Statute of limitations does not apply to adverse possession where mortgagee consents to mortgagor's occupation post-sale order.

An Chúirt Uachtarach

The Supreme Court

Appeal No. 108/2009 & 109/2009

Denham C J

Dunne J

Charleton J

Between

Ulster Investment Bank Limited

Plaintiff/Respondent

and

Rockrohan Estate Limited

Defendant/Appellant

Judgment of Mr Justice Charleton delivered on the 26th day of February 2015

1. At issue in this appeal is the application of the Statute of Limitations 1957, in circumstances where a mortgagor has remained in

possession of lands for more than twelve years after the High Court has made a well charging order together with an order for sale.

The lands in question comprise about 120 acres, and are entered in the Register of Freeholders for County Cork on folio 28285. As is

usually the case on making such an order, no order for possession was made with the primary order. Central to that issue is the

question of whether such occupation, after the making of an order for sale, is in fact adverse to the mortgagee. Estoppel by

convention, based on the shared understanding of the parties, is claimed by the mortgagee bank to ensure that there has been

neither an adverse occupation by the mortgagor nor an efflux of time to enable the creation of a title by adverse possession. The

mortgagor of the lands in question is the defendant/appellant Rockrohan Estate Limited and the mortgagee is the plaintiff/respondent

Ulster Investment Bank. In the High Court, the trial judge, Irvine J, decided that the Statute of Limitations had no applicability in the

circumstances of this case; Ulster Investment Bank Limited v Rockrohan Estate Limited [2009] IEHC 4.

Background

2. The background to this case is fully described in the judgment of Irvine J. A feature of this background is the long-running dispute

involving a company called Bula Limited, an enterprise proposing to mine for zinc and lead in County Meath. The obligation of

Rockrohan to the bank in this case came about through a guarantee debenture dated 22nd September 1981 which was, on the face

of it, an obligation limited to the recovery of €1 million, together with interest applicable under the primary contract of borrowing. On

Bula defaulting on the loan in July 1982, a receiver was appointed over its assets. In July 1986, Rockrohan was called upon to meet

its obligation under the debenture. The relevant rate of interest was specified, as was the degree to which other securities had

realised cash against the obligation guaranteed. Bula Limited became involved in a series of actions against a number of parties.

These proceedings are relevant as forming part of the origin of this case, but are not as to the amount charged on the land or as to

the propriety of the realisation of the debenture, since no such defence was raised. Instead, the solution proposed by Rockrohan in

the High Court in respect of the sum that was sought to be declared well charged on the land pursuant to the guarantee debenture

was a plea, by way of affidavit filed back in 1989, that Rockrohan would be able to discharge its obligations upon the litigation

concluding against Tara Mines Limited, together with other related litigation, including a claim against this bank and other banks and

against the State. Sets of litigation had been started in 1986, which involved other parties meeting claims of breach of contract and

tort related to the mining enterprise and the funding thereof. It was averred that it would be inequitable to allow the bank to proceed

to execute against the lands “as such relief may be entirely unnecessary.” Among the reliefs sought in the litigation involving this

bank were declarations that all consent judgments, all guarantees and all contracts were unenforceable. That remedy, should it have

been granted, would have meant that this guarantee debenture was void. An adjournment was sought in this matter until the

conclusion of the litigation. That was not granted. After hearing argument, Blayney J proceeded to make an order declaring “the

principal moneys secured by the said Guarantee Debenture” together with the interest thereon “and the costs hereinafter awarded”

well charged on the interest of Rockrohan in the lands. Then the sum involved was IR£1,267,149.02; but with growing interest on that

amount if not paid within three months, and costs. The order of 16th February 1987 continued that should payment not be made by

Rockrohan:

… the said lands and premises be sold at such time and place subject to such conditions of sale as shall be settled by the

Court and the following Account and Inquiry are to be taken and made in the Examiner’s Office namely:-

No. 1. An Account of all incumbrances subsequent as well as prior to and contemporaneous with the Plaintiff’s demand

No. 2. An Inquiry as to the respective priorities of all such demands as shall be proved …

3. The Court did not grant the bank an order for possession, as had been sought. The reason for that would have been well known to

all the parties, as counsel’s note of the judgment of Blayney J of the same date makes clear:

The Defendant is saying that there is a different method by which the Plaintiff Bank may be paid. The Defendant argues

that if the Plaintiff waits until the other proceedings are determined then the Bank will be paid and there is an inference

that the Bank will be paid more expeditiously in this way and the claim by the bank will be satisfied more fully. But the

Bank is entitled to choose by which method it will realise money due to it. No real case is being made alleging any

invalidity in the Debenture. The only case being made is that the bank in effect should wait and if it were to wait, it would

be paid off by the moneys recovered in the other proceedings. That however is not a ground to resist the Order which

the plaintiff is seeking. By virtue of the fact of the guarantee debenture, the Bank has a good charge over the lands for

the amount which is currently due under the guarantee. Therefore the bank is entitled to the usual Order declaring these

sums well charged on the lands in question. The bank also seeks an Order for possession. However, there does not appear

to me to be any reason to make an order for possession. There is no evidence before the court such as would satisfy me

that there is any necessity for such an Order. There is nothing to suggest that the Bank would be impeded in the sale of

the land if the well charging order is made.

4. This ruling was appealed to this Court by notice dated 3rd of April 1987. The matter came on for hearing some time later. The

principal affidavit grounding the appeal did not challenge the decision of the High Court either as to liability or as to the amount

charged. Instead, it was contended that the order charging the debt on the land ought to have been postponed until the Bula

litigation against Tara, against the State and against other banks and parties, had concluded. But for the wrongs therein complained

of, it was averred, the relevant loans would have been repaid, and no question of enforcing the security would ever have arisen. In

the result of the appeal, the initial stay granted by Blaney J in the High Court was extended over three months to the 2nd of October

1990.

5. The issues on this appeal were initiated by a motion seeking possession in favour of the bank for the purposes of sale, dated the

17th of July 2008. This was immediately countered by a motion dated 25th July of the same year from Rockrohan seeking a

declaration that the bank has no interest in the lands or entitlement to enter into possession of, or to sell, same.

Facts

6. It was not until the 10th of June 2005 that the Bula Limited litigation against the various banks and other defendants including the

State and Tara Mines concluded. On that date, an order restraining all further litigation without leave of the High Court was made.

Litigation had failed first in the High Court and then on appeal to this Court in relation to the action against Tara Mines Limited and

other parties.

7. The claims against banks, including the bank in this case, were dismissed in the High Court on the 1st of February 2002, and on

appeal, by this Court in February 2003. Those behind the litigation then claimed to have fresh evidence that the High Court and the

Supreme Court had been deceived by fraud and a new action based on deceit was commenced. That fresh case was only eventually

dismissed in June of 2005.

8. When an order for sale is made in a mortgage suit, the sale takes place under the direction of the court; see Order 51 of the Rules

of the Superior Courts. The process leading to a sale is commenced in the Examiner’s Office by the service of a Notice to Proceed in

accordance with Order 55 R 11 of the RSC. In this case, the Notice to Proceed issued on the 12th of February 1999 and was duly

served on Rockrohan. On the 26th of September 2006, the Assistant Examiner of the High Court set the conditions and date for the

sale of the lands of Rockrohan, which were charged to the bank. As a matter of procedure, in the normal course of sale, no further

application to court would ever have been needed. The conditions of sale would have been set by court conveyancing counsel. It

would have been the mortgagor, Rockrohan, who would have sold the property under the supervision of the Examiner of the High

Court, and that company, on the sale being completed, would have been bound to deliver up good title and peaceful possession to

the purchaser. As a matter of practicality, it is not always necessary for mortgagors in possession to have an order against them

requiring the vacation of the property for the purpose of sale. Most often, such an order is made in court because grounds are shown

whereby vacant possession becomes a necessity, perhaps because of an apprehension of obstruction of, or of less than full

cooperation in, the sale, or because repairs are needed to a premises that has deteriorated through waste.

9. A judicial review application was then commenced by Rockrohan against the Assistant Examiner and others which, after leave was

granted, came on for hearing before McGovern J in the High Court. This judgment was issued on the 30th of March 2007; Rockrohan

Estate Limited and Richard Wood v Thomas Kinirons and Ulster Investment Bank Limited, Ireland and the Attorney General [2007]

IEHC 112. On behalf of Rockrohan, it was averred that the motion to enable the sale of the lands in February 1999 was a “colourable

device in pursuance of a misconceived attempt to defeat the statute of limitations and keep alive a power of sale”. It was alleged

that the guarantee to the bank was collateral, and that since the main debt had been discharged, there could be no amount due to

the bank from Rockrohan. Ultimately, however, notwithstanding these pleas, the High Court was ultimately asked only to resolve the

issue of whether the rule preventing counsel from appearing before the Examiner was in breach of fair procedures, and whether the

Examiner had failed to apply Article 6 of the European Convention on Human Rights. That Article guarantees that in “the determination

of his civil rights and obligations … everyone is entitled to a fair and public hearing within a reasonable time by an independent and

impartial tribunal established by law”. In the course of his judgment, McGovern J referenced the wide ranging allegations of fact

exchanged between the parties and, in particular, expressed a view, which Irvine J rightly did not regard as binding, that Rockrohan

were never in possession of the lands in a manner adverse to the bank. This comment was not surprising in light of the contention on

affidavit by Rockrohan that since 1989 that company had been in unchallenged possession of the lands, and consequently, at that

point, had the benefit of a title through adverse possession. At pages 5 to 6 of his unreported judgment, McGovern J, in refusing the

relief sought, stated:

In the course of the hearing counsel for the applicants spent a great deal of time arguing that the first named notice

party had failed to act with expedition in enforcing the order for sale and had in effect for many years done nothing about

enforcing it and that it is now to be estopped from doing so. Counsel claimed, inter alia, that the applicants had acquired

adverse possession of the lands against the first named notice party and that the lands could not therefore be sold. I

reject this argument. Blayney J. did not give an order of possession to the first named notice party and at all times the

first named applicant has been in possession of the lands since they have not yet been sold. The Applicants have not

been in possession adverse to anyone else so the question of adverse possession does not arise. Furthermore I am

satisfied that the arguments relating to the alleged delay on the part of the first named notice party are irrelevant to the

issues which I have to decide in this judicial review application. They seem to be directed more towards showing that the

lands in question should not be sold or that the order of Blayney J. should not be or cannot be enforced. Having heard the

submissions of the parties and in particular the submissions of the first named notice party on this issue I am quite

satisfied that the delay in achieving a sale of the lands in question is due to protracted litigation which has continued by

one or other or both of the applicants up to this date in both the High Court and Supreme Court. These proceedings raise

issues such as a declaration that the ‘Bula debt’ was discharged and unenforceable, a claim relying on the statute of

limitations including the release of securities collateral to the guarantees given by the second named applicant. It is clear

from the proceedings in the various actions which have continued through to the end of 2004 that the basis upon which

the judgment of Blayney J. was given has been under attack by the second named applicant.

10. The way was then, apparently, clear for the sale of the lands charged, but, as indicated, the motion of the bank in that regard

was countered by the contention that adverse possession had extinguished the rights of the bank over the land charged.

Adverse possession

11. Central to the question of the extinguishment of rights is whether, over the period from the order of the Supreme Court whereby

the stay on the order of Blayney J expired, which was the 2nd of October 1990, Rockrohan could be regarded in law as being in

adverse possession of the lands. The statutory basis for any such claim is to be found in section 13(2)(a) of the Statute of

Limitations, which fixes a bar on recovery of land after twelve years has elapsed from “the date on which the right of action accrued

to the person bringing it”; and in section 18(1), which provides that no “right of action to recover land shall be deemed to accrue

unless the land is in the possession … of some person in whose favour the limitation period can run”; which requires, as section 18(2)

(b) provides, that a “right of action” only accrues “unless and until adverse possession is taken of the land”; thereupon section 24

provides that “at the expiration of the period fixed” in the legislation “the title of that person to the land shall be extinguished.”

12. Not all possession of land or premises, otherwise than by its owner, is adverse. In some cases it has been held that the intention

of the owner as to the future use of the land may result in what would otherwise be the ordinary and complete use and possession of

land by a stranger to the title not being adverse; Leigh v Jack (1879) 5 Ex D 264, Wallis’s Cayton Bay Holiday Camp Ltd v Shell-Mex

and BP Ltd [1975] 1 QB 94, Cork Corporation v Lynch [1995] ILRM 598. This line of authority was criticised by Brady and Kerr as being

“arguably subversive of the policy reasons which have undergirded successive statutes of limitations”; Brady and Kerr – Limitation of

Actions (2nd edition, Dublin, 1994) at page 101. It was not followed by Barron J in Seamus Durack Manufacturing Limited v Considine

[1987] IR 677. Such a principle, those commentators point out, would also make apparently overt acts of dispossession as may found

adverse possession depend upon the subjective intention of the owner of the title to land. Some parcels of land, however, may be

such as to constitute waste land, or land which is not capable of use or enjoyment, save perhaps on rare occasions. An example of

this would be land beside or under a bridge that the owner used only for periods of inspection of the structure; Dundalk UDC v

Conway [1987] IEHC 3. Founding the concept of adverse possession is the principle that the party thereby claiming rights must not

take or hold the land by force, by deception or with the permission of the owner of the legal title; or as lawyers of an earlier

generation would have expressed it nec vi, nec clam, nec precario. O’Hanlon J explained the use which a possessor must make of land

or premises, so that it was adverse to that of the owner, in Doyle v O’Neill (High Court, unreported, O’Hanlon J, 13 January 1995) at

page 20 thus:

In order to defeat the title of the original landowner, I am of opinion that the adverse user must be of a definite and

positive character and such as could leave no doubt in the mind of a landowner alerted to his rights that occupation

adverse to his title was taking place. This is particularly the case when the parcel of land involved is for the time being

worthless or valueless for the purposes of the original owner.

13. Mere occasional user of land is therefore insufficient. There must be a taking over and use of the land or premises in a way that is

inconsistent with the title held by the owner. Particular regard must be had to the individual circumstances of possession. The matter

was put thus by Lord O’Hagan in Lord Advocate v Lord Lovat (1880) 5 App Cas 273 at page 288:

As to possession, it must be considered in every case with reference to the peculiar circumstances. The acts, implying

possession in one case, may be wholly inadequate to prove it in another. The character and value of the property, the

suitable and natural mode of using it, the course of conduct which the proprietor might reasonably be expected to follow

with a due regard to his own interests – all these things, greatly varying as they must, under various conditions, are to be

taken into account in determining the sufficiency of a possession.

14. In many subsequent cases, this analysis has been quoted with approval, most importantly by this Court in Bula Ltd v Crowley (No

3) [2003] 1 IR 396 at page 425 per Denham J. In addition, see Canny - Limitation of Actions (Dublin, 2010) at pages 67-70. The

application of the test of adverse possession can be difficult; as in Murphy v Murphy [1980] IR 183, where a widow whose deceased

spouse had left land divided by a road to her and their two sons, one of whom exercised rights over what was her portion as residuary

legatee without her ever understanding her entitlement. At page 202 of the report on the appeal to this Court, Kenny J amplified the

nature of possession which is adverse, specifically excluding possession by consent:

Before the year 1833 the common law had engrafted the doctrine of non-adverse possession on to the earlier Statute of

Limitations so that the title of the true owner was not endangered until there was possession clearly inconsistent with

recognition of his title, i.e., adverse possession, and so there had to be an ouster. This doctrine of non-adverse

possession was abolished by the Real Property Limitation Act, 1833, in which the words “adverse possession” were not

used (Lord Upjohn in Paradise Beach & Transportation Co. Ltd. v. Price-Robinson [[1968] A.C. 1072]). The use of the

words “adverse possession” in the Act of 1957 does not revive the doctrine of non-adverse possession which existed

before 1833. In s. 18 of the Act of 1957, adverse possession means possession of land which is inconsistent with the title

of the true owner: This inconsistency necessarily involves an intention to exclude the true owner, and all other persons,

from enjoyment of the estate or interest which is being acquired. Adverse possession requires that there should be a

person in possession in whose favour time can run. Thus, it cannot run in favour of a licensee or a person in possession as

servant or caretaker or a beneficiary under a trust: Hughes v Griffin [[1969] 1 W.L.R. 23.]

15. Possession by a mortgagor can be adverse to the interests of a mortgagee. That depends upon the circumstances, however.

Where, for instance, repayment to a bank stops, and the bank takes no steps to enforce their security over decades, albeit that this

is an unlikely scenario, possession in such circumstances may be adverse to the interests of the bank. In National Westminster Bank

Plc v Ashe [2008] 1 WLR 710, a couple, by the name of Babai, mortgaged the house in which they lived to the plaintiff bank. Financial

difficulties caused payments between 1990 and 1993 to be intermittent. In 1993, the husband was declared bankrupt. The bank

acted only by issuing a formal demand and by engaging in correspondence. Thirteen years later, the trustee in bankruptcy of the

husband, as legal holder of his entire property, successfully sought a declaration of adverse possession in the High Court, which was

upheld in the Court of Appeal. The argument accepted was that a mortgagor in possession in such circumstances did not hold the

premises with the permission of the bank. At paragraphs 86 and 87 of his speech, Mummery LJ stated:

In my judgment, however, the continued possession of the property by Mr & Mrs Babai after they had mortgaged it was

referable to their property interest in it. This was not objected to by the bank. It must have been tacitly accepted by the

bank in the context of the charge, but the bank’s right of action and its tolerance of their possession did not prevent

them from being in ordinary possession of the property which satisfied the requirements of paragraph 8[of the limitations

legislation]. The nature of this possession did not therefore prevent time running against the bank once its cause of

action had accrued, or had accrued afresh by reason of a part payment.

In summary, the bank had a right of action. More than 12 years passed since it accrued afresh. Mr & Mrs Babai’s

continued possession of the property with the apparent leave and licence of the bank did not prevent them from being

persons against whom the bank’s right of action to recover the property arose on the granting of the legal charge, which

right is treated as having accrued afresh when a payment in respect of it was made. Nor did it prevent Mr & Mrs Babai

from being persons in whose favour time can run under the 1980 Act. According to the ruling in the Pye case [2003] 1 AC

419 their possession was adverse possession within paragraph 8.

16. The central nature of the relationship between the party ostensibly in possession and the holder of the legal title is illustrated by

Bula Ltd v Crowley (No 3) [2003] 1 IR 396. In law, a receiver technically acts as agent for the mortgagor, in that case Bula Limited,

and not for the mortgagee bank. The plaintiff company in that earlier case, which is part of the chain of litigation of which this case

forms a link, made the claim that where a receiver was in possession of lands pursuant to a mortgage debenture secured on the lands

pursuant to a contract with, among others, the plaintiff bank in this appeal, that his possession was adverse to the bank. In other

words, possession by a receiver is possession by the mortgagor and so adverse to the bank. This was rejected in the High Court and,

on appeal, in this Court. Receivership is essentially a device to protect the mortgagee. While the receiver was treated as an agent of

the mortgagor, that was to ensure effective dealings with third parties. The concern of the receiver was to ensure the benefit of the

secured property for the bank, to which the property was mortgaged. At page 425, Denham J stated:

It is this relationship which governs this case and is the key. Approaching the relationship from another aspect, this

unique position may be further illustrated. In considering the possession of land, one has to consider all the relevant

circumstances. If a person is in possession with consent, that is a critical factor.

17. At all times Rockrohan were in possession of the lands with the permission of the bank. There is no sense that in making the order

that he did on the 16th of February 1987, Blaney J was in some way handing Rockrohan some aspect of possession without the

consent of the bank. In no way was this possession adverse to the bank. At any stage, the bank, as holders of an order for sale,

would have been entitled to put the property on the market, in which case the lands would, in the course of sale by Rockrohan, be

under an implied covenant to yield good title and peaceful possession to a purchaser. The bank held off in this step at the express

pleading of Rockrohan to await the end of the litigation. The bank did not have to do this, but everyone involved knew that this was

their approach and further knew the reasons why.

18. In terms of fundamental rational, this claim by Rockrohan was correctly characterised by Irvine J, at page 29 of her judgment, as

outside the purpose for which limitations on actions to recover land were imposed by legislation. Her reasoning is clearly correct:

Given that so much of the submission of Rockrohan is based upon various provisions of the Act of 1957, it is worthwhile

briefly reflecting upon the purpose of legislation of this nature. Limitation statutes are intended to prevent stale claims

and to relieve certain classes of defendants of the uncertainty of late claims being made against them. They are designed

to further remove the potential injustice that may be generated by the increased difficulty of proving a claim or defence

after an extended period of time. Brady and Kerr in their 2nd Ed. of The Limitation of Actions at p. 3 described such

concerns as follows:-

“One can therefore conclude that the underlying rationales of the Statutes of Limitations 1957 and 1991, are

threefold, and that they may be described as the certainty, evidentiary and diligence rationales.”

These considerations do not apply where one party seeks to enforce a judgment or order previously made against the

other party thereto at sometime removed from the date upon which it was made. There is no surprise or evidential

unfairness inherent in such a process. This being so there are good policy reasons for the courts to distinguish between

“actions” within the meaning of s. 2 of the Act of 1957 and procedures whereby an order or judgment may be executed.

Similarly, there are good reasons, beyond the consideration of time limits, why a further distinction should be made

between applications for leave to issue execution in respect of a prior order or judgment and an order required for the

purposes of giving effect to an existing court order and these reasons emerge in the case law referred to later in this

judgment.

19. It might also be noted that here are many aspects of the Statute of Limitations which do not apply to bar litigation or settle

entitlements through the passage of time; equity actions are the most obvious example in this regard but, there, equitable principles

such as delay and estoppel substitute as a straightforward manner of enabling a fair appraisal of the justice of the situation. Had

there been a lack of action by the bank, circumstances might have arisen whereby the bank could possibly be estopped from

asserting title as against Rockrohan. That, however, did not happen. Estoppel is the matter which must next be considered, however,

in relation to the claim made by Rockrohan.

Estoppel

20. Every fact in this protracted history points to the bank not proceeding because of the posture adopted by Rockrohan in this, and

in related litigation. Their position was that there was an expectation of success in the proceedings, whereby the guarantee

debenture would be overturned, or to more particularly deal with the representations made, to stop the bank proceeding to obtain an

order for sale in this case, whereby a sufficient sum in damages would ultimately be recovered from the State defendants or other

defendants to cover and to discharge the debt charged on the land.

21. One of the arguments advanced in the High Court, but effectively abandoned on this appeal, was that the Rules of the Superior

Courts would not permit what was contended to be the extension of time necessary under Order 42, rules 23 and 24, whereby leave

might be given by the court to issue execution. Irvine J did not find that to be a good argument; and correctly so. She found support

for the averments of the bank that it was the existence of these proceedings and the challenges to the underlying securities which

resulted in the bank taking no further steps to enforce the order for sale of Blayney J, once it had been made. That must be correct.

Everything in this case suggests that the bank did not sleep on its rights or represent that it had no rights, but instead, was primarily

concerned to see an end to litigation, which had extended over decades, and which had resulted in an argument being made before

Blayney J in 1987 by Rockrohan that time should be allowed to pass in order to facilitate success in that litigation. There is every

reason to believe that had the bank not waited until the end of that litigation, the same argument would have been reiterated on

every occasion. Furthermore, given that the bank itself was the subject of serious allegations in that related litigation, it was

reasonable for the bank not to effectively sell property out from under the feet of one of the litigants in circumstances where serious

allegations of breach of contract and tortious wrongdoing were being made against it.

22. The case of Revenue Commissioners v Moroney [1972] IR 372 is an example of a classic estoppel situation; though in that case,

estoppel based on representation was at issue. At page 381, Kenny J adopted the formulation from the 26th edition of in Snell on

Equity whereby the defence is founded upon unequivocal representation, as opposed to a mutuality of understanding:

Where by his words or conduct one party to a transaction makes the other a promise or assurance which is intended to

affect the legal relations between them, and the other party acts upon it, altering his position to his detriment, the party

making the promise or assurance will not be permitted to act inconsistently with it.

23. A more modern version of that work, Snell’s Equity, 32nd Ed., (London, 2010), sets out the approach to estoppel which can

encompass the embracing by parties of a situation contrary to the accrual of legal rights through representation, or where

entitlements can arise through an assumption adopted on the basis of conduct as to how the parties expect each other to act. At

paragraph 12-009, this edition indicates:

Where by his words or conduct one party to a transaction freely makes to the other a clear and unequivocal promise or

assurance which is intended to affect the legal relations between them (whether contractual or otherwise) or was

reasonably understood by the other party to have that effect, and, before it is withdrawn, the other party acts upon it,

altering his her position so that it would be inequitable to permit the first party to withdraw the promise, the party making

the promise or assurance will not be permitted to act inconsistently with it.

24. Estoppel may go beyond unequivocal oral or written representation. An unequivocal representation, however, is the normal

situation. Very often in litigation, it is not the legal basis that is disputed, but the facts whereby estoppel is said to be founded. Facts

may be asserted by one side and denied by the other. Estoppel can arise, however, through an assumption shared by those

interacting. This does not necessarily always have to be written or spoken once the state of affairs is clear, and therefore obvious,

and the parties act upon it. For estoppel to arise, it is essential that there is conduct which establishes an objective state of affairs,

whereby the party to be estopped, who would otherwise be bound by the legal relations, is placed in circumstances whereby it is

clearly understood that a new state of affairs governs the rights and obligations as between the parties. This requires some

demonstrable action, behaviour or representation by the party who is to be bound by the altered state of affairs. It is insufficient, to

establish estoppel, merely for the party later pleading that defence to conclude that matters must be so. There must, instead, be a

foundation in the behaviour of the party who is to be estopped from asserting a legal entitlement, either pursuant to contract or

otherwise. The same applies where estoppel is used not as a shield but as a sword. It would be an unwarranted and dangerous

extension of the doctrine of estoppel to permit it to be one-sided; which it would be if based on bare assumption. It has always been

central to the equitable principle of estoppel that it derives either from representations or from situations of behaviour that,

reasonably construed, clearly withdraw or alter the strictures of legal obligations in such a way that circumstances may later arise

whereby it would be unfair to enforce these. Where the matter is one of representation, it should be relatively simple to identify the

legal term supposedly set aside thereby, and where, and in what terms, the representation had been directed in this regard. Where,

on the other hand, it is a matter of both parties proceeding on the basis of a clear common understanding, the mutual convention of

the parties may suffice as a foundation for estoppel. Depending on the facts, estoppel may become operative in that situation, but

only because of that common understanding. In Treitel’s The Law of Contract, 13th Ed. (London, 2011) at 3.094 the learned editor

sets out the law thus:

Estoppel by convention may arise where both parties to a transaction "act on an assumed state of fact or law, the

assumption being either shared by both or made by one and acquiesced in by the other". The parties are then precluded

from denying the truth of that assumption, if it would be unjust or "unconscionable" to allow them (or one of them) to go

back on it. Such an estoppel differs from estoppel by representation and from promissory estoppel in that it does not

depend on any "clear and unequivocal" representation or promise. It can arise where the assumption was based on a

mistake spontaneously made by the party relying on it, and acquiesced in by the other party, though the common

assumption of the parties, objectively assessed, must itself be "unambiguous and unequivocal.

25. The decision of this Court in Courtney v. McCarthy [2008] 2 IR 376 has been described as an estoppel by convention finding. In

that case, however, there was in fact the clearest possible representation that legal rights were to be held in abeyance, namely the

passing of the closing date for the sale of property. Geoghegan J relied on the authority of Amalgamated Property Co. v. Texas Bank

[1982] 1 QB 84. At pages 389-390, he set out an analysis of the law, which is of general application to cases of estoppel, as follows:

The case related to a bank guarantee given by a company, the validity of which was being disputed by the liquidator of

that company. A question arose as to whether even if the guarantee was not valid an estoppel had arisen by virtue of

the conduct of the company which precluded denial of the guarantee. Brandon L.J., though forming the view that the

guarantee was in fact effective, went on to consider the estoppel question in the event that he was wrong. Two main

arguments against the existence of the estoppel had been put forward in the High Court and the Court of Appeal. The

first was that since the bank held its mistaken belief as a result of its own error alone and that the company had at most

innocently acquiesced in that belief which it also held, there was no representation which could found an estoppel. The

second argument was that the bank was seeking to use the estoppel not as a shield but as a sword and that that was

not permitted by the law of estoppel. Brandon L.J. rejected both arguments. He expressed the view that the particular

estoppel relied on was of the kind described in Spencer Bower and Turner, Estoppel by Representation (3rd ed., 1977), at

pp. 157 to 160 as "estoppel by convention". He cited the relevant passage of that work as follows:-

This form of estoppel is founded, not on a representation of fact made by a representor and believed by a

representee, but on an agreed statement of facts the truth of which has been assumed, by the convention of the

parties, as the basis of a transaction into which they are about to enter. When the parties have acted in their

transaction upon the agreed assumption that a given state of facts is to be accepted between them as true, then

as regards that transaction each will be estopped as against the other from questioning the truth of the statement

of facts so assumed.

In this particular case, both parties knew that the contract was lawfully rescinded and both parties accepted that that

was to remain the position subject only to the proviso that both would act on the artificial assumption that the contract

was still alive and enforceable if the sale was completed on a particular date and time.

Brandon L.J. then dealt with the second argument which, as I have already pointed out, was an argument which featured

heavily in this case and particularly in the High Court. Counsel for the plaintiff argued strongly that estoppel here was

being used as a sword and not a shield. But this is what Brandon L.J. had to say in relation to this alleged principle at pp.

131 to 132 of Amalgamated Property Co. v. Texas Bank [1982] 1 Q.B. 84:-

In my view much of the language used in connection with these concepts is no more than a matter of semantics.

Let me consider the present case and suppose that the bank had brought an action against the plaintiffs before

they went into liquidation to recover moneys owed by A.N.P.P. to Portsoken. In the statement of claim in such an

action the bank would have pleaded the contract of loan incorporating the guarantee, and averred that, on the true

construction of the guarantee, the plaintiffs were bound to discharge the debt owed by A.N.P.P. to Portsoken. By

their defence the plaintiffs would have pleaded that, on the true construction of the guarantee, the plaintiffs were

only bound to discharge debts owed by A.N.P.P. to the bank, and not debts owed by A.N.P.P. to Portsoken. Then in

their reply the bank would have pleaded that by reason of an estoppel arising from the matters discussed above,

the plaintiffs were precluded from questioning the interpretation of the guarantee which both parties had, for the

purpose of the transactions between them, assumed to be true.

In this way the bank, while still in form using the estoppel as a shield, would in substance be founding a cause of

action on it. This illustrates what I would regard as the true proposition of law, that, while a party cannot in terms

found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel, succeed on a

cause of action on which, without being able to rely on that estoppel, he would necessarily have failed. That, in my

view, is, in substance, the situation of the bank in the present case.

As I have illustrated earlier in this judgment that is exactly the position which pertains in this case.

26. The facts of that case illustrates the principle that what is involved in the matter before the Court is not a case of sleeping

entitlement being allowed to die through neglect. Rather, while unequivocal representations by Rockrohan are not to be found to

establish an estoppel of the legal effect of the passage of time for limitation purposes, neither can it be said that the bank, as

mortgagee, merely jumped to an assumption that everything would remain as it was as and from the order of Blayney J in 1987. On

the contrary, the position of the parties was clear. Through the decades following the making of the order, the bank was engaged in

protracted litigation, in circumstances where the parties knew that the rights of the bank had been the subject of an order which was

being held in abeyance at the express and open request of Rockrohan, made in the public forum of a court hearing, pending an

expectation of success by Rockrohan as against that bank and as against the State. There was a common assumption between these

parties, reasonably held and based on unequivocal circumstances, that the parties would hold their hand as against each other until

such time as that litigation had come to a practical conclusion one way or the other. Had it come to a conclusion as against the

bank, both parties assumed, again reasonably, as Rockrohan had expressly and publicly represented, that the debt would be paid out

of the profit from the litigation. Had it come to a conclusion, which it did, as against Rockrohan, then that would be the end of any

excuse whereby it could be claimed that the bank should hold off on selling the property or in making an application to court, usually

only made in the case of some form of difficulty or obstruction, that an order for possession for the purpose of sale was not

appropriate.

Action to recover land

27. In addition to the provisions of sections 13 and 18 of the Statute of Limitations 1957 set out in paragraph 11 above, it must be

added that section 2(1) thereof, while not containing a definition of what an action is, provides that this word “includes any

proceeding (other than a criminal proceeding) in a Court established by law.” Section 11(6)(a) provides that no action is to be

“brought upon a judgement after the expiration of twelve years from the date on which the judgement became enforceable.” While

section 11(6)(b) provides against the recovery of arrears of interest “in respect of any judgement debt … after the expiration of six

years from the date on which the interest became due”, no argument in this regard was pursued at the oral hearing of this appeal.

Section 37 also deals with the barring of interest recovery. After an analysis of the relevant case law, the reasoning of Irvine J on the

application of the specific interest provisions was shown to be equally applicable to her rejection of the other argument made in

relation to adverse possession. At pages 40-41, the trial judge stated:

There are also practical reasons why the Court believes that the provisions of s. 11(6)(b) nor indeed any other provision

of the Act of 1957, were [not] intended to apply in the manner contended for by Rockrohan. The relief granted by the

court in proceedings brought on foot of an equitable mortgage or charge provides the plaintiff with the right to recover

monies outstanding by seeking a sale of the defendant’s lands. That sale is under the control of the court and is for the

benefit of all who may have a charge or encumbrance burdening the land. The plaintiff’s ability to realise a defendant’s

assets is not entirely within its control. The uncertainty of the plaintiff’s ability to realise the assets the subject matter of

the court order within any defined period is all too readily apparent from the facts in the present case. Firstly, there was

the delay generated by the earlier proceedings wherein a challenge was made to the security on foot of which the

plaintiff obtained its order for sale. Secondly, there was the claim of Mr Hegarty to adverse possession of certain portions

of the lands the subject matter of the well charging order. Whilst this claim did not ultimately trouble the Court on the

present application, in another case such a claim could have delayed an application for possession or the possibility of

[e]ffecting a sale for many years. Finally, the judicial review proceedings instituted by Rockrohan also delayed [the

plaintiff bank’s application] for a further period of approximately eighteen months.

Any number of complications may arise, unrelated to any default on the part of a plaintiff, which could result in the lands

charged not being sold within six years of obtaining a well charging order. On the basis of Rockrohan’s arguments, the

plaintiff might find itself unable, because of matters outside its control, including obstruction tactics on the part of the

defendant, to recover the sums due for principal and interest which a defendant had contracted to pay at the time the

charge was created. All of these factors would suggest that it is unlikely that the legislature intended to impose any time

limit on firstly, the right of a plaintiff to enforce a well charging order, secondly, its rights to take such steps as might

prove necessary to enforce that order or thirdly, its right to recover interest on the monies outstanding on foot of such

order.

28. It has not been demonstrated that this analysis by Irvine J is in any way incorrect. Rather, that reasoning is compelling. Even

were that not so, there has been an action to recover land within the meaning of the Statute of Limitations. The only action there

has been, in that regard, ended in an order being made against Rockrohan, in favour of the bank, in 1987. Thereafter, the lands

possessed by Rockrohan were subject to the order of the High Court, securing the rights of the Bank, at a time when Blayney J had

concluded that no order for possession was necessary, as there was “nothing to suggest that the Bank would be impeded in the sale

of the land if the well charging order is made”. Every single step that should have arisen thereafter, and which was only delayed

because of the litigation between the parties, would have been conducted through the Examiner’s Office. Conditions of sale would

have been set out of court, normally by conveyancing counsel, and the sale would have been conducted by Rockrohan, as vendor,

and with the burden of all encumbrances on the land. In the ordinary way, distribution following sale would be by the Examiner’s Office

in appropriate order to those banks and other debtors according to the ranking in priority afforded to them by virtue of the date of

registry of their charge or other security. The need to seek an order for possession would have arisen through a concern that the

vendor would not cooperate in the sale, or would somehow cause prospective purchasers to be put off. Only in that circumstance

would it have been necessary to go to court to seek an order for possession for the purpose of sale; though such circumstances are

not a prerequisite to the making of such an order. On that necessity arising, which, in fact, it has in this case, due to the most

particular circumstances, that would not have been, and this is not, an action to recover land. That action has already taken place.

Any order in respect of possession for the purpose of sale is entirely supplementary to the conclusion of that action.

29. The supplementary nature of the order sought is immediately apparent from the nature of is the order sought and the

circumstances in which the order for sale was made; and on the basis by which this supplementary step became possible. An action

is, of its nature, a dispute between parties, where there is an assertion of fact or an argument of law, whereby one party seeks the

benefit of some legal entitlement as against the other. The action in this case took place when the bank, as mortgagee, asserted

that they had a charge over the lands held by Rockrohan as mortgagor and whereby Rockrohan had an entitlement to plead to the

contrary or to offer any evidence to challenge that assertion, or to demonstrate through cross examination or legal argument that the

action should fail. No such step was taken by Rockrohan and in no sense is any aspect of the definition in section 2(1) of the Act of

1957 be taken as embracing supplementary steps once an action, so property described, as either succeeded or failed.

Conclusion

30. Rockrohan, as mortgagor of the lands in County Cork, was made subject to a debenture in favour of the bank, as mortgagee, in

respect of borrowings by third parties related to a proposal to develop a mining project through Bula Limited. In 1987, due to the

failure of that project, the guarantee was activated by the bank, and the borrowings of the primary debtors were charged as against

the lands. While an order for sale was made by the High Court in that year, no order for possession for the purpose of sale was made,

because of the express plea on behalf of Rockrohan that other litigation challenging that debt, and alleging other wrongdoing against

the bank and other parties, was likely to be successful. As it turned out in the decades thereafter, the expectation of Rockrohan of

success and the generation thereby of sufficient funds to repay those liabilities did not come to pass. A claim of adverse possession

by Rockrohan, in circumstances where the bank held off the sale of the property in order to facilitate that litigation through to a

conclusion, is untenable. Rockrohan continued in possession of the property with the consent of the bank and under the order of the

High Court in favour of the bank for the sale of the lands. Consent to the occupation of land and adverse possession are mutually

exclusive concepts. Time did not begin to run under the Statute of Limitations 1957 because at no stage was any continued

occupation by Rockrohan adverse to the bank’s interest. Even were that so, the motion to obtain possession of the land by the bank

as against Rockrohan is not an action to recover land; the concept of action being essential to bar this claim. An action had already

taken place, namely the action which resulted in the bank obtaining an order for sale in 1987. Finally, the relation of the parties has

been such that each clearly continued, after the order for sale, in a holding position on the mutual understanding that it was only on

the conclusion of the related litigation that the repayment of the debt or the disposal of the land would take place. It would be

inequitable to allow Rockrohan to now resile from that mutual understanding.

31. The appeal is therefore dismissed.