Justice delayed, lis pendens denied
Irish High Court vacates a lis pendens on application by receiver due to delay on the part of the Plaintiff.

Background

In the recent case of Ken Fennell v Darren Collins [2019] IEHC 572, Mr Fennell as receiver appointed over lands in County Galway brought an action pursuant to section 123 of the Land and Conveyancing Law Reform Act 2009 ("the 2009 Act") to have a lis pendens registered against part of the lands vacated. The nephew of the owner of the lands had registered the lis pendens when he issued his own legal proceedings in respect to the lands in May 2017 claiming an interest arising from an alleged promise. The receiver argued that his power of sale under the mortgage was being frustrated as a result of the lis pendens. 

Lis pendens

A lis pendens is a burden that can be registered against land under section 121 of the 2009 Act in circumstances where there is ongoing litigation over a property that can affect the interest of its owner by limiting the title or ultimately reduce its value.

Unreasonable delay

Simons J. relied on the Court of Appeal decision in Carthy v Harrington [2018] IECA 321 where the Court held that under section 123 of the 2009 Act  it was entitled to vacate a lis pendens at the request of a 'person affected' by it in the case of unreasonable delay. The Court of Appeal in that case stated that a litigant asserting a beneficial interest in or over encumbered property and who seeks to litigate his/her rights in relation to same should do so "with reasonable expedition". The Court also held that had the owners of the property owed considerable debt and the possibility that a charge holder who had validly appointed a receiver could be adversely affected by delays in litigation were compelling arguments for ensuring delay by the Plaintiff who has registered a lis pendens not be accepted by the courts.

Proceedings not prosecuted bona fide

The High Court found that the nephew had no reasonable explanation as to why his proceedings, which had been commenced in May 2017, had not progressed past the service of a plenary summons. Simons J.  found that the proceedings were not being prosecuted bona fide from the following:

  1. the unexplained delay in prosecuting the proceedings; 
  2. the family relationship between the plaintiff and the defendant; 
  3. the language of the plenary summons, with a disproportionate emphasis on restraining the sale of the lands; and
  4. the fact that the alleged promise of an interest in the lands post-dated the creation of the mortgage.

Despite being afforded an opportunity to explain the delay the plaintiff had not offered any reasonable explanation and the High Court found that intent of the proceedings appeared to be to frustrate the enforcement of the mortgage. An order vacating the lis pendens was made.

Key Points

Registering a lis pendens is a relatively simple and inexpensive procedure that does not need a court application. However as can be seen above the process for vacating a lis pendens is more burdensome as it requires an application to court. However, the recent case law shows that the courts are more alive to delays in prosecuting proceedings where a lis pendens has been registered and that where there is no reasonable explanation for such delay a court will be more likely to remove the lis pendens.

 

Contributed by: Simona Mulligan

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Fergus Doorly Partner

Craig Sowman Partner

Ruairi Rynn Partner

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