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Cite as: [2000] IESC 5

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Bank of Ireland v. Gleeson [2000] IESC 5 (6th April, 2000)

THE SUPREME COURT

21/98

MURPHY J

BARRON J

GEOGHEGAN J

IN THE MATTER OF THE FREEHOLD PROPERTY THE SUBJECT OF A SETTLEMENT MADE THE 4TH DAY OF MARCH, 1954 BY PADRAIG O'GLASAIN, NOW DECEASED

AND

IN THE MATTER OF A CONTRACT FOR SALE OF PART OF THE SAID PROPERTY

AND

IN THE MATTER OF THE TRUSTEE ACT, 1893

AND

IN THE MATTER OF DIRECTIONS SOUGHT BY THE TRUSTEES OF THE SAID SETTLEMENT IN RELATION TO MATTERS THAT HAVE ARISEN IN THE ADMINISTRATION OF THE TRUST OF THE SAID SETTLEMENT.

BETWEEN:

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

APPLICANT/ RESPONDENT

AND

TADGH GLEESON

RESPONDENT/ APPELLANT

JUDGMENT OF MR JUSTICE FRANCIS D MURPHY DELIVERED THE 6TH DAY OF APRIL, 2000 (nem. diss.)

1. The issues which arise in this case must be considered from two distinct stand points. First,

as between the parties to these proceedings, namely, the Governor and Company of the Bank [*2] of Ireland (the Bank) and Tadgh Gleeson (Mr Gleeson) and secondly, as between the Bank and the Commissioners of Public Works in Ireland (the Commissioners).

2. Consideration of the first perspective commences with two indentures both dated the 4th day of March 1954 and expressed to be made between Padraig O'Glasain of the one part and the National Bank Limited of the other part. By those indentures Padraig O'Glasain conveyed certain properties in freehold to the National Bank Limited upon trust to sell the same but so that during the life of the wife of the said Padraig O'Glasain such sale should only be made with her consent in writing and so that the trustee should hold the proceeds of the trust for sale upon trust for the wife of Padraig O'Glasain and his children or remoter issue or some one or more of them upon and subject to the terms by the said Indentures provided and declared. The trust property comprised and the said indentures included the upper floors of Number 11 O'Connell Street in the City of Dublin which were at the date of the conveyance subject to an indenture of lease dated the 4th day of March, 1898 made between Robert J McEniry of the one part and John North of the other part for a term of eighty-eight and one half years from the 30th day of October, 1903 subject to the yearly rent of £177:00. By Deed of Assignment dated the 30th day of March, 1971 made between Maher Hayes & Company of the one part and the Commissioners of the other part the interest of the Lessee under the said lease was assigned to the Commissioners for the residue of the term granted by the said lease and subject to the terms and conditions therein.

3. The rights, duties and interests of the National Bank were transferred to and vested in the Bank of Ireland pursuant to the provisions of the Central Bank Act, 1971.

[*3] On the expiration on the 13th day of April, 1992 of the 1898 Lease the Commissioners served on the Bank a Notice of Intention to acquire the fee simple interest in the upper floor of the O'Connell Street premises pursuant to the provisions of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978. Between 1992 and 1995 negotiations took place between the Bank and the Commissioners. By contract of sale dated the 20th day of December, 1995 the Bank, with the consent of the widow of Padraig O'Glasain, agreed with the Commissioner for the sale to them of the fee simple in the premises comprising of the first to the fifth floors in 11, Upper O'Connell Street (being the premises demised by the 1898 Lease) for a sum of £63,000. It is clear that this price represented or took into account the terms on which the freehold could be acquired under the 1978 Act and did not represent the open market value of the property.

4. On the 3rd day of May, 1996 Mr Gleeson, purporting to represent all of the beneficiaries or possible beneficiaries under the trust declared by the indentures dated the 4th day of March, 1954, expressed their objection to the completion by the Bank of the contract for sale aforesaid. It was their contention that the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978 as amended by the Landlord and Tenant (Amendment) Act, 1984 did not apply to the premises in question and accordingly the Bank was not bound to sell the same to the Commissioners and in particular not bound to sell the same on the basis of a price calculated in accordance with the provisions of those Acts. The views put forward by Mr Gleeson had the support of certain observations made by O'Flaherty J in the course of his judgment in Metropolitan Properties Ltd. v. O'Brien which was delivered on the 3rd day of April, 1995 and reported in 1995 2 ILRM 383. It is the contention of Mr Gleeson that the sale of the premises by the Bank would involve a breach of trust by the Bank.

[*4] The other perspective is to view the matter as between the Bank and the Commissioners. The Bank did enter into a contract for the sale of the premises to the Commissioners for the sum of £63,000. No doubt the Commissioners contended that they had a right to purchase that freehold pursuant to the provisions of the Landlord and Tenant Acts, 1978-1984. Moreover, it is clearly the case that the Bank believed and had been professionally advised that the Commissioner did enjoy such a statutory right.

5. On its face the Contract for Sale is unconditional and contains no reference to the rights of either party under any legislation nor is it expressed to be conditional upon the existence or otherwise of any such rights.

6. Furthermore, unlike the circumstances which existed in Dance v. Goldingham [1873] 8 Ch App 902, there was nothing in the contract which would put the Commissioners on notice of any irregularity.

7. Having regard to the objections raised by Mr Gleeson the Bank instituted proceedings by way of Special Summons issued on the 14th day of August, 1997 seeking the directions of the High Court in the following terms:-

"Ought the Applicant (the Bank) in the events that have happened and against the will of the Respondent (Mr Gleeson) proceed to complete the contract named in the title hereof?"

[*5] These proceedings were grounded exclusively on the affidavit sworn by Richard Fanning an Officer of the Bank. It seems to me that the answer to the question posed by the Summons depends essentially on the question whether the contract for sale is enforceable by the Commissioner against the Bank. If the Bank is bound by that contract and neglects to perform it, liability and costs will be incurred which would obviously be detrimental to the interests of the beneficiaries. If for any reason the Bank could escape liability on foot of what appears to be an unconditional contract no doubt a better price could be obtained on the open market for the premises untrammelled by any obligations under the Landlord and Tenant Acts.

8. Whether the Bank, as trustees, are bound by the obligations apparently imposed on them by the contract for sale is a matter which could only be resolved in proceedings between the Bank and the Commissioners. Legal opinion has been obtained by the Bank from Senior Counsel advising that the Bank is indeed bound by the contract. However a determination of that issue could only be made in legal proceedings involving both the vendor and the purchaser. As those parties are not before the Court that issue could not be determined. Unless and until that issue is determined it would be impossible to express any opinion or give any directions as to the obligations of the trustee to the beneficiaries under the settlement in relation to the sale of the premises.

9. In those circumstances the President of the High Court was, in my opinion, entirely correct in declining to answer the question posed by the summons. I would myself, however, have said that it was impracticable, and perhaps impossible, to answer those questions rather than [*6] to state that the Court had no jurisdiction so to do. However nothing turns on that point. The questions could not be answered.

10. I would affirm the judgment of the former President and dismiss the appeal.