Re Galdan Properties Ltd (in Liq.)

• Jurisdiction: Ireland
• Judge: McCarthy J
• Judgment Date: 11 March 1988
• Neutral Citation: 1988 WJSC-SC 274
• Docket Number: [S.C. No. 191 of 1986],(191/86)
• Court: Supreme Court
• Date: 11 March 1988

In re GALDAN PROPERTIES LTD (IN LIQUIDATION)

RE: GALDAN PROPERTIES LTD (IN LIQUIDATION)

1988 WJSC-SC 274

Finlay C.J

Hederman J

McCarthy J

(191/86)

The Supreme Court

Synopsis:

PROFESSIONS

Solicitor

Lien - Title deeds - Receipt as trustee - Sale of land - Preparation work performed - Title deeds surrendered - No lien crated - Galdan Properties, a company in liquidation, was the owner of certain licensed premises subject to a mortgage in favour of the Industrial Credit Corporation - Prior to the commencement of the winding up, the company instructed its solicitors to prepare particulars and conditions of sale of the licensed premises for a proposed auction of the premises - The firm of solicitors obtained the title deeds of the premises from the mortgagees by signing a receipt in which the firm agreed to hold the documents "in trust for the said I.C.C. and not to do any act which would enable the property dealt with by it to be mortgaged or assigned without the I.C.C.'s consent or its lien thereon to be in any way postponed or prejudiced" - The company's solicitors prepared the particulars and conditions of sale and attended the auction of the premises, at which the premises were withdrawn after a top bid of #681,000 - The costs of the company's solicitors for that work amounted to #8,414 - After the commencement of the winding up, the liquidator's solicitors requested the company's solicitors to return the title deeds to the mortgagees and, after a threat of litigation, the company's solicitors returned the title deeds to the mortgagees with a letter in which the company's solicitors stated that "the documents are sent to you on the strict understanding, as advised to the liquidator's solicitors, that our lien is preserved..." - They expressly stated that their claim to a lien was an assertion of a right to the possession of the title deeds in priority to any such rights of the company or the liquidator, but that it was not an assertion to priority in respect of the rights of the mortgagees under the mortgage - The company's liquidator applied to the court for the determination of the question whether or not the company's solicitors were secured or unsecured creditors in respect of their claim to #8,414 costs - The High Court (Carroll J. - 12/5/86) held, in an extempore judgment, that the company's solicitors were not entitled to claim a lien for their said costs and the solicitors appealed - Held, in disallowing the appeal, that a solicitor's lien arises by operation of law and not by unilateral act of the solicitor - Held that the company's solicitors had received the title deeds as trustees for the mortgagees and had never acquired an independent right to possession of the deeds so that no lien had been created in their favour: ~Caldwell v. Sumpters~ [1972] 1 All E.R. 567 distinguished - (191/86 - Supreme Court - 11/3/88)

|In re Galdan Properties Ltd.|

Citations:

RUSHFORTH V HADFIELD 1805 6 EAST 519

HALSBURY'S LAWS 4ED VOL 1 813

HALSBURY'S LAWS 4ED VOL 28 520 & 523

HALSBURY'S LAWS 4ED VOL 44 235

PELLY V WATHEN 1849 7 HARE 351

MEREDITH V WALKER 1893 68 LT 517

YOUNG V ENGLISH 1843 7 BEAV 10

LLEWELYN, IN RE 1891 3 CH 145

LLOYD V GOUGH 70 LT 725

CLARKE, IN RE LR 1876 7 CH 575

GAUPEN, THE 1975 WN 138

CALDWELL V SUMPTERS 1972 1 AER 567

1 Judgment of McCarthy J delivered the 11th day of March, 1988[NEM DISS]

2 Galdan Properties Ltd (Galdan) were the owners of the Cat and Cage licensed premises in Drumcondra, Dublin which were mortgaged to the Industrial Credit Company Ltd (I.C.C). Haughtons is a firm of Solicitors practicing in Dun Laoghaire and Wicklow; on the 17th November, 1983 they were instructed by Galdan, then trading, to prepare particulars and conditions of sale for an intended auction. The title deeds were in the possession of I.C.C. as mortgagees but had been obtained from I.C.C. by Haughtons on the 16th November on Foot of an accountable receipt "to hold the said documents in trust for the said I.C.C. and not to do any act which would enable the property dealt with by it to be mortgaged or assigned without the I.C.C's consent or its lien thereon to be in anyway postponed or prejudiced". Haughtons did the work required in preparing the conditions of sale and attending what proved to be an abortive auctions held on the 28th November when the property was withdrawn at £681,000. Haughtons' charges amount to £8,414 including VAT. On the 8th February, 1984 a provisional liquidator was appointed to Galdan and it is in the course of the consequent liquidation that this matter comes before this Court. The solicitors to the liquidation, Messrs A & L Goodbody, by letter of the 8th February requested the return of the...