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Cunnane v. Shannon Foynes Port Company [2002] IESC 55 (8th July, 2002)

RECORD NO 2001/250

2001/9260P

MURPHY J

MURRAY J

GEOGHEGAN J

BETWEEN:

PLAINTIFF/APPELLANT

DEFENDANT/RESPONDENT

JUDGMENT OF MR JUSTICE FRANCIS D MURPHY DELIVERED THE 8^th DAY OF JULY, 2002 [Nem Diss.]

___________________________________________________________________________

1.       The above named defendant/respondent (Shannon) is the owner in fee simple of the premises known as Aras Ide, Foynes in the County of Limerick (the premises) being the lands comprised in folio 23676F of the Register of Freeholders, County Limerick. By contract dated the 11th May, 2001, Shannon agreed with the Foynes Aviation and Maritime Museum Ltd. (the purchasers) for the sale to them of the premises for the sum of £250,000. The closing date for the sale was two months from the date of the agreement, agreed to be, the 13th July, 2001. The premises were valued by DeCourcy's, Auctioneers and Valuers, in a sum of £210,000. The sale of the premises is governed by section 15 (2) of the Harbours Act 1996 which provides as follows:

"(2) The consideration for which any land is sold by a company shall, in so far as is

practicable, not be less than its open market value."

2.       The above named plaintiff/appellant (Mr. Cunnane) is a solicitor who carries on practice in part of the premises. It appears that he currently occupies four rooms therein (and previously two) which he has occupied as tenant thereof since the 1st November, 1993. Mr. Cunnane instituted proceedings against Shannon by way of plenary summons issued on the 15th June, 2001. In the summons Mr. Cunnane claimed as series of declarations and injunctions. The relief most material to the present application is that contained in paragraphs 3 and 4 in the following terms:-

"3 A declaration that the plaintiff's business occupation, as lessee of part of the premises known as Aras Ide, Foynes in the County of Limerick (being all of the property comprised in folio 3644F, now closed off to property number 1 in folio 23676F, of the Register of Freeholders County Limerick) and, in particular, as the lessee of the constituent building immediately adjacent to the constituent building known as the Harbour Office occupied by the defendant, vests in the plaintiff sufficient interest in the market value of the premises to entitle the plaintiff to treat with the defendant in any sale or proposed sale of the premises occupied by the plaintiff and to have such bids as the plaintiff may make taken into account in determining the open market value of the premises further to the aforesaid statutory duty.

4 The declaration that any purported sale or proposed sale of the premises or part of the premises comprised of the said folio 3644F now closed off to property number 1 on folio 23676F of the Register of Freeholders County Limerick (and any contract entered into or conveyance made thereunder) which is made by the defendant without reference to the plaintiff's interest in the open market value of the premises is null and void."

3.       Mr. Cunnane presented a requisition to the Land Registry for the registration of the said proceedings as a lis pendens in respect of folio 23676F and the Registry duly issued a certificate that such lis pendens was in existence as at the 2nd July, 2001. The statement of claim was delivered on the 29th November, 2001. The defence delivered on the 24th January, 2002, and the case was listed for hearing - over a period of three days - commencing on the 26th June, 2002.

4.       By notice of motion dated the 19th July, 2001, Shannon applied for an order vacating the lis pendens and for an order striking out the proceedings pursuant to the Rules of the Superior Court or pursuant to the inherent jurisdiction of the Court on the grounds that the proceedings constitute an abuse of process.

5.       By order dated the 31st July, 2001, McCracken J. ordered that the lis pendens be vacated for the reasons set out in an ex tempore judgment of the same date. It does not appear that the application to strike out the proceedings was pursued.

6.       As McCracken J. pointed out, the relevant Irish legislation provides no definition of a lis pendens. Shannon relied on the UK decision in Calgary & Edmonton Land Co. Ltd. v. Dobinson [1974] 1 Ch. 102 in which Megarry J. defined or described the analogous system of registration under the Land Charges Act 1972 (at p. 107G) in the following terms:-

"What is registrable as a pending land action is an action or proceeding which claims some propriety right in the land, and not an action merely claiming that the owner should be restrained from exercising his powers of disposition. Accordingly, on authority both ancient and modern, and on principle, I hold that the defendant's proceedings in the Companies Court do not constitute a "pending land action" within the Land Charges Act 1972."

7.       In that case the plaintiff company was in liquidation and the liquidator thereof proposed to sell part of its lands. The defendant was a creditor and contributory of the company. He sought to restrain the liquidator from disposing of any of the assets of the plaintiff company at what he, the defendant, contended was an under value. The defendant accordingly issued a summons in the Companies Court seeking an order restraining the liquidator from disposing of any of the company's land until appropriate arrangements were made to obtain the highest price obtainable. The defendant then procured the registration of the pending action against the property of the company. The proceedings before Megarry J. related to the application by the plaintiff company - through the liquidator - to have the registration vacated.

8.       Throughout the nineteenth century the system of the registration of pending litigation and the effect of such registration was similar in both England and Ireland. The registration of pending legislation was governed in England by the Judgments Act, 1839 and here by the Judgments (Ireland) Act, 1844. The relevant provisions were virtually identical in their terms.

9.       The Act of 1844, s.10 provides as follows:-

"No lis pendens shall bind or affect a purchaser or mortgagee without express notice thereof, unless and until a memorandum or minute containing the name and the usual or last known place of abode, and the title, trade or profession, of the person whose estate shall be intended to be affected thereby, and the court of equity, and the title of the cause or information, and the day when the bill or information was filed, shall be left with such officer so to be appointed as aforesaid, who shall forthwith enter the same particulars in a book as aforesaid, in alphabetical order, by the name of the person whose estate is intended to be affected by such lis pendens, ...."

10.       That provision (and the comparable legislation in England) recognises that some category of pending litigation is capable of affecting "a purchaser or mortgagee" and expressly limits the circumstances in which it could have that effect to cases where the purchaser or mortgagee either had express notice of the pending litigation or where a memorandum or minute in relation thereto had been registered in accordance with the provision of the Act. The particular section is not particularly informative as to the effect of pending litigation or the categories of litigation which can and should be registered so as to affect those purchasers who do not have express notice thereof.

11.       The meaning and effect of the doctrine of lis pendens and the nature of the rights protected by the Judgments Act, was considered in a number of cases which were reviewed by Kenny J. in Giles v. Brady [1974] IR 462. That learned judge considered in particular the decision of the Court of Appeal in Chancery in Bellamy .v. Sabine 1 DeG & J 566. Having described it as an authority of the highest standing, he went on to quote extensively from the judgment of Lord Cranworth and in particular the following statement:-

"What ought to be said is, that, pendente lite, neither party to the litigation can alienate the property in dispute so as to affect his opponent."

12.       How that principle was applicable in the case before Kenny J. was explained in the following terms at p. 467:-

1"The plaintiff has paid some of the deposit; if he succeeds in his claim for its recovery, he will have a purchaser's lien on the land for it. This is the type of right which the doctrine of lis pendens protects, and so the suit affects the second defendant's estate."

13.       It was on that basis he held that the lis was registrable.

14.       The decision in the Calgary case concerned the meaning of the expression "pending land action" in s.17(1) of the UK Land Charges Act, 1972, rather than any definition of a lis pendens as that term was used in the Judgments Acts. The essence of the case made by the defendant/creditor was that the statutory term "pending land action" was more extensive than the earlier legislation. As the legislative term was defined as meaning "any action or proceeding pending in court relating to land" the case for an extended meaning was certainly arguable. Counsel for each party accepted that some limitation had to be placed on the words "relating to land". They agreed that, for example, that an action to restrain a nuisance alleged to emanate from a defendant's land did not relate to "those lands in such a way as to fall within the statutory definition". The question was, as Megarry J. pointed out, how restricted the interpretation should be. Counsel for the plaintiff formulated the restriction in terms of proprietary claims being made against the owner of land and counsel for the defendant said that the test had nothing to do with proprietary claims and that an issue as to whether land was capable of being alienated by the defendant, having regard to the claim made against it, would be captured by the provision.

15.       Megarry J. concluded at p. 107 that registration was limited in the following manner:-

"The rights made registrable under the Land Charges Act 1972, as under the Land Charges Act 1925, are in general substantive rights in the land. Those with specified rights or claims to the land or any interest in it must register those rights or claims (and so give warning to purchasers) or else suffer the consequences of failure to register. What is protected is some substantive right adverse to the owner, rather than a mere fetter on the owner's rights of dispossession. That being so, it is not surprising that an expression as wide and general in its literal meaning as "any action or proceeding pending in court relating to land or any interest in or charge on land" should be given a narrower meaning more in conformity with the generality of rights registrable under the Act."

16.       Mr James O'Reilly, SC, for Mr Cunnane submitted that the decision in the Calgary case did not represent a correct statement of the law in this jurisdiction. To the extent that Megarry J was interpreting an entirely different legislative provision and giving a narrower interpretation to a term capable of a broader one, there is no direct parallel in this jurisdiction. Furthermore, counsel for the plaintiff submitted that the decision in the Calgary case was distinguished by the Court of Appeal in Whittingham .v. Whittingham [1979] Fam. 9. In that case the issue was whether proceedings under the Matrimonial Causes Act 1973 for a property transfer order in respect of particular property was registrable as a "pending land action" into the Land Charges Act 1972. The Court of Appeal affirmed the decision of the High Court that it was so registrable. The Court of Appeal, at p. 23, expressly upheld the conclusion by Megarry J. in the Calgary case but questioned the test proposed by him to this extent:-

"If Megarry J intended to lay down the principle that in order to be registrable there must be a claim to an existing interest in the land, then I venture to think he came to a wrong conclusion in that regard."

17.       I confess that I had not understood Megarry J. to exclude from registration proceedings relating to a claim on or to premises which claims were not then in existence. If that was so, I agree, it should not represent the law in this jurisdiction. Whether a plaintiff must have an existing estate or interest in the property in respect of which the proceedings are instituted so as to render them registrable was considered by my colleague Mr. Justice Geoghegan in AS .v. GS [1994] 1 IR 407. In that case the issue was whether proceedings for a property adjustment order in judicial separation proceedings were registrable as a lis pendens. Mr. Justice Geoghegan, following the decision of the UK Court of Appeal in Perez-Adamson .v. Perez-Rivaz [1987] Fam. 89, held that they were. He explained the position and set out his conclusion (at p. 412) in the following terms:-

"Although the Court of Appeal [in Perez-Adamson] partly relied on the wording of the Act of 1972, it seems clear that the English legislation referred to was nothing more than a replacement of the Judgments Act, 1839, which was the English equivalent of the Act of 1844 in Ireland and did not, in any relevant or significant way, alter the nature of a lis pendens, the circumstances in which it could be registered and the effect of registration. Nicholls L.J. raises what is the real problem about (sic.) regarding an application for a property adjustment order as a registerable (sic.) lis pendens. At the time of the institution of the proceedings the applicant spouse has no estate or interest in the property sought to be transferred. She or he has merely a claim to it. Is that sufficient? Nicholls L.J. points out that in Whittingham .v. Whittingham [1979] Fam. 9, the English Court of Appeal decided that it was sufficient. With some hesitation I have also come to the conclusion that an application for a property adjustment order relating to specific property is a registerable (sic.) lis."

18.       It would seem to me that what the authorities in both jurisdictions establish is that to be registrable as a lis pendens an action must claim an interest in land but that the interest claimed need not be in existence at the date on which the proceedings are instituted. If no such interest is claimed the proceedings are not registrable.

19.       It would seem to me that the decisions in both jurisdictions - namely, Calgary, and Giles, Whittingham, and AS v. GS - while not expressed in identical terms, reach the same conclusion: to be registrable as a lis pendens an action must claim an interest in land but the interest claimed need not be in existence at the date on which the proceedings are instituted. If no such interest is claimed the proceedings are not registrable. Furthermore, those with specified claims to the land must register those rights or claims (and so give warning to purchasers) or else suffer the consequences of failure to register.

20.       In the present case Mr. Cunnane in his statement of claim has alleged is that Shannon proposes in breach of its statutory duty in that behalf, to sell the premises at an undervalue. Questions may arise as to the locus standi of Mr. Cunnane to make that case but, assuming that issue to be resolved in his favour, he would then argue as he has done in the affidavit sworn by him on the 19th July, 2001, that:-

"There is an open market available to the defendant (Shannon) for the sale of this premises either in whole or in lots and that market has not been resorted to nor tested by the defendant (Shannon). I am a customer in that market and I am interested in purchasing the premises either in whole or in lots and I will bid and negotiate in relation to the same when given an opportunity."

21.       Mr. Cunnane does not claim to have an option to purchase the premises or a right of first refusal thereon. Assuming, for present purposes only, that sale of the premises at "its open market value" requires that they placed on the market so that members of the public may bid for it, his only role in the matter in such an event would be as a potential and probable bidder. He claims no right in the property but asserts that Shannon have a duty to ascertain and obtain the market value of the premises and that this would involve affording an opportunity to Mr. Cunnane and other interested parties - including the other tenants of the premises - to bid for the premises. Mr. Cunnane's only possible claim against the premises is that in the event of their being offered for sale by public auction or tender he might be the highest bidder therefor and so obtain ownership. As matters stand he has no proprietary interest in the premises but, more than that, he has no claim to or against the premises. If he succeeded fully in the proceedings he might have the possibility of becoming the owner but the successful outcome of the action would not of itself give him any estate whatever in the premises. What the authorities establish is that where a plaintiff does not at the commencement of proceedings have a proprietary interest in the premises in respect of which a claim is made does not, as has been already pointed out, mean that the litigation is not registrable but where the claim if successful would not result in an existing interest in or right against the premises - as is the case here - there is no basis on which the lis falls within the Judgments Act of 1844.

22.       Accordingly I would dismiss the appeal.