Promontoria (Oyster) Designated Activity Company v Kean

• Jurisdiction: Ireland
• Judge: Ms. Justice Pilkington
• Judgment Date: 17 July 2023
• Neutral Citation: [2023] IECA 181
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record No. 2022/252

Between/

Promontoria (Oyster) Designated Activity Company

Plaintiff/Appellant

and

Michael Kean

Defendant/Respondent

[2023] IECA 181

Costello J.

Pilkington J.

Butler J.

Court of Appeal Record No. 2022/252

High Court Record No. 2019/247 SP

THE COURT OF APPEAL

CIVIL

Unapproved

No Redactions Needed

JUDGMENT ofMs. Justice Pilkingtondelivered on the 17th day of July 2023

Introduction

1 . This appeal concerns the entitlement of the appellant, Promontoria (Oyster) DAC (‘Promontoria’) to maintain well charging proceedings in respect of lands registered in the name of the respondent.

2 . It was agreed in the High Court (Simons J.) that this hearing proceeds on a modular basis and accordingly there are only two issues to be considered within this appeal.

3 . The trial judge expressly relies upon his earlier judgment in Promontoria (Oyster) DAC v. Fox (‘ Fox’) 1. This case, which I shall refer to as ‘ Kean’, and Fox are inextricably linked, for the reasons set out below.

4 . In the High Court, in both the Fox and Kean proceedings, the respective respondents were successful. Promontoria appealed both decisions. Prior to hearing this appeal in Kean, this Court upheld Promontoria's appeal in Fox.2

5 . Within this appeal Promontoria also raises a separate ground of appeal, which did not arise within Fox.

Background

6 . The respondent is registered as owner of the property comprised in Folio 15424 3 of the Register of Freeholders County of Roscommon (‘the folio’). As in Fox, this case deals with registered lands only.

7 . Pursuant to an agreement between the appellant and respondent, the respondent agreed, in return for certain advances, to the deposit of his land certificate as security over the folio. From March 2005 this security was held by Ulster Bank (thereafter Promontoria) by way of a deposit of this land certificate.

8 . Thereafter, by a loan facility letter dated 17 February 2012, three additional loans were advanced to the respondent. Promontoria seeks to rely upon the security set out within that facility letter as ‘Lien registered over 77 acres of land at …..land cert folio no RN15454F’ [sic]. This 2012 loan facility is the factual premise underlying this appeal.

9 . The issues that arise, both within Fox and this case, concern the implications of s.73 of the Registration of Deeds and Title Act 2006 (‘the 2006 Act’) in respect of the security previously held by the retention of land and charge certificates over registered lands.

The Legislation

10 . S.73 of the 2006 Act concerns the previously well-established practice 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. The holders of that security could rely upon it as production of these certificates was required in respect of any subsequent transaction affecting the lands, so they were therefore on notice of it and by withholding the certificate effectively could prevent the registered owner from disposing of or further charging his interest in the lands.

11 . This practice was given statutory recognition, from the inception of the system of land registration in Ireland, within s. 81 of the Local Registration of Title (Ireland) Act, 1891 (‘the

1891 Act’) and thereafter s.105 of the Registration of Title Act 1964 (‘the 1964 Act’). That remained the position until the enactment of s.73 of the 2006 Act

12 . The pertinent portion of s.73 of the 2006 Act is as follows;

Section 73 of the 2006 Act

‘PART 5

MISCELLANEOUS

Abolition of land certificates and certificates of charge.

73.—(1) The Authority shall cease to issue land certificates and certificates of charge under the Act of 1964, and accordingly—

(a) sections 28, 32(2), 32(3), 51(3), 51(4), 62(5) and 64(3) of that Act are repealed, and

(b) section 105 (certificates) thereof—

(i) applies only in relation to land certificates and certificates of charge issued before the commencement of this subsection and not already cancelled, and

(ii) ceases to have effect 3 years after the commencement of subsection (2)4.

(2) Subject to subsection (3), land certificates and certificates of charge issued before the commencement of subsection (1) and not already cancelled cease to have any force or effect on the expiration of the period of 3 years after the commencement of this subsection (my emphasis).

(3) The following provisions have effect during the period referred to in subsection (2):

(a) the Authority shall cause adequate notice to be published of the coming into operation of subsection (2) and of its implications for persons to whom land certificates or certificates of charge have been issued and for any others who may be affected, including persons holding a lien on registered land or a registered charge through deposit or possession of those certificates;

(b) a holder of such a lien may apply to the Authority for registration of the lien in such manner as the Authority may determine;

(c) the application shall be on notice by the applicant to the registered owner of the land or charge and be accompanied by the certificate concerned;

(d) the lien is deemed for the purposes of section 69 of the 1964 Act to be a burden which may be registered as affecting registered land;

(e) the Authority shall register the lien without charging any fee or duty for doing so.’

13 . In my view s.73 is therefore straightforward in its terms;

• (a) The Land Certificates and Certificates of Charge which were previously held as security ceased to have effect after 31 December 2009, with a grace period of three years provided to those who held such certificates to register their interest(s), up to the same date. (Section 73 (1)(b)).

• (b) Pursuant to s.73(3)(b) “the holder of such a lien may apply to the authority for registration of the lien….”

• (c) The means of registration of the lien is as a burden pursuant to s.69 of the 1964 Act – s. 73(3)(d).

14 . In summary therefore, s.73 of the 2006 Act ensures that, rather than a creditor relying upon possession of a certificate of charge or land certificate (both of which cease to have effect after 31 December 2009) as evidence of their lien as a secured interest, s.73 introduced the simple device of requiring the registration of the (pre-existing) lien as a burden on the folio pursuant to s.69 of the 1964 Act (‘the s. 73 lien’).

15 . On the facts of this case, pursuant to the terms of s.73(3) of the 2006 Act this lien, previously held by way of the deposit of the land certificate, was registered as a burden on the folio on 31 December 2009 in favour of Ulster Bank Ireland Limited, with the entry also noting the interest of Promontoria since 9 March 2017 5.

16 . The issue that arose both within Fox and this case concerns the implications of advances by Promontoria to the respective respondents, post 31 December 2009, and its seeking to secure that lending against the s. 73 lien.

Authorities

17 . S.73 has been considered by the Supreme Court in Promontoria (Oyster) DAC v. Hannon[2020] 1 IR 364 (‘ Hannon’). In that case the liens had not been registered within the period ending 31 December 2009, which differs from the factual position in both Fox and Kean. The Supreme Court held that a lien held over registered land by means of holding a land or charge certificate ceased to exist after 31 December 2009.

18 . Clarke C.J. (as he then was), in considering the three year transitional period within s.73 and the requirement for registration, stated (paragraph 68)

“Rather, it is appropriate to say that the existing interests of a holder of a lien in respect of registered land by deposit of a land certificate continue beyond the relevant three year period but subject only to registration as a lien. Viewed against that characterisation, I do not consider that the retrospectivity argument carries significant weight. It is not, in my judgment, sufficient to outweigh the clear statutory intent that the land certificate is to cease to have any legal effect for any purpose which, in my view, carries with it a clear implication that a lien by deposit of such certificates can no longer, in the absence of registration, give security over the lands concerned”

19 . In considering s.73 and the system of land registration in general Clarke C.J. also comments as follows;

“7. What does the 2006 Act do?

[48] There can be little doubt but that the 2006 Act is designed to represent a further move towards a universal system of land registration in which all, or almost all, interests in land or entitlements which run with land can be definitively determined by consulting the register. For example, it is now necessary to register for the first time any property, not previously registered, which is the subject of a transfer of ownership. While much agricultural property, or land which was once in agricultural use, has long since been registered because of the requirements of Victorian land legislation, the registry of deeds system has remained prevalent in respect of urban land. However, the fact that even urban land will gradually become registered, as the obligation for first registration on transfer comes into play, will greatly extend the proportion of land within the State which is registered”

This passage is relied upon by the respondents to this appeal and the trial judge in both cases. It is considered later in this judgment.

20 . In her concurring judgment Dunne J. focused upon the history of this form of security over registered lands, focusing initially upon the 1891 and 1964 Acts. In considering the 1891 Act she stated as follows (she subsequently confirmed that the same applied in respect of the 1964 Act);

“[82] In other words the Act of 1891 recognised the importance of the creation of equitable mortgages by the deposit of title deeds and made...