Supreme Court gives significant ruling against fund over land claim
Posted on 4th June 2019 at 22:28
Fund cannot rely on a man’s deposit of land certificates to give it a claim over his lands
A financial fund cannot rely on a man’s deposit of land certificates with a bank to give it a lien or claim over his registered lands in Co Sligo, a five-judge Supreme Court has ruled.
In a significant unanimous decision on Tuesday, the court ruled Promonotoria (Oyster) Designated Activity Company does not retain the benefit of a lien by deposit because of changes to the law effected by the Registration of Deeds and Title Act 2006.
The court found the intention of the 2006 Act was to, within a three-year period by the end of 2009, bring about a “complete end” to the system of lien by deposit of a land certificate in respect of registered land.
It stressed the issues in Gerard Hannon’s case are concerned only with liens over registered, not unregistered, land.
On that basis, it allowed the appeal by Mr Hannon, of Ballymote, Co Sligo, against a decision of the Court of Appeal that the fund has the benefit of a lien by deposit over five folios of his lands in the county.
The Chief Justice, Mr Justice Frank Clarke, stressed nothing in his judgment should be taken as expressing any view on whether Promotoria has other means of pursuing a claim against Mr Hannon based on having security over the lands.
That is a matter to be determined in any other proceedings which Promotoria may be advised it can maintain, he added.
In a concurring judgment, Ms Justice Elizabeth Dunne also allowed the appeal.
She said section 73 of the 2006 Act abolished the creation of equitable mortgages by deposit of land certificates or other title deeds.
That does not mean an equitable deposit of title deeds in respect of unregistered land cannot occur but, in time, as more and more unregistered land becomes registered, the number of such equitable mortgages will decrease, she said.
The change in the law has no bearing on any other method of creating an equitable mortgage in a manner previously known to the law, she added.
The three other members of the court – Mr Justice George Birmingham, Mr Justice John MacMenamin and Mr Justice Peter Charleton – agreed with their colleagues.
The case arose after Mr Hannon deposited land certificates for five folios of land in Co Sligo with Ulster Bank as security for past and future indebtedness. He had argued the certificates were lodged only for safekeeping but did not appeal a High Court finding otherwise.
In March 2010, Ulster Bank informed him it intended to register a lien on the relevant folios under section 73.3 of the 2006 Act.
Mr Hannon brought proceedings seeking to set aside the Property Registration Authority’s decision to register the relevant liens.
That case was stayed pending proceedings by Ulster Bank, later Promontoria after it acquired Mr Hannon’s loan and security from Ulster Bank in 2016, aimed at enforcing its lien. The issue in the fund’s case was whether it has a lien by deposit because, if it had a lien, the validity or otherwise of the registered liens as raised in Mr Hannon’s case would have little practical significance.
The High Court and Court of Appeal both found in favour of the fund
Mr Hannon represented himself in both lower courts but, in his appeal to the Supreme Court, he was represented by lawyers under a scheme agreed between that court and the Bar of Ireland and Law Society.
The core issue in the Supreme Court appeal was whether, in light of the 2006 Act, the fund retains the benefit of a lien by deposit of the relevant land certificates originally effected in favour of Ulster Bank. All five judges agreed it does not.
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