While in England it is standard conveyancing practice that a binding contract does not come into force until exchange of contracts has taken place, there is no such general practice in Ireland (see Wylie, 2nd ed. 1.32).
The court distinguished the facts from those in Kelly v. Irish Nursery, accepted Mr. Dwyer’s submission regarding the failure of the defendant’s solicitor to have the spouse give her prior consent and, in the circumstances, the court declined to make a direction. Mr. Brady S.C. proceeded to lead evidence.
10. Evidence on behalf of the Defendant
10.1 Mr. Peter Casey had instructions in summer 2001 to sell and had a brochure printed with a photograph of the Shell filling station on the front page. In November, 2001 the vendor took ill and was unwell until spring of 2002.
Mr. Casey first met the plaintiff on 30th January, 2002 and gave him a copy of the brochure. The plaintiff asked for a copy of the Shell agreement. On the second meeting on 4th February, 2002 he gave the purchaser financial data and the letter of agreement with Shell of 17th April, 1998. His evidence was that the plaintiff had asked if he could get out of the agreement and he told the plaintiff to take advice. He was selling the property with the Shell agreement until 2008. A few days later he was with the plaintiff and his wife at the premises when the plaintiff asked if it was possible to buy the garage separate from the house, he replied it was not. He believed that the purchaser and his solicitor were buying the residential filling station with the Shell agreement until 2008. He said that the purchaser said he would be able to work with it.
For stamp duty purposes an apportionment of the price was agreed: the house at £150,000 and the garage (the petrol filling station) at £300,000 less costs.
He believed that if there was no separate entrance to the house that there would be a diminution of £20,000 in the value. If there was an easement the diminution would be £10,000. Parking would affect the price by 10%. If a property was severed it would have a negative effect on both parts.
He agreed, in cross-examination that the agreement was not a ten year agreement to 2008 but a ten year agreement from 1st September, 1999. He believed it to be the duty of the purchaser to get the Shell agreement. He agreed that he did not tell the purchaser that he had to take over the Shell agreement when he spoke to him on the 3rd or 4th February, 2002. He himself did not see the agreement of September, 1999 until 11th February, 2005 during the hearing before the court. He said that he had told the purchaser that the agreement of 17th April, 1998, was not the solus agreement and believed that, as he was in the oil business himself, that he would understand. He had told him to get advice and that Shell would be in contact with him after the contract was entered into. He did not say that the contract was subject to him being approved by Shell. He agreed that there was nothing in the contract for sale regarding Shell but that he had always mentioned a ten-year solus agreement.
He said that the defendant’s wife, Mrs. O’Loughlin, had been at the meetings and he believed she was the co-owner.
10.2 Mr. Jack B. Fitzgerald had been a solicitor for over 30 years with a conveyancing practice and is a partner in Kennedy Fitzgerald, the defendant’s solicitors.
In his evidence he said that the letter of 17th April, 1998. would put him on enquiry and he would have raised the issue of the loan agreement by way of pre-contract enquiry. He would have insisted on examining the documents with Shell. He would have asked a direct question. If he had not followed conveyancing practice in that manner he believed that there would have been problems at closing.
In cross-examination he said that had he been acting as vendor he would have difficulties with special condition 4 and would not have agreed to it. In relation to the correspondence asking confirmation that there were no continuing agreements he would have referred to the documents in his possession regarding the solus agreement and would have written to the purchaser’s solicitor to clarify that the ten years extended to 1999.
He would have raised a specific question regarding the agreement of 17th April, 1998. Mr. McDonald made a general enquiry which should have elicited a specific response. He would have been much more direct. He agreed that the solus agreement should have been given to the purchaser.
He believed he asked Mrs. O’Loughlin, the defendant’s wife, if she had given prior consent. She did not give prior consent.
In relation to the requisitions his evidence was that if acting for the vendor he would reply yes, and give details in relation to fixtures and fittings. The purchaser should have been aware, given the letter of the auctioneer of 8th March, 2002, listing the furniture and fittings and, in particular, the forecourt equipment owned by Patrick O’Loughlin, the defendant. Four items corresponding with those mentioned in the letter of 17th April, 1998, were indicated as being property of Shell. He believed that he must know that that answer was wrong despite it being answered three times to the contrary. He believed that if he were on notice he was on full enquiry. It would not be prudent conveyancing practice to omit to ask specific questions. It was put to him that Mr. McDonald said that he had not sufficient information to ask specific questions. Mr. Fitzgerald replied that if the letter of 17th April, 1998 were not available then he would accept the answer to the requisition but agreed that the solicitor for the vendor should have included the Shell document in the reply.
As conveyancing solicitor he said that he must make direct enquiries. The vendor’s then solicitor was not justified in giving the answers he gave.
10.3 Mr. David McNeala gave detailed evidence regarding the five planning permissions from 1975 to 1998 in relation to the development of the dwelling house and filling station together with septic tank on the last folio acquired. The entire site was shown as lodged with the planning application by way of one planning unit.
If there were separate sales it would be necessary to make a planning application in relation to a separate entrance and separate septic tank with percolation area. He referred specifically to site distances on the road and the area necessary for percolation and concluded that planning would not be successful.
Under cross-examination he referred to his report concluding that planning permission “may” not be forthcoming. Notwithstanding he was of the opinion that he did not think a subdivision was possible given that it had been considered as a single planning unit.
10.4 Mr. John Hartnett had been with Irish Shell from 1975 and he was a Dealer Area Manager for the west of Ireland for the previous seven years. He outlined to the court the difference between the sales agreement and the loan agreement. The former was known as a solus agreement. He referred to paragraph 8 thereof which required the buyer not to transfer to third parties without the consent of Shell. He knew of no case of refusal. If there had been transfer without consent he would have initiated a suit against the dealer and any third party supplier, if any, for passing off.
In relation to the transfer of equipment, he said that where there was a breach of condition all equipment would be removed and the premises would be de-branded.
Shell did not allow a buyout of the solus agreement. The defendant had previous agreements with Shell and, indeed, had leased the property by way of reassignment of the sale agreement and then had it reassigned back.
The letter of 17th April, 1998 was a letter of offer. Once accepted development would take place and the sales agreement would become operative from the date of the first delivery of fuel.
He was aware of the defendant’s illness. He had arranged with the defendant to meet the new purchaser a week before the closing of the sale when he was told that the meeting was off. He contacted the plaintiff who told him that he was not planning on signing the agreement with Shell.
Under cross-examination he agreed that the solus agreement predated the Competition Act but said that they had successfully sued under such agreements and, in the previous twelve months had released unprofitable dealers. He was not familiar with the sales agreement. He agreed that Shell had no interest in the land and that the 1999 agreement did not bind a purchaser.
If they had proof that the defendant had taken Emo oil they would have sued.
10.5 The defendant, Mr. Patrick O’Loughlin, gave evidence of his marriage and of the development of his business. He was a mechanic by trade and in 1969 had purchased the site to which the first two folios referred. In 1998 he purchased the third folio and built a workshop, the house, new pumps and canopy and a shop in 1992. There was redevelopment in 1998 which took over a year to complete.
He had two sales agreements with Shell before 1999.
He was planning to retire and to move back to his parents’ house which he had renovated. He had leased the business when his mother was sick and he had stayed with her.
He gave evidence of the sales agreement and the loan agreement for equipment. He wanted to sell the entire together with the Shell agreement which was referred to in the auctioneer’s brochure.
He had known the plaintiff and his family who came from the same village where they had a supermarket and hardware store and also an Esso filling station. He assumed they had an Esso agreement.
When he realised that the plaintiff was serious he gave him the accounts and the letter of 17th April, 1998.
While the plaintiff was a customer of his coming in and out he identified four occasions when they had met with regard to the sale. On the third they had gone to the garage workshop, Mr. Casey, the auctioneer, had left and they discussed the carriage equipment and the Shell agreement. His evidence was that the plaintiff had said he would be happier without it but would go along with it. He said that if the plaintiff had not gone with Shell that would have finished the matter.
Mr. Dwyer S.C. objected that this was not put to Mr. McMahon, the plaintiff. What was put to Mr. McMahon in relation to the agreement appeared to have been a conversation with Mr. Casey, the defendant’s auctioneer and not with the defendant
10.6 The defendant’s wife, Mrs. Eileen O’Loughlin told the court that her signature was made after 19th April, 2002, and not before. In cross-examination she referred to being at the former solicitor’s office only once at the end of April when she signed the memorandum of agreement. She remembered her husband, the defendant, asking if he had to sign and being told, “no”.
11. Submissions of Counsel on behalf of the plaintiff
11.1 Mr. Dwyer, S.C. referred to the contract of the 19th April, 2002, and of the obligation of the vendor to disclose. The agreements of September, 1999, were not brought to the attention of the plaintiff. The previous letter of the 19th April, 2002, did not run with the land. The defendant did not take proper steps to reply to correspondence and to requisitions in relation thereto. It was not until the 21st June 2002 that copies of the September, 1999, agreement were furnished. The defence at paragraph 5.1 was wrong.
Section 3 of the Conveyancing Act, 1882 put the purchaser on enquiry and was followed by the plaintiff’s letter of 26th February, 2002, and the 26th March, 2002, which replied that there were no ongoing contractual provisions. Moreover, special condition 4 was unambiguous. The reply to requisitions were also unambiguous.
The plaintiff knew that there were agreements but did not know “how deep they were”. His own supply contract with Emo could have been determined by agreement. His brother and father had operated petrol stations. He insisted on seeing agreements which he was on notice of and gave these to his solicitor who advised that the agreements did not run with the land.
He had received a contract which was not suitable for business and had so advised by way of letter of 25th February, 2002. On the following day, 26th February, 2002 he had raised pre-contract enquiries. Mr. Fitzgerald had given evidence of the need for specific enquiry. It was submitted that his was a reasonable query. The reply was that there were no ongoing contractual arrangements. No evidence was given by the then solicitor for the defendant. In any event, the plaintiff/purchaser was not given the 1999 agreements until June 2002 two months after the contract was signed.
11.2 Consel referred to Massey v. Midland Bank [1995] 1 All E.R. 929; Banco Exterior International v. Mann [1995] 1 All E.R. 936; Bank of Baroda v. Rayarel [1995] 2 F.L.R. 376.
The obligation of the vendor/defendant is to convey under the contract. The contract broke down on the agreement with Shell. The agreement furnished did not impose any obligation on the purchaser. The 1999 agreement was not furnished until after the contract.
11.3 In relation to the consent for the Family Home Protection Act, Mr. Dwyer, said that he was not in a position to contradict the evidence of Mrs. O’Loughlin, the defendant’s wife.
He referred to s. 3 of the Family Home Protection Act. There was no notice that s. 1 of the Family Home Protection Act was not complied with.
If the court were to hold that s. 3 did not apply then he was entitled to sever the legal contract and he referred to AIB .v. O’Neill [1995] 2 I.R. 473 which followed on Bank of Ireland .v. Smyth [1995] 2 IR 459 and Roberts v. O’Neill [1983] I.R. 47.
In Roberts .v. O’Neill, where specific performance granted could not be performed as the wife did not consent, the court awarded damages.
In relation to a possible mistake, he submitted that the defendant had not sought rectification or rescission and referred to Irish Life .v. Dublin Land Securities [1989] I.R. 332 case where the High Court had refused rectification and relied strictly on the terms of the contract. While the Supreme Court had invited the defendants to amend their pleadings to allow for rectification, no application was, in fact, made.
Mr. Dwyer, S.C. submitted that the defendant’s evidence was that the plaintiff had never been told that he would have to sign the Shell agreement. Therefore, Condition 1 of Rooney McFarland .v. Carlin [1981] N.I. 138do not apply. There was no ambiguity in the contract signed.
It is clearly a case of unilateral mistake. The plaintiff sought specific performance of the whole contract or of the petrol filling station or damages if the court decided that s. 3 of Lord Cairn’s Act (the Chancery Amendment Act, 1858) applied.
12. Submissions on behalf of the defendant
12.1 Mr. Brady S.C. submitted that specific performance is a discretionary remedy. The plaintiff had constructive notice of the solus agreement. There was clearly lack of consensus ad idem. Even though the plaintiff/purchaser was not furnished with the actual contract between Shell and the defendant/vendor before the contract was signed on the 19th April, 2002, he had been furnished with the brochure and a copy of the letter of the 17th April, 1998, between Shell and the defendant. In those circumstances, the purchaser and the purchaser’s solicitors, were bound to have raised an express enquiry – a clear enquiry and they did not do so.
He referred to Delaney: “Equity and the Law of Trusts in Ireland”, 3rd ed. at 45:
“A person will be deemed to have constructive notice when he fails to make the inquiries and inspections which he ought reasonably to have made, judged by reference to standard conveyancing procedures.”
That standard was clearly stated by Mr. Fitzgerald.
It is stated in Snell’s Equity (30th Ed., 2000) at pages 53 to 54 that a purchaser would be treated as having constructive notice “of all that a reasonable prudent purchaser, acting on skilled advice, would have discovered”. The question of constructive notice was considered by Henchy J. in the Supreme Court in the context of the application of the Family Home Protection Act, 1976 in Somers .v. W. [1979] I.R. 94 at 108.
The letter of the plaintiff’s solicitor of the 17th April, 1998 advised that the purchaser was not bound “as things stood”. All the inditia of Shell in the filling station were clear. The enquiry in any event, was almost obtuse.
He referred to the Conveyancing Act, 1882 and to Northern Bank v. Henry [1981] 1 I.R.
12.2 In any event Condition no. 4 should be construed on an eiusdem generis basis relating only to employment obligations.
12.3 Counsel also referred to clear evidence of no prior written consent of Mrs. O’Loughlin, the defendant’s wife and referred to the relevant case law distinguishing between vendor and purchaser suits and mortgage suits.
13. Decision of the court:
13.1 On this basis of the uncontested facts of the case and the law in relation to constructive notice under s. 3 of the Conveyancing Act, 1882 and prior consent under s. 3 of the Family Home Protection Act, 1976 the court acknowledges the difficulties posed by this case.
What is primarily relevant is the contract itself rather than the negotiations leading up to its execution. Oral evidence may be allowed where written evidence does not exist (see Wylie: Irish Conveyancing Law, 2nd ed., 6.03; 6.33).
The evidence in relation to the conversation between the vendor and the purchaser regarding the Shell agreements is contested. The court must balance the defendant/vendor’s version of this event together with the auctioneer’s evidence with
the provisions of the memorandum of agreement containing the special condition and the requisition and reply thereto.
Mr. Brady S.C., on behalf of the defendant/vendor relied on Delaney and Snell with regard to constructive knowledge. Both references relate to enquiries and inspections which ought reasonably to have been made and of notice that a reasonable purchaser, acting on skilled advice would have discovered. This, of course, begs the question of what enquiries ought reasonably to have been made. The plaintiff/purchaser’s former solicitor did make enquiries from the vendor’s solicitor. The answer to the enquiries made no reference whatsoever to the existence of the agreements with Shell.
The former solicitor, having considered both the special condition proposed by the purchaser and the first requisition, should have been alerted to the need to make specific reference to the Shell agreements, if such agreements were to affect the purchaser. No thought seems to have been given to the matter. It should have been clear that certain fixtures and fittings were not the property of the defendant/vendor
The former solicitor had previously acted for the vendor in the letting of the Shell filling station to a tenant during the period when the defendant was ill and should have been aware of the need to protect his client from proceedings resulting from a breach of the agreements with Shell.
The purchaser’s solicitor, on the other hand, did raise this matter in the first requisition and, of course, as already referred to, had negotiated special Condition no. 4 (see 13.3 below), raised an unambiguous requisition in relation thereto and had referred to the matter in correspondence.
The court finds that the plaintiff had constructive notice as defined by s. 3 of the Conveyancing Act and did take steps (special condition 4) and make inquiries (requisition 1) in relation thereto.
13.2 Wiley: Irish Conveyancing Law, (2nd ed. [1996]) has a number of relevant passages in relation to conveyancing practice.
As in the case of the vendor’s solicitor, the purchaser’s solicitor must take care he receives full detailed instructions from his client at the earliest opportunity. He refers to a detailed instruction form and a progress sheet and states that:
3.40 “It is also essential for the purchaser’s solicitor to check with the purchaser the details of the property being bought. These then may be checked with the particulars provided by the vendor’s solicitor in the draft contract. A further check may be made by writing to the vendor’s estate agent asking him to furnish a copy of the sale particulars prepared by the latter. Particular care should be taken to discover if extra items are included in the sale of the property, e.g. fixtures and fittings.”
In relation to fixtures and fittings Wiley states:
9.15 “We have mentioned in earlier chapters the importance of determining
precisely what fixtures, fittings or chattels are to be included in the sale. One way of doing this is to include in the particulars a list of the items in question, or to incorporate by reference to an infantory attached to the contract. If this is done, it has the advantage that it will attract the warranty by the vendor contained in the Law Society’s general conditions of sale (1995 edition) that, at the date of actual completion, they ‘shall not be subject to any lease, rental hire, hire purchase or credit sale agreement or chattel mortgage’.”
In relation to commercial and industrial property Wiley at para. 5.14 refers to pre-contract enquiries or requisitions being usually made and to a due diligence exercise being carried out by the solicitor acting for the purchaser carrying out a full ‘health check’ including a thorough investigation of the title, a full survey of the property, a check on compliance with planning, environmental and related legislation and, of course, detailed examination of the business financial state.
13.3 What is of crucial significance is special Condition 4 which refers to four elements.
The first of these is the goodwill of the business carried on and the property in sale, was to be included in the price. This would imply that the purchasers should pursue some form of due diligence search in relation to the business. Significantly, both the accounts and the letter of agreement with Shell of the 17th April, 1998, but not the agreements themselves, were furnished at the same time.
The second element contained in the condition related to an undertaking to pay all debts and liabilities and to perform all obligations regarding the conduct of the business prior to completion. While it was not argued by the plaintiff, the terms of that general undertaking may have had some relevance to the personal agreement between the vendor and Shell.
The third element related to the warranty, certification and indemnity in relation to employees. No issue arose in relation to this matter.
The fourth, and controversial, element of the condition that the purchaser ‘shall not assume responsibility for any contracts, agreements or obligations of a continuing or ongoing nature’ referred to the future. While, here again, it might have been helpful to refer specifically to the Shell agreements, it seems that a prudent solicitor for a vendor should have been alerted that this condition excluded agreements such as the Shell agreements.
Indeed, the very introduction of a special condition by the purchaser should always alert the vendor’s solicitor to a likely restriction on the vendor’s interests.
The vendor himself understood that the benefit and the burden of the Shell agreement would pass. However, the agreement was not by way of a right or easement passing with the land but rather a personal agreement in relation to the financing of the development of the premises and a tied agreement in relation to supplies. In addition certain items were designated as “property of Shell”.
The court is not persuaded by the eiusdem generis argument in relation to this special condition. The general is not that of obligations in relation to employees. It may relate to obligations in relation to debts and liabilities regarding the conduct of the business prior to completion, or in relation to the goodwill of the business and the property in sale being included in the price.
The court finds that the fourth element in Condition 4 is a separate condition and cannot be restricted by the eiusdem generis rule.
Having introduced the fourth element of Condition 4 and having raised the matter in requisitions it seems to me that the purchaser was entitled to proceed on the basis that he would not be bound by any obligation and, in particular by the agreement with Shell. This is so notwithstanding the somewhat unsatisfactory lack of clarification of fixtures and fittings owned by Shell, and the absence of inquiries with regard to the passing of the property owned by Shell specified in the agreement of 1998 of which the plaintiff had notice.
Were it not for the absence of the vendor’s wife’s prior consent in writing the court is of the view that the purchaser would have been entitled to rely on the contract with the special condition, reinforced by the reply to the first requisition.
13.4 There is no doubt that the conveyancing implications of the Family Home Protection Act, 1976 and the Family Law Act of 1995 are of critical importance. This legislation has caused conveyancers many difficulties. The Law Society has published guidelines for practitioners.
The essential reason why conveyancers must be aware of that legislation is that it declares any disposition of an interest in the family home by the owning spouse as being void unless the disposition had the prior consent in writing of the non-owning spouse. The authorities regard void as being of no effect and not just voidable.
The burden of proof of proving validity is on the person alleging it (s. 3(4) of the Act and Bank of Ireland v. Smith [1996] 1 I.R. 241).
The court should also consider that the Act should not be construed as if it were a conveyancing statute (see Bank of Ireland v. Purcell [1989] I.R. 327 at 333). Some ten years earlier Henchy J. in Nestor v. Murphy [1979] I.R. 326 at 329, in the context of both spouses entering into a contract held that it would be outside the spirit and purpose of the Act if either the husband or the wife could have the contract declared void because the other did not give a prior consent in writing.
Farrell: Irish Law of Specific Performance, 1994 edition, comments on Nestor v. Murphy that:
“The defendants arguments would have the effect that contracts could be unfairly or dishonestly repudiated by parties who entered into them freely, willingly and with full knowledge.”
In the present case, of course, both spouses had not entered into the contract. Mrs. O’Loughlin was not the registered owner.
The defendant in his evidence said that he had signed the contract for sale on 19th April, 2002. His wife’s signature was not on it. He had never seen her signature on it. His then solicitor said that his wife would have to sign it which she did some ten days later. He and his wife’s evidence was that she signed and that he had asked if he had to sign and was told he didn’t have to. I accept the evidence on behalf of both Mr. & Mrs. O’Loughlin in this regard.
It is difficult to understand why the contract was not re-executed after the wife’s written consent given that the correspondence clearly referred to such prior consent being available.
13.5 The plaintiff had submitted that, while accepting that the Family Home Protection Act was not complied with, that the court should sever the contract of the family home from that of the business.
Mr. Dwyer, S.C. on behalf of the plaintiff, relied on Allied Irish Banks v. O’Neill [1995] 2 I.R. 473 at 481 where Laffoy J. was of the view that in defining the expressions ‘family home’ and ‘dwelling’ in the Family Home Protection Act of 1976, the legislature itself theoretically severed such a larger holding and theoretically created new holdings calling the family home, being the dwelling together with any garden or portion of ground attached to and usually occupied with it or acquired for its amenity or convenience, on the one hand, and the balance of the holding on the other hand. Counsel argued that the purpose of the legislation could only have been intended to render void the purported conveyance or disposition insofar as it affected the family home.
Mr. Brady S.C., on behalf of the plaintiff, argued that in Allied Irish Banks v. O’Neill and similar cases related to transactions by way of security rather than of contract for sale Laffoy J. had stated:
“The application of the principles may vary depending on the nature of the transaction, whether it is an outright transaction by way of security, or whether it is for value or voluntary, and whether it remains in contract stage or the contract has been completed.”
The court has heard extensive evidence in relation to the practical difficulties in severing the family home from the petrol station. There was conflict in relation to the outcome of planning permission for separate entrances, foul waste and supply of services.
The court finds, on the basis of the expert evidence, that planning permission would not be readily forthcoming. Neither party should be forced into possible further litigation in relation thereto.
The court accepts the practical difficulties of severing the subject property compared to that of severing a family home, together with its amenities, from farmland.
The court accepts that there are practical difficulties with regard to the severing of the dwelling from the petrol station and further difficulties with planning permission. The dwelling house is more ancillary to the petrol station than independent from it. Moreover, the court is persuaded that the authorities favouring severance relate to enforcement of security of residential farms rather than of contracts for sale of residential business. In the circumstances it does not seem that it would be appropriate for the court to sever the dwelling from the petrol station.
Moreover, the court accepts the distinction referred to by Laffoy J. in Allied Irish Bank v. O’Neill [1995] 2 I.R. 473 that the application of principles may depend on the nature of the transaction. The case law favouring severance of the dwelling from other lands seem to be mortgage suits rather than vendor and purchaser suits.
It follows that the court must consider the entire contract void by reason of the non-compliance with the prior written consent of the vendor’s spouse.
13.6 The plaintiff, while accepting that in the event of mutual mistake a contact will not be enforceable and, subject to the issue of restitution, the contract will be rescinded, argued that the situation in respect of unilateral mistake was more complex and allowed him a remedy.
Unilateral mistake occurs where:
– the other party to the contract is aware of the mistake and is aware that it is due to error;
that such other party did not draw attention to the mistake;
mistake is calculated to benefit the other party (see Delaney 467 – 469).
The plaintiff argued that there was a mistake in that the defendant understood that the plaintiff knew and had accepted the Shell agreement. Though the plaintiff was aware, and was put on notice of the defendant’s view, his solicitor made inquiries and was satisfied that the Shell agreement did not affect the sale. Thus he could not be said to have relied on same, or indeed sought to benefit from it. Such a mistake was not one which would entitle the defendant to rescind or disentitle the plaintiff to seek specific performance: Irish Life Assurance Company Limited v. Dublin Land Securities [1986] I.R. 332 applies.
The plaintiff’s solicitor in addition sought to restrict any continuous and ongoing agreements and was entitled to rely on the reply to the first requisition.
13.7 In summary this is a case where the vendor had intended that the purchaser would take over the Shell agreement and where the purchaser did not want nor had any obligation to do so. Though put on inquiry the plaintiff/purchaser’s solicitor negotiated a special condition protecting his client and raised an appropriate general requisition the reply to which indicated that no agreement affected the contract.
The parties are entitled to rely on their solicitors with regard to the technical and complex drafting of contracts and raising and replying to requisitions. Their respective clients are bound by their solicitors.
The vendor’s then solicitor, seemingly contrary to instructions, failed to make any stipulation with regard to the Shell agreement, ignored the effect of the latter portion of special Condition 4, inaccurately replied to the relevant requisition and failed to obtain the prior consent in writing of the vendor’s spouse.
The court has already indicated (13.3 above) that, were it not for the absence of the vendor’s wife’s prior consent in writing, the purchaser would have been entitled to rely on the contract.
It is, of course, somewhat unsatisfactory to arrive at such an outcome.
13.8 The plaintiff’s further claim is for damages in lieu of specific performance. The Court has a discretionary power to award damages either in addition to or in substitution for specific performance. Section 2 of the Chancery Amendment Act, 1858 gives the Chancery Court power where it would have jurisdiction to award specific performance. Under the Judicature Act this is extended to all courts. It does not apply where the contract in question is of such a type that it is not specifically enforceable. The jurisdiction may be involved in cases where damages could not be awarded at common law, e.g. where the contract lacks some legal formality but is nevertheless enforceable in equity. (See Wylie: Irish Conveyancing Law, 2nd ed., 13.54 and footnotes 355, 356).
Mr. Dwyer has urged the court to consider awarding damages in lieu of specific performance. He referred to Roberts v. O’Neill [1983] I.R. 47 where the Supreme Court in granting specific performance held that the relevant point in time for ascertaining the existence of alleged hardship was the date of the contract for sale (17th January, 1978 in that case) together with interest.
However, in Wroth v. Taylor [1974] Ch. 30, Megarry J. decided to refuse specific performance but did grant damages in lieu, measured at the date of judgment.
The court proposes to hear counsel on whether damages should be awarded in the circumstances of the present case and, secondly, whether, and to what extent, the court, if it decides to award damages, should follow the authorities cited above.
Guckian v. Brennan
[1981] IR 478
Gannon J. 478
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 that Act 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.
Tempany v. Hynes
1976 IR 100
O’Higgins C.J.
I have read the judgment of Mr. Justice Kenny and I agree with it.
Henchy J.
The issue in this appeal is whether the defendant, as purchaser of the land, was entitled to repudiate the contract in the circumstances in which he purported to do so. If he was so entitledand the trial judge so heldhe has a good answer to the instant claim by the plaintiff, as vendor, for specific performance of the contract; in that event the dismiss of that claim in the High Court should stand, otherwise this appeal by the plaintiff should succeed.
The relevant circumstances are briefly these. The defendant entered into a written contract to purchase from the plaintiff a garage in Longford for £30,500. The property is registered property which is governed by the Registration of Title Act, 1964. The registered owner was Tractasales (Longford) Ltd. and the plaintiff contracted to sell as receiver of that company. In the present proceedings it has not been questioned that the plaintiff, as receiver, was entitled to stand in the shoes of the registered owner for the purpose of making title.
The defendant’s solicitor proceeded to investigate the title. Because of difficulties in the title (such as the discovery that the property was registered on three folios and not on two), the date for completion specified in the contract passed without the parties being ready to complete. Eventually, all the legal difficulties that had arisen were smoothed out, except for one it transpired that subsequent to the date of the contract two .
judgment mortgages had been entered on the folios as burdens affecting the interest of the registered owner. The plaintiff was advised that, in order to give a good title, it was not necessary for him to discharge those two post-contract judgment mortgages by paying the amounts due under them; but the defendant’s solicitor was reluctant to complete the sale on that basis.
After lengthy negotiations, a compromise was reached by the solicitors. It was agreed by them that the sale would be closed subject to the retention on joint deposit receipt of £4,500 out of the purchase money for a period of six weeks and that an application would be made during that period to the registrar of the Land Registry to register the defendant freed from the post-contract judgment mortgages. It was agreed that if that application were not successful within the six weeks, the £4,500 (which would have been adequate to discharge the amounts due to the judgment mortgagees) would be released to the defendant so that he could discharge those burdens by paying off the judgment mortgagees. In agreeing to that compromise the plaintiff was being eminently reasonable. In effect, he was saying to the defendant:”In order to give you a good title I am not bound to discharge the amounts due on foot of the post-contract judgment mortgages but, to allay any fears you may have on that score, I shall put to one side out of the purchase money £4,500 for six weeks so that my opinion may be put to the test in the Land Registry; if I am not proved right in that time, I shall surrender the £4,500 to you so that you may discharge the amounts due on the judgment mortgages.” It is no wonder that the defendant’s solicitor agreed to completion on that basis.
However, when the defendant and his solicitor arrived for the appointment with the plaintiff’s solicitor to close the sale, the defendant flatly repudiated the basis on which his solicitor had agreed to close. The defendant was prepared to close only if the £4,500 was delivered into his custody forthwith. The plaintiff, who was selling as receiver for a debenture holder, could not agree to that proposal. Although his solicitor strongly advised him to complete the sale on the agreed basis, the defendant adamantly refused to do so. With that impasse the sale broke down. Hence the present proceedings for specific performance.
One thing is clear about the defendant’s conduct between contracting to buy the property in February, 1974, and repudiating the contract in March, 1975: he came to regret the contract he had signed and decided to get out of it one way or another. He lived in Dublin, and he had bought this property with a view to developing it as a roadhouse and garage. But, as he frankly admitted in evidence, for family and other reasons he found the move to Longford undesirable; so from about September, 1974, he was resolved to repudiate the contract. The ground on which he eventually repudiated it in March, 1975, was only the particular pretext he fastened on for that purpose. However, his motives are irrelevant if the ground of repudiation was sound in law.
When a binding contract for the sale of land has been made, whether the purchase money has been paid or not, the law (at least in cases where the parties proceed to the stage of conveyance) treats the beneficial ownership as having passed to the purchaser from the time the contract was made: Gordon Hill Trust Ltd. v. Segall. 25 From then until the time of completion, regardless of whether the purchase money has been paid or not, the vendor, in whom the legal estate is still vested, is treated for certain purposes (such as the preservation of the property from damage by trespassers) as a trustee for the purchaser. But, coupled with this trusteeship, there is vested in the vendor a substantial interest in the property pending completion. Save where the contract provides otherwise, he is entitled to remain in possession until the purchase money is paid and, as such possessor, he has a common-law lien on the property for the purchase money; even if he parts with possession of the property, he has an equitable lien on it for the unpaid purchase money; and he is entitled to take and keep for his own use the rents and profits up to the date fixed for completion. It is clear, therefore, that between contract and completion the vendor has a beneficial interest in the property which is capable of being charged by a judgment mortgage: see Megarry and Wade on Real Property (4th ed., p. 575), Williams on Vendor and Purchaser (4th ed., pp. 545-7), Lewin on Trusts (16th ed., pp. 153-4) and Halsbury’s Laws of England (3rd ed., paras. 484-6).
Therefore, when a judgment mortgage is registered as a burden affecting the interest of a registered owner after an enforceable contract has been made to sell the land, what becomes affected thereby is the transient beneficial interest of the registered owner. Section 71, sub-s. 4, of the Registration of Title Act, 1964, stipulates26 that on registration of the judgment-mortgage affidavit, the charge thereby created on the interest of the judgment debtor shall be subject to the registered burdens, the burdens taking effect under s. 72 without registration, and “all unregistered rights subject to which the judgment debtor held that interest at the time of registration of the affidavit.” The latter category applies here, for a “right”is defined in s. 3, sub-s. 1, of the Act of 1964 as including “estate, interest, equity and power”thus covering the estate or interest of the purchaser. Since the judgment creditor (by registering his judgment as a judgment mortgage) could not acquire any greater estate or interest in the land than the registered owner had at the time of such registration, all that could pass to the judgment creditor here was the interest in the land which the registered owner had after the making of the contract to sell, namely, an interest which would pass out of existence once the sale had been completed, the purchase money paid and the purchaser registered as full owner. It follows, therefore, that if the defendant completes the purchase and becomes registered as full owner, the post-contract judgment mortgages will no longer affect the lands and he will be entitled to have them cancelled from the folios.
This conclusion is in line with that of Kennedy C.J. in In re Murphy and McCormack 27 and that of the majority of the Supreme Court in In re Strong.28 Those decisions were given under the Local Registration of Title (Ireland) Act, 1891, which is now repealed by the Act of 1964. In each of those cases the judgment mortgage had been registered after the execution of the deed of transfer and after payment of the full purchase money whereas, in this case, the judgment mortgage was registered before the deed of transfer had been executed or the full purchase money paid. My concurrence in the conclusion reached in those judgmentsthat the registered judgment mortgage could not affect the estate or interest of the registered transfereeis in no way affected by the latter difference, for the reasoning in those judgments leading to that conclusion applies with no less force to a case such as the present where the judgment mortgage was registered after the contract of sale but before the execution of the deed of transfer or the payment of the balance of the purchase money.
If a registered judgment mortgage could be classified as “a charge created on the land for valuable consideration” within the terms29 of s. 68, sub-s. 3, of the Act of 1964, it would be unaffected by the unregistered right of the purchaser for value; but a judgment mortgage is a process of execution and is not a charge created for valuable consideration: perKennedy C.J. in In re Murphy and McCormack 27 and per O’Byrne J. in In re Strong .28
The conclusion reached in those judgmentsthat the unregistered right of a purchaser for value from the registered owner is not subject to a judgment mortgage registered against the registered owner subsequent to the contract to sellwould now appear to have been given statutory recognition because s. 71, sub-s. 4(c), of the Act of 1964 provides that the registration of the judgment mortgage affidavit shall charge the interest of the judgment debtor subject to “all unregistered rights subject to which the judgment debtor held that interest at the time of registration of the affidavit.” In other words, in a case such as this, the unregistered “right” of the defendant as purchaser is superior to the interest of the registered owner which became charged by the post-contract judgment mortgages.
It follows, in my opinion, that (apart from the effect on pre-contract mortgages of the appointment of the plaintiff as receiver on foot of mortgage debentures, an effect which was not dealt with in the High Court and was only touched on in this appeal) the plaintiff was not bound, in order to make good title, to discharge the moneys due on foot of the post-contract judgment mortgages. Those mortgages took effect subject to the defendant’s equitable estate or interest in the land, they could affect only such beneficial estate or interest as the registered owner then had and that estate or interest could not survive the completion of the sale and the registration of the defendant as full owner. The defendant could then have the post-contract judgment mortgages cancelled from the folios.
As the defendant’s purported repudiation of the contract was ineffective to rescind it, I would allow the appeal and decree specific performance.
Kenny J.
Tractasales (Longford) Ltd. (the company) carried on a garage business and were the registered owners under the Registration of Title Act of the lands in folios 9792, 12146 and 12386 in the county of Longford. A first mortgage debenture was made on the 11th September, 1969, between the company and United Dominions Trust (Ireland) Ltd. (the debenture holders), and it recited that the company had requested the debenture holders to lend them £25,000 and that the debentures holders had agreed to make this advance with interest provided that the repayment was secured by a debenture.
By that instrument the company charged its property in the following terms:”the company hereby charges its undertakings and all its property assets and goodwill whatsoever and wheresoever both real and personal present and future including therein the uncalled capital of the company for the time being with the repayment to the debenture holder of all the principal and interest and other monies payable under this debenture so that the charge hereby created shall be a first charge on the property charged herein and so that it shall be a floating security only not hindering any sale or other dealings by the company in the ordinary course of its business with its property and assets comprised in the charge but that the company shall not be at liberty to create any mortgage or charge on any of its property or assets ranking in priority to or pari passu with this debenture without the previous consent in writing of the debenture holder provided always that the said charge above referred to so far as it relates to the property comprised in the schedule hereto shall be a specific charge thereon and not a floating charge as on the borrower’s other property.” The property described in the schedule was folio 9792. The completion of the debenture had been carried out rapidly because the company were in severe financial difficulties and the solicitor who prepared it had not been told that the company were registered as owners of the lands in folios 12146 and 12386.
The sum advanced under the debenture of the 11th September, 1969, was not sufficient to solve the company’s difficulties and they sought further help from the debenture holders who agreed to give it. By a second debenture made on the 1st June, 1971, and registered on folio 9792 only, the company charged its assets and undertaking with all further sums advanced so that the charge was to be a floating charge on all its assets but a specific charge on the property in folio 9792.
On the 26th July, 1971, the debenture holders appointed the plaintiff to be receiver of all the property charged by the two debentures. The plaintiff decided to sell all the property in one lot but he and his solicitors thought that the company were registered as owners of the lands in folios 9792 and 12146 and were not aware that part of the property was in folio 12386. Between the date of the appointment of the plaintiff as receiver and the public auction, two judgment mortgages were registered against the lands included in folios 9792 and one of them had also been registered in folios 12146 and 12386. The conditions of sale described the property as being that comprised in folios 9792 and 12146.
The special conditions provided that the plaintiff was selling the property as receiver in exercise of his power of sale conferred by the mortgage debentures of the 11th September, 1969, and the 1st June, 1971; the conditions also provided:”The vendor shall discharge all charges registered against the said folio on or before closing and shall pay all Land Registry fees for the cancellation of such charges.”
The closing date was 28th May, 1974, and, in the event of the sale not being closed on that date, interest at the rate of 18% was to be paid by the purchaser on the balance of the purchase money until completion. The defendant attended the auction on the 26th February, 1974, and purchased the property for £30,500; he paid £7,625 which was paid “as a deposit and in part payment of the purchase money” and he signed the contract attached to the conditions of sale.
On the 23rd November, 1971, Peter F. Doggett registered a judgmentmmortgage against the lands in folio 9792 and on the 26th March, 1973, Henry Smith registered a judgment mortgage against the lands comprised in the three folios. These two judgment mortgages were registered after the appointment of the receiver but before the contract for sale had been signed. On the 22nd May, 1974, Longford Arms Motor Works Ltd. registered a judgment mortgage on the three folios and on the 1st July, 1974, Foster Finance Ltd. registered a judgment mortgage on folios 12146 and 12386. The last two mortgages were registered after the contract had been signed.
The defendant had purchased the property because he thought that he could get finance to develop it. He was unable to do this and became determined that he would get out of the sale if he could. He raised questions about planning permission and, when these had been dealt with, he made searches in the Land Registry and on the 23rd January, 1975, he found out that part of the lands surrounding the garage was registered on folio 12386. The plaintiff had forgotten that the land certificate in relation to this had been handed over to him when he was appointed receiver and he had left it in his office in Longford. It was not deposited with him as security.
The defendant’s solicitor then required the discharge of the judgment mortgages which had been registered after the date of the contract, and negotiations in connection with this took place. The plaintiff’s solicitors had obtained releases of the two judgment mortgages registered before the contract and it was ultimately agreed between the solicitors that the sale should be closed on the 18th March, 1975, on an undertaking by the plaintiff’s solicitors that they would put £4,500 on deposit in the joint names of the solicitors which was to be held for six weeks. If, within that time, the plaintiff’s solicitors had not succeeded in having the two post-contract judgment mortgages removed from the folios, the sum was to be paid to the defendant’s solicitor. At this time the plaintiff’s solicitors believed that the two judgment mortgages registered before the contract had to be discharged out of the purchase money but that those registered after the contract would be removed by the registrar on registration of the transfer to the defendant. When the parties met at the Four Courts on the 18th March, the defendant refused to close the sale on these terms and insisted that the £4,500 should be paid to him immediately; this was a demand which the plaintiff’s solicitors could not accept.
The plaintiff decided to go on with his action for specific performance of the contractan action which he had begun on the 3rd December, 1974. The action was heard by the President of the High Court and he dismissed it because he thought that the title shown by the plaintiff might involve the defendant in litigation with the post-contract judgment mortgagees. The grounds for his decision were that folio 12386 was not included in the written contract for sale, that the debenture holders were not mortgagees of it by equitable deposit and had not registered either of their debentures against it and that the judgment mortgagees might succeed in a claim that their judgment mortgages were effective against it in priority to the claim of the debenture holders.
The first argument for the plaintiff was that when the contract for sale was signed on the 26th February, 1974, the company became a trustee for the defendant who became the owner of the entire beneficial interest in the lands and that the company did not own any estate or interest on which the two judgment mortgages of the 22nd May and the 1st July, 1974, could operate; it was submitted that those judgment mortgages would be removed from the folio on the registration of the transfer to the defendant.
A vendor who signs a contract with a purchaser for the sale of land becomes a trustee in the sense that he is bound to take reasonable care of the property until the sale is completed, but he becomes a trustee of the beneficial interest to the extent only to which the purchase price is paid. He is not a trustee of the beneficial interest merely because he signs a contract. This is made clear by Lord Cranworth in Rose v. Watson 30 where he said at pp. 683-4 of the report:”There can be no doubt, I apprehend, that when a purchaser has paid his purchase-money, though he has got no conveyance, the vendor becomes a trustee for him of the legal estate, and he is, in equity, considered as the owner of the estate. When, instead of paying the whole of his purchase-money, he pays a part of it, it would seem to follow, as a necessary corollary, that, to the extent to which he has paid his purchase-money, to that extent the vendor is a trustee for him; in other words, that he acquires a lien, exactly in the same way as if upon the payment of part of the purchase-money the vendor had executed a mortgage to him of the estate to that extent.” Until the whole of the purchase money is paid, the vendor has in my opinion a beneficial interest in the land which may be charged by a judgment mortgage.
Some judges and writers of standard text-books (Cheshire, and Megarry and Wade) who have dealt with this matter have stated that from the date of the signature of the contract (whether the whole or any part of the purchase money has been paid or not) the purchaser is the owner of the entire beneficial interest in the land. Thus in Shaw v. Foster 31 Lord Cairns said at p. 338 of the report:”. . . there cannot be the slightest doubt of the relation subsisting in the eye of a Court of Equity between the vendor and the purchaser. The vendor was a trustee of the property for the purchaser; the purchaser was the real beneficial owner in the eye of a Court of Equity of the property, subject only to this observation, that the vendor, whom I have called the trustee, was not a mere dormant trustee, he was a trustee having a personal and substantial interest in the property, a right to protect that interest, and an active right to assert that interest if anything should be done in derogation of it.” In Lysaght v. Edwards 32 Jessel M.R. said at p. 506 of the report:”the moment you have a valid contract for sale . . . and the beneficial ownership passes to the purchaser . . .” Both these statements are inconsistent with the clear principle stated by Lord Cranworth and are, I believe, incorrect. When a contract for sale has been signed, the vendor becomes a trustee of the beneficial interest to the extent that the purchase money has been paid.
This issue arose in Kissock and Currie’s Contract33 which was a decision of the Court of Appeal in Ireland, in which a judgment mortgage had been registered against a vendor between the date of the contract for sale by him and its completion. The sale was closed without any payment being made to the judgment mortgagee. A subsequent purchaser objected to the title because he maintained that the judgment mortgage was valid and this claim was upheld. Sir Ignatius O’Brien L.C. said at p. 388 of the report:”I think that, from the point of view of the judgment-creditor . . . his debtor had an interest in land after the date of contract for sale and until completion, capable of being affected by the judgment.” If this case was correctly decided, as I think it was, the principle underlying it disposes of the puzzling concept in some of the other cases that such a judgment mortgage is valid when registered but ceases to be effective when the sale is completed because then the vendor’s interest is deemed to have passed to the purchaser from the date of the contract. I prefer the principle stated by Lord Cranworth.
Counsel for the plaintiff relied on a passage in the judgment of O’Byrne J. in In re Strong 34 at pp. 401-402 of the report. It reads:”Under the general rules of law and equity, apart from the provisions of the Local Registration of Title (Ir.) Act, 1891, the position, as between a purchaser of lands, who has paid his purchase money but has not obtained a conveyance, and a judgment debtor [sic] who has registered his judgment as a mortgage affecting such lands, seems to be quite clear. Where a contract is entered into for the sale and purchase of lands the vendor becomes a trustee for the purchaser and the latter becomes owner in equity of the lands subject to certain rights of the vendor to secure payment of the balance of the purchase money and to regain possession of the lands should the contract not be completed.” The first sentence is dealing with the position of a purchaser who has paid the whole of the purchase money and has not got a conveyance when a judgment mortgage is registered against the vendor; the purchaser then takes the lands free of the judgment mortgage. The second sentence deals with the position after a contract for sale has been signed and no part, or part only, of the purchase price has been paid. The second sentence is, in my view, incorrect. The structure of the two sentences suggests that the second is explanatory of the first: it is not. It is re-stating the view of Lord Cairns and of Jessel M.R. which I do not accept and which is not consistent with what Lord Cranworth said.
At the date when the two post-contract judgment mortgages were registered on the folios, the deposit only had been paid and they therefore affected whatever beneficial interest the company had in the lands. Therefore, I reject the argument that, because a contract for sale had been signed, the vendor company had no beneficial interest in the lands which could be affected by the post-contract mortgages.
The next argument was based on the provisions35 of s. 71, sub-s. 4, of the Registration of Title Act, 1964; logically it should have been the first because, if correct, it disposes of the four judgment mortgages. This sub-section appears in a section dealing with the registration and effect of judgment mortgages on registered lands: nothing corresponding to sub-s. 4 of s. 71 is to be found in the Act of 1891. The plaintiff’s argument was that, when the receiver was appointed, there was an equitable assignment to the debenture holders of all the property which was subject to the floating charge, and that the result of this was that the claim of the debenture holders in relation to the lands in the three folios ranked before that of the judgment mortgagees.
The two mortgage debentures created a specific charge on the lands in folio 9792 and a floating charge over all the other assets, present and future, of the company; and the effect of the appointment of a receiver under a debenture is that there is an equitable assignment to the debenture holder of all the property which is subject to the floating charge: Robbie and Co. Ltd. v. Witney Warehouse Ltd. 36; Rother Iron Works Ltd. v. Canterbury Precision Engineers Ltd. 37 and Murphy v. The Revenue Commissioners .38The word “right” is defined by s. 3 of the Act of 1964 as including “estate, interest, equity and power.” The equitable assignment effected by the appointment of the receiver was, in my opinion, an unregistered right subject to which the company held the lands on which the debentures were not registered at the time of the registration of the affidavits creating the four judgment mortgages. A judgment mortgage is a process of execution and the judgment mortgagee is not a purchaser for valuable consideration: Eyrev. McDowell. 39 Counsel for the defendant said that the Court should not decide this issue in the absence of the judgment mortgagees; but when the defence is made that the title is too doubtful to be forced on a purchaser it is the duty of the Court to decide this question: Alexander v. Mills 40;In re Nichols and Von Joel’s Contract.41
In my opinion the claim of the debenture holders in relation to the lands in the three folios ranks before the rights of the four judgment mortgagees and the vendor has shown a good title to all of the lands in the three folios. When the transfer from the plaintiff and the company to the defendant, the mortgage debentures and the appointment of the receiver are produced to him, it will be the duty of the registrar of titles to cancel42the entries of the four judgment mortgages which appear on the folios without proof of the payment of any sum in respect of any of them.
Counsel for the defendant argued that specific performance was a discretionary remedy and that the Court should not interfere with the decision of Mr. Justice Finlay. The President refused specific performance only because he thought the title was too doubtful to be forced on a purchaser and, as his view on this matter was incorrect, the exercise of his discretion should in my opinion be set aside.43 It is right to say, however, that the effect of the appointment of the receiver does not seem to have been argued before him because he does not refer to it in his judgment.
The contract provides for the payment of interest at the rate of 18% from the date fixed for completion which was the 28th May, 1974. In March, 1975, the solicitors had agreed that one month’s interest only would be payable but the defendant repudiated the agreement which they had made and the plaintiff is not now bound by it. It would, however, be inequitable that interest should be payable from the date fixed for completion because the existence of the third folio had not been discovered on that date. In my opinion the order that the contract ought to be specifically performed should provide that interest at 18% should be payable from the 23rd January, 1975, when the parties became aware that part of the property of the company was registered on a third folio.
In my opinion, the appeal should be allowed and there should be an order that the contract ought to be specifically performed with the variation which I have suggested. There will be liberty to apply to the High Court.
In the Matter of the Companies Clauses Act, and the
Belfast and Northern Counties Railway Act, 1890
In re Gilmour
High Court of Justice.
Chancery Division.
4 March 1895
[1895] 29 I.L.T.R 53
Porter M.R.
Porter, M.R.—The question here involves a very small sum of money. The Taxing Master disallowed certain items in a bill of costs, and his decision is now appealed from. I take this case as if it had been a conveyance of the whole lands. There is no more expense in registering a large than a small holding. The Vesting Order was made in 1890, and the Act was passed in 1892. It might have been registered up till 1st Jan., 1893, without any expense. The Vesting Order is a perfectly good one, but the Act of Parliament says that registration is compulsory. What, therefore, is the meaning of the word “compulsory”? The Act does not say that the registration shall be an act precedent. By s. 25 (1), “any dealings with the land before the registration shall have effect accordingly.” I can’t tell what those words mean unless they mean that any purchaser without notice might defeat the claims of the Land Commission. Mr. Wylie states that it has been decided by Mr. Justice Monroe, in an unreported case, that first registration is not necessary if the purchase itself is registered. I won’t decide that now. The railway company said to Gilmour that he must register his title under the Act. That is either necessary or unnecessary. According to Mr. Justice Monroe it is unnecessary. I don’t think it lies in their power to say it was necessary. I must, therefore, allow these items, and costs of this motion. I don’t know whether Gilmour could be indicted for breach of statutory conditions or not.
Dunne v Hamilton
[1982] 2 JIC 0901, 1982 WJSC-SC 800
Supreme Court
Judge: C’HIGGINS C.J., Henchy J., GRIFFIN J, HEDERMAN J., I, Mr. Justice Costello
It is in the light of the foregoing that I now turn to consider whether Section 3(1) of the Family Home Protection Act1976operates to render void the Conveyance executed by Major Hamilton. If it does so operate it is necessary to have regard to the effect such an operation would have on the rights of Frank Dunne. Under the Contract for Sale of January 23rd, 1973, he acquired a contractual right to have the sale completed by the the conveyance to him by Major Hamilton alone of the legal estate. Not only was this so but by Order of the High Court made in an action which he commenced before this Act came into operation he was declared entitled to the specific performance of this Contract by the execution of such conveyance. Being at all times a willing purchaser endeavouring to complete the Contract by the payment of the purchase money and the acceptance of a conveyance and, having sued for and having been held entitled to specific performance, there can be no doubt that he was the beneficial owner of the lands contracted to be sold. In my view, the case of Tempany v. Hynes 1976 I.R. 101 which was cited in argument, has no application to a case of this nature. That case deals only with the transient interest of a vendor in property contracted to be sold pending the due completion of the sale by the payment of the purchase money. It has no application to a case such as this where the vendor defaulted and was liable to a decree for specific performance. If then the submission made on behalf of Mrs. Hamilton be correct, the effect of Section 3(1) of the Act is to render the completion of the sale in accordance with the Contract impossible and to deprive Frank Dunne of the benefit of his Contract, of his right to enforce the same specifically and of his previously acquired beneficial interest in the property contracted to be sold. All of this would have been brought about by a subsequent change in the law without any compensation to him for which he may have lost. Counsel for Mrs. Hamilton accept that this would be so and state that in such circumstances the Constract for Sale became frustrated and was rendered impossible of performance without fault or liability on either of the contracting parties. It is now necessary to examine the Act to ascertain whether it was intended to have and has this claimed retrospective effect.
If I were to examine the legislation solely in accordance with the common law principles which I have outlined I would be bound to assume that the Legislature did not intend to affect contracts and transactions already entered into but, on the contrary, intended only to affect such contracts and transactions as were entered into after the Act came into operation. I would continue so to view it unless or until something in its provisions compel me to take a contrary view. Adopting this approach, in the first instance, I must at once declare that I can find nothing in this Act which displaces the presumption of prospectivity. A retrospective intent on the part of the Legislature would indicate a lack of concern for contractual rights acquired before the requirement of the other spouse’s consent became necessary or was known to be necessary. I find no evidence or indication of such a lack of concern. In fact there are indications to the contrary. Section 3(2) expressly provides that the avoidance effected by subsection (1) is not to apply to a conveyance executed in pursuance of an enforceable agreement made before the marriage. It would be strange indeed that a Legislature which showed this concern for contractual rights acquired prior to the marriage of the conveying spouse but after the operation of the Act should have intended to affect and impair similar contractual rights acquired before the Act came into operation. Again an exclusion from the avoidance provisions is made in favour of a purchaser in good faith who acquires an interest in the property for full value. Such a purchaser would be one who had no knowledge of the existence of a spouse and who could not have been affected by constructive notice thereof. Again the Legislature is indicating a concern for the contractual rights of persons buying the property in good faith after the Act became law which would, in my view, be completely inconsistent with an intention callously to disregard similar rights of persons who bona fide agreed to purchase before they could ever have known of the necessity for the other spouse’s consent. I find, therefore, nothing in the legislation which would displace the common law presumption that it was not intend to impair of affect existing vested rights. However, when one considers that this is an Act of the Oireachtas, the proposition that it was intended to affect and frustrate pre-Act contractual rights becomes unstatable. Were this legislation to have the effect contended for it would constitute an unjust attack upon and a failure by the State to vindicate the property rights of Frank Dunne and of others similarly situated and would constitute a clear infringement of Article 40.3.2 of the Constitution. Not only must one assume that this was not intended but, as I have already indicated, there is every indication that it was not.
I have, therefore, come to the clear conclusion that the submission made on behalf of Mrs. Hamilton fails and that Section 3(1) of the Family Homes Protection Act1976does not operate to avoid the conveyance executed by Major Hamilton in favour of Frank Dunne. Having come to this conclusion I do not find it necessary to express any opinion on the other issues raised in this appeal.
I would accordingly allow this appeal. I would set aside the declaration made in the High Court and direct the closure of the sale in accordance with the Order already made in the High Court for specific performance. I would set a new date for the closure of the sale.
Henchy J. I
I have had an opportunity of perusing in advance the judgment just delivered by O’Higgins C.J. and that which Costello J. is about to deliver. They reach contrary conclusions. Despite the impressive and comprehensive way in which Costello J. deals with the arguments presented in this appeal, I have come to the opinion that the conclusion reached by the Chief Justice is the correct one, namely, that the execution by the vendor of a deed of conveyance of the property contracted to be sold, which property includes a “family home” as now defined by the Family Home Protection Act,1976, is not to be deemed void by reason of the provisions of s. 3 of that Act.
I assent to that conclusion for two main reasons, one arising out of the special circumstances of this case, and the other having an application to all cases where an enforceable contract to sell a family home was entered into before the coming into operation of the 1976 Act but where the conveyance was not executed until after the passing of the Act.
In the instant case it is common ground that on the 25 January 1973 the vendor entered into a valid and enforceable written agreement to sell the property in question for £150,000. On foot of that agreement the purchaser paid a deposit of £15,000 and there was a stipulation in the agreement that the closing date would be the 25 January 1975, subject to the proviso that the vendor could close the sale sooner on giving three months notice to the purchaser or to the purchaser’s solicitor. No such notice was given by the vendor, who in fact regretted having entered into the agreement to sell and decided not to complete the sale. It is manifest, therefore, in those circumstances that if the purchaser had taken timely action to enforce his rights under the agreement, he could have successfully invoked the aid of the High Court so as to have the agreement to sell consummated in a valid conveyance long before the 1976 Act came into force and began to cast its shadow over certain dispositions of family homes. It was the purchaser’s indulgence and forbearance, in the face of the vendor’s reluctance to complete the sale without his wife’s approval, that led to this protracted and expensive litigation.
Although the contract provided that the closing date was to be, at latest, the 25 January 1975, the purchaser did not commence specific performance proceedings against the vendor until the 10 November 1975. The title had been investigated and a draft conveyance to the mutual satisfaction of the parties” solicitors had been prepared by November 1973. In the circumstances, the vendor had no defence to the purchaser’s specific performance suit. His obligation to complete in accordance with the written contract was as clear as crystal. His difficulty was that this wife was opposed to the sale; but she had no right, title or interest in the property; so, as the law then stood, she was not entitled to block the completion of the sale. However, not wishing to rush the vendor into completion of the sale without his wife’s approval, the purchaser did not deliver a statement of claim until January 1976 and the pleadings were not closed until May 1976. Then, on the 12 July 1976, the Family Home Protection Act was passed. One would have expected, if s. 3 of that Act was thought to have the effect of debarring specific performance in this case, that the defence would be amended so as to raise that plea. But although the defence was amended in December 1976, no provision of the 1976 Act was invoked by way of defence. Eventually the case came on for hearing before Hamilton J. in December 1976, the vendor having left the 1976 Act out of the reckoning. Hamilton J. reserved judgment. That reserved judgment was delivered on the 4 May 1977. It gave a decree for specific performance and directed that the sale be closed and possession handed over to the purchaser on or before the 1 February 1978. That order still stands, except to the extent that, with the consent of the purchaser, extensions of the date for closing were allowed by the court, the last of such extensions being until the 1 November 1979.
Meanwhile, in July 1979, the vendor’s wife instituted proceedings against both the vendor and the purchaser seeking,inter alia,a declaration that the conveyance signed (but not delivered) by the vendor was void by reason of s. 3 of the 1976 Act. In October 1979 Finlay P. made an order consolidating the specific performance proceedings with the proceedings brought by the vendor’s wife. On the hearing of those consolidated proceedings, Gannon J. ruled in Feb. 1980 that any purported conveyance in pursuance of the specific performance decree would be void under s. 3 of the 1976 Act, and he directed that all further proceedings in the specific performance suit be stayed. It is from that order that the present appeal has been taken by the purchaser.
I have itemised in chronological order the various relevant steps taken in the first of the two actions that were consolidated, primarily for the purpose of showing that when the 1976 Act came into force, there was pending in the High Court a specific performance suit brought by the purchaser under which he was entitled (as the unappealed order of Hamilton J. was to prove) to compel the vendor to convey to him the property which was the subject matter of the written agreement of the 25 January 1973. What the order under appeal has done in effect is to bring to a halt and render sterile the purchaser’s judicially approved claim in that specific performance suit; and the authority relied on for so deciding is s. 3 of the 1976 Act. In other words, s. 3 has been interpreted as having had the effect of killing off a valid and pending claim in the High Court by a purchaser for the specific performance of a pre-Act contract to sell property which included property which on the passing of the Act came under the Act’s definition of a “family home”. Such was the power which the legislature was held to have conferred on itself by s. 3.
Even if this consolidated action were to be decided under common law, without any reference to the limitations imposed on the legislature by the Constitution, I would feel unable to uphold that ruling. From a wide range of judicial decisions I find the relevant canon of interpretation at common law to be this: when an Act changes the substantive as distinct from the procedural law, regardless of whether the Act is otherwise prospective or retrospective in its operation, it is not to be deemed to affect proceedings brought under the pre-Act law and which were pending at the date of the coming into operation of the Act, unless the Act expressly or by necessary intendment provides to the contrary. See, for example, Hitchcock v. Way (1837) 6 Ad. and El. 943, 951; Restall v. London and South Western Rail Co. (1868) L.R. 3Exch. 141; Colonial Sugar Refining Co. v. Irving (1905) A.C.369; Welby v. Parker (1916) 2 Ch. 1; R. v. Southampton Income Tax Commissioners, Ex parte Singer (1916) 2 K.B. 249, 259;Hutchinson v. Jauncey (1950) 1 K.B. 574; at 578 and 579;Jonas v. Rosenberg (1950) 2 K.B. 52; Attorney General v. Vernazza (1960) A.C. 965, 978; Zainal bin Hashim v. Government of Malaysia (1980)A.C. 734. There is no such express provision or necessary intendment to the contrary in the 1976 Act and the change made in the law by the Act could not be said to be procedural rather than substantival. Its provision that an agreement to sell, as well as the actual conveyance, shall be void without the prior consent in writing of the vendor’s spouse, might be argued (in my view, without much hope of success) to connote a retrospective operation, but a statable argument could not be propounded that the Act gives an express or necessarily implied power to strike down proceedings which were pending when the Act came into operation. Maxwell, The Interpretation of Statutes, 12th edn., pp. 220-1, puts the applicable rule of interpretation thus:
“In general, when the substantive law is altered during the pendency of an action, the rights of the parties are decided according to the law as it existed when the action was begun, unless the new statute shows a clear intention to vary such rights”
I would cavil at that statement of the law to the extent that the rule of interpretation it sets out is stated to be only a general one, thereby suggesting that it admits of exceptions. In my opinion, the judicial authorities show that it is a universal rule and that it applies to all pending actions unless the language used in the enactment is susceptible of no other conclusion than that the rights of parties to pending actions are intended to be affected: see, for instance, the judgment of the Privy Council inZainal bin Hashin v. Government of Malaysia (1980) A.C. 734. In this jurisdiction, the general common law rule as to the impact or lack of impact of a statute on pending proceedings was purported to be specifically adapted by s. 21(1) of the Interpretation Act,1937, to deal with the effect of a new statute on pending proceedings which were brought under a statute which is repealed by the new statute.
But even if the 1976 Act showed a clear intention to put an end to pending proceedings for the specific performance of a pre-Act agreement to sell what the Act was to define as a “family home”, such an invasion by the legislature of what is exclusively a judicial preserve would not be constitutionally permissible. As Professor J.M. Kelly has pithily put it in his book, The Irish Constitution (1980), at p. 191:
“What does appear to be inviolable is the actual judicial process itself while in operation; once begun, it must be allowed to run its course without interference”.
The judicial authority for that statement (which points to the fact that the common law rule of interpretation to which I have referred must give way to the limitations imposed by the Constitution on the powers of the legislature) is the case ofBuckley and Others (Sinn Fein) v. Attorney General and Another (1950) I.R. 67. In that case the issue was as to the ownership of certain moneys representing the central fund of the Sinn Fein Organisation. The plaintiffs, having lodged the moneys in the High Court, brought an action in the High Court, on their own behalf and on behalf of all other members of the Organisation, against the Attorney General (as representing the People) and the personal representative of the last surviving trustee of the fund, seeking a declaration that the moneys were the property of the Organisation and, also, seeking an order directing the payment of the moneys to them or to two of them as honorary treasurers of the Organisation. While the action was pending, the Sinn Fein Funds Act,1947, was passed. It provided, inter alia, that all further proceedings in the action should be stayed and that the High Court, if an application were made ex parte on behalf of the Attorney General, should dismiss the action and direct that the moneys be disposed of in the manner laid down by the Act. It was held by Gavan Duffy P., in effect, that the Act was unconstitutional. That decision was affirmed by the Supreme Court. In the course of giving the decision of the Supreme Court, O’Byrne J. said (at p. 84):
“The effect of [Art.6] and of Arts. 34 to 37, inclusive, [of the Constitution] is to vest in the Courts the exclusive right to determine justiciable controversies between citizens or between a citizen or citizens, as the case may be, and the State. In bringing these proceedings the plaintiffs were exercising a constitutional right and they were, and are entitled to have the matter in dispute determined by the judicial organ of the State. The substantial effect of the Act is that the dispute is determined by the Oireachtas and the Court is required and directed by the Oireachtas to dismiss the plaintiff’s claim without any hearing and without forming any opinion as to the rights of the respective parties to the dispute. In our opinion this is clearly repugnant to the Constitution, as being an unwarrantable interference by the Oireachtas with the operations of the Courts in a purely judicial domain”.
If, therefore, the effect of the 1976 Act was to extinguish or to stultify the purchaser’s constitutional right to pursue his pending claim for specific performance (a claim which the High Court, after a plenary hearing, has formally declared to be good in law), the Act would, to that extent be unconstitutional. However, as the Act enjoys a presumption of constitutionality, and as it makes no reference, expressly or by necessary intendment, to pending proceedings (such as that brought by the purchaser), I would hold that it must be read as having no bearing on such proceedings. It follows, in my view, that the decree made by Hamilton J. for specific performance of the vendor’s agreement to sell was validly made and should be fully implemented. Neither at common law nor by the application of the relevant constitutional limitations could the 1976 Act be held to be capable of trenching on the purchaser’s right to carry through his pending specific performance action to a successful conclusion.
While the foregoing reasons are sufficient in my estimation to uphold the purchaser’s appeal, they rest on the narrow and special consideration that the purchaser had on foot in the High Court, at the time the Act came into force, a valid claim for specific performance in his favour of a pre-Act contract made by the vendor to sell him property which included the family home of the vendor and his wife. But what would the purchaser’s rights be if such proceedings were not pending? Since there must have been cases of pre-Act contracts to sell a “family home” where the deed of conveyance was not executed until after the Act came into force, and where regard was not had to compliance with the requirements of s. 3 of the Act, I think it desirable that I should express an opinion as to whether the purchaser would be entitled to succeed in this appeal even if his specific performance suit was not pending when the Act came into force. If I did not do so, this judgment might be thought to cast a shadow of voidness over the deeds of conveyance that were executed in all such cases.
Judicial opinion in Ireland and England has been unanimous in holding that when a vendor and purchaser enter into a valid and enforceable contract, supported by payment by the purchaser of part of the purchase price, for the sale of property, the vendor becomes a constructive trustee for the purchaser of a beneficial or equitable estate in the property. The only area of disagreement is as to the extent of that estate: see Wylie,Irish Land Law, pp. 455-6; and Wylie,Irish Conveyancing Law, pp. 501 et seq. In Tempany v. Hynes 1976 I.R. 101 I expressed the opinion that the purchaser, whether he has paid part of the purchase price or not, becomes the equitable or beneficial owner of the whole estate. That view, however, did not prevail in that case. Kenny J. with whom O’Higgins C.J. concurred) considered that the equitable or beneficial estate became vested in the purchaser only to the extent to which the purchase price was paid. Unless and until a different conclusion is reached by a full Court, that majority opinion must be taken to be the law.
This means that, since the purchaser in this case paid one-tenth of the purchase price on signing the contract, he acquired a beneficial estate in one-tenth of the fee simple in the property contracted to be sold. The central question, therefore, is whether s. 3 of the 1976 Act had the effect of devaluing the purchaser’s vested one-tenth share of the fee simple and of sundering from him what was unquestionably his pre-Act right to acquire both the legal and equitable estates in the whole of the fee simple.
The judicial authorities (which are referred to in the judgment which O’Higgins C.J. has just delivered) make clear that because there is a presumption that a statute does not intend to operate unfairly or unjustly or oppressively by trenching on rights or obligations lawfully acquired or created before the statute came into force, it should be construed as prospective in its application, and not retrospective, unless there is a clear and unambiguous intention to the contrary expressed or necessarily implied in the statute, or unless the change effected by the statute is purely procedural.
It could not be suggested that the change in the law effected by the 1976 Act is procedural only. In fact, it amounts to a novel and profound change in substantive land law and, consequently, in the law of conveyancing. Because there is no indication in the Act that it is to operate retrospectively so as to render void the contract to sell entered into in 1973, counsel for the vendor’s wife have refrained from arguing that that contract has been made void by the operation of the Act. What they have argued is that, by the prospective operation of s. 3 of the Act, the execution of a conveyance of the property validly contracted to be sold will be void.
The flaw in this argument, it seems to me, is that, under the guise of prospectivity, it unwarrantedly introduces respectivity. For, if the pre-Act contract to sell cannot be brought to fruition in a deed of conveyance, there is necessarily a retrospective depreciation of its legal effect. It has not been suggested, nor could it be, that that contract was voidab initio, or that it became void in consequence of the Act. What is inherent in the argument is that the avoidance of a post-Act deed of conveyance of an interest in a family home, executed by a spouse without the prior consent in writing of the other spouse, will have the effect in this case of making the pre-Act contract sterile, in that it can never mature into a valid conveyance. From being a valid contract, bestowing on the purchaser a judicially established right to specific performance, it was, according to the argument, demoted by the Act to a Limbo of unenforceability, leaving the purchaser with an equitable estate in the property, but no more.
Such an interpretation of the effect of the Act on the pre-Act contract to sell is in my view contrary to the spirit and the scheme of the Act. The principal innovative feature of the Act is that it created a new right, which may justifiably be termedsui juris, whereby a non-disposing spouse is given an entitlement (subject to qualifications which are not relevant to this case) to block not only a conveyance by the other spouse of an interest in what is defined as a “family home” but also what would but for the Act be an enforceable contract to make any such conveyance. The draftsmen of the Act, therefore, intended to give to the non-disposing spouse a power to veto the disposition by the other spouse to a third party of either an equitable interest or a legal interest in the family home. But where (as was the case here) an equitable interest in the family home had had been already validly granted to a third party by means of an enforceable pre-Act agreement, such an agreement could become void or unenforceable only if the Act unequivocally so provided. But the Act did not do so. On the contrary it is markedly silent as to its effect on pre-Act agreements to sell. If the legislature intended the Act to affect retrospectively, the rights created by such agreements – upon the expected operation of which the parties may have further committed themselves – one would expect the enacted words to state that effect clearly and unambiguously. Since they fail to state such an intention expressly, one must endeavour to see if an inference to that effect follows necessarily from the statutory provisions.
To ascertain this, one must look at the statutory scheme and the rationale behind it. The Act provides for the protection of the family home, presumably as an implementation of the constitutional duty that falls on the State to protect the family and to guard with special care the institution of marriage. To this end, the Act (as I have pointed out) created a new right whereby (save in excepted cases) the non-disposing spouse is given a right to veto the disposition to a third party of any legal or equitable interest in the family home. But the Act goes further than giving such a power of veto. Even in cases where the non-disposing spouse did not profess to exercise the right to veto (because, for example, he or she did not know of such a right), or even where the non-disposing spouse was willing not to exercise the right to veto and had expressed such willingness orally, nevertheless if the prior consent in writing was not actually given by the non-disposing spouse, the purported “conveyance” (save in the excepted cases) is rendered void by s. 3. This, to my mind, shows that the legislature, in order to preserve inviolate the dual and interlocking rights of the spouses in the family home, intended the penalty of voidness to apply in order to prevent either a legal or an equitable right in the family home being disposed of to a third party by the unilateral action of one of the spouses. But in the present case it is unquestioned that the husband, validly and without breaching the then-unenacted Act, disposed of an equitable interest in the family home to the purchaser and that such interest still subsists in the purchaser. I consider that legal fact to be such as to put the case outside the reach of s.3 of the Act; for the primary purpose of s. 3 would appear to be the prevention of the unilateral alienation of any interest, legal or equitable, in the family home. Where, as is the case here, the family home was, as a result of a valid pre-Act transaction, encumbered with an equitable interest vested in a third party, the reasonable inference seems to be that an accomplished fact had occurred which s. 3 was not designed to undo. The prohibition in s. 3 must be held to be directed only against post-Act “conveyances”, so as to enable the unilateral disposition of both legal and equitable interests in the family home to be barred; so as to achieve basic fairness by honouring lawful transactions and, in particular, so that ignorance of the law will justifiably not excuse transactions which are declared void because they do not observe the requirements of the Act. An ex post facto avoidance or devaluation by statute of an agreement to sell which was valid and enforceable when made is prima facie punitive and unfair. Hence the rule as to prospectivity, which is clearly stated as follows in Maxwell, Interpretation of Statutes 12th edn., p. 215:
“Upon the presumption that the legislature does not intend what is unjust rests the leaning against giving certain statutes a retrospective effect. They are construed as operating only in cases or on facts which come into existence after the statutes were passed unless a retrospective effect is clearly intended”.
Since, in my view, such an intention of retrospective effect is not clearly indicated in the Act, I would hold that the power to veto or annul the disposition of an interest in a family home, as given to the non–disposing spouse by the Act, applies in this context only to agreements to sell or to instruments of conveyance entered into after the coming into operation of the Act.
Because my opinion on the point would be obiter and because it was not argued, I refrain from expressing any conclusion as to whether, if the Act had expressed or necessarily implied an intention to interfere with rights which arose under a pre-Act contract to sell, it would thereby be unconstitutional for failing to protect property rights. The primary duty of the State in regard to such property rights arises under Art. 40, s. 3, of the Constitution (seeBlake and Others v. Attorney General (1981) I.L.R.M. 34), but such duty would have to be balanced against other constitutional duties, such as the protection of marriage and the family. However, since my opinion is that the Act was designed to prevent only the disposition in futuro, without complying with the Act, of both equitable and legal interests in family homes, the constitutional point to which I have referred is entirely academic so far as the instant case is concerned.
It follows from the foregoing that I would allow this appeal (1) on the special ground that because the purchaser was, at the time the Act was passed, pursuing in the High Court a valid claim for the specific performance of an enforceable pre-Act agreement entered into by the vendor to sell him property which included what was later to come under the Act’s definition of a “family how”, the Act did not debar, and could not constitutionally have debarred, the purchaser from continuing those proceedings to a successful conclusion; and (2) on the more general ground that the avoidance by s. 3 of “conveyances” applies only to agreements to convey and to instruments of conveyance which came into existence after the Act was passed.
Accordingly, I would declare that the purchaser is entitled to stand on the order for specific performance already made in the High Court, and I would make such auxiliary orders as may be necessary to give full effect to that order.