knowledge 9 November 2018 |

When is Delay Unreasonable for the Purposes of Applying to Vacate a Lis Pendens?

Purpose and effect of a Lis Pendens

The registration of a lis pendens is simply a means of notifying any potentially interested parties as to the existence of proceedings where a claim is being made to an estate or interest in land in such proceedings.  However, such a registration can have a chilling effect on the ability of a person to sell or otherwise deal with their property.  

Jurisdiction to vacate a Lis Pendens

While the jurisdiction of the court to vacate a lis pendens where an action has not been prosecuted bona fide is a long standing one¹, the enactment of the Land and Conveyancing Law Reform Act 2009 (the “2009 Act”) saw an extension to the courts’ jurisdiction. This Act now allows an order to vacate on the basis of unreasonable delay to be made under section 123 (b) (ii).  The recent decision of the High Court in Hurley Property ICAV v Charleen Limited ² provides welcome guidance as to what constitutes “unreasonable delay” for the purposes of section 123 (b) (ii) of the 2009 Act.

Issue before the court

An application was brought by Hurley Property ICAV (“HPI”) to vacate a lis pendens registered on foot of proceedings issued by the respondent, Charleen Limited (“CL”) against HPI and a number of other defendants.  While evidence of protracted dealings between HPI and CL relating to the proposed sale of a freehold interest in part of the Athlone Town Centre during the period 2015 – 2017 was before the court, the court confined its consideration of unreasonable delay to the period between the commencement and service of the proceedings.  

CL issued proceedings on 18 May 2017.  A lis pendens was registered on the relevant folios on 3 August 2017.  Solicitors for HPI wrote to solicitors for CL on 16 August 2017 requesting details of (a) the identity of the land over which CL was claiming an estate or interest, (b) the nature of the estate or interest being claimed by CL and (c) the basis of such claim.  The letter confirmed authority to accept service of proceedings and requested service of proceedings “forthwith”.  Further correspondence was exchanged including three letters from solicitors for HPI between 25 August 2017 and 29 September 2017 seeking service of the proceedings, however the proceedings were not served until 24 November 2017, four days after HPI had issued (1) an originating notice of motion seeking the vacating of the lis pendens and (2) an application to have the matter admitted to the Commercial Division of the High Court. 

The court stated that while the question of unreasonableness in the context of a delay in prosecuting proceedings depends on the context and particular facts, the policy of section 123 (b) (ii) of the 2009 Act and the intention of the Oireachtas was clear.  The court further stated a person who has commenced proceedings and registered a lis pendens would be required to act with “particular expedition and vigour” (drawing on the decision of Haughton J in Togher Management Company Ltd. v. Coolnaleen Developments Ltd. (in receivership) ³) in prosecuting the proceedings and as such a court considering whether to vacate a lis pendens on the basis there has been unreasonable delay should not tolerate delays in the prosecution of proceedings, such as service of proceedings or the subsequent delivery of pleadings.  In finding that the obligation rested with the person commencing the proceedings and registering the lis pendens to act with particular expedition and vigour the court took the view that this obligation was not dependent on HPI requesting service of the proceedings.

While CL argued there was a stated desire to resolve matters amicably and proceedings were therefore not served while that was being attempted, the court questioned whether such an explanation was justifiable prior to the letter of 16 August 2017 calling for service of the proceedings.  The court found however that no such explanation or excuse (which was not in any event advanced by CL) could possibly apply to justify the failure to serve the proceedings and prosecute the action once service of the proceedings was requested.  The unreasonableness of CL’s delay was further compounded by the delay in delivering CL’s statement of claim almost three months after the service of proceedings.

Comment

The court was clearly mindful of the impact that the registration of a lis pendens can have on property owners’ ability to deal with property, noting that section 123 (b) (ii) of the 2009 Act was intended to counterbalance the statutory entitlement to register a lis pendens.  While it remains the case that a lis pendens can be registered with relative ease and the bar remains high as regards the bona fide limb of section 123 (b) (ii) of the 2009 Act, this decision should act as a warning that the court may not tolerate parties “sitting” on proceedings where a lis pendens has been registered in the absence of a good reason for doing so.