Clearscape Property Developments Ltd v Bennett Tarmacadam Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Emily Egan
• Judgment Date: 22 July 2022
• Neutral Citation: [2022] IEHC 453
• Court: High Court
• Docket Number: [2019 7478 P]

Between

Clearscape Property Developments Limited

Plaintiff

and

Bennett Tarmacadam Limited

Defendant

[2022] IEHC 453

[2019 7478 P]

THE HIGH COURT

Reasonable cause of action – Vacating lis pendens – Security for costs – Defendant seeking an order dismissing the proceedings – Whether no reasonable cause of action was disclosed

Facts: The defendant, Bennett Tarmacadam Ltd (Bennett), purchased land at Rosslare Strand, County Wexford (the property) from Allied Irish Banks Plc (AIB) in or about February 2019. The plaintiff, Clearscape Property Developments Ltd (Clearscape), the former owner of the property, sought a declaration that the purported transfer of the property to Bennett was invalid, void and of no effect, a declaration that Clearscape was the full owner of the lands and damages. Clearscape registered a lis pendens against the property in the Central Office in October 2019. Bennett sought an order dismissing the proceedings pursuant to O. 19 r. 28 of the Superior Court Rules or alternatively pursuant to the inherent jurisdiction of the High Court, on the basis that no reasonable cause of action was disclosed. Bennett also sought an order pursuant to s. 123 of the Land and Conveyancing Law Reform Act 2009 and/or pursuant to the inherent jurisdiction of the court vacating the lis pendens registered by Clearscape on the basis that the proceedings were not being prosecuted bona fide. In the event that the proceedings were not dismissed, Bennett also sought an order for security for costs pursuant to s. 52 or s. 390 of the Companies Act 2014 and/or pursuant to O. 29 r. 1 of the Rules. At the conclusion of the hearing, and on notice to Bennett, Clearscape furnished the court with a draft Amended Statement of Claim which if permitted it proposed to deliver. Bennett did not object to the court considering it de bene esse. Six separate, but interlinked, allegations were advanced by the Amended Statement of Claim: (1) the wrongful application for planning permission; (2) the invalidity of the development agreement; (3) the invalidity of the mortgage deed and deed of appointment of the receiver; (4) the breach of contract/wrongful demand for payment; (5) the malicious prosecution; and (6) the declaration that the transfer is void.

Held by Egan J that she could see no credible basis for a claim against Bennett in regard to the alleged deficiencies in the development agreement or mortgage deed; nor was there any conceivable claim against Bennett arising from any alleged invalidity in the appointment of the receiver. She found that no reasonable cause of action against Bennett was disclosed in those respects by the pleadings. Nothing in the affidavits changed her view that no reasonable cause of action on the part of Clearscape against Bennett was disclosed in those respects. In the circumstances, she held that there was a reasonable case to be made on credible evidence that the invoice was issued in breach of the terms of the development agreement. She held that the facts potentially disclosed a reasonable cause of action for breach of contract and malicious prosecution against Bennett. She accepted that a successful claim for breach of contract and malicious prosecution would usually sound in damages only. Equally, she was satisfied that a purchaser who has notice, actual or constructive, of an irregularity or unlawfulness in the sale of lands could not obtain good title. On the facts of the case, she was satisfied that Clearscape had made out a reasonable case for the declaratory relief sought and if necessary for an order setting aside the transfer of the lands to Bennett. She rejected the argument that the proceedings did not advance a bona fide claim to an interest in land. She therefore declined to vacate the lis pendens.

Egan J held that it was not possible to discern whether or not the defendant had a prima facie defence to such aspects of the plaintiffs claim as she had found disclosed a reasonable cause of action. She declined to order security for costs.

Relief refused in part.

JUDGMENT of Ms. Justice Emily Egan delivered on the 22nd day of July, 2022

Introduction

1 This action concerns land at Rosslare Strand, County Wexford (“the property”) which the defendant, Bennett Tarmacadam Ltd (“Bennett”), purchased from Allied Irish Banks Plc (“AIB”) in or about February 2019.

2 The plaintiff, Clearscape Property Developments Ltd (“Clearscape”), is the former owner of the property. In these proceedings, Clearscape seeks a declaration that the purported transfer of the property to Bennett is invalid, void and of no effect, a declaration that Clearscape is the full owner of the lands and damages. Clearscape registered a lis pendens against the property in the Central Office in October 2019.

3 In the present application, Bennett seeks an order dismissing the proceedings pursuant to O. 19 r. 28 of the Superior Court Rules (“the Rules”) or alternatively pursuant to the inherent jurisdiction of the court, on the basis that no reasonable cause of action is disclosed. Bennett also seeks an order pursuant to s. 123 of the Land and Conveyancing Law Reform Act, 2009 and/or pursuant to the inherent jurisdiction of the court vacating the lis pendens registered by Clearscape on the basis that these proceedings are not being prosecuted bona fide. In the event that the proceedings are not dismissed, Bennett also seeks an order for security for costs pursuant to s. 52 or s. 390 of the Companies Act, 2014 and/or pursuant to O. 29 r. 1 of the Rules.

4 At the conclusion of the hearing, and on notice to Bennett, Clearscape furnished the court with a draft Amended Statement of Claim which if permitted it proposes to deliver. Bennett, whilst correctly observing that it was unsatisfactory that the amended pleading was produced in an informal manner at such a late stage, did not object to the court considering it de bene esse. I have therefore had regard to the draft Amended Statement of Claim in adjudicating upon this application.

Summary of factual background

5 The factual background is averred to in the affidavit of Owen Doyle (“Mr Doyle”) who is the director and sole shareholder of Clearscape. He is not however a plaintiff in this application and no application has been made to join him to the proceedings. This causes some difficulty because, as will become apparent, many of the arguments advanced by Mr Doyle would be more properly advanced in proceedings in which he was suing as co-plaintiff.

6 Mr Doyle has been profoundly deaf as a result of a childhood accident in respect of which he received a substantial sum in settlement of personal injuries proceedings. Mr Doyle states that he is a vulnerable person and is heavily dependent on his father, Adrian Doyle, who has always managed his settlement monies. Mr Doyle maintains that he was coerced by his father into a number of property transactions, including the purchase of the property by Clearscape in 2007 for €910,000. Slightly less than a third of this purchase price was funded by Mr Doyle personally from his settlement monies and the remainder was financed by a loan from AIB to Clearscape, which loan was secured upon the property by a deed of mortgage in favour of the bank. Mr Doyle also alleges that he was coerced by his father into providing a personal guarantee in respect of Clearscape's liabilities. Mr Doyle maintains that he acted without independent legal advice and did not understand the nature and meaning of any of the forgoing transactions. Mr Doyle also alleges that, unknown to him, his father procured Clearscape to enter into a development agreement (“the development agreement”) with Bennett in respect of the property. Mr Doyle and Clearscape maintain that Adrian Doyle had a very close relationship with Michael Bennett, the director of that company.

7 Pursuant to the terms of the development agreement, eight residential units were to be built on the property. On the sale of each unit, the building costs of each unit were to be repaid to Bennett and one eighth of Clearscape's borrowings to AIB were to be repaid. On completion of the entire development, profits or losses would be shared equally between Clearscape and Bennett. To this end, planning permission for the development of the residential units had been secured in August 2009. Although one residential unit was built and sold in 2014 for €249,520.81, it does not appear that the majority of the development proceeded at that time and repayments were not made to AIB. In due course, AIB sought full repayment of the loan. In 2014 and 2015, Bennett issued several invoices to Clearscape in respect of building costs incurred to that date. There is a dispute between the parties as to the entitlement of Bennett to issue these invoices. In any event, these invoices were not discharged by Clearscape and Bennett issued proceedings on foot thereof in January 2016 (“the 2016 proceedings”). At the same time, Bennett registered a lis pendens on the folio of the property. Neither Mr Doyle nor Clearscape were aware of the existence of the proceedings, which were never served on Clearscape, or of the registration of the lis pendens.

8 In June 2018, as Clearscape remained in default of its repayment obligations, AIB appointed a receiver over the property. In November 2018 the property was placed on the market at a guide price of €70,000. It is common case that the lis pendens registered by Bennett against the property negatively impacted on the property's sale price. It appears that Bennett was the only interested party and ultimately purchased the property for €80,000 in December 2018. Clearscape asserts that this sale was at a gross undervalue. It pleads that, at the time of the delivery of the original Statement of Claim in October 2020, one of the residential units on the property was advertised for sale at €495,000. It therefore appears that Bennett has...