On the 26th February 2019, Justice Quinn delivered a judgment in ACC Loan Management Limited v Fryday & others, which was a significant step by the courts in combating the misuse of cautions and inhibitions by parties with the primary aim of disturbing the sale of well charged properties by judgment mortgagors.
The facts of this case, and in particular the chronology of the events, are of significance when considering Justice Quinn’s judgment.
- In 2009 ACC was awarded judgment in the sum of €1,301,344.44 against William and Vanda Fryday.
- In February 2011, this judgment was registered as a judgment mortgage over the Fryday property, namely five folios.
- On the 11th of January 2012, ACC issued a special summons seeking orders declaring the judgment debt to be well charged on the folios. This summons was opposed by the Frydays through two affidavits sworn in December 2012 and January 2014. Whilst a number of arguments were made by the Frydays in these affidavits, at no time did they suggest that they were not full owners of the property or that anyone else had an “interest” in the property.
- In April 2014 and December 2014, two inhibitions were registered on the property by Lavina Fryday and Richard Fryday who claimed in the proceedings that they had an “interest” in the properties.
- The plaintiff, having obtained a well charging prder and order for sale from the court, then made an application requesting the court to cancel these inhibitions which the plaintiff submitted was registered “in a concerted effort by the defendants and the notice parties to frustrate the plaintiffs ability to enforce its judgment”. The plaintiffs submissions further referred to the timing of the registrations and alleged “lack of candor” in the defence of these proceedings whereby the defendants failed to disclose the inhibitions or indeed the interests of any notice party in the properties.
- In reaching its conclusion, the court referred to the “central importance” of the above chronology and sequence of events referring to the plaintiff having suffered a judgment in 2009, the registration of a judgment in 2011, and that it was only when the special summons for the well charging proceedings were issued in 2012 and listed before the court in 2014 that any steps were taken by the notice parties to protect the proprietary interests now claimed. Having exercised its discretion pursuant to section 98 (3) of the Registration of Title Act 1964, the court ultimately ordered for the inhibitions to be cancelled having concluded that the inhibitions were lodged for the sole purpose of defeating the due enforcement of ACC’s well charging order.
As can be seen by the short summary of this case, there is a growing practice of debtors filing inhibitions, cautions and indeed lis pendens against well charged property which has the primary purpose of attempting to frustrate the charge holder form realising their security. This Fryday judgment shows the growing impatience of the courts to tolerate such mal fides. In contrast to the relatively straight forward process of obtaining a registered caution/inhibition/lis pendens, the steps required to vacate or cancel such burdens can, in the absence of consent, be both complicated and costly. It is clear that we need to not only consider the rights of property owners but also the bona fide rights of a judgment mortgagor who’s costs and frustrations have increased by the registration of fabricated property rights and interests by third parties. It is becoming apparent that the registration process for cautions, inhibitions and indeed lis pendens may need to be reviewed and updated in order to stem the growing tide of such practices.