This is an appeal to the Lands Tribunal under section 25(1) of the Land Registration (Scotland) Act 1979 ("the Act"). We heard debate at Edinburgh on 16, 17 and 18 February 1998. The appellants were represented by Sir Crispin Agnew, QC, and Mr Ian MacLean, Advocate, instructed by Robert Thomas and Caplan, Solicitors, 365 Victoria Road, Glasgow. Mr Colin Campbell, QC, appeared with Mr J Bevan, Advocate, instructed by the Solicitor to the Secretary of State on behalf of the respondent, the Keeper of the Registers of Scotland.
The case had been sent to debate on the preliminary plea of the appellants challenging certain averments of the respondent. However it was apparent that these averments raised issues of title and relevancy more suitable for debate at the instance of the respondent and, before the hearing, pleas to title and relevancy were added on his behalf. The debate was accordingly heard on the respondent's pleas.
The appellants are heritable proprietors of subjects, which include five separate residential addresses in Kirkmuirhill, by virtue of a Disposition in their favour by Duncan Scott Douglas ("Douglas") dated 12 and recorded in the Division of the General Register of Sasines applicable to the County of Lanark on 20, both dates in September 1994. Douglas's immediate predecessors in title were West European Building Corporation Limited ("Webco") whose title came from two dispositions recorded on 11 January 1972 and 18 November 1981, respectively. They conveyed the subjects to him by disposition which was recorded in the said Division of the General Register of Sasines on 24 October 1991. The Disposition in favour of Douglas bore to be "without any consideration being paid" and the Disposition by him in favour of the appellants bore to be "for certain good causes with no consideration being paid".
The subjects are held by tenants under two long leases, one granted in 1861 for a term of 975 years, and the other in 1815 for a term of 999 years. So far as material to the present debate the leases were agreed to be in substantially identical terms. In particular, they each bound the tenant (and his heirs, executors, successors and assignees whatsoever):
"to pay a full year's rent according as the same shall be estimated at the time by two men to be mutually chosen and who in case of difference in opinion shall have power to choose an Oversman whose decision shall be final and that on the entry of every assignee under this Lease with interest during the not payment".
Both parties were agreed that this provision was properly described as a "casualty".
It is not disputed that assignations of the tenants' interests in each of the five properties took place between October 1986 and December 1987, a period when Webco were heritable proprietors. The assignations gave rise to applications for first registration of the tenants' interests under the provisions of section 4 of the Act. The Keeper accordingly required to make up and maintain title sheets of the various interests in terms of section 6. Under the provisions of section 6(1)(e) and (2) that title sheet should have included: "any enforceable real right pertaining to the interest or subsisting real burden or condition affecting the interest." It was not disputed in this case that the casualties here in issue would fall within the scope of that provision. It is admitted that the Keeper omitted any reference to these casualties from the various title sheets.
In their application to the Tribunal, the appellants set out, under the heading "Appellants' interest in the subjects", not only narrative of their status as heritable proprietors of the land but also detail of various assignations. They aver that Webco had assigned, inter alia, all casualties and debts due or to become due to it, including arrears, whether demanded or not, to Douglas by Disposition dated 8 December 1995. In course of submissions it was also pointed out that this deed conveyed to Douglas "the whole remaining assets, heritable and moveable" of Webco. The appellants aver that Douglas by assignation dated 23 August and 10 September 1996 assigned to the appellants his whole right, title and interest including his right to that of Webco in respect of leasehold casualties and his right, and that of Webco, to claim compensation arising from the respondent's omission in respect of certain of the subjects. He further assigned to the appellants his whole right, title and interest in and to these casualties and his right, and that of Webco, to claim compensation arising from the respondent's omission, in respect of the remaining subjects, by assignation of 1 and 25 August 1997 registered in the Books of Council and Session on 10 September 1997. In his answers, the respondent pointed out that Webco and Douglas had ceased to be heritable proprietors on 24 October 1991 and 20 September 1994 respectively and it was not disputed that neither of them had invoked any entitlement to be indemnified prior to these dates.
It is averred that as a result of the respondent's omissions the appellants (sic) have lost the right to recover from the tenants sums which would otherwise be due or become due to them on the entry of assignees as tenants of each of the subjects. They set out detail of assignations in recent years and of their calculations of the loss claimed in respect of sums which they say ought to have been due as casualties. They also set out calculation of loss in respect of probable future assignations. It was agreed that the present debate was not concerned with the detail of quantification which would, if necessary, require further procedure. However, questions arose in course of submission in relation to the origin and nature of their loss and senior counsel provided further information as to the way in which the appellants acquired their title and learned of the difficulties. They had acquired the heritable title with the intention of making full use of their feudal or similar rights. They were aware that the land was subject to long leases but unaware of the detail of these leases. When they examined their titles it appeared that they had rights under the casualty provisions. When they investigated the circumstances of the individual properties, it appeared that there had been assignations and accordingly that certain payments were due. However, when they first sought payment, they were met on or about 19 September 1994 by a refusal to pay and production of a Land Certificate from which the casualty had been omitted. Under the Act the tenants were entitled to rely on the Land Certificate as a shield. As matters stood, no payments could be recovered from any of the tenants. In the circumstances the appellants had sought to be indemnified by the Keeper under the provisions of section 12(1)(d) (which we set out below). The Keeper had delayed or refused to indemnify. Sir Crispin said that for present purposes it was unnecessary for the Tribunal to go into the history of the Keeper's response to the claim. The pleadings contain detailed averments of this. However he pointed out that as a result of late amendment by the respondent denying that there was an omission from the Land Certificates themselves, the appellants added a claim based on section 12(1)(b). The Keeper had had ample time to rectify. The appellants now sought to be indemnified under either one or other or both the provisions (b) and (d).
It is convenient to summarise briefly the general scheme of the Act and to set out the particular provisions which were subject to analysis in submission. The exposition of Lord President Hope in Short's Trustee v Keeper of the Registers of Scotland 1994 SC 122 and the speeches of Lord Keith of Kinkel and Lord Jauncey of Tullichettle in the report at 1996 SC (HL) 14 provide a helpful general commentary on the Act and we do not attempt to repeat this material.
The Act established a public register of interests in land and provides for the registration of most forms of transfer of interest in land in the areas where it is operative including transfer of an interest where the land is held under a long lease: section 2(1)(a)(v). The effect of registration is to vest in the person registered as entitled, a real right in the land "subject only to the effect of any matter entered in the title sheet of that interest": section 3(1)(a). Under section 6 the Keeper is directed to make up and maintain a title sheet of the interest in land by entering various details including "(e) any enforceable real right pertaining to the interest or subsisting real burden or condition affecting the interest". It is apparent that if the Keeper does not include detail of any particular real right in the title sheet, the subjects will be held free from that right burden or condition.
Section 9 provides that the Keeper may, whether on being requested or not and shall, on being so ordered by the Court or the Lands Tribunal for Scotland, rectify any inaccuracy in the Register. However this provision is qualified by the provisions of section 9(3) where rectification would prejudice a proprietor in possession. It is not disputed, in the present case, that the circumstances are such that the Keeper is unable to rectify the Register.
It is plain that the intention of the Act was that the Register was to be relied upon as providing the full relevant detail of real interests in heritage. It was neither necessary nor possible to look behind the registered title for that purpose. (Any exceptions to this are not relevant to the present case.)
By section 12 provision is made for indemnification. This section is in the following terms:
|"12. -||(1)||Subject to the provisions of this section, a person who suffers loss as a result of -|
|(a)||a rectification of the Register made under section 9 of this Act;|
|(b)||the refusal or omission of the Keeper to make such a rectification;|
|(c)||the loss or destruction of any document while lodged with the Keeper;|
|(d)||an error or omission in any land or charge certificate or in any information given by the Keeper in writing or in such other manner as may be prescribed by rules made under section 27 of this Act, shall be entitled to be indemnified by the Keeper in respect of that loss.|
|(2)||Subject to section 14 of this Act, the Keeper may on registration in respect of an interest in land exclude, in whole or in part, any right to indemnity under this section in respect of anything appearing in, or omitted from, the title sheet of that interest.|
|(3)||There shall be no entitlement to indemnity under this section in respect of loss where -|
|(a)||the loss arises as a result of the title prevailing over that of the claimant in a case where -|
|(i)||the prevailing title is one in respect of which the right to indemnity has been partially excluded under sub-section (2) above, and|
|(ii)||such exclusion has been cancelled but only on the prevailing title having been fortified by prescription,|
|(n)||the claimant has by his fraudulent or careless act or omission caused the loss;|
Section 13 provides:
|"13. -||(1)||Subject to any order by the Lands Tribunal for Scotland or the court for the payment of expenses in connection with any claim disposed of by the Lands Tribunal under section 25 of this Act or the court, the Keeper shall reimburse any expenditure reasonably and properly incurred by a person in pursuing a prima facie well-founded claim under section 12 of this Act, whether successful or not.|
|(2)||On settlement of any claim to indemnity under the said section 12, the Keeper shall be subrogated to all rights which would have been available to the claimant to recover the loss indemnified.|
|(3)||The Keeper may require a claimant, as a condition of payment of his claim, to grant, at the Keeper's expense, a formal assignation to the Keeper of the rights mentioned in subsection (2) above.|
|(4)||If a claimant to indemnity has by his fraudulent or careless act or omission contributed to the loss in respect of which he claims indemnity, the amount of the indemnity to which he would have been entitled had he not so contributed to his loss shall be reduced proportionately to the extent to which he has so contributed".|
In the pleadings the detail of assignations of individual tenancies is fully set out with averments of loss arising in respect of probable future assignations of tenancy. However no attempt is made to distinguish between claims made by the claimants as assignees and claims made direct, nor to distinguish loss sustained by the cedents from loss sustained direct. The parties' written Notes of Argument and, indeed, the opening submission for the respondent, tended to suggest that the appellants' claim was seen as based solely on their rights as assignees, although their pleadings claim that they themselves have suffered the loss. The submissions covered a range of discrete heads of argument and the basis of the appellants' loss did not require to be set out explicitly in relation to each. It is now clear that in respect of probable future assignations of tenancy their primary claim is a direct one in their own name with the argument based on title as assignees being presented simply on an esto basis to meet a particular contention of the respondent. In respect of the earlier period their cedents had a right to casualties which had been incurred even if no claim had been made. The appellants had title as assignees in respect of such casualties. Their claim in respect of that period is based on their rights as assignees. As we note below, there is still scope for confusion as to the precise formulation of that claim.
On the unopposed motion of the appellants the tribunal ordered Notes of Argument to be lodged and both sides duly lodged detailed Notes. The appellants also prepared their submissions in writing on the assumption that they would be meeting an argument based directly on the respondent's Note of Argument. In the event counsel, in opening for the respondent, took a fresh approach, dividing the submissions into five distinct heads. The appellants, in course of reply, were able to adopt their written submission but had to adapt it to meet the respondent's submissions. The Tribunal accordingly had the matters in issue presented from a variety of angles. Although this was not an unmixed blessing, we welcomed the provision of written material and were indebted to counsel for the clarity of their oral submissions on the five distinct heads. The area of obscurity related to the assumptions made as to the capacity in which the appellants made their claim to indemnity. This was clarified as the submissions proceeded but we are not confident that the difficulties have been fully resolved.
We accordingly take as a preliminary matter the underlying question of the capacity in which the appellants have or may have a title. We then deal with the five specific heads of the respondent's submission.
The respondent submitted that the only party entitled to claim indemnity was the party with right to the landlord's interest at the respective dates of the Keeper's omission on first registration. At that point Webco had lost the right to the casualties whether or not they knew it. Section 12 gave them the right to indemnity.
In both the Note of Argument for the respondent and in the opening submissions, this proposition appeared to be a matter of assumption. For example, under the fourth head, Mr Bevan presented his substantive contention dealing with the right to assign, on the basis of an assertion that the effect of the Act was to limit the indemnity to the party infeft in the landlord's interest at the date of the first registration. This was not elaborated. It was not supported by analysis of the Act nor by reference to principle. However the proposition was developed by Mr Campbell's submissions as to the proper understanding of the nature of the interests involved in the claim. The effect of section 3 was that the omission on first registration extinguished the obligation to pay casualties. Accordingly, no valid right to enforce casualties could, in fact, be transmitted by the proprietor infeft at that time. The value of his property, his rights in relation to the subjects, was diminished with immediate effect. In place of the lost rights, the owner obtained a right to indemnity from the Keeper. It was fundamental to proper understanding of the scheme of the Act that the indemnity covered the loss to the proprietor at that time, whether or not the proprietor realised his loss. The loss was a single event enforceable from that moment. He accepted that there could be a range of losses if, for example, there was a multiplicity of benefited proprietors losing benefit of a land obligation. However he submitted that there could not be a series of losses by successive proprietors. The loss was of the right to claim casualty in respect of any assignation which had taken place and of the probable stream of future income. If a proprietor suffered that loss no successive proprietor could also suffer the loss. A person could not incur a loss by purchase or acquisition. A purchaser purchases property as it is, not as it might have been.
Prima facie, therefore, the loss is suffered by the person who owns the land at the time of omission. Mr Campbell accepted that circumstances could arise in which the direct and natural result of the omission on first registration would fall, at that date, on a party other than the infeft proprietor. There might be a contractual chain taking the loss away from that owner. This might arise if, for example, a third party had entered missives for purchase of the landlord's interest in reliance on a right to casualties. We understood him to accept that the loss in that situation might properly give rise to a claim to indemnity by that third party. However, he argued that that was an unusual situation and no such circumstances had been here averred. If the loss was not to be seen as arising once and for all and thus restricted to the initial proprietor or one deriving right directly from him, there could be a series of claims in respect of substantially the same perceived loss.
In short, it was a fundamental error to describe loss in terms of loss of individual casualty payments running from the time of the omission. The loss was suffered at that time. Webco could not assign a right to collect casualties thereafter because this right had plainly ceased to exist. He submitted that underpinning the appellants' submissions was the idea that the right to casualties continued to exist in some way. That was a basic flaw. At highest all that a subsequent proprietor could rely on was an assignation, not of the right to casualties because it no longer existed, but an assignation of the right to a claim against the Keeper.
That the right was restricted to the initial owner was re-enforced by reference to section 12(3)(n) and by reference to section 13(4). Both these provisions dealt with the Keeper's possible defence by reliance on actings of the claimant. This, he said, plainly looked at the actings at or in connection with first registration.
He suggested that this submission could be presented as a question of remoteness. Loss perceived by a purchaser on his inability to collect casualty was too remote to attribute to the omission. It was attributable to his acquisition of a heritable interest which no longer included a right to casualties. If the acquisition was by purchase the fact that the purchaser might have paid too much is plainly not added to the initial loss. In this case the appellants averred that the omission from the Land Certificate was the effective cause of loss. However the effective cause was truly the original loss to Webco. It was unnecessary to become involved in the detailed provisions of section 12(1)(b) or section 12(1)(d). The appellants had no title to sue in their own name. The loss had been incurred at an earlier stage.
He submitted that if the appellants did have a claim as assignees, there was, in any event, no loss. The present case was an example of an initial loss arising unknown but being, in effect, superseded by the circumstances of disposal. (This argument appears more fully below under head 3.)
The appellants in reply submitted that there was nothing in the provisions of section 12(1) to suggest that a claim was only open to the proprietor in possession of the landlord's interest at the date of first registration. It would have been easy to express such a restriction had this been intended. On the contrary the reference was to "a person who suffers loss". Similarly, a claimant is simply a person who submits a claim. It is unrestricted. The only prerequisites for a claim to indemnification were that: (1) a person had suffered loss; and (2) that the loss was suffered as a result of one of the events specified under (a) to (d) of section 12(1).
The appellants pointed out that the respondent's submission was predicated on loss crystallising at the date of the Keeper's error. However, the statutory basis of claim was section 12(1). The events listed thereunder were not tied to the original omission. In particular, the failure to rectify under section 12(1)(b) was likely to come after the problem had come to attention of an interested party who faced a loss. This was obvious from the provisions of section 9 which allowed rectification in certain circumstances. Until it can be seen that the Keeper is not going to rectify, there is no loss. Accordingly this claim is not linked to the proprietor at the time of registration. He may not suffer any loss. Indemnification can properly be seen as insurance against latent defect. It should operate when the defect is discovered. Sir Crispin stressed that it is important to keep in mind the range of land obligations which might be affected by the Act and how these are created. A benefited proprietor would often have no awareness of the initial omission. There might well be several singular successions before the matter became live. He suggested as an example, a negative burden such as an obligation not to use premises for sale of alcohol. The neighbouring, benefited, proprietors would have no reason to know of the omission unless and until an attempt was made, say, to change the house to an hotel. There was no reason not to accept that the real loss fell upon these proprietors as they were at the date of change rather than at the date of omission. It cannot have been the intention of Parliament that persons would lose the benefit of such obligations without indemnity. The situation would be worse if the respondents were correct to argue that the original proprietor could not assign his claim against the Keeper but, in any event, it cannot have been the intention of Parliament to have such a limitation.
There was no reason to restrict the class of claimants. If it was suggested that a reasonably careful purchaser would check the position before purchasing or that a particular claimant had acquired title knowing or suspecting the terms of the Register, the Keeper could found on this under section 12(3)(n). If the error was due to fault of the proprietor in possession the Keeper could rectify under section 9(3)(a)(iii).
The appellants submitted that it was wrong to say that there was no loss to them in their own name because the right against the tenant had become unenforceable before the present appellants acquired title. They were entitled to acquire in reliance on their own title. The rights of a singular successor did not depend on any positive agreement to acquire a particular long lease. The appellants were in the same position as if they had bought heritage and examined the estate cartulary on taking entry. They would find the leases and, but for the Keeper's failure, would have had a right to enforce casualties. Their loss arose when faced with the Land Certificate or when the Keeper refused to rectify. The appellants' position was that they had acquired the land assuming the existence of long leases and with a view to exercising their "feudal" rights. They had examined the leases and attempted to exercise these rights. At that stage only, the tenant had produced the Land Certificate in defence. (We observe that this occurred before the appellants' title was recorded but nothing appears to turn on this.) The initial pleadings had relied on section 12(1)(d) but the claim was equally open under (b).
The appellants claim loss arising under both or either of these provisions. The Note of Argument for the respondent contended that there was no "error" in the Land Certificate because it was only a copy and it was not in dispute that it was a true copy of what was in the title sheet. However this was a fallacious argument. It could not be supposed that Parliament was intending to deal simply with clerical errors when regard was had to the provision that the Land Certificate was to be treated "for all purposes" as sufficient evidence of the contents of the title sheet of which it was a copy: section 5(2). The Land Certificate was simply the public document. It was the shield behind which the appellant could not go. If it was sufficient evidence of the contents of the title sheet the actual content of the title sheet could not be in issue. The effective cause of loss is the Land Certificate. That is what the tenant relies on to resist the claim.
In any event the appellant could found on section 12(1)(b). The Keeper had had ample notice of the true state of affairs. The casualty should have been included in the Register. However, he had refused or omitted to make a rectification. It was not disputed that he had not done so because he did not, in the whole circumstances of this case, now have power to do so. However it was clear from Short's Trustee that a claim arose under section 12(1)(b) even where the Keeper had no power to rectify. If a claim fell under section 12(1)(b), the onus was on the Keeper to show why no payment should be made.
It was further submitted that support for the appellants' approach could be found by comparison with the situation where the Keeper has expressly excluded indemnity under section 12(2). In that event, the Register was open to challenge and correction within ten years in terms of section 1 of the Prescription and Limitation (Scotland) Act 1973 as amended by section 10 of the 1979 Act. That challenge could be presented by anyone in right of the landlord's interest during that period. By contrast, where indemnity was not excluded, a singular successor could not challenge the title but has a claim under the indemnity instead.
It was pointed out that the respondent's restricted approach would have consequences which could not have been intended. It was easy to envisage circumstances where the opportunity to make a claim would be very short. The proprietor of a landlord's interest might well have sold before learning of the assignation. There might have been no loss in respect of the assignation which triggered the first registration. Payment might have been made. The landlord might not have any reason to know of the problem until faced with defence to a claim in respect of a subsequent assignation of the tenancy.
Finally, Sir Crispin referred to the case of GUS Property Management Limited v Littlewoods Mail Order Stores Limited 1982 SLT 533. Although that case was allowed to proceed on the basis of the claim as assignees rather than a direct claim by the singular successors, it did not support the proposition that loss necessarily disappeared with a change of owner. It was a question of circumstances. In any event, it was misleading to see the present case as raising the same issues as physical damage to property. On the contrary it turned on the provisions of section 12.
If the respondent's proposition was accepted, the appellants' alternative submission was that the loss could not just disappear. If Webco was properly the party which had sustained the loss, Webco had a right to be indemnified and could, and had, assigned that right to the appellants. All that was in issue was simply the measure of loss which was a matter for another day.
It is clear that a plea of no title to sue covers challenge both to formal title and to interest. Mr Campbell's submission can, we think, properly be seen as a change to interest. Although the initial submission was expressed in terms of a proposition that the title to sue was solely that of the party infeft at the date of the omission, he accepted that the claim was not necessarily limited to the infeft proprietor. The loss could fall on a party with relevant personal rights. The essence of his submission was that, as the loss of value of the rights in the landlord's interest followed immediately on omission, subsequent events could not create a fresh loss giving a title (semble, title and interest) to parties whose interest in the land only arose after the initial omission.
Sir Crispin's position was that his claims were presented in the alternative. If the appellants did not have title in their own name under the provisions of section 12(1), Webco, their effective cedent must have had a good title. It was unnecessary for him to deal explicitly with the nature and quantum of loss under each title. The appellants had a loss because they could not enforce the rights they ought to have had under the leases.
We accept the appellants' submission that the question of formal title turns on the provisions of section 12 and that the section does not limit the categories of claimant. However it does expressly define them in terms of persons who "suffer loss". There can be no title without interest. We, accordingly, think it clear that the issue turns on the nature of the loss envisaged by that section.
Mr Campbell contends in effect that the only loss is that to the landlord's interest at the date of omission. From that date the ability to exact casualty has in fact gone. It does not matter that the loss is not recognised. A purchaser at that date, knowing the whole truth, would give less for the landlord's interest because of the loss of the potential flow of future income. As the loss at that stage includes all future income, there can be no subsequent loss triggered by inability to enforce particular casualties as assignations occur or come to notice. Any such "loss" would, in reality, duplicate the loss already sustained.
There is undoubted force in this submission; the strict logic of it is clear. It has the advantage of avoiding any possible difficulty over duplication of claims. It deals with the perceived problem that a party who has acquired a bundle of titles on a speculative basis without knowing precisely what rights he has acquired or what their value may be, cannot properly be said to sustain a loss simply because an apparent right which he finds on first examination of the papers proves on further investigation to be valueless. Loss cannot depend upon the order of his discoveries.
However it is important to look at the nature of the loss contemplated by the Act. In the first place it is plain that no provision is made for loss arising simply from omission or error in the title sheet as such./ There is nothing in section 12 dealing with loss on first registration. On the contrary, title to claim indemnity appears to be given to the party faced with the consequences of any of the events there set out. With the possible exception of section 12(1)(c) the subsection deals with events which would only occur some time after first registration. The legislators must have been aware of the possibility of changes in title during such a period. It is loss to the party faced with one or other of the events specified which appears to be contemplated by the Act. Secondly, we have regard to the purpose to be served by the indemnity. The scheme for indemnity was necessary because the public benefit of certainty of the Register meant that parties had to lose the benefit of the right they had under the former Sasine system to go behind the recorded title. Under that system, if a party had better evidence to establish his rights, the adverse Sasine title would not necessarily prevail. Although the bases of loss set out under section 12(1) are varied, it seems clear that the right provided by section 12(1)(b), to indemnity based on refusal to rectify is due to recognition that the claimants have lost their ability to rely on the rights they would have had under the rules of the Sasine system. The underlying basis of the present appellants' claim is that they have lost the rights that they would otherwise have been able to rely on. This fits the scheme of the Act.
In the instant case although the quantification of loss may present some difficulties, the nature of the right which has been lost is clear. The right to exact casualty did exist before the omission. It is no longer enforceable. However it is not hard to envisage cases where the right allegedly lost might not be admitted nor be so clearly identifiable. Quantification of the damage is essentially a second stage in the process of establishing a loss. If the conflict between the prior rights and the registered rights was not obvious, emerged long after registration, and required investigation and assessment, it would be quite artificial to say that, nevertheless, the relevant loss was sustained at date of registration.
The appellants contended that, in relation to a case where indemnity had been excluded by the Keeper, title to challenge the Register would plainly pass to singular successors. Any party with an apparent interest to challenge the Register could do so until it was fortified by prescription. This was not disputed. It is an illustration o the fact that title to challenge under the Sasine rules was not limited to the party vested in the contrary right at the date of recording. If one party with a relevant interest did not mount a challenge, a party who later acquired that interest could challenge the recorded Title.
If the appellants can demonstrate a loss in their own name by a comparison between the rights they would have had under the Sasine system, being rights they should have had under the Register, and the rights they now, in fact, have under the Register, we are not prepared to hold that such a loss is illusory, simply on the basis that if the truth had been patent, the loss would have been suffered at an earlier stage. There is no suggestion that the omission had any real effect on the value of the landlord's interest at the time. It is not disputed that no-one recognised any loss at the time of omission. It is, of course, precisely because the Keeper did not recognise the true state of rights at the time, that the problem has arisen. There is no justification for an assumption in his favour, contrary to fact, that the omission was recognised with the immediate effect of reducing the value of the landlord's interest.
It may be observed that, pressed to its logical conclusion, the respondent's analysis does run the risk of consigning all loss into the kind of "black hole" envisaged by Lord Stewart in the GUS case (in the report under the name of J Dykes Ltd v Littlewoods Mail Order Stores Ltd 1982 SLT page 50 at p 54). It is clear that if all the facts were patent the value of a landlord's interest would drop immediately after first registration. At that stage, however, the landlord would have no claim under the provisions of section 12(1) because none of the trigger events there specified would have happened. He might attempt to set up a claim by requesting the Keeper to rectify. However, by that stage, the loss would, on this analysis, have already been incurred. It would not be a result of the refusal but of the omission. A similar difficulty could arise in relation to quantification.
The loss measured at the date of omission could fall far short of the loss incurred when that omission actually came to light. For example, if an upper flat owner lost the right to a contribution to roof repairs due to the Keeper's omission from the title of a lower flat, the loss at date of omission would be measured by the drop in value of his own flat. If the roof was in apparent good order at that time and the loss only came to attention a year or later when substantial unexpected roof work required to be carried out, the indemnity based on loss at date of omission might fall far short of the value of contribution to which he would have otherwise have been entitled.
We think it plain that a practical approach to loss must be taken giving full effect to the fact that the date of loss contemplated by section 12(1) may come well after the error in the original title sheet. We accept that this may give rise to an apparent risk of duplication of claim and that the provisions of section 12(3)(n) and section 13(4) will not provide an answer to certain situations which can be imagined. However, these provisions are not expressly limited to fault in relation to first registration and we see no reason to treat them as so limited. We note that Lord Keith of Kinkel in Short's Trustee, supra, at p 20 F considered that section 12(3)(n) was possibly intended to be a catch-all provision covering a variety of situations. We see no reason to doubt this. In any event, this problem may be more apparent than real. In some cases, the Keeper may be able to obviate it by notice. Each case will require scrutiny of its own facts. It may be that there will be features about the circumstances of acquisition of an apparent paper right which demonstrate that in no reasonable sense of the term has the holder incurred a loss attributable to the Keeper's omission. The averments of the parties do not demonstrate such features in the present case. A speculative acquisition necessarily takes a chance on various matters. It does not require to take a chance on any vagaries of registration because the scheme for indemnification is there to avoid this particular risk.
Support for this approach to the question of loss may be found in consideration of the range of circumstances in which the terms of the Register could make ineffective, rights which would otherwise have been enforceable. Sir Crispin referred to omission of a prohibition on use for sale of alcohol. A benefited proprietor would, on the respondent's approach suffer loss of value immediately. However it might be many years and several successors before circumstances revealed the absence of the right. We heard no positive submission as to the practice of examination of neighbouring titles on purchase. This might depend on the nature of the right and the particular circumstances of transfer. As Sir Crispin pointed out, if the Keeper thought any loss perceived by a subsequent proprietor was due to carelessness, a defence would normally be available under section 12(3)(n). We have little doubt, however, that a party who has acquired subjects making a legitimate assumption based on his own title that the neighbouring property could not be turned into a hotel without his consent, may have a genuine loss if this is able to happen as a result of an omission from the Register.
Examples of errors at first registration could include omission in the title of a lower flat of an obligation to share roof burdens or, say, positive mistakes over boundaries. It is not uncommon under the Sasine rules to find boundary disputes turning on competing progresses of title. The fact that the "progress" evidenced by a Land Certificate is conclusive, is not a justification for limiting the title of those who would otherwise have an interest to challenge it.
What the respondent characterised as a fundamental flaw in the appellants' argument was the concept that, despite the omission, the rights in casualties "in some way" continued to exist. Mr Campbell pointed out that the rights had plainly come to an end on first registration without them. They had ceased to exist and, accordingly, could not be assigned. However we think that, in the context of the scheme for indemnity, there is no difficulty in the concept of rights being treated as if they did exist "in some way". They can exist as the measure of what the situation would have been if there had been no Register. They are the measure of what the situation would have been if the Register had been accurate. In the context of assessment of loss, measurement against rights as they might have been, makes perfectly good sense. In Short's Trustee, supra, Lord Keith at 21 C to D said "Rectification of the register is available only in a limited number of circumstances, and it is only just that a person clearly entitled to valuable rights who cannot bring himself within any of that limited number should receive compensation, unless there is good reason for denying it". Plainly his Lordship had in mind rights which were no longer enforceable.
We must also deal with the suggestion that an answer to the appellants' claim might be that the loss was too remote and not linked to the omission because it was attributable to the acquisition of a title which no longer had the rights attached. As it stands, this is a circular argument. If a loss exists it cannot be attributable solely to the acquisition of the title as such because plainly the rights acquired must be taken as a whole. There is only a loss by comparison with "what might have been" and it is hard to see the omission as anything other than a dominant and proximate cause when tested on that basis. In any event reference to the concepts of remoteness, familiar in other areas of law, carries a reminder of the need to avoid an excessively logical or philosophical approach.
We have referred to section 12(1)(b) in our analysis of the nature of the loss to be indemnified. There are other types of loss within the contemplation of the section including loss caused by rectification of the Register. There would be no need to limit this claim to the party infeft at the date of first registration, and indeed such limitation might be quite inappropriate. The appellants' claim was initially based on section 12(1)(d). It was not suggested that the difference between that subsection and subsection (b) was of significance in this case. It is therefore sufficient for us to indicate briefly that we accept that the error or omission referred to is not limited to error or omission established by comparison with the title sheet. It may be that section 12(1)(d) like section 12(1)(c), was inserted primarily to cover the risk of clerical or administrative error, and that the risk of an inaccurate copy was, indeed, in mind, but we cannot accept that the provision as enacted is restricted to deficiencies in copying. It covers errors or omissions in information given by the Keeper in writing and that must be error or omission assessed by reference to the true facts. A Land Certificate which does not include a burden which should have appeared on it, can be said to contain an omission even if the explanation for the omission is that it was missed from the title sheet.
We accordingly consider that the appellants have a title and interest to seek indenmity in their own name from the Keeper in respect of casualties which, but for the omission, they would have been able to claim from the date when they acquired title to the land. We consider that they have also a title as assignees in respect of the earlier period although we have some reservation as to the precise nature of the claim now being presented.
It will be necessary to have a proof to deal with quantum and as the present pleadings do not formally distinguish the title in which different heads of claim are made, that must be proof before answer with the plea to title to sue still standing. We are aware that the respondent has not taken any narrow pleading point in this case and a flexible approach to pleadings is appropriate in tribunal proceedings. However we think that to facilitate future procedure in the present case, the bases of claim should be set out formally and we shall give the appellants an opportunity to amend to deal with this.
Implicit in certain of the arguments presented under heads 3 and 4 below, is the assumption that the appellants base at least part of their claim on a right in their cedent to claim indemnity under section 12(1). It is not, however, clear that the cedent fell into any of the categories of claimant provided for by that section. There is plainly room for confusion between a claim for loss to the appellants due to their inability to enforce rights they would otherwise have had as assignees, and a claim based on their cedent's right to indemnity. Neither the pleadings nor written arguments appear to us to throw light on this distinction. Indeed, in their written Submission the appellants describe their claim in respect of past casualties simply as being as "fortified" by the assignations in their favour. Although the fault may lie with the Tribunal, the matter did not appear to be clarified by the oral submissions. It may prove to be a distinction without practical substance.
However, as we consider a proof before answer to be required to deal with the nature and quantum of loss, it is unnecessary to say more at this stage. The matter may be clarified by amendment.
We turn now to deal with the five heads of argument presented in the opening submission for the respondent. On the view we have reached on the preliminary point, it now appears that the last four heads are limited in their potential application to casualties arising in the period before the appellants obtained a heritable title.
It was argued that on a proper construction of the leases:
Strict construction was said to be justified both by the conra proferentem rule and by the presumption against restraint on an owner of land. Reference was made to Roebuck v Edmunds 1992 SLT 1055; Kaye v Archibald, Hamilton Sheriff Court, 27 June 1996, unreported; Gordon Scottish Land Law 22.41; Stair Encyclopaedia Volume 13, para 227.
Counsel for the respondent referred to various provisions of the lease as showing that, although the parties clearly had in mind circumstances where partial assignation might be appropriate, they had nevertheless made no provision for a casualty on partial assignation. Nothing should be read into such a document. It was not disputed that partial assignation was permitted by the lease. There was, however, nothing to justify interpretation of the casualty clause as covering a partial assignation. It could be read quite reasonably as covering only assignation of the full subjects. The normal rule of interpretation was that the greater includes the lesser but this was superseded by the contra proferentem rule. Further, where a provision would operate to restrict freedom to exercise property rights to the full, the scope and content of that provision should be read strictly in favour of freedom. Interpretation should be as narrow as the text will fairly bear: Gloag on Contract, 401.
Under the second head, it was submitted that although the lease envisaged and, indeed, required the tenant to build houses, there was nothing to show that the casualty clause was intended to cover buildings erected on the ground. It would be a heavy burden to rent the tenant on houses he himself had provided. Such a burden should have been clearly set out. The landlord would get the benefit of the houses at the end of the lease. The tack itself was small. The benefit of the casualty would be irregular. In the context the landlord could reasonably be taken to have expected a modest return from bare ground rather than a return from buildings.
For the appellants, Mr MacLean pointed out that the lease referred to "every assignee under this lease". This was quite unrestricted. It could be contrasted with "every assignee of this lease". It could also be contrasted with the grassum payable by an heir where the reference was to every "heir to this Tack". This might suggest a reference limited to the whole subjects. The reference to assignation on the other hand covered every assignation. The machinery provided allowed assessment of appropriate rents for parts assigned. Kaye v Archibald supra, turned on the precise terms of the lease there in issue. The ratio was precisely specified by the Sheriff as turning on the reference to "the said subjects", which, in context, could only mean the whole subjects.
Morrison's Trustees v Webster 1978, 5 R 800 was an example of the Court accepting without question that a similar provision in a feudal title applied to partial disposal. Crawford v Campbell 1937 SC 601 showed the willingness of the Court to treat leasehold casualties as virtually in the same position as feudal casualties.
The assertion that a lease had to be construed contra proferentem was too broad. Such a rule of interpretation would only come into play if the provision was obscure or equivocal. In that situation a document presented for execution by the party which prepared it might have to be interpreted against that party. However this was a mutual commercial lease. There was no assumption that one or other party was weaker: Gloag on Contract, 401; Rankine on Leases, 3rd ed 98. Roebuck v Edmunds dealt simply with clauses of pre-emption.
In the present case the whole terms of the lease showed that partial assignation was contemplated. It was to b e noted that if the respondent's argument was correct, the whole effect of the casualty would be defeated by the first partial assignation.
The term "full year's rent" was plainly intended to cover the whole relevant subjects, ground and buildings. It was well established that buildings became part of the land. The landlord would expect the benefit of the intended development. Anderson v Potts 3 Shaw 334 showed that "full rent" meant rent of land and buildings.
A document conferring real rights must be construed strictly so that succeeding parties can see clearly the extent of their obligations. The presumption in favour of freedom also requires a strict approach. We have some reservation about the applicability of the contra proferentum rule. In the first place we accept that in this type of lease there can be no automatic assumption that the landlord should be treated as proferens. We also consider that the justification for the rule is based on the presumed intention and motivation of the initial parties. This does not sit comfortably with the need of singular successors to see clearly their rights in the language used. However these rules all support strict interpretation in favour of the burdened party and we accept that this is appropriate. The starting point, however, is the language used. Rules of strict construction cannot be applied to create an ambiguity if the language is not fairly capable of two interpretations.
In a lease which permits assignation of parts of the subjects, we consider that, read fairly, there is no real ambiguity in the provision for a casualty "on the entry of every assignee under the lease". The expression as it stands is entirely apt to cover an assignation of a part. Such an assignation is an assignation under the lease. The provision, cannot be read as limited to assignations of the whole subjects without reading in words which are not there. We find no justification for this.
We do not think that this issue is assisted by reference to authority. Sir Crispin founded on Morrison's Trustees v Webster supra, as showing that disposal of part of feued subjects was, without apparent comment, treated as covered by a provision for duplicand. In that case what was to be doubled was "the said feu duty". The Court apparently saw no difficulty in doubling what was not, in fact, "the said feu duty" but only the portion of that feu duty allocated to the part subjects. We do not think that any principle can be derived from that. It was not contended that there was, at the time of the present leases, any established meaning to be given to the language used which might have supported a contention that it impliedly related only to full assignation. Morrison's Trustees would have tended to negative any such contention.
We also consider it plain that the reference to quantification as "a full year's rent" is unambiguous in relation to the subjects to be rented. It is well established that houses accresce to the land on which they are built. Rent is normally assessed on the value of the heritage. It is plain that in absence of special circumstances a rent for land which had been built upon would include the value of the buildings. There was no suggestion of any contrary practice or understanding at the date of these leases. As far as it goes, Anderson v Potts 3 SH 334 shows the opposite. Both leases provided for a full year's rent to be assessed by independent parties. There is nothing in this provision to direct those parties to carry out an assessment of hypothetical rent by ignoring the actual buildings. The provision cannot properly be interpreted as applying only to the bare ground without reading in words which are not there.
It appears to us that the constructions contended for by the respondent are not truly based on ambiguity but are attempts to incorporate qualification of the words used by oblique reference to the intention of parties. However, if intention is in any way relevant, we consider that the strict interpretation is supported by reference to the whole lease and the inferences it supports of intention. These leases not only expected, but required, a house or houses to be built on the ground. If the intention had been to exclude the buildings some provision would have been required to direct the independent assessors to the material they were to assess. Further, partial assignation is agreed to have been within the contemplation of the lease. The parties cannot have understood the provision as allowing the casualty to disappear on assignation of a part. Accordingly if we were able to have regard to intention of parties this would merely confirm our view of the strict interpretation.
We consider that the decision in Kaye v Archibald can be seen simply as an application of a strict approach to a particular provision. The lease apparently provided for payment "at every sale or transference one full year's rent or value of the said subjects according to the actual value thereof at the time for the first year's possession or entry of every assignee or singular successor".
The Court accepted the submission that a casualty based on a rent "of the said subjects" did not envisage an assignation of only part of the subjects. No provision was made which fitted a payment of casualty on assignation of only part of the subjects. The Sheriff expressly relied upon the reference to the words "of the said subjects". As the measure of any such obligation is to be found strictly in the language used, we do not think that any general guidance is to be derived from the decision. Similarly the decision in Roebuck v Edmonds supra, appears to us to be no more than an illustration of the application of the rule of strict construction in its particular context.
In the present case we are satisfied that there is no real ambiguity in the language used and that the provision I apt to cover partial assignation. Casualty is due in respect of every assignation. The measure of it is rent for the heritable subjects as they stand at the time. Machinery for ascertainment of this is provided.
The submissions as to the applicability of the quinquennial prescription established by section 6 of the Prescription and Limitation (Scotland) Act 1973 covered two distinct heads: the obligation of the Keeper to indemnity; and the individual casualties.
It was submitted that the obligation on the Keeper under section 12 (of the 1979 Act) to indemnity a person who suffered loss was in substance an obligation to make reparation. Accordingly it was subject to the quinquennial prescription as it fell within Schedule 1(d) of the 1973 Act. This applies the prescription "to any obligation arising from liability (whether arising from any enactment or from any rule of law) to make reparation". What was sought here was a pecuniary remedy for a wrong done by the Keeper. It was to be noted that no other time limit was provided by the Act. If the claim was not subject to a five year prescription it would only be subject to long negative prescription of 20 years. There was no justification for such a long period. Counsel referred to Miller v City of Glasgow District Council 1989 SLT 44 and to Holt v Dundee District Council 1990 SLT (Lands Tr) 30 as authorities which might be thought contrary to his argument. However he emphasized that in Miller the pursuer was seeking the positive remedy of decree ad factum praestandum. The dicta had to be read in that context. Holt dealt with breach of planning control. This was not a civil wrong. The dicta should not be taken broadly.
If the five year prescription did apply to the Keeper's obligation it was accepted that there would require to be evidence in relation to each assignation in respect of the appellants reliance on section 11. Mr Bevan said that it was unnecessary for him, at this stage, to deal with the type of knowledge required and whether evidence that the Keeper's omissions of some casualties was general knowledge might prevent reliance on section 11.
The individual casualties were said to fall under the provisions of Schedule 1(a)(v ) of the 1973 Act. It was submitted that "periodical" did not require to be in respect of regular intervals of time. A period was simply an interval of time. Something could be described as periodical if it was in the nature of a recurrent payment. Rent was an example of a regularly recurring payment. It was not easy to envisage other regular payments under a lease. Accordingly "periodic" must have been intended to have a wider meaning. It would have to be an obligation which arose from time to time. Having regard to the duration of these leases it was an inevitable feature that the casualty obligations would recur. They therefore fell within the meaning of "periodical" as used in the Schedule.
In response, it was submitted that the Keeper's obligation was not properly described as an obligation to make reparation. It was plain from both Miller and Holt that Schedule 1(d) should be read as using the term "reparation" in an accepted technical sense of pecuniary remedy for loss caused by a wrong such as delict or breach of statutory duty. A claim for indemnity did not fall into that category. The scheme of the Act recognised that a party might lose rights without fault of the Keeper. It would, however, be inequitable to lose rights without compensation and therefore provision was made for indemnification. It was clear from the terms of the statute and the decision in Short's Trustee supra, that a right to indemnity could arise without any fault by the Keeper. It should also be noted that section 13 provided for payment of expenses to an unsuccessful claimant. Similarly the provision for subrogation of the claimant's rights to the Keeper, showed that the whole scheme was not based on fault. It would be illogical and unworkable to have a prescription which only applied if fault was demonstrated, particularly if a respondent was to be allowed to set up his own fault as a basis for a prescription which would not otherwise apply.
It was agreed that no provisions or time limit were made in the Act. That, however, could be explained by reference to the Hendry Report on Registration of Title to Land in Scotland which preceded the 1979 Act. Paragraphs 3 and 4 show that this was not an oversight. The Committee had considered that the long negative prescription was appropriate.
The argument that "casualties" fell within Schedule 1(a)(v) was misconceived. The event which triggered a casualty was the entry of an assignee. The measurement was a year's rent but the payment was not due "in respect of a particular period". Accordingly it was not within the scope of paragraph 1(a). In any event, it was of the essence of casualties that they were not periodical payments. Reference was made to various definitions of "casual" in the Oxford English Dictionary (2nd Edition). The whole emphasis was on uncertainty of occurrence. Implicit in the word was recognition that it was not a payment that occurred at regular periods but rather was a payment on the occurrence of a casual event, something which could not be calculated on, uncertain or unsettled. It was not inconceivable that a casualty might never fall due if, for example, the initial tenant was a corporate or religious body.
Counsel contrasted the essential meaning of "casual" with that of "periodical". He again referred to the Oxford English Dictionary. The emphasis was on regular recurrence. He was unaware of Scottish authority directly in point but referred to certain English cases which emphasized the regular nature of periodical payments: Joans v Ogle 1872 LR 8 Ch 192; Bishop of Rochester v Le Fanu 1906 2 Ch 513; and In Re, Gale 1906 1 Ch 513.
Further he submitted that there were good practical reasons why a casualty payable at irregular intervals should be treated differently from a payment due at fixed or regular intervals. It was reasonable that the latter type of payment be subject to five year prescription because it was open to a landlord to keep proper records of when the payment was due. It was his own fault if he failed to enforce payment. On the other hand an irregular payment was quite different. The landlord would require to rely on others. He could not rely on his own records. It was quite reasonable in the circumstances to have a longer prescriptive period.
We consider the appellants' submissions on both heads to be well founded.
Both submissions turn on interpretation of provisions of Schedule 1 of the 1973 Act. It is plain that the scheme of that Act is to proceed, not by way of broad principle, but by way of detailed listing of types of obligation. An obligation which does not fall within the categories specified in part 1 of the schedule is not affected by the prescriptive period of five years under section 6.
The obligation on the Keeper to indemnity is, of course, entirely a creature of the statute. It is part of a scheme intended to bring certainty to public records. It is recognised that this certainty may involve loss of rights as between private citizens. The state has provided for a scheme of indemnity to match this potential loss. There is nothing in the scheme to suggest that it depends in any way on any concept of blameworthy conduct by the Keeper. It is clear, not only that a claimant does not require to prove any fault, but that liability to indemnity can arise in circumstances which are entirely out of the control of the Keeper: see, for example, Short's Trustee, supra.
We accept that making any payment by way of compensation for something lost could be described as making reparation. The payment repairs the loss. However where the word "reparation" occurs in the context of a list of reasonably precise references to different types of legal obligation, it must be taken to be used in its accepted legal sense. Without attempting an exhaustive definition of that accepted sense, we think it clear that it is not used as equivalent to compensation; that it would not naturally be applied to an obligation arising from a scheme for indemnity; and that it is properly to be understood in the context of a pecuniary remedy which the law affords for loss caused by a wrong. The "wrong" can arise from statute, delict, or, possibly, from a failure in respect of a contractual relationship. However, an element of wrongful acting is a common factor. Plainly, "reparation" is wide enough to cover obligations arising from vicarious and from strict liability where there is no personal blame. The existence of such well recognised categories of liability to make reparation does not change the underlying sense of the words. Liability to provide compensation by way of indemnity and without any reference to fault does not fall within the normal scope of the term.
We consider that this is consistent with the decision of this Tribunal in Holt v City of Dundee District Council, supra. In that case an enforcement notice h ad been served on the owner of a commercial garage alleging breach of planning control. He required to cease operations because of a stop notice. The enforcement notice was quashed and a claim for compensation in respect of loss of profits was duly presented. However there was a lengthy period of delay before formal application was made to the Tribunal and it was met with a plea based on the quinquennial prescription. The decision turned on interpretation of paragraph 1(d). The tribunal held that statutory compensation claims could not be described as based on an obligation arising from liability to make reparation.
As we consider it plain that the scheme for compensation does not fall within the normal use of the expression "liability to make reparation" in the context of categories of obligation recognised by Scots Law, it is necessary to consider whether there is any justification for giving it a wider meaning.
We may observe that the expression was not positively intended by the legislators to cover the scheme for indemnity which, of course, did not come into being until the 1979 Act. When that Act was passed Parliament was clearly aware of its implications for prescription and, in section 10, made certain positive provision by way of amendment of the 1973 Act. It would have been an easy and straightforward exercise to amend the 1973 Act by adding to the list in the Schedule a reference to the Keeper's obligation of indemnity. We do not consider that the legislators could have thought that the new obligation fell so obviously within the meaning of paragraph 1(d) that clarification by way of express provision was simply unnecessary. We infer that it was not the intention of the legislator that the obligation created by the 1979 Act should be subject to the short prescription. We reach this conclusion without reliance on the provisions of the Hendry Report to which reference was made without adverse comment from the respondent. Plainly that material supports our conclusion: Report on Registration of Title to Land in Scotland; paragraph 48, Note 4 is in the following terms: "We do not think it necessary that any time limit should be imposed within which indemnity may be claimed … In Scotland ultimately the long negative prescription will cut off such a claim".
In any event, we consider that a broad approach to the term "reparation" is inconsistent with the Inner House decision in Millar, supra. That case concerned a claim for reinstatement or repair by the owner of a shop, part of which, a toilet, had been wrongfully removed by the local authority in course of a refurbishment scheme. The primary claim was to have work done by the defenders. Although it was argued by them that it was likely that reinstatement would prove impractical and that the pursuer would require to fall back on a remedy in damages, the Court was faced with what was, in effect, a claim ad factum praestandum.
The case can therefore be distinguished from the present. It was not a claim for monetary compensation. Indeed, what was described as "perhaps the most compelling reason" for giving the word "reparation" its technical meaning was the reference in paragraph 2gg to "make reparation or otherwise make good" and in Schedule 3 to making "reparation or restitution". It was said that these words would be unnecessary if "reparation" was to be given the wider meaning then contended for.
It may also be observed that it is not altogether clear why the Court considered that the way in which the word "reparation" was used in section 11(1) of the 1973 Act had nothing to do with the meaning of the word for the purposes of the Act. Its use in that section is very closely related in context to its use in paragraph 1(d). It does not, however, appear to us that review of this particular dictum would advance the respondents position. The essence of the decision in Millar was that the Act was dealing with what may be described as technical aspects of the law of Scotland that "reparation" should not be given a wider and different meaning than it would normally receive: Opinion of the Court at page 47F.
The prescription of individual casualty payments also turns on interpretation of Schedule 1. The relevant provision is paragraph 1(a)(v) which is in the following terms: "… section 6 of this Act applies - (a) to any obligation to pay a sum of money due in respect of a particular period - (v) by way of rent or other periodical payment under a lease". (The expression "periodical payment" is used in similar fashion in the paragraph as an alternative in relation to feu duty due under a feu grant, and to ground annual due under a contract of ground annual and is also used by itself under heads (vi) and (vii). The meaning to be given to it must have regard to the use made in the context of the whole paragraph. However we consider that the uses are consistent and nothing turns on this.)
The obligation under the lease was to pay "a full year's rent … on the entry" of every assignee under the lease. Thus, each casualty was a payment due in respect of a single event, namely entry of an assignee. Although the amount due was to be measured by reference to the period of a "year" it was not suggested that this had any bearing on the nature of the obligation itself. It appears therefore that this obligation does not fall within the prima facie meaning of the words used in the statute. The payments were not due "in respect of a particular period" but in respect of a particular event.
Similarly, we consider that in the normal sense of the words the payments were "casual" not "periodical". We accept the appellants' submission that in the context of money due, the term "casual" is normally used in contra-distinction to "periodical". The latter implies a broad regularity of payment. This is consistent with the usage in the definitions from the Oxford English Dictionary, cited to us. For example, "casual - 2. Occurring or coming at uncertain times; not to be calculated on, uncertain, unsettled." "Periodical - 2. Recurring after more or less regular periods of time." The various examples of usage emphasis the recurrence at more or less regular intervals.
We consider that the proper approach is to read the provision as a whole. As the obligation presently in issue does not fit the first part of the provision we think this must colour the proper interpretation of the second part. Even if the word "periodical" is capable of covering an obligation whose recurrence is at best irregular and at worst uncertain, this would not serve to bring a payment which is in respect of a single event within the ordinary meaning of "in respect of a particular period". This reinforces our view that a casual payment does not fall within the scope of the reference to periodical payment in this paragraph.
As we have already observed, these provisions occur in the context of a list of specific types of obligation. It seems plain that the words used were intended to bear established meanings. There is nothing to suggest either that any broad popular meaning was intended or that the words were to be interpreted in any unusual or extended sense. The purpose of paragraph 1(a) can be seen as providing a short prescriptive period for payments of a recurring nature arising under contracts of potentially long-term duration.
A clear distinction was necessary to ensure that only the individual payments were caught and that the underlying obligation remained. Parliament chose to do this by reference to payments due in respect of a particular period. It might be thought that a wider provision would also have been reasonable to provide a short prescriptive period for every type of individual payment due under the agreement while preserving the underlying obligation. However, even if we were satisfied that this was the intention, we are not free to give effect to that intention unless the language used can reasonably bear that construction.
Equally, however desirable it might be to have some form of short prescription in relation to casualties, we cannot create a prescription by giving the Act a meaning outwith the scope of the normal construction of the words used, unless there is a basis for concluding that Parliament must have intended some extraordinary meaning. We find nothing to suggest a positive intention to include casualties and nothing to justify an interpretation of "in respect of a particular period" as including an obligation arising on occurrence of a single casual event entirely unrelated to any lapse of time.
We could accept if that the statutory reference had been to "an event" this could have been construed as covering the expiry of a particular period. We are not persuaded of the converse that a definition made expressly in terms of a period of time contains any element of ambiguity reasonably capable of applying to a single event.
Further, it is clear that a draftsman with casualties in mind would not have regarded such payments as naturally covered by reference to periodical payment. In the context of a list of specific types of obligation it would have been the easy and obvious thing to add specific reference to casual payments if this had been the intention. We consider that any attempt to achieve the wider purpose would inevitably have drawn specific attention to the problems of defining the type of intermittent payment represented by the casualties presently in issue. We cannot think that the draftsman, having identified the problem, could have accepted the terms "periodical payment" and "in respect of a particular period" as adequate to embrace casual payments due in respect of a particular event. We must, accordingly, conclude either that t here was an intention not to apply the short prescription to such obligations or that intermittent casualties of the present type were overlooked. It is not a function of the Tribunal to remedy a casus improvisus.
Some support for the view that casualties of the present type were overlooked may be derived from the history of such casualties as perceived at the time of the Act. Feudal casualties had been abolished. As the present case itself shows, there was a time when practitioners regarded leasehold casualties as of no practical significance. Support may also come from the absence of any express staring date of any such prescription. The obligations listed in paragraph 1(a) can, on the construction we prefer, be seen as easily identifiable known debts. There is no risk of prejudice to a creditor from a prescription running from the due date. On the other hand, a creditor might well be unaware of the event giving rise to an obligation to pay the casualty. Had this matter been considered it might have been expected to lead to specific provision on the lines of either section 11 or schedule 2. (Although we recognise that the draftsman might have thought entry in the Register as adequate formal notice in this context however unrealistic that might be from the landlord's point of view.) The alternative inference again is that it was considered and thought unsuitable for short prescription.
In summary, we are satisfied that the term "periodical payment" is not apt to include a payment due by way of such a casualty as the present. Further, we do not consider that an obligation in respect of a single event falls within the scope of paragraph 1(a) as being the equivalent of a payment of money due in respect of a particular period. Taking the provision as a whole we cannot find that the casualties presently in issue are subject to the quinquennial prescription.
The respondent's contention was that in so far as the appellants' title was based on an assignation, which had appeared from the pleadings to be the whole basis of their claim, they required to be treated as standing in the shoes of their author; but their author had suffered no loss. This did not turn on the fact that neither Webco nor Douglas had made a claim against the Keeper although this highlighted the pointed. It turned simply on the fact that, by the time the omission was realized, Webco had sold the subjects. There was no suggestion that the price received had been reduced to take account of any diminution in the value of the landlord's interest. There was, accordingly, no loss. The appellants could get no higher right than their assignor.
Although the present debate did not cover quantification, questions could be raised as to the proper approach to loss. Primarily, assessment would be the diminution of the value of the landlord's interest although there might be other proper ways of measuring it. Mr Bevan accepted a possible distinction between Webco's right to claim casualties in respect of assignations during their ownership and the right to "future stream" of payment which could be part of the value of the landlord's interest. His submission covered both.
Mr Campbell elaborated this to stress that the assignation on which the appellants had to rely was in 1995, by which time Webco had voluntarily disposed of the subjects without price and in ignorance of loss. If the cedent was prepared to give away the property for nothing, knowledge of the omission could not add a loss. Counsel posed the question; if the cedent was not a person who had sustained a loss, what claim could be assigned? He contented himself by describing as a "conundrum" the question of whether a person could have a claim when he was in ignorance of having suffered loss, but, in any event, submitted that Webco had no loss and the appellants therefore had no title as assignees.
The appellants' response has, we think, been adequately dealt with in relation to the preliminary issue of title. Their claim is not based on Webco's loss but on the rights they have acquired from Webco which are no longer enforceable.
The submissions on this head proceeded implicitly on the assumption that the loss to the landlord's interest was sustained at the time of the omission. We have rejected that argument. It was not contended that on sale a landlord lost the right to collect casualties which were due and unpaid. Clearly he could assign that right to the purchaser, to a third party, or could collect the debts himself. His knowledge of the detail would not be relevant and we see no reason why his complete lack of knowledge of the nature and existence of the rights at the time of his disposal of the subjects should alter matters. If he found out about an earlier assignation of tenancy he could claim casualty. Accordingly, provided he validly assigned all his rights, his assignee can investigate to find out what rights exist and then enforce them. That would have been the position but for the omission. A loss is sustained because of the inability to have the omission rectified.
The first part of Mr Bevan's fourth head of argument, that the only parties entitled to indemnification were those infeft at first registration was elaborated in submissions and has been dealt with above. The argument in relation to the right to assign can be seen as a separate issue. It was contended that the effect of section 12 was that the claimant under the Act was intended to be the person who suffered the loss and that the Act should be interpreted as precluding any right to assign.
It was accepted that the general rule was that incorporeal moveable rights were capable of transfer by assignation and that the established exceptions related to rights of an alimentary nature, or rights involving an element of delectus personae. However it was contended that the provisions of the Act suggested that assignation of the indemnity provided by section 12 was not envisaged by Parliament. The Act referred specifically to the "claimant". The inference was that the person making the claim was the person in right to make it. There was no provision for anyone else. It was contrary to public policy that there be a market in such claims. If there was a chain of assignations it would be increasingly difficult for the Keeper to satisfy himself that the claim was well founded. If assignation was permitted, this would allow advantage to be taken of the scheme of indemnity by permitting assignees to dredge through titles and make claims against the Keeper in circumstances where there was, in fact, no live dispute. This could encourage claims based on a technical irregularity. The risk of this might drive the Keeper to a more cautious approach to his powers under section 12(2) to exclude indemnity. This would not be in the public interest.
It was accepted that dicta in Libertas-Kommerz, appellants, 1978 SLT 22 were against this submission. However this case was not directly in point. It dealt with the assignability of a floating charge. This was primarily a commercial instrument and assignation was to be expected. That was quite a different situation from a statutory scheme providing a right to indemnity.
Senior Counsel for the respondent also challenged the terms of the assignations relied on, contending that they were not wide enough effectively to assign a right to make a claim against the Keeper. The Assignation by Douglas in favour of the appellants included a purported assignation of Webco's right to the relevant leasehold casualties. However it was clear that the effect of the omission was to extinguish that right. The Assignation also contained elaborate provision purporting expressly to assign the right to Douglas and the right of the said Webco to claim compensation against the Keeper arising from the omission by him of the onerous casualties imposed by the leases. These provisions contrasted with the terms of the General Conveyance by Webco to Douglas, dated 8 December 1995. It was submitted that the only relevant passage was the following provision "and we assign all rents, feu duties, ground annuals, casualties, and debts due or to become due to the company, including arrears thereof whether demanded or not and whether heritable or moveable to the said Duncan Scott Douglas and his foresaids". The only word apt to cover the claim against the Keeper was "debt". However no claim had been made by Webco against the Keeper. Any right against him could not properly be called a debt.
In reply, the appellants stressed the normal rule that in Scots law all personal rights of this nature were, in principle, capable of transfer: Erskine Inst III v 2. Nothing in the Act excluded that rule. It was so well established that it would need express provision to be excluded. This could easily have been done, as was done, for example, under section 87(1) of the Social Security Administration Act 1992. Libertas-Kommerz supra showed that another right which was entirely the creature of statute was assignable even where no express provision for assignation had been made.
If the respondent was correct that the only claim available vested in the persons in possession of the landlord's interest at the date of first registration, it would be entirely appropriate that he could assign such right. There was no basis for the argument, suggested by the respondent's pleadings, that the infeft proprietor must have actually lodged a claim with the Keeper before being able to assign.
It should also be borne in mind that a right could effectively be assigned by allowing another party to make a claim in the assignor's name. The General Conveyance included such a provision in favour of Douglas. The fact that this could be done without formal assignation simply pointed to the fact that there was no reason to assume assignation to be excluded.
Sir Crispin submitted that the assignations by Webco and Douglas were wide enough to cover the right to claim against the Keeper. "Assignation" was not a term of art. The General Conveyance, in addition to the assignation of debts also bore to convey to Douglas "the whole remaining assets, heritable and moveable, real and personal, belonging to us". This was wide enough to include a claim against the Keeper. Assets included the right to make claims: Skarpass v Skarpass 1993 SLT 343. It was further submitted that the landlord's title included a "right" to collect albeit that there was no longer an obligation on the tenant to pay.
We did not find the respondent's submissions persuasive on this head. The rule is well established that incorporeal moveable rights are capable of assignation. We consider that there is nothing in the scheme of the 1979 Act which is reasonably capable of an inference that Parliament intended to exclude a right to assign the right to indemnity. Plainly, if a right to assign is normally implied, express provision is unnecessary and absence of express provision cannot lead to a contrary inference. We cannot accept the bare assertion that public policy requires a special approach to the Act to protect the Keeper. Justification for this is not self-evident. The effect of the Act is that private rights may be lost because of the public interest in the certainty of the Register. That is an obvious public benefit. It does not follow that the public purse required to be protected at the expense of a private citizen. A degree of protection exists in the fact that the onus is on an applicant to prove his loss. His task as assignee is to prove his cedent's loss. We are not persuaded that any extra difficulty the Keeper might find in establishing a defense in that situation could justify an inference of an intention to exclude assignation altogether.
We consider that the submission based on public policy against the risk of persons dredging through titles is not likely to have been a factor in the minds of the framers of the 1979 Act. If it had been, express provision to guard against this might have been expected. On the other hand, although we consider public policy to be an unnecessary and uncertain guide to the present issue, it must be observed that an ability to assign is a valuable and convenient right both commercially and in the area of domestic Conveyancing. If a problem arises at point of sale, we see no reason why Parliament would wish to commit the seller to resolving any dispute with the Keeper without giving the parties the option of having the matter taken over by the new proprietor.
We consider that the decision in Libertas-Kommerz, supra, supports the appellants. The Court in that case was able to look at the statutory form of charge as providing specific authority for the assignability of the particular rights there in issue. However, Lord Kincraig started his consideration of this pint by observing: "The law of Scotland allows incorporeal rights to be assigned except those of a personal nature". We know of no other view of the law which might have been in the mind of legislators in 1979.
We accept the submission that "assignation" is not a term of art. The General Conveyance in favour of Douglas bore to convey "the whole remaining assets, heritable and moveable, real and personal, belonging to us". If Webco had a right to make a claim against the Keeper at that point we are satisfied that the terms of this conveyance were wide enough to include that claim.
We have observed above that precisely how the appellants rely on an assignation of a claim against the Keeper is not clear from the pleadings. There is no express averment that the appellants seek indemnity as assignees and this was not, as we understood it, a matter of express submission. However, this point was not taken by the respondent.
The parties were agreed that a landlord was entitled to claim against the tenant in possession in respect of unpaid casualties due on a prior assignation: reference was made to Turnbull v Scott 1626 M 15273; McGregor v Hunter 1850 13D 90; Rankine, The Law of Leases in Scotland (Third Ed) 194-195; Paton and Cameron, Landlord and Tenant page 163. Parties were also agreed: (1) that the effect of registration without reference to casualties cut off such a claim; and (2) that in addition to a claim against an assignee currently in possession, the landlord still had a claim against the original cedent. It is, accordingly, unnecessary for us to express a view on these points. The parties' submissions under this head were limited to considering whether a claim should be permitted against the Keeper when there was another possible debtor. Issues of title and loss did not arise.
The respondent's contention was that although the appellant had lost the right against the current tenant, the right against the original assignee remained and it was not proper that the Keeper should incur any liability in that situation. In any event, the Keeper should not be first in line. It was up to the appellants to demonstrate that they had failed in attempts to recover from the original assignee before seeking a remedy against the Keeper. It was conceded that this was not an important issue in the present case as it appeared from the pleadings that only one assignation, in 1980, fell into that category.
The appellants' response was that, but for the omission, they would have had an easy, straightforward remedy against the current tenant. They have lost that. They now have no reasonable means of identifying the whereabouts of prior tenants. They are, in the circumstances, under no obligation to attempt to pursue past tenants for past casualty payments before making a claim on the respondent's indemnity. If the respondent considers it reasonable or practical to find previous tenants and pursue them for payment, he may seek to do so on settlement of the appellants' claim by means of subrogation under section 13(2).
We accept the appellants' submission. It is clear that if a landlord has a right to go direct against the tenant in possession, this is a valuable asset, which confers significant practical advantages. It is agreed that the ability to recover has been cut off by the omission. The provisions for subrogation under section 13 demonstrate that it was not the intention of Parliament that claimants first be compelled to work out every possible alternative remedy. We consider that although there might be circumstances where the Keeper could rely on a failure to mitigate, nothing in the averments of either party raise that issue in the present case. In the normal course the Keeper's remedy lies in the provisions for subrogation.
In the result, although we have rejected the main heads of the respondent's challenge to title to sue, we have concluded that the nature and quantum of loss requires to be determined after proof before answer. Certain issues of title and interest will remain to be determined at that stage. Accordingly it is inappropriate to repel the respondent's plea. However we can sustain the preliminary plea for the appellants to the extent, at least, of excluding from probation the last sentence in the respondent's answer 2 and their averments in answer 5(iii) from and including the fourth to the penultimate sentences.
As discussed above, we continue the case to allow parties to consider amendment and shall put it out for hearing to clarify the procedure necessary thereafter.
|for the appellants:||Sir Crispin Agnew, QC and I MacLean, Advocate, instructed by Messrs Robert Thomas & Caplan, Solicitors, Glasgow|
|for the respondent:||C M Campbell, QC and J S Bevan, Advocate, instructed by The Solicitor to the Secretary of State, The Scottish Office, Edinburgh|
|Heard:||Edinburgh 16, 17 and 18 February 1998|
|Decision Issued:||19 May 1998|
LTS/LR/1997/4, 5, 6, 7 & 8