Court refuses land sale order

A unanimous Supreme Court ruling today refusing the Revenue an order for sale of lands co-owned by a man and his estranged wife so as to execute judgment orders obtained against the man has major implications for creditors seeking to sell co-owned property to satisfy a judgment mortage obtained against just one owner.

The effect of the decision is the courts have no jurisdiction to make an order for sale of the entirety of co-owned property, in lieu of partition of such property, so as to enforce a judgment mortgage.

The Revenue had sought orders entitling it to sell 19 hectares in Co Cork owned by Thomas and Carmel Deasy to satisfy three judgments obtained by it against Thomas Deasy.

In 2004, the Revenue secured charging orders over Mr Deasy's interest in the lands, but in 2006 the High Court ruled it was not entitled to an order for sale of the lands, and the Supreme Court has upheld that order.

The Revenue is involved in at least 20 similar cases while other cases were deferred pending today's decision by the three judge court comprising Ms Justice Fidelma Macken, Mr Justice Joseph Finnegan and Mr Justice Donal O'Donnell.

While Thomas Deasy had since reached a settlement with the Revenue, it asked the Supreme Court to determine the issues due to their relevance to other cases.

The Chief Justice, Mr Justice John Murray, previously said the issues were of "fundamental importance" to the Revenue and remained live in the context of the continued exercise of its power to recover outstanding taxes.

The issues also had important implications for the property rights of co-owners of registered land against whom it was sought to enforce judgment orders, he noted. In those circumstances, and as Carmel Deasy's counsel had agreed to take on the defence role in the case, the Supreme Court agreed to decide the issues.

The Revenue's action was against Mr Deasy but Carmel Deasy was later joined to the case by order of the High Court as she was a co-owner of the lands.

Ms Deasy raised an issue whether the High Court had jurisdiction to give a judgment creditor a remedy for enforcement of their judgment mortgage when that remedy affected not just the judgment debtor but the co-owner of the property.

In the High Court in 2006 Ms Justice Mary Laffoy found, where a judgment mortgage is registered against the interest of one of the owners of co-owned registered land, the only effective remedy for enforcement of the judgment mortgage would be to order either partition of the land between the co-owners or a sale in lieu of partition after which the proceeds would be divided between the owners.

She ruled both those options would interfere with the property rights of the co-owner and, in the absence of specific jurisdiction, it would be inappropriate for the High Court to make such an order.

The interest of a judgment creditor of registered land who has judgment mortgages registered against just one co-owner of that land is insufficient to give the creditor the necessary legal standing to maintain an action for partition of the land, she found.