OPINION

(First) IAIN HOLWILL and (Second) ANN HOLWILL (Appellants)
v
THE KEEPER OF THE REGISTERS OF SCOTLAND (Respondent)

Introduction

[1] This case concerns land at the boundary between subjects known as Craigbeg House, Dechmont, Broxburn and North Lodge, Craigbinning, Dechmont. Craigbeg House was formerly known as Craigneuk. It is now registered under Title WLN46248. It formerly belonged to the appellants. The North Lodge subjects are registered under Title WLN36946. The appellants’ position is that some land pertaining to Craigbeg House under a sasine title was erroneously included in the North Lodge title at the time of registration.

Procedure

[2] The case commenced as an appeal under section 25 of the Land Registration (Scotland) Act 1979, solely in the name of Mr Holwill, by means of an appeal document dated June 2013. The remedy sought at that stage was unclear. After much process the stage has been reached where it is understood that the case now involves both appellants making a claim for compensation under section 12 of the 1979 Act. This is no doubt in recognition of the fact that both sets of subjects have registered titles, with a coterminous boundary at the disputed points, so in practical terms rectification would in all probability be impossible since it can be anticipated there will be third party proprietors in possession.

[3] We say what the case is “understood” to involve since we must point out that the appellants, who are unrepresented, have presented their case in a somewhat disorderly fashion which makes it difficult to identify the issues. In particular, their documents which have been treated as pleadings are neither concise nor coherent and this has led to a disproportionate amount of Tribunal time being spent on trying to understand what the case is actually about. The case was appointed to a debate in January 2016 on the basis of a note of argument by the Keeper. The debate was discharged on the basis that the first appellant had medical problems. The appellants then appointed solicitors to act for them who subsequently withdrew from acting. The case narrowly survived a motion for dismissal by the Keeper for want of prosecution on 10 October 2017.

[4] We heard a debate on certain discrete points on 4 December 2017 at the instance of the Keeper. The first appellant represented himself and his wife, the second appellant. The Keeper was represented by Ms Laura-Anne van der Westhuizen, advocate.

Background facts and circumstances

[5] The underlying sasine title for Craigbeg House is not entirely straightforward. It would appear that the appellants obtained title by means of two dispositions. Firstly, they obtained title to land referred to in a disposition by Mrs Anne Smith or Ramsay in favour of Alexander Ross and Another recorded GRS (West Lothian) 17 July 1980 (“the 1980 disposition”). That disposition conveyed subjects more particularly described by (Primo) disposition by James Cradock and Another in favour of Mary Walker recorded said GRS 11 April 1940 and (Secundo) Disposition by James Cradock in favour of George More recorded said GRS 23 June 1949 under exception; all outlined in red on a plan. We were not shown the disposition by which the land in the 1980 disposition was disponed to the appellants, but infer that one exists.

[6] The other deed in favour of the appellants is a disposition by Mrs Anne Smith or Ramsay in favour of the appellants recorded said GRS 19 May 1995 (“the 1995 disposition”). This disposition narrates that the plan in the 1980 disposition was incorrect, that the appellants are proprietors of the subjects conveyed in the 1980 disposition, and that the 1995 disposition is a corrective conveyance. The 1995 disposition contains a longer conveyancing description making reference to a disposition by James McKillop in favour of Noah Jarvie recorded said GRS 17 November 1927 under exception of three dispositions. There is no title plan to the subjects, although there is reference to a plan for the larger McKillop subjects. When Craigbeg House was sold by the first appellant’s trustee in sequestration and the second appellant (via the sheriff clerk in implement of a decree of division or sale) in 2013 to a third party, the relevant disposition used the 1995 description as well as a title plan.

[7] The above sasine descriptions were not gone into in detail for the purposes of the debate. Quite what the Craigbeg/North Lodge boundaries were on the ground in terms of the sasine deeds and any relevant possession is yet to be determined. However for present purposes there does appear to be some dispute whether the 1995 disposition in favour of the appellants was a corrective conveyance comprising the entire Craigbeg subjects, or whether it simply included an additional area. Our impression is that the disponer, Mrs Ramsay having already disponed the main part of the subjects to Mr and Mrs Ross, would only have had title to dispone what had not been disponed before, i.e. any residual area not conveyed in 1980, and we note that she did not grant warrandice in 1995. On the other hand the description of the subjects is wide (“those subjects known as Craigneuk…”) and does not suggest a title description of only a limited boundary area.

[8] As we understood it, the pre-registration sasine title to North Lodge was based upon a disposition by James Cradock and another in favour of George Waugh and another recorded GRS (West Lothian) 18 May 1943 (the 1943 disposition”). This conveyance is referred to as one of the excepted areas in the 1995 disposition for Craigbeg House.

[9] There was an issue between the appellants and owners of North Lodge as to the boundary between the two subjects. In 2000 the owners of North Lodge were a Mr and Mrs Dennis Clair. The appellants, the Clairs and the Clydesdale Bank signed a minute of agreement and mutual disposition (the “MAMD”) in 2000 and 2001 which sought to clarify the boundaries between the subjects by means of a detailed plan. Amongst other things the appellants purported to dispone in favour of the Clairs certain areas of land at the boundary. The deed was not registered other than, we understand, in the Books of Council and Session. According to what Mr Holwill told us at the hearing, the Clairs built two buildings in approximately 2000 near to the boundary. The Clairs then sold North Lodge, including the two buildings, in about 2006. The purchasers were a Mr and Mrs Glendinning who sought to register title to the North Lodge. The Keeper identified problems in linking the boundary specified in the 1943 disposition with the O/S map. Furthermore, the Keeper’s staff refused to register the title on the basis of the MAMD, stating amongst other things that the deed was inept since the current proprietors (Mr and Mrs Glendinning) were not party to the deed. The Keeper was prepared to have the matter resolved by use of a section 19 agreement between Mr and Mrs Glendinning and the appellants, but we infer that no such agreement was forthcoming.

[10] Subsequently in 2010 the Keeper essentially changed her mind. After meeting a delegation on behalf of the Glendinnings, which included a university professor of conveyancing, she was prepared to register the land in favour of the Glendinnings on the basis that the MAMD could be used as a valid unrecorded link in title. At this point the North Lodge title was duly registered, we understood, on the basis of the details contained in the MAMD. It would appear that the appellants were not informed of this registration.

[11] Separately the appellants had entered into an equity release mortgage with LV Equity Release Limited (“LV”). The standard security was recorded on 2 September 2008. It states “The property is: Craigbeg House, By Dechmont, as described in full below.” The deed then describes the subjects as: “Those subjects known formerly at Craigneuk, and now as Craigbeg House, Craigbinning, Uphall … being the subjects described in disposition by Anne Ramsay in favour of the borrowers … recorded in the … GRS … on 19 May 1995 together with… the dwellinghouse and whole other erections thereon …”

[12] The first appellant was sequestrated on 4 March 2009. In terms of the relevant sheriff court deliverance, the whole estate of the first appellant at 30 January 2009 was vested in his trustee, Mr Matthew Henderson, registered insolvency practitioner. From the information before us it would appear that Mr Henderson proceeded to ingather the estate and paid a redemption sum to the secured lender LV. A discharge of the standard security was produced.

[13] When the trustee in sequestration and the second appellant, at the hand of the sheriff clerk as mentioned above, sold Craigbeg House in January 2013, the title to the third party purchaser was duly registered. As we have mentioned, certain boundaries are coterminous with the North Lodge subjects in the respective title sheets.

[14] The trustee sent a letter to the Tribunal dated 10 June 2013 to the effect that the section 25 application to the Tribunal was made without his approval or consent. He further states that any residual heritable property previously held in the name of the first appellant still vests in the trustee, and that the first appellant has no locus to make any application relating to the heritable property.

Compensation claim

[15] The appellants eventually produced to the Tribunal a “Plan A” purporting to show the area of land which they contend should not have been transferred into the North Lodge title. This includes two yellow areas along the boundary of North Lodge which we understood is comprised within the North Lodge title sheet. There is also an explanation of how Plan A was produced in a “Note B”. This makes certain comments upon the 1943 disposition of North Lodge. For present purposes we infer that the yellow areas were disponed or purportedly disponed by the appellants to the Clairs by the MAMD. The appellants contend the MAMD was invalid as a link in title for the reasons given by the Keeper in 2006. The Keeper was therefore wrong, they say, to change her mind in 2010. We do not understand the first appellant’s pleadings to make any point about his sequestration in this context. As compensation the appellants claim the sum of £450,000. Of this, £250,000 is approximately the amount which was paid by the trustee in sequestration to LV. The appellants’ averments state:-

“The mortgage provided by LV was a capped lifetime mortgage which required to be repaid on the death of the two appellants or if the property on which it was secured left the ownership of the appellants. The land sold by the trustee was unencumbered and not subject to the mortgage so the sale was not dependent on the repayment of the mortgage.”

[16] The appellants also claim £200,000 in respect of “the value of the residential units unnecessarily transferred to the Glendinnings.” The appellants have obtained a surveyor’s report valuing two standalone properties at £200,000 in 2010 and showing their position on a plan. We infer for present purposes that these properties lie within the yellow areas of Plan A; in other words the areas which the appellants say belonged to them in terms of the sasine deeds, but which ought not to have been registered as part of North Lodge owned by the Glendinnings by means of the MAMD.

Arguments for Keeper

[17] The Keeper accepted that the appeal properly fell to be considered under the 1979 Act. Counsel criticised the state of the appellants’ pleadings. Nevertheless she focused on two clear cut issues on which she maintained the appellants’ case was bound to fail. The Keeper did not seek to take “traditional” specification points with the appellants’ case but reserved her position on those. She also took exception to certain “scandalous” averments.

[18] In the first place the Keeper argued that the first appellant had no interest to sue. The complaint related to a decision taken by the Keeper on 12 February 2010 when she decided that the MAMD could be referred to as a valid unrecorded link in title. That decision was given effect to in May 2010 when registration was complete. However, by 2010 the first appellant had no interest in Craigbeg House since he had been sequestrated in 2009. His assets vested in his trustee. Reference was made to Sections 31 and 33 of the Bankruptcy (Scotland) Act 1985 (the 1985 Act”). At the time of the decision complained of, the first appellant had no interest in the property.

[19] Secondly, counsel submitted that the averments of loss were irrelevant. Any indemnity would require to be under section 12 of the 1979 Act, which insofar as relevant provided:

“(1) Subject to the provisions of this section, a person who suffers loss as a result of … (b) the refusal or omission of the Keeper to make such a rectification; … shall be entitled to be indemnified by the Keeper in respect of that loss.”

Counsel highlighted the words as a result of, i.e. there required to be a causal link between the refusal to rectify and the loss.

[20] It was submitted that the appellants’ averments were contradictory regarding the £250,000 paid to LV by the trustee. In a revised appeal document to the Tribunal dated 2 March 2015 it was stated that “the security has now been repaid because of the Keeper’s actions …”. However, in adjustments of 17 June 2015 the appellants averred “The Keeper’s actions in 2010 only came to light because of the sale of Craigbeg in 2013”. It was clear that Craigbeg House was sold by order of the court and as a consequence of the sequestration. The sale was carried through by the trustee in sequestration who had required the assistance of the court to proceed with the transfer in absence of the consent of the second appellant in an action for division or sale. The appellants’ averments as to loss in respect of the payment to LV were incoherent.

[21] According to the Keeper’s written note of argument there was nothing produced to substantiate the £200,000 claim to cover the claim for “residential units unnecessarily transferred” to the owners of North Lodge. The Keeper had great difficulty in understanding this part of the claim. It appeared from documents that the trustee had sold the property for £470,000 whereas in the action for division or sale, a man of skill had indicated that it should be marketed with an asking price of offers of £450,000.

[22] Finally, counsel referred to the following averments by the appellants in adjustments of 24 September 2015 which included the following:-

“The action for division and sale did not come before the Court until 2013 and the authority to sell the property was achieved by the Court being misinformed as to value. The Trustee had a value of £750,000 but he withheld that information and also that he had access to a further valuation at £880,000. The circumstances of him securing the courts authority is currently the subject of a police criminal investigation.”

[23] It was submitted that these were not only irrelevant averments but also scandalous and should be deleted. Reference was made to MacPhail, Sheriff Court Practice (3rd ed) para 10-60.

Appellants’ submissions

[24] Mr Holwill laid much emphasis upon the MAMD. There were two versions, he said, one registered in the Books of Counsel and Session and the other which had been given to Mr and Mrs Clair. As we understood him, it was an unaltered version which was given to Mr and Mrs Clair. (There appears to be a dispute about the origin of certain markings upon a copy version of the deed which was lodged in addition to the unmarked copy.) This deed only gave Mr and Mrs Clair personal rights and could not be used as a link in title. Accordingly he had retained real right to land which the Keeper had erroneously registered with the North Lodge title.

[25] Turning to his sequestration, Mr Holwill emphasised that the second appellant had not been sequestrated. On any view she had retained a half share in the Craigbeg property. He understood that the trustee had been discharged on 20 September 2013. He, Mr Holwill had also been discharged. He understood there was a four year period for the trustee within which to gather claims of the current nature and if not done so, the right to the claim would vest in him. His written submission also referred to section 51(5) of the Bankruptcy (Scotland) Act 1985 indicating that any surplus estate required to be made over to the debtor, thus he retained a residual interest in pursuing the claim.

[26] Turning to the claim for compensation for the £250,000 paid by his trustee to LV, as we understood his position, it was that the standard security he and his wife executed only applied to the disputed overlap area. It did not include Craigbeg House since the 1995 disposition only conveyed the smaller area. Had the trustee not repaid the LV loan, then the appellants would still own that property, albeit encumbered by the LV standard security. As he put it in his written arguments:-

“The LV security was held solely under the terms of the Ramsay/Holwill disposition and the land involved was transferred in 2010 from the Craigbeg title to that of North Lodge. Had the transfer not occurred then the LV security could have remained intact and the LV life term mortgage could have remained unchanged. Under the terms of the mortgage the appellants had no liability to LV to repay anything as repayment fell to be dealt with after their death.”

He also states:-

“… the net asset value of Craigbeg as sold by the trustee was further diminished by the need to repay the LV security to achieve a sale.”

[27] As we understood his position, the two residential units had, as it were, become a windfall since the MAMD failed to transfer the land on which those houses were built to the Glendinnings. The registration of the North Lodge had included those two properties; thus the appellants had lost the ownership of the two buildings.

[28] Turning to the “scandalous” averments Mr Holwill submitted that he had a basis for stating the words used in his pleadings. However, we understood him to accept they might not be relevant to the actions of the Keeper.

Discussion by Tribunal

[29] In this case we have some sympathy for the Keeper who is at the receiving end of a disorderly and diffuse set of pleadings. However, we think at heart the appellants’ case has now been tolerably specified by reference to Plan A and Note B in which the latter makes reference to the 1943 disposition; that is a claim that the yellow areas belonged to the appellants in terms of their sasine titles and that these ought not to have passed via the MAMD to the registered title for North Lodge. That title has been issued with indemnity and the appellants seek compensation in that rectification is presumably not available to them. In fairness the Keeper did not attack the pleadings on a broad front on the above matters.

[30] Turning to the question of the first appellant’s interest to sue, it seems to us very arguable that the point in issue is better described as one of “title” to sue. If all the first appellant’s assets in 2009 vested by statute in the trustee, including those converted into a claim for indemnity at some point subsequently, the logic of the Keeper’s argument would suggest that the first appellant has no title to pursue the claim. This is in the sense that there may be no legal relationship between the first appellant and the Keeper in which the first appellant as a divested owner of land has any statutory locus to seek rectification or indemnity. On the other hand, “interest” to sue generally means some pecuniary interest in the claim. If the claim were to be successful, for aught yet seen the first appellant might be put in a position enable full payment of his creditors so that there would remain some surplus available to him, in terms of section 51(5) of the 1985 Act. So although the matter was not argued, it may be preferable to treat the question as one of title to sue.

[31] It is apparent from the letter to the Tribunal by the trustee that he had no intention to seek to become involved in the section 25 appeal. It is possible to infer that inasmuch as the section 25 appeal was, or could become, a claim for compensation, the trustee had no intention to make such a claim. We were not referred to any authority whether or not a sequestrated debtor could himself make a claim against a third party where that claim was in effect abandoned by his trustee. We understand that the 1985 Act prior to its repeal had detailed provisions about dealings by the bankrupt in his estate once vested in the trustee, including specific provisions about abandonment of assets by the trustee including heritable property: cf section 32 ss(8), (9), (9A) and (9B). We would have expected these provisions to have been expressly cited to us and discussed in the context of the above argument, but neither party did so. We are not prepared to dismiss the application without these provisions being addressed by parties.

[32] We are also aware that section 31(5A) of the 1985 Act provides that certain “non-vested contingent interests” vest in the trustee by virtue of subsection (5), but where they remain vested in the trustee for four years after the date of sequestration, they are reinvested in the debtor. Mr Holwill was perhaps alluding to this subsection during the debate, without citing it. On the face of it we are doubtful whether this subsection can apply to the present claim, since although the claim necessarily concerns a “contingent” interest, it was not “non-vested” in the sense that it required any specific assignation in order to vest in him a claim for indemnity under the 1979 Act. Again, the point was not fully argued and we do not seek to decide it. In the event we are not persuaded as matters stand that the appeal requires to be dismissed quoad the first appellant. We shall therefore reserve all matters of the first appellant’s title and interest to sue.

[33] Turning to the claim regarding the repayment of the loan to LV, we agree that this is incoherent and bound to fail. We cannot read the conveyancing description in the standard security as comprising anything other than including the property Craigbeg House. It may be that Anne Ramsay had already disponed most or all of those subjects by the 1980 disposition, and thus in 1995 could only dispone what still remained in her ownership, but that does not mean the description in the standard security did not include Craigbeg House. Clearly it does. Therefore the idea that the secured lenders only obtained security for an unspecified area adjacent to the boundary, excluding the main house, does not make sense. It is natural that the trustee in sequestration had to sell the first appellant’s share of the house and redeem the secured loan to LV. In any event, if as the appellants suggest the trustee ought not to have repaid the lender for any reason, that is hardly a matter for which the Keeper can be responsible.

[34] Regarding the two properties said to be worth £200,000 in 2010, it seems to us that by a comparison of the surveyor’s report of 28 July 2017 showing “buildings 2 and 3 (marked in yellow)” these can, we think, be related to “Plan A” in which the appellants maintain the yellow area ought not to have been registered as part of the North Lodge title. Given the limited nature of the Keeper’s attack on the appellants’ case, we are not prepared to find that there is insufficient to explain how this part of the claim was made up. From the information before us, it appears that the trustee did not sell these two buildings in 2013. If it be the case that they were “lost” to the Craigbeg title, and we pass no comment upon that, it would appear that the quantification of the claim has been adequately specified and supplemented by reference to the surveyor’s report. We accept that the appellants’ pleadings have not clearly specified the “omission … to make rectification” in causation terms under section 12, but the point was not pressed and we are not persuaded that this is so fundamental so as to merit dismissal of the appeal.

[35] Finally, we agree that the averments in the 24 September 2015 adjustments, as criticised by the Keeper as “scandalous,” are irrelevant. The fact that the trustee might have had higher valuations in his possession does not make a case that he was bound to take them into account. Even if the trustee had failed to secure a higher price for the subjects based upon other valuations in his possession, and whether or not there was a police investigation, it was not explained how such acts or omissions can form any part of a claim for indemnity against the Keeper.

Decision

[36] We reserve all questions as to the first appellant’s title and interest to sue in the light of his sequestration. We shall dismiss that part of the claim relating to the sum of £250,000 or thereby paid by the trustee in sequestration to LV. We shall also strike out from the claim the words in the 24 September 2015 adjustments, paragraph 4 from “The action for division or sale …” until “… a police criminal investigation”. We shall allow the remainder of the claim to proceed. We have reserved all questions of expenses and sanction for counsel.

Further procedure

[37] As we indicated at the hearing, it appeared that central to the case is the appellants’ argument that the MAMD did not form a valid link in title from the appellants to the Clairs’ successors. We would be grateful for parties to consider whether this issue might be resolved by a further debate rather than necessitating a hearing on evidence. There are of course other issues which may ultimately have to be resolved.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 12 December 2017

Neil M Tainsh – Clerk to the Tribunal