The Governor and Company of the Bank of Ireland (applicant) v Tadgh Gleeson (respondent).

Trusts - Administration - Obligations of trustee to beneficiaries - Contract for sale of part of property the subject of a settlement - Whether contract should be concluded against the will of the beneficiaries - Whether contract was enforceable against the trustee - Landlord and Tenant (Ground Rents) (No. 2) Act 1978 as amended by the Landlord and Tenant (Amendment) Act 1984.

The Supreme Court (Mr Justice Murphy, Mr Justice Barron and Mr Justice Geoghegan); judgment delivered 6 April 2000.

It would be impossible to express any opinion or to give any directions as to the obligations of a trustee to the beneficiaries under a settlement in relation to the sale of premises, in the absence of legal proceedings between the trustee and the purchaser to determine whether a contract for the sale of those premises was enforceable by that purchaser as against that trustee.

The Supreme Court so held in declining to give directions sought by way of special summons instituted by the applicant in the High Court and on appeal to the Supreme Court.

Brian Spierin SC and Michael Hourican BL for the applicant; James Dwyer SC and Willis Walshe BL for the respondent.

Mr Justice Murphy viewed the issues arising in the case from two distinct standpoints: firstly as between the applicant and respondent, and secondly, as between the applicant and the Commissioners of Public Works in Ireland (the commissioners).

Mr Justice Murphy considered the perspective between applicant and respondent which commenced with two indentures of 4 March 1954 made between Padraig O Glasain of the one part and the National Bank Limited of the other part. By these indentures Padraig O Glasain conveyed certain properties in freehold to the National Bank Limited upon trust to sell the same but so that during the life of the wife of the said Padraig O Glasain such sale should only be made with her consent in writing and so that the trustee should hold the proceeds of the trust for sale upon trust for the wife of Padraig O Glasain and his children or remoter issue or some one or more of them upon and subject to the terms by the said indentures provided and declared. The trust property comprised and the said indentures included the upper floors of No 11 O'Connell Street, Dublin, which were at the date of the conveyance subject to an indenture of lease dated 4 March 1898 made between Robert J. McEniry of the one part and John North of the other part for a term of eighty-eight and one-half years from 30 October 1903 subject to the yearly rent of £177.00.

By deed of assignment dated 30 March 1971 made between Maher Hayes & Company of the one part and the commissioners of the other part the interest of the lessee under the said lease was assigned to the commissioners for the residue of the term granted by the said lease and subject to the terms and conditions therein. The rights and duties of the National Bank were transferred to and vested in the Bank of Ireland pursuant to the provisions of the Central Bank Act 1971.

On the expiration of the 1898 Lease on 13 April 1992, the commissioners served a notice of intention to acquire the fee simple interest in the upper floor of the premises pursuant to the provisions of the Landlord and Tenant (Ground Rents) (No 2) Act 1978. By contract of sale dated the 20 December 1995 the applicant, with the consent of the widow of Padraig O Glasain, agreed with the commissioners for the sale to them of the fee simple in the premises demised by the 1898 Lease for a sum of £63.00.

Mr Justice Murphy stated that it was clear this price took into account the terms on which the freehold could be acquired under the 1978 Act and did not represent the open market value of the property. On 3 May 1996 the respondent, purporting to represent all of the beneficiaries or possible beneficiaries under the trust declared by the indentures dated 4 March 1954, expressed objection to the completion by the applicant of the contract for sale. The respondent contended that the 1978 Act as amended by the Landlord and Tenant (Amendment) Act 1984 did not apply to the premises in question and accordingly the applicant was not bound to sell the same on the basis of a price calculated in accordance with the provisions of those Acts.

Mr Justice Murphy accepted that this view was supported by certain observations made by Mr Justice O'Flaherty in Metropolitan Properties Ltd v O'Brien [1995] 2 ILRM. The respondent had further contended that the sale of the premises by the applicant would involve a breach of trust.

Mr Justice Murphy then considered the perspective as between the applicant and the commissioners. The applicant had entered into a contract for the sale of the premises to the commissioners for the sum of £63.00. Mr Justice Murphy stated that it was clearly the case that the applicant believed and had been professionally advised that the commissioners enjoyed a statutory right to purchase the freehold pursuant to the provisions of the 1978 Act as amended. Mr Justice Murphy further stated that the contract for sale did not contain any reference to the rights of either party under any legislation and was not expressed to be conditional upon the existence or otherwise of any such rights. Mr Justice Murphy observed that there was nothing in the contract which would put the commissioners on notice of any irregularity, unlike the circumstances which existed in Dance v Goldingham [1873] 8 Ch App 902.

Having regard to the objections raised, the applicant instituted proceedings by way of Special Summons seeking directions to the High Court as to whether the applicant, in light of the events that had happened and against the will of the respondent, should proceed to complete the contract with the commissioners. Mr Justice Murphy stated that the answer to that question depended essentially on the question whether the contract for sale was enforceable by the commissioners against the applicant. Mr Justice Murphy observed that if the applicant was bound by that contract and neglected to perform it, liability and costs would be incurred which would obviously be detrimental to the interests of the beneficiaries. Mr Justice Murphy expressed the view that if, for any reason, the applicant could escape liability on foot of what appeared to be an unconditional contract, then a better price could be obtained on the open market for the premises untrammelled by any obligations under the said legislation.

Mr Justice Murphy stated that whether the applicant, as trustee, is bound by the obligations apparently imposed by the contract for sale was a matter which could only be resolved in legal proceedings involving both the applicant as vendor and the commissioners as purchasers. Mr Justice Murphy said that since those parties were not before the Court that issue could not be determined and unless and until that issue is determined, it would be impossible to express any opinion or give any directions as to the obligations of the trustee to the beneficiaries under the settlement in relation to the sale of the premises.

Mr Justice Murphy concluded that in those circumstances the President of the High Court was entirely correct in declining to answer the question posed by the summons. Mr Justice Murphy would have said that it was impracticable or perhaps impossible to answer those questions rather than to state that the Court had no jurisdiction to do so.

Mr Justice Barron and Mr Justice Geoghegan concurred.

Solicitors: Matheson Ormsby Prentice (Dublin) for the applicant; Maurice Power & Sons (Limerick) for the respondent.