High Court of Ireland Decisions

1. The Plaintiff, to whom I will refer as "the Vendor" in this judgment, is the owner of the lands registered on Folio 2463 of the Register of Freeholders County Louth, being a residential farm which is known as Marsh Farm containing in excess of 200 acres. She also claims a possessory title over tidal lands or foreshore on the seaward side of the eastern boundary of the lands registered on Folio 2463, which, for the sake of brevity but not in any technical sense, I will call "the Foreshore".

2. The lands registered on Folio 2463 are, and were at all material times, subject to a charge for present and future advances repayable with interest, which is registered as a burden at entry number 16 on the Folio. Originally, Bank of Ireland Finance Limited was the registered owner of this charge. Subsequently, on 23rd June, 1994 Bio Enterprises Limited (Bio) was registered as owner of this charge in place of Bank of Ireland Finance Limited. At that stage, Bank of Ireland Finance Limited had already, as mortgagee, obtained an order for possession of the lands in proceedings in the Court entitled " Bank of Ireland Finance Limited -v- Nicholas Browne and Joan Browne " (Record No. 1985 No. 380 Sp. Court 6), which, for the sake of clarity, I will refer to as "the mortgage proceedings", the order for possession having been made on 15th July, 1985. By a further order made in the mortgage proceedings on 24th June, 1996 Bio was substituted as Plaintiff in the mortgage proceedings in lieu of Bank of Ireland Finance Limited and Bio was given leave to issue execution on foot of the order for possession of 15th July, 1985. The Vendor appealed to the Supreme Court against the order dated 24th June, 1996. The appeal was due to be heard on 30th June, 1997, but prior to that date the Vendor agreed to sell Marsh Farm and the possessory title in the Foreshore to the first named Defendant, to whom I will refer to as "the Purchaser" in this judgment.

3. The second named Defendant, Mr. Monahan, who is a well known property developer, is the beneficial owner of the Purchaser. Mr. Monahan knew of Marsh Farm for some time and was interested in acquiring it for development purposes. Before entering into negotiations with the Vendor, he had been negotiating with the representatives of Bio and was contemplating acquiring its mortgagee's interest. However, having decided that the better course was to deal with the Vendor, he concluded negotiations with the Vendor for the acquisition of Marsh Farm on 25th June, 1997 and his bargain with the Vendor was incorporated in the following documents which were executed on that day:-

4. On its face, the Agreement provided for a purchase price of £1,600,000. The closing date stipulated was 30th October, 1997. It was to be a sale free of encumbrances and Condition 5 of the special conditions provided as follows:-

5. It was understood between the parties that the Vendor would have to procure the discharge of the charge of Bio and deal with the pending appeal to the Supreme Court. The understanding between the parties was that the Vendor would compromise with Bio by agreeing a sum to be paid in full and final settlement of its claim as mortgagee and she would withdraw her appeal. The Vendor did achieve a compromise with Bio under which she withdrew her appeal to the Supreme Court and agreed to pay the sum of £1,000,000 to Bio in full and final settlement of its claim on or before 31st October, 1997, the day following the contractual closing date in the Agreement In return, Bio agreed not to act on foot of its order for possession until 1st November, 1997. The terms of the compromise were reflected in the following documents:-

6. As the Vendor had to agree to pay £1,000,000 to Bio to procure the discharge of its charge, under the terms of the Letter of Comfort the purchase price payable by the Purchaser to the Vendor under the Agreement became £1,700,000 and that this was the case was never disputed by the Purchaser.

7. The claim of Bio having been compromised, it appeared that all of the parties, the Vendor, the Purchaser, Mr. Monahan, Mr. Sherwood and Bio were on course to a mutually satisfactory outcome on 30th October, 1997. However, it was not to be.

8. Requisitions on title in the standard form published by the Law Society of Ireland (1996 edition) were despatched by the Purchaser's solicitors on 23rd September, 1997 and these were replied to on 7th October, 1997 by the Vendor's solicitors. Requisition 12(1)(a) queried whether any notice, certificate or order had been served upon or received by the Vendor or whether the Vendor had notice of any intention to serve a notice relating to the property or any part of it under various statutes, twenty nine in all, listed in the requisition, including the Wild Life Act or under any other act or any statutory rule or order or statutory instrument. The Vendor's solicitors reply was:-

9. However, contemporaneously with raising rejoinders, the Purchaser's solicitors were carrying out their own independent searches and enquiries, in consequence whereof on the evening of 29th October, 1997 they discovered that the lands registered on Folio 2463 and the Foreshore were within a proposed Natural Heritage Area designation (site code 455-Dundalk Bay) proposed by the Department of Arts, Heritage, Gaeltacht and the Islands, which, it subsequently transpired, had been the subject of notices to that effect in local newspapers. The upshot of this discovery was that the Purchaser adopted the position that the proposed Natural Heritage Area designation was a matter which the Vendor was under a duty to disclose under Clause 35 of the general conditions in the Agreement and that failure to disclose it before the sale entitled the Purchaser to rescind. Accordingly, on 7th November, 1997 the Purchaser, through its solicitors, served notice of rescission under Clause 35 on the Vendor.

10. In these proceedings the Purchaser claims specific performance of the Agreement and ancillary relief. In order to progress matters, the Vendor brought an interlocutory application seeking specific performance - in effect, a mandatory injunction to compel the Purchaser to close the sale. That action did progress matters to the extent that, having regard to the urgency of the matter from the Vendor's perspective, the matter was listed for plenary hearing without pleadings having been delivered, on the basis that the parties would agree the issues to be determined by the Court. The parties have agreed that the following are the issues for determination:-

11. I propose addressing these issues first and then considering what relief, if any, should be granted to the Vendor.

12. Clause 35 provides as follows:-

13. The expression "Competent Authority" is defined in Clause 2 of the general conditions as including -

14. The Purchaser bases its entitlement to rescind under Clause 35 on the publication of two notices in local newspapers in circulation in the Dundalk area where Marsh Farm is situated.

15. The first of these notices was published in the 18th November, 1994 edition of "The Argus" under the imprint of the Office of Public Works. It was headed "Natural Heritage Areas" and "Notice of Interest to Land Owners". The text of the notice was as follows:-

16. The notice incorporated a list of townlands in which the Natural Heritage Areas in County Louth were situated, which included Mooretown in which Marsh Farm is located. The notice also incorporated a map based on the A.A. map of County Louth which depicted the Natural Heritage Areas.

17. The second notice was published in the 17th March, 1995 edition of

18. I suspect that Counsel for the Vendor, Mr. Nesbitt, was correct in surmising that the "U-turn" reflected in the second notice published was a reaction, albeit a belated reaction, to the decisions of this Court and of the Supreme Court in MacPharthalain -v- Commissioners for Public Works , reported at (1992) 1 I.R. 111 and (1994) 3 I.R. 353 respectively. In that case, the Supreme Court upheld the decision of this Court (Blayney J.) that designation of an area of land near Clifden as an area of international scientific interest by the Wildlife Services, a section of the Office of Public Works, was a decision and a decision capable of being judicially reviewed and his conclusion that the designation was a designation which affected the lands and, as such, could only be taken after due regard to the requirements of natural justice including the first fundamental requirement of natural justice that a land owner affected should be given the opportunity to be heard or to object or to make representations on the issue.

19. Be that as it may, the question which falls to be considered in relation to the published notices referred to above and the decisions they reflected as between the parties to these proceedings is whether both published notices were or either was made or issued by or at the behest "of a Competent Authority" within the meaning of Clause 35 and whether they or either of them affected Marsh Farm at the date of the sale, that is to say, 25th June, 1997. This is primarily a question of the proper construction of Clause 35. However, there are a number of preliminary observations to be made. First, it is common case that no statutory authority or basis existed at any time for designation as a Natural Heritage Area or proposed designation as a Natural Heritage Area or for publication of notices in respect of any such designation or proposed designation. Secondly, it was acknowledged on behalf of the Purchaser by Mr. Gardiner, properly in my view, that the second notice effectively negatived the first notice and that the Purchaser's case for rescission under Clause 35 must rest on the second notice. Thirdly, no evidence has been adduced as to the intention of the Minister in publishing the second notice or as to its effect, save as is to be inferred from the notice itself and, in particular, no witness was called from the Department of Arts, Heritage, Gaeltacht and the Islands.

20. Before attempting to interpret Clause 35 and apply its provisions to the facts, I propose recording two findings of fact. First, I find that Vendor was not aware of either published notice before 25th June, 1997 or of the decisions reflected in those notices. Secondly, I find that, although Mr. Monahan was generally aware that Marsh Farm was ecologically sensitive because of the reasons ascribed for conditions imposed in a planning permission dated 5th March, 1993, which had been granted by An Bord Pleanala for the development of an airfield and ancillary buildings at Marsh Farm, he was not aware of the published notices or the decisions reflected in them prior to the sale, nor was any other officer or representative of the Purchaser.

21. The effect of Clause 35 is to impose a positive duty of disclosure upon a Vendor in relation to the orders and notices which come within its ambit, so that the caveat emptor maxim does not apply in relation to such orders and notices or the subject matter of them. As Clause 35 is structured, it is for a Purchaser to establish that an order or notice which comes within the ambit of Clause 35 known to the Vendor was not disclosed by the Vendor prior to the sale and the onus then is on the Vendor to establish the existence of one or more of the four factors which obviate a rescission even where there has been a failure on the part of the Vendor to disclose.

22. Accordingly, the first question which arises in applying Clause 35 to the facts of the instant case is whether the Purchaser has established that the second published notice was a notice within the ambit of Condition 35. There are two aspects to this question. The first aspect is whether it was a notice "made or issued by or at the behest of a Competent Authority", which affected Marsh Farm and the Foreshore on 25th June, 1997. If it was, the second aspect arises: whether it was notified or given to the Vendor in any manner or was otherwise known to the Vendor.

23. In relation to the first aspect, it was submitted by Mr. Gardiner, pointing to the disjunctive "or" after "Statutory Undertaker", that the definition of "Competent Authority" in Clause 2 recognises two categories of public bodies, one category being the specified public bodies, namely, the State, any Minister thereof, a Statutory Undertaker, etc. and the second category being other public bodies captured by the general description of "any Department, Body or person". It was further submitted that the words "by statutory provision or order for the time being in force authorised directly or indirectly to control....." in the definition only refer to the second category and do not qualify the first category. In other words, it was contended that any notice made or issued by a Minister is made or issued by a Competent Authority per se. A further submission made was that, in any event, the qualifying words which require a person or body to have either direct or indirect statutory authority to control the development, etc., of land are merely intended as an identifying mark of the type of body or person who qualifies as a "Competent Authority" and that there is no requirement in the definition that that body or person should have statutory competence in relation to the particular order or notice in issue under Clause 35. To illustrate this point, it was submitted that the Commissioners of Public Works, for instance, are empowered under Section 11(1) of the National Monuments (Amendment) Act, 1994 to acquire land compulsory and, accordingly, so the argument goes, they are a Competent Authority within the definition for all purposes including functions which do not have statutory basis.

24. I have no doubt that the definition of "Competent Authority" was intended to cast a wide net and to capture every conceivable public person or body who could make or issue a legally effective order or notice in relation to land. Moreover, I would accept that the definition of "Competent Authority", in terms of identifying a person or body as such, on its own, should be interpreted in the manner suggested by Mr. Gardiner. But that is not the end of the matter. What Clause 35 requires is that the order or notice made or issued by a Competent Authority should affect the property at the date of the sale. In other words, what is required is that the person or body in question should have legal competence to affect, either immediately on prospectively, the land to which the order or notice relates in the manner in which it purports to do so in the order or notice as of the time of the making or issuing of the order or notice.

25. There was implicit recognition in the judgments of this Court and the Supreme Court in the MacPharthalain case that express statutory authority was not an essential prerequisite to the designation of an area as an area of international scientific interest by the Commissioners of Public Works. In my view, on the proper construction Clause 35, and reading into it the definition of "Competent Authority" contained in Clause 2, it admits of an interpretation that an order or notice made or issued by, say, a Minister or by the Commissioners of Public Works is within its ambit even though such order is not made or notice given on foot of an express statutory authority, but only provided that it is the exercise prior to the sale of a function within jurisdiction and competence which has legal effect as regards the property the subject of the sale at the date of the sale. Clearly, the second published notice was not of that character. It merely evinced a proposal or a statement of intent to designate at a future date and subject to compliance with law including the rules of natural justice. It is clear from the evidence that by 25th June, 1997 no steps had been taken which would have advanced the proposed designation, as regards Marsh Farm or the Foreshore, beyond the stage of being a mere proposal or statement of intent and, accordingly, the second published notice was not a notice "affecting" Marsh Farm or the Foreshore within the meaning of Clause 35 as of that date.

26. Moreover, in my view, the publication or advertisement of the second published notice in "The Independent" did not have the consequence of the Vendor having been "notified or given" notice of the proposed designation within the meaning of Clause 35. Notification or the giving of notice ordinarily connotes that information is actually conveyed to and received by the object of the notification or the giving of notice. In the absence of a statutory provision, a contractual obligation or some other legally enforceable mechanism which deems publication in a local newspaper to be notice for the purpose of conveying information to an owner or occupier of land, such person cannot be regarded as having been notified or given notice of a decision, proposal or intention of a public body in relation to the land merely by the publication or advertisement in a local newspaper. As I have already found, the Vendor did not know of the second notice.

27. Accordingly, the Purchaser has failed to establish on both aspects of the question that the second published notice came within the ambit of Clause 35 and, accordingly, the entitlement of the Purchaser to rescind does not arise.

28. This brings me to the third question which the parties have sought to have determined, namely, whether the Vendor is entitled to an order of specific performance.

29. The gravamen of the Purchaser's resistance to such an order is that on the contractual completion dated, 30th October, 1997, the Vendor was unable to fulfil her obligation under Special Condition 5 to furnish a "discharge" of all encumbrances affecting the land in sale. This complaint focused on only three of the many burdens registered on Folio 2463. In relation to those burdens the following facts were established in evidence:

30. The stance adopted by the Purchaser's solicitors in the lead up to the closing date and thereafter was that, by virtue of Special Condition 5, they were entitled to be furnished with requisitions for discharge executed by the owner of every charge and judgment mortgage registered on the folio. There are a number of general observations to be made in relation to this. First, the Vendor was selling free from encumbrances and, even in the absence of Special Condition 5, the Vendor would have been contractually bound to furnish evidence of the discharge of all encumbrances appearing on the title at closing. Secondly, while one method of procuring the cancellation of a registered burden off a folio is to produce the prescribed form of discharge executed by the owner of the burden, the prescribed form in the case of a judgment mortgage being Form 76 of the Land Registration Rules, 1972, that is not the only method available. As is pointed out in Fitzgerald on Land Registry Practice , 2nd Edition, at p.243, and as the Vendor's solicitors were aware, any person having an interest in a registered burden or registered property may apply on affidavit in Form 71B to have the burden cancelled.

31. On the evidence I am satisfied that had the Purchaser turned up to close the sale on 30th October, 1997, the Vendor would have been in a position to fulfil her contractual obligations in relation to discharge of the encumbrances affecting the title, both her general obligation by reason of the sale being a sale free from encumbrances and her specific obligation under Special Condition 5. On any objective appraisal of the matter there cannot be any doubt that, in relation to each of the three burdens referred to above, the Vendor's solicitors would have been in a position to produce documentation sufficient to procure the cancellation of the burdens off the folio. Moreover, on the evidence, I am satisfied that the Purchaser's solicitors had no genuine concern in relation to the discharge of the encumbrances. They did have an understandable genuine concern about the revelations which resulted from the enquiries in the Department of Arts, Heritage, Gaeltacht and the Islands and I infer from the evidence that their stance in relation to the discharges was a posture for the benefit of the Vendor that the Purchaser had "more than one string to its bow".

32. In any event, in the context of the issue whether the Vendor is entitled to a decree of specific performance the foregoing debate about the discharge of encumbrances is entirely academic. Even if the Vendor had not been in a position to fulfil her contractual obligations in relation to clearing off encumbrances on the title on the contractual closing date, this would not have amounted to a breach of contract which would have entitled the Purchaser to terminate the contract or regard itself as discharged from further performance thereof forthwith, time not being of the essence. The service of a notice to complete under Clause 40 of the general conditions by the Purchaser and a failure to comply with it by the Vendor would have been a necessary prerequisite to rescission by the Purchaser. It is clear beyond peradventure that had such notice been served, the Vendor would have been able to comply with it.

33. I now turn to considering whether the existence of the order for possession in favour of Bio is a bar to an order of specific performance. The charge of which Bio is registered as owner remains registered as a burden at entry number 16 on Folio 2463. In fulfilment of her contractual obligations to the Purchaser, the Vendor will have to discharge that charge on or before closing. Bio, in addition to being the registered owner of the charge, has the benefit of the orders of this Court of 15th July, 1985 and 24th June, 1996, the combined effect of which is that Bio is entitled to issue execution on foot of the order for possession. Bio also has the benefit of the order of the Supreme Court dated 30th June, 1997 wherein the Vendor effectively undertook to deliver up possession on 1st November, 1997.

34. In the interest of completeness I should perhaps record that when the Purchaser failed to close the sale on 30th October, 1997, the Vendor, on the following day, 31st October, 1997, applied to the Supreme Court for a stay of execution on the delivery up of possession. Bio undertook on that occasion not to execute for possession for one week from 31st October, 1997 and this undertaking is recorded in an order of the Supreme Court of that day. By order dated the 21st November, 1997, the Supreme Court declined to entertain any further application from the Vendor for a further stay or postponement of taking possession, on the ground that the situation which had arisen was something over which it had no control or no jurisdiction.

35. The submission made on behalf of the Purchaser is that, because of the existence of the various orders in the mortgage proceedings, the Vendor has been under an obligation to deliver possession of Marsh Farm to Bio since 1st November 1997 and that since that date, because of the existence of that obligation, the Vendor has been unable to comply with her contractual obligation to furnish vacant possession to the Purchaser on completion. This submission utterly fails to take account of the true nature of Bio's interest in the lands. Bio is merely the owner of a charge on the lands as security for the Vendor's indebtedness to it in accordance with the provisions of the charge and law. While it also has an entitlement to immediate possession of the lands and can enforce that entitlement, that entitlement only persists for the purpose of the facilitating the realisation of the security with a view to the discharge of the Vendor's indebtedness to it. One of the fundamental rubrics of our law of property and one of equity's great contributions to its development is that a mortgagor is entitled to redeem his mortgage.

36. On the evidence I am satisfied that the purchase price payable to the Vendor by the Purchaser, £1,700,000.00, is as of today sufficient to discharge the indebtedness of Bio and all other encumbrances. Accordingly, subject to compliance by the Purchaser with its contractual obligation to the Vendor, I am satisfied that the Vendor is in a position to redeem the charge in favour of Bio and set at nought the effect of the orders of this Court and the Supreme Court, that is to say, Bio's entitlement to execute for possession and the Vendor's obligation to deliver possession. Accordingly, neither the existence of the orders nor the compromise evidenced by the letter dated 14th July, 1997 is a bar to an order for specific performance.

37. In relation to the substantive relief claimed by the Vendor in the proceedings, the Vendor is entitled to an Order for specific performance of the Agreement as supplemented by the Letter of Comfort. I will, accordingly, make an order for specific performance by the Purchaser of the Agreement on or before Friday, 6th February, 1998. The Vendor will have liberty to apply on notice to the Purchaser to fix a time for hearing any application the Vendor has in relation to the ancillary relief claimed.