Maher v Dublin City Council

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker,Mr. Justice Brian Murray
• Judgment Date: 11 April 2024
• Neutral Citation: [2024] IESC 14
• Court: Supreme Court
• Docket Number: Supreme Court Record No.: S:AP:IE:2023:000098 Circuit Court Record No.: 0527/2020

Between/

Michelle Maher

Plaintiff/Respondent

and

Dublin City Council

Defendant/Appellant

[2024] IESC 14

Dunne J.

Baker J.

Woulfe J.

Murray J.

Collins J.

Supreme Court Record No.: S:AP:IE:2023:000098

High Court Record No.: 2022/195 CA

Circuit Court Record No.: 0527/2020

AN CHÚIRT UACHTARACH

THE SUPREME COURT

Derelict sites charge – Sale of property – Derelict Sites Act 1990 – Respondent seeking a declaration that she held her property free from the derelict sites charge – Whether the derelict sites charge was overreached by the sale by the Bank in the exercise of its statutory powers of sale

Facts: The plaintiff/respondent, Ms Maher, issued proceedings on 10 June 2016 seeking a declaration that she held her property free from the derelict sites charge. She paid the sum of €50,153.42 to the defendant/appellant, Dublin City Council (the Council), under protest on 8 August 2019, with a view to facilitating a sale by her of the property, and thereafter the proceedings were by consent remitted to the Circuit Court where she sought the recovery of that sum from the Council. The action was heard by Judge O’Connor who delivered his reserved written judgment on 27 July 2022 by which he held that the charge was not overreached for the reasons set out. Simons J allowed the appeal of the respondent in his reserved judgment delivered on 18 July 2023 ([2023] IEHC 408), and the Supreme Court granted leave to appeal by determination dated 17 October 2023 ([2023] IESCDET 121). The grounds of appeal were concisely stated to contend that the High Court judge erred in his conclusion, which was argued was inconsistent with the plain meaning of the words used in s. 24(1) of the Derelict Sites Act 1990 (the DSA), and failed to address or properly address the meaning of the provision that the levy would remain a charge on the land “until payment”. It was contended that the clear and unambiguous wording of s. 24(1) did not yield the conclusion to which he came.

Held by Baker J that the derelict sites levy and statutory charge to secure payment thereof did purport to reflect a valuable social purpose. Baker J held that the legislative scheme did achieve that purpose in part; however, the scheme created by the DSA did not displace the overreaching power contained in s. 21 of the Conveyancing Act 1881, now s. 104 of the Land and Conveyancing Law Reform Act 2009. Baker J held that the scheme of the Act does not purport to impose an obligation to pay the levy on anyone other than the owner of the derelict land as broadly defined. Baker J held that the scheme does not provide that the liability would attach to a mortgagee, other than to a mortgagee in possession, expressly identified as an owner for the purposes of payment of the levy. Baker J held that the ordinary rules of registration, and the scheme of priorities for which the law of property generally provides, whether with regard to registered or unregistered land, does not admit of an interpretation of s. 24 of the DSA that gives the derelict sites charge a form of super priority over prior registered charges; in addition, in the absence of any clear provisions in the DSA itself that permits the derelict sites charge to be treated as having special characteristics, the DSA charge must be treated as one requiring registration where it purports to affect registered land, and to be subject to the general principles attaching to the creation of security interests and the respective security interests over unregistered land. Baker J held that the DSA is not effective to displace the provision of s. 21 of the 1881 Act, and the High Court judge was correct to hold as he did that the sale by Bank of Ireland to the respondent meant that the charge was payable by the owner of the land, remains (or remained so at the time the sale closed) recoverable as a simple contract debt from that owner, but ceased to affect the land on a sale by the mortgagee exercising the statutory power of sale with its attendant right of overreaching.

Baker J dismissed the appeal.

Appeal dismissed.

JUDGMENT ofMs. Justice Bakerdelivered on the 11th of April 2024

1 . This appeal raises a net question of law: whether a sale by a mortgagee exercising the statutory power of sale under the Conveyancing Act 1881 (“the Act of 1881”), and now section 104 of the Land and Conveyancing Law Reform Act 2009, (“LCLR Act of 2009”), can overreach a statutory charge created by the Derelict Sites Act 1990 (“DSA”), so that a purchaser from such mortgagee takes freed from the derelict sites charge.

The Background Facts

2 . By contract dated 27 June 2014 the respondent Ms. Maher (“the purchaser” or “the respondent” where appropriate) agreed to purchase property at East Wall, Dublin from Bank of Ireland (“the Bank”). The Bank was selling in order to realise its security created by a legal mortgage dated 8 October 2007. The property in question is unregistered leasehold title. The contract was entered into by Stephen Tennant, a receiver appointed by the Bank. A special condition provided that the sale would be completed by an assignment by the Bank as vendor.

3 . Before the sale closed, the solicitor acting for the vendor notified the solicitor for the purchaser that the property was subject to an unregistered charge securing a derelict sites levy under the DSA. The premises was vacant and in a state of dereliction. The owner had been served with a demand for payment of a levy under the DSA before the sale was agreed, and the amount of the levy remained unpaid after demand.

4 . In accordance with the statutory provisions creating the charge, which I discuss in detail below, the levy became due on the date of demand, 9 January 2008, and thereafter, it not having been paid, became a charge on the subject property pursuant to section 24(1) of the DSA. The statutory charge created by failure to pay the levy within two months of demand, therefore, postdates the Bank's mortgage, and in the ordinary scheme of title to land the Bank's mortgage would rank in priority.

5 . The amount of the levy secured by the derelict sites charge was €50,153.42. The precise amount owed is immaterial to the issues in this appeal.

6 . In the letter notifying the solicitor for the purchaser of the charge, the vendor's solicitor expressed the view that the charge would be overreached by the vendor as it was “selling as mortgagee in possession.” I will later in this judgment comment upon the precise method of sale and the role of the receiver appointed by the Bank and named as vendor.

7 . In the event, title was in fact assured by deed of assignment from the Bank, and it expressly sold in exercise of the statutory power of sale in section 21 of the Act of 1881. The operative part of the deed, dated 30 September 2014, made this clear:

“… as mortgagee and in exercise of the powers vested in it by virtue of the said Mortgage and the Statute or Statutes in that behalf and of every other power it enabling hereby grants and assigns onto the purchaser …”

8 . Thus, by this mode of sale to Ms. Maher, at least prima facie, the vendor could hope to sell and overreach the derelict sites charge.

9 . Following the initial letter informing him of the charge, the purchaser's solicitor sought confirmation from Dublin City Council (“the Council” or “the appellant” where appropriate) of its view of the legal position regarding the continuance of the charge following the sale. In correspondence before the sale closed, the Council indicated its view that the Bank's mortgage may in law have priority over the charge for the purposes of the overreaching provisions, but it was for an individual purchaser to satisfy themselves as to the correct factual position. After the sale closed further correspondence was had between the solicitor acting for Ms. Maher and the Law Agent of the Council in which it was asserted on behalf of the Council that the charge would remain on the property until it was paid in full.

10 . The sale closed on 30 September 2014, and these proceedings were issued on 10 June 2016 seeking a declaration that the plaintiff held her property free from the derelict sites charge. She paid the sum of €50,153.42 to the Council under protest on 8 August 2019, with a view to facilitating a sale by her of the property, and thereafter the proceedings were by consent remitted to the Circuit Court where she sought the recovery of that sum from the Council.

11 . The action was heard by Judge O'Connor who delivered his reserved written judgment on 27 July 2022 by which he held that the charge was not overreached for the reasons set out. Simons J. allowed the appeal of Ms. Maher in his reserved judgment delivered on 18 July 2023, [2023] IEHC 408, and this Court granted leave to appeal by Determination dated 17 October 2023, [2023] IESCDET 121. This Court held (at para. 19):

“The point sought to be raised regarding the interpretation of s.24 of the [DSA] does appear to the Court to be one of general public importance and to be a net question of statutory interpretation of potentially broad application. The decision of the High Court on Circuit is final by reason of s.39 of the Courts Act 1961 save when leave is granted to appeal to this Court. The test articulated in [ Pepper Finance Corporation v. Cannon[2020] IESC 2, [2022] 1 I.R. 128] for such leave is met here.”

The Judgment of the High Court

12 . The question which requires consideration is the interaction between the DSA and section 21 of Act of 1881. The judgment of Simons J. is succinct and analytical. As he says, the term “overreaching” is not found in the legislation but is a useful shorthand to describe the process by which the interests of subsequent incumbrancers are “in effect transferred to the sale proceeds” which are, after sale, held by a vendor on trust to distribute in the order and according to the priorities...