Judgment of Mr. Justice Clarke, Chief Justice, delivered the 4th June, 2019
1. Introduction
1.1 It has long been the case that an equitable mortgage or charge could be created by the deposit of title documents. Such deposit has always been held to give the mortgagee a lien on the land to which the deeds relate as opposed to merely having a lien on the deeds themselves.
1.2 When the system of registration of title was introduced in Ireland by means of the Local Registration of Title (Ireland) Act 1891 ("the 1891 Act"), it was recognised (by s. 81(5) of that Act) that a lien could be created on registered land by the deposit of a land certificate. A similar provision was contained in s. 105(5) of the Registration of Title Act 1964 ("the 1964 Act"). Thus, the concept of the creation of a lien over registered land has a long history and even more ancient antecedents. However, the core question which arises in these proceedings is as to the status of that traditional, and informal, method of creating a lien over land in the light of the enactment of the Registration of Deeds and Title Act 2006 ("the 2006 Act").
1.3 For the purposes of these proceedings, it has been established that the defendant/appellant, Mr. Hannon, deposited a land certificate in respect of certain lands in circumstances such as would undoubtedly have given rise to a lien on the lands in question prior to the passage of the 2006 Act. The core net issue which arises for consideration on this appeal is as to whether it can be said that the plaintiff/respondent, (which, for reasons which will become apparent, was originally Ulster Bank Limited ("Ulster Bank"), but which is now Promontoria (Oyster) Designated Activity Company ("Promontoria")) retains the benefit of a lien by deposit in the light of the changes to the law which came about as a result of the 2006 Act. That issue is of general application and is not, to any significant extent, dependent on the facts of this particular case. However, it is appropriate to start by briefly outlining the facts.
2. The Facts
2.1 On 7 June 2006, Mr. Hannon deposited with Ulster Bank the land certificates for five folios of land in County Sligo as security for his indebtedness both present and future. It might be noted that in the High Court, Mr. Hannon argued that the certificates were in fact merely deposited for safekeeping. However, the High Court found against Mr. Hannon in that regard and Mr. Hannon did not seek to appeal this finding in the Court of Appeal.
2.2 Later, on 29 March 2010, Ulster Bank wrote to Mr. Hannon informing him of their intention to register a lien on the relevant folios, pursuant to s. 73(3) of the 2006 Act. The Property Registration Authority ("PRA") acceded to Ulster Bank's request. The burden on each folio is listed with an effective date of 27 November 2009. Mr. Hannon brought proceedings against the PRA seeking to set aside the registration of the liens in question. Those proceedings have not progressed in light of the decisions of the High Court and the Court of Appeal in these proceedings. If, as the courts below held, Promontoria has a lien by deposit in any event, the validity or otherwise of the registered liens are of little practical significance.
2.3 Be that as it may, it was noted by counsel for Mr. Hannon in their submissions that the validity or otherwise of the registration of the liens is not in issue in this appeal and that neither the High Court nor the Court of Appeal made any finding in that regard. However, it stands to reason that, if Mr. Hannon is successful in arguing that the system of a lien by deposit has, in fact, been done away with, then the question of the validity of the registration of the lien to which reference has been made may become of greater relevance.
2.4 It was in those circumstances that the then plaintiff, Ulster Bank, by special summons issued on 2 September 2009, originally brought proceedings before the High Court, seeking to enforce what it claimed to be its lien over the lands in question. Those proceedings were the subject of a judgment of the High Court in favour of Ulster Bank, followed by an unsuccessful appeal by Mr. Hannon to the Court of Appeal.
2.5 In passing, it should be noted that while Mr. Hannon was represented before the High Court, he represented himself before the Court of Appeal. However, when this Court granted leave to appeal ( Ulster Bank Limited v. Hannon [2018] IESCDET 107), the Court also indicated to Mr. Hannon that he could seek to avail of the scheme put in place by agreement between the Supreme Court, on the one hand, and the Council of the Bar of Ireland and the Law Society of Ireland, on the other hand, whereby solicitor and counsel may be nominated by the Chief Justice from a panel of practitioners who have agreed to accept instructions in cases where leave to appeal is granted to an unrepresented party. It should be recognised that those practitioners undertake that task without payment from the party concerned, although it remains open to them, in appropriate cases, to seek such order for costs as may be considered just in the light of the result of the appeal.
2.6 It should also be noted that, by global deed of transfer dated 19 December 2016, Ulster Bank sold the loan asset and related security of Mr. Hannon to Promontoria. An application was made before the High Court on 4 February 2019 substituting Promontoria as plaintiff/respondent, which application was granted. It is appropriate to turn first to the judgments of the High Court and the Court of Appeal.
3. The Judgments of the High Court and the Court of Appeal
3.1 The judgment of the High Court was delivered by White J. (Ulster Bank Ireland Limited v. Hannon [2014] IEHC 670). Having set out the relevant legal principles, White J. concluded as follows in relation to the effect of the 2006 Act on the system of a lien by deposit, at para. 31 of his judgment:-
"I am satisfied that the effect of Section 73 of the Registration of Deeds and Title Act 2006 was not to abolish equitable mortgages as such. Its effect subsequent to its commencement on the 1st day of January, 2007 was to make the creation of an equitable mortgage of registered land impractical, because the prior benefit of the physical possession of the Land Certificate, had the effect that no dealing could be completed in the Land Registry without the original Land Certificate being lodged."
3.2 The trial judge also rejected the argument raised by Mr. Hannon to the effect that the service of notice of the registration of the liens with the PRA had not been sufficient and not within the relevant time limits. However, the trial judge made no finding as to the validity or otherwise of the purported registration of the liens by Ulster Bank with the PRA.
3.3 Mr. Hannon appealed that decision to the Court of Appeal. In an ex tempore judgment delivered by Finlay Geoghegan J., the Court of Appeal (Finlay Geoghegan J., Irvine and Hogan JJ. concurring) (Ulster Bank v. Hannon (Unreported, Court of Appeal, Finlay Geoghegan J., 9th February 2017)) upheld the decision of the High Court. Finlay Geoghegan J. noted that under the 1964 Act, the deposit of land certificates for the purpose of giving security in respect of monies loaned had the effect of creating an equitable charge on the lands which did not need to be registered in the Land Registry as a burden in order to secure priority as against subsequent transactions. Finlay Geoghegan J. continued:-
"12. It appears to me that the above position explains the purpose of s. 73 of the 2006 Act, because the change which was being effected by this section was to now require the registration by a Bank of a lien in order to ensure continued priority of prior equitable charges which they held by reason of the deposit of Land Certificates.
13. It appears to me that Mr. Philips' submission is correct in law that there is nothing in the 2006 Act which indicates an intention or has the effect of abolishing or interfering with security created by the deposit of a Land Certificate as between the person who has deposited the Land Certificate and the person to whom it has been deposited and to whom it has been given as security for borrowings. Therefore, the trial judge was correct in my view, in determining that as between the Bank and Mr. Hannon, the deposit of the Land Certificates, which the trial judge held was for the purpose of giving to the Bank security, and creating an equitable charge over the lands to which the Land Certificate related, was not affected by the requirements of s. 73, including the provision in s. 73 that a Land Certificate would cease to have effect after three years. The Land Certificate does cease to have effect, but as Mr. Philips submitted, the section does not in any way indicate that an equitable charge which had been created by a deposit of a Land Certificate would in any way cease to be valid or have effect. Therefore, in my view the trial judge was correct in granting the well charging declaration which he granted."
3.4 Finlay Geoghegan J. noted that White J. had made reference to the existence of proceedings brought by Mr. Hannon against the PRA concerning the registration of the liens. Taking that into account, she concluded at para. 16 of her judgment:- "For reasons that I have given in this judgment, it appears to me that irrespective of the outcome of those proceedings the plaintiff Bank is entitled to the declaration granted by the High Court, but I do wish to emphasise that I am not expressing any view on the validity of the purported registration of the lien… For those reasons I would dismiss the appeal and uphold the declaration made by the High Court."
3.5 Against that judgment of the Court of Appeal, Mr. Hannon sought and was granted leave to appeal to this Court. The question of law identified in the determination of this Court by which leave was granted (Ulster Bank Ltd v. Hannon [2018] IESCDET 107) specified the question of law which arose in the following terms:- "Has the Registration of Deeds and Title Act 2006, and in particular s73 thereof, abolished equitable mortgages by deposit of land certificates or other title deeds with a view to securing borrowings and what is the effect of that legislation in terms of the ranking of priorities where several charges are created over land including by the deposit of land certificates or title deeds?"
3.6 It is necessary to make two points in relation to the issue as thus described. First, it is clear that the issues which arise in this case are concerned only with liens over registered land and thus no questions arise now concerning unregistered land.
3.7 Second, it was made clear by the parties that, in reality, no issue of priority between any interest which Promontoria might have as the holder of a lien and any other interest in the property in question actually arises in the circumstances of this case. Therefore, the only issue which arises on this appeal is as to whether Promontoria retains the benefit of a lien by the deposit of the relevant land certificate originally effected in favour of Ulster Bank. If it does so retain, then full effect will have to be given to that interest in the lands and the decisions of the High Court and the Court of Appeal will be upheld. If it does not, then there may be other issues which will arise concerning any entitlement which Promontoria may assert. No such issues were before this Court, for the only basis on which Promontoria claimed to be entitled to relief in these proceedings was as the holder of a lien by deposit. But it is clear that if the Court were to hold that the concept of a lien by deposit of land certificates in respect of registered land has not survived the coming into full force of the 2006 Act, then any interest which Promontoria might have argued it held by virtue of being the holder of a lien by deposit of a land certificate would have been determined not to exist and no questions of priority would, therefore, arise.
3.8 It follows that the sole question for determination on this appeal is as to whether, as a matter of the proper construction of the 2006 Act, it can be said that any entitlement which a party might have formerly held in respect of registered land, as the holder of a lien by virtue solely of the deposit of a land certificate, ceased to have any force by the end of 2009.
3.9 Against that background, it is appropriate to start an analysis of the legal issues which arise with a consideration of the relevant statutory provisions.
4. The Statutory Provisions
4.1 The 1964 Act made provision for the creation of a lien by deposit of a land certificate. In this regard, it replicated the terms of s. 81 of the 1891 Act. Section 105 of the 1964 Act provided:-
"(1) Subject to general rules, the land certificate or certificate of charge granted on the registration of an owner of land, or of a charge on land, shall be produced to the Registrar on any subsequent transaction in relation to the land or charge requiring registration, as the case may be, and shall be either cancelled or so altered as to be brought into conformity with the register.
(2) Subject to general rules, the Registrar may, on the application of the registered owner, or of any person appearing to the Registrar to be entitled to require the production of a land certificate or certificate of charge, order any person in whose custody the certificate may be to produce the certificate to the Registrar for the purpose of any dealing with the registered land or charge which can be effected without the consent of the person having the custody of the certificate.
(3) The production of a certificate under this section shall not alter the right to the custody of the certificate, and shall not affect any lien of any person thereon.
(4) A land certificate or certificate of charge shall be prima facie evidence of the several matters therein contained.
(5) Subject to any registered rights, the deposit of a land certificate or certificate of charge shall, for the purpose of creating a lien on the land or charge to which the certificate relates, have the same effect as a deposit of the title deeds of unregistered land or of a charge thereon."
4.2 Section 73 of the 2006 Act abolished land certificates and certificates of charge and provided that the PRA would cease to issue such certificates under the 1964 Act. Section 73(1) provides:- 4.3 Section 73(2) provides:- "Subject to subsection (3), land certificates and certificates of charge issued before the commencement of subsection (1) and not already cancelled cease to have any force or effect on the expiration of the period of 3 years after the commencement of this subsection."
4.4 Section 73(3) then provides:- "The following provisions have effect during the period referred to in subsection (2):
(a) the Authority shall cause adequate notice to be published of the coming into operation of subsection (2) and of its implications for persons to whom land certificates or certificates of charge have been issued and for any others who may be affected, including persons holding a lien on registered land or a registered charge through deposit or possession of those certificates;
(b) a holder of such a lien may apply to the Authority for registration of the lien in such manner as the Authority may determine;
(c) the application shall be on notice by the applicant to the registered owner of the land or charge and be accompanied by the certificate concerned;
(d) the lien is deemed for the purposes of section 69 of the 1964 Act to be a burden which may be registered as affecting registered land;
(e) the Authority shall register the lien without charging any fee or duty for doing so."
4.5 Section 73 of the 2006 Act came into operation on 1 January 2007 (Registration of Deeds and Title Act 2006 (Commencement) (No. 2) Order 2006 (S.I. No. 511 of 2006)). Thus, the three year transition period referred to in that section ran from 1 January 2007 to 31 December 2009.
4.6 Finally, reference should be made to subss. (4) and (5) of s. 73 which provide:-
"(4) Notwithstanding subsection (2), where the holder of a lien has suffered loss by reason of not having applied to the Authority during the period referred to in subsection (3) for registration of the lien as a burden affecting the registered land, the holder may apply to the court for compensation for the loss, on notice to the Minister for Finance.
(5) On the application the court may, if satisfied—
(a) that the applicant is the holder of the lien concerned,
(b) that the holder was prevented from applying to the Authority under subsection (3) by reason of being under a disability (within the meaning of section 48 of the Statute of Limitations 1957) or of other exceptional circumstances and has thereby incurred financial loss,
(c) that the remedies available for the recovery of the loss have been exhausted, and
(d) that it would be manifestly unjust for the holder to suffer the loss,
declare that the holder is entitled to compensation for the loss and determine the amount of the loss."
4.7 Against that backdrop, it is necessary to analyse the issues which arise and the position of the parties on those issues.
5. The Issues and Positions of the Parties
5.1 The essential case which is made on behalf of Mr. Hannon begins with reliance on the general principle that, in respect of registered land, the register is normally conclusive so that interests which are not registered cannot generally be recognised. However, it is accepted that the principle just identified is not absolute. In the particular context of this case, it is clear that there were, under the 1964 Act, statutory provisions which gave recognition to the existence of security created by deposit even though there would not be any mention of the existence of that security on the register. It is also true that other unregistered interests can affect registered land.
5.2 However, the starting point for the argument put forward on behalf of Mr. Hannon is that it was those statutory provisions (latterly, s. 105(5) of the 1964 Act) which permitted the creation of a lien by deposit of title deeds. On the basis of that argument, it is suggested that those provisions created an exception to the general proposition that it was only matters which appeared on the register of titles which were recognised as affecting the registered land concerned.
5.3 The next stage in the argument relies on the fact that s. 105(5) of the 1964 Act was discontinued from 31 December 2009, by virtue of s. 73(1)(b) of the 2006 Act. Thus, it is argued, the underlying basis for the regime for the deposit of land certificates for the purposes of creating a lien disappeared as of that date.
5.4 Next, it is said that the law as it was prior to the 2006 Act made clear that the lien, being of its nature derived from the holding of a land certificate, required the continuing retention of the relevant land certificate in order that the lien might continue in existence ( Re Driscoll's Estate (1867) 1 I.R. Eq 285). The logic behind that case law was that the holding by the mortgagee of the land certificate effectively prevented a sale or other disposition of the land in question in a bona fide manner, for it would have been necessary to produce the land certificate in the context of a transfer of an interest in the lands in question.
5.5 On that basis, it is said that the abolition of land certificates, which came about by reason of the provisions of ss. 73(1) and (2) of the 2006 Act, had the effect of removing the rationale for the lien by deposit of land certificate regime although it is not suggested that the legislation in question had any effect on the creation or continuance of equitable mortgages by deposit of title deeds in relation to unregistered land.
5.6 It is said that such an analysis is wholly consistent with, and supported by, the provisions of s. 73(3) of the 2006 Act, which created a three year time limit for the legislation of a lien by deposit as a registered lien on the folio. Thus, it is argued that a clear legislative intent can be identified, not least by the combined effect of the removal of the underlying provisions of the 1964 Act (which, it is said, permitted the creation of a lien by deposit) within three years of the date of the legislation (that is, by the end of 2009), by the abolition of land certificates as of that date and by affording that same period of time to the holders of land certificates as equitable security to register their interest as a lien. In substance, it is said that the legislative intent was that the pre-existing system of lien by deposit in the case of registered land was to disappear in three years but that mortgagees, having the benefit of such liens, had the same period within which they might register their interest as a lien on the land.
5.7 In addition, it is said that this interpretation of the legislative intent is supported by the provisions of ss. 73(4) and (5) of the 2006 Act, which allow the holders of liens, who do not register during the relevant three year period, to obtain compensation from the State in certain circumstances. It is said that, if the lien by deposit system were to have been intended to continue unaffected by the 2006 Act (insofar as existing liens were concerned), there would have been no purpose in creating such a compensation scheme.
5.8 In response, Promontoria questions whether Mr. Hannon is correct to argue that the sole basis for the recognition of a lien by deposit of a land certificate is to be found in statute. It will be necessary to consider that issue in more detail.
5.9 Building on that first submission, Promontoria then goes on to argue that, if it be correct in submitting that a lien by deposit in respect of registered land is not a creature of statute, it does not matter whether such liens are consistent or inconsistent with the scheme of the 1964 Act for, it is said, such liens operate on a standalone basis.
5.10 On a similar basis, Promontoria argues that questions concerning the proper interpretation of the 2006 Act likewise are not relevant. However, as a fall back position, it is argued that the interpretation urged on behalf of Mr. Hannon would be contrary to the presumption against retrospective legislation.
5.11 Finally, it is argued that s. 73 of the 2006 Act, which, as already noted, provides for compensation in certain circumstances, on its proper construction only relates to persons who are the holder of a lien and thus, it is said, does not provide support for the proposition that the right to a lien is lost if it is not registered within three years of the operation of the 2006 Act.
6. Discussion
6.1 As the argument developed at the oral hearing, it became clear that both sides placed heavy reliance on what were said to be fundamental propositions which were argued to support their case and undermine their opponents.
6.2 For Mr. Hannon, it was accepted that the existence of an equitable mortgage by deposit of title deeds had a long history which predated the 1891 Act. However, it was said that the creation of the system of registered land which was brought about by the 1891 Act gave rise to a significantly different regime in respect of the ownership of interests in land which came to be registered under the provisions of that Act. On that basis, it was argued that a fundamental aspect of the system of registration of land was that persons should be able to identify the owner of any interest in the land concerned by consulting the register. While it was acknowledged that there were exceptions to that general proposition, it was argued that such measures should be seen as exceptions to a general rule. Viewed in that way, it was suggested that it may well have been considered impossible to ignore the well established practice of the creation of an equitable mortgage by deposit, which was then very prevalent in Ireland, so that, on the basis of Mr. Hannon's argument, the provision contained in s. 81 of the 1891 Act, and replicated by s. 105 of the 1964 Act, was necessary so as to enable a system analogous to that of equitable mortgage by deposit to continue in respect of registered land after the 1891 Act came into force.
6.3 On that basis, it was argued that the 1891 Act brought about an entirely new system for the recognition in law of the ownership of land in Ireland, insofar as it related to land which might come to be registered under the terms of the legislation in question.
6.4 It has sometimes been said that the register should, therefore, "mirror" the actual ownership of the land. By this it is meant that a person who consults the register ought to be able to know who owns what interest in the land and who may have the benefit of charges or burdens over the land.
6.5 It was, however, accepted that this principle of "mirroring" could not be said to be absolute, not least because the 1964 Act itself (in s. 72) provided for a range of "burdens" which were capable of affecting land, even though not registered.
6.6 However, in essence, the argument made on behalf of Mr. Hannon was that the default position was that only those interests in or over land which were registered were recognised, subject to express and, it was argued, limited exceptions. On that basis, it was argued that the decision by the legislature in 1891 to expressly allow for the continuance of the regime relating to the creation of an equitable mortgage by deposit amounted to a conscious exception to the "mirroring" principle. However, it was said that it remained an exception to a general principle of high value and that its continuance required that the legislative basis for the exception itself continued in force.
6.7 On the other side of the equation, counsel for Promontoria suggested that a decision to make ineffective all existing liens by deposit in respect of registered land would have amounted to retrospective legislation and would have required clear statutory language. The basis of that argument started with the undoubtedly correct proposition that, immediately prior to the enactment of the 2006 Act, the holders of liens by deposit had a potentially valuable property right which could operate as security for any monies owing and might, subject to the value of the land, the amount of the debt and the potential presence of other charges over the land which had priority, result in a person being able to recover a debt which would have been, in practice, irrecoverable in the absence of the lien concerned.
6.8 On that basis, it was argued that any legislative measure which might be said to have removed that property right would require clear language not said to be present in the 2006 Act. Indeed, as one member of the Court observed in the course of the oral hearing, the measures which are said to have, in effect, abolished the lien by deposit in respect of registered land, are to be found in a part of the 2006 Act headed "Miscellaneous".
6.9 There is undoubtedly some substance in both of the general propositions put forward. The underlying reform brought about by the registration of title system was designed to create a registry which, at least in general terms, would be considered to be "conclusive evidence" of all matters of title, thus "mirroring" the ownership which would have existed outside of the registration system.
6.10 It is equally true that a court will be required to lean against retrospective legislation and will only construe a statute in a manner which may be retrospective where the language of the legislation concerned clearly required such retrospective effect. Indeed, in that context, it should be observed that there may be circumstances where retrospective legislation may be found to represent a disproportionate interference with property or other rights and thus be found invalid as being inconsistent with the Constitution unless a constitutionally permissible interpretation can be placed on the legislation in question.
6.11 However, the recognition of the fact that both of the principles identified and relied on by the respective parties have some application to the resolution of the issues which arise on this appeal does not provide any ready answer to the key issue which falls for determination, for the two principles pull in opposite directions. On that basis, it is necessary to analyse the 2006 Act in greater detail in order to ascertain what assistance may be obtained in answering the key issue of principle which arises in this case.
7. What does the 2006 Act do?
7.1 There can be little doubt but that the 2006 Act is designed to represent a further move towards a universal system of land registration in which all, or almost all, interests in land or entitlements which run with land can be definitively determined by consulting the register. For example, it is now necessary to register for the first time any property, not previously registered, which is the subject of a transfer of ownership. While much agricultural property, or land which was once in agricultural use, has long since been registered because of the requirements of Victorian land legislation, the registry of deeds system has remained prevalent in respect of urban land. However, the fact that even urban land will gradually become registered, as the obligation for first registration on transfer comes into play, will greatly extend the proportion of land within the State which is registered.
7.2 Next, it is important to note that, whatever may be the appropriate inferred consequences, it is clear that the 2006 Act has abolished land certificates. In the past, the possession of a land certificate formed a vital part of the title to registered land, for it was necessary to lodge the land certificate in respect of dealings in the land in question. It followed that the absence of a land certificate greatly impaired the ability of the registered owner to deal with the relevant land. On any view, therefore, there was a particular logic in treating the deposit of a land certificate as security, in much the same way as the deposit of the title deeds to unregistered property created a security over that property. Without the title deeds, the owner of unregistered land would have found it almost impossible to effect a bona fide transfer of an interest in the lands concerned. Without a land certificate, the registered owner of registered land would have been in a similar position.
7.3 While it is undoubtedly true that some of the authorities speak of the equitable mortgage by deposit as being based on the agreement between the parties to create security over the land in question which is evidenced, or partly performed, by the deposit of title deeds, it is nonetheless the case that the existence of the title deeds or a land certificate formed an important part of the exercise.
7.4 It seems to me, therefore, that while it cannot be said that the termination of land certificates is decisive, that measure represents an important part of the overall analysis. In that context, it is appropriate to note that s. 73(2) of the 2006 Act provides that all existing land certificates are to "cease to have any force or effect" at the end of the relevant three year period. It is not just, therefore, that no new land certificates are to be issued but rather that all existing land certificates ceased to "have any effect" on the expiry of that period. It will be necessary to return in due course to some of the case law relied on by Promontoria to suggest that there are exceptions to the general proposition that it was necessary to continue to hold the relevant land certificate in order to retain a lien by deposit, but it may well be said that, in any event, there is a significant difference between acknowledging that there may be circumstances when holding a land certificate is not considered vital to the continuance of a lien because of the particular circumstances of the case, on the one hand, and a situation, such as that brought about by the 2006 Act, whereby, with effect from the end of 2009, a land certificate becomes what might reasonably be characterised as a piece of paper with no legal effect and only of historical interest.
7.5 Next, it is necessary to consider the reasons behind the three year transitional period specified in the 2006 Act. It is clear that this same transitional period both identifies the end point at which land certificates are to cease to have effect but also defines the period during which the holder of a lien by deposit has the possibility to have their lien over the land registered. Essentially, counsel for Mr. Hannon argued that this represents a coherent scheme which simply provides for the conversion of a lien by deposit into a registered lien, with the three year period in question being designed to afford a reasonable opportunity to the holders of liens by deposit in respect of registered land to put the lien registration process in train.
7.6 There can be little doubt but that the legislation provides that opportunity. In my view, the first point that derives from that analysis is that it is not appropriate to characterise the interpretation sought to be placed on the legislation on behalf of Mr. Hannon as being one which truly would operate in a retrospective way. A party who held a land certificate as equitable security undoubtedly had a valuable right at the time when the 2006 Act came into force. There was, obviously, the possibility that the right in question might be lost but only if the party concerned did not go through the relatively straightforward procedure of registering their lien on the lands in question. It follows that the proper characterisation of the situation which might be said to have been brought about by the 2006 Act, if it is to be interpreted in the way urged on behalf of Mr. Hannon, is that it did not retrospectively interfere with the underlying right which Ulster Bank (or Promontoria, as their successor) enjoyed. Rather, that right continued in existence for three years and continued thereafter, provided only that the relevant party registered their entitlement as a lien on the lands in question. It is, in my view, an overstatement to suggest that an existing right has been retrospectively removed, when the only requirement of the legislation which is said to remove it is that an affected party must register their interest in order for it to continue to be enforceable. That analysis is not necessarily decisive but it does, in my judgment, diminish the strength of the argument which suggests that the legislation can properly be said to remove rights and thus could only do so if that intent was expressed in clear language. Rather, the legislation regulates, in what I think can fairly be described as a light touch way, the entitlements of holders of liens by deposit by requiring registration.
7.7 It is now necessary to turn to those cases relied on by Promontoria which concern the question of whether it was always necessary to deposit the land certificate to give effect to an equitable lien. These cases are said to be of relevance having regard to the fact that, undoubtedly, all land certificates ceased to have any legal effect as of the end of 2009.
7.8 There can be little doubt but that there was ample authority for the proposition that, in respect of unregistered land and prior to the creation of the system of registration, it was not always necessary that all of the title deeds had to be deposited so as to create a valid equitable mortgage. Put another way, it was unnecessary that the deeds deposited showed a good title to the property in question. See, for example, Ex parte Wetherell (1805) 11 Ves. Jr. 398. That principle was also extended to matters such as copies of court roles relating to copyhold estate on the basis that, as explained in Goodwin v. Waghorn 4 LJ (N.S.) Ch. 172, such copy "is the best evidence of title that the party has the power of depositing".
7.9 It is next necessary to look at those cases, such as Mason v. Morley (No. 2) (1865) 34 Beav 475 and Baskett v. Skeel (1863) 11 WR 1019, in which it has been held that an equitable mortgage (in both cases, pre-dating the registration of title system) continued to exist notwithstanding the fact that the deeds deposited were not retained. In fairness, counsel for Promontoria accepted that Mason v. Morley did not provide great assistance, for in that case the mortgagor re-took the deeds without consent. However, counsel did rely on Baskett , in which case the mortgage deeds had been lost so that the mortgagee by deposit no longer had control of them.
7.10 Interesting and all as much of that old case law is, it does not seem to me to provide particular assistance on the issue with which this Court is now concerned.
7.11 While there was some debate between the parties as to whether it could be said that the original statutory provision, being s. 81(5) of the 1891 Act, created a lien by deposit of a land certificate (as opposed to that system operating on a standalone basis), it does not seem to me that this question is particularly important for the resolution of the appeal. The question is not as to whether the section in question created a lien by deposit of land certificate but rather whether the general structure of the system of registration of land brought about by the 1891 Act might have led to difficulties in recognising a lien by deposit of a land certificate, were it not for the provision in question. On that basis, it may well be that a system for the registration of land would not, in and of itself, have done anything to prevent the operation of liens or equitable mortgages by deposit in respect of such registered land, in parallel to the then well established system for the creation of similar equitable mortgages in respect of unregistered land. But it seems to me that, at least in part, s. 81(5) of the 1891 Act and its successor, s. 105(5) of the 1964 Act were intended to remove any doubt about the continuing validity of equitable mortgages by deposit in relation to land which was, from the 1891 Act on, to become registered. This is so against a backdrop of it being the case that it was at least intended in general terms that interests in land which had become registered would themselves, by and large, be registered on the folio itself.
7.12 But, even if that historical view is incorrect, it again does not seem to me to be decisive. Clearly, if it were to be the case that the legislative provisions in question were necessarily required to allow for the continued existence of the equitable mortgage by deposit system in respect of registered land, then the repeal of the relevant provisions of the 1964 Act would equally necessarily lead to the conclusion that liens by deposit of land certificates could not have survived beyond the three year transitional period specified in the 2006 Act. But the reverse is not the case. Even if the relevant provisions of both the 1891 Act and the 1964 Act were not necessary to allow for the equitable mortgage by deposit regime to continue in respect of registered land, notwithstanding the creation of the system of registration of title, that does not answer the question of whether the 2006 Act may, nonetheless, as a matter of statutory interpretation, be held to have brought the system in question to an end.
7.13 Furthermore, it does not seem to me that those cases, which undoubtedly support the view that not all title deeds needed to be deposited to create an equitable mortgage by deposit and that the retention of title deeds, at least in some circumstances, was not considered essential to the continuation of an equitable mortgage by deposit, are decisive.
7.14 Insofar as the case law relied on established that it was not necessary that all title deeds be deposited, it must, of course, be noted that there is, in reality, only one document which evidences title in respect of registered land, being the land certificate itself. Anything else could not, in the words used in Goodwin v. Waghorn , be "the best evidence of title that the party has the power of depositing".
7.15 Likewise, those cases which established that continuing possession of the title deeds was not always essential do not seem to me to be particularly apposite to the situation which now pertains, being that the document of title deposited (that is, the land certificate) has, by statute, been determined to be no longer of any legal consequence. There is, in my judgment, a significant difference between saying, on the one hand, that someone who has simply lost title deeds to unregistered land can retain an otherwise valid interest as an equitable mortgagee and, on the other hand, saying that a person is in a like position where the person concerned has actually retained a land certificate which has, by law, become a document of no legal value and cannot, therefore, properly be described as a document of title.
7.16 Against the backdrop of that analysis, it seems to me that the key question does come down to one of statutory interpretation. In that context, one question which came into particular focus at the oral hearing was as to whether there was any explanation for certain of the provisions of the 2006 Act which was consistent with the interpretation urged on behalf of Promontoria, being that existing liens by deposit of land certificates in respect of registered land were to continue in existence. Counsel for Promontoria argued that the sections relied on by Mr. Hannon were capable of being seen in the context of retaining priority. In respect of the compensation regime set out in s. 73 of the 2006 Act, it was argued that this could have effect in a case where a person, perhaps under a disability, did not in fact register their lien within the relevant three year period. In such a circumstance, it would, as counsel argued, have been possible for the registered owner of the land in question to sell the relevant land to a third party in circumstances where it would, of course, have no longer been necessary to produce the land certificate which had been deposited. On that basis, it is possible to envisage a bona fide purchaser for value without notice being in a position to acquire a clean title to the lands in question in a manner which defeated the interest of the mortgagee by deposit.
7.17 Promontoria suggests that two points follow. First, as already noted, attention is drawn to the fact that s. 73(5)(a) refers to the applicant in question as being the holder of the lien. This is done by the use of the word "is". It is said that the use of that language implies that the benefit of the lien subsists at a time which, by definition, postdates the expiry of the three year period. That argument is said to support a construction of the statute which is consistent with the lien continuing after the three year period.
7.18 But, in addition, it is said that the analysis just referred to provides an explanation for the practical efficacy of the section, even though the lien in question can be said to have continued in existence. There is, I think, some merit in that latter argument. It does point to certain practical circumstances where, even if the lien is taken to continue to exist after the relevant three year period has expired, the holder of the lien might lose the benefit of that lien precisely because the physical object which represented the lien (being the deposited land certificate) ceased to have any legal effect so that an effective disposition of the land could occur to a bona fide purchaser, without the holder of the lien being aware of it. Obviously, if the holder of the lien by deposit had registered their lien within a three year period, then no such difficulty could arise, for the lien would appear on the folio and the sale would clearly be subject to that lien. But if, for the sort of reasons identified in the section, the lien was not registered, then it is possible that the benefit of it might be lost by a transaction involving a bona fide purchaser for value so that it might be considered just, in such circumstances, to award compensation.
7.19 For those reasons, I do not consider that the existence of a compensation scheme in itself necessarily supports the argument put forward on behalf of Mr. Hannon. It will be necessary to return to the first point, being the use of the word "is" in s. 74(5) of the 2006 Act, in due course.
7.20 However, I do consider that the abolition of land certificates provided for by s. 73 and, in particular, the language used in subs. (2), being that all certificates not already cancelled are to cease to have "any force or effect", must be given significant weight in the overall interpretation of the effect of the 2006 Act. While it is, of course, the case, for the reasons already analysed, that the deposit of all title deeds and their retention was not necessarily essential to the continuance of an equitable mortgage in all circumstances, nonetheless the complete nullification of the status of the land certificate on the expiry of the relevant three year period seems to me to be of a different character altogether. However one characterises the legal basis for the creation of a lien by deposit in respect of registered land, it does require the deposit of something representing evidence of title. Where that which has been deposited has, by statute, been deemed to be no longer of any legal effect whatsoever, it seems to me that it is difficult to sustain the view that the lien by deposit can survive.
7.21 I have earlier indicated the reasons why I do not consider it appropriate to characterise the effect of the 2006 Act as being retrospective. Rather, it is appropriate to say that the existing interests of a holder of the lien in respect of registered land by deposit of a land certificate continue beyond the relevant three year period but subject only to registration as a lien. Viewed against that characterisation, I do not consider that the retrospectivity argument carries significant weight. It is not, in my judgment, sufficient to outweigh the clear statutory intent that the land certificate is to cease to have any legal effect for any purpose which, in my view, carries with it a clear implication that a lien by deposit of such certificates can no longer, in the absence of registration, give security over the lands concerned.
7.22 Viewed in that way, it seems to me that the 2006 Act provides for a coherent statutory scheme. The overall approach of the legislation is to move further towards all land being registered and all interests in land being likewise registered. In neither respect is the movement absolute, but the direction of movement is clear.
7.23 Viewed against that general backdrop, the three year period which, in the events that happened, came to a close on the last day of 2009, fulfils two connected purposes, both of which are designed to allow for the orderly transposition of liens by deposit of land certificates into registered liens while affording a reasonable period to persons holding such deposit to protect their interests by giving effect to the registration of a lien. It is true that the use of the word "is" in s. 73(5) does somewhat point to an opposite view, but that issue is not, in my judgment, sufficient to displace what seems to be the clear statutory intent. All liens by deposit in respect of registered land are to cease to have effect at the end of 2009, but an appropriate system to protect the interests of those holding such liens is put in place by giving adequate time to allow for the registration of such liens over the lands.
7.24 In those circumstances, and for those reasons, I am satisfied that counsel for Mr. Hannon was correct in arguing that the effect of the 2006 Act was not only to preclude the creation of new liens by deposit but also to extinguish any such liens with effect from the end of 2009 and to do so in proportionate circumstances, where the holders of such liens were given a perfectly adequate period within which to protect their interests by the registration of the lien. Indeed, in that context, although I do not consider it to be a particularly weighty point, it is worth observing that it might well be considered a somewhat strange result if all new liens by deposit of land certificate were precluded but that all existing ones were to continue in existence, practically unaffected, while at the same time providing for a means of protecting such interests by the registration of such liens.
8. Conclusions
8.1 It is important to emphasise that, for the reasons set out earlier in this judgment, the only issue which properly fell for decision on this appeal was the question of whether, having regard to its proper construction, the 2006 Act had the effect of terminating the existence of liens by deposit of land certificates from the end of 2009. This judgment is not concerned with whether any purported registration of a lien over relevant lands by Promontoria is valid or whether Promontoria has security over such lands on any other basis. The High Court and the Court of Appeal were both satisfied that the lien by deposit had not ceased to exist and, being otherwise satisfied that a valid lien existed in this case, made the appropriate orders recognising Promontoria's position as the beneficiary of a lien over the lands the subject matter of these proceedings.
8.2 However, for the reasons set out in this judgment, I am of the view that the proper construction of the 2006 Act is such that it must be taken to have been the statutory intention to bring, by the expiry of the relevant three year period, a complete end to the system of lien by deposit of a land certificate in respect of registered land. On that basis, I am satisfied that the appeal must be allowed and that it must be determined that Promontoria does not have the benefit of a lien by deposit over the lands the subject of these proceedings.
8.3 I would emphasise that nothing in this judgment should be taken as expressing any view on whether there may or may not be any other means open to Promontoria to pursue a claim against Mr. Hannon based on having security over the relevant lands. That is a matter to be determined in any other proceedings which Promontoria may be advised they can maintain. I would, therefore, propose that the appeal be allowed and that counsel on both sides be heard further as to whether any additional orders are required.
