Re Strong

• Jurisdiction: Ireland
• Judgment Date: 27 June 1940
• Date: 27 June 1940
• Court: Supreme Court

Supreme Court.

In re Strong.

In the Matter of MABEL E. STRONG, a Registered Owner of Land

Land Registry - Priorities - Sale by registered owner - Judgment mortgage registered prior to registration of transfer to purchaser - Purchaser registered subject to judgment mortgage - Application by purchaser to have judgment mortgage cancelled - Equitable rights of purchaser who has paid purchase-money - Nature of rights acquired by judgment mortgagee - Local Registration of Title (Ir.) Act, 1891 (54 & 55 Vict. c. 66) ss. 21, 35, 36, 44, 45, 49; Land Registration Rules, 1937 (Stat. R. & Or., 1937, No. 264) rr. 99, 117.

Motion on Notice.

The applicants, Messrs. Connolly Brothers, applied by motion on notice to have set aside an order of the Registrar of Titles, cancelling the entry of the applicants' judgment mortgage from Folio No. 9786, County of Meath.

The facts, as stated in the judgment of Maguire P., were as follows:—

Matthew Tevlin, the registered owner of the lands comprised in Folio No. 9786, County of Meath, offered these lands for sale by public auction on the 14th October, 1939. Mabel E. Strong was declared the purchaser for the sum of £840. On the 18th October, 1939, at half-past eleven in the forenoon, the purchase money having been paid, Matthew Tevlin executed a transfer of the lands to Mabel E. Strong in feesimple. Later on the same day and before Mabel E. Strong was registered as owner of the lands pursuant to the transfer referred to, Messrs. Connolly Brothers had entered on the Folio, as a burden, a judgment mortgage on foot of a judgment of the High Court obtained by them against Matthew Tevlin for the sum of £834 8s. 8d. Mabel E. Strong, later on the same day, was registered as owner of the lands. She then applied to the Registrar of Titles for an order, under r. 117 of the Land Registration Rules, 1937, cancelling the judgment mortgage. To this application the Registrar acceded and he directed the cancellation of the judgment mortgage.

Messrs Connolly Brothers appealed from the Registrar's decision to the High Court.

A purchaser for value of registered land is entitled to have cancelled from the register a judgment mortgage which has been registered against the vendor's interest in the land in priority to the purchaser's deed of transfer but after payment of the purchase money due under the contract of sale.

So held by a majority of the Supreme Court (Sullivan C.J., Geoghegan and O'Byrne JJ.; Murnaghan and Meredith JJ. dissenting), reversing the decision of the High Court (Maguire P.).

T., who was registered under the Local Registration of Title (Ir.) Act, 1891, as full owner of certain lands, executed a deed of transfer thereof to a purchaser for value. On the same day, after payment of the purchase money and execution of the transfer deed but a few minutes before the transfer was lodged for registration, a judgment mortgage was registered against T.'s interest in the lands. The purchaser was subsequently registered as full owner and obtained from the Registrar of Titles an order cancelling the registration of the judgment mortgage. The judgment mortgagee appealed from the Registrar's decision to the High Court.

The High Court (Maguire P.) allowed the appeal and ordered that the judgment mortgage be restored to the Folio, holding that, as the right of a purchaser who has paid his purchase money under a contract of sale cannot be registered as a burden affecting the lands, there was no justification for allowing the registration pursuant to the contract to defeat the rights of the owner of a burden duly registered in accordance with the Act.

The purchaser appealed to the Supreme Court.

Held by a majority of the Supreme Court (Sullivan C.J., Geoghegan and O'Byrne JJ.; Murnaghan and Meredith JJ: dissenting), that the purchaser was entitled to have the judgment mortgage cancelled from the register, and accordingly that the appeal must be allowed and the order of the Registrar restored.

Holding that the decision in Devoy v. Hanlon, [1929] I. R. 246, correctly explains the effect of s. 44 of the Act, viz., that that section recognises the creation of rights in registered land which do not appear on the register, O'Byrne J. (Sullivan C.J. and Geoghegan J. concurring) was of opinion that the interest of a person who has entered into a contract for the purchase of registered land and has paid his purchase money is "a right" within the meaning of sub-s. 2 of that section, and does not, where there is a previously registered judgment mortgage, affect "the registered owner of a charge created on the land for valuable consideration," under the sub-section, since a judgment mortgage is a process of execution and is not such a charge.

The provision in s. 35, sub-s. 2, of the same Act that "until the transferee is registered as owner," the instrument of transfer "shall not confer on the transferee any estate in the lands" relates only to the effect of the transfer and operates so as to prevent any estate or interest being conveyed by the transfer until registration, it does not affect any equitable right that may exist in the transferee under a contract of sale coupled with payment of the purchase money. Such a right is not subject to the provisions of s. 49 of the Act, as to the priority of burdens, by reason of the fact that, since the coming into operation of the Land Registration Rules, 1937, such a right has not been capable of registration.

Cur. adv. vult.

Maguire P. :—

In this case there is raised an important question affecting the rights of the owner of a judgment mortgage against lands registered under the Local Registration of Title (Ir.) Act, 1891. [He stated the facts, as set out above.]

It is clear from his order that the Registrar considered that the question of the rights of the owner of a judgment mortgage in these circumstances had been settled by the decisions in In re Murphy and McCormack(1), and Quinnv. McCool and Merritt(2). I am unable to take this view.

It may seem strange, after the lapse of so many years from the passing of the Local Registration of Title (Ir.) Act, that the position and rights of the owner of a judgment mortgage, which has been entered upon the register after the registered owner of lands has entered into a contract for the transfer of the lands for valuable consideration, should be in doubt. Unfortunately such is the case.

It was generally thought that the effect of the decision in Pim v. Coyle(1) was that a judgment mortgage, entered on a Folio of registered land after the registered owner had entered into a contract to transfer the lands but before the title of the transferee had been registered, created an effective burden upon the lands, regardless of the nature of the consideration. This view of the judgment in Pim v. Coyle(1)found clear expression in Mooney v. McMahon(2), per Cherry L.J., at p. 135. In In re Murphy and McCormack(3),however, Wylie J., having stated that he had long thought that some of the observations of the Judges in Pim v. Coyle(1)went farther than was intended by the decision, held that that case only made clear the rights of the owners of judgment mortgages where the contract was for voluntary consideration. In the case before him a contract for sale of registered land had been made and a transfer pursuant to the contract executed by the registered owner before the judgment mortgage had been entered on the Folio. Although the transferee was not registered pursuant to the transfer at the time the judgment was registered as a mortgage, Wylie J. held that, by reason of his having entered into a contract for the transfer of the lands for valuable consideration, the registered owner of the lands had parted with the beneficial ownership of the lands and was only a trustee for the purchaser, and that the registered owner had no interest in the lands which the judgment mortgage could effect. Accordingly he directed the cancellation of the entry of the judgment mortgage on the Folio. In Quinn v. M'Cool and Merritt(4) Johnson J. followed this decision. An appeal from the decision of Wylie J. in the former case was then pending in the Supreme Court. The judgment given later is reported in [1930] I. R. 322. The Court, consisting of Kennedy C.J., FitzGibbon and Murnaghan J.J., unanimously affirmed the decision of the Judicial Commissioner, but on a different ground from that upon which he had based his decision. It was unnecessary therefore for the Court to express a view upon the question decided by Wylie J. Two members of the Court, Kennedy C.J. and Murnaghan J.,

did, however, consider the point and express their opinions upon it. They differed in their views, Kennedy C.J. sharing the opinion of Wylie J., while Murnaghan J. took the opposite view. FitzGibbon J. refrained from expressing an opinion on the point. It would seem, therefore, that, while the right of the owner of a judgment mortgage which has been entered upon the Folio after the owner of registered lands has contracted to transfer for voluntary consideration is clear and his position secure, we still lack an authoritative decision as to the position of the owner of a judgment mortgage similarly placed where the owner of the lands has entered into a contract for the transfer of the lands for valuable consideration. Normally I would feel bound to follow the decision of a Judge of the High Court if it appeared to govern a question before me. In this case, however, in view of the unusual position in which the matter stands, I feel that I am bound to treat the question here raised as still open for determination. I think I fairly represent the arguments before me by saying that I was pressed, on the one hand, by Mr. McGonigal to adopt the reasoning of Kennedy C.J., and, on the other hand, by Mr. Roe to adopt that of Murnaghan J. in. In re Murphy and McCormack(1).

Mr. Roe pointed out that, since the judgment in that case, new rules have been made...