McCourt v Tiernan

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 29 July 2005
• Neutral Citation: [2005] IEHC 268
• Docket Number: [No: 10626P/2002]
• Court: High Court
• Date: 29 July 2005

MCCOURT v TIERNAN

BETWEEN

DECLAN MCCOURT

PLAINTIFF

AND

FRANCIS TIERNAN

DEFENDANT

[2005] IEHC 268

[No: 10626P/2002]

THE HIGH COURT

INJUNCTIONS

Interlocutory

Mareva - Claim to legal and beneficial interest in property - Claim that stamp duty paid on property by plaintiff - Allegation of fraud - Whether evidence of risk of dissipation of assets - Bennett Enterprises Inc v Lipton [1999] 2 I.R. 221; Aerospares Ltd v Thomson (Unrep, Kearns J, 13/1/1999) and Tracey v Bowen (Unrep Clarke J, 19/4/2005; [2005] IEHC 138) applied - Order requiring compliance with undertakings made

PRACTICE AND PROCEDURE

Dismissal of proceedings

Application to vacate lis pendens -Plaintiff claiming legal and beneficial interest in property - Whether plaintiff's claim frivolous or vexatious - Whether alleged agreement allowed sale of property to bona fide purchaser for full value - Barry v Buckley [1981] I.R. 306 applied - Claim to legal interest struck out (2002/10626P - Clarke - 29/7/2005) [2005] IEHC 268

MCCOURT v TIERNAN

Facts: The plaintiff was a solicitor practising in Dundalk and for a number of years the defendant was his client. The plaintiff sought a declaration that he was entitled to a legal and beneficial interest in certain properties in Dundalk. The basis of the claim was an alleged agreement between the plaintiff and the defendant. The parties brought various motions which required the determination of two issues namely, whether the plaintiff had an arguable case that he had an interest in the property and therefore was entitled to retain the lis pendens and, in the event of a sale, what portion of the net proceeds should be retained pending the resolution of the proceedings.

Held Clarke J. in declining to vacate the lis pendens that the plaintiff retained a claim to a beneficial interest in the property. In the event of a bona fide sale on the open market, an appropriate sum to represent the plaintiff’s claim to a beneficial interest together with an additional sum to represent the stamp duty would be retained.

Reporter: R.W.

BARRY v BUCKLEY 1981 IR 306

TRACEY v BOWEN UNREP CLARKE 19.4.2005

BENNETT ENTERPRISES INC & ORS v LIPTON & ORS 1999 2 IR 221 1999 1 ILRM 81

AEROSPARES LTD v THOMPSON & ORS UNREP HIGH 13.1.1999 1999/1/22

Mr. Justice Clarke

1. Introduction

1 1 The plaintiff ("Mr. McCourt") is a solicitor practising in Dundalk. For a number of years the defendant ("Mr. Tiernan") was a client of Mr. McCourt. In recent times, however, significant disputes have arisen between the parties which are the subject not only of the proceedings with which I am currently concerned but also other proceedings.

1 2 In these proceedings Mr. McCourt seeks, principally, a declaration that he is entitled "to a legal and beneficial interest" in certain properties at Dundalk as set out in the pleadings. The basis upon which that claim, and certain supporting claims, are advanced is in reliance on an alleged agreement made between Mr. McCourt and Mr. Tiernan in January 2001 whereby it is alleged Mr. Tiernan agreed to give an interest in the property to Mr. McCourt in return for the payment of certain monies by Mr. McCourt for or on behalf of Mr. Tiernan. On any view the agreement was not, therefore, a simple purchase. It should also be noted that the existence of any agreement is hotly contested. However on the basis of Mr. McCourt's case the agreement was that he would be required to make a variety of payments for or on behalf of Mr. Tiernan and that as a result thereof he would, in the words of paragraph 4 of the statement of claim, "acquire an interest in the said property to the extent of the monies invested by the plaintiff in accordance with the market value of the premises as at January 2001". Thereafter, and over a period of some sixteen months, Mr. McCourt contends that he paid a total sum of €309,666.14 to and on behalf of Mr. Tiernan and, on that basis, it is said that he is entitled to an interest in the property.

1 3 While much of the facts surrounding this case are hotly disputed it appears to be clear that Mr. Tiernan originally purchased the property which comprises of lands at Hill Street know as the former Reynolds Electronic site and lands at Marsh's Upper know as the former Boyne Motor site from Dunloe Management Services Limited ("the Property") for IR£1,500,000 in early 2001. While there was an initial suggestion that the purchase occurred a year earlier that does not seem to be now advanced. Equally it is common case that a significant portion of the funding for that purchase came by way of an advance from the Irish Nationwide Building Society ("the Society") in the sum of IR£1,350,000. As security for that loan the Society were to obtain a mortgage over the property and in support thereof Mr. McCourt gave undertakings in the usual way to the Society concerning the stamping of the purchase deed by which Mr. Tiernan acquired the property and in respect of lodging the title deeds with the Society (which deeds would necessarily include an executed version of the agreed form of mortgage of the property in favour of the Society).

2. The initial hearing

2 1 This matter first came before me on foot of a motion dated 22nd March 2005 in which Mr. Tiernan sought orders requiring Mr. McCourt to comply with those undertakings.

2 2 When first moved before me the position adopted by Mr. McCourt in relation to that application was to indicate that he was, in principal, happy to comply with his undertaking to stamp the relevant deeds out of funds which he would provide (without prejudice to his contention that as and between himself and Mr. Tiernan he was not obliged so to do). However he expressed concern about lodging all of the title deeds with the Society on the grounds of a stated fear that by so doing he would place Mr. Tiernan in a position where he would be able to sell the property without reference to himself. For reasons which it will be necessary for me to analysis in greater detail in this judgment he asserted that he had a reasonable fear that in those circumstances Mr. Tiernan would act so as to prevent him from obtaining what he claimed was the appropriate proportion of the net proceeds of sale that were attributable to his interest.

2 3 On an initial hearing of the motion I indicated that it seemed to me that not only was it necessary that the deed be stamped but that also theprima facia position was to the effect that Mr. McCourt was obliged to comply with his undertaking to lodge the deeds with the Society. Given that that process would take some little time I indicated that if Mr. McCourt wished to interfere, in any way, with the freedom of any party to deal with the property thereafter he should bring an appropriate application before the court. On the initial hearing it also appeared that an issue might arise between the parties as to the registration of a lis pendens by Mr. McCourt on the property as a result of his claim in these proceedings. I further directed that in the event that Mr. Tiernan wished to apply to have that lis pendens vacated he should do so on the same occasion as any application brought by Mr. McCourt to restrict the freedom of the parties to deal with the property. I also adjourned further consideration of the original motion insofar as it related to a requirement to lodge the title deeds.

3 The Issues

3 1 In substance there are, therefore, before the court a series of motions which, in reality, are all concerned with the same matter. These are as follows:-

1 The remaining aspects of the original motion of the 22nd March 2005 in which Mr. Tiernan seeks compliance by Mr. McCourt with his undertakings in relation to the lodgement of the title deeds with the Society;

2 A motion dated 24th June 2005 in which Mr. Tiernan seeks an order vacating alist pendens and also, as a necessary precursor to that, seeks an order pursuant to the inherent jurisdiction of the court dismissing as frivolous and vexations and/or as an abuse of the court process so much of Mr. McCourt's claim as suggests that he is entitled to an interest in the property as distinct from an interest in the proceeds of sale thereof; and

3 A motion brought by Mr. McCourt seeking an order that the Society retain possession of the deeds to the property pending the determination of the proceedings or in the alternative an order that in the event of a sale of the property that Mr. Tiernan be required to lodge 50% of the net proceeds of that sale into court. In anticipation that a motion of that variety was likely to be issued I directed that in the event of Mr. McCourt bringing such a motion the Society should be placed on notice. This was done and the Society duly appeared at the hearing before me.

3 2 While procedurally complicated, in reality all of the matters which require determination under the various motions come down to two. These are:-

(a) Has Mr. McCourt an arguable case to the effect that he has an interest in the property. If he has such an arguable case then he is entitled to retain thelis pendens. Furthermore in such circumstances he would have established at least one element of the grounds necessary to entitle him to some form of protection concerning a potential sale of the property.

(b) What is the extent of any claim which Mr. McCourt can be said to have. In that context it is important to note that counsel on behalf of Mr. Tiernan has accepted that it would be appropriate that in the event of a sale of a property a certain portion of the net proceeds (the amount whereof being an issue to which I will necessarily have to return) should be retained pending the resolution of these proceedings. The real issue between the parties on this aspect of the case is as to the extent of any such retention.

It is clear therefore that any analysis of the entitlements...