Supreme Court allows compensation claim for land boundary error despite prior ownership determination.

THE SUPREME COURT

Keane C.J.

Murray J.

Hardiman J.

Geoghegan J.

Fennelly J.

100/01

BETWEEN

PERSIAN PROPERTIES LIMITED

RESPONDENTS/PLAINTIFFS

AND

THE REGISTRAR OF TITLES AND THE MINISTER FOR FINANCE

DEFENDANTS/RESPONDANTS

JUDGMENT delivered the 2Oth day of February, 2003, by Keane C.J.

This case involves a plot of land no more than 116 square feet in area. The ownership of the plot has, however, led to two sets of

proceedings in the High Court, one of which lasted for several days, and an appeal to this court. To some extent, this is explained by

the fact that the plot which caused all the difficulty is in a prominent position in the city of Dublin, i.e., beside what was formerly the

Merrion Hall and is now the Davenport Hotel in Lower Merrion Street and was of some strategic importance in the development which

culminated in the conversion of Merrion Hall into the hotel.The proceedings which were the subject of the appeal to this court took

the form of an application by the respondents/plaintiffs (hereafter “the developers”) for compensation pursuant to S.12(1) of the

Registration of Title Act 1964 (hereafter “the 1964 Act”). The first named appellant/respondent (hereafter “the Registrar”) made an

adjudication and order on the 26th July 1999 dismissing the claim. There followed an appeal by the developers to the High Court which

was heard by Ms. Justice Carroll who, on the 14th February 2001, allowed the appeal. From that judgment and order, the Registrar

and the Minister for Finance have appealed to this court.

The facts are set out with customary clarity by the learned High Court judge in her judgment. There is an entrance between the side

of the Davenport Hotel and the rear of the house and garden at No. 1 Merrion Square. It is a bottleneck entrance: there is a strip

measuring approximately 22 feet in length and 5 feet in width at the rear of No. 1 Merrion Square and a corresponding strip on the

Davenport Hotel side. After 22 feet approximately the entrance widens out to 15 feet.

The title position is as follows. The Commissioners for Public Works in Ireland had acquired the leasehold interest in No. 3 Merrion

Square from the Pembroke Estate under lease dated 23rd March 1931. The lease also included the plot of ground at the rear of No. 1

Merrion Square which is the subject of these proceedings. By conveyance of the 25th April 1975, the Commissioners acquired the fee

simple in the premises from the Pembroke Estate: it was conveyed by reference to the premises comprised in the lease. In

accordance with the provisions of the 1964 Act, the Chief State Solicitor applied on behalf of the Commissioners for first registration

on 3rd February 1976, identifying the property comprised in the Conveyance as outlined in red and blue on the map accompanying the

application .

That map was inaccurate, in that it reduced the strip at the rear of No. 1 Merrion Square by about 3 feet, although it showed the full

width of the strip on the Merrion Hall side. However, the critical error occurred in the Land Registry which eliminated the bottleneck

entirely on both sides and showed a passage approximately 15 feet wide from what had previously been the “neck” of the bottle. The

title was registered on Folio 8708F, County Dublin.

The Commissioners also acquired the fee simple in No. 2 Merrion Square and their freehold title was registered in a separate folio. The

Commissioners transferred the lands in Folio 8708F (including the disputed strip) and No. 2 Merrion Square to a company on the 16th

September 1988 which in turn transferred all those premises to Foleyhurst Limited on the 11th January 1989. A company called Minoa

Limited which wished to erect townhouses and apartments at the rear of No.s 2 and 3 Merrion Square acquired part of Folio 8708F

(including the disputed strip) as well as the remainder of the premises. They obtained planning permission for the erection of three

townhouses and two apartments at the rear of No.s 2 and 3 Merrion Square.

The developers, as already noted, acquired Merrion Hall with the intention of converting it into what subsequently became the

Davenport Hotel. Since they did not wish the townhouse/apartment development contemplated by Minoa Limited to go ahead in close

proximity to their new hotel, they also bought the plot at the rear of No. 1 Merrion Square together with the remainder of the

premises owned by that company, from them. The sale was closed on 7th May 1992 and a transfer executed on the 2nd July 1992.

At the time the developers bought that plot, the leasehold interest in No. 1 Merrion Square was owned by Tomkin Estates Limited

(hereafter “Tomkin”) under a reversionary lease from the Pembroke Estate dated 1st March 1955. The premises at the side and to the

rear of No. 1 Merrion Square comprised in that lease had at the date of the Tomkin lease been demolished. The auctioneering firm of

Morrisseys had built a premises for the carrying on of their business on this cleared site. However, the gable wall of the Morrissey

building was approximately 5 feet inside the boundary as shown on the lease. There was a screen wall extending approximately 5 feet

at right angles to the gable wall with a pedestrian entrance and an arch a short distance in from the entry to the laneway. The rest

of the laneway was closed off by substantial gates at night time. Beyond the screen wall the laneway opened out to 15 feet. The

screen wall and pedestrian entrance is shown in the map lodged with the application for planning permission and they are also visible

in a photograph taken before the hotel development began. That photograph also shows a car parked on the portion inside the

boundary of the Tomkin lease.

On the 8th May, i.e., the day after the sale to the developers of the property including the disputed strip was closed, the builder of

the hotel, Mr. Maguire, demolished the screen wall and pedestrian entrance. A crane was then moved onto the site so that the

building work could proceed. On the 15th May 1992, Tomkin wrote to Mr. Noel O’Callaghan, the person principally concerned with the

hotel development, claiming that they were the owners of that part of the entrance where the screen wall and arch had stood by

virtue of their lease. (At a later stage, Tomkin acquired the fee simple interest in the premises.) Tomkin then issued proceedings in

the High Court in which they claimed to be entitled to the disputed plot. The proceedings were defended by the developers and Mr.

O’Callaghan, who was personally sued, and a trial lasting four days ensued before McCracken J. In a written judgment, he found in

favour of Tomkin and granted them a declaration that they were the owner of the disputed plot. He also awarded them the costs of

the proceedings. The developers then made their application for compensation under the 1964 Act. On the hearing of the appeal from

the Registrar’s refusal of the application, evidence was given by Mr. O’Callaghan, the solicitor for the developers, Mr. Kelly, the

architect of the hotel development, Mr. James O’Connor, the builder, Mr. Maguire, and two valuers on behalf of the developers and

the Registrar of Titles.

Mr. Kelly said that, when the sale from Minoa Limited to his clients was closed on 7th May, there was a “huge urgency” as the

preliminary work had already started and a crane had to be erected on the site. He made a telephone call to say the sale was closed

and the crane went on the site within hours of the closing.

Mr. Kelly became aware of Tomkin’s claim on the 20th May. There was a meeting on the site attended by Mr. O’Callaghan, Mr. Maguire

and representatives of Morrisseys and Tompkins. After the meeting, Mr. Kelly advised his client that the claim that the builder had

trespassed and wrongfully demolished the arch was “nonsense”: he based this on the land registry map and the map annexed to the

contract. He asked his client to inspect the map and satisfy himself, but he could not get access to the original lease map without

permission from Minoa Limited. While he could not get access to the dealings on first registration prior to the closing, he agreed that

he was thereafter entitled to inspect them and did so in June 1992. He then saw how the mistake had happened. In view of the

submissions advanced to this court, it is important to note that the solicitor for the developers and Mr. O’Callaghan had, accordingly,

become fully apprised of the true position as to the title to the disputed site several months before the proceedings ultimately heard

by McCracken J were instituted on the 14th December 1992.

Mr. O’Callaghan, in his evidence, said that he had bought the rear gardens of No.s 2 - 3 Merrion Square from Minoa Limited in order to

prevent the townhouse/apartment developments, to provide on site parking for the hotel and to allow the crane in. He said he was

not aware of any claim by Tomkin prior to the closing of the sale and said there was no complaint by Morrisseys to his knowledge of

the demolition of the entrance and arch. He had defended the action brought by Tomkin against the developers and himself because

that was the legal advice he had received. (That was confirmed in evidence by Mr. Kelly.) He said that Tomkin had wanted £10,000 a

year for the disputed plot.

Mr. Christopher Hogan, the deputy registrar of the Land Registry, said, in evidence, that, at the time of the application for first

registration by the Chief State Solicitor, the lease map and an ordinance survey map were lodged. The lease map was drawn in 1931,

but the buildings then on the site had been replaced by the Morrissey building which had not been built on precisely the same site.

The Land Registry had misinterpreted the map by taking Morrisseys as the physical boundary and showing the boundary as running

along the gable wall. The map submitted with the application had also contained an error in showing the boundary a distance of 2 feet

from the actual boundary. As a result, in his view, the Land Registry had contributed to 40% of the discrepancy. The application had

been accompanied by a certificate that the Chief State Solicitor had examined the title, thus allowing the registrar to modify his

examination of the title. Had the person examining the title in the Land Registry compared the ordinance survey map with the lease

map, the difference would have been noticed, but that would not necessarily have been done. The area of the disputed plot – 116

square feet – was 1.8% of the total area the subject of the application for first registration. The area sold by Minoa Estates to the

developers was 4840 square feet and, accordingly, the disputed plot represented 2.5% of the total.

In her judgment, the trial judge said that the error which had given rise to the application was not within the acceptable margin of

error in mapping practice contemplated by S.85 of the 1964 Act, applying the judgment of the High Court in Boyle –v- Connaughton

(Unreported; Laffoy J; judgment delivered 21st March 2000). She pointed out that, even though the error as a percentage of the

entire area comprised within the application on first registration was very small, it nonetheless affected two thirds of the entrance to

the lane.

The trial judge went on to find as a fact that Mr. O’Callaghan entered into the contract for sale with Minoa Limited for three reasons:

in order to get a crane on to the site, to prevent the townhouses being built and to provide onsite car parking spaces for the hotel.

She said that she was also satisfied that he became aware on the 6th May 1992, the day before closing, that Tomkin claimed to own

the pavement in front and behind the gate and pier and that she was also satisfied that he did not tell his solicitor, Mr. Kelly, who

would have advised him not to close. Thus, in her view, he deliberately took a risk by not making further inquiries. She also found that

he had kept Tomkin at bay by saying (on the 18th May) that he had instructed his architect to let them have proposals relating to

reinstatement of the laneway within a week to ten days (which never materialised). She also referred to what she described as other

“delaying tactics” until the 18th January 1993 when the developers effectively laid claim to the disputed strip. She went on:

“It is significant that in the letter of 15th June 1992 Mr. O’Callaghan’s solicitor stated that any application for an injunction

which would result in interruption or delay in carrying out the building works would have most serious consequences and would

involve their client in substantial loss. Mr. O’Callaghan’s solicitor knew in June, 1992 having inspected the lease map exactly

where the problem lay.

“Mr. O’Callaghan achieved his second objective in that he did not build the townhouses and the planning permission withered.

He achieved his third objective by being able to provide onsite car parking for the hotel. He said it is used for parking 20 – 25

cars.”

The trial judge then went on to consider the evidence of the valuers. The applicant’s valuer had estimated the diminution in value to

the developer’s freehold interest by reason of the loss of the strip at £200,000. She pointed out that the same valuer in the

proceedings before McCracken J valued the plot of land at £7,320. The valuer for the respondents had estimated the diminution in

value at £7,500.

The trial judge said that she was satisfied that the value should be more than the value per square foot paid for the entire site:

allowance should be made for the fact that it occupied a key position at the entrance to the site. She accepted the valuation given

on behalf of the defendants of £7,500 but increased it to £10,000 because of the key position it occupied. She also said that she was

satisfied that, if the developers had brought the matter up with Minoa Limited before closing, their options under clause 16 of the

contract would have been to withdraw from the sale, which she was convinced Mr. O’Callaghan would not have done, or to negotiate

for compensation for the reduction in area.

The trial judge finally concluded that the developers were entitled to recover the costs of the litigation in the High Court before

McCracken J but not the costs of the appeal to this court which had been withdrawn. In the result, they were entitled to recover the

costs as taxed on a party and party basis and paid to Tomkin and their own costs of defending the proceedings taxed on a solicitor

and client basis. They were also entitled to interest on the costs from the date of payment until the date of reimbursement, but were

not entitled to interest on their own costs of defending the proceedings, which had not at that stage been paid.

The trial judge rejected the argument on behalf of the defendants that they were liable for only 40% of the loss.

The oral hearing of the appeal in this court was principally concerned with the question as to whether the trial judge was correct in

law in awarding the developers the costs of the High Court proceedings before McCracken J. There were, however, other arguments

advanced on behalf of the defendants in support of their submission that no award of compensation should have been made, which

should be first considered. At the outset, the relevant provisions of the 1964 Act should be set out.

Section 120 is the provision requiring compensation to be paid. It provides that

“(1) This section applies to a loss sustained by any person by reason of

a) Rectification by the court of any such error in registration as may be rectified under subsection (1) of S.32, or

b) Any error originating in the Land Registry (whether of misstatement, misdescription, omission or otherwise and

whether in a registry or in the registry map) which occurs on registration and is not rectified under the said subsection

(1) or

c) Any entry in or omission from a register or registry map caused or obtained by forgery or fraud or

d) Any error in an official search carried out by a registering authority or any of his officers, or,

e) The inaccuracy of any office copy of or extract from a register or registry map, or of any office copy of extract from

any document or plan filed in the Land Registry.

(2) Where any person sustains loss to which this section applies, and the loss was not caused or substantially contributed to

by the act, neglect or default of himself or his agent, that person and also any person deriving title from him shall be entitled

to compensation for that loss in accordance with this section.”

Section 31(1) provides that

“The Register shall be conclusive evidence of the title of the owner to the land as appearing on the Register and of any right,

privilege, appurtenance as appearing thereon; and such title shall not, in the absence of actual fraud, be in any way affected

in consequence of such owner having notice of any deed, document, or other matter relating to land; but nothing in the Act

shall interfere with the jurisdiction of any court of competent jurisdiction on the ground of actual fraud or mistake, and the

court may upon such grounds make an order directing the register to be rectified in such a manner and on such terms as it

thinks just.”

Finally S.85 provides that

“Registered land shall be described by the names of the denomination of the ordinance survey maps in which the lands are

included, or by reference to such maps, in such manner as the Registrar thinks best calculated to secure accuracy, but,

except as provided by this Act, the description of the land in the Register or on such maps shall not be conclusive as to the

boundaries or extent of the land.”

The first submission advanced on behalf of the defendants was that any loss that might have been sustained by the developers was

“caused or substantially contributed to by the act, neglect, or default of himself or his agent”

within the meaning of S.120 (2).

It was argued that the developers had allowed the sale to be closed at a stage when they knew Tomkin was making a claim to the

disputed strip and had deliberately refrained from taking advice from their solicitors. It was submitted that, where a party completes a

transaction in the knowledge that he is taking a risk of that nature, the defendants should not be required to compensate him.

I am satisfied that this submission is not well founded. There were clearly pressing commercial considerations indicating that the sale

should be closed forthwith and the developers were, in my view, perfectly entitled to rely at that stage on the Register and complete

as they did. The mere indication by another party, such as Tomkin, that they were asserting a title to the disputed strip did not

oblige the developers to withdraw from the sale or enter into negotiations with Minoa Limited for a reduction in the price. The

defendants would, in any event, have been obliged to compensate Minoa Limited for that reduction.

It was also submitted on behalf of the defendants that the fact that cars were parked on the disputed strip should have indicated to

them that there were certain unregistered rights in the form of easements to which they would take subject, even thought they were

not registered, having regard to the provision of S.72 of the 1964 Act.

Again, I am satisfied that this submission is unsustainable. Tomkin did not contend in the proceedings successfully instituted by them

in the High Court that they had unregistered rights which the court should uphold: they unequivocally asserted a claim to be the

owners of the fee simple in the disputed strip, a claim which was upheld by the High Court.

It was further submitted on behalf of the defendants that the error did not arise entirely in the Land Registry, since the initial

application made to the registry itself contained an inaccuracy. That submission is also, in my view, clearly unsustainable. The Land

Registry in this case adopted the procedure authorised by the relevant rules which entitles the Registry to dispense with a full

investigation of the title in certain cases where there is a certificate by the solicitor that the title is in order. That procedure is in

ease of applicants for registration and plainly does not relieve the defendants of the obligation to pay compensation pursuant to

S.120(2) in respect of an error in registration which has not been caused, or substantially contributed to, by the person sustaining

the compensatable loss.

It was also submitted that the defendants were entitled to rely on S.85 of the 1964 Act which makes it clear that the description of

the land in the Register is not to be conclusive as to the boundaries or extent of the lands. I am satisfied that the trial judge was

entirely correct in holding, as Laffoy J had done in the earlier unreported decision already referred to, that this section did not relieve

the defendants from payment of compensation where the error could reasonably be regarded as substantial. While the error

undoubtedly related only to 1.8% of the area of land comprised in the first registration, it related to two thirds of the entrance to the

lane and could not be regarded as merely a minor error.

There remains the question as to whether the developers are also entitled to compensation in respect of the losses incurred by them

in defending the High Court proceedings before McCracken J.

It must again be pointed out that several months before those proceedings began the solicitor for the developers had become aware

of the error in the Land Registry map. Nevertheless, at a stage when the assertion of a title to the disputed strip was not in any way

necessary for realising the commercial objectives which had prompted the purchase from Minoa Limited in the first place, they refused

to admit the title of Tomkin and, when proceedings were instituted claiming inter alia a declaration that Tomkin was the owner in fee

simple of the disputed strip, they delivered a full defence denying that Tomkin was entitled to any such relief. The taxed costs of

Tomkin amounted to £81,661.39 and the amount of the solicitor and client costs payable by the developers was agreed with the

defendants in the sum of £57,407.25. There was also a sum of £2783 payable in respect of cost drawers’ fees.

In the course of his judgment, McCracken J referred to a submission on behalf of Mr. O’Callaghan and the developers that an order

rectifying the register by describing Tomkin as the owner could not be made and would cause “injustice” to the defendants, and

expressed his conclusions as follows:

“In my view I do not have to decide whether the Land Registry map, or the register, can be rectified. I am not being asked to

make such an order by the plaintiff. The plaintiff’s case is very straightforward. It has a fee simple title which is not

registered, and the defendant is trespassing on its land and has destroyed a pier and gate and a wall which stood in its land. It

has shown that the disputed land was conveyed to it in fee simple. There is no suggestion that the defendant has acquired a

statutory title to this disputed plot, as there is clear evidence that the plaintiff’s tenant has used this land regularly to park

cars, and even went so far as to erect a “No Parking” notice on the wall of the Morrissey building, which is a clear act of

ownership. Accordingly, the plaintiff is entitled to a declaration in the terms of paragraph one of the amended statement of

claim.”

It need hardly be pointed out that the declaration thus made by the learned High Court judge did not confer the ownership of the fee

simple on Tomkin as of that date: it was an express finding, which cannot now be disputed, having regard to the withdrawal of the

appeal to this court, that Tomkin at all material times was the owner of the leasehold interest or the fee simple of the disputed strip.

As I understand the submission advanced on behalf of the developers in support of the proposition that the defendants should be

responsible for the payment of all the costs of both sides in this litigation, it is twofold.

First, it is submitted that, had the developers not resisted the claim of Tomkin to be entitled to the fee simple, the defendants might

successfully have resisted the application for compensation, on the ground that an applicant for compensation must show that he has

taken all means open to him to obviate any loss which he claims to have suffered, citing the decision of Madden J in Re: Local

Registration of Title Act –v- Patterson, 3 NIJR 90, 108 and the statement of the law in McAlister on Registration of Title, pp.300/301.

Secondly, it was submitted that, having regard to the provisions of S.31(1) of the 1964 Act, to the effect that the Register is to be

conclusive evidence of the title of the owner of the land, it was reasonable for the developers, in the absence of any court order

pursuant to S.32(1) of the 1964 Act rectifying the Register, to resist the claim of Tomkin to be the owners in fee simple of the

disputed strip.

In considering the first of these submissions, I should refer to S.83(5)(c) of the English Land Registration Act, 1925, which, although

not helpful to his case, was properly drawn to our attention by Mr. George Brady SC on behalf of the defendants. It provides that

“No indemnity shall be payable under this Act in any of the following cases…

(c) On account of costs incurred in taking or defending any legal proceedings without the consent of the registrar.”

Despite the absence of any corresponding provision in the 1964 Act, I am satisfied that the submission on behalf of the developers

that they were obliged to resist the claim by Tomkin and engage in expensive litigation in the High Court before applying to the

defendants for compensation is wholly unsustainable.

In Patterson,which was the first application for compensation arising out of an error in the Land Registry, Madden J said :

“I am of opinion that it is not sufficient to point to a fault on the part of the registrar, and say that loss has been incurred in

consequence. In future the claimant must prove before me what is the actual loss he has incurred and what proceedings he

has taken to obviate it and unless he has shown that he has exhausted all the means open to him he will not be entitled to be

compensated out of the Fund.”

(Under the statutory regime then in force, the compensation was payable out of an insurance fund.)

How the procedure there laid down operated in practice is illustrated by a decision of Madden J’s successor as the Land Judge, Wylie

J, Re Serridge, Provincial Bank v Trustees of Insurance Fund ((1926) IR 169. In that case, the bank claimed compensation from the

fund because of a delay by the Registrar in registering a judgment mortgage which could result in their being postponed to another

charge. The bank had additional security for the money secured by the charge but that security had not been realised by them. The

trustees opposed their application for compensation relying on Patterson. Wylie J held that they were entitled to compensation but

directed that they should exhaust any other remedies available to them and that the matter should stand over for six months, the

costs being reserved. The only changes in procedure since that decision have been that the compensation is now payable directly

from the central fund and the application is to the Registrar with an appeal to the High Court. At worst, if such an application had

been made, it would also have been adjourned to enable the title issue to be litigated and the developers would have been no worse

off, although I am bound to say that I cannot see any basis on which the Registrar could have required the developers to engage in

such expensive and unnecessary litigation.

However, it is sufficient to say that it would seem to me wholly unjust and unreasonable that any party should be required to bear

the substantial costs of litigation such as occurred in this case without being given any opportunity whatever to indicate whether

they considered it as a necessary precondition to their liability to pay compensation. No doubt, in the absence of any provision in our

legislation corresponding to that in the English Act of 1925, it cannot be said that in every case where a party is seeking

compensation pursuant to S.120(2), it will not be entitled to recover the costs of taking or defending legal proceedings without the

consent of the Land Registry. Whether they are entitled to be reimbursed any such costs will inevitably depend, accordingly, on the

circumstances of the particular case. In the present case, I am satisfied that it would be unjust and unreasonable to require the

defendants to bear the substantial costs involved in the High Court proceedings when they were at no stage given any indication by

the developers that they proposed to resist them up to and including the service of a notice of appeal to this court.

The second submission rests on a misunderstanding of the true significance of S.31(1) of the 1964 Act. The Local Registration of Title

(Ireland) Act, 1891, which that Act repealed and replaced, was intended to provide in Ireland a system of registration of title which

would relieve the owners of registered land from the difficulties of establishing their title to the land which were the lot of owners of

unregistered land throughout the then United Kingdom and which were associated with the notorious complexity of the English law of

real property. Those landowners were always exposed to the risk of having the documentary title to their land impugned because of

frailties in the chain of title stretching back, it might well be, to a root of title in the distant past. Save in cases of “actual fraud or

mistake”, the owners of registered land were in the far more advantageous position of being entitled to rely on the Register, and the

Register alone, as conclusive evidence of their title “as appearing on the Register”. But since it was also obvious that, in any such

system, errors would occur in the actual delineation of the boundaries and extent of the land in question, S.85 went on to provide

that the “description” of the land in the Registry was not to be conclusive as to “the boundaries or extent” of the lands. Such an

error occurred in this case, through no fault of the developers, and, while that inevitably had the result, as found by McCracken J,

that they were not entitled to the ownership of the disputed strip, they were undoubtedly entitled to the appropriate compensation

for the loss they sustained as a result of the error in the Land Registry.

This was not a case in which at any time Tomkin were seeking to set up unregistered equitable rights by way of defence to a claim

for possession by the registered owner, a course of action which was not permitted in McManus –v- Kiernan (1939) IR 297. This was

a case in which they were at all times seeking to rely on their uncontestable documentary title and an admitted error in mapping by

the Land Registry. McCracken J was correct in law in upholding their claim to be the owners in fee simple of the disputed strip and in

any event that claim is now res judicata and cannot be reopened in these proceedings.

I would, accordingly, allow the appeal and substitute for the order of the High Court an order awarding the developers the sum of

£10,000, being the value of the strip of land the subject of the application for compensation.