Promontoria [Finn] Ltd v Markham (Approved)

Factual and Procedural Background

This opinion concerns an application by Company A pursuant to section 123(b)(ii) of the Land and Conveyancing Law Reform Act 2009 and/or the Court's inherent jurisdiction for an order to vacate a lis pendens registered by the Defendant on Folio 56271F of the Register of Freeholders, County Dublin (the property), along with ancillary relief.

The Defendant commenced plenary proceedings against Company A and a receiver appointed by it on 15 July 2020 and simultaneously filed a lis pendens, which was registered on 22 July 2020. The plenary summons was never served on the defendants despite requests. Consequently, Company A issued this application by way of Originating Notice of Motion on 9 June 2022, as the original proceedings had not been served and thus the application could not be brought within those proceedings.

The lis pendens has been blocking the sale of the property by the receiver appointed by Company A, frustrating a contract for sale entered into on 25 June 2020. The Defendant opposes the application, relying on arguments including lack of unreasonable delay and disputing Company A’s status as a person affected by the lis pendens.

Legal Issues Presented

1. Whether Company A is a person affected by the registration of the lis pendens.
2. Whether there has been an unreasonable delay in prosecuting the action to which the lis pendens relates.
3. Whether the action is being prosecuted bona fide.

Arguments of the Parties

Company A's Arguments

• The lis pendens adversely affects Company A’s ability to deal with the property, including frustrating a sale by its appointed receiver.
• The Defendant has unreasonably delayed prosecution of the proceedings by failing to serve the plenary summons for over thirty months despite requests.
• The Defendant’s explanations for delay, including Covid-19 and health issues, are insufficient and illogical given he was able to issue proceedings and file affidavits.
• Company A is the registered owner of the mortgage over the property and holds rights including appointing a receiver and selling the property.
• Failure to provide attested copies of documents or allow inspection does not negate Company A’s status as a person affected by the lis pendens.

Defendant's Arguments

• The Defendant denies owing a debt to Company A and disputes the validity of the loan, mortgage, transfer, and appointment of receiver.
• The Defendant claims entitlement to inspect original documents under section 91 of the 2009 Act and alleges Company A has not provided attested copies.
• He contends that Covid-19, difficulty accessing courts, and underlying health issues prevented timely prosecution of proceedings.
• Raises a claim that a third party holds a charge that may supersede Company A’s rights.
• The Defendant did not make oral submissions at the hearing, relying on his affidavit.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Hurley Property ICAV v Charleen Limited [2018] IEHC 611	Interpretation of section 123(b)(ii) of the 2009 Act concerning unreasonable delay in prosecuting proceedings and the obligation to prosecute with expedition and vigour.	The court relied extensively on this authority to establish that the Defendant had a statutory obligation to prosecute expeditiously and that the delay here was unreasonable and unjustified.
Charleton v Hassett [2021] IEHC 746	Referenced regarding the validity of appointment of a receiver and related procedural issues.	The court noted the Defendant’s reliance on this case in contesting the validity of the receiver’s appointment, but did not find it determinative for the lis pendens issue.

Court's Reasoning and Analysis

The court began by confirming that Company A is a person affected by the registration of the lis pendens, as it adversely affects its ability to deal with the property, notably frustrating a sale by its receiver. The court rejected the suggestion that failure to provide attested copies or inspection rights negated this status, noting these are separate issues.

The court then focused on whether there had been unreasonable delay in prosecuting the proceedings. It found that the plenary summons was not served for over thirty months despite repeated requests and offers by Company A’s solicitors to accept service. The Defendant’s explanations—relating to Covid-19 and health issues—were found illogical and insufficient, especially as the Defendant had managed to issue proceedings and file affidavits during this period.

Applying the principles from Hurley Property ICAV v Charleen Limited, the court emphasized the special obligation on a person who registers a lis pendens to prosecute proceedings expeditiously and with vigour, beyond normal procedural requirements. The court concluded that the Defendant had failed to meet this obligation.

Because of the unreasonable delay, the court did not need to consider whether the proceedings were being prosecuted bona fide. The Defendant was on notice and participated in the hearing through affidavit evidence.

Holding and Implications

The court’s final decision is to VACATE THE LIS PENDENS registered on Folio 56271F.

The direct effect of this decision is to remove the legal burden on the property caused by the lis pendens, enabling Company A or its receiver to proceed with dealings concerning the property, including potential sale. No broader precedent was established beyond the application of existing statutory interpretation and case law concerning unreasonable delay in prosecuting proceedings linked to a lis pendens.