SHORT'S TRUSTEE v. KEEPER OF THE REGISTERS OF SCOTLAND

The Land Registration (Scotland) Act 1979 must be read as a code which gives registered interests a high degree of indefeasibility while permitting rectification of the register in limited circumstances (section 9) and a state indemnity where rectification is not available (section 12(1)(b)). A decree of reduction of a disposition under section 34 of the Bankruptcy (Scotland) Act 1985 is not an "event…capable of affecting the title to a registered interest in land" for the purposes of section 2(4)(c) of the 1979 Act and so is not registrable as such. Where rectification under section 9(3)(a)(ii) or (iii) is not available because rectification would prejudice the proprietor in possession and that prejudice was not caused wholly or substantially by the proprietor's fraud or carelessness, the successful applicant under the reduction has his remedy by indemnity under section 12(1)(b), not by direct registration under section 2(4)(c).

This appeal concerned an application by the permanent trustee in the sequestrated estates of Alexander Short for judicial review of the Keeper's refusal to register in the Land Register a decree of reduction of four dispositions of two flats. The dispositions had been registered in the Land Register; the trustee obtained decrees of reduction under section 34 of the Bankruptcy (Scotland) Act 1985 in the Scottish courts. The trustee applied to the Keeper to register the decrees under section 2(4)(c) of the Land Registration (Scotland) Act 1979. The Keeper refused, contending that reduction of a deed was not an event registrable under section 2(4)(c) and that rectification under section 9, or indemnity under section 12, were the appropriate remedies. The Lord Ordinary dismissed the petition and the First Division refused the reclaiming motion; the trustee appealed to the House of Lords.

The central issues were (i) whether a court decree of reduction of a disposition is a transaction or event registrable under section 2(4)(c) of the 1979 Act, and (ii) if not, whether the scheme of the Act contemplates that such a decree may be given effect only by rectification under section 9 or by indemnity under section 12.

The House of Lords held that while, as a matter of ordinary legal effect, reduction of a deed plainly affects title, the statutory scheme of the 1979 Act shows Parliament intended that rectification under the limited terms of section 9 is the method by which the register is altered and that, where rectification is not available, the remedy is indemnity under section 12(1)(b). The court relied on the Act's purpose of creating largely indefeasible registered title, the restrictive conditions for rectification (notably section 9(3)(a)(iii)) and the statutory indemnity regime (section 12 and its exclusions). The House dismissed the appeal and affirmed that a decree of reduction is not registrable under section 2(4)(c); the proper route to give effect to reduction of a registered disposition is rectification where the statutory tests are met, otherwise compensation under section 12(1)(b).

Appeal dismissed. The House concluded that a decree of reduction of a registered disposition, although it affects title at common law, is not an event registrable under section 2(4)(c) of the Land Registration (Scotland) Act 1979; rectification under section 9 is the means to give effect to such decrees in limited circumstances, and where rectification is not available the appropriate remedy is indemnity under section 12(1)(b).

Lord Ordinary (interlocutor dismissing petition) 18 December 1992; First Division refused reclaiming motion (Lord President Lord Hope) 5 November 1993 (reported 1994 SC 122); appeal to House of Lords resulting in this judgment [1995] UKHL 21.