Promontoria (Oyster) DAC v Fox

• Jurisdiction: Ireland
• Judge: Ms. Justice Pilkington
• Judgment Date: 31 March 2023
• Neutral Citation: [2023] IECA 76
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record No. 2022/111 Court of Appeal Record No. 2022/112 High Court Record Nos. 2019/129Sp

Between/

Promontoria (Oyster) Designated Activity Company

Plaintiff/Appellant

and

John Fox

Defendant/Respondent

Between/

Promontoria (Oyster) Designated Activity Company

Plaintiff/Appellant

and

Tomas Lynn

Defendant/Respondent

[2023] IECA 76

Costello J.

Pilkington J.

Butler J.

Court of Appeal Record No. 2022/111

High Court Record Nos. 2019/115Sp

Court of Appeal Record No. 2022/112

High Court Record Nos. 2019/129Sp

THE COURT OF APPEAL

CIVIL

Unapproved

No Redactions Needed

JUDGMENT of Ms. Justice Pilkington delivered on the 31st day of March 2023

Introduction

1 . Both appeals come before this court in respect of the entitlement of the appellant Promontoria (Oyster) DAC (‘Promontoria’) to obtain well charging orders in respect of their interest in certain registered lands.

2 . Specifically, both appeals involve consideration of one issue; the application of s.73 of the Registration of Deeds and Title Act 2006 (“s.73” and “the 2006 Act”) as it affects registered lands, in the circumstances of this case.

3 . S.73 is considered in detail below, but in essence it altered the previous well-established position whereby security over registered lands could be created and maintained by the retention of a land certificate or certificate of charge by the holder of that interest. S.73 brought that system to an end and provided that the land certificate or certificate of charge ceased to have any legal effect and that such security must now be registered within a three-year window ending on 31 December 2009. Thereafter, instead of the security being effected in the holding of the relevant title or charge documentation, it was now secured by the registration of the lien as a burden on the relevant folio.

4 . The question for the High Court was, on the facts of these two cases, whether a creditor (Promontoria) could rely on its registered liens as security for further advances to a debtor (Messrs Fox and Lynn respectively) where those advances took place after 31 December 2009. I shall refer to these as the Fox and Lynn proceedings respectively.

5 . Within the Lynn proceedings Simons J. delivered judgment on 15 March 2022. At paragraph 40 the trial judge pointed out that, for the reasons within his recent judgment in the Fox proceedings, the loans advanced to the defendant by Ulster Bank (thereafter Promontoria) are not secured against the relevant lands and cannot be relied upon as security. Thereafter, the Court stated that it would hear the parties on the implications of the plaintiff's claim arising from his recent judgment in the Fox proceedings. Accordingly, whilst there are two appeals, they both arise in respect of one judgment; that of Simons J. within the Fox proceedings.

6 . In his judgment in the Fox proceedings dated 7 March 2022, Simons J. held that Promontoria was not entitled to well charging orders on the basis that s. 73 of the 2006 Act cannot secure future lending after 31 December 2009.

7 . In this appeal the appellant, Promontoria, begs to differ arguing that the monies advanced formed part of its registered interest, its security was properly registered and therefore capable of being the subject of a well charging order.

8 . Consideration of these matters requires a brief recitation of the facts in the Fox and Lynn Proceedings. This is followed by an analysis of the relevant statutes and in particular s.73 itself. Two cases have considered s.73 in detail. The first is the Supreme Court judgment of Clarke C.J. (as he then was) and the concurring judgment of Dunne J. in Promontoria (Oyster) DAC v. Hannon [2020] 1 IR 364 (“ Hannon”) and of this Court in Promontoria (Oyster) DAC v. Greene, a judgment of Collins J., [2021] IECA 93 (“ Greene”). The High Court judgment follows.

9 . To begin with the facts of the Fox and Lynn proceedings

Fox proceedings

10 . The Special Summons issued on 21 March 2019 seeks well charging orders together with what might be described as the other standard orders and reliefs, including orders for sale (‘the well charging proceedings’) on the basis of two facility letters, both dated 27 May 2010 and signed by Mr Fox on 23 June 2010.

11 . Within both facility letters, whilst other items of security are noted, the relevant item of security for this appeal is as follows:

“Lien over Folio No. 14403 County Westmeath comprising of 40 acres.”

12 . Folio 14403 in the Register of Freeholds County of Westmeath shows John Fox was registered as owner on 23 February 1998. The relevant burden is at No. 4 entered on 19 March 2009 in the following terms:

“Lien pursuant to s.73(3) of the Registration of Deeds and Title Act, 2006, in favour of Ulster Bank Ireland Limited.

Note: The interest of Promontoria (Oyster) Designated Activity Company is noted on Instrument Number [set out] 9 March 2017.”

Lynn proceedings

13 . The Special Summons issued on 26 March 2019 seeks well charging orders on the basis of the three facility letters dated from 21 October 2010 to 28 July 2014, each signed by the Defendant.

14 . Within each facility letter various items of security are listed. The wording varies slightly in respect of each but not in any way material to this appeal.

(a) The first facility is;

“Lien over Folio No. 4913 County Westmeath comprising of 46.369 acres located at Churchtown, County Westmeath.”

The same wording is also reflected in respect of Folios 11280F and 9121 respectively.

(b) Within the second facility letter the security relevant for this appeal comprises:

“3. Equitable deposit of the title deeds to 46.369 acres of agricultural land at Churchtown, County Westmeath (registered as a lien on Folio 4913, County Westmeath).”

Again, the same wording is also reflected in respect of Folios 11280F and 9121 respectively.

(c) Within the third and final facility letter the relevant items of security comprise:

“3. A first legal charge over 46.369 acres of agricultural land at Churchtown, County Westmeath registered as a lien on Folio WH4913……”

Again, the same wording is also reflected in respect of Folios 11280F and 9121 respectively.

(d) Thomas Lynn, was registered as full owner of Folio 4913 on 2 February 1999, of Folio 11280F as full owner on 30 April 1998 and of Folio 9121 as full owner on 31 March 1978.

(e) In respect of each folio there is an entry of a burden dated 10 December 2009 in the following terms:

“Lien pursuant to s.73(3) of the Registers of Deed and Titles Act, 2006, in favour of Ulster Bank Ireland Limited.

Note: The interest of Promontoria (Oyster) Designated Activity Company is noted on Instrument Number [set out] 9 March 2017.”

15 . It was clearly the intention in both cases that the registered liens would secure the monies to be advanced by the new facilities, each of which were accepted by Messrs Fox and Lynn. It was not disputed that the monies were advanced on these terms or that the borrowers were in default. The issue is whether the debts are in fact as a matter of law secured by the registered liens. Prior to the enactment of s. 73 it was possible to secure future advances by existing liens created by the deposit of land certificates or certificates of charge. Whether this remains the case depends upon the import of s. 73.

16 . This in turn requires consideration of the legislation prior to the enactment of s.73 dealing with the system of land registration in Ireland, in particular the Local Registration of Title (Ireland) Act 1891 (‘the 1891 Act’) and its successor the Registration of Title Act 1964 (‘the 1964 Act’).

The Legislation

17 . S.81 of the 1891 Act is replicated within s.105 of the 1964 Act. Both sections of the respective Acts, save for the designation of a ‘registering authority’ in the 1891 Act which becomes the ‘Registrar’ in the 1964 Act, are identical. Accordingly, I have only set out s.105 of the 1964 Act in full.

Registration of Title Act 1964, S. 105

‘ (1) Subject to general rules, the land certificate or certificate of charge granted on the registration of an owner of land, or of a charge on land, shall be produced to the Registrar on any subsequent transaction in relation to the land or charge requiring registration, as the case may be, and shall be either cancelled or so altered as to be brought into conformity with the register.

(2) Subject to general rules, the Registrar may, on the application of the registered owner, or of any person appearing to the Registrar to be entitled to require the production of a land certificate or certificate of charge, order any person in whose custody the certificate may be to produce the certificate to the Registrar for the purpose of any dealing with the registered land or charge which can be effected without the consent of the person having the custody of the certificate.

(3) The production of a certificate under this section shall not alter the right to the custody of the certificate, and shall not affect any lien of any person thereon.

(4) A land certificate or certificate of charge shall be prima facie evidence of the several matters therein contained.

(5) Subject to any registered rights, the deposit of a land certificate or certificate of charge shall, for the purpose of creating a lien on the land or charge to which the certificate relates, have the same effect as a deposit of the title deeds of unregistered land or of a charge thereon’.

18 . S. 105 and its predecessor s.81 of the 1891 Act both confirm that those who held their security over registered lands by holding land certificates or certificates of charge do so without the necessity for registration on the folio itself.

19 . As s. 105(1) provides that this security must be produced prior to any subsequent transaction, this ensured that such holders of this security were on notice of any subsequent transaction. S.105(5) confirms that the deposit of this security for the purpose of creating a lien on lands has...