The Gazette 1981

DE C EM BER 1981

GAZETTE

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.

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

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

Summaries of Judgments prepared by E. G. Hall, Brendan Garvan, Joseph Sweeney and Barry O'Neill and edited by Michael V. O'Mahony.

xxvii