332 / 346
GAZETTE
SEPTEMBER 1983
SALE OF LAND
Payment of booking deposits - priority of
depositors against Equitable Mortgagee.
Barrett Apartments Limited ("The
Company") owned a site at Clontarf
Dublin on which it proposed to build a
block of flats. It was intended that the
sales of the flats be carried out by means
of a contract for sale and an agreement
for lease. Fourteen persons paid
deposits ranging from £3,000 to £10,000
to the Company. Each of the depositors
paid "booking deposits" of at least
£3,000 and a further £7,000 was to be
paid on the execution of the building
agreement. Building Agreements were
signed in only 2 cases.
In respect of some of the deposits a re-
ceipt was issued which included the
following statement "the sum referred
to above is a booking deposit only. It is
returnable upon notification by either
party. Any agreement regarding the
proposed purchase will be the subject of
a written contract, and it is agreed that
this receipt does not constitute a note or
memo of any agreement. It is further
agreed that no right of action at law
arises out of this receipt".
In a number of cases the Solicitors for
the Company wrote to the Solicitors for
the proposed purchasers a letter
including the following statement "we
wish to confirm that we act for Messrs.
Barrett Apartments Limited who have
instructed us that your client(s)
has/have agreed to purchase the above
premises". In some cases the initial
letter from the Company's Solicitor
included the following statement
"Although your client(s) has paid a
booking deposit direct to our clients
there is not in existence any contractual
obligation on our clients to complete a
binding agreement with your client(s)
and this letter and the enclosures are not
intended to constitute an offer to sell the
above mentioned apartment to your
client(s). Accordingly until such time as
the contracts which are enclosed here-
with, together with the other documents
enclosed, have been executed by our
clients, and all payments have been
made in accordance with the first
schedule to the contract, our clients will
not be contractually bound to your
client(s)".
The Company created a Floating
Charge over all its assets in favour of the
Northern Bank Limited ("the Bank")
on 20 December 1979. On 26 September
1980 the Company created an Equitable
Mortgage by deposit of their deeds to
the site in favour of the Bank. On 1
October 1980 a Receiver was appointed
by the Bank under the powers contained
in the Floating Charge.
All the depositors had paid their
deposits to the Company before the
Equitable Mortgage was created.
It was submitted on behalf of one of
the depositors, Michael Cummins, who
had entered into a building agreement,
that his deposit was in part payment of
the purchase money, that the Company
was a trustee for him to that extent of the
legal estate in the property and that he
was therefore entitled to a lien on the
property in respect of the deposit in
accordance with the decision in
Tempany
-v-
Hynes
(19761 1.R.101 and
was entitled to rank as a secured
creditor. It was argued on behalf of the
Bank that such a lien only arose in the
case of a contract of which the court
would grant specific performance and
that this was not such a contract.
The Court held that where there was a
contract in existence the payment of a
deposit entitled the purchaser to a lien
on the property in respect of the money
so paid and the existence of an equitable
lien could not depend on the availability
of the remedy of specific performance
referring to
Rose
-v-
Watson
10
H.L.C.672 and
Tempany
-v-
Hynes.
In the case of the other depositors
who had not entered into agreements it
was argued on behalf of the bank that
where no contract at all existed, or at
best, a contract which could not be
enforced either by an action for specific
performance or in any other way, no lien
arose in favour of the depositors.
The Court rejected this argument
relying on the decision in
Whitbread&
Co. Ltd.
-v-
Watt
11902] lCh835 and
Rose
-v-
Watson.
The Court noted that it
was conceded that the Company had not
been for some time in a position to
implement the transaction in respect of
which the deposits were paid. It was
clear that if the Company were not in
liquidation the depositors would have
an uncontestable right in every case to
recover their deposits. If the lien relied
on depended on that right and need not
be the result of any express contract it
followed that the fact that in a number of
cases there was no enforceable contract
was not material. The court therefore
held that the depositors were entitled to
a lien on the site in respect of the money
so paid and were entitled to rank as
secured creditors in the liquidation.
As the deposits had been paid before
the Equitable Mortgage was created,
the equitable interests created by the
payment of the deposits had priority
over the subsequent equitable interests
created by the deposit of the title deeds
and the appointment of the Receiver.
The court noted that the position might
well have been different if the bank had
stipulated for a legal mortgage of the
property as a condition of making their
advance.
In the Matter of Barrett Apartments
Limited, High Court per Keane J. 15
July 1983 unreported.
John F. Buckley.
CRIMINAL LAW
Section 7 Offences against the State Act
1939 - Obstruction of Government.
Patrick Kehoe had been convicted in
the Special Criminal Court of the
offence of obstruction of government
under Section 7 of the Offences against
the State Act 1939, and sentenced to
three years in prison. The Court had
accepted evidence that Kehoe was one
of a large number of people who had
marched to the British Embassy
protesting at conditions in the H Blocks
in Northern Ireland. Some of these
marchers
had
carried
various
implements. The Gardai had erected
barriers at some distance from the
British Embassy, and organised
themselves behind the barriers in order
to prevent the advance of the marchers
towards the British Embassy. The
Gardai were then attacked by some of
the marchers, and an attempt was made
to breach the barriers. Kehoe was in
possession of a large pole, with which he
attacked the officer in charge of the
Gardai.
On the basis of the evidence, the
Special Criminial Court convicted
Kehoe under Section 7. The Court held
that the Gardai, in setting up the cordon
and resisting the further progress of the
march, were manifestly performing the
duty imposed on the Government to
discharge its obligations under the
provisions of the Diplomatic Relations
and Immunity Act 1967, and in
particular protecting the premises of a
foreign mission.
On appeal, the Court of Criminal
Appeal held as follows:
1. There was sufficient evidence of
identification to allow the Special
Criminal Court to convict Kehoe.
2. The word "government" in Section 7
denotes more than the word
"cabinetx".
It
includes
the