The Gazette 1976

GAZETTE

UNE

1976

RECENT IRISH CASES

COMPULSORY PURCHASE

High Court says property firm

should be paid lower compensation

for compulsory purchase.

In a reserved judgement in the

High Court Mr. Justice McMahon

held

that

the

compensation

to be paid to a Dublin firm of

developers in respect of lands in the

Bray road area acquired by Dublin

County Council should be deter-

mined in relation to an order served

on the developers on April 14th,

1975—not in relation to an earlier

compulsory purchase order served on

December 14th, 1972.

The effect of the judgment is that

the company, Green Dale Building

Company Ltd., of Burlington Road,

Dublin, is to be paid £60,000 com-

pensation instead of £90,000 com-

pensation as would have been the

case under the earlier order.

The matter came before the Court

by way of a case stated by Mr.

Owen McCarthy, BE, who had

acted as arbitrator, and who asked

the Court to determine which com-

pulsory purchase order he should

act upon. The lands are situated at

Galloping Green South.

Mr. Justice McMahon said that

the value of the land which was sub-

ject to a compulsory purchase order

had been falling since the order was

confirmed in 1972, thereby giving

rise to a dispute as to the proper

time for assessing compensation. The

order, under the 1966 Housing Act,

had been made by the County

Council on November 11th, 1968,

and was confirmed, with amend-

ments, on August 25th, 1972.

Within the statutory three weeks,

Mr. William Fuller and The Holi-

day Motor Inns Ltd., owners of part

of the property affected, instituted

High Court proceedings, claiming

that the order was invalid in its en-

tirety or, alternatively, insofar as

affected their property.

The Green Dale Building Co.

Ltd. did not question the validity

of the order and, on December 14th,

1972, the County Council served

what purported to be a notice to

treat on the company. The com-

pany's case was that the compensa-

tion payable was to be based on the

value of the land at the time when

this notice was served.

Mr. Justice McMahon said that

the County Council contended that

it was not a valid notice because by

reason of the pending proceedings

in the High Court by Mr. Fuller

and The Holiday Motor Inns Ltd.,

the order had not become operative.

In the latter proceedings, the High

Court, on February 19th, 1975,

suspended the operation of the

order, on the application of the

Council, insofar as it affected the

property belonging to Mr. Fuller

and The Holiday Motor Inns. These

proceedings were later dismissed, by

consent.

Arbitrator sought

Mr. Justice McMahon said that

on April 14th, 1975, the Council

served a second notice to treat on

Green Dale Building Co. Ltd. who,

in the meantime, asked to have an

Arbitrator appointed.

At the subsequent inquiry, Green

Dale Building Go. Ltd. made the

case that the value of the lands for

the purpose of determining com-

pensation should be taken at the

time when the first notice to treat

was served.

Mr. Justice McMahon held that

the services of the first notice to

treat was not merely irregular but

ultra vires

the powers of the County

Council which could not, by serving

such notice before the order had be-

come operative, make itself liable to

pay compensation based on the

value of the land at that time. As a

statutory body with limited powers,

the Council could not be bound by

estoppel to do what was

ultra vires

its powers, or to refrain from doing

what it was its duty to do, and

therefore it could not be estopped

from relying on the invalidity of

the first notice to treat. Accordingly,

he held that the relevant time was

April 14th, 1951.

The Court made no order as to

costs.

Fuller and Holiday Inns Ltd. v. Green

Dale Building Go. Ltd. — McMahon J.

— unreported — June 1976.

VENDOR AND PURCHASER

Sale of registered land subject to

registered judgment mortgages—

Conditions under which order for

specific performance will be granted.

The complicated facts of this case

were stated in the December Gazette,

1975, at page 297. It will be re-

called that the plaintiff Tempany,

was the receiver of two debentures,

the first one of September, 1949

between Tractasales (Longford) and

United Dominions Trust which re-

lated solely to a loan of £25,000 in

respect of the lands contained on

Folio 9792 only. Although there

were 3 Folios involved in the lands

belonging to Tractasales the plain-

tiff, in putting up these lands for

sale by auction, only mentioned two

of them, and forgot to mention Folio

12386, Co. Longford. The auction

was held on 26th February, 1974,

and the defendant bought the lands

for £30,500, and paid a deposit of

£7,625. Two further Judgment

Mortgages against the lands com-

prised in the three Folios were regis-

tered by Peter Doggett and Henry

Smith before the contract for sale

had been signed. After the contract

was signed, further Judgment Mort-

gages were registered in respect of

the lands by Foster Finance Ltd.

and the Longford Arms Motor

Works Ltd.

In buying the premises, the de-

fendant thought he could get finance

to develop it, but he was unable to

do so. As a result of searches in the

Land Registry, in January, 1975, he

discovered the existence of the mis-

sing Folio 12386 relating, to the

lands. There was a meeting at the

Four Courts on 18th March, 1975

when the defendant refused to close

the sale unless £4,500 was paid to

him immediately. The plaintiff re-

fused to comply, and proceeded with

his action for specific performance to

carry out the terms of his contract.

Finlay P. duly dismissed this action,

mainly because he thought that the

title shown by the plaintiff would

involve the defendant in litigation

with the post-contract judgment

mortgages.

It was contended on behalf of the

plaintiff that, when the contract for

sale was signed, that Tractasales be-

came a Trustee for the defendant,

who became the owner of the whole

beneficial interest in the lands. Con-

sequently Tractasales could not own

any estate or interest on which the

two judgment mortgages of Foster

Finance and of Longford Motor

Works could operate. The position

is that a vendor who signs a contract

with a purchaser for the sale of land

becomes a trustee to the extent that

he is bound to take reasonable care

of the property until the sale is com-

pleted. However the vendor becomes

a trustee of the beneficial interest

merely because he signs a contract.

Consequently, until the whole pur-

chase money is paid, the vendor has

a beneficial interest in the land which

may be charged by a Judgment

Mortgage. Furthermore, when a

contract for sale has been signed,

the vendor becomes a trustee of the

beneficial interest only to the extent

that the purchase money has been

paid. This contention is therefore