Spouses & Property
Cases
McQuillan v Maguire
[1996] 1 ILRM 394, Costello P
The plaintiff, Dr McQuillan, and his wife owned a premises at 7, Herbert Place, Dublin and engaged the first named defendant, Mr James Maguire, to renovate them. The work began in April 1980. Before it commenced the plaintiffs agreed to pay Mr Maguire a sum between £15,000 and £20,000, depending on the amount of dry rot discovered in the premises. In July 1981 the plaintiffs were informed that a further sum of £10,000 (over and above a sum of £19,300 already paid) would be required and the work was ultimately completed in November 1981. In the following year Mr Maguire did further work for the plaintiffs and in August 1982 a demand for sums due on this second contract and the balance due on the 7, Herbert Place contract amounting to approximately £29,000 was advanced. In the following year Mr Maguire sued Dr McQuillan and his wife and they counterclaimed for a substantial sum for damages in respect of alleged defective workmanship on the Herbert Place premises. A lodgment of £27,000 was accepted by Mr Maguire in respect of his claim and the counterclaim proceeded for one day before Murphy J. It was then settled. On the 24 October 1990 a decree for £45,000 and costs was made in favour of Dr McQuillan and his wife against Mr Maguire. Mr Maguire was the owner of premises at 40, Villiers Road, Rathgar and on 27 July 1991 the plaintiffs converted the decree into a judgment mortgage over Mr Maguire’s interest in the Rathgar premises. No part of this judgment has been paid. The costs have been taxed (presumably in Mr Maguire’s absence) at the considerable sum of £35,545.40.
These present proceedings arise because of certain steps taken by Mr Maguire and his wife in relation to the Rathgar premises. On 19 November 1990 Mrs Maguire (shortly after the consent decree had been given against her husband) instituted proceedings under the provisions of the Married Women’s Status Act 1957 against her husband and on 18 January 1991 an order by consent was made declaring that Mrs Maguire was entitled to the entire beneficial interest in the Rathgar premises and in the furniture, chattels and effects therein. After Dr *398 McQuillan learnt of this order he and his wife instituted these present proceedings by summons of 3 July 1991 joining Mrs Maguire as a defendant. Mrs Maguire died last year and her personal representatives were represented at the hearing. The plaintiffs’ claim is for a declaration that Mr Maguire was at all material times the beneficial owner of the Rathgar premises, and a declaration that the judgment mortgage is well charged on that beneficial interest. It is claimed that the order of 18 January 1991 made in the Married Women’s Status Act proceedings was obtained by collusion and with the intention to defraud the plaintiffs, that it should therefore be set aside.
The case made by the defendants in support of the claim that Mrs Maguire was entitled to the entire beneficial interest in the Rathgar premises is this. Mrs Maguire’s father had died in 1945 leaving her approximately £4,000 in cash and a sum of £2,000 in National Security Bonds. With the money she received she purchased eight houses at Bective Square, Kells. She married Mr Maguire on 16 April 1947. Some months after their marriage she and the defendant decided to build a home at Kilmainham, Kells in the County of Meath and she swore an affidavit on 19 November 1990 to the effect that each of the eight houses were sold and the entire proceeds of these sales were expended on the erection of the family home in Kilmainham. The erection of the dwelling cost approximately £1,600. The site on which the house was built was conveyed to Mr Maguire. In August 1963 Mr and Mrs Maguire decided to purchase 40, Villiers Road for a sum of £3,200. A bridging loan was obtained from the Northern Bank by Mr Maguire pending the sale of the Kilmainham premises. These were sold for £3,800 in 1964. Out of this sum the debt due to the Northern Bank was discharged. The Rathgar premises were registered in the name of Mr Maguire but Mrs Maguire claimed that the entire beneficial interest in the premises belonged to her because all the monies used to purchase it had ultimately been provided by her.
This was the claim made in an affidavit sworn by Mrs Maguire in the Married Women’s Status Act proceeding on 19 November 1990. Mr Maguire filed an affidavit on 5 December 1990 in which he stated that he had read his wife’s affidavit and that he agreed that the sums expended in the purchase of the properties were provided by the plaintiff as she had alleged and that it had always been his intention that his wife would be entitled to the entire beneficial interest in the property and that he was not desirous to dispute the plaintiff’s claim.
I can summarise the principles of law which are applicable in this case as follows:
(1) The plaintiffs’ judgment mortgage is subject to all equitable interests affecting the land at the date of its registration. If therefore Mrs Maguire had a beneficial interest in the lands the judgment mortgage is subject to her interest.
(2) Mr and Mrs Maguire agreed between them that Mrs Maguire was beneficially entitled to the entire premises and a declaratory order to that effect *399 was made. However, that order is not binding on the plaintiffs and if it can be shown Mrs Maguire was not in fact entitled to the entire beneficial interest in the premises the court is not bound by the agreement that she was or by the order made pursuant to that agreement.
(3) If the court should find that Mrs Maguire had no beneficial interest in the property or that Mr Maguire’s interest was less than 100% then the court could set aside the agreement entered into between Mr and Mrs Maguire if that agreement was avoidable under the Conveyancing Act (Ireland) 1634 (10 Chas I, Sess. 2, c. 3). The court need not find that the agreement was motivated by actual fraud — if it can be shown that the necessary or probable result of the agreement was to defeat or delay creditors then it could be avoided (see In re Moroney (1887) 21 LR Ir 27 at p. 61).
(4) If it can be shown that Mrs Maguire contributed financially to the Rathgar property then she will have an equitable interest in the property proportionate to the amount of her contribution. As stated by Henchy J in McC. v. McC. [1986] ILRM 1 at p. 2:
Since the decision of Kenny J in C. v. C. [1976] IR 254, it has been judicially accepted that where the matrimonial home has been purchased in the name of the husband, and the wife has, either directly or indirectly, made contribution towards the purchase price or towards the discharge of mortgage instalments, the husband will be held to be a trustee for the wife of a share in the house roughly corresponding with the proportion of the purchase money represented by the wife’s total contribution. Such a trust will be inferred when the wife’s contribution is of such a size and kind as will justify the conclusion that the acquisition of the house was achieved by the joint efforts of the spouse.
I come now to my conclusions on the facts of this case. In reaching them I am very conscious of the fact that when Mrs Maguire swore her affidavit and when Mr Maguire gave evidence in these proceedings both were endeavouring to recollect events which occurred a very long time ago. Not surprisingly, I think their recollections were not accurate and on the balance of probabilities I think that what occurred is as follows:
(1) Mrs Maguire purchased eight small houses at Bective Square, Kells before her marriage in 1947. Not long after the marriage a site was purchased at Kilmainham for the purpose of building a home. The new dwelling-house was built by Mr Maguire who was at that time a building contractor in a small way of business. At about the time he was building his own dwelling-house he also had a contract with the Meath County Council to build nine cottages.
(2) Mrs Maguire is wrong in her recollection that her eight houses were sold and the proceeds expended on the erection of the Kilmainham home. The documentary evidence shows that all the houses, except for one, were sold after *400 the Kilmainham dwelling had been put up. I think, however, that it is probable that she made some contribution towards the cost of building her new home and purchasing the site. I think it is highly improbable that she paid her husband or any of her husband’s workmen any wages.
(3) The evidence establishes that the value of the house, when built, was approximately £1,600 and that approximately 50% of that value would have been attributable to materials and 50% to labour costs. I think that it is probable that Mrs Maguire contributed approximately 50% of the total cost of the site and the erection of the dwelling and that accordingly she had a 50% equitable interest in the Kilmainham home (which had been conveyed to her husband).
(4) In August 1963 number 40, Villiers Road, Rathgar was purchased in Mr Maguire’s name. The price was £3,200. Mr Maguire had an account with the Northern Bank, Kells and an overdraft facility was obtained by him to enable the house to be purchased. The family home in Kilmainham was sold in 1964 for £3,800 and from this sum Mr Maguire’s overdraft to the Northern Bank was discharged.
On the facts which I have just summarised I think the legal consequences are that Mrs Maguire enjoyed a 50% equitable interest in the property at 40, Villiers Road. As the agreement entered into between Mr and Mrs Maguire in the proceedings taken under the Married Women’s Status Act 1957 had the effect both of hindering and delaying the payment of debt due by Mr Maguire to Dr McQuillan and his wife, that agreement is void.
The plaintiffs are, therefore, entitled to a well charging order against Mr Maguire’s 50% interest in the Rathgar premises. I will hear submissions from counsel as to the appropriate consequential orders to be made.
D. (C.) v. D. (W.)
[1997] IEHC 23 (5th February, 1997)
Judgment of Mrs. Justice McGuinness delivered on the 5th day of February 1997
1. In these proceedings, the Plaintiff, who is the wife of the first named Defendant, brings a claim pursuant to Section 12 of the Married Women’s Status Act, 1957 that she is entitled to a beneficial interest in lands in County Kilkenny held in her husband’s sole name. She also seeks a declaration that the second named Defendant’s claim, if any, to be secured on the said lands affects only her husband’s beneficial share in the said lands.
2. The lands in question are farm lands comprised in and described in Folio 7567 of the Register of Freeholders of County Kilkenny. The folio, a certified copy of which was handed into Court, shows that as and from the 21st July, 1972 W.D., the first named defendant, is full owner of the lands. On 8th September, 1989, a charge was registered in favour of the second named Defendant, Barclays Bank Ireland Limited, for present and future advances repayable with interest. The lands themselves consist of 26 acres, 3 roods and 30 perches. The family home of the Plaintiff and the first named Defendant does not form part of these lands and they have never lived in a family home on the lands. The lands are, and have at all relevant times been, used by the first named Defendant in his business as a farmer.
THE HEARING
3. At the opening of the hearing before this Court, an application was made on behalf of the Solicitors for the Plaintiff to come off record in the case. The Plaintiff consented to this application and an Order to this effect was made. The Plaintiff was accompanied in Court by a Mr. Looney, whom she wished to have with her as a friend to assist her. Counsel for the second named Defendant objected to the presence of Mr. Looney on the grounds that he had been involved on behalf of both the Plaintiff and the first named Defendant in previous negotiations with Barclays Bank.
4. I was conscious of some undesirable elements in allowing such a person to be present in Court, in particular, in a case which was to be heard in camera. I had also formed the impression that the advices being given by Mr. Looney to the Plaintiff appeared to be of a quasi-legal nature and to deal with matters which would more properly be dealt with by a Solicitor. Nevertheless, bearing in mind the disadvantages of a personal litigant, I permitted Mr. Looney to remain in Court to assist Mrs. D. while stressing that his role was strictly limited to taking notes on her behalf and quietly making suggestions and assisting her generally during the hearing as had been set out in an Order made by the Supreme Court in a similar situation on 13th October, 1995 in the case of Seamus Quinn -v- The Governor and Company of the Bank of Ireland and Martin A. Harvey, Timothy Bracken and Breda Morey .
5. In the event, Mrs. D. herself gave her evidence and set out the basis of her claim clearly and cogently and was not unduly disadvantaged by the absence of legal representation.
6. The first named Defendant was also unrepresented and had been so at all stages of the proceedings. At the outset, he made it clear that in the circumstances he was not opposing his wife’s claim. He had not filed any Affidavit in the proceedings, but at the request of the Court, he gave oral evidence of certain factual matters, mainly by way of clarification.
7. The second named Defendant was fully represented by Solicitor and Counsel. The evidence of the second named Defendant was fully and clearly set out on Affidavit sworn by Mark McParland, Solicitor, on behalf of the bank.
8. The Plaintiff’s Special Summons which was issued on the 11th June, 1995 was originally grounded on an Affidavit sworn by her on the 10th July, 1995. On the day of hearing of the proceedings, she submitted a second Affidavit to the Court which had, as I understood the matter, been drafted with the assistance and advice of Mr. Looney. While this Affidavit had not been served in time on either Defendant, in the circumstances, I permitted it to be opened to the Court. Unfortunately, it consisted largely of allegations of various kinds of improper conduct against the second named Defendant and its servants and agents which could not in any circumstances form a relevant part of the evidence in the proceedings before the Court. Whether or not such allegations were based in fact, they were relevant only to the bank’s separate proceedings for possession against the second named Defendant. This was pointed out to the parties. The Plaintiff’s evidence therefore consisted of her grounding Affidavit and the relevant parts of her second Affidavit sworn on the 21st January, 1997 and her oral evidence.
THE FACTS
9. The Plaintiff and the first named Defendant were married on the 9th August, 1983 and they have three children aged ten, eight and seven. The Plaintiff is a nurse by profession and the first named Defendant is a farmer. For the first six years of their marriage, they lived in the home of the Plaintiff’s mother in Abbeyleix. Throughout the marriage, the Plaintiff has worked in her profession as a nurse, at first full time and at a later stage part time. In her evidence, the Plaintiff said that during the six years in Abbeyleix, she made fairly minimal contributions to her mother’s household since her mother was aware that she was saving for a home for herself and the first named Defendant. At the time of the marriage, she had savings of her own of in or about £2,000. The Plaintiff states that between these savings and the savings she made from her earnings between 1983 and 1989 she contributed a sum of in or about £25,000 to the building and furnishing of the couple’s present family home at Feereigh, Donaghmore, County Laois. The evidence of the amount of her contribution was challenged in cross-examination by Counsel for the bank and no actual receipts were produced in evidence. However, the Plaintiff appeared to me to be a good manager and financially careful and I accept her evidence as regards her contribution. I also accept her evidence that she obtained some building materials such as second-hand windows from members of her family and that these were also used for the family home. The Plaintiff and the first named Defendant agree that the Plaintiff paid for or otherwise provided the materials used in the building while the first named Defendant either carried out the labour himself or, where necessary, paid for other labour costs. The Plaintiff also provided monies for the furnishing of the family home.
10. The said family home was not however a new house but an extension and adaptation of the house already occupied by the first named Defendant’s widowed mother and other members of his family. The building works which were carried out, and to which the Plaintiff contributed, seem to have been the creation of a separate apartment for the accommodation of the Plaintiff, the first named Defendant and their family. They moved to this accommodation in or about 1989 and continue to reside there as their family home.
11. The Plaintiff in part rests her claim to a beneficial interest in the lands in Folio 7567, County Kilkenny (which I will call “the Kilkenny lands”) on her contribution in cash and kind to the building and furnishing of this family home.
12. The Plaintiff in her evidence also stated that throughout the marriage she received very little by way of housekeeping money or other contributions to the household maintenance from her husband. By and large, she used her earnings as a nurse to provide for the day to day expenses of the household while her husband used his monies in operating the farming enterprise both on the Kilkenny lands and on other lands in Laois which he held jointly with his brother P. It appears that the husband and the wife operated virtually separately as far as the finances of the family were concerned. The husband agreed with his wife’s evidence in this regard.
13. The Plaintiff also rests her claim on an assertion that, at an early stage in the marriage and from time to time thereafter, her husband told her that he would put the Kilkenny lands into their joint names. She was unable to give any detail as to dates and times when such an undertaking was given and it was clear that no steps, such as consulting a solicitor, were ever taken to put such an undertaking into effect. She was however adamant that she had relied on her husband’s statements and considered herself to be a joint owner of the lands.
14. The husband, in evidence, gave a much more casual impression of any statement made by him. He admitted that a transfer into joint names ” would have been spoken of” but that there were many problems ” higher in his head ” than the question of transferring any property to his wife. Under cross-examination, he admitted that he had told the bank in 1986 that he was the sole owner of the lands and that in 1986 he would certainly have regarded himself as being the sole owner.
15. It should of course also be noted that there is no matrimonial dispute between the Plaintiff and the first named Defendant and there are no proceedings whether pursuant to the Judicial Separation and Family Law Reform Act, 1989 or otherwise between them other than the wife’s present claim pursuant to the Married Women’s Status Act, 1957. Neither has the wife made any claim to beneficial ownership of a share in the family home (which is held in the husband’s sole name) nor to beneficial ownership of any other lands which the husband holds jointly with members of his family.
16. I now turn to the evidence in regard to the second named Defendant, Barclays Bank Plc, formerly Barclays Bank Ireland Limited. The lands the subject matter of these proceedings (the Kilkenny lands) were charged by Mr. D. to Barclays Bank by virtue of a Deed of Charge dated the 26th May, 1986.
17. The charge was granted as part of the security required for a Joint Commercial Loan Account for the first named Defendant and his brother, P. D., who owned lands jointly with him in Laois and apparently farmed with him. The lands in Laois also formed part of the security but the family home of the Plaintiff and the first named Defendant was in no way involved.
18. The loan from the second named Defendant was not the first involvement in borrowings and indebtedness of the first named Defendant. In his own evidence, he says that in or about the time of his marriage he (or he and his brother) owed a large sum to the Bank of Ireland and it appears that the loan from the second named Defendant was part of a re-financing package for the farming enterprise.
19. The first named Defendant and his brother defaulted on the loan and the second named Defendant brought proceedings against them by way of Special Summons on 3rd May, 1991 seeking an Order for possession of the Kilkenny lands and the Laois lands and an Order for the sale of the lands in default of payment of the sums then due and owing on the Commercial Loan Account which then amounted to £65,000 odd. There is no need here to detail the proceedings and negotiations which ensued, most of which are irrelevant to the Plaintiff’s present claim. In summary, on 14th October, 1991, an Order of Possession over both the Laois and Kilkenny lands was granted to Barclays Bank by Mrs. Justice Denham in this Court. After further unsuccessful negotiations, Execution Orders of Possession issued and were executed, though with some difficulties which gave rise to Orders made by Laffoy J. on 22nd May, 1995 and 15th June, 1995. The position at present is that the bank, in accordance with the Court Orders, has sold the Laois lands but has not at yet sold the Kilkenny lands.
20. In his Affidavit sworn on behalf of the second named Defendant, Mr. McParland avers that the bank proceedings and the Court Orders were not only served on the first named Defendant and his brother but also on the Plaintiff for her information. In evidence, the Plaintiff admits that she was served with the documents but says that she neither understood them nor took any notice of them. She regarded them as solely her husband’s business. She had enough on her mind what with the children, the household and her employment without having to cope with her husband’s difficulties with the bank. However, she does admit that she took some active part in verbal negotiations with the bank’s representatives at the family home on the 5th October, 1994, the day of execution of the Order of Possession of the Laois lands. She also concedes that at no stage before the issue of the present proceedings in June 1995 did she in any way indicate to the bank that she had any proprietary claim on the Kilkenny lands. She explains this submission by saying that she was unaware that she had any rights.
THE LAW
21. Considering the evidence as a whole, it is hard to avoid the conclusion that the Plaintiff’s action is more a last ditch effort to rescue some form of asset from the bank than a true dispute between herself and her husband. Nevertheless, it seems proper that the Court should consider, firstly, if she has any sustainable claim on the Kilkenny lands under Section 12 of the Married Women’s Status Act, 1957 and, secondly, if she has such a claim, whether her claim can have any priority over the bank’s undoubted rights as established in their proceedings against the first named Defendant and his brother.
Section 12 of the Married Women’s Status Act, 1957, insofar as it is relevant, provides as follows:-
“12(1) This section applies to the determination of any question arising between husband and wife as to the title to or possession of any property.
(2) Either party or any person concerned may apply in a summary way to the High Court or (at the option of the applicant irrespective of the value of the property in dispute) to the Circuit Court to determine the question and the Court may make such Order with respect to the property in dispute and as to the costs consequent on the application as the Court thinks proper”
22. During the 1970’s and 1980’s, a considerable line of case law was developed in this Court in regard to the effect of direct and indirect financial contributions by spouses in acquiring a beneficial interest in matrimonial property. This line of cases stemmed from the decisions of the learned Kenny J. in Heavey -v- Heavey (1974) 111 I.L.T.R. 1 and C. -v – C. [1976] IR 254 and developed through the law of resulting and constructive trusts. A clear and authoritative statement of the law in this area is to be found in the judgment of the learned Finlay P. (as he then was) in the case of W. -v- W. [1981] I.L.R.M. 202 at pages 204 to 205. I quote the paragraphs relevant to contributions made by a wife:-
“1. Where a wife contributes by money to the purchase of a property by her husband in his sole name in the absence of evidence of some inconsistent agreement or arrangement the Court will decide that the wife is entitled to an equitable interest in that property approximately proportionate to the extent of her contribution as against the total value of the property at the time the contribution was made …
3. Where a wife contributes either directly towards the repayment of mortgage instalments or contributes to a general family fund thus releasing her husband from an obligation which he otherwise would have to discharge liabilities out of that fund and permitting him to repay mortgage instalments she will in the absence of proof of an inconsistent agreement or arrangement be entitled to an equitable share in the property which had been mortgaged and in respect of which the mortgage was redeemed approximately proportionate to her contribution to the mortgage repayments: to the value of the mortgage thus redeemed and to the total value of the property at the relevant time. It is not expressly stated in the decision to which I have referred but I assume that the fundamental principles underlying this rule of law is that the redemption of any form of charge or mortgage on property in truth consists of the acquisition by the owner or mortgagor of an estate in the property with which he had parted at the time of the creating of the mortgage or charge and that there can be no distinction in principle between the contribution made to the acquisition of that interest and the contribution made to the acquisition of an interest in property by an original purchase …
5. Where a wife expends monies or carries out work in the improvement of a property which has been originally acquired by and the legal ownership in which it is solely in her husband, she will have no claim in respect of such contributions unless she established by evidence that from the circumstances surrounding the making of it she was led to believe (or of course that it was specifically agreed) that she would be recompensed for it. Even where such a right to recompense is established either by an express agreement or by circumstances in which the wife making the contribution was led to such belief it is a right to recompense in monies only and cannot and does not constitute a right to claim an equitable share in the estate of the property concerned.”
23. These principles received the approval of the Supreme Court in the case of McC. -v- McC. [1986] ILRM 1 in which Henchy J. stated:-
“When the wife’s contribution has been indirect (such as contributing, by means of her earnings, to a general family fund) the Court will in the absence of any express or implied agreement to the contrary, infer a trust in favour of the wife, on the grounds that she has to that extent relieved the husband of the financial burden he incurred in purchasing the house.”
24. The Supreme Court again approved this approach in N. (E.) -v- N. (R.) [1992] 2 IR 116.
25. While it is accepted on the evidence of the wife in the present proceedings that she made a substantial direct contribution to either the improvement or the provision of the family home, she has not made any claim to a beneficial interest in that property. Her present claim applies only to the Kilkenny lands. These lands had been acquired by her husband in his sole name in 1972, eleven years prior to the marriage. It is clear that she made no direct contribution to the acquisition of these lands.
26. With regard to indirect contributions, the wife, by her own earnings and her expenditure of these earnings on the needs of the household, undoubtedly contributed to what the learned Finlay P. described as the “general family fund” and thus freed her husband to use any earnings of his own in the farming business. However, such an indirect contribution could not have resulted in the wife having acquired any interest in the Kilkenny lands between the marriage in 1983 and the date of the bank’s charge in 1986 since the husband was already the full owner and the lands at that stage appear to have been unencumbered. By 1986, therefore, the wife had no beneficial interest in the lands resulting from the operation of a trust based on either direct or indirect contributions. If the wife had no proprietary rights in the form of a beneficial interest in the Kilkenny lands in 1986 at the stage when the second named Defendant bank acquired the charge, then the entire ownership of the lands both legal and beneficial was available to the husband to use as security in obtaining his loan from the bank.
27. The wife also bases her claim on her evidence that her husband on a number of occasions undertook to transfer the lands into their joint names. Even were such an undertaking, without any further steps, sufficient to ground a claim for a half share in the lands, it seems to me that the husband’s evidence does not evince any serious intention to carry out such a transfer at any stage. He is in a sense now willing to cooperate with his wife in order to reduce the bank’s claim, but the height of his evidence was that such a thing “would have been spoken of” but he had problems “higher in his head” than that. In cross-examination, as I have said, he was quite clear that in 1986 he regarded himself as the sole owner of the lands. It is also clear from the wife’s own evidence that she took little or no interest in the husband’s farming activities or in the land until she realised that the second named Defendant was about to take possession of it in October 1994. The fact is that when the bank’s proceedings for possession were served on her she did not even read the papers handed to her as she regarded all that as being her husband’s and his brother’s business and nothing to do with her. This is not the attitude of a joint owner of the lands. Understandably, she felt she had enough to cope with in the household, the care of the children and her profession. Nevertheless, her evidence does not create the impression of one who believed over the years of the marriage that she had a proprietary interest and a half share in the Kilkenny lands. On the evidence, this aspect of the wife’s claim cannot succeed.
28. In considering both these aspects of the wife’s claim, one must of course clearly distinguish this type of claim pursuant to the Married Women’s Status Act from a claim to a Property Adjustment Order under the Judicial Separation and Family Law Reform Act, 1989 or the Family Law Act, 1995, where the Court is directed to have regard to very many more factors and wider considerations than are possible under the Married Women’s Status Act. In the present proceedings, judicial separation is not sought and happily the family remains intact. The considerations relevant to a Property Adjustment Order therefore are not applicable here.
29. On the evidence in this case, it seems to me clear that both the direct and indirect contributions of the wife went towards the acquisition or improvement and furnishing of the family home and had no relevance to the Kilkenny lands. Her claim to a beneficial interest due to contributions therefore also fails.
30. Counsel for the second named Defendant also made a number of submissions to me in regard to any possible priority of the wife’s claim over that of the bank and, for the sake of completeness, I will also refer to these submissions.
31. Even if the wife were to establish a beneficial interest in the lands which existed at the time of the registration of the bank’s charge, it does not appear to me that such a claim could take priority over the bank’s charge. Under the Registration of Title Act, 1964, such an unregistered burden could only take effect and have priority if it came within Section 72 subsection (1)(j):-
“The rights of every person in actual occupation of the land or in receipt of the rents and profits thereof save where upon enquiry made of such person the rights are not disclosed.”
32. At no stage was Mrs. D. in actual occupation of the Kilkenny lands nor did she receive rents and profits from them.
33. Counsel for the second named Defendant also submitted, correctly in my view, that the Plaintiff was barred from her equitable remedy by her acquiescence in the obtaining of the commercial loan by her husband and in the registration of the charge. The Plaintiff, in evidence, stated that she was unaware of the significance of her husband’s borrowings at the time (in 1986) and this may well be so. However, the Special Summons of the second named Defendant was served on her in May 1991 and the Order for Possession in December 1992. At no stage did the Plaintiff indicate to the second named Defendant that she had any claim to the lands or that she considered herself to be a joint owner.
34. On the 5th October, 1994, lengthy negotiations took place between the representatives of the second named Defendant and the first named Defendant, his brother and the Plaintiff. Although the Plaintiff appears to have taken an active part in these negotiations, she did not in any way assert that she was a joint owner of the lands or had any claim on them. The first indication of her claim was the issuing of her present proceedings on the 11th June, 1995. As was stated by Lord Wensleydale in Archbold -v- Scully (1861) 9 H.L.C. 360 at 383:-
“If a party, who could object, lies by and knowingly permits another to incur an expense in doing an act under the belief that it would not be objected to, and so a kind of permission may be said to be given to another to alter his condition, he may be said to acquiesce.”
35. It appears to me that by her failure to put the second named Defendant on notice of her claim at any stage before June 1995 the Plaintiff acquiesced in the situation.
36. From another point of view, it could also be said that the Plaintiff is estopped by her conduct, including her negligence and silence, from asserting her claim as against the second named Defendant (see Doherty -v- Doherty [1991] 2 I.R. 458, judgment of Blayney J.).
37. I cannot but feel sympathy for the Plaintiff’s financial difficulties, particularly as they seem to have arisen through no fault of her own, but for all the reasons set out above the Plaintiff’s claim must fail.
Bank of Ireland v. Lennon
[1998] IEHC 193
1. In relation to the plaintiff’s claim there is no dispute; the money is due and owing. There was a challenge as to the compound interest. I accept the submissions furnished by Mr O’Neill, counsel for the plaintiffs, an that issue. And I am satisfied that the monies in full are due and owing.
The fundamental issue in this case is that raised in the defendant’s counterclaim as to the existence of a duty of care on the part of the plaintiffs to the defendants in the particular circumstances as given in evidence in this case. The onus is patently on the defendant to establish his case on the balance of probabilities.
Turning to the evidence — I accept Mr Delaney’s evidence as being, on balance, the more accurate account of the relationships between the plaintiff and the defendant over the years during which they did business. I accept the other witnesses who were called on behalf of the plaintiff insofar as it is relevant to the determination of the issue of law that is before me.
As for the defendant — I do not think the defendant set out to mislead me but I have major reservations as to his evidence before me. To take an example, which is paragraph 17(a)(b)(c)(d) of the statement of Claim, there is in my view no evidence to support those allegations.
Likewise in relation to paragraph 18, there is no evidence to support the allegations which are very serious: Allegations of falsehood — misleading, inaccurate advice alleged to have been given by the plaintiffs to the defendant, which is alleged to have resulted in the defendant suffering loss. I take that as an example. I reject that.
The defendant had been a most successful entrepreneur until in or about 1987 when his fortunes changed. I am satisfied that this was due to the dispute which arose between the defendant and his wife. And when this case opened before me on 14 January I indicated that I wished all of the matters which were private as between the defendant and his wife would not be raised in open court. And counsel for both parties acceded to that. However, having considered the case at great length I am satisfied that these events are integral to the issues between the plaintiff and the defendant in this case. Far from it being the case that the plaintiffs failed to advise the defendant, I am satisfied that the defendant at no time made his position clear to the plaintiffs.
As of 1986/87 he was a man of substantial wealth. His wife then commenced proceedings against him. And having considered the evidence at great length, I am satisfied that the defendant set out an a deliberate course to dissipate his assets so as to defeat, on the balance of probability, his wife’s claim against him. I am satisfied that he never made this position clear to the plaintiffs. I am satisfied that Mr Delaney, on behalf of the plaintiffs, was a close friend of the defendant but was not aware of the full intent of the defendant’s actions in this regard.
I note at the particular time that nobody seemed to have averted to the fact that there could have been an issue of severance in relation to the family home and the extensive acreage of some 300 acres that the defendant owned at the time. I am satisfied also on the balance of probabilities that the defendant’s spouse would not have executed the consent which was necessary to give effect to the plaintiffs’ security.
I am recognising the reality of this case, which is that there is currently no security by virtue of the defendant’s actions. I accept that the plaintiff ascertained that the security was worthless due to the absence of the wife’s consent in or about 12 October 1988. At this stage I am satisfied there was no possibility of the defendant obtaining his spouse’s consent due to the nature of the matrimonial disputes. In addition, I accept that the defendant had reduced his operations from in or about 1987 when his wife had instituted proceedings. And it seems to me that the coincidence of this run-down in his business cannot under any circumstances, having regard to the evidence that I have heard, be laid at the plaintiffs’ door.
I note particularly that the defendant had vigorously contested the proceedings by his wife from 1987 to 1992 and that he had in the proceedings commenced in May 1991 contested them for some time. Nonetheless, there is the most unusual circumstance that he did not contest his spouse’s claim to the family home before the High Court, and he did not appear before the High Court to contest his wife’s claim to the family home, which was then worth between #800,000 and #1,000,000 excluding the 300 acres. I am equally unimpressed by the fact that prior to his decision not to contest these proceedings he had granted a ten-year lease of the surrounding farm lands to a third party.
I regret to come to the conclusion that during these years the defendant was running an agenda which he did not make the plaintiffs aware of and did not make this court aware of. In the circumstances I accept the evidence adduced on behalf of the plaintiffs in relation to the counterclaim.
I turn now to the nature of the issue of law that was raised in this case: As to the nature of the relationship of banker and customer — this is one of general contract which is basic to all transactions. Special contracts can also arise but these are only brought into being in relation to specific transactions or banking services. I note that Bankes LJ in Joachimson v Swiss Bank Corporation [1921] 3 KB 110 at page 117 held that in the ordinary case the relationship of banker to customer depends “entirely or mainly upon an implied contract.” This relationship may be said to begin the moment the parties enter into relations or negotiations which are to be considered part of the contract ultimately concluded. The negotiation must however be part of the process and lead directly to the agreement.
The next paragraph is headed:
“Duty of care owed by a banker to a customer:
The existence and scope of an implied contractual duty of care owed by a banker to his customer has arisen principally in the context of the execution of payment instructions, the of giving advice in relation to investments, the duty of secrecy, the duty of giving information as to the credit of a customer and the duty of taking and realising security.
A duty of care in tort can also arise where the parties are in a contractual relationship.”
However, I note the opinion of Lord Scarman, when he held in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank [1986] Appeal Case at 80, [1985] 2 AER at 947:
“Their Lordships do not believe that there is anything to the advantage of the law’s development in searching for a liability in tort where the parties are in a contractual relationship. This is particularly so in a commercial relationship. Though it is possible as a matter of legal semantics to conduct an analysis of the rights and duties inherent in some contractual relationships, including that of banker and customer, either as a matter of contract law when the question will be what, if any, terms are to be implied or as a matter of tort law when the task will be to identify a duty arising from the proximity and character of the relationship between the parties, their Lordships believe it to be correct in principle and necessary for the avoidance of confusion in the law to adhere to the contractual analysis: On principle because it is a relationship in which the parties have, subject to a few exceptions, the right to determine their obligations to each other and for the avoidance of confusion because different consequences do follow according to whether liability arises from contract or tort, eg in the limitation of action.”
Exceptions to this principle have arisen in the English courts. It was held that a contracting party may be liable in tort to another for misrepresentations or misstatements made before the signing of a written agreement (Esso Patroleum Co Ltd v Mardon [1976] 2 All ER 5) or the entering into of a general contractual relationship such as that of banker and customer (Woods v Martins Bank Ltd [1959] 1 QB 55). And it is necessary to note that whether or not a tortious duty of care arises is wholly dependent an the circumstances of each case.”
Turning to the issue before me in this case in relation to contracts of security: A contract creating security is not a contract of utmost good faith requiring full disclosure of all material facts by both parties (Paget’s Law of banking, at page 492).
The English courts have indicated that before a duty of care arises between a banker and a customer in relation to the signing of a security document, it is generally necessary for the banker to have chosen to have made some form of representation to the customer.
A contract of security can be avoided if it has been induced by a material misrepresentation of fact made by the bank or its agent (Kingsnorth Trust Ltd v Bell [1986] 1 All ER 423). Statements as to the terms and effect of a security document, although involving a representation as to the effect in the law of security, will nevertheless probably be classified as a representation of fact (Chitty on Contract, page 214-215).
Where a banker chooses to explain the terms and effect of a security document in circumstances where he knew or ought to have known that the person to whom the explanation is proffered would rely on it in deciding whether or not to execute the security, it is likely that a duty of care will arise on the part of the banker not to misstate the position proffered.
The duty of care owed by a banker to a customer in relation to the terms and the effects of a security document arose in Cornish v Midland Bank plc [1985] 3 All ER 513, which in my view is authority for the proposition that where a banker chooses to explain the nature and effect of a security he must take care not to misstate the position.
However, it was also suggested by Kerr LJ, that in certain circumstances, a bank may owe a duty to the giver of security at least if he is a customer to proffer some explanation as to the nature and effect of the security document to be executed. However, he expressed this duty of care to be confined to customers only and this in my view is indicative of the fact that the duty may indeed be contractual in nature, and therefore must be taken to arise from an implied term of the contract between the banker and the customer.
Turning to the position of the Irish courts on the issue: I think it is fair to say that there has been little opportunity to examine the extent and the duty of care which arises between banker and customer. I note that it has recently been decided by the Supreme Court in Bank of Ireland v Smith [1996] 1 ILRM 241, in the context of the Family Home Protection Act 1976, (according to which the consent of the spouse must be obtained prior to the conveyance of the “family home” in relation to a security document) that the plaintiff bankers did not owe a duty of care to the spouse to explain the charge fully to her or to suggest that she should obtain independent advice. The Supreme Court in particular noted that the only reasons why the plaintiffs should have taken such steps was to ensure that their own interests were protected and that the consent would not be open to challenge.
While this dicta does not resolve the issue currently before me between the plaintiffs and the defendants, it seems to me that the Supreme Court has indicated a limit to the duty of care contractual or otherwise, which can arise between banker and customer. Likewise, it seems to me that this case can be distinguished, in that the spouse had indeed signed the required consent form in accordance with the Family Home Protection Act 1976, and to this extent the bank had discharged its liability on obtaining consent. However, it seems to me that the salient point is that the bank did not owe a duty to the spouse to explain the nature and effect of the document which she was signing.
Amongst the many other cases cited to me there was that of Kennedy v AIB unreported in the High Court an 18 May 1995 before Murphy J. In this case the judge placed significant importance an the distinction between a situation in which a bank is obliged to act for both its own interests and that of a customer and the situation where the bank is not required to inform the customer of the nature and effect of the transaction. The judge suggests, it seems to me, that whether or not a bank is obliged to explain the effect of a transaction is dependant on several factors: For example, the nature of the transaction and the experience and qualifications of the customer which enabl him to understand the transaction, and hence, do not require it to be explained to him.
Where a bank is in a situation which only requires it to act in its own interests, then naturally a tortious duty of care does not arise in relation to the customer. However, if it can be proven that the transaction in question is complicated and the customer involved could not possibly understand its nature and effect due to a lack of knowledge or experience, then it may be the case that a bank in such circumstances will owe a duty to the customer of care to explain the nature and effect of the transaction.
That case, however, in my view may be distinguished by the evidence of the fact that the bank actually informed the customer that the grant in that case of the additional loan was in fact subject to conditions and further approval. To this extent the bank had chosen to proffer an explanation as to the nature and effect of the transaction, and by definition a tortious duty of care would have arisen at this point. The consequences of this were not in issue in that particular case and the question was left undecided. The judge did, however, highlight a situation in which the bank was acting purely in its own interests, and in such circumstances therefore did not owe a duty of care to the customer.
I accept the submissions submitted by the plaintiff and the defendant in this case. I compliment counsel for the attention to detail. I accept in full the submissions relied upon by counsel for the plaintiffs on this issue. Therefore, it seems to me — adopting the submissions made by counsel for the plaintiff — having regard to the issues that I have herein before adumbrated, I would conclude this case as follows: The factors required before establishing that a tortious duty of care can arise between the parties, such as the plaintiff and the defendant in this case, are it seems to me as follows: Primarily it must be adduced before the court from evidence that the banker in question had chosen to proffer an explanation of the security documents in question to the defendant. Were this indeed to be the case, then the banker may only be presumed to have been negligent where it is clear from the evidence that information in the explanation constituted either a misstatement of a misrepresentation to the customer.
Secondly, it must be established whether or not the plaintiff was acting in its own interest or whether the plaintiff was obliged to have regard to the interests of the customer. If it can be established that the plaintiff was under no obligation to act in any manner other than in its own interest, then no tortious duty of care can arise.
Thirdly, it must be adduced from the evidence whether or not the defendant knew or could have known from his own knowledge and experience that the transaction would be invalid without his wife’s consent. If the defendant had no knowledge of the complicated nature of this transaction or any experience of such a transaction, then the plaintiffs might be considered to have owed the defendant a duty to explain the transaction before it was concluded.
Finally, and in the alternative, for the defendant to succeed it must be established whether or not he actually requested any information in relation to the requirements and the criteria to comply with. And indeed if the customer had requested the information, then he must establish on the balance of probabilities whether or not the bank replied in a negligent manner.
Having regard to the law as I have stated and having regard to the evidence that I have accepted, I am satisfied that the defendant has failed to establish any of the criteria required by either Irish or English law to establish that there was tortious duty of care in these particular circumstances. I reiterate that in my view, regrettably the defendant kept the plaintiffs and the court in the dark as to his real intentions. In the circumstances I have to come to the conclusion that the plaintiff has failed to establish his counterclaim in this action. And I therefore dismiss it.
In these circumstances there will be judgment for the plaintiffs in the amount sought in the Pleadings.
L. v L.
[1992] ILRM 115 Finlay CJ
This is an appeal brought by the defendant who is the husband against so much of the order made by Barr J in the High Court, on the hearing of a summons pursuant to the provisions of the Married Women’s Status Act 1957 as declared that the husband held a moiety of his beneficial interest in the family home, its curtilage and gardens, in trust for the wife.
The wife had instituted in the High Court two sets of proceedings, one being a petition for judicial separation and the other being the claim for declarations pursuant to the Married Women’s Status Act of 1957.
The proceedings were heard in 1988, and judgment was delivered in both of them together by the learned trial judge on 3 October 1988 (See [1989] ILRM 528).
Originally, the husband appealed against certain aspects of the order made in the proceedings for judicial separation, but that appeal was abandoned before us, and the only issue which arose before us was the appeal against the finding of a trust in favour of the wife as to one half of the beneficial ownership in the family home.
No issue arose on the hearing of this appeal as to the correctness of the findings of fact made by the learned trial judge in the High Court. In so far as they are relevant to this aspect of the proceedings between the parties, they are as follows. The parties married in 1968 and originally resided in rented accommodation. In the year 1970 the husband purchased and had conveyed to him in his own name a family home and a substantial farm of land for the sum of £40,000. This purchase was funded by way of a gift of £30,000 from the husband’s father and by way of a deferred payment of the balance of the purchase price by the vendor over a period of five years. The latter amount was discharged out of farming profits.
The family took up residence in the property in 1971, and the parties resided in the family home, with some interruptions, when one or other of them left it for a period, from that time up to 1988 when, as a result of differences between the parties and a threatened application by the wife for a barring order the husband voluntarily left the home. At the time of the trial in the High Court the wife was still residing in the family home and the husband was excluded from it.
It would appear that at the time of the hearing in the High Court the family home was unencumbered by any mortgage or charge.
From the time of the marriage the wife did not earn in any outside employment or profession. Having reviewed these facts in considerable detail, and having reviewed the existing authorities with regard to the claim made by a spouse to an interest in the family home, arising from contributions towards its acquisition, the learned trial judge stated as follows at p. 541:
Reviewed in the light of the formidable line of judicial authority on this topic since 1976, the conclusion is inescapable that the wife is not entitled to a beneficial interest in the family home or farm because she has made no contribution in money or money’s worth, directly or indirectly, towards the acquisition of either property. Her claim in that regard must fail unless she can rely upon other rights not previously considered by the courts.
The learned trial judge then went on to consider submissions which had been made to him on behalf of the wife, concerning the provisions of Article 41 of the Constitution and the jurisdiction which it was contended that those provisions gave to the courts with regard to a claim by a wife to a share in the beneficial ownership of the family home. That jurisdiction was to declare her entitled to a share in trust in such beneficial ownership arising not from any contribution, direct or indirect, by her to the acquisition of the home, but on the basis that the Constitution warrants the declaration of such a share as a method of endorsing the constitutionally preferred option that a wife who is also a mother should remain at home and devote herself entirely to the family, after the marriage.
The portion of the judgment in which the learned trial judge sets out this concept reads as follows at p. 542:
Article 41 contains two fundamental concepts which are inter-related. First, the family is recognised as the natural, primary and fundamental unit group of society, which is the necessary basis of social order, and it possesses inalienable rights that are superior to all positive law. Secondly, it is recognised that a woman’s life within the home gives to the State a support without which the common good cannot be achieved. It seems to me that Article 41, in so far as it relates to woman, underscores the pivotal role which she has within the family, and recognises that in the day-to-day life of the unit group she plays a crucial part in weaving the fabric of the family and in sustaining the quality of its life. The strongest possible emphasis is placed on woman’s role within the home. Having regard to the terms of sub-article 2 which casts a specific duty on the State to endeavour to ensure that mothers will not be obliged by economic necessity to engage in labour to the neglect of their duties in the home, it is evident that the Constitution envisages that, ideally, a mother should devote all her time and attention to her duties in the home, and that it is desirable that she ought not to engage in gainful occupation elsewhere, unless compelled to do so by economic necessity. It follows that if the Article is to be given flesh and meaning in practical terms, a mother who adopts that concept and devotes herself entirely to the family after marriage, has a special place in society which should be buttressed and preserved by the State in its laws. In my view the judiciary has a positive obligation to interpret and develop the law in a way which is in harmony with the philosophy of Article 41 as to the status of woman in the home. It is also in harmony with that philosophy to regard marriage as an equal partnership in which a woman who elects to adopt the full-time role of wife and mother in the home may be obliged to make a sacrifice, both economic and emotional, in doing so. In return for that voluntary sacrifice, which the Constitution recognises as being in the interest of the common good, she should receive some reasonable economic security within the marriage. That concept can be achieved, at least in part, by recognising that as her role as full-time wife and mother precludes her from contributing, directly or indirectly, in money or money’s worth from independent employment or avocation towards the acquisition by the husband of the family home and contents, her work as home maker and in caring for the family should be taken into account in calculating her contribution towards that acquisition — particularly, as such work is of real monetary value. In this regard, I draw no distinction between the purchase of the family home entirely or substantially by the husband out of his independent assets and the more usual case where the home is acquired by him subject to a mortgage repayable over a term of years.
In brief, the husband’s appeal against that finding consisted of an assertion that the remedy of granting to a wife and mother in the position of the plaintiff a share in the beneficial ownership of the family home, in addition to other rights she might have for maintenance or to her occupation in the family home, was unknown to the law and that it was not possible from the provisions of Article 41 of the Constitution to identify that particular remedy as a constitutional right which the courts could protect and grant to the wife.
The wife did not enter any cross-appeal or notice to vary, and does not contest the finding by the learned trial judge that on the authorities concerning the acquisition of a share in the family home by way of constructive or resulting trust arising from contributions, direct or indirect, towards that home by a spouse, that the plaintiff on the facts of the case cannot be entitled to a share.
Relevant constitutional provisions
The relevant constitutional provisions are Article 41.1 and 2. They read as follows:
Article 41
1.1° The State recognises the family as the natural primary and fundamental unit group of society, and as a moral institution possessing inalienable and imprescriptible rights, antecedent and superior to all positive law.
2° The State, therefore, guarantees to protect the family in its constitution and authority, as the necessary basis of social order and as indispensable to the welfare of the nation and the State.
2.1° In particular, the State recognises that by her life within the home, woman gives to the State a support without which the common good cannot be achieved.
2° The State shall, therefore, endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.
The conclusion reached by Barr J in this case, as set out in his judgment which I have quoted, receives support from a judgment which appears to be ex tempore and which was delivered on 20 June 1989 by Barrington J, but is not reported, in a case of H. v H. In the course of that judgment, though clearly obiter to the question which he had to decide, the learned judge stated as follows:
I am quite satisfied that this house was held by the husband in trust for himself and his wife, jointly, in equal shares, if I may use that phrase, of a joint tenancy, and there is the additional factor I think I feel entitled to add, that I can resolve the principal issue of the case on the basis of the traditional approach, but it does appear to me that this is a classic example of the situation which Barr J had to deal with in L. v L., and it appears to me the issue in the case in relation to financial contribution of the wife, in relation to the purchase of the matrimonial home belongs to a legal approach which is quite foreign to the legal approach contained in Article 41 of our Constitution. They start from the wrong point in the law, equity, and the proper starting point is the one taken by Barr J, and on that interpretation it would appear that the courts should recognise the contribution the wife makes by her work as a carer and rearer of the family within the home, because it appears to be quite inconsistent with the values in Article 41 of the Constitution that the wife who leaves the home and has an independent income and is therefore able to make a financial contribution towards the repayment of the family mortgage, might at the end of the day be in a very much better position than the wife who fulfils the constitutionally preferred role and remains at home to rear the children. That seems to me to be an inconsistent conclusion and inconsistent with the principles of Article 41. My judgment does not turn on that.
I would accept the inconsistency pointed out by Barrington J in this extract from his judgment, and pointed out by Barr J in the instant case, between the position of a wife who leaves the home for the purpose of carrying out remunerated work and contributes either directly to the repayment of a mortgage or, indirectly, to the repayment of the mortgage by a contribution to the family pool, and the less advantageous position with regard to ownership of an interest in the family home of the wife who appears to follow the preferred constitutional activity of staying at home to look after the family.
I would have little difficulty in appreciating the very significant social and other values which are attached to what experience would indicate is a very common modern habit, whereby the parties to a marriage and the parents of a family, by agreement between them, become joint owners of the family home. It is difficult to deny the fact that anything that would help to encourage that basis of full sharing in property values as well as in every other way between the partners of a marriage, must directly contribute to the stability of the marriage, the institution of the family, and the common good.
However, the problem which appears to me to arise is a simple question as to whether if this Court were to follow the reasoning contained in the judgment of Barr J it would in truth, as he suggests, and as the comments of Barrington J suggest, be developing an existing law within the permissible limits of judicial interpretation, or whether in fact it would be legislating.
After careful consideration and with a reluctance arising from the desirable objective which the principle outlined in the judgment of Barr J would achieve, I conclude that to identify this right in the circumstances set out in this case is not to develop any known principle of the common law, but is rather to identify a brand new right and to secure it to the plaintiff. Unless that is something clearly and unambiguously warranted by the Constitution or made necessary for the protection of either a specified or unspecified right under it, it must constitute legislation and be a usurpation by the courts of the function of the legislature.
The doctrine of a constructive or resulting trust applied towards the situation where a spouse makes contributions towards the acquisition of a family home, which was first elaborated by Kenny J in the High Court in C. v C. [1976] IR 254, which was eventually considered by this Court in the case of McC. v McC. [1986] ILRM 1, had as its basic requirements a contribution of money towards the acquisition of a family home. To an extent the development of that doctrine in its application to the position of husband and wife, as distinct from the principles which would apply to persons jointly involved in the purchase of property who were not so related, has not been more extensive than this. In addition to the direct contribution towards purchase price, whether the cash price of an actual purchase of a home, or the acquisition of the equity of redemption by contribution to the clearing off of a mortgage, a trust could, having regard to the particular features of dealings between husband and wife in a marriage which was amicable, arise from what are described as indirect contributions by the provision through earnings of monies into the family pool.
To extend or develop such a doctrine so as to provide that a person who did not make any monied contribution either towards the acquisition of a family home or towards the clearing off of a mortgage to it, whether of either a direct or indirect nature, but who by carrying out the constitutionally endorsed activities of a wife and mother within the home saved her husband from the possibility of having to hire outside help to carry out those functions or who, by the ordinary maintenance of a house, kept the house in good order, would be not to develop a doctrine, in my view, but to introduce a new one.
The provisions of Article 41 of the Constitution can, in my view, be separated in their purpose and object in two ways. S. 1, sub- ss. 1 and 2, clearly represents the recognition by the State of the existing fundamental rights of the family and the undertaking by the State to protect those rights. Neither Article 41.1.1° or 2° purports to create any particular right within the family, or to grant to any individual member of the family rights, whether of property or otherwise, against other members of the family, but rather deals with the protection of the family from external forces.
With regard to Article 41.2, on the other hand, the State by subs. 1 clearly recognises the value to the common good of the activities of the wife within the home, and by subs. 2 accepts an obligation to ensure that if the wife is a mother as well she shall not be obliged by economic necessity to engage in labour to the neglect of her duties in the home.
It is this last subsection which was in particular relied upon by the plaintiff in this case, both in the High Court and in this Court. I accept the contention made that the judiciary is one of the organs of the State and that, therefore, the obligation taken by the State to endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour outside the home to the neglect of their duties is an obligation imposed on the judiciary as well as on the legislature and the executive.
There is, however, I am satisfied, no warrant for interpreting that duty on the judiciary as granting to it jurisidiction to award to a wife and mother any particular interest in the family home, where that would be unrelated to the question of her being obliged by economic necessity to engage in labour to the neglect of her duties. If a court is assessing the alimony or maintenance payable by a husband to a wife and mother, either pursuant to a petition for separation or to a claim under the Family Law (Maintenance of Spouses and Children) Act 1976, it should, in my view, have regard to and exercise its duty under this subsection of the Constitution in a case where the husband was capable of making proper provision for his wife within the home by refusing to have any regard to a capacity of the wife to earn herself, if she was in addition to a wife a mother also, and if the obligation so to earn could lead to the neglect of her duties in the home. In other words, maintenance or alimony could and must be set by a court so as to avoid forcing by an economic necessity the wife and mother to labour out of the home to the neglect of her duties in it. Beyond that capacity of the judiciary to take part in the endeavour to comply with the provisions of Article 41.2.2° of the Constitution, I do not consider that the transfer of any particular property right could be a general jurisdiction capable of being exercised in pursuance of that sub-article of the Constitution.
It is, of course, clear that if the legislature decides, as in fact it has done, by virtue of the provisions of the Judicial Separation and Family Law Reform Act 1989, to give to the court powers to declare a right in a spouse to a beneficial interest in the family home as part of the general jurisdiction of the court upon the granting of a separation, to make monetary provisions arising from it, the court may exercise that expressed statutory power in obedience to and furtherance of the provisions of this sub-article of the Constitution.
For these reasons, I would allow this appeal.
McCARTHY J:
In his judgment in the High Court, Barr J correctly concludes at p. 542 that:
it is evident that the Constitution envisages that, ideally, a mother should devote all her time and attention to her duties in the home, and that it is desirable that she ought not to engage in gainful occupation elsewhere unless compelled to do so by economic necessity. It follows that if the Article is to be given flesh and meaning in practical terms, a mother who adopts that concept and devotes herself entirely to the family after marriage, has a special place in society which should be buttressed and preserved by the State in its laws.
Following that ringing declaration, the learned trial judge held that the concept of reasonable economic security within the marriage could be achieved, at least in part, then her work as home-maker and in caring for the family should be taken into account. In H. v H. (High Court, 20 June 1989) Barrington J, having referred to the decision in the instant case, expressed the result in negative form:
It appears to be quite inconsistent with the values in Article 41 in the Constitution that the wife who leaves the home and has an independent income and is therefore able to make a financial contribution towards the repayment of the family mortgage, might at the end of the day be in a very much better position than the wife who fulfils the constitutionally preferred role and remains at home to rear the children. And that seems to me to be an inconsistent conclusion and inconsistent with the principles of Article 41.
This inconsistency, in his judgment just read, the Chief Justice accepts, and thus identifies the problem arising on the appeal: Would the declaration of an equitable share in the mother be judicial interpretation or judicial legislation? The Chief Justice concludes that to identify this right in the circumstances set out in this case is not to develop any known principle of the common law, but is rather to identify a brand new right and to secure it to the plaintiff and, thereby, is a usurpation by the courts of the function of the legislature.
In C. v C. [1976] IR 2254, there does not appear to have been any reference to Article 41 and Kenny J held the wife/mother entitled to a share in proportion to the amount of the contribution she had made towards the purchase or the repayment of the mortgage. So also in McC. v McC. [1986] ILRM 1 the decision is entirely related to monetary contribution, whether direct by way of payment towards purchase or repayment of the mortgage, or indirect by contribution into the family pool. This is a true development of the law in a common law framework. That common law, like all statute law, must conform to or not be inconsistent with the Constitution. Barr J and the Chief Justice have eloquently identified the social value involved. It is not too extreme a case to posit — is the wife/mother who leaves her children in the care of others in order to earn more than that particular cost and contributes thereby, directly or indirectly, to the acquisition of a family home to be awarded an equitable share in the property while the wife/mother who stays at home gets none? If it be not inconsistent with the Constitution so to enact by statute law, although such statute must interfere with property rights, is the remedy solely in the hands of the legislature?
The doctrine of the separation of powers precludes interference by the judicial power with what is the role of the legislature; but the foremost duty of the judicial power is to uphold the Constitution. Apart from the President, it is only the judiciary who are expressly bound by the Constitution to make a public declaration of commitment to that duty. Article 41.2 proclaims the State’s recognition that by her life within the home woman gives to the State support without which the common good cannot be achieved and guarantees ‘ therefore (emphasis added) [to] endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.’ The question does not arise in this appeal or in that of N. v N., but I am not to be taken as holding that these guarantees are restricted to mothers of families based upon the institution of marriage. It is because of the importance of her life within the home that the State shall endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home. It is common case that many mothers, in order to devote themselves to their duties in the home, sacrifice material and emotional rewards that might follow from being gainfully employed outside the home.
It is not in contest that Barr J was correct in holding that the common law concerning the acquisition of a share in the family home by way of constructive or resulting trust arising from contributions, direct or indirect, towards that home, does not entitle the instant plaintiff, the wife, to such a declaration. It would be making a quantum leap in constitutional law to hold that by her life within the home the mother acquires a beneficial interest in it. This would be in recognition of the support that the mother gives by her life within the home in carrying out her constitutional role as a mother. No complementary role is accorded a father, although such a role reversal is, nowadays, by no means uncommon. That does not, necessarily, dispose of the matter. It may be that in another instance circumstances may arise whereby, on the true interpretation of the relevant article, it would prove necessary to accord to the mother some proprietary interest in the home. Such is not the case here, and, for that reason, I would allow the appeal.
The Oireachtas has, already, by the Act of 1989, made statutory provision for property adjustment orders on the granting of a decree of judicial separation or at any time thereafter. That Act did not come into operation until six months after 19 April 1989 and, accordingly, does not apply to the instant case.
O’FLAHERTY J:
I agree that the extension of the law as proposed by Barr J cannot be sustained.
For my part, however, I would make a further point. While Article 41 of the Constitution is headed ‘The Family’, s. 2 of the article is clearly referring to ‘mothers’ only: not wives, nor wives and mothers, but mothers. This makes clear that it cannot be called in aid to govern the division of property rights between spouses. What it does do is to require the State to endeavour to ensure that mothers with children to rear or to be cared for are given economic aid by the State. If a mother in dire economic straits were to invoke this section it would be no answer for the State to say that it did not have to make any effort in her regard at all, though it would be open for it to say that it was doing its best having regard to the State’s overall budgetary situation.
I am confirmed in my belief that Article 41 is not confined exclusively to the family just as Article 42 is not confined exclusively to ‘Education’: see In re Adoption (No. 2) Bill 1987 [1989] IR 656 at 663.
EGAN J:
The plaintiff/respondent (hereinafter referred to as ‘the wife’) and the defendant/appellant (hereinafter referred to as ‘the husband’) were married in Germany in 1968. Early in the following year they came to reside and cohabit in Ireland. There were two children of the marriage. In 1970 the husband purchased in his own name what became the family home and adjoining farmland. The total purchase price was £40,000. £30,000 of this sum came from a gift which the husband had received from his father and the balance was paid to the vendor over a period of years out of farm profits.
The marital relationship deteriorated some years ago and proceedings were instituted by the wife in July 1987. The proceedings included a claim pursuant to s. 12 of the Married Women’s Status Act 1957 which provides for the determination of any question arising between husband and wife as to the title or possession of any property. The section states that the court may make such order with respect to the property in dispute as the court thinks proper. The family home and farm in this case were, as stated, bought in the husband’s name and it was not suggested that the wife made any financial contribution to the purchase. The learned trial judge found that such assistance as she may have given her husband in his farming activity had not relieved him directly or indirectly of the financial burden relating to the acquisition of the property. He was satisfied that she had been a ‘full-time wife and mother’ during a long period of years and that this precluded her from contributing directly or indirectly in money or money’s worth from independent employment or avocation towards the acquisition of the family home and contents.
I do not find it necessary to review the long line of authorities in regard to the consequences in law where the legal title to the family home is held in the name of one spouse and the other spouse has directly or indirectly contributed to its acquisition. In those circumstances the contributing spouse, in the absence of any arrangement or understanding to the contrary, is entitled to a beneficial interest in the property having regard to the extent and value of the contribution. That was the effect of the case law in the matter prior to the coming into operation of the Judicial Separation and Family Law Reform Act 1989, which by virtue of s. 20(2)(f) obliges the court when making a property adjustment order on the granting of a decree for judicial separation to have regard inter alia to ‘the contribution which each of the spouses has made or is likely in the foreseeable future to make to the welfare of the family, including the contribution made by each spouse to the income, earning capacity, property and financial resources of the other and any contribution by looking after the home or caring for the family’.
Prior to the coming into operation of the Act of 1989 (which does not apply to the problem in this case) the authorities were to the effect that looking after the home or caring for the family were not of themselves regarded as entitling the spouse who did so to claim any title to the family home. In the case of McC. v McC. [1986] ILRM 1 the Supreme Court per Henchy J stated the law as follows:
[W]here the matrimonial home has been purchased in the name of the husband, and the wife has, either directly or indirectly, made contributions towards the purchase price or towards the discharge of mortgage instalments, the husband will be held to be a trustee for the wife of a share in the house roughly corresponding with the proportion of the purchase money represented by the wife’s total contribution. Such a trust will be inferred when the wife’s contribution is of such a size and kind as will justify a conclusion that the acquisition of the house was achieved by the joint efforts of the spouses.
When the wife’s contribution has been indirect (such as by contributing, by means of her earnings, to a general family fund) the courts will, in the absence of any express or implied agreement to the contrary, infer a trust in favour of the wife, on the ground that she has to that extent relieved the husband of the financial burden he incurred in purchasing the house.
The learned trial judge commented on the above and other authorities when in the course of his judgment he stated as follows at p. 541:
Reviewed in the light of the formidable line of judicial authority on this topic since 1976, the conclusion is inescapable that the wife is not entitled to a beneficial interest in the family home or farm because she has made no contribution in money or money’s worth, directly or indirectly, towards the acquisition of either property. Her claim in that regard must fail unless she can rely on other rights not previously considered by the courts.
He then went on to consider a wife’s interest in matrimonial property in the context of her rights under Article 41 of the Constitution and, having done so, made a declaration that the wife was entitled to a beneficial interest in the family dwelling and the contents therein. Having regard to all the circumstances of the case he assesssed her interest at 50%. The husband now appeals against this finding and declaration. The relevant portion of Article 41 which must be considered is s. 2 thereof which provides as follows:
2.1° In particular, the State recognises that by her life within the home, woman gives to the State a support without which the common good cannot be achieved. 2° The State shall, therefore, endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.
Despite the reasoning of the learned trial judge, I find it impossible to hold that the wording of subs. (1) is such as would confer on a woman such as the plaintiff any right to a beneficial interest in the family home. The subsection gives a recognition of the support which woman, by her life within the home, gives to the State. The following subsection is the one which imposes an obligation on the State (including, of course, the judicial arm thereof) to endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home. I do not think that subs. (1) contains anything which imposes a positive obligation. It voices a ‘recognition’ and, in my opinion, is really a prelude to explain the positive obligation in the following subsection which provides that the State shall, therefore , endeavour etc. The obligation imposed by the subsection has nothing to do with the family home so far as the ownership thereof is concerned.
Apart from the arguments based specifically on the Constitution, it was argued that this is a matter where new principles can be established on a case law basis. The Oireachtas has not said that a woman who contributes financially to the acquisition of the family home is entitled to share in the ownership. It is judge-made law which says so and it is argued that present case law can be extended. I do not think it would be proper to extend it. Present case law is based on long-standing equitable principles as a result of which trusts are implied in favour of a contributing spouse. These principles have been extended to their permissible limit. The Oireachtas was perfectly entitled to alter existing law in this regard but the fact that it has done so by virtue of the provisions of s. 20 of the 1989 Act (and, in particular, subs. (2)(f) and (2)(g)) is not relevant to this case.
E.N. v R.N.
[1992] ILRM 127 Finlay CJ
This is an appeal by the plaintiff against an order made in the High Court on 27 June 1989 by Barron J in certain proceedings instituted by the plaintiff against the executors of her deceased husband in which she claimed a declaration that she was entitled to a 50% beneficial interest in the property of the family home consisting of a house situate in the City of Dublin. The learned trial judge held that she was entitled to a one-fifteenth share only in the said premises.
The facts
The facts out of which the claim arose, which were not in dispute, no evidence being adduced on behalf of the defendants, were as follows. The plaintiff married her late husband in 1964. At the time of the marriage he was a qualified architect carrying on practice in the City of Dublin, and she was a state registered nurse who was employed in the City of Dublin.
Upon marriage the plaintiff gave up her employment so as to be a full-time wife and three children were born of the marriage, a son in June 1965, a daughter in May 1967 and a second daughter in January 1969. Except for extremely limited, temporary employment, the plaintiff did not work as a nurse after the marriage until the youngest of the children was quite grown up, and resumed employment again only in 1983. From then until 1987 she was full-time employed for a period and part-time employed for a further period as a nurse. In 1987 she ceased to be employed, apparently due to a disability.
Her husband died in April 1988.
In January 1966 the husband purchased the property concerned in this action for the sum of £5,000. That purchase money was provided from a bequest made to him by his late father and also by a further gift from his mother. He borrowed by way of mortgage on the house a further sum of £5,000 to renovate the house and convert it into apartments. The plaintiff and her husband and the one child who was then born then occupied one apartment, which the family did for the rest of the husband’s lifetime, and the balance of the house was converted into bedsitter apartments. The title of the house was in the sole name of the husband. From the commencement of the occupation of the house after it had been renovated, the evidence which was accepted by the learned trial judge was to the effect that the plaintiff took over the entire management of the bedsitter apartments which originally numbered nine, but which in 1984, when the husband moved his office to the house, were reduced to five. Throughout the entire period up to the date of the death of the husband, the plaintiff had, on the evidence, managed these apartments to the extent of making the lettings in them, dealing with complaints, collecting the rents and providing for and organising the maintenance of the apartments. At all stages the rents of the apartments would appear to have been devoted either directly or indirectly towards the payment of interest on the mortgage. In the first instance on the mortgage of £5,000, the entire of the sum went directly towards that purpose; later at periods it may have gone into a mixed family fund out of which mortgage repayments were made.
The evidence established that a total of five mortgages were raised on the premises during the lifetime of the husband, that four of them had been discharged in his lifetime and that the fifth was discharged because it was an insured endowment policy which was redeemed at his death. These mortgages were as follows:
1. To the Lombard & Ulster Bank on 13 June 1966 for £5,000. The purpose of this mortgage was, as has been indicated, the renovation and conversion of the house so as to create nine bedsitters and a garden flat.
2. To the Lombard & Ulster Bank in October 1966 for an unascertained sum.
3. To Allied Irish Banks for a sum of £6,000, the date of which was not established.
4. To Lombard & Ulster Bank in 1975 for £5,000.
5. To the Irish Nationwide Building Society for £15,000 in 1977. With regard to this mortgage the evidence was that it was taken out largely for the purpose of adding a single storey extension to the house.
Evidence was given that due to difficulties in the husband’s architectural practice the family’s financial situation deteriorated significantly in the years prior to his death, having been quite comfortable previously. In particular, it would appear that arrears of income tax had built up with regard to the practice which left his estate at the date of his death apparently insolvent.
For that reason steps were being taken by the husband, shortly before his death, to try and ascertain whether he could give to his wife, in the event of his death, an interest in the house which, in a sense, would be protected against debts which he had incurred. Though he was willing to execute any necessary documents to grant to her a 50% interest in the house, no transaction had actually taken place.
The judgment in the High Court
The claim for a declaration of a 50% interest in the premises was substantially based in the High Court on a submission that on the facts of the case the learned trial judge should follow the decision of Barr J in L. v. L. [1989] ILRM 528, to the effect that where a wife and mother worked in the home and rendered services of substantial value in looking after the home, providing for the husband, housekeeping and looking after the children, instead of going out to work, that, having regard to the provisions of Article 41 of the Constitution it was open to the courts in their discretion to declare such a wife entitled to an appropriate share, probably in most cases to be an equal share of 50%, in the family home. The learned trial judge rejected that submission and stated that he was unable to follow the decision of Barr J. With regard to the alternative claims, the learned trial judge concluded, firstly, that he must reject any assertion that the plaintiff by reason of her work in the home as a mother and housekeeper was entitled to any share in the family home and, secondly, that he must reject any claim arising from the wife’s activities in looking after the rented bedsitters, on the one hand, or her subsequent earnings from 1983 to 1988, on the other hand, except in so far as her original organisation and running of the rented bedsitter apartments contributed to the discharge of the interest and capital of the loan on the £5,000 mortgage which was obtained for the purpose of renovating and converting the house and except in so far as some contribution must be taken to have been made by her to the £15,000 mortgage taken out in 1977 which also yielded improvements to the house in the form of the extension. With regard to the latter contribution the learned trial judge concluded that they did no more than to keep alive a one-fifteenth interest which the original contributions, by way of management of the apartments, had made to the £5,000 mortgage which in turn had yielded an ascertained increase in the value of the premises of £3,000.
The decision
With regard to so much of the appeal as was based on an assertion that the learned trial judge erred in failing to follow the decision of Barr J in L. v L., I have just delivered judgment in the appeal which came before this Court in the case of L. v L., and have reached a conclusion, which is supported by the other members of the court, to the effect that that decision cannot be upheld. For the reasons set out in my judgment in that case I would, therefore, reject this appeal in so far as it was based on an assertion that the decision should have been followed by Barron J.
With regard to the other submissions that have been made, I have come to the following conclusions.
The reasoning contained in my judgment in L. v L. is based upon the fact that it does not appear to me that the court has got jurisdiction, by reason of the constitutional provisions contained in Article 41 of the Constitution, or by reason of any general principle to be derived from them, to make specific declarations concerning ownership of the property consisting of the family home which are derived from a principle of reward or implied benefit not known to the existing doctrines of resulting or constructive trust.
Having regard to that fact, I am satisfied that no matter how desirable it may be, that a wife who is also a mother should if at all possible work in the family home and carry out the duties involved, in particular, of rearing children there rather than be employed outside, if she does not wish so to be employed, I do not consider that it is possible from that constitutionally preferred course of conduct to construe any form of resulting or constructive trust, even on the basis, as was submitted in this case, that by so doing she made a saving to what otherwise would have been a probable expenditure from the husband’s earnings for the housekeeper or nanny, and therefore enabled him with greater facility to discharge outgoings on the house, including the repayment of mortgages raised from time to time.
For the same reason, namely, the confining of the rights to interests in the family home to the broad concept of resulting and constructive trust which would arise between persons other than husband and wife, I do not consider as I indicated in my decision in W. v W. [1981] ILRM 202, that a direct contribution, even in money’s worth, to an improvement made on the family home by a wife, where the husband is the sole owner of it, can, in the absence of express or readily implied agreement constitute a claim for a beneficial interest in it. To that extent it appears to me that the rejection by the learned trial judge in this case of a specific claim arising from the fact that the mortgage to which the plaintiff contributed, certainly, from 1983 onwards, by contributions to the family funds from her earnings as a nurse, which was used for the extension constituted an additional percentage interest in the beneficial ownership of the home, was correct.
Where, however, it seems to me the learned trial judge in this case has fallen into an error, is in his refusal to have regard to the mortgages which were raised and apparently repaid on the premises, between the initial mortgage of £5,000 in 1966 for the conversion into bedsitter apartments and the later mortgage in 1977 for the extension of the house.
In the course of my judgment in W. v W. dealing with the situation where a wife contributed either directly towards the repayment of a mortgage or to a general family fund, thus releasing her husband from obligations which facilitated his redeeming a mortgage, I stated (at pp. 204, 205) as follows:
It is not expressly stated in the decisions to which I have referred, but I assume that the fundamental principle underlying this rule of law is that the redemption of any form of charge or mortgage on property in truth consists of the acquisition by the owner or mortgagor of an estate in the property with which he had parted at the time of the creating of the mortgage or charge, and that there can be no distinction in principle between a contribution made to the acquisition of that interest and a contribution made to the acquisition of an interest in property by an original purchase.
I would adhere to that view and its application to this case means that throughout the period of the ownership by the wife and husband of this house between 1966 and 1988, the wife has made contributions to the discharge not only of the first and fifth mortgages, as was found in the High Court, but of all the five mortgages which were raised and which have been redeemed. Those contributions consist, firstly, of the contribution by the wife throughout the entire of that period, consisting of her total management of the bedsitter apartments, the organisation and collection of the rents payable in respect of them and their general maintenance and care. Such activities are different from and not to be identified with the activities of a wife and mother in the home. Secondly, from the year 1983 to 1987, when she was earning as a nurse, she *133 made contributions into the family fund which indirectly contributed towards the repayment of the amounts due on mortgages. This was at a time when the family finances were not as good as they had been and constituted a very important contribution.
Having regard to my view of the extreme importance on the evidence accepted by the learned trial judge of the contribution made by the wife in this case in the entire management of the bedsitter units and the position that the rental from them took in the family finances, over all the years, and having regard to the fact that I am satisfied she is entitled to credit for contribution towards the redemption of all the mortgages, it follows that the share of one-fifteenth assessed by the learned trial judge in the value of this house as being the share of the wife, is quite inadequate.
Having regard to all the considerations which are appropriate, I take the view that the proper share to which she is entitled on the facts as established and accepted by the trial judge is one-half. I would allow the appeal and vary the order of the High Court accordingly.
Friends Provident Life Office v Doherty
[1992] ILRM 372, Blayney J
The facts in these appeals from the Circuit Court are not in dispute. Michael Joseph Doherty and Deirdre Doherty (to whom I shall refer as Mr and Mrs Doherty) were married on 20 April 1973. In 1974 Mr Doherty bought a rood of ground as a site for a house. The site was duly transferred to Mr Doherty and was registered on Folio No. 4829F of the Register of Freeholders County Donegal. The cost of the construction of a house on the site, which came to £13,700, was paid by Mrs Doherty. Since the time that the house was built, it has been the Doherty’s family home.
In or about the month of September 1982 Mr Doherty, who was in the potato business, was advised that he should borrow £22,000 in order to finance the expansion of his business. He got in touch with the Friends Provident and they agreed to advance the money on the security of a mortgage of the family home. Messrs Gerrard Scallan and O’Brien, solicitors, acted on behalf of the Friends Provident, and Messrs V.P. McMullin and Son acted on behalf of Mr Doherty. Requisitions on title were duly furnished and replied to; Mr Doherty made the usual statutory declaration that none of the burdens set out in s. 72 of the Registration of Title Act 1964 affected the lands in the folio, and Mr and Mrs Doherty jointly made a statutory declaration in the following form:
IN THE MATTER OF THE FAMILY HOME PROTECTION ACT 1976 THE FAMILY LAW ACT 1981 AND IN THE MATTER OF A MORTGAGE OF THE PREMISES COMPRISED IN FOLIO 4829F COUNTY DONEGAL.
We, Michael J. Doherty and Deirdre Doherty of Mullanboy, Castlefin, County Donegal, both aged 21 years and upwards do make oath and say as follows:
1. The said premises are in the sole name of Michael J. Doherty.
2. By indenture of mortgage dated the day of 1982 the said Michael J. Doherty mortgaged premises to Friends Provident Life Office and Deirdre Doherty endorsed her consent to the mortgage on the said indenture of mortgage.
3. The said premises are our family home being the dwelling-house in which we ordinarily reside.
4. We were married on 20 April 1974 and we refer to a copy certificate of said marriage marked with the letter A upon which we have signed our names prior to the completion hereof. We are now the lawful spouses of each other and neither of us have been married or engaged to any other person.
5. We make this solemn declaration for the satisfaction of the said Friends Provident Life Office conscientiously believing the same to be true for the purposes of the Family Home Protection Act 1976 the Family Law Act 1981 and by virtue of the Statutory Declarations Act 1938.
Declared etc.
The mortgage was duly executed by Mr Doherty, the date of the mortgage being 7 February 1983, and the following consent, endorsed on the mortgage, was signed by Mrs Doherty:
I, Deirdre Philomena Doherty (formerly McDermott) being the lawful wife of the within mortgagor, Michael Joseph Doherty, and being fully aware of my rights under the Family Home Protection Act 1976, do hereby fully consent to the within mortgage of our family home in favour of the Friends Provident Life Office.
Signed Deirdre Doherty
Dated this 14 January 1983.
In pursuance of the mortgage the sum of £22,000 was advanced by Friends Provident to Mr Doherty.
On 23 February 1988 the Friends Provident served notice on Mr Doherty terminating his tenancy at will in the mortgaged premises and demanding vacant possession of the premises. A separate notice in the same terms was served on Mrs Doherty.
On 30 May 1988 the amount due by Mr Doherty on foot of the mortgage for principal and interest was a sum of £31,079.76.
The Friends Provident issued a civil bill against Mr Doherty on 7 July 1988 claiming possession of the mortgaged premises. A copy of the civil bill had previously been sent to Mrs Doherty on 18 April 1988. An order for possession was granted to the Friends Provident in the Circuit Court on 15 March 1989 and a notice of appeal from the whole of the order was served by Mr Doherty’s solicitors on 23 March 1989. Shortly before that judgment, Mrs Doherty, on 17 February 1989, brought an application in the Circuit Court under s. 12 of the Married Women’s Status Act 1957 claiming a declaration that she was entitled to an interest in excess of 50% in the family home. Friends Provident were added as a notice party in the application. Having heard the case, the learned Circuit Court judge reserved his judgment and delivered it on 8 December 1989 refusing the application. By notice of appeal dated 13 December 1989 Mrs Doherty appealed against such refusal.
There are accordingly two appeals before the court: Mr Doherty’s appeal against the order for possession, and Mrs Doherty’s appeal against the refusal of her application for an order under s. 12 declaring her entitled to an interest in the family home. Both appeals can be dealt with together. There is really a single issue to be decided: whether Mrs Doherty can establish an interest in the family home which is not affected by her husband’s mortgage to the Friends Provident.
On behalf of Mrs Doherty it was submitted that, by virtue of having contributed the entire cost of the construction of the family home, she was entitled to a substantial interest in it in equity, and this interest was one of the burdens which, under s. 72 of the Registration of Title Act 1964, affected the land without registration as it came within subs. (1)(j) of the section:
the rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where, upon enquiry made of such person, the rights are not disclosed.
It was submitted that, because Mrs Doherty’s interest was such a burden, existing at the time of the mortgage, it was not affected by the mortgage, with the result that it was Mr Doherty’s interest only which was charged.
In response to this submission it was argued by counsel for the Friends Provident that enquiry had been made of Mrs Doherty, in the requisitions of title that had been served, as to her interest in the family home, and none had been disclosed with the result that her rights did not come within s. 72. In addition, it was submitted that even if she had an interest, she was estopped from asserting it against the Friends Provident, and it was on this submission that greatest reliance was placed. And I think correctly. In my opinion there is no evidence that any enquiry was made of Mrs Doherty by Friends Provident as to whether she had any interest in the family home. It is suggested that the requisitions of title contain such an enquiry, but although I have read them a number of times I cannot find any, and even if such an enquiry was contained in them it would not be sufficient to take Mrs Doherty’s interest out of s. 72 as the requisitions were not addressed to Mrs Doherty but to her husband.
I am satisfied accordingly that Mrs Doherty had an interest in the premises at the time of the mortgage, and that that interest was a burden which took effect without registration. The issue that I have to decide is whether Mrs Doherty is estopped from asserting that interest as against Friends Provident.
The type of estoppel relied on is estoppel by representation. Counsel for the Friends Provident submitted that Mrs Doherty represented to the Friends Provident: (1) that she was consenting to the mortgage of the full interest in the family home, and (2) that her husband, as registered owner, was entitled to charge the full interest in the family home.
As to the basis for the estoppel counsel relied on the following paragraph from Volume 16 of Halsbury (4th Edition) para. 1592:
To form the basis of an estoppel a representation may be either by statement or by conduct; and conduct includes negligence and silence.
Having considered Mrs Doherty’s statements and conduct at the time of the mortgage, the conclusion I have come to is that the submission made on behalf of the Friends Provident is well founded. I am satisfied that Mrs Doherty by her statements in writing and her conduct at the time of the mortgage represented to the Friends Provident that she had no interest in the family home and that her husband was solely entitled and accordingly in a position to mortgage the entire interest. This conclusion is based on the following facts:
1. In paragraph 4 of her affidavit, Mrs. Doherty said: ‘While the site was in the name of my husband, I regarded myself as being the primary beneficial owner of the house….’
Mrs Doherty remained silent as to this very important fact.
2. Mrs Doherty fully consented to the mortgage which was a charge by her husband as sole registered owner of the property.
3. Mrs Doherty swore a statutory declaration in which it is stated that the premises were in the sole name of Michael J. Doherty.
In my opinion the only conclusion the Friends Provident could have come to on these facts was that Mrs Doherty was representing that her husband was the sole beneficial owner of the property, that she was consenting to his mortgaging the entire interest, and that she herself had no beneficial interest. Since the Friends Provident acted on this representation by granting the loan to her husband, she is now estopped from alleging the contrary as against them. As their counsel pointed out, this does not mean that Mrs Doherty ceases to have an interest in the property; the effect of the estoppel is to postpone that interest to the rights of the Friends Provident.
It was submitted on behalf of Mrs Doherty that Friends Provident ought to have enquired from her if she had any interest, but it seems to me that they had no duty in this respect. There was nothing to put them on notice that Mrs Doherty might have an interest. On the contrary, as already indicated, her conduct would have led them to believe that she had none. It was also submitted that the consequences of the mortgage had not been explained to her. But once again, *377 the Friends Provident had no obligation in this regard. The Dohertys were being advised by their own solicitor, so there was no reason to think that Mrs Doherty would not have everything fully explained to her.
In coming to the conclusion that Mrs Doherty is estopped, I am supported by the decision of Barrington J, in H.(A.) v H.(F.), High Court, 20 June 1989. In that case a husband and wife had an unspoken understanding that their house was joint property but the conveyance had been taken in the sole name of the husband. The husband guaranteed two mortgages on the house and the wife gave her consent for the purposes of the Family Home Protection Act. On these facts Barrington J came to the following conclusion:
It appears to me that the lending institution was led to assume first that the husband was the sole owner or the wife was consenting or alternatively if the wife was claiming any interest in the house by consenting to mortgaging the house she was, so far as the lending institution was concerned, waiving her interest in the house, at least to the extent that the rights of the financial institution, lending institution, would be fully protected.
In the present case I am satisfied that the Friends Provident were also led to assume that Mr Doherty was the sole owner so that it would in my opinion be wholly unfair to allow Mrs Doherty at this stage to assert as against them an interest in the property. So while inevitably I must have great sympathy for Mr and Mrs Doherty in their financial difficulties, I must confirm the decision of the learned Circuit Court judge and dismiss Mr Doherty’s appeal.
As for Mrs Doherty’s application, I will hear counsel as to what form of order I should make.
Bank of Ireland v. Smyth
[1993] 2 IR 103
Geoghegan J.
26th March 1993
This is a claim for possession by the plaintiff of the house and lands comprised in numbers 1, 2 and 3 of Folio 9173F of the Register of Freeholders, County Tipperary, pursuant to s. 62, sub-s. 7 of the Registration of Title Act, 1964. The plaintiff is registered as owner of a charge purported to have been created by instrument of charge. The first defendant is the registered owner of the property and the second defendant is his wife.
The defendants between them have defended this action on a number of quite separate grounds of defence. Three of these grounds were rejected by this court when they were raised on an application for a non-suit at the end of the plaintiff’s case. The first was that there was non-compliance with O. 9, r. 9 of the Rules of the Superior Courts, 1986, in that at the time the proceedings were instituted the first defendant’s mother was allegedly in possession or in receipt of rents and profits within the meaning of the rule, because she enjoyed a right of residence and a right of support charged on the property. I ruled against the first defendant on the grounds that:
(a) Having regard to s. 81 of the Registration of Title Act, 1964, the mother’s right of residence was a lien for money’s worth. The entitlement to that right or to the right of support did not constitute her a person in possession or in receipt of rents and profits within the meaning of the rule. As to whether a County Registrar executing an order for possession could require the mother, if she were still alive, to vacate is quite another matter and did not fall to be determined in this action.
(b) The mother is, at any rate, now dead. I took the view that even if the mother ought to have been served with the summons under the Rules of the Superior Courts, 1986, I should not dismiss the action for failure to do so, but on the contrary should dispense with the requirement having regard to the fact that she is now deceased. If and insofar as service on the mother was required, therefore, I dispensed with that requirement.
The second ground of application for non-suit was a related ground. It was submitted that the action ought to be dismissed or struck out for failure to comply with O. 9, r. 14, of the Rules of the Superior Courts, 1986. I considered that having regard to paragraph 10 of the first affidavit of Mr. David Dowley, manager of the relevant branch of the plaintiff, there was sufficient compliance with the rule. I also took the view that even if there was not strict compliance, nobody was prejudiced and that it would be wrong to non-suit the plaintiff on this account.
The third ground of application for non-suit was that the evidence seemed to indicate that the consent of the second defendant to the charge under the Family Home Protection Act, 1976, was signed after the instrument of charge had been signed by the first defendant. However, when on my request Mr. Dowley, the manager at the time of the transaction was re-called, he stated that he could not really remember which document was signed first but that he was satisfied he would have complied with the guidelines which had come from headquarters and which had been put in evidence. I refused the non-suit on the grounds that this defence had not been pleaded. Before doing so, I indicated that I would favourably entertain an application for an adjournment by the second defendant to amend her defence, provided that her counsel could assure me that her client would be testifying that she signed the consent after the husband signed the charge. The invitation was not taken up. Even if the absence of prior consent had been pleaded, I would take the view that, as a matter of reasonable inference from the evidence, the instrument of charge could not have been treated as having been unconditionally signed, sealed and delivered by the first defendant prior to the signature of his wife on the form of consent under the Family Home Protection Act, 1976. Pending the wife’s signature, the deed of charge would have been considered as signed and sealed but not yet delivered, or alternatively delivered as an escrow. This view is in line with Bank of Ireland v. Hanrahan (Unreported, High Court, O’Hanlon J., 10th February, 1987) where in the analogous situation of an equitable mortgage by deposit of title deeds, the learned judge decided that even though the document had been handed to the bank prior to the signing of the spouse’s consent, the mortgage was valid as not having been intended to take effect until the consent was signed.
Following on the refusal of the non-suit the only witness who gave evidence was the second named defendant. At the close of the defendants’ case two substantive grounds of defence were argued. The first was that the consent of the second defendant was not a true consent in that she was not advised to obtain independent legal advice and that she did not have a proper understanding of what she was signing. It was submitted that the charge was void, both because, on the evidence, the plea of non est factum in relation to the consent had been sustained, and because in signing the consent, the second defendant was allegedly entering into an improvident transaction without the benefit of independent legal advice and without a proper understanding of the transaction involved.
The second substantive ground of defence was based on the judgment of Denham J. in First National Building Society v. Ring [1992] 1 I.R. 375, a case involving the exercise of discretion under s. 4 of the Partition Act, 1868. By analogy with Denham J.’s interpretation of the section in the Partition Act, 1868, it has been argued that upon the wording of s. 62, sub-s. 7 of the Registration of Title Act, 1964, I have a discretion as to whether I order possession in this case or not. I will now discuss each of these substantive defences separately.
To determine the consent issue it is necessary to analyse carefully the provisions of s. 3 of the Family Home Protection Act, 1976. Section 3, subject to four statutory exceptions, renders void a purported conveyance by a spouse of any interest in the family home, unless either there is a prior consent in writing by the other spouse or a court order dispensing with such consent. Of the four statutory exceptions, the only one which would be relevant to this case is the exception under s. 3, sub-s. 3 (a) of a conveyance to a purchaser for full value. “Conveyance”is defined in s. 1 of the Act as including (inter alia) a “mortgage”.”Mortgage” is in turn defined as including (inter alia) “a charge on registered land”. Accordingly the charge in this case is a “conveyance”within the meaning of the Act of 1976.
The expression “full value” is defined in sub-s. 5 as meaning “such value as amounts or approximates to the value of that for which it is given”. In the context of a mortgage or a charge there has always been some doubt as to the meaning of “full value”. But this question does not arise for decision in this case in that the plaintiff is relying on the existence of a valid consent and not on any suggestion that it is a purchaser for value. This was a proper approach for the plaintiff to take, because on the particular facts of the case, if the consent is invalid on any of the grounds contended for by counsel for the respective defendants, the plaintiff had or ought to have had knowledge of the vitiating elements and therefore could not be a “purchaser” within the artifical definition of that expression in the 1976 Act. In order to be a “purchaser”within the meaning of the Act, the plaintiff would have had to be a chargeant acquiring “in good faith” the interest in the property – see s. 3, sub-s. 6 of the Act of 1976. The Supreme Court in Somers v. W. [1979] I.R. 94 has held that the words “in good faith” import the equitable doctrine of notice. Since the bank in this case had full notice of all the factors alleged by the defendants to vitiate the consent, it follows that if the consent is invalid by reason of any of those factors, the bank is not a “purchaser”. Accordingly the escape route of the statutory exception in favour of a “purchaser for value” is not available to the bank. It is only necessary to consider therefore was the consent invalid?
Counsel for the second defendant, Ms. Kennedy, submits that a consent by a wife under the Family Home Protection Act, 1976, to a mortgage or charge in favour of the bank is not valid unless the wife understands the nature and consequences of the transaction. She cannot normally be said to have such understanding unless:
(1) She is told of the amount of the loan involved, and if the security is to cover future advances, that she is informed of that.
(2) She has explained to her the repayment terms.
(3) She has explained to her the consequences of non-payment and in particular that possession of her family home may be recovered by the bank, and the home may be sold.
(4) She is recommended to obtain independent legal advice.
In making this submission Ms. Kennedy relies heavily on Barclays Bank plc v. O’Brien [1992] 3 W.L.R. 593. That was a case before the Court of Appeal in England in which a wife joined in a charge over the matrimonial home jointly owned by her and her husband, as security for a personal guarantee by her husband in favour of the bank. Scott L.J. delivered the principal judgment and I believe that the views expressed by him represent Irish law, particularly having regard to the line of Irish cases dealing with voluntary deeds. I do not find it necessary to quote at length from the judgment because the headnote ([1992] 4 All E.R. 983) accurately sets out what the court held. The relevant part of the headnote reads as follows:
“Held – as a matter of policy married women who provided security for their husbands’ debts and others in an analagous position such as elderly parents on whom pressure might be brought to bear by adult children, were to be treated as a specially protected class of sureties so that where the relationship between the surety and the debtor was one in which influence by the debtor over the surety and reliance by the surety on the debtor were natural and probable features of the relationship, the security given by the surety would in certain circumstances be unenforcable notwithstanding that the creditor might have had no knowledge of and not have been responsible for the vitiating feature of the transaction. The circumstances in which equity would hold that the security given by a surety in that protected class was unenforceable were:
(i) if the relationship between the debtor and the surety and the consequent likelihood of influence and reliance was known to the creditor,
(ii) if the surety’s consent to the transaction was procured by undue influence or material misrepresentation on the part of the debtor or the surety lacked an adequate understanding of the nature and effect of the transaction,
(iii) if the creditor, whether by leaving it to the debtor to deal with the surety or otherwise, failed to take reasonable steps to try and ensure that the surety entered into the transaction with an adequate understanding of its nature and effect and that the surety’s consent to the transaction was a true and informed consent. Accordingly although each case within the protected class depended on its own facts, as a general rule a creditor who took security from a married woman for her husband’s debts ought to take reasonable steps, such as advising her to take independent advice or, if she declined to do so, offering a fair explanation of the security document before she signed it, to see that she understood the transaction she was entering into . . .”
In my opinion Ms. Kennedy’s reliance on this case is fully justified. I do not think that any valid distinction can be drawn between that case and the present case on the grounds either that the second defendant is not a co-owner of the family home or on the grounds that the liability of the husband being secured was a primary liability and not a guarantor liability. The rights of a spouse conferred by the Act of 1976 are very important quasi proprietary rights, even if they are not ownership rights.
Applying Scott L.J.’s criteria, it is obvious that Mr. Dowley was well aware of the husband and wife relationship with the consequent inherent likelihood of influence and reliance. He was equally well aware that the wife’s understanding of the transaction depended essentially on what he told her. He should have realised that what he told her and what he advised her were inadequate. He did not take adequate steps to ensure that the second defendant fully understood the transaction. In particular he did not advise her to take independent advice.
It is only fair to say at this juncture, that I reject the second defendant’s evidence that Mr. Dowley did not use the expression “family home” but merely referred to the property generally. Mr. Dowley is certain that he did refer to the family home and I believe him. Having regard to the fact that this was the first legal charge with which Mr. Dowley was involved after the 1976 Act was enacted, I think it highly unlikely that he would not have explained in a general way the purpose of the consent as referred to in the guidelines. However, I do not think that the second defendant was deliberately giving false evidence. I suspect that she was engaging in some wishful thinking and she had no clear memory as to what exactly was said at the discussion with Mr. Dowley. It may well be that in Mrs. Smyth’s mind she thought that, as there was a first charge on her home in favour of ACC because of a loan of £8,000.00 from ACC to build the house, the bank would be unable to sell or take possession of the home. At one point in her evidence Mrs. Smyth spoke of the house as being owned by the ACC. But if these matters were in her mind Mr. Dowley could not reasonably have been expected to be aware of them. But the bank via Mr. Dowley did not adequately explain to Mrs. Smyth the potential liabilities secured by the charge and above all did not explain to her that in the event of default the property including the matrimonial home could be sold by or at the instance of the bank, or that an order for possession could be sought by the bank. These are vital matters of which Mrs. Smyth should have been made aware before she signed the consent. Furthermore she was not recommended to obtain independent advice. I am reasonably satisfied that Mr. Dowley did tell Mrs. Smyth that she would be signing a consent to a mortgage of the family home, but having regard to Barclays Bank v. O’Brien [1992] 3 W.L.R. 593, I do not consider that that was sufficient. Accordingly, in my view, while there was a document purporting to be a consent in writing, there was in fact no consent within the meaning of the Act of 1976. In coming to that conclusion I prefer to rely on the equitable principles referred to by Scott L.J. rather than the doctrine ofnon est factum which would not apply in this case in my view. The charge is therefore void, and for the reasons indicated the bank is not a”purchaser” within the meaning of the Act of 1976. That is sufficient to dispose of this action but in case the matter goes further I think I should indicate my views on the other substantive ground of defence.
It is submitted on behalf of the defendants that, as a matter of discretion, I ought to refuse the application for possession. It is suggested that the wording of s. 62, sub-s. 7 of the Registration of Title Act, 1964, gives the court this discretion, and that the judgment of Denham J. in First National Building Society v. Ring [1992] 1 I.R. 375 supports the view that I should exercise it against the plaintiff I disagree. I do not think that First National Building Society v. Ring [1992] 1 I.R. 375 has any relevance to this case. The decision of Denham J. turned on an interpretation of s. 4 of the Partition Act, 1868. But the wording of that section is totally different from the wording of s. 62, sub-s. 7 of the Registration of Title Act, 1964. The words “may, if it so thinks proper”in s. 62, sub-s. 7 mean no more, in my view than, that the court is to apply equitable principles in considering the application for possession. This means that the court must be satisfied that the application is made bona fide with a view to realising the security. But Mr. Dowley establishes this essential proof in paragraph 11 of his first affidavit, and it is not disputed in either a replying affidavit or the pleadings or at the hearing. It had been held in Northern Banking Company Ltd. v. Devlin [1924] 1 I.R. 90 that even though the Registration of Title Act, 1891, conferred on a registered owner of a charge the rights of a legal mortgagee under the Conveyancing Act, 1881, nevertheless a registered owner of a charge, unlike a legal mortgagee, could not obtain an order for possession for the purposes of a sale out of court, because the legal mortgagee’s right to possession arose by virtue of his estate in the land at common law, and not by virtue of the Conveyancing Act, 1881. This yawning gap in the rights of a legal chargeant was heavily criticised by Glover in his Registration of Land in Ireland, 1933. The position was corrected by s. 13 of the Registration of Title Act, 1942, which is in identical terms to s. 62, sub-s. 7 of the Registration of Title Act, 1964. The historical background to the subsection therefore reinforces me in the interpretation which I give to it. I do not believe that the Oireachtas intended a wide discretion which could take sympathetic factors into account. If, therefore, I had been of the view that the consent of the second defendant was a valid consent for the purposes of the Act of 1976 I would have made the order for possession. But as I have held that there was in fact no valid consent, I must refuse the application.
R. v R.
1978 No. 243 Sp
High Court
12 January 1979
[1979] I.L.R.M. 1
McMAHON J
delivered his judgment on 12 January 1979 saying: These proceedings are brought by the wife who is the plaintiff by a special summons claiming an order under s. 12, Married Women Status Act 1957 declaring that she is entitled to the sole beneficial interest in the family home or alternatively determining the extent of her beneficial interest in the premises.
The parties were married in March 1968. They had been going together for some years before marriage. The husband is a machine operator in a Dublin firm. The wife was aged 18 on marriage and the husband was some years older than his wife.
For the first year of their marriage the parties lived in a mobile home which the husband had acquired. He then bought a home in a County Dublin village by means of a mortgage. He obtained some of the money for the deposit of £500 by the sale of the mobile home and some by borrowing from a credit union. The house was purchased in the husband’s name.
There were no children of the marriage. The parties separated and the marriage broke up in September 1973. The family home has been sold with the wife’s consent and the nett proceeds are held by the husband’s solicitor pending the outcome of these proceedings. The wife has resumed employment and has not made any claim on the husband for maintenance.
Before the marriage the wife held various jobs and she continued to work after marriage. The records of the Department of Social Welfare which have been proved show that between July 1968 and July 1973 the wife was employed for a total of 166 weeks, that is, an average of 33 weeks per year. The wife claims that the money she earned was spent on her own necessaries and on meeting the expenses of the household and in that way her earnings helped her husband to meet the mortgage repayments on the house and she is therefore entitled to a beneficial interest in the proceeds of the sale. The husband swore an affidavit in which he said that after they were married his wife worked for short periods only and all the money which she earned was spent on herself on make-up, buying clothes and having her hair done. Faced with the records of the wife’s employment from the Department of Social Welfare the husband retreated somewhat from this extreme position but still alleged that most of the wife’s earnings were spent on herself. The wife’s evidence was given with moderation and carefully and in general I accept it. The husband is clearly mistaken in his recollection of the periods for which the wife was employed and I do not think that his allegations of extravagance on her part were substantiated.
The family home cost £3,500. It is situated in a new housing estate adjoining a County Dublin village which would in estate agents’ language be described as a dormitory suburb. The husband’s job involved night work and he therefore required a car to get to work. The wife’s earnings helped the husband to live in this County Dublin village and to run the car and at the same time the couple were able to enjoy a reasonable but not extravagant standard of living. Had the wife not been earning the husband would not have been able to keep up the mortgage repayments and run a car and maintain their standard of living. The wife spent some of her earnings on providing food and other requisites for the household and some was spent on herself for clothes and having her hair done but so far as the money was spent on the wife’s needs it seems to me that these were expenses which the husband would have been bound to meet if she was not able to pay for them herself. I can see no distinction between money paid *3 for necessaries for herself and in my view both kinds of expenditure come within the principle enunciated by Kenny J in C. v C. [1976] IR 254 namely that the wife’s contribution which will give her a claim to a beneficial interest in the matrimonial home may take the form of paying the expenses of the household so that her husband has the money which makes it possible for him to pay the mortgage instalments. In either case there is a saving to the husband and if that enables him pro tanto to meet the mortgage repayments the wife should be regarded as contributing towards those repayments.
The husband got the benefit of the appropriate tax reliefs as a married man in his assessment to income tax and the wife’s earnings were subject to deduction of tax at the rate of 35p in the pound. The fairest approach in my view is to assume that their respective contributions to the family purse and therefore to the mortgage repayments were in the same proportion as their respective gross earnings before tax. On that basis I calculate the husband’s gross earnings during the period the parties lived together at £10,000 and the wife’s gross earnings £1,800. I therefore hold that the nett proceeds of the sale of the house should belong to the husband and the wife in the proportion of 100 to 18.
Doreen McC. v Michael McC.
1982 No. 52
Supreme Court
29 March 1984
[1986] I.L.R.M. 1
(Nem Diss.) (Henchy J, Griffin and Hederman JJ)
29 March 1984
HENCHY J
(Griffin and Hederman JJ concurring) delivered his judgment on 29 March 1984 saying: In these proceedings the wife as plaintiff is claiming against the husband as defendant that she is entitled to a share in the family home in Cork. The marriage has broken down and the wife has instituted these proceedings for the purpose of asserting a number of claims. In this appeal, however, the only question is whether Costello J was correct in holding that the wife’s claim to a share in the family home in Cork was unfounded.
In 1972 the husband and wife were living in Dublin. He was employed by an insurance company. In that year he was transferred to Cork. That meant that he had to sell the family home in Dublin. This he did. It realised £5,000, but out of that sum there had to be paid £3,200 in discharge of a mortgage on the house. That left £1,800. It seems to be agreed that because the wife had in effect contributed one-third of the purchase price of that house, she was entitled to one-third of the £1,800. However, she never got any part of the £600 she was entitled to. She allowed her husband to use it.
The husband proceeded to buy a family home in Cork. It cost £9,000. Because he was in the employment of an insurance company, he was able to get his employers to take a mortgage for the full amount of the purchase money. Thus he did not have to lay out any part of the purchase money. He merely had to pay the instalments due under the mortgage.
As to the £1,800 left over from the sale of the Dublin home, the wife allowed the husband to use it in full. He spent it in furnishing and fitting-out the Cork home. Costello J held that, because the wife was entitled to one-third of the £1,800, she became entitled to a one-third share in the furniture and fittings (including carpets) in the Cork home. Counsel for the wife contends that that was not a correct conclusion. He says that the proper conclusion to be drawn from the use of the wife’s money in furnishing and fitting-out the Cork home is that it gave her a one-third share in the house itself.
Since the decision of Kenny J in C v C [1976] IR 254, it has been judicially accepted that where the matrimonial home has been purchased in the name of the husband, and the wife has, either directly or indirectly, made contributions towards the purchase price or towards the discharge of mortgage instalments, the husband will be held to be a trustee for the wife of a share in the house roughly corresponding with the proportion of the purchase money represented by the wife’s total contribution. Such a trust will be inferred when the wife’s contribution is of such a size and kind as will justify the conclusion that the acquisition of the house was achieved by the joint efforts of the spouses.
When the wife’s contribution has been indirect (such as by contributing, by means of her earnings, to a general family fund) the courts will, in the absence of any express or implied agreement to the contrary, infer a trust in favour of the wife, on the ground that she has to that extent relieved the husband of the financial burden he incurred in purchasing the house.
In the present case it has been contended on behalf of the wife that, in allowing the husband to use her one-third of the £1,800, which he spent on furniture and fittings for the house in Cork, he should be held to be a trustee for her of a one-eighteenth share in the house (one-eighteenth being the proportion between the wife’s £600 and the £10,800 spent by the husband on acquiring the house and furnishing it). This contention rests on the submission that the wife’s £600 went into a family fund and that to that extent it eased the financial liability incurred by the husband in purchasing the house.
I am unable to accede to this proposition. The wife’s £600 was in no way applied to the purchase of the house. The full purchase price was provided by the husband’s employers, who got a mortgage on the house. The employers collected the mortgage payments by means of deductions from his salary. So it could not be said that the £600 or any part of it relieved the husband of any share of the financial burden he incurred in purchasing the house.
The true position, it seems to me, was that found by Costello J, namely that the £600 was applied by the husband, not in acquiring the house, but as part of the £1,800 he spent on furniture and fittings. The expenditure thus by the *3 husband of the £600 could not be said to have given the wife any beneficial interest in the house. All she got was, as was held in the High Court, a one-third share in the furniture and fittings (including carpets).
I would accordingly dismiss this appeal.
GR v JJD
[2014] IEHC 665
JUDGMENT of Mr. Justice Abbott delivered on the 5th day of December, 2014
1. This judgment relates to the respondent’s motion for discovery of certain bank accounts and documents relating to farm and other transactions. It further seeks discovery of any files relating to the transfer of Folio No. , of the County of , (on which the family home is situated), documentation relating to a loan facility with the Bank of Ireland extended to the applicant to include loan proposals, the loan application and any vouching documentation in relation to same, and also the loan facility letter from the bank and any amendments to same.
2. The background of the application is as follows. In these proceedings the applicant, who is the registered owner of the said Folio, seeks to sell same and to obtain an order of the court dispensing with the consent of the respondent to sell the family home pursuant to the Family Home Protection Act1976. The applicant was married to the respondent in 1997 and they have two children. On 18th June, 2003, the respondent executed a transfer of the said folio to the applicant in consideration of his natural love and affection. A “particulars delivered” (PD) stamp on this transfer was dated 23rd June, 2003. The applicant became the registered owner of the said lands comprised in the said folio on 9th June, 2005, and the ownership of the respondent was cancelled on the same date.
3. On 7th July, 2003, the respondent made a statutory declaration averring that he was solvent at the date of the said transfer and that the purpose of the transfer was to benefit his wife, the applicant, and not for the purpose of defeating his creditors.
4. The applicant obtained a loan from the Bank of Ireland (which apparently is now secured on the said folio) and judgment was obtained by the bank against her on 23rd February, 2011, for the sum of €1,698,001.51 with measured costs of €2,650.00 plus VAT. There was a stay on the order for nine months and the court was informed that interest is running on this judgment debt at a sum in excess of €2,500.00 per week. In order to reduce the applicant’s indebtedness to the Bank of Ireland, she must sell the lands comprised in the said folio and, for that purpose, has applied in the above entitled proceedings for an order of this Court to dispense with the consent of the respondent to the sale by the applicant of the family home under the Family Home Protection Act 1976. She further seeks a declaration that she is the beneficial owner of the family home, the respondent having failed to be there to provide the said consent or agree that she is the beneficial owner.
5. After some attempts at effecting service of the proceedings on the respondent, which necessitated an order for substituted service upon the respondent, the respondent eventually appeared as a litigant in person. He answered the claim initially submitting that he required an adjournment so that he could inquire if he could negotiate a reduction of the debt with the bank. He acknowledged to this Court that the debt was due to the bank. He stated that he needed a further adjournment at a later date to obtain legal advice and eventually he was represented at a further adjourned date by his first senior counsel who sought a further adjournment and asserted that the application “might not have been as straightforward as it seemed.” Counsel for the respondent stated that it would take “a significant amount of time to obtain full instructions in relation to the complex background of the matter.” A further adjournment was obtained.
Progress of Case
6. The respondent transferred the property into this wife’s name “in case anything happened to him or in case his business collapsed”. The court was told by his first senior counsel that the respondent had a large vehicle which had a spectacular crash into another large vehicle in England; the like of which could give rise to multiple personal injuries claims. On the basis that he was afraid that he would be sued, he transferred the family home into the name of the applicant wife to protect his assets. In para. 8 of his affidavit sworn on 13th December, 2012, the respondent says:-
“I say that the land was transferred to the applicant to hold for us as a family in case anything went wrong in this deponent’s business life.”
Throughout a number of affidavits the respondent stated that he continued to farm the lands comprised in the folio and that he paid numerous bills, or had third parties pay for them, that he liaised with the accountant dealing with the farm business and that he paid several sums to the bank in respect of the bank debt.
7. The matter came on for hearing in relation to the application for discovery and disclosure before this Court on day of , 2014. Written submissions were furnished to the court which had been prepared by counsel for each party. The submissions on behalf of the applicant dealt with the law of advancement between husband and wife as illustrated in Hilary Delaney, Equity and the Law of Trusts in Ireland, 5th Ed., (Dublin, 2011), p. 168 onwards where it is stated that the resulting trust may arise when a donor conveys or transfers property to a donee, but that this presumption may be rebutted by the presumption of advancement in certain cases and, most relevantly in this case, as between the husband and wife, and that this presumption of advancement may be rebutted in evidence. The submissions continued to highlight the manner in which Delaney states that if the transfer intended to benefit the transferee at the date of the transfer, he cannot subsequently change his mind. In O’Brien v. Sheil, (1873) I.R. 7 Eq. 255, O’Sullivan M.R. said:-
“Declarations of the (transferor) subsequent to the advancement, if they are not so connected with it as to be reasonably be regarded as contemporaneous, cannot be evidence to rebut the presumption of advancement.”
In that case the memorandum found among the father’s papers after his death was not admissible in evidence to rebut the presumption of evidence in favour of his daughter in relation to a transfer of securities into their joint names during the father’s lifetime. Delaney also dealt with the question of rebutting the presumption of resulting trusts, referring to the case Standing v. Bowring, (1885) 31 Ch. D. 282, p. 164 of her work. She states that the judgment of the Court of Appeal also makes it clear that the relevant time for establishing evidence of intention to make a gift is the time of transfer and once this is shown, a donor cannot subsequently change his mind and withdraw this intention. A good illustration of this principle is provided by the decision of the British Columbia Court of Appeal in Romaine Estate v. Romaine (2001), 205 D.L.R. (4th) 320, in which an uncle transferred property to his nephew before his death in order to save taxes, however; he subsequently regretted his decision. Levine J.A. confirmed that:-
“All the evidence of the donor’s intention written or oral at the time of a transfer that is claimed to be a gift was made is admissible to determine whether the transfer was a gift.”
The Court of Appeal ruled that the trial judge had erred in admitting statements made after the parties fell out to support the presumption of a resulting trust. All the evidence of the uncle’s intention up to that time suggested that he intended to transfer the property to his nephew and it was held that when all the admissible evidence was considered, it rebutted the presumption of a resulting trust.
8. It was submitted that the respondent cannot make the case which he is now attempting to make by pleading his own intention to defraud creditors. It was submitted that the case of Tinker v. Tinker [1970] 2 W.L.R. 331 was a case in which all the legal issues were identical with the present case. It was submitted in conclusion that the respondent had himself committed the fraud and that he cannot himself rely upon a claim through his own fraud on the authority of Tinker v. Tinker. Moreover, that the respondent did not fall within the category of s. 74(3) of the Land and Conveyancing Law Reform Act, 2009, which provides that any conveyance of property may with the intention of defrauding a creditor is voidable by any person thereby prejudiced. S. 31 of the Registration of Title Act, 1964, provides that the register shall be conclusive evidence of the title of the owner of the land appearing on the register and such title shall not, in the absence of actual fraud, be in any way affected in consequence. The judgment in In Re. Mulhern, [1931] I.R. 700 is relevant, particularly insofar as it was then claimed that the Bank of Ireland had a charge on the property.
Submission on Discovery
9. Chapter 4 of William Abrahamson, James B. Dwyer and Andrew Fitzpatrick, Discovery and Disclosure, 2nd Ed., (Dublin 2013) summarises the relevance of documents and necessity for discovery. Until 1999, when O. 31, r. 12 of the Rules of the Superior Courts was first amended, the majority of discovery applications were decided solely on the basis of the requirement of relevance which was usually applied quite broadly. Very little express consideration was given to the necessity requirement until the amendment of the Rules in 1999 which prompted the Irish courts to consider the necessity requirement in more detail. This greater focus on whether discovery is necessary in any particular case has also led to greater judicial consideration of the relevance requirement and its application to discovery. The dictum of Morris J. in McKenna v. Best Travel Limited [1995] 1 I.R. 577, at p. 580 was relied on wherein it is stated:-
“It is in my view well settled that it is only documents which would support or defeat an issue that arises in the existing action which are required to be discovered or should be made the subject matter of an order for discovery. Unless the documents in question enable the plaintiff to advance her own case or damage the defendant’s case these documents are not discoverable.”
On the basis of this test it was submitted that evidence of the nature in respect of which an application for discovery and disclosure is being sought in this case after the relationship of the parties broke down is not admissible since it was after the time of the execution of the transfer, moreover; it was submitted that it was not relevant as per Romaine Estate v. Romaine (2001), 205 D.L.R. (4th) 320.
10. In oral submissions counsel for the applicant referred to the judgment of Costello J. (as he then was) in the case of Parkes v. Parkes, [1980] ILRM 137, in which it was held that the court should not assist a purchaser who has placed property in his wife’s name dishonestly and by means of an illegal act performed for the purpose of evading the law. Counsel for the applicant further opened the judgments in Gascoigne v. Gascoigne [1918] 1 K.B. 223 and Tinker v. Tinker [1970] 2 W.L.R. 331 referred to in the judgment of Costello J.
The Submissions on behalf of the Respondent
11. The respondent’s legal submissions set out a number of preliminary points, including:-
(a) That the respondent entered into the Deed of Transfer on 18th June, 2003, transferring the farm to the applicant for the purpose of protecting the family home, and this deed was not part of any agreement to permanently transfer ownership.
(b) Further reference is made to Deed of Separation in or around 2006 “solely for the purpose of assisting the applicant in obtaining a loan”.
(c) A divorce settlement which is alleged not to have been seen by respondent until recently shown same by his counsel and long descriptions of the manner in which the applicant received income from the farm “through the offices of the respondent” but that the respondent runs the farm and takes responsibility for it and has always done so.
12. The respondent’s submissions then proceeded at length to outline the law of discovery as explained by the Supreme Court in Ryanair Plc. v. Aer Rianta C.P.T. [2003] 4 IR 264, and the higher standard of proof of some objective necessity as a pre-condition to the grant of an order for discovery in Swords v. Western Proteins Limited [2001] 1 I.R. 324. It was submitted that the definition laid down in Compagnie Financière et Commerciale du Pacifique v. Peruvian Guano Co. (1882) 11 Q.B.D. 55 remains the universally accepted test of what is the primary requirement for discovery, namely the relevance of the documents sought. It was conceded in para. (g) of the submissions that a court may have regard to alternative means of proof which are open to the applicant for discovery. These may include the possible service of notices to admit facts, such as the respondent in the present case, which contests all the relevant on the pleadings and has formally objected to its opponent resorting to affidavit evidence can plausibly ask the court to deprive its opponent of access to documents which will enable it to improve matters which it disputes. It was submitted that the respondent (who is also the applicant for discovery) had sufficiently specified the categories of documents in respect of which he sought discovery. The respondent’s submissions at Part C proceed to deal with the presumption of advancement and refers to the principles set out in In re Eykyn’s Trusts (1877) 6 Ch. D. 115 and the judgment of Finlay P. (as he then was) in W. v. W. [1981] I.L.R.M. 202. It was submitted that the courts of this jurisdiction have identified a principle of equality of spouses within marriage under Articles 41 and 42 of the Constitution, and that in 1981 the common law defence of martial coercion available to a wife was abolished in State (Director of Public Prosecutions) v. Walsh, [1981] I.R. 412, and similarly in 1993 the rule of dependent domicile was abolished by W. v. W. [1993] 2 I.R. 476. It was stated that in the Supreme Court decision of McKinley v. Minister for Defence, [1992] 2 I.R. 333, the court held that the affect of the principle of equality of spouses was to extend the benefit of the common law rule to the wife. The majority of 3:2 took the view that the defect should not be remedied in a positive manner, while the minority thought the solution was to abolish the action entirely. It was further stated and submitted that the presumption of advancement relied upon by the applicant is incompatible with Article 5, Protocol 7 of the European Convention on Human Rights which states:-
“Spouses shall enjoy equality of rights and responsibilities of a private law character between them and, in their relations with their children, as to marriage during marriage and in the event of its dissolution. This article shall not prevent states from taking such measures as are necessary in the interests of the children.”
It was further submitted in the alternative that the presumption of advancement relied upon by the applicant can be rebutted.
13. The decision in R.F. v. M.F., [1995] 2 I.L.R.M. 572, was referred to. It was further submitted that the case Shell UK Ltd. v. Lostock Garage Ltd. [1976] 1 W.L.R. 1187 that the applicant could not rely on the equitable principle of the presumption of advancement if the applicant does not come to court with clean hands, and that in refusing to allow the respondent to negotiate with the bank, had acted unreasonably and unfairly.
14. The respondent’s submissions proceed to deal with issues regarding dispensing with consent to the sale of the family home pursuant to s. 4(2) of the Family Home Protection Act, 1976. It was submitted that it would be inappropriate to dispense with consent in the circumstances given that the respondent has not been unreasonable in withholding his consent to the sale of the family home in circumstances where the respondent is attempting to liaise with the bank. As in Somers v. W., [1979] I.R. 94, the onus for proving that the withholding of consent is unreasonable rests “fairly and squarely” on the spouse seeking an order dispensing with the consent. It was submitted that the respondent had made every effort to discharge the loans to the bank, which have now become a charge on the property. It was submitted that the applicant was actively attempting to sell the family home in which the respondent resides and has made no attempt to negotiate with the lending institution in relation to the debt. In the case of E.D. v. F.D. (Unreported, High Court, Costello J., 23rd October, 1980), Costello J. (as he then was) was satisfied that the husband’s behaviour was deliberate in not making any efforts to sort out his financial situation as it pertained to the family home and made an order transferring the family home to the wife in the circumstances.
Conclusions
15. The greater part of the respondent’s defence to the applicant’s claim to have consent to the sale of the family home dispensed with rests in his allegation that there was a resulting trust in the property. While counsel for the respondent in oral submissions emphasised the written submissions and added that the court should be reminded that in many situations where there is a registered title the court, notwithstanding in family law cases, enters upon inquiry in relation to where the “beneficial” ownership lies, and may adjust with the appropriate order, the circumstances of this case are not such that such an inquiry is necessary or relevant for the following reasons:-
(1) These inquiries occur where the parties have the property registered in the name of one spouse but where there is an express or implied agreement to pay down a loan through the efforts of both spouses, or where it is shown that the spouse not registered in respect of the land has made a contribution towards the purchase of the land or the construction of buildings on the land. The affidavits in this case show that this clearly was not the situation.
16. I am, therefore, of the view that the status of the registered ownership of the folio concerned should be governed by the principles set out in Tinker v. Tinker [1970] 2 W.L.R. 331 dealt with in the submissions. This is on the basis that the court should take, as a separate exercise, the position of the respondent as an honest man, who intended in the face of some apprehended (but not present) financial collapse of his business, to protect his assets for his wife. In these circumstances the authority of Tinker v. Tinker [1970] 2 W.L.R. 331 would indicate that there is a clear intention to be inferred that the respondent intended a clear gift and the presumption of advancement is not required to save it. Additionally, on the basis of the respondent’s submissions, through his first senior counsel, that the transfer of the lands comprised in the folio was to safeguard him against potential personal injuries claims arising for the spectacular accident, the court must look at the situation where it might not take the respondent as an honest man. In that instance, I am of the opinion that the court should not give him any relief by way of a declaration of resulting trust in respect of the transfer of the folio by reason of the application of the principles clearly set out in Parkes v. Parkes, [1980] ILRM 137. In consequence of these decisions it is not necessary to decide whether the presumption of advancement has any application.
17. In view of my conclusions in relation to the non-application of the doctrine of resulting trust, saving any interests of the respondent in the said folio, I am of the opinion that the extensive disclosure and discovery sought by him in this notice of motion is not necessary and is quite vexatious. Neither is any discovery relevant as it seeks material created only after the completed gift by transfer. Accordingly, the application for such discovery and disclosure should be dismissed. To argue that this discovery and records of payments allegedly made by the respondent are necessary to negotiate with the bank, it is important to realise that the respondent has held himself out as a business man at all times and is under an obligation under ss. 886 and 903 of the Taxes Consolidation Act 1997, to maintain records of such business. In these particular circumstances, the court should be most reluctant to alleviate the respondent’s neglect in relation to his obligations on record keeping and keeping his tax affairs in order, thereby compelling at this stage on onerous discovery and disclosure as sought by him.
18. Finally, there is a further ground for refusing discovery arising from what I consider to be the bad faith of the respondent proposing to negotiate with the bank in respect of a debt owed by the applicant by first enlisting the support of this Court by way of order declaring a resulting trust in the main asset of the applicant to meet (at least part) of the debt. When the respondent first appeared before me in relation to the application for consent to be dispensed with, he did represent to the court that he required a chance to negotiate with the bank and an adjournment was facilitated to him for this purpose. This anxiety to negotiate with the bank ultimately turned out to be potentially a subterfuge to deny the bank any effective remedy by being denied the possibility of recourse against the lands comprised in the folio, through same being declared to be in the ownership of the respondent, while at the same time having no privity of the contract for the debt or judgment in respect thereof against the respondent. The question must be asked if the court would have any influence to retrieve a situation where the respondent held the land but failed or refused to negotiate.
19. Having refused the respondent’s application for discovery and disclosure, the application for dispensing with consent without considerations of resulting trust in the property in favour of the respondent and without disclosure or discovery shall now proceed.