Prior executed but unregistered Charge V Judgment Mortgage

The decision in Larianov Foundation v Leo Prendergast and Sons (Engineering) Ltd [2017] IEHC 192 is a welcome decision for secured lenders and has clarified the complex position regarding priority of charges.

The crux of this case was whether a validly executed charge not registered in the Land Registry at the point of execution ranks in priority over a judgment mortgage which came into being after the first charge was executed but was registered in the Land Registry some 8 months before the first charge.

The Plaintiff, Larianov Foundation, obtained a judgment mortgage against the Defendant which was duly registered as a burden on the Defendant’s lands by the Land Registry on 9 January 2012. Cascade (a limited liability company incorporated in the British Virgin Islands) had taken a charge against the Defendant’s land prior to the judgment mortgage being registered, but their charge wasn’t registered in the Land Registry until 30 August 2012.

The question the court had to consider was whether a charge executed before the date a judgment mortgage is registered as a burden, but registered after that date, holds priority over the judgment mortgage.

Mr Justice Keane ultimately held that a judgment mortgage is subject to any right or encumbrance affecting the relevant land, whether registered or not, pursuant to section 117(3) of the Land and Conveyancing Law Reform Act 2009. This provision conflicts with s.68(3) of the Registration of Title Act 1964 which sets out that “an unregistered right in or over registered land … shall not affect the registered owner of a charge created on the land for valuable consideration”. However the Court relied on the maxim that ‘the general does not derogate from the specific’ in the finding that s.117 is applicable as it specifically deals with how a judgment mortgage is to be treated and s.68 does not. Therefore, the executed charge has priority over the judgment mortgage even though it was only registered in the Land Registry after the judgment mortgage.