The Estate of Maxwell Close

• Jurisdiction: Ireland
• Judgment Date: 05 June 1905
• Date: 05 June 1905
• Court: Court of Appeal (Ireland)

In the Matter of the Estate of Maxwell Close (2).

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.

1905.

Landlord and tenant — Land Purchase Acts — Redemption of superior interests — Date at which value is to be ascertained — Variable rent — Principles on which redemption price is to be fixed.

C. sold his estate to his tenants under the Land Purchase Acts. The estate was held under a perpetuity grant from Trinity College, Dublin, subject to a rent of £1836, variable in accordance with the provisions of the Trinity College, Dublin, Leasing and Perpetuity Act, 1851. After payment of outgoings C. had, prior to the sale, a profit rent of £117, most of his tenants having fixed judicial rents of second statutory terms. The purchase-money of the estate was £52,423. On an application to fix the redemption price of the rent payable to Trinity College, Dublin, Meredith, J., had fixed the same at the sum of £45,000, on principles appearing in his judgment, already reported (ante, p. 207):—

Held, by the Court of Appeal, that the order of Meredith, J., should be affirmed.

The price to be paid for a superior interest on redemption is the amount which will enable the owner to purchase an investment equally secure, which

will produce an income equal to that of the superior interest, together with a small addition by reason of the redemption being compulsory. But in determining what is the nature of the security afforded by the superior interest the Court will not treat the income derived therefrom as a perpetual annuity charged upon the purchase-money, but will value the estate in the lands sold, of which the owner of the superior interest was possessed at the moment of the sale.

The special circumstance that Trinity College is bound to utilise the redemption price as an income-bearing fund should not influence the Court in ascertaining the money value of the rent.

There is no rule of law that the number of years' purchase to be paid for such a rent as that payable to the College, where a sale is within the zones, must be at least as many as the owner of the mesne interest received upon his net income upon the sale to his tenants.

Leader's Estate ([1904] 1 I. R. 368) explained.

Appeal by Trinity College from the decision of Meredith, J., already reported, ante, p. 207, where the facts of the case are fully stated.

Ronan, K.C., and Jellett, K.C. (with them G. W. Walker], for the appellants.

Matheson, K.C., and S. L. Brown, K.C. (with them Chaytor), for the respondent.

Lord Ashbourne, C.:—

This is an appeal from Mr. Justice Meredith, and is important as it involves the consideration of the principles upon which “superior interests” are to be valued, when their redemption is necessary under the Land Law (Ireland) Act, 1903.

The appeal practically challenges and seeks to re-open the decision of this Court in Leader's Estate (1). The law relating to the redemption of superior interests under the Irish Land Purchase Acts has been fully discussed in Owen's Estate (2), and the sections in the Acts of 1885, 1887, 1896, and 1903, relating thereto, have been fully opened and examined in the arguments addressed to us.

The facts of the case are stated in the fullest and clearest way in the judgment of Mr. Justice Meredith, and I deem it only necessary to refer to such of them, and to such an extent, as may be necessary for the purpose of my judgment.

Mr. Close sold to his tenants his estate, which was held under a perpetuity grant from Trinity College, Dublin, subject to a rent of £1836, for £52,423. Under the provisions of the Trinity College Leasing and Perpetuity Act, 1851, this rent was variable every ten years, and in accordance with the scale of prices laid down in the Act; but at the time of the sale there was no present probability of a variation. After payment of outgoings, Mr. Close had only a profit rent of about £117 a year. The tenants' rents were practically second-term judicial rents when Mr. Close sold and applied to have the redemption price of the perpetuity rent fixed.

Mr. Justice Meredith, after evidence and argument, fixed the redemption price of the College rent “with all its advantages and infirmities” at £45,000. The soundness of his decision has been challenged in this appeal, and it is urged that he should have awarded at least the entire purchase-money of £52,423, and that even then Trinity College would have been a loser.

I do not think that it is quite the function of this Court to sit in judgment on the actual figure selected by the primary Court, and to balance on estimates of value and considerations of amounts, more or less, what particular figures might appear to be most satisfactory.

It is, I think, expedient for the appellants to show that the Court below has misapplied, or omitted to apply, legal principles, and has made mistakes in law or miscalculations as to facts or figures in making its valuation.

The appellants' counsel do not hesitate to insist that the decision of Mr. Justice Meredith is open to a series of legal objections, all of which were dealt with and considered by that learned Judge, and many of them repeated here with great power by Mr. Honan and Mr. Jellett.

The two broadest contentions of the appellants were—(1) that Mr. Justice Meredith had misconceived the nature of the superior interest to be redeemed; and (2) that the decision in Leader's Estate(1) had been misinterpreted by Mr. Justice Meredith, or was itself erroneous.

As to the first of these two cardinal objections, Mr. Ronan insisted that Mr. Justice Meredith was radically and essentially wrong in treating the superior interest to be redeemed as the fee-farm rent issuing out of and charged on Mr. Close's estate at the time of the sale. He contended that the superior interest was a perpetual annuity of £1836 charged on £52,423; and he urged that at the governing dates the lands were discharged from the fee-farm rent, and the College claim had become one against the purchase-money alone. Mr. Ronan wanted to get rid of all the uncertainties and vicissitudes of value that a fee-farm rent charged on lands is liable to—the depreciation of the value of the lands, the possible lowering of the fee-farm rent, the lessening of the security, the narrow margin left after its payment. In other words, his contention amounted to a claim that the College fee-farm rent was to be valued after the sale on entirely different principles from those which attached to it before the sale—that it might be hampered and fettered by all the uncertainties and disadvantages of Irish Land tenure one day and freed from them the next. This argument would really alter the subject-matter to be redeemed. I cannot think this contention well-founded, as it is not so much the superior interest, as the claim which the owner of the superior interest had against the land in respect of that interest, which is transferred to the purchase-money. Mr. Ronan rightly pressed this contention with much insistence; and if he had succeeded in it, the figure to be awarded as the value on redemption might have been substantially affected.

The argument as to the application and meaning of the decision in Leader's Estate (1) took several forms.

It was the decision of this Court, and at all events bound the members who joined in the decision. The way the decision was approached before us was, by the statement that the Judges who decided it could not have intended to interfere with the law of compensation for the compulsory purchase of property; that the closing part of the order in Leader's Estate (1) was inconsistent

with the earlier part; that it went too far; and that Mr. Justice Meredith had given those closing words too absolute a meaning, and that he did not sufficiently recognise the owner's right to be indemnified against loss.

What was the order in Leader's Estate (1)? The order was in the following terms:—“Declare that the redemption price of the rent ought to be fixed at the price or sum which appears upon due consideration of all the circumstances of the case—of the selling prices of similar interests, of the value of money, and of the fact that the redemption is compulsory—to be the fair value thereof; but that the amount of the said price ought not to be affected by the consideration of indemnifying the owner of the said rent against loss of income by reason of the difference between the annual amount of the said rent and the annual income of any investment or class of investments in which the redemption money might be invested.”

It was urged on behalf of the appellants that the latter portion of the order was inconsistent with its earlier portion as well as with the existing law, and that it misled Mr. Justice Meredith. But the order was framed to meet the case before the Court of Appeal, and the grounds upon which Mr. Justice Ross had based his decision. This Court, from the report of the case in the Land Court, had reason to believe that Mr. Justice Ross had held that the price ought to be adjusted at the sum which if invested in gilt-edged securities would produce an income equal to the rentcharge redeemed, although its true value might be below the value of such securities. Possibly the terms of the order in Leader's Estate (1) are not sufficiently precise or guarded on this subject, although indeed it is manifest from the closing words of the order that the Court was dealing with particular investments or classes of investments. I cannot find that Mr. Justice Meredith imputed to the order in Leaders Estate (1) any other meaning than that which I have indicated. At the close of his judgment he says: “I asked Mr. Jellett what he meant by his sixteenth proposition. He answered, as I expected he would, that his clients should be awarded such a sum of money as invested at 3¹/₂ per cent. would

produce the £1836.” This was like the...