Allied Irish Banks Plc v Gannon

• Jurisdiction: Ireland
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 08 November 2017
• Neutral Citation: [2017] IECA 291
• Docket Number: [C.A. No. 234 of 2016],Neutral Citation Number: [2017] IECA 291
• Court: Court of Appeal (Ireland)
• Date: 08 November 2017

BETWEEN/

ALLIED IRISH BANKS PLC

RESPONDENT / PLAINTIFF

- AND -

MARTINE GANNON

AND

RICHARD FAIR

APPELLANTS / DEFENDANTS

[2017] IECA 291

Hogan J.

Finlay Geoghegan J.

Peart J.

Hogan J.

Neutral Citation Number: [2017] IECA 291

Record No. 2016/234

THE COURT OF APPEAL

Property & conveyancing – Conveyance – Alleged fraud – Whether Court having jurisdiction to declare conveyance void for fraud on creditor – S 74 of Land and Conveyancing Act Law Reform Act 2009

Facts: The appellants were husband and wife, and had taken a mortgage on a property with the respondent. The wife purported to transfer her interest to her husband, and the respondent sought to have the transfer declared as void as a fraud. The High Court had declined to remit the proceedings to the Circuit Court, and the appellants now sought to challenge the decision before the Court of Appeal.

Held by Hogan J, that the appeal would be allowed. S 74 of the Land and Conveyancing Act Law Reform Act 2009 allocated the Circuit Court sufficient jurisdiction to hear cases such as the present where there were no compelling reasons for the matter to go before the High Court.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 8th day of November 2017

1 Does the Circuit Court have jurisdiction to entertain an application to declare void a voluntary conveyance on the ground that it amounted to a fraud on a creditor for the purposes of s. 74(3) of the Land and Conveyancing Law Reform Act 2009 ('the 2009 Act'). This is the principal issue which arises on this appeal from a decision of the High Court (Binchy J.) dated 9th May 2016 not to remit these present proceedings to the Circuit Court.

2 In these proceedings the plaintiff Bank ('AIB') seeks an order pursuant to s. 74(3) of the 2009 Act declaring void a voluntary conveyance made on 13th April 2010 of certain property in Cork as between the first defendant, Ms. Gannon on the one hand and her husband, the second defendant, Mr. Fair on the other. The property in question is in fact the principal private dwelling of the couple who are married to each other. Prior to the conveyance the property was jointly owned by the couple, but the effect of the conveyance was to transfer Ms. Gannon's interest to her husband, so that Mr. Fair is now the full owner of the property.

3 AIB commenced these proceedings in the High Court in May 2015. The first defendant's solicitor wrote to AIB's solicitors on 11th April 2016 seeking consent to the remittal of these proceedings to the Circuit Court, but no such consent was apparently forthcoming. It is accepted that the rateable valuation of the property is less than the current maximum figure of €253.95 prescribed by the Third Schedule of the Courts (Supplemental Provisions) Act 1961 ('the 1961 Act').

4 On 18th April 2016 the solicitors for the second defendant issued a motion seeking an order pursuant to either Ord. 49,.r.7 or s. 25 of the Courts of Justice Act 1924 transferring the proceedings to the Circuit Court in Cork. An affidavit grounding the motion was sworn by the second defendant's solicitor. She deposed to the fact that Mr. Fair was retired and the defence of these proceedings would impose a heavy burden on him. She further stated that the defence of the proceedings in the Circuit Court 'would mitigate the costs of defending this action' on the part of her client. No replying affidavit was sworn on behalf of AIB.

5 The matter came before Binchy J. in the High Court in the course of a busy Monday list. Having heard a brief argument the judge ruled that AIB 'probably had an election as to the jurisdiction in which to bring the proceedings'. He refused the motion to remit the proceedings to the Circuit Court, ruling that in the event that AIB were successful, the defendants could seek that costs be paid on the Circuit Court scale on that basis that they had previously attempted to limit the costs by seeking to have the matter remitted to the Circuit Court and that this application had been resisted by the Bank.

6 The defendants have now appealed to this Court against that decision not to remit the proceedings.

Does the Circuit Court have jurisdiction pursuant to s. 74 of the 2009 Act?

7 Section 74 of the 2009 Act provides:

'(1) Subject to subsection (2), any voluntary disposition of land made with the intention of defrauding a subsequent purchaser of the land is voidable by that purchaser.

For the purposes of subsection (1), a voluntary disposition is not to be read as intended to defraud merely because a subsequent disposition of the same land was made for valuable consideration.

(2) Subject to subsection (4), any conveyance of property made with the intention of defrauding a creditor or other person is voidable by any person thereby prejudiced.

(3) Subsection (3) does not:

a) apply to any estate or interest in property conveyed for valuable consideration to any person in good faith not having, at the time of the conveyance, notice of the fraudulent intention, or

b) affect any other law relating to bankruptcy of an individual or corporate insolvency.'

8 It will be seen that while s. 74 of the 2009 Act creates a new statutory cause of action, it is nonetheless one with deep roots in our system of property law as the new section essentially re-states and re-enacts in modern form a jurisdiction to set aside conveyances previously contained in the Conveyancing Act 1634 and in the Voluntary Conveyances Act 1893. Both of these items of legislation were repealed by the 2009 Act.

9 So far as the issue of jurisdiction is concerned, s. 74 of the 2009 Act, admittedly, does not in terms positively confer jurisdiction on the Circuit Court and, indeed, the section is silent on the question of which Court can exercise this jurisdiction. The Circuit Court is, of course, a court of local and limited jurisdiction for the purposes of Article 34.3.4 of the Constitution, so that its jurisdiction must be prescribed by law. As this Court stated in Permanent TSB v. Langan [2016] IECA 229:

'Article 34.3.4 of the Constitution provides that: 'The Courts of First Instance should also include Courts of local and limited jurisdiction with a right of appeal as determined by law'. As the Circuit Court is, accordingly, a court of local and limited jurisdiction for the purpose of Article 34.3.4, it is necessary to consider the nature of that jurisdiction. One consequence of this constitutional provision is that the Circuit Court enjoys no inherent jurisdiction, as the limitations of the jurisdiction of the court must be as specified by law. This is in contrast to the position with regard to the High Court which, by virtue of Article 34.3.1 of the Constitution, enjoys a full original jurisdiction in respect of all justiciable matters.'

10 Section 74 of the 2009 Act must, however, be read in conjunction with s. 3 of that Act. Section 3 provides that, 'unless the context otherwise provides' the term court is defined as meaning:

'(a) the High Court, or

(b) the Circuit Court when exercising the jurisdiction conferred on it by the Third Schedule to the Courts (Supplemental Provisions) Act 1961.'

11 Section 22 and the Third Schedule to the 1961 Act confers jurisdiction in civil cases on the Circuit Court (concurrently with the High Court) in a variety of miscellaneous circumstances, each of which in turn are subject to certain exceptions and qualifications. (The various exceptions and qualifications are not relevant to the issue under appeal). Two such specific provisions of the Third Schedule are relevant here.

12 Ref. No. 8 confers jurisdiction on the Circuit Court in respect of an action 'in which the title to land comes into question, other than ejectment.' I find it hard to say that the present...