High Court of Justice in Northern Ireland Chancery Division Decisions

"Why should Parliament wish to protect a registration relating to hopeless or vexatious proceedings merely because they are being prosecuted in good faith? Bona fides and reasonableness are far from being the same thing, and sometimes the most unreasonable of men are the most honest and sincere in their unreason."

I therefore conclude that the proper course is to assess the reasonableness of the registration of the charge and not just the good faith of the Plaintiff's proceedings. Clearly if they are not brought in good faith they are unlikely to be reasonable.

"Its underlying principle is, that the Court will not allow a statute which was passed to prevent fraud to be made itself an instrument of fraud. In other words, the court disregards the absence of that formality which the statute requires when insistence upon it would render it a means of effecting, instead of a means of averting, fraud. The question in each case is, whether the plaintiff has an equity arising from part performance which is so affixed on the conscience of the defendant that it would amount to a fraud on his part to take advantage of the fact that the contract is not in writing."

I consider that Mr Orr dealt with these submissions effectively, for this application at least. He pointed out that the conscience of the defendant was affected here in that it was the conscience of Mr Wolsey, controlling director of the first defendant and trustee and beneficiary of the pension fund. If the plaintiff is right he knew that he had entered into an agreement which covered all the properties between 701 and 707 Lisburn Road. The parties had completed the sale of a public house known as Ta Tu bar and restaurant at 701 Lisburn Road in the sum of £3,125,000.00. That was an act of part performance because the plaintiff company would not have paid that for the bar unless they were also getting the other properties. They hope to add another floor to the premises at 701 Lisburn Road. It would be very difficult to do this if they did not own the adjoining properties, as they say they had agreed with Mr Wolsey. In support of that contention, Mr Orr referred to some correspondence between the solicitors where the solicitors for the plaintiff were asking for a contract for the sale of the other lands on foot of their client's oral agreement. At no point in the correspondence is the fact of that oral agreement disputed by the solicitors for the defendants. The height to which they go is to say, at a late stage, that their client (ie Mr Wolsey) did not consider that there was any "binding agreement". This would be consistent with him taking the point that there was no note or memorandum in writing. It does seem inconsistent with any contention that he had not made an agreement at all. Indeed the first contract furnished to the plaintiff with regard to 701 actually refers to the other properties although the relevant lines are then stroked out. No affidavit has been served from Mr Wolsey, nor from the solicitor with carriage of the conveyance(s).

"In the present circumstances I am unwilling to make it impossible for the plaintiffs to succeed in an action for specific performance on the present material. I am also unwilling that the defendant should be put to loss by reason of the actions of the plaintiffs without being able to recover from them.

In these circumstances it appears to me that I have jurisdiction to do this: I can make an order vacating the register. As soon as that order is made the plaintiffs, having now before me an application in an action where they are asking for specific performance, can apply immediately for an interlocutory injunction pending trial, restraining the defendant from selling, letting or dealing with the property in any way inconsistent with the plaintiff's claim for specific performance. The defendant is willing to submit to such an injunction as soon as it is asked. There will be no need for anybody to go away and draft a notice of motion. It is entirely a matter for the plaintiffs. If they ask for such an injunction the defendant will submit to it. The consequence will be that if the injunction is made there will be a cross undertaking in damages by the plaintiffs. So if at the end of the day it appears that the plaintiffs are not entitled to specific performance then the defendant will be able to claim damages under the Cross undertaking. …… It seems to me that that course will both preserve the plaintiff's right to specific performance and the defendant's right to damages if in the event the plaintiffs fail in the action. I see no reason why I should not adopt that course, whether it be behaving robustly or not, and that is the course I propose to take."

In Norman v Hardy [1974] 1 All ER 1170 at 1176 Goulding J cited this passage "with very great respect" but without expressing any view on the rightness of the decision itself. The case was considered by the Court of Appeal on England in Tiverton Estates Limited v Wearwell Limited [1974] 1 All ER 209. Lord Denning MR at page 219 cites Clearbrook in this way.

"In some circumstances it would not be right to vacate the caution. For example, if the cautioner had a substantial point in his favour and it would be unfair to him to vacate it. The court might then try to protect both sides by telling the cautioner: 'You may keep the caution on the register if you undertake to pay the owner any damages caused by its presence if it is afterwards held that it was wrongly entered. But, if you are not ready to give such an undertaking, then the caution must be vacated.' An alternative would be to do what Templeman J did in Clearbrook Property Holdings Limited v Verrier. But in the present case I would not do any of those things because it is plain to my mind that there was no enforceable contract. The register should be rectified by cancelling the caution."

In Price Brothers (Somerford) Limited v J Kelly Holmes (Stoke on Trent) Limited and Others [1975] 3 All ER 369 at 374 a separate Court of Appeal certainly upheld their right to vacate a caution if on the facts of the case it ought not to be in the register, as an exercise of the court's discretion. They were a little more cautious about the decision of Templeman J. But two distinguished judges cited the decision in successive reports in [1990] 2 All ER. In Blue Town Investments page 897 Sir Nicholas Browne-Wilkinson V-C expressly applied the decision. His decision was criticised by the then Hoffman J in Oxy Electric Limited v Zainuddin page 903 at pages 905, 906. But his distinguishing of Clearbrook does not carry the implication of disapproval of its ratio, in appropriate circumstances, it seems to me.

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of in international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions of penalties."

Measures which fall short of deprivation but which substantially interfere with an individuals peaceful enjoyment of his or her possessions or property are capable of constituting control within the meaning of Protocol 1 Article 1 and therefore an interference with the right which has to be justified eg. planning controls: Pine Valley Developments Limited v Ireland (1991) 14 EHRR 319, ECtHR. It seems to me that the combination of the State's provision of a statutory procedure for the registration of a pending action combined with the natural caution of a purchaser or a lender in the face of such a registration together amounts to control within the meaning of Article 1 of the First Protocol. On the authorities that interference would appear to be justifiable only where it is lawful, in the public interest and deemed "necessary" by the State. There is statutory provision for the matter and I consider it therefore lawful. I consider it must be in the public interest that potential buyers of property are alerted by a system of registration of pending actions to legal proceedings which may mean that the apparent legal owner of the property may not indeed enjoy a good title. This may bring an advantage in litigation to the plaintiff but that is not the essential purpose of it. The same result i.e. protecting a purchaser, is achieved if an injunction is in force restraining the defendant from selling, subject only to a deliberate flouting of the Order of the Court by the vendor, which is unlikely, and more unlikely as his solicitors would also be aware and would scarcely wish to act in contempt of court by facilitating such a sale, or by remaining silent if such a sale was being contemplated. The issue, in human rights terms, as is not infrequently the case, is therefore whether it is "necessary"? Or, whether necessity is established only if the party achieving the registration is, in the appropriate case, obliged to give a cross undertaking in damages. One could readily see that the necessity for the registration of a pending action would only exist in tandem with a cross undertaking if the plaintiff's action was a highly speculative one. It may be that the stronger the plaintiff's case the easier it is to justify the registration. Clearly a relevant factor in assessing the matter is whether the lis pendens is in fact interfering with the peaceful enjoyment of the property. If the property in question were a dwelling house in which the defendant is continuing to live, or a farm which he was continuing to farm, without any intention of selling the same, these issues would not really arise. If the plaintiff had a good arguable case but was impecunious and not in a position to offer a cross undertaking of any value it may still be right to uphold the registration. The courts have not ruled out, in the field of injunctive relief, granting injunctions where a plaintiff is not in a position to give a worthwhile cross undertaking. It is right to say that too ready a granting of such an application for vacation followed by an injunction with cross undertaking could lead to an unwelcome sub-species of litigation, where every defendant who has a lis pendens registered seeks to extract a cross undertaking from the plaintiff who has done so. But they would have to address the matters set out above. I would be firmly of the opinion that such applications would be entirely inappropriate in very many cases. The court would be mindful, for example, with regard to the impecunious plaintiff that that plaintiff would enjoy rights under Article 6 to a trial of their action. If they had an arguable case the caution might well be justified even if they were unable to provide a cross undertaking.