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GAZETTE
DE
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EM
BER 1981
by letter in November 1973 that it
was due to "pressure of work" and
that they (Mr. H's Solicitors) were
returning the deeds of the house to
the F.N.B.S., the first mortgagees.
The Plaintiffs then obtained the deeds
directly from the F.N.B.S. in
December 1973 and sent them to
their legal department in Belfast with
instructions to prepare immediately a
second mortgage. The Plaintiffs' legal
department relied on the original
requisitions raised in 1964 by the
F.N.B.S. solicitors and merely
carried out a Registry of Deeds
search against Mr. H., which did not
disclose any acts.
The Plaintiffs were not aware of
the fact that in May 1973 Mr. and
Mrs. H had separated and that Mrs.
H had consulted a Firm of Solicitors
who advised her to take proceedings
against Mr. H. for a declaration that
she was the beneficial owner of the
house where she was continuing to
reside. The Plaintiff failed to make
any enquiries or requisitions and on
22 January 1974 the Mortgage was
executed and subsequently registered.
On that same day (22 January 1974)
Mrs. H began proceedings against
Mr. H for a declaration that she was
the beneficial owner of the house and
for an order for the transfer of the
house to her, to which proceedings
Mr. H never appeared.
The Plaintiffs first became aware
in July 1974 of Mrs. H's claim when
Mrs. H's Solicitors wrote to them.
On 24 February 1975 the High
Court made an order declaring that
Mr. H. held the house in trust for
Mrs. H. and an order that it be
assigned to her subject only to the
first mortgage in favour of the
F.N.B.S. On the making of these
orders the then High Court Judge
(Kenny J.) was unaware at the time
of the Plaintiffs' second mortgage.
The Plaintiffs then commenced
High Court proceedings seeking a
declaration
that
their
second
mortgage was well-charged on the
premises and a declaration that their
mortgage ranked before the claim of
Mrs. H. The High Court Judge
(McWilliam J.) in the course of his
judgment held that, as two of the
inquiries which would normally and
therefore ought reasonably to have
been made were not made by the
Plaintiffs, then the Plaintiffs were
deemed to have notice of the interest
of Mrs. H. The inquiries were, (i) "Is
there any litigation pending or
threatened in respect of the
property?" The Plaintiffs appealed to
Supreme Court.
Held
(per Kenny J.), after quoting
passages from Wylie's Irish Land
Law (1975 edition p.p. 103/104 and
643/644) and Cheshire's, Modern
Law of Real Property (12th edition p.
64)
under
the
heading
of
Constructive Notice, both of which
passages were in accordance with the
remarks of Lindley M.R. and the
judgment of the Court of appeal in
England in
Bailey v. Barnes
[ 1894] 1
Ch. 25, (where it was held that
regard must be had to the usual
course of business and a purchaser
who wilfully departed from it in order
to avoid acquiring a knowledge of his
vendor's title was not entitled to
derive any advantage from his wilful
ignorance which would have come to
his knowledge if he had transacted
his business in an ordinary way),
That,
as the Plaintiffs made no
inquiries whatsoever about the title or
other interests in the house when they
took the second mortgage; and as
they relied on answers to requisitions
given to the first mortgagee's
solicitors in 1964; and as there was
no evidence that they carried out any
investigation but were prepared to
take whatever interest Mr. H had
("warts and all"); and as they had
failed even to raise the two
requisitions referred to by McWilliam
J. (supra), the Plaintiffs did not act as
reasonable mortgages normally do
and were therefore fixed with
constructive notice of Mrs. H's estate
when they took their second
mortgage.
Henchy J.,
in a concurring judgment
stated that the Plaintiffs had failed to
make such inquiries and inspections
as ought reasonably to have been
made and he applied an objective test
to the extent that he questioned what
a purchaser (mortgagee) or a
particular property ought reasonably
to have done in order to acquire title
to it, and he found that the Plaintiffs
had made no inquiry as to who was
in actual occupation of the house at
the time of the second mortgage and
that they had not made any inquiry
as to whether any litigation was
threatened or pending in respect of
the property, nor even an inquiry as
to the existence of any proceedings or
claims arising from statutory notices
under such statutes as the Housing
Acts or the Planning Acts, which
might fatally flaw the title; and,
further that despite the fact that the
premises were obviously a family
home (although the mortgage of
January 1974 took place before the
Family Home Protection Act 1976)
the
Plaintiffs
as
"purchaser"
(mortgagee) ought reasonably to have
adverted to the fact that there were
judicial decisions showing that a wife
who had made payments towards the
acquisition or payment of instalments
of the mortgage of the family home
acquired a corresponding share in its
beneficial ownership; and that the
Plaintiffs did not therefore show the
care that was expected from a
reasonable purchaser (mortgagee).
Parke J.
in a further concurring
judgment went further and gave
consideration to what should be the
duty of a Conveyancer who was
investigating title on behalf of a
purchaser or mortgagee, and noted
that the facts of this case provided a
striking illustration of the necessity of
assessing the extent of this duty by
applying an objective test of the
needs of a particular purchaser
engaged in a particular transaction.
Parke J. stated that a conveyancer
could not properly discharge that
duty unless he could obtain for his
client title which would not be
subsequently defeated by a third
party whose rights ought to have
been
discovered
on
proper
investigation and stated that a
requisition requiring confirmation of
vacant possession (on a sale) «or
evidence that there was no person in
possession with any claim of right (on
a mortgage) might have sufficed in
the present case, as also even would
the standard requisition as to
threatened litigation because Mrs. H.
had already threatened proceedings.
Plaintiffs appeal dismissed.
Northern Bank Limited v. T.H.,
H.D.H. and First National Building
Society
— Supreme Court (per
Kenny J. with concurring judgments
from Henchy J. and Parke J.) — 17
April, 1980 — unreported.
Summaries of Judgments prepared
by E. G. Hall, Brendan Garvan,
Joseph Sweeney and Barry O'Neill
and edited by Michael V. O'Mahony.
xxvii