Re FORTESCUE's ESTATE

• Jurisdiction: Ireland
• Judge: Wyle J.
• Judgment Date: 28 February 1916
• Court: Court of Appeal (Ireland)
• Date: 28 February 1916

In re Fortescue's Estate.

Wyle J.

Appeal.

CASES

DETERMINED BY

THE CHANCERY DIVISION

OF

THE HIGH COURT OF JUSTICE IN IRELAND

AND BY

THE IRISH LAND COMMISSION,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL.

1916.

Land Purchase Acts — Sale — Mortgage — Covenant by Mortgagor to give twelve months' Notice of Intention to pay off, or to pay twelve months' Interest in lieu thereof — Clog on Equity of Redemption — Irish Land Act, 1903, sect. 24, subs. 6.

A mortgagor of lands sold the lands under the provisions of the Irish Land Act, 1903. The mortgage, made in the year 1900, contained a proviso that, if interest were duly paid, the mortgagee should not require payment of the principal for ten years, or after that period without twelve months' notice; and a proviso that the mortgagor should not be at liberty to pay off any part of the principal before the expiration of ten years, nor after the expiration of that period without giving twelve months' notice; and a further proviso that, in the event of the mortgagees having (owing to a compulsory sale or otherwise) to accept payment without having received twelve months' notice in writing of intention to pay same, they should be entitled to twelve months' interest in addition to the principal and interest payable under the mortgage. No actual notice of intention to pay was served on the mortgagees, but more than twelve months expired between the service of the final notice to incumbrancers and the distribution of the purchase-money.

Held by the Court of Appeal (reversing the decision of Wylie J.), that the proceedings in the Land Commission did not amount to notice to the mortgagees within the meaning of the covenant, and that they were accordingly entitled to be paid out of the proceeds of the sale twelve months' interest in lieu of notice, in addition to the amount of the principal and interest then due under the mortgage, and costs.

In re Kennedy's Estate, 32 I. L. T. R. 115, not followed.

Question arising on allocation as to whether mortgagees who were paid their principal debt, and interest up to the date of payment, were also entitled to be paid an additional twelve months' interest in lieu of notice, under a proviso contained in their mortgage deed.

By indenture of mortgage dated the 3rd August, 1900, and made between M. E. C. Fortescue of the one part, and Count Arthur Moore and Thomas Leonard of the other part, the lands sold in this matter under the Land Purchase Acts were conveyed to Count Arthur Moore and Thomas Leonard to secure the sum of £44,000 and interest as therein mentioned. The deed contained a covenant for payment with interest on the 10th February, 1901, and a proviso for redemption and reconveyance upon such payment. The deed also contained a proviso that if interest was duly paid payment of the principal money thereby secured should not be required until the expiration of ten years from the date thereof, nor alter the expiration of the said period without twelve months' notice requiring such payment; also a proviso that the mortgagor should not be at liberty to pay off the said principal sum, or any part thereof, before the expiration of ten years from the date thereof unless the mortgagees should be willing to receive the same earlier, nor to pay the same on or after the expiration of the said period without giving twelve months' notice of intention to do so; and further, a proviso that in the event of the mortgagees having (owing to a compulsory sale of the hereditaments thereby granted, or any part thereof, or otherwise) to accept payment of the said principal sum, or any part thereof, without having received twelve months notice in writing of intention to pay the same, the mortgagees should be entitled to receive, together with any principal money paid to them, a sum equivalent to twelve months' interest after the rate of £4 per cent. per annum on the amount of such principal moneys, in addition to all interest then payable on principal moneys remaining due under the mortgage deed.

By indenture dated 15th June, 1904, the said mortgage was tranferred to Charles Moore and Charles William Clifford.

On the 11th July, 1907, M. E. C. Forteseue lodged an originating application with the Land Commission to carry out a sale of the said lands to his tenants. On the 17th December, 1909, notice in Form E prescribed by the Land Commission Rules was published in the Dublin Gazette, and at the same time a similar notice was sent to the mortgagees, who, on the 6th January, 1910, entered an appearance in the Land Commission matter. The mortgagees received notice of the proceedings from time to time up to the ruling of the final schedule in July, 1915, when they attended to prove their claim. In addition to the principal moneys due under their mortgage deed and interest up to date, they claimed to be entitled to an additional twelve months' interest in lieu of notice under the proviso therein contained.

Meredith K.C., for the mortgagees.

R H. Macrory, for the vendor.

Wylie J.:—

In this case mortgagees, who were paid at allocation their principal debt and interest up to date of payment, claim an additional twelve months' interest in lieu of notice under a proviso in the mortgage deed. The mortgage was dated the 3rd August, 1900, and contained a covenant for payment with interest on the 10th February, 1901, and a proviso for redemption and reconveyance upon such payment. There was also a proviso that the mortgagor should not be at liberty to pay off the principal money or any part thereof before the expiration of ten years from date, nor after the expiration of said period without giving twelve months' notice in writing of intention so to do. Then there was this further proviso upon which the claim for additional interest is based, that in the event of the mortgagees having (owing to a compulsory sale or otherwise) to accept payment without having received twelve months' notice in writing of intention to pay the same, the mortgagees should be entitled to receive a sum equivalent to twelve months' interest in addition to the principal money and interest thereon payable under the mortgage.

Now there is no doubt that in the case of a sale under the Land Purchase Acts, both before and since the Act of 1903, a mortgagee upon the land sold was compellable to accept payment of his incumbrance, and the claim to additional interest would appear to be good unless the mortgagees have received due notice, or unless the proviso is invalid as a clog on redemption, or is rendered ineffective by sect. 24, sub-s. 6, of the Act of 1903. It seems to me the claim can be most easily disposed of on the ground of notice. I think the exact point was decided by Meredith J. in In re Kennedy's Estate (1). In that case the mortgage, dated February, 1897, contained an express covenant by the mortgagor that, in the event of his selling the lands to his tenants or otherwise, the mortgagor, before requiring the mortgagee to take payment, should give the mortgagee three calendar months' notice of his intention to pay. Proceedings for sale were commenced in April, 1897; the mortgagee was served with notice in the usual way, and entered an appearance on the 11th June, and got notice of the proceedings from time to time. On the ruling of the final schedule by the examiner, a claim was put forward by the mortgagee for interest up to the date of payment, and three months' additional interest in lieu of notice. The claim for additional interest was disallowed by the examiner, and came before the judge for his ruling; and Meredith J. decided that the course of proceedings in the Land Commission leading up to payment of incumbrances in all cases, whether the mortgage deed was silent as to notice or contained an express covenant to give notice, was sufficient notice.

In this case the mortgagor lodged an originating application to carry out a sale to his tenants on the 11th July, 1907. On the 17th December, 1909, notice in Form E was published in the Dublin Gazette, and a similar notice was at the same time sent to the mortgagees, who entered an appearance on the 6th January, 1910. They received notice of the proceedings from time to time up to the ruling of the final schedule in July, 1915, when they

attended and proved their claim. They had, therefore, over five years' notice of intention to pay according to the course of the Court; and they received a subsequent notice fixing the very day on which payment would be made unless they were in default in proving their claim. The facts, therefore, bring the case clearly within the decision in In re Kennedy's Estate (1).

This question came again before Meredith J. in In re Talbot's Estate (2), where he considered it in connexion with sect. 24, sub-s. 6, of the Act of 1903, and where the payment was made within six months from the date of the filing of the originating application; and notwithstanding an express covenant in the mortgage requiring six months' notice, the learned judge held that interest could only be claimed up to the day of payment.

Counsel for the mortgagees in support of their claim referred to my own decision in In re Armstrong's Estate (3), and seemed to suggest that it was inconsistent with In re Talbot's Estate (2). In my opinion there is no inconsistency. I certainly had no intention of casting any doubt upon the correctness of the decision in In re Talbot's Estate. (2). In In re Armstrong's Estate (3) the question was not one of notice, or interest in lieu of notice. The covenant there expressly provided for payment off at allocation of the purchase-money, if it occurred within five years, and defined the mortgagee's rights in that event; and the mortgagee's claim was in accordance with the rights so agreed upon. There was neither “direction, proviso, nor covenant contrary to payment off” at allocation, and therefore it seemed to me that sect. 24, sub-s. 6, did not apply. I could not allow this claim for additional...