Palaceanne Management Ltd v Allied Irish Bank Plc

• Jurisdiction: Ireland
• Judge: the President
• Judgment Date: 10 May 2017
• Neutral Citation: [2017] IECA 141
• Docket Number: [C.A. No. 537 of 2014],Neutral Citation Number: [2017] IECA 141 [2014 No. 537]
• Court: Court of Appeal (Ireland)
• Date: 10 May 2017

[2017] IECA 141

THE COURT OF APPEAL

Ryan P.

The President

Edwards J.

McDermott J.

Neutral Citation Number: [2017] IECA 141

[2014 No. 537]

BETWEEN

PALACEANNE MANAGEMENT LIMITED

PLAINTIFF/RESPONDENT

AND

ALLIED IRISH BANK PLC

DEFENDANT/APPELLANT

Easements – Common areas – Right-of-way – Appellant seeking right-of-way over the common areas – Whether appellant was entitled to a right of way

Facts: The plaintiff/respondent, Palaceanne Management Ltd, was the management company of a block of 9 apartments located at Palaceanne, Enniskeane, County Cork. The defendant/appellant, Allied Irish Bank plc, held a mortgage over the two apartments in the block that remained to be sold and was granted possession of them by order of the Circuit Court in Cork in 2009. On 4th May 2012, the High Court (Clarke J) held, in answering an agreed statement of issues, that the bank did not have any entitlement to the use of rights including a right-of-way over the common areas, except for access to a site beside the block. As a result, the two apartments held by the bank stood in landlocked isolation surrounded by property held by the management company and the bank could not lawfully gain access to the apartments. The appellant appealed to the Court of Appeal submitting that the issue was whether the mortgage of 20th May 2005 gives it easements over the common areas of the development "sufficient to enable it and Purchasers from it to access those apartments and also rights of support and running of services, which it may enforce against the Plaintiff/Respondent Management Company for the Development." The respondent proposed that the primary issue was: "Whether a way of necessity or other implied right-of-way could be said to arise where a property, which is part of a multi-unit development in respect of which an estate scheme is in the course of being implemented (and whether that scheme would have provided for an express right-of-way), is the subject of mortgage by demise outside the scope of the scheme and with no express grant of a right-of-way." The bank submitted that the argument in the High Court, and ultimately the judgment, proceeded on a mistaken understanding by the parties of a crucial deed. The bank submitted that the legal positions of the parties as found by the High Court could not be reconciled with the deed when correctly understood.

Held by Ryan P that it was irresistible that a right arose by necessity or by implication of law or under the rule in Wheeldon v Burrows [1879] 12 Ch D 31. Ryan P held that it was not necessary to invoke those legal implications of rights in the circumstances of the case. In Ryan P's judgment, the bank was entitled to a right of way to the apartments prior to the execution of the court-ordered deed of 2009 and its right was not affected by that transaction.

Ryan P held that the bank's appeal should be allowed.

Appeal allowed.

JUDGMENT of the President delivered on 10th May 2017

Introduction

1 This is an appeal by the defendant, AIB, from the orders of the High Court made by Clarke J. on 21st June 2012, giving effect to his judgment delivered on 4th May 2012. The plaintiff is the management company of a block of 9 apartments located at Palaceanne, Enniskeane, County Cork. The bank holds a mortgage over the two apartments in the block that remain to be sold and was granted possession of them by order of the Circuit Court in Cork in 2009. The dispute concerns easements to the common areas of the block; the High Court held, inter alia, in answering an agreed statement of issues that the bank did not have any entitlement to the use of rights including a right-of-way over the common areas, except for access to a site beside the block. As a result, the two apartments held by the bank stand in landlocked isolation surrounded by property held by the management company and the bank cannot lawfully gain access to the apartments.

2 The context of the proceedings is the claim by the management company for payment of service charges by the bank in respect of the two apartments. Major expenditure is required to remedy structural and other defects and the owners of units that have been sold recovered judgment against the developer who was declared bankrupt in the United Kingdom. The management company is thus facing substantial cost in getting repairs carried out. The bank is not willing to pay service charges as demanded by the company for the two apartments it holds.

3 In this appeal, the bank submits that the issue is whether the mortgage of 20th May 2005, gives it easements over the common areas of the development 'sufficient to enable it and Purchasers from it to access those apartments and also rights of support and running of services, which it may enforce against the Plaintiff/Respondent Management Company for the Development.' The management company proposes that the primary issue is:

'Whether a way of necessity or other implied right-of-way could be said to arise where a property, which is part of a multi-unit development in respect of which an estate scheme is in the course of being implemented (and whether that scheme would have provided for an express right-of-way), is the subject of mortgage by demise outside the scope of the scheme and with no express grant of a right-of-way.'

4 A major new controversy arises in the appeal with the submission by the bank that the argument in the High Court, and ultimately the judgment, proceeded on a mistaken understanding by the parties of a crucial deed. Mr. James Dwyer SC for the bank, who did not appear in the High Court, submits that the legal positions of the parties as found by the High Court cannot be reconciled with the deed when correctly understood. It is important to note that this point about the deed is not referenced in the Notice of Appeal. Mr. Bland SC, for the management company, who also did not appear at first instance, argues that the bank should be confined to the grounds appearing in the Notice of Appeal, on which he contends that the High Court was correct. While counsel for the management company accepts that the parties did inadvertently misinterpret the conveyance in the argument before the High Court, he submits that his client is entitled to succeed on a true construction of the instrument. The admission of this ground must accordingly be added to the issues in the appeal.

Background

5 Ms. Gail Coles proposed to develop a building at the above address to provide 9 apartments in a block which would be operated and controlled in a conventional manner by a management company. Ms. Coles was the freehold owner. By agreement of 16th December 2003, she agreed to sell and convey the common areas to the management company in fee simple. It was agreed that easements, rights and privileges over the common areas of the block would be granted to purchasers of the units and to the management company. The purchase was to be completed on the expiration of 28 days from the completion of sale of the last of the units. Ms. Coles as vendor agreed to maintain the common areas in a proper state up to the completion date.

6 Purchasers of apartments did so by long lease from Gail Coles to which Palaceanne was also a party and the purchaser also became a shareholder in the management company.

7 By deed dated 20th May 2005, Gail Coles mortgaged 5 unsold apartments to Allied Irish Bank of which three were subsequently purchased leaving two apartments still subject to the mortgage.

8 Reference may now be made to the Statement of Facts as agreed between the parties and dated 27th June 2011. This records that some purchasers of apartments brought proceedings against the developers because of defects and were awarded substantial damages by the High Court. However, the developers were insolvent and subsequently were made bankrupt in the United Kingdom. On 9th June 2008, the High Court ordered that Gail Coles transfer the common areas of the development to the management company;

'. . in accordance with the contract entitled the Memorandum of Agreement made on the 16th day of December 2003 between Gail Coles and Palaceanne Management Limited.'

9 It was further ordered that in default of the transfer as ordered, a conveyance to that effect was to be executed by the Principal Registrar of the High Court. By indenture of 22nd January 2009, the Principal Registrar Mr O'Neill conveyed to the purchaser, the management company, as follows: –

'ALL THAT AND THOSE the said premises [but excluding the property as described in the Part Two of the Third Schedule hereto ('the retained property')] together with the easements, rights and privileges specified in the Fourth Schedule hereto EXCEPTING AND RESERVING unto the retained property the easements rights and privileges specified in the Fifth Schedule TO HOLD the same unto the Purchaser in fee simple subject to and with the benefit of the Leases more particularly described in the Sixth Schedule hereto.'

10 Part Two of the Third Schedule is headed RETAINED PROPERTY and is then as follows: –

'ALL THAT AND THOSE the property at Murragh, Enniskeane in the County of Cork being the property marked blue on the map attached hereto and the following parts of Palaceanne Mills.

Apartment 'Murragh Suite' Palaceanne Mills, Murragh, Enniskeane, County Cork

Apartment 'Daly Suite' Palaceanne Mills, Murragh, Enniskeane, County Cork'

The Fifth Schedule refers to easements, rights and privileges accepted and reserved out of and over the premises for the benefit of the retained property and every part thereof. It specifies that the rights subsist for the benefit of the vendors, their successors and assigns and others including rights-of-way and rights in regard to services.'

11 Under the terms of this deed, the two mortgaged apartments were not transferred and they retained the easements, rights and privileges...