The Gazette 1977

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The position of a purchaser under the Family Home Protection Act 1976

by Patrick Ussher, M.A., LL.B. (Cantab). Lecturer in Law, Trinity College, Dublin

This paper has the purpose of analysing the burden placed upon a purchaser by the Family Home Protection Act 1976. This Act strives to prevent a spouse, consistently referred to during the Bill's passage through the Dáil as "vindictive," from disposing of the family home over the head of his or her mate. In fact, in the Dáil Debates, such a vindictive spouse was generally assumed to be masculine, and for convenience I shall adopt that convention here, though, of course, the Act works both ways, should there perchance happen somewhere to be a spouse of the female variety sufficiently endowed with both property and malice. The basic underlying position adopted by the Act is that any purported conveyance of the family home by a husband without the prior written consent of his wife shall be void: Section 3(1). And not only is the actual conveyance or transfer void in such circumstances, but also any contract to make such a conveyance: see the definition of 'conveyance' in the interpretation Section 1(1). These formidable provisions are not absolute, as will appear, but where they do bite, their consequences upon a purchaser could be devastating. They have the potential of transferring the burden of a husband's less than perfect marital conduct from his wife to his purchaser who may, at worst, be left not only homeless (his existing home having been sold on the faith of the void purchase) but also financially destroyed. At best, the disappointed purchaser in such a case has the cold comfort of a personal quasi-contractual action against a purported vendor (if he has neither absconded nor become insolvent) for moneys had and received by him under the void transaction, e.g. a deposit paid to him or his agent where the unconsenting wife comes to light before completion, or the sole purchase money where she surfaces later; a proprietary action might lie against such moneys where they remain traceable; and, if a solicitor has been employed, he may be justified in feeling vulnerable and looking to his professional indemnity policy. What then can a prospective purchaser do to avoid these serious consequences? If the basic provisions of Section 3(1) as outlined above had remained unmodified, he and his prospective mortgagee would, in order to safeguard their respective interests, have been forced to the ridiculous lengths of employing someone to investigate the occupancy of the house throughout the period of the prospective vendor's residence therein. Apart from actual inspection of the premises in a search for traces of departed women and children, enquiries would be bound to include questions asked of the neighbours. Had they ever observed a woman on the premises? Then would follow the delicate matter of eliciting from the prospective vendor his precise relationship with the lady in question, supported, of course, by statutory declarations which would thenceforth lie on the title for all the world to sec. Every now and then the vendor's answers would lead to interesting discussions on the civil consequcnces of church annulments, the effect of an Irish domicile on an

English divorce and on bigamy generally. These investigations would not be confined to apparently single and unattached prospective vendors: a vendor in current possession of an apparent wife could not claim to be above suspicion. The only limit to investigation would be the period of the vendor's occupation of the house, since to qualify as a "family home" the wife whose consent is required must have been ordinarily resident there at some time: Section 2(1). But this basic position as it v/ould exist under an unqualified Section 3(1) was modified by later provisions of die Act, and the question remains to what extent these modifications have relieved the purchaser from the foregoing private investigator's dream and conveyancer's nightmare, in which the spectral spouse arises in a new guise to haunt not only the finer points of the Rule against Perpetuities, buut everyday suburban conveyancing as' well. The Bill as introduced into the Dáil which even at that stage represented the sixth draft of a "difficult and novel piece of legislation" (Minister for Justice: Parliamentary Debates, Dáil Éireann, vol. 291, No. 3, Col. 434) modified the basic position of a purchaser under Section 3(1) in the following terms, which were themselves to be substantially amended at the Committee stage into the present form of the Act, representing, one must suppose a seventh or subsequent draft of what became by virtue of them an even more "difficult and novel piece of legislation". The purchaser's burden in Section 3(1) was originally modified in these terms: "(3) Subsection (1) shall not apply as against a person if he is a purchaser in good faith for full value and if all such steps, inquiries and inspections as ought reasonably to have been taken' and made for the purpose of ascertaining whether a consent was necessary under that subsection or, if necessary, was obtained were taken and made by him or on his behalf; and if a question arises, in any proceedings whether the conditions specified in this subsection were fulfilled, the burden of proving this shall be on that person". Some solicitude for the purchaser under such a provision was expressed during the second reading debate in the Dáil, and in particular Deputy O'Kennedy (ibid, cols. 378, 379) asked pertinently what was meant by "such steps, inquiries and inspections as ought reasonably to have been taken" by a purchaser? The Minister in winding up took the opportunity of explaining the duties of a purchaser. Firstly, he explained his understanding of the requirement of "good faith" as being aimed against collusion between vendor and purchaser (ibid, vol. 431). It will be submitted below that "good faith"bears a somewhat wider meaning than this. Secondly, he purported to deal with the purchaser's obligation to make all reasonable inquiries. "He must", said the Minister, "have made all reasonable inquiries. The phraseology of the Bill refers to the obligation to make reasonable enquiries as does the Conveyancing Act, 1882. Deputy O'Kennedy 3

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purchaser ought as a matter of prudence to have made, having regard to what is usually done by men of business under similar circumstances: Bailey v. Barnes [1894] 1 Ch. 35. We are now in a position to turn to the final form of Section 3 of the 1976 Act as modified by an amendment introduced by the Minister at the Committee stage of the Bill. As already mentioned, this amendment swept away the greater part of the original formulation of the qualifications in favour of a purchaser quoted above. The amended form provides: "(3) No conveyance shall be void by reason only of subsection (1) — (a) if it is made to a purchaser for full value, (b) if it is made, by a person other than the spouse making the purported conveyance referred to in subsection (1), to a purchaser for value, or (c) if its validity depends on the validity of a conveyance in respect of which any of the conditions mentioned in . . . paragraph(s) (a) or (b) is satisfied. (4) If any question arises in any proceedings as to whether a conveyance is valid by reason of subsection . . . (3), the burden of proving that validity shall be on the person alleging it. (5) In sub-section (3), "full value" means such value as amounts or approximates to the value of that for which it was given. (6) In this section, "purchaser" means a grantee, lessee, assignee, mortgagee, chargeant or other person who in good faith acquires an estate or interest in property. (7) For the purposes of tliis section, section 3 of the Conveyancing Act, 1882 shall be read as if the words "as such" wherever they appear in paragraph (ii) of subsection (1) of that section were omitted." Considering first the position of an immediate purchaser of a family home, it will be observed that the duty to make reasonable inquiries is no longer stated. The only quality expressly required of a purchaser apart from the giving of full value is that he be in good faith. This somewhat overworked term is capable oi bearing a wider meaning than merely the avoidance of the collusion adverted to by the Minister (supra); the term, as commonly understood, embraces more than the freedom from actual complicity in a fraudulent design. Good faith requires actual subjective honesty of such a quality that suspicious circumstances alone, without actual knowledge of or complicity in them, founds a duty to enquire which, if not discharged, leads to a person being found mala fide Jones v. Gordon, 2 App. Cas. [18771 616 at 628, 9). Honesty is subjective, and it follows that a person's good faith is judged by his own mental state, equipment and knowledge at the relevant time (e.g. Hutton v. West Cork Railway Co. [1883] 23, Ch. D. 654 at 671); and that failure to live up to an objective standard such as that of the ordinary, prudent purchaser envisaged by Section 3 of the Conveyancing Act 1882 is not necessarily equivalent to bad faith. Identical facts therefore will result in a prospective purchaser who appreciates the significance of what comes to his attention being in bad faith, and another who does not, being blameless. Thus if good faith alone were the test, it is arguable that a prospective purchaser who hears that a prospective vendor had a wife

asked precisely what it meant. It has a clear meaning in the realm of conveyancing. It means that reasonable steps, in the circumstances of a particular title, have to be taken by a purchaser. That normally means that he puts the usual requisitions or questions to the vendor and may seek a statutory declaration to support the replies to the requisitions. He has to make reasonable enquiries to satisfy himself that there was no need for a consent... It is only another incident of title that will have to be investigated on the Conveyance, and it will not be a harsh or onerous burden". With every respect to the Minister, this answer begs the question. Omitting the circularity, it boils down to a statement that reasonable conduct on the part of a purchaser cons i s ts in doing that which is wsua/.Unhappily, doing what is usual is in the case of a .novelty somewhat difficult. Furthermore, the reference to Section 3 of the Conveyancing Act 1882 was unfortunate. This reference was clearly made initially by way of analogy only, and not in the context a wholly sound analogy at that, but now as a result of the amendments of Section 3 of the original Bill introduced at the Committee stage (of which more below) the Act reads as //Section 3 of the Conveyancing Act 1882 has of its own motion a direct application to the type of situation created by the 1976 Act, which it does not. Section 3 of the Conveyancing Act 1882 says, inter alia, that "a purchaser shall not be prejudicially affected by notice of any instrument, fact or thing, unless . . . it is within his own knowledge, or would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to bave been made by him . . ." This section does not of course operate so as to remove in favour of a purchaser who has done everything he reasonably ought to have done by way of investigation of title any legal incapacity on the part of the vendor or any legal inability to convey what he purported to convey through lack of legal title in him. For example, a purchaser may have properly and fully investigated a forty years title to an apparent fee simple estate only to find himself defeated years later by the reversion on a long lease falling in. Section 3 of the Conveyancing Act will not help him. Similarly, the vendor's disability under the 1976 Act is legal, in the sense that his purported conveyance is void at law except in favour of a limited class of purchasers. Indeed, it is trite knowledge that Section 3 of the Conveyancing Act 1882 is concerned not with the passing of legal titles but with the standard to be observed by a purchaser of a legal estate who wishes to avoid being bound by a pre-existing equitable proprietary interest. And the framers of the Bill disavowed the intention of conferring on a wife any such interest in the family home. Apart from the foregoing conceptual difficulties, references to Section 3 of the Conveyancing Act 1882 are scarcely appropriate as a means of elucidating (as the Minister sought to do) the standards of investigation required of a purchaser, simply because the Section Presupposes a pre-existing body of case law, (which in fact the Section sought to restrict) setting out what a reasonable purchaser ought to do to avoid being bound by outstanding equitable interests. This casc-law reflects current conveyancing practice and the former refects the ktter in a symbiotic relationship, whereas in the case of the new "right" created by the 1976 Act there was when the Minister spoke neither current practice nor case-law. rne words "ought reasonably to have been made" in Section 3 of the 1882 Act refer to the enquiries which a 4

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who had fled the nest will be in good faith if he remains ignorant of the requirement of her consent until after completion. Though Ignorantia iuris haud excusat, statute is at liberty to provide otherwise. However, this said, it will be rare to find such happy ignorance on the part of a purchaser prevailing throughout every stage of a conveyancing transaction; he will almost inevitably have employed a solicitor (in the case of a private treaty sale often before the contract stage or at worst purported contract, and in the case of many auctions only afterwards) and that solicitor's better informed mental state together with its consequences will be imputed to his client as is normal in such curcumstances between an agent and a principal. (Rolland v. Hart, Law Rep. 6 Ch. 678, 682; and Bradley v. Riches [18781 9 Ch. D. 189, 196. See also Section 3(7) of the 1976 Act, of which more below, which ends in the same direction). The central- question therefore arises: can a prospective purchaser who is well-informed, whether by imputation or otherwise, on the provisions of the 1976 Act and its consequences assume in the absence of suspicious circumstances (whether founded in rumour, or on inspections of the premises or otherwise) that a prospective vendor is unmarried and remain in good faith? Or must such a prospective purchaser automatically, whatever the circumstances, make enquiries about the prospective vendor's marital status in order to remain in good faith, and if so, how extensive should such enquiries be? It is an essential element of good faith that the person required to possess it may assume that all is in order and in accordance with appearances unless he is put on inquiry; in other words, there is no underlying duty to investigate unless suspicious circumstances come to that person's attention. Were the position otherwise under this concept, no one could at common law have taken a negotiable instrument without first having investigated title (see Jones v. Gordon, supra, and Manchester Trust v. Furness [1895] 2 Q.B. 539, 545). Applying these principles to the legally well- informed purchaser of a dwelling house, must he assume that a vendor who remains an apparent bachelor is so unusual as to be sufficiently suspect to warrant further inquiry? One would think, or certainly hope, not. One would think also that apparent wives might consistently with good faith (and in the absence of suspicious circumstances) be accepted at their facc value as being what they purport to be, without either requiring the production of the marriage lines or investigating the vendor's occupation of the house in a search for other, earlier women and so on. Nonetheless, the translation of an established concept to a new context obviously engenders uncertainties, and the extent of the underlying assumptions of a purchaser in good faith cannot yet confidently be predicted. Accordingly therefore, it is suggested that the prudent course for the legally well- informed purchaser (meaning usually one who has retained the services of a solicitor) to follow would lie in asking a vendor whether he or she has a spouse as part of an appropriate preliminary enquiry (if a solicitor is employed at the precontractual stage) and, in any event, as part of an appropriate requisition before completion. The answers to these questions may, it is submitted, be accepted as conclusive (see Sclcngor Rubber Estates Ltd. v. Cradock (No. 3) [1968] 2 All E. R. 1073 at 1104), unless the answer is sufficiently ambiguous or evasive as of itself to found a duty to enquire, or unless, as ever, other suspicious circumstances come to the attention of

the purchaser or his agents. Such then is the concept of good faith required of a purchaser. It remains to be seen what more, if anything, is required by the 1976 Act of a purchaser as a prerequisite to gaining a clear tide. These further elements are being treated here separately from good faith pardy because the Act is less than clear on them, and partly because good faith is a tolerably certain concept, suited to treatment in isolation. It will be recollected that the Bill up to the Committee Stage (unlike the Act) expressly imposed on a purchaser the obligation to make reasonable enquiries and inspections in addition to the requirement that there be good faith on his part; that the Bill, though imposing these additional objective standards on a purchaser, failed to spell out what their satisfaction involved; that the Minister, in seeking to explain, got distinct concepts into confusion and, in any event, begged the question by referring to as appropriate whatever practice might be usual, when, of course, there was none; and that the Minister dropped the express statement of an objective standard of conduct at the Committee stage and substituted the present section 3(7) of the Act. He, himself, was clear about what he thought he was accomplishing by this. He said: "the substance of the requirements regarding notice is the same in the amendment as in the original section although expressed in different terms. What I am doing here is incorporating Section 3 of the Conveyancing Act 1882. The conveyancing obligation in that section will apply to all purchasers under this proposed section." (Parliamentary Debates Dáil Éireann, Official Report, vol. 29, No. 11 paragraph 1602 et seq ). Be that as it may, all that Section 3(7) of the 1976 Act in fact did on the face of it was to modify, for the purpose of the 1976 Act, that part of Section 3 of the Conveyancing Act 1882 dealing with imputation of notice from agent to principal, on the assumption that the 1882 Act in some manner already- laid down an objective code of standards to be followed

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by a purchaser in respect of his obligations under such a Piece of legislation as the 1976 Act. As I have sought to show, sucli an assumption is both false and inept. Nevertheless, we have in the 1976 Act this oblique reference to the Act of 1882; it is therefore a practitioner's duty to make some attempt to predict what the Courts will make of it; one must, if one is to err on the side of caution, suppose that the Courts will be tempted by a leap in construction to hold that the 1976 Act intended to impose some sort of objective standard cn a purchaser in addition to the subjective requirement of good faith; and that that objective standard is to be found in the words of the 1882 Act which refer merely to "such inquiries and mspections . . . as ought reasonably to have been made", thus begging the question again but this time by a more circular route. I would submit that the Courts should find that this question, (namely what inquiries and inspections ought reasonably be made?) is one to be answered by the legal profession itself, in that doing whatever is usual in a conveyancing situation generally satisfies also the requirement of being reasonable in a constructive notice context. Consequently, if the Incorporated Law Society of Ireland were to lay down certain guidelines which it considers to be appropriate to be followed by a solicitor acting for the purchaser of a family home, those guidelines will ipso facto become the reasonable inquiries and inspections which it has been supposed as a matter of construction the 1976 Act requires. A purchaser who satisfies them and who is also in goodfaith will taice free o f any. spouse's claim. The Conveyancing Committee of the Incorporated Law Society is currently considering this problem, and it is to be hoped that they do not set the objective standard high. Indeed, little more than the standard which the cautious view expects of a legally well-informed purchaser he is to remain in good faith, (supra), should suffice, i.e. a straight question to which a seemingly straight answer may be accepted as conclusive. Additional elements w ould include the normal searches in the Registers, and an inspection of the property itself by someone aware of the legal questions which might arise would be advisable: mdeed, such an inspection has always been advisable in conveyancing, and is reasonably to be expected, but unfortunately has by no means always been undertaken in Practice. Furthermore, it is to be hoped that the Law Society will limit the necessity for reasonable enquiries and inspections to the posr-contractual stage, so that a Purchaser who wishes to allege that he has a valid contract (with a consequent right to damages for non- completion and a lien for the deposit) will have only to surmount the hurdle of showing that he was in good faith. l f Wroth v. Tyler [19731 1 All E.R. 897 were to be followed in Ireland, it is probable that a purchaser under an open contract whose vendor has failed to complete through failure to obtain his spouse's consent would be entitled to damages for loss of bargain, notwithstanding the rule in Bain v. Fothergiil [1874] L.R. 7 H.L. 158 limiting a disappointed purchaser's damages to his costs enly, e .g. of investigation of title, where the vendor has failed to show title through some irremovable defect of htle not brought about through his own fault. The 1976 Act provides that a spouse may register the fact of her marriage, in the case of unregistered land, in the Registry of Deeds and, in the case of registered land,

in the appropriate folio: Section 12. A purchaser seeing such an entry will fail to satisfy the test of good faith if he ignores it. and if he fails to make the searches which would have revealed it. he will have failed to fulfil the objective standard postulated above, it being assumed naturally that a search for such an entry will form part of the recommended usual practice. This, it is submitted, is the scheme of the 1976 Act even though the normal position as far as unregistered land is concerned is that registration in the Registry of Deeds does not constitute notice: Latouche v. Dunsany 1 Sch Lef. 137. Failure to register is not to "give rise to any inference as to the non-existence of a marriage": Section 12(2) of the 1976 Act. Indeed, in the case of registered land the 1976 Act appears to envisage that the requirement of a spouse's consent should rank as an overriding interest within the ambit of Section 72(1) of the Registration of Title Act 1964, viz. "... all registered land shall be subject to such of the following burdens as for the time being affect the land, whether those burdens are or are not registered, namely . . . (q) the burdens to which Section 59 . . . applies." Section 59(1) states that nothing in the 1964 Act "shall affect the provisions of any enactment by which the alienation, assignment, subdivision or subletting of any land is prohibited or in any way restricted ...". That spouse's right to consent should fall into this category was stated in the 1976 Act in an unnecessarily oblique manner, the draftsman merely satisfying himself with providing in Section 13 thereof: "Section 59(2) of die Registration of Title Act, 1964 (which refers to noting upon the register provisions of any enactment restricting dealings in land) shall not apply to the provisions of this Act", the implication in the context being that Section 59(1) abovementioned, does so apply. The last specific matter briefly to be mentioned concerns the outlines of the position of the sub-purchaser, that is to say, a purchaser who has taken from a purchaser whose conveyance was void under the Act. Section 3 of the 1976 Act in effect provides that the conveyance to such a sub-purchaser will fail to pass the property unless he can show that he was likewise in good faith, and likewise had, assumedly, followed the appropriate conveyancing practice. In such a case, it is submitted that the sub-purchaser should be entitled to accept as conclusive the signature of an apparent spouse in the conveyance to his immediate predecessor or the registration of his immediate predecessor as proprietor as the case may be, on the grounds that omnia praesumuntur ut rite esse acta . This would leave him vulnerable to suspicious circumstances actually known to him, adverse claims communicated to him, and registrations in the Registry of Deeds which had clearly not been satisfied in the purported conveyance to his predecessor. In conclusion, one hopes that it is not too reactionary to say that purchasers are as much to be protected by our law as unfortunate wives, anc it is tc be regretted that the choice having been made not to put the onus of self- protection on the wife herself (as would have been the case if an exclusive system of registration akin to that introduced in England under the Matrimonial Homes Act 1967 had been chosen) the burden on the purchaser was not more clearly defined.

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the reference must be express and therefore capable of control by the party concerned by the exercise of normal care. Case 25/76 — Galeries Segoura (Brussels) and Bonakdarian (Hamburg) (preliminary ruling) 14 December 1976. This again is a question of interpretation of the first paragraph of Article 17 of the Brussels Convention, in a slightly different context. The first question asked the Court of Justice whether the requirements of the first paragraph of Article 17 of the Convention are satisfied if, at the oral conclusion of a contract of sale, a vendor has stated that he wishes to rely on his General Conditions of Sale and if he subsequently confirms the contract in writing to the purchaser and annexes to that confirmation his General Conditions of Sale which contain a clause conferring jurisdiction. The Court has ruled that in the case of the oral conclusion of a contract the formal requirements of the first paragraph of Article 17 of the Convention of 27 September 1968 are fulfilled only if the written confirmation from the vendor accompcnied by the general business conditions has provoked a written acceptance by the purchaser. A second question asked whether Article 17 of the Convention is to be applied where, in dealings between merchants, the vender, after the oral conclusion of a contract of sale, confirms in writing to the purchaser the conclusion of the contract subject to his General Conditions of Sale and annexes to that document his conditions of sale and conferring jurisdiction and if the purchaser does not challenge this confirmatory letter. The Court has ruled that the fact that the purchaser raised no objection does not signify acceptance of the clause conferring jurisdiction unless the verbal agreement is to be viewed in a context of current commercial relations between the parties on the basis of the general conditions of one of them including a clause conferring jurisdiction. Case 45/76 — Comet and Produktschap voor Siergewassen (preliminary ruling) 16 December 1976. Rules of Procedure — Period of Limitation — The Comet undertaking, which exports flower bulbs, brought an action against the Produktschap voor Siergewassen for a declaration that it was not liable to pay contributions constituting charges having an effect equivalent to customs duties on export, as prohibited by the Treaty. The said charges, designed to finance publicity in Germany for flower bulbs, were levied by the Produktschap in respect of exports effected during the final months of 1968 and the beginning of 1969. The plaintiff in the main action, Comet, has requested the national court to recognise that it is entitled to set off the sums paid in error against sums claimed from it by the Produktschap in a different connection. The Prcduktschap maintains that since it did not 7

DECISIONS OF THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES 1. Judgements Case 24/76—Colzani (Milan) and Riiwa (Cologne) (preliminary ruling) 14 December 1976. Brussels Convention — The Bundesgerichtshof (Federal Court of Justice) referred to the Court of Justice of the European Communities in Luxembourg two cases (24/76 — Colzani and 25/76 — Segoura) concerning the interpretation of the first paragraph of Article 17 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels Convention). The first paragraph of Article 17 of the Convention provides that: "If the parties, one or more of whom is domiciled in a Contracting State, have, by agreement in writing or by an oral agreement confirmed in writing, agreed that a Court or the Courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular relationship, that Court or those Courts shall have exclusive jurisdiction". The first question put to the Court of Justice by the Bundesgerichtshof was as follows: Does a clause conferring jurisdiction, which is included among General Conditions of Sale printed on the back of a contract signed by both parties, fulfil the requirement of a writing under the first paragraph of Article 17 of the Convention? In its general interpretation of Article 17 the Court of Justice has stated that the validity of clauses conferring jurisdiction is subject, pursuant to Article 17, to conditions which must be strictly interpreted. The formal requirements of Article 17 are designed to ensure that consent beteen the parties has indeed been reached. The Court which is seised of the matter is under a duty to examine, first of all, whether the clause conferring jurisdiction upon it is indeed the outcome of consent between the parties, which must be clearly and precisely apparent. In the light of these general considerations the Court has replied to the first question with a ruling that the requirement of a writing under the first paragraph of Article 17 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters is fulfilled in the case where a clause conferring jurisdiction is included among the General Condition of Sale of one of the parties, printed on the back of the contract signed by both parties, only where the contract signed by both parties includes an express reference to those general conditions. A second question asked whether the requirement of a writing under the first paragraph of Article 17 of the Brussels Convention is fulfilled if the parties expressly refer in the contract to a prior offer in writing which, in its turn, referred to General Conditions of Sale including a clause conferring jurisdiction. In that hypothesis, the Court of Justice nas ruled that

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EEC Treaty concerning procedural aspects of actions at law. These questions were raised in the context of proceedings concerning the payment in 1968, in respcct of imports by Rewe, of charges in respect of phytosanitary inspection, which were considered to be equivalent to customs duties by the judgment of the Court of 11 October 1973 in Case 39/73 [19731 ECR 1039). The respondent, the Agricultural Chamber for the Saarland, rejected the complaints of the appellant Rewe, requesting the annulment of the decisions imposing the charges and the reimbursement of the sums paid (including interest), on the ground that they were inadmissible in that the time-limit laid down by Article 58 of the German Rules of Procedure of the Verwaltungsgericht was not observed. The first question asked whether, where an administrative body in one State has infringed the prohibition on charges having equivalent effect, the Community citizen concerned has a right under Community law to the annulment or revocation of the administrative measure and/or to a refund of the amount paid, even if under the rules of procedure of the national law the time-limit for contesting the validity of the administrative measure is passed. The court has replied with a ruling that in the case of a litigant who is challenging before the national courts a decision of a national body for incompatibility with Community law, that law, in its present state, does not prevent the expiry of the period within which proceedings must be brought under national law from being objected against him, provided that the procedural rules applicable in his case are not less favourable than those governing the same right of action on an internal matter. The second question asked whether the fact that the Court has already ruled on the question of infringement of the Treaty has an affect on the reply given to the first question. The Court answered in the negative.

institute proceedings within the period laid down by the national legislation concerning such proceedings against the assessments arid the reminder notice sent to it, the plaintiff in the main action can no iongcr contest the contributions at issue nor claim repayment of them. For its part, Comet maintains that the supremacy of Community law implies that any measure infringing that law is void and that therefore it has a cause of action before the national courts, independently of restrictions laid down by the national legislation which might lessen the impact of the direct affect of that law in the legal systems of the Member States. The question put to the Court of Justice asks whether the procedure — at least in so far as periods of limitation are concerned — in respect of judicial actions intended to ensure protection for rignts which individuals hold by reason ot the direct effect of a Community provision are governed by the national law of the Member State where those rights of action are exercised or whether, on the contrary, they are independent and can only be governed by Community law itself. After analysing the principle of co-operation with -national courts laid down in Article 5 of the Treaty, the Court of Justice has ruled that in the case of a litigant w ho is challenging before the national courts a decision of a national body for incompatibility with Community law, that law, in its present state, does not prevent the expiry of the period within which proceedings must be brought under national law from being objected against him, provided that the procedural rules applicable in his case ure not less favourable than those governing the same right of action on an internal matter. Ca s e 3 3 / 7 6 - R e w e - Z e n t r al AG and Londwirtschaftskammer fur das Saarland (preliminary niling) 16 December 1976. Rules of Procedure — Period of Limitation — This case is simiiar to Case 45/76 (Comet), summarised above. This time the Bundesverwaitungsgericht turned to the Court in Luxembourg to obtain its interpretation of Article 5 of the

FORTHCOMING LECTURES AND SEMINARS March 31 — London — The European Communities Q nd The Rule of Law. Hamlyn Lecture I. First of four by Lord Mackenzie Stuart — at Institute of Advanced Legal Studies, Russell Square, London. April 4 — London — The European Communities and The Rule of Law. Hamlyn Lecture II. April 5 — London — The European Communities and The Rule of Law. Hamlyn Lecture III. April 6 — London — The European Communities and The Rule of Law. Hamlyn Lecture IV. 6JE. April 28 — London — Confidentiality and Clients Privilege. Sponsors: Solicitors European Group and Commerce and Industry Group of The Law Society, Law Society's Hall, 113 Chancery Lane, London WC2A 1PL. Tel. (01) 242 1222.

April 28 29 — Venice — First European Seminar on Product Liability. Sponsors: European Organisation for Quality Control and the Italian Association for Quality- Control (AICQ). Languages: (Simultaneous translation) English, French, German, Italian. Apply: AICQ Seminar Secretariat, Piazza Diaz 2, 20123 Milan, Italv. Tei. (02) 80.08.21 or 89.22.85. Telex 22481 I UNI Sig'.na.Pagetti. May 15-21 — Florence — New Perspectives on a Common Law of Europe. Sponsor: The European University Institute, Badia Fiosolana, Florence, Italy. May 22-25 —Nice — 74th French Notaries Congress. Theme: "Droit Fiscal et Gestion des Bicns". Organiser: Mme. Boulanger, P.O. Box 149,62520 Le Touquet-Paris- Plage, France.

April 19 — London — "Consequencesand experiences concerning the competition between Floating charges and Reseiration and of Title". Sponsor: Section on Business Law of the International Bar Association. Apply: The director General. International Bar Association, 93 J ermyn Street, London SW1Y 6JE. April 20-21 — London — The Responsibility and Liability of Directors and the Lawyer's Role as a bircctor. Sponsor: International Bar Association. Apply: Director-Gcileral, IBA, 93 Jermyn Street, London SW1 8

JANUARY/FEBRUARY IV77

GAZT I I H

the Solicitor from the case, leaving the Solicitor liable on foot of a previous Undertaking given on the client's behalf. Broadly speaking, Solicitors' Undertakings fall into three categories :- First: Those they give to other Solicitors in the course of everyday practice — mostly in conveyancing transactions; Second: Those they give to persons or bodies other than other Solicitors — mostly Banks or other providers of Finance; Third: Those they give in their capacity as Officers of the Court — that is, in general terms, those they give to the Court — and mostly relating to litigation. The same basic considerations apply to all three and it should possibly be borne in mind that, in the case of Undertakings given as Officers of the Court, a Solicitor is actually liable to commital for breach of such an Undertaking. A Solicitor failing to enter an appearance in an action, in pursuance of a written Undertaking — a very common situation — is liable to attachment. Fortunately, the situation is seldom reached wherein such drastic measures are necessary or resorted to, but it is worth remembering that such remedies exist. As between Solicitors themselves, usually in conveyancing transactions, it is accepted — and probably rightly so — that without such Undertakings and without the mutual trust that makes such Undertakings possible, a great many wheels would very rapidly cease to turn and considerable hardship would result to a great many unsuspecting and innocent clients. However, most Solicitors have their Blacklists, and some have been forced into the extreme position of refusing to accept any Undertakings whatsoever. Most Solicitors content themselves with being selective as to whose Undertakings they will accept. The Conveyancing Sub-Committee of the Dublin Solicitors' Bar Association was interested to discover recently that one of the country's leading Banking Groups keeps all Solicitors' Undertakings it receives under the personal eye of the Law Agent himself, who is believed to have remarked that he has a whole filing cabinet drawer full of what can only be called, at best, 'dubious' undertakings, and who has told us that the Law Society is now backing up the Bank to ensure that all Solicitors' Undertakings arc performed. This is absolutely as it should be, but no doubt a good many red faces will result. The practical points to be made concerning Undertakings are very few and the writer considers that they can be reduccd to the following, applied in a general fashion to all situations:- First:- Always ensure, before giving it, that the client's clear authority to give the Undertaking has been obtained. And it should be noted that a Solicitor cannot hide behind an Undertaking expressed to be given 'on behalf o f . . . ' the client. It has been judicially decided that, such an Undertaking still binds the Solicitor personally. Second:- Always ensure, before giving the Undertaking, that the client's written Undertaking has been obtained not to discharge the Solicitor's retainer in connection with the matter in which the Undertaking is given. Third:- Always ensure, before giving the Undertaking, either (a) that the Title documents or whatever may be

DUBLIN SOLICITORS' BAR ASSOCIATION

As already reported in The Gazette, at the first half- yearly meeting of the Association, held on the 5th April 1976, Mr. Charles Meredith read a paper on the subject of Solicitors' Undertakings which the meeting recommended should be offered to The Gazette for publication. The text of the Paper, slightly amended for visual rather than verbal presentation, is set out below. There is a further warning which may be passed on to the profession as a whole, beyond that inherent in the contents of the Paper; in direct consequence of his industry in the preparation of his address, the writer was co-opted to the Incorporated Law Society's Sub- Committee on the whole question of Undertakings. Let those who presume to air their views beware! UNDERTAKINGS NOT TO BE UNDERTAKEN LIGHTLY You may not know the story - the, sadly, true story - of The Three Solicitors. Unlike the Three Bears, who were, one is led to believe, a family, or at least a related group of Bears, the Three Solicitors had nothing in common except their professional qualifications and, possibly, the desire to secure a prospective piece of lucrative conveyancing business. The Three Solicitors gave three separate undertakings to hold title documents in trust for three separate banks, in three separate financing arrangements — the only small snag being that the three separate solicitors all turned out to be acting for the one client and there was only one property the subject of the title documents referred to. Fortunately for one of the three solicitors, the lucky one did indeed hold the Title Deeds, but the other two found themselves in positions of considerable discomfort, especially as the client left the jurisdiction, with the borrowed money in his pocket! The story of the Three Solicitors is a salutory story - and one which serves as a timely reminder of the risks Solicitors run in giving Undertakings on their clients' behalf without considering extremely carefully just what they are doing. The writer was recently involved in advising upon the strength of a collection of paper writings held out by an independent Merchant Bank to represent security for advances amounting to approximately £1,000,000. These turned out to be a motley collection of unperformed Solicitors' Undertakings dating from the property boom of 1973, given in every conceivable circumstance of property utilisation. Guarantees by the directors of private development companies and other miscellaneous security documents - but mostly, regrettably, Solicitors' Undertakings. In at least one case, it appeared that the Solicitor concerned had returned the title documents to his own client, leaving himself open to the Bank on an Undertaking securing an advance in excess of £50.000. All this is a somewhat lengthy way of pointing out the very obvious fact that Solicitors should never give undertakings without very careful consideration; without being absolutely certain that they can perform that Undertaking; without ensuring continuously thai they remain able to perform that Undertaking; and without ensuring that their client is not in a position to discharge

GAZ L T N - :

JANUARY/F IZ BRUARY 1977

the subject of the Undertaking are in the Solicitor's hands; (b) that the Solicitor will without question be physically capable of performing the Undertaking, whatever it may be; (c) that, if necessary, the Undertaking is clearly qualified by reference to any matter which, at the time the Undertaking is given, is not within the Solicitor's competence. Fourth:- Always ensure, if giving an Undertaking to a provider of finance, that the money so provided on the strength of the Solicitor's Undertaking, passes through the Solicitor's hands and that he sees to its application in the proper manner. The Solicitor's Undertaking in cases of this nature should be expressed to be binding on the Solicitor giving it, only so long as the provider of finance passes that finance through the hands of the Solicitor concerned. Fifth:- Always ensure that the Undertaking given — and, Possibly more important, that the Undertaking received — is wholly unambiguous. It is not unknown for Undertakings deliberately to be expressed in such The Dublin Solicitors' Bar Association has for the past Tear being investigating the possibility of introducing into Dublin a system of "document exchanging" which has been operating in certain areas of London since 1975, with apparent success and with considerable saving to its users in postal expenses. Practitioners will probably have noticed during the past year that, with the re-printing of London Solicitors' stationery, more and more letterheads are including the Mysterious information "L.D.E. Box No:...". This is, in j*ct, the number of the firm's Exchange Box at the London Document Exchange, into which will be delivered oy hand letters and packets from correspondents within c a s y travelling distance of the Exchange itself. The first London Exchange was opened on 15th September 1975, just off Chancery Lane and includes, by n °w, virtually every firm of Solicitors in the area, as well y a considerable number of other offices (Insurance, estate Agency, Accountants, Building Societies, etc.). the Law Society itself is among the members. . On 1st December 1975 a second Exchange was Maugurated, in the City, with similar success. Through London Solicitors, the Dublin Solicitors' Bar Association contacted the proprietors of the London Exchanges and the possibility of opening a similar Exchange in Dublin was considered in great detail. Inspired by the compactness of the centre city area and y the fact that not only Solicitors, but almost every other u^t of trade and commerce takes place in the same area, e Proprietors of the London Exchanges are establishing ^Exchange in Dublin, which will open on 1st March Counsel's Opinion has been obtained in London that mc Document Exchanges do not infringe the Post Office Monopoly and, as the legislation is similar in this ountry, the same advice has been received here. Members of the Dublin Document Exchange will be lette atCd a Stee1 ' l o c k a b , e ' s l i t t ed b o x ' capable of taking wid S a n d d o c u m e n t s up to 15 inches in length, 12 inches accJ! a n d ^ inches thick. Larger items can be *>mmodated in larger, special boxes, by arrangement p Exchange staff. c 0m e r s o , ? s ( w h o ne ed not be Members) wishing to send Mmunications to Members, merely visit the Exchange 10

vague or obscure terms as to be virtually meaningless and, too often, this is realised only after the failure by the giver of the alleged Undertaking to perform it. Sixth:- And probably the most practical of all the essentials — Solicitors should always note on their files, the original deeds, the working papers and even — with discretion - on Account Cards, that an Undertaking has been given in the case concerned — in order to save themselves and their staff from doing something irretrievably unfortunate - and expensive —with the security. There are other things that might be added — such as for example, to take a clear note of any Undertakings given, but space forbids and the purpose of these words is really to remind the Profession of the seriousness of their Undertakings and to point out the fact that they are likely to be enforced against them. It is up to every Solicitor to work out the systems of personal protection best suited to individual working practices. and place their communications in the various numbered boxes of the intended recipients. The Members themselves, to collect whatever offers visit the Exchange whenever suitable, open their own locked box with their own key and remove the contents On the same visit, they can, of course, deliver their outgoing correspondence to the boxes of other Members The experience in London has been that, in the case of busier firms, a despatch and collection can be made twice a day, with considerable saving in time, as well as postal charges. The DubUn Exchange is situated at 3 Molesworth Place (just off Molesworth Street opposite South Frederick Street) and will open from 8.00 a.m. to 6.00 p.m., Monday to Friday. It is envisaged that the hours of opening may be varied in the light of experience. The annual rent for an Exchange Box will be £250 and an entrance fee of £50 will be charged upon joining. However, the entrance fee of £50 will be waived for all members joining the Exchange prior to 1st Julv 1977. In view of the involvement of the Dublin Solicitors' Bar Association in introducing the Exchange to Dublin, ail sole practitioners who are members of the Bar Association and every firm having one or more partners who are members of the Bar Association are being offered a permanent discount of 20% on the annual rent from time to time and, in addition, for Bar Association members the entrance fee of £50 will be suspended until 1st November 1977. On an estimated postal cost of 15p per communication the Dublin Document Exchange calculate that members of the Exchange will only have to deliver 6 letters per day through the Exchange to break even with the rental cost. Thereafter, every letter delivered represents a clear saving. The Solicitors to the Exchange are Matheson, Ormsby and Prentice. The first fifty subscriptions to the Exchange will be held by McMahon & Tweedy, Solicitors, as independent stakeholders and, if the target of fifty subscribers has not been reached by 1st November 1977 all subscriptions received will be refunded. The Dublin Document Exchange will be managed bv Miss B. S. Dei-han For further pan.eulars please contact her at the Dublin Document Exchange 1 Molesworth Placc. Dublin 2. Telephone 01-767101. « c n a n g e. í

DUBLIN DOCUMENT EXCHANGE