Tanager Designated Activity Company v Kane

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 31 October 2018
• Neutral Citation: [2018] IECA 352
• Docket Number: [C.A. No. 29 of 2018],Neutral Citation Number: [2018] IECA 352
• Court: Court of Appeal (Ireland)
• Date: 31 October 2018

BETWEEN/

TANAGER DESIGNATED ACTIVITY COMPANY

PLAINTIFF/APPLICANT

- AND -

ROLF KANE

DEFENDANT/RESPONDENT

- AND -

PROPERTY REGISTRATION AUTHORITY

AMICUS CURIAE

- AND -

BANK OF SCOTLAND

NOTICE PARTY

[2018] IECA 352

Baker J.

Peart J.

Whelan J.

Baker J.

Neutral Citation Number: [2018] IECA 352

Appeal No.: 2018/29

THE COURT OF APPEAL

Property & conveyancing – Mortgage – Order for possession – Ss 31 and 90 of Registration of Title Act 1964

Facts: The defendant had entered into a mortgage agreement with the Bank of Scotland (Ireland) Ltd, who registered their charge over the property. Following the transfer of assets and liabilities to the Bank of Scotland plc, the interest in the charge was sold to the plaintiff without Bank of Scotland plc having registered their ownership of the charge. A dispute arose over the right of the plaintiff to seek possession of the property and the High Court stated points of law for determination under ss 31 and 90 of the Registration of Title Act 1964.

Held by Baker J., that the plaintiff could not challenge the registration of the plaintiff as owner of the charge or claim that the circumstances in which the registration took place were a mistake. Further, the provisions of s 90 of the 1964 Act did apply to the transfer of the charge to the plaintiff.

JUDGMENT of Ms. Justice Baker delivered on the 31st day of October 2018

1 This judgment concerns the entitlement of Tanager DAC (‘Tanager’) to obtain an order for possession against Mr Kane in a mortgage suit and deals primarily with the interplay between the provisions of s.64 and s. 90 of the Registration of Title Act 1964 (‘the 1964 Act’).

2 Noonan J. has referred certain questions of law for determination by this Court.

Material facts

3 Mr Kane is the registered owner of the property comprised in folio 91184F of the Register of Freeholders, Co. Dublin, a dwelling house known as 1 Elmwood, Clonsilla, Co. Dublin, which is his principal private residence.

4 On 20 March 2006, Bank of Scotland (Ireland) Ltd. (‘BOSI’) became registered as owner of a charge on the folio, having advanced money to Mr Kane secured by way of charge.

5 All the assets and liabilities of BOSI including the mortgage and charge on Mr Kane's folio transferred to Bank of Scotland plc. (‘BOS’) pursuant to the cross-border merger made under S.I. No. 157/2008, the European Communities (Cross-Border Mergers) Regulations 2008 of Ireland (‘the Irish Regulations’), and The Companies (Cross-Border Mergers) Regulations 2007 of the United Kingdom (‘the UK Regulations’), the operative time whereof was 23.59 on 31 December 2010. BOSI was then dissolved without going into liquidation.

6 BOS then sold a portfolio of securities to Tanager including its interest in the charge on the defendant's dwelling. That transaction closed on 14 April 2014, and on 25 April 2014, Tanager became registered as owner of the charge previously registered in favour of BOSI. BOS never became registered as owner of the charge and it is this fact that forms the case of the questions to be determined in this judgment.

7 Tanager claims that the defendant fell into arrears on his mortgage repayments, and ultimately, a civil bill for possession issued on 15 January 2015 in the Circuit Court.

8 Noonan J. was hearing an appeal from the order of Judge Linnane in the Circuit Court, where she dismissed the plaintiff's claim for an order of possession, and he gave an interim ruling on 22 November 2017, Tanager DAC v. Kane [2017] IEHC 697.

9 He identified the issue in respect of which a case was stated to this Court at para. 5 of his judgment:

‘Although a number of issues arise in this appeal, the primary issue is a contention on the part of the defendant that because BOS never became registered as owner of the charge in issue, it was not entitled to transfer or assign the charge to the plaintiff. The plaintiff accordingly never acquired title to the charge and was thus not entitled to enforce it against the defendant. Insofar as the plaintiff has become registered as owner of the charge, the defendant contends that such registration was erroneous and a mistake on the part of the Property Registration Authority (‘the PRA’).’

General: the dictum in Kavanagh v. McLaughlin

10 The case stated raises the issue not required to be answered in the judgment of the Supreme Court in Kavanagh v. McLaughlin [2015] IESC 27, [2015] 3 IR 555. That judgment concerned the effect of the cross-border merger by which the BOSI portfolio transferred to BOS, and was concerned, inter alia, with the question of the title of BOS following the merger. Two judgments, of Clarke and Laffoy JJ., were delivered, in which it was determined that the securities held by BOSI over the McLaughlin property, including those held by way of charge on registered land, passed by operation of law to BOS.

11 Kavanagh v. McLaughlin was concerned with the validity of the appointment by BOS of a receiver but at para. 119, in an obiter comment, Laffoy J. noted the following:

‘As regards any further steps which require to be taken to enforce the 2006 Charge, for the reasons set out above, I have come to the conclusion, that, notwithstanding the manner in which the 2006 Charge became vested in BOS, if BOS wishes to avail of the statutory rights conferred by s. 62 of the Act of 1964 to enforce the 2006 Charge, it must comply with the requirement that it be registered as owner of the charge. That conclusion, which is obiter, is based on the absence of any legislation relieving a transferee in the position of BOS of the obligations imposed by s. 62.’

12 That observation by Laffoy J. concerned the question, not central to the present case stated, of whether BOS, which had taken the benefit of the charge from BOSI, could exercise rights under s. 62 of the 1964 Act which were wholly statutory in origin.

13 Mr Kane, however, derives his argument from another obiter comment of Laffoy J. in Kavanagh v. McLaughlin concerning the interplay between s. 64 and s. 90 of the 1964 Act. Section 64 deals with the means by which title to a registered charge may be assured, and s. 90 confers powers on a person on whom the right to be registered as owner of a charge has passed in prescribed circumstances to assure or charge that interest before registration of his or her title has been completed.

14 At para. 108 of her judgment, Laffoy J. said the following:

‘Section 90 of the Act of 1964, which was referred to in Freeman v. Bank of Scotland Plc [2014] IEHC 284, (Unreported, High Court, McGovern J., 29th May, 2014), confers powers on a person on whom the right to be registered as owner of the charge has devolved in prescribed circumstances, for instance, by reason of an instrument of transfer made in accordance with the provisions of the Act of 1964, to transfer or charge the charge before he himself is registered as the owner of the charge, subject to certain qualifications. I am satisfied that s. 90 has no application to the issue of the entitlement of BOS, as successor to BOSI, to enforce the security which was transferred to it by operation of law on the cross-border merger against the McLaughlins.’

15 The defendant raised the argument before Judge Linnane, and on appeal to Noonan J., whether, in the light of the provisions of s. 64 and s. 90 of the 1964 Act and this observation by Laffoy J., the correct position at law is that BOS was not entitled to transfer its interest in the charge which had devolved to it by operation of law without itself first becoming registered.

16 Mr Kane, therefore, argues that not only is the Register which reflects Tanager as owner of the charge incorrect, but that the Property Registration Authority (‘PRA’) was not entitled, as a matter of law, to register Tanager as owner of the charge, because it had taken its title from BOS before BOS was registered as owner of the charge and in circumstances where it could not be said that BOS had taken its title by any of the matters recognised in s. 90 of the 1964 Act.

The questions asked in the case stated

17 Noonan J. asked five questions for determination by this Court as follows:

1) does the defendant have an entitlement to challenge the registration of the plaintiff as owner of the charge at entry no. 7 on the defendant's folio in these proceedings having regard to the conclusiveness of the Register pursuant to s. 31 of the 1964 Act?

2) if the answer to the foregoing question is in the affirmative, is it open to this court to join the PRA as a notice party for the purpose of hearing further argument from it on this issue?

3) if the answer to (i) is in the affirmative, is this court entitled to have regard to the circumstances in which the plaintiff became the registered owner of the charge on the defendant's folio?

4) is it open to the defendant to argue that those circumstances amounted to a ‘mistake’ within the meaning of s. 31 of the 1964 Act?

5) in considering the validity of the registration of the plaintiff as owner of the charge, do the provisions of s. 90 of the 1964 Act apply to the transfer of the charge by BOS to the plaintiff as the party entitled to be registered as owner of the charge?

18 Prior to determining the questions to be stated, Noonan J. granted liberty to the PRA and to BOS to apply to be joined in the proceedings as amicus curiae and notice parties respectively and orders to that effect were made by him on 17 January 2018. The application by the defendant to join each of Ireland, the Attorney General, and the PRA as defendants to the proceedings was refused.

The hearing of the case stated

19 Submissions were made orally and in writing by counsel on behalf of Tanager, Mr Kane, the PRA, and Bank of Scotland, the notice party.

20 The public interest in the determination of the questions raised by Noonan J. for consideration by this Court cannot be denied, and PRA...