Hurley Property ICAV v Charleen Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice David Barniville
• Judgment Date: 31 October 2018
• Neutral Citation: [2018] IEHC 611
• Court: High Court
• Docket Number: [2017 No. 350 MCA]
• Date: 31 October 2018

IN THE MATTER OF SECTION 123 OF THE LAND AND CONVEYANCING LAW REFORM ACT 2009

BETWEEN

HURLEY PROPERTY ICAV

APPLICANT

AND

CHARLEEN LIMITED

RESPONDENT

[2018] IEHC 611

Barniville J.

[2017 No. 350 MCA]

THE HIGH COURT

COMMERCIAL

Lis pendens – Delay – Prosecution – Applicant seeking orders vacating various lis pendens registered by the respondent on certain folios – Whether there had been an unreasonable delay in prosecuting the action

Facts: The applicant, Hurley Property ICAV, applied to the High Court for orders pursuant to s. 123(b)(ii) of the Land and Conveyancing Law Reform Act 2009, or alternatively, pursuant to the inherent jurisdiction of the court, vacating various lis pendens registered by the respondent, Charleen Ltd, on certain folios of the Register of Freeholders, Co. Westmeath, namely Folios 1664L, 2753L, 28021F, 2928L, 23608F, 29586F and 33325F. The applicant contended that the lis should be vacated on the grounds that: 1) the respondent could establish no estate or interest in any of the lands in question (which all formed part of the Athlone Town Centre in Athlone, Co. Westmeath) and was, therefore, not entitled to register the lis having regard to the provisions of s. 121(2) of the 2009 Act; 2) there had been an "unreasonable delay in prosecuting the action" on the part of the respondent; and 3) the action was "not being prosecuted bona fide" by the respondent.

Held by Barniville J that there had been an "unreasonable delay" in the prosecution of the proceedings by the respondent. Barniville J held that this was sufficient to dispose of the applicant's application. Barniville J found it unnecessary to rule on the other grounds advanced by the applicant in support of the application.

Barniville J held that this was an appropriate case in which to make an order under s. 123(b)(ii) vacating the lis pendens registered by the respondent in the Central Office and on the Folios, on foot of the proceedings issued by the respondent in May 2017.

Application granted.

JUDGMENT of Mr. Justice David Barniville delivered on the 31st day of October, 2018

Introduction

1 This is my judgment on an application by the applicant, Hurley Property ICAV ('Hurley'), for orders pursuant to s. 123(b)(ii) of the Land and Conveyancing Law Reform Act 2009, (the '2009 Act'), or alternatively, pursuant to the inherent jurisdiction of the court, vacating various lis pendens [The singular and plural of lis pendens being the same,] registered by the respondent, Charleen Limited ('Charleen'), on certain folios of the Register of Freeholders, Co. Westmeath, namely Folios 1664L, 2753L, 28021F, 2928L, 23608F, 29586F and 33325F (the 'Folios').

2 The applicant's application was made by an originating notice of motion issued on 20th November, 2017. The motion sought orders pursuant to s. 123(b)(ii) of the 2009 Act or, alternatively, pursuant to the inherent jurisdiction of the court vacating the lis pendens registered by the respondent as a burden on the Folios. The lis were registered on the Folios in the context of proceedings commenced by the respondent (as plaintiff) on 18th May, 2017 which bear record number 2017 No. 4489 P (the 'proceedings'). The applicant (Hurley) is one of eight defendants named in the proceedings. Following the commencement of the proceedings, the respondent (Charleen) registered the lis pendens in the Central Office on 7th June, 2017 and registered the lis as burdens on the Folios on 3rd August, 2017. While the proceedings were issued on 18th May, 2017, they were not in fact served on the applicant until 23rd November, 2017. A statement of claim was not delivered until 14th February, 2018 (one week prior to the hearing of the applicant's application to vacate the lis).

3 The applicant contends that the lis should be vacated on various grounds. First, it is contended that the respondent was not entitled to register the lis on the grounds that the respondent can establish no estate or interest in any of the lands in question (which all form part of the Athlone Town Centre in Athlone, Co. Westmeath) and was, therefore, not entitled to register the lis having regard to the provisions of s. 121(2) of the 2009 Act. Second, the applicant contends that the lis should be vacated on the grounds that there has been an ' unreasonable delay in prosecuting the action' on the part of the respondent. Third, the applicant contends that the action is ' not being prosecuted bona fide' by the respondent.

4 The respondent has resisted the application. It contends, first, that the proceedings do seek to establish an estate or interest in the lands in the form of a transfer to the respondent of the freehold title in the Sheraton Hotel in Athlone and in the form of various easements over other parts of Athlone Town Centre by means of a transfer and a deed of mutual easements and covenants which it claims the applicant agreed to execute in its favour thereby entitling it to register the lis under s. 121 of the 2009 Act. Second, the respondent rejects the suggestion that there has been an ' unreasonable delay' in the prosecution of the proceedings. Third, it contends that the proceedings are being ' prosecuted bona fide'. Therefore, it submits that the court should not vacate the lis pendens pursuant to s. 123(b)(ii) of the 2009 Act (or otherwise).

5 The applicant's application was grounded on an affidavit sworn by Ms. Darina Delahunt, an asset manager with Alanis Unlimited Company, a firm of asset managers retained by the applicant to manage its portfolio of real estate in Ireland, on 14th November, 2017. An affidavit was sworn on behalf of the respondent by Mr. John O'Sullivan, a director of the respondent company, on 18th December, 2017 in response to Ms. Delahunt's affidavit. Further affidavits were sworn by Ms. Delahunt and Mr. O'Sullivan for the purposes of the application.

Scheme of Judgment

6 I propose to initially outline a summary of the relevant factual background. There are significant factual disputes between the parties. The applicant accepts that it is not possible to resolve those factual disputes on the basis of the affidavit evidence adduced in the context of this application. It accepts that the respondent's case must be taken at its height for the purposes of the application. When setting out the relevant factual background below, I will point to areas in which the facts are in dispute. I will assess later in the judgment whether it is nonetheless possible to reach conclusions on the applicant's application in respect of those issues. Once I have addressed the relevant factual background, I will then turn to consider the relevant legal principles in relation to the court's jurisdiction to vacate a lis pendens. In that context I will consider a number of relevant authorities. Having identified the relevant legal principles, I will seek to apply them to the particular issues raised in this application and then set out my conclusions on the application.

Relevant factual background

7 The applicant and the respondent have interests in a property known as the Athlone Town Centre in Athlone, Co. Westmeath (the 'Centre'). The Centre has three distinct and separate parts or areas (in respect of which there are some shared common areas), namely, (a) the commercial area, (b) residential units and (c) the hotel which trades under the Sheraton name (the 'Hotel'). The applicant acquired ownership of the Centre on foot of a contract of sale dated 19th May, 2015 and a deed of transfer dated 2nd October, 2015. The applicant acquired ownership of the Centre from the Receivers of the previous owners, Abbiamo Ltd. ('Abbiamo') and Prefero Ltd. ('Prefero'), who were the freehold owners of the residential units in the Centre and of the Hotel, and of ATC Retail Ltd. ('ATC Retail'), which was the freehold owner of the commercial area (which it acquired from Abbiamo and Prefero in 2009 on foot of a contract of sale and a transfer of sale, both dated 30th October, 2009).

8 The applicant acquired the Centre subject to a lease in respect of the Hotel which the respondent had entered into with Abbiamo and Prefero on 1st December, 2006 (the 'Hotel Lease'). The lease is a 700-year lease. As we shall see, the applicant accepts that at the time it acquired ownership of the Centre in October 2015, the Receivers of Abbiamo and Prefero had been in negotiation with the respondent with a view to transferring the freehold interest in the Hotel to the respondent and with a view to entering into a deed of mutual easements and covenants with it. The applicant says that no agreement was reached for that transfer or for the grant of such a deed prior to the date of its acquisition of the Centre or indeed at any time thereafter, although it was agreeable ' in principle' to the transfer and to entering into the deed on certain terms.

9 The respondent claims that an agreement for the transfer and for such a deed was reached in September 2015. It says that the consideration which it provided for that agreement was its forbearance from seeking injunctive relief in respect of the sale by the Receivers of Abbiamo, Prefero and ATC Retail of the freehold in the Centre to the applicant. The respondent contends that the proceedings issued by it seek to enforce that agreement and that it is entitled to register the lis pendens in the context of those proceedings.

10 There is a dispute between the parties as to what occurred prior to the applicant's agreement to purchase the freehold in the Centre on foot of the contract for sale dated 19th May, 2015. The applicant says that it has no knowledge of certain arrangements which the respondent claims were entered into, or intended to be entered into, in respect of the structure of the ownership of the various parts of the Centre back in 2006. Mr. O'Sullivan sought to explain what those arrangements were in the affidavit which he swore on 18th...