Short's Trustee v Keeper of the Registers of Scotland

A decree reducing a disposition underlying a registered interest in Scottish land is not independently registrable as an event affecting title under section 2(4)(c) of the Land Registration (Scotland) Act 1979. The decree may instead justify rectification if the restricted conditions in section 9(3) are satisfied.

Where rectification is unavailable because it would prejudice a proprietor in possession, the successful party may claim indemnity under section 12(1)(b). The exclusions concerning titles reduced or varied by court order do not remove indemnity for loss caused by the Keeper's refusal to rectify. This construction preserves the statutory balance between security of registered title, limited rectification and compensation.

The permanent trustee on Alexander Short's sequestrated estates obtained reduction under section 34 of the Bankruptcy (Scotland) Act 1985 of four dispositions affecting two registered flats. He asked the Keeper of the Registers of Scotland to enter the decree in the Land Register under section 2(4)(c) of the Land Registration (Scotland) Act 1979. The Keeper refused, maintaining that rectification under section 9 was the appropriate procedure.

Lord Coulsfield dismissed the trustee's judicial review application. The First Division, reported at 1994 SC 122, refused the reclaiming motion. The trustee appealed to the House of Lords. The central issue was whether a decree reducing a disposition was independently registrable or could take effect only through the statutory scheme of rectification and indemnity.

1. Appeal dismissed unanimously. Lord Keith of Kinkel and Lord Jauncey of Tullichettle delivered the substantive speeches. Lord Mustill, Lord Woolf and Lord Nicholls of Birkenhead agreed with the reasons given in both speeches.

2. Per Lord Keith, the statutory scheme made rectification, rather than registration under section 2(4)(c) of the Land Registration (Scotland) Act 1979, the means of giving effect to a decree reducing a deed underlying a registered title. Rectification was available only within the limited conditions in section 9(3)(a), particularly where the proprietor in possession consented or had caused the inaccuracy wholly or substantially by fraud or carelessness.

3. Per Lord Keith, although it was artificial to describe the register as inaccurate after the underlying deed had been reduced, section 12(3) contemplated that such reduction might lead to rectification. Parliament's omission of draft provisions permitting wider rectification following reduction supported the conclusion that reduction was not generally intended to justify rectification against a proprietor in possession.

4. Per Lord Keith and Lord Jauncey, section 12(1)(b) covers loss caused by the Keeper's refusal to rectify when the statutory conditions leave the Keeper without power to do so. A successful pursuer who obtained reduction but could not secure rectification therefore had a right to indemnity.

5. Per Lord Keith and Lord Jauncey, the exclusions in section 12(3)(b) and (c) did not apply to that loss. Their language concerned loss arising from a title's reduction or variation, ordinarily affecting the person deprived of the registered right. It did not describe the successful pursuer's loss caused by the refusal to give effect to the order.

6. Per Lord Jauncey, section 2(4)(c), read alone, was wide enough to encompass a decree of reduction because such a decree dramatically affected the disponee's title at common law. Its prima facie meaning was nevertheless displaced by the Act's wider structure once indemnity was recognised as available.

7. Per Lord Keith, the different treatment of decrees under the Land Register and the Register of Sasines followed from their distinct principles. Registered title was guaranteed, subject to limited rectification and indemnity, whereas the Sasine system depended upon recording deeds and instruments affecting title.

1. House of Lords: The trustee's appeal was dismissed unanimously. The First Division's decision was affirmed.
2. First Division of the Court of Session: The reclaiming motion was refused and Lord Coulsfield's interlocutor was affirmed: 1994 SC 122.
3. Outer House of the Court of Session: Lord Coulsfield dismissed the trustee's application for judicial review of the Keeper's refusal to register the decree.