Ulster Investment Bank Ltd v Rockrohan Estate Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice Charleton
• Judgment Date: 26 February 2015
• Neutral Citation: [2015] IESC 17
• Court: Supreme Court
• Docket Number: Appeal No. 108/2009 & 109/2009,[S.C. Nos. 108 &109 of 2009]
• Date: 26 February 2015

Ulster Investment Bank Ltd v Rockrohan Estate Ltd

An Chúirt Uachtarach

Between

Ulster Investment Bank Limited

Plaintiff/Respondent

and

Rockrohan Estate Limited

Defendant/Appellant

[2015] IESC 17

Denham C J

Dunne J

Chatleton J

Appeal No. 108/2009 & 109/2009

The Supreme Court

Land – Estoppel – Adverse possession – Plaintiff seeking estoppel by convention – Whether the Statute of Limitations 1957 has applicability in the circumstances

Facts: The defendant/appellant, Rockrohan Estate Ltd, had remained in possession of lands as mortgagor for more than twelve years after the High Court had made a well charging order together with an order for sale. The lands in question comprised about 120 acres, and were entered in the Register of Freeholders for County Cork on folio 28285. No order for possession was made with the primary order. Estoppel by convention, based on the shared understanding of the parties, was claimed by the mortgagee, the plaintiff/respondent Ulster Investment Bank, to ensure that there had been neither an adverse occupation by the mortgagor nor an efflux of time to enable the creation of a title by adverse possession. In the High Court ([2009] IEHC 4), the trial judge decided that the Statute of Limitations 1957 had no applicability in the circumstances of the case. At issue in the appeal to the Supreme Court was the application of the Statute of Limitations in the circumstances. Central to that issue was the question of whether such occupation, after the making of an order for sale, is in fact adverse to the mortgagee bank.

Held by Charleton J that at all times Rockrohan were in possession of the lands with the permission of the bank and that in no way was this possession adverse to the bank; at any stage, the bank, as holders of an order for sale, would have been entitled to put the property on the market, in which case the lands would, in the course of sale by Rockrohan, be under an implied covenant to yield good title and peaceful possession to a purchaser. The Court noted that the bank held off in this step at the express pleading of Rockrohan to await the end of the litigation; the bank did not have to do this, but everyone involved knew that this was their approach and further knew the reasons why. In terms of fundamental rational, the claim by Rockrohan was held by Charleton J to have been correctly characterised by the High Court as outside the purpose for which limitations on actions to recover land were imposed by legislation. Charleton J held that the facts of Courtney v McCarthy [2008] 2 IR 376 illustrate the principle that what was involved in the matter before the Court was not a case of sleeping entitlement being allowed to die through neglect. Charleton J noted that there was a common assumption between the parties, reasonably held and based on unequivocal circumstances, that the parties would hold their hand as against each other until such time as the litigation had come to a practical conclusion one way or the other: had it come to a conclusion as against the bank, both parties assumed, again reasonably, as Rockrohan had expressly and publicly represented, that the debt would be paid out of the profit from the litigation; had it come to a conclusion, which it did, as against Rockrohan, then that would be the end of any excuse whereby it could be claimed that the bank should hold off on selling the property or in making an application to court, usually only made in the case of some form of difficulty or obstruction, that an order for possession for the purpose of sale was not appropriate. Charleton J held that it would be inequitable to allow Rockrohan to resile from that mutual understanding

Charleton J held that the appeal should be dismissed.

Appeal dismissed.

1 Mr Justice Charleton delivered on the 26th day of February 2015

2 Judgment delivered by Charleton, J.

3 1. At issue in this appeal is the application of the Statute of Limitations 1957, in circumstances where a mortgagor has remained in possession of lands for more than twelve years after the High Court has made a well charging order together with an order for sale. The lands in question comprise about 120 acres, and are entered in the Register of Freeholders for County Cork on folio 28285. As is usually the case on making such an order, no order for possession was made with the primary order. Central to that issue is the question of whether such occupation, after the making of an order for sale, is in fact adverse to the mortgagee. Estoppel by convention, based on the shared understanding of the parties, is claimed by the mortgagee bank to ensure that there has been neither an adverse occupation by the mortgagor nor an efflux of time to enable the creation of a title by adverse possession. The mortgagor of the lands in question is the defendant/appellant Rockrohan Estate Limited and the mortgagee is the plaintiff/respondent Ulster Investment Bank. In the High Court, the trial judge, Irvine J, decided that the Statute of Limitations had no applicability in the circumstances of this case; Ulster Investment Bank Limited v Rockrohan Estate Limited [2009] IEHC 4.

Background

4 2. The background to this case is fully described in the judgment of Irvine J. A feature of this background is the long-running dispute involving a company called Bula Limited, an enterprise proposing to mine for zinc and lead in County Meath. The obligation of Rockrohan to the bank in this case came about through a guarantee debenture dated 22 ^nd September 1981 which was, on the face of it, an obligation limited to the recovery of €1 million, together with interest applicable under the primary contract of borrowing. On Bula defaulting on the loan in July 1982, a receiver was appointed over its assets. In July 1986, Rockrohan was called upon to meet its obligation under the debenture. The relevant rate of interest was specified, as was the degree to which other securities had realised cash against the obligation guaranteed. Bula Limited became involved in a series of actions against a number of parties. These proceedings are relevant as forming part of the origin of this case, but are not as to the amount charged on the land or as to the propriety of the realisation of the debenture, since no such defence was raised. Instead, the solution proposed by Rockrohan in the High Court in respect of the sum that was sought to be declared well charged on the land pursuant to the guarantee debenture was a plea, by way of affidavit filed back in 1989, than Rockrohan would be able to discharge its obligations upon the litigation concluding against Tara Mines Limited, together with other related litigation, including a claim against this bank and other banks and against the State. Sets of litigation had been started in 1986, which involved other parties meeting claims of breach of contract and tort related to the mining enterprise and the funding thereof. It was averred that it would be inequitable to allow the bank to proceed to execute against the lands "as such relief may be entirely unnecessary." Among the reliefs sought in the litigation involving this bank were declarations that all consent judgments, all guarantees and all contracts were unenforceable. That remedy, should it have been granted, would have meant that this guarantee debenture was void. An adjournment was sought in this matter until the conclusion of the litigation. That was not granted. After hearing argument, Blayney J proceeded to make an order declaring "the principal moneys secured by the said Guarantee Debenture" together with the interest thereon "and the costs hereinafter awarded" well charged on the interest of Rockrohan in the lands. Then the sum involved was IR £1,267,149.02; but with growing interest on that amount if not paid within three months, and costs. The order of 16 ^th February 1987 continued that should payment not be made by Rockrohan:

5 … the said lands and premises be sold at such time and place subject to such conditions of sale as shall be settled by the Court and the following Account and Inquiry are to be taken and made in the Examiner's Office namely:-

6 No. 1. An Account of all incumbrances subsequent as well as prior to and contemporaneous with the Plaintiff's demand

7 No. 2. An Inquiry as to the respective priorities of all such demands as shall be …

8 3. The Court did not grant me bank an order for possession, as had been sought. The reason for that would have been well known to all the parties, as counsel's note of the judgment of Blayney J of the same date makes clear:

9 The Defendant is saying that there is a different method by which the Plaintiff Bank may be paid. The Defendant argues that if the Plaintiff waits until the other proceedings are determined then the Bank will be paid and there is an inference that the Bank will be paid more expeditiously in this way and the claim by the bank will be satisfied more fully. But the Bank is entitled to choose by which method it will realise money due to it. No real case is being made alleging any invalidity in the Debenture. The only case being made is that the bank in effect should wait and if it were to wait, it would be paid off by the moneys recovered in the other proceedings. That however is not a ground to resist the Order which the plaintiff is seeking. By virtue of the fact of the guarantee debenture, the Bank has a good charge over the lands for the amount which is currently due under the guarantee. Therefore the bank is entitled to the usual Order declaring these sums well charged on the lands in question. The bank also seeks an Order for possession. However, there does not appear to me to be any reason to make an order for possession. There is no evidence before the court such as would satisfy me that there is any...