Экзамен зачет учебный год 2023 / SLC, Report on land registration. Vol 1

case is in a sense under-registration, but unlike the simple case of underregistration, it does result in inaccuracy.

Which parts of the Register can be inaccurate?

17.47 The parts of the Register that can be inaccurate are the Title Sheet Record and the Cadastral Map. They are the parts of the Register in which the Keeper can assert the existence or non-existence of rights. In the other two parts, the Application Record and the Archive Record, the Keeper does not assert the existence or non-existence of rights. If, for example, the Archive Record contains a deed that turns out to be a forgery, that does not mean that the Register is inaccurate and so the question of rectification does not arise in relation to the Archive Record. Suppose that the deed is a disposition to Y purportedly by X on the basis of which Y was registered as owner. X raises an action of reduction and is successful. The result will be that the inaccuracy in the Title Sheet Record will be rectified (by deleting Y's name and replacing X's). And a copy of the extract decree of reduction will be added to the Archive Record. But the forged deed is not torn up. It remains in the Archive Record as a historical fact, however regrettable, which provides the explanation of why the Title Sheet Record was, for a time, wrong.

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Part 18 Rectifying the Register

18.

Introduction

18.1 In Part 17 we discuss the questions of inaccuracy and the rectifiability of the Register. In this part we consider not the substantive question of rectifiability, but rather its procedural and evidential aspects.

Current law and practice

18.2 Under the existing law, the road to rectification crosses three bridges. (i) The fact of the inaccuracy has to be established. (ii) The inaccuracy has to be of a type that is rectifiable.1 (iii) The third bridge is set out in section 9(1) of the 1979 Act:

"Subject to subsection (3) below, the Keeper may, whether on being so requested or not, and shall, on being so ordered by the court or the Lands Tribunal for Scotland, rectify any inaccuracy in the register…."2

18.3This third bridge has three lanes over it. They are:

•The Keeper, acting unprompted, so decides. This is a matter of pure discretion: the Keeper is equally free not to rectify.

•The Keeper so decides following an application for rectification. This is a matter of discretion: the Keeper is equally free not to rectify.

•The Keeper is ordered to rectify by the court or the Lands Tribunal. Here the Keeper has no discretion.

18.4In other words, except where there is an order from the court or Lands Tribunal, the Keeper has a discretion whether or not to rectify.3 The Keeper can know the Register to be inaccurate, and yet can choose that it should remain inaccurate. The 1979 Act says nothing else about rectification as a process.

18.5The Rules add nothing except to say that "an application to the Keeper, under section 9(1) of the Act, for the rectification of the register shall be on Form 9."4 It is the Keeper's practice to add such applications to the Application Record, and since applications (whether for registration or for rectification) are dealt with in order of receipt that means that no registration application can be processed until a rectification application has been dealt with. Often an application relates to two title sheets (for example an application to rectify an alleged inaccuracy about a boundary) but this may not always be immediately apparent to the Keeper's staff (because the Form 9 will often specify only one title number) and so in practice a rectification application may appear in the Application Record only in relation to

1 For the distinction between rectifiable and non-rectifiable inaccuracies see Part 17. In the new scheme all inaccuracies would be rectifiable.

2 1979 Act, s 9(1).

3 Assuming that rectification is not barred by s 9(3). See Part 17.

4 2006 Rules, rule 17. Rule 20 made similar provision in the 1980 Rules.

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one title sheet. The Form 9 asks only for the title number of one property. There is nothing on the Form saying something like "where the rectification sought would necessitate the rectification of another title sheet, give the number of that title sheet".

18.6Almost always an application for rectification will, if given effect to, prejudice some other person – typically a neighbour. If that other person agrees to the rectification, then well and good, and the rectification can go ahead. But of course that consent may not be forthcoming. Often the position boils down to simple assertion and counter-assertion. Sometimes the dispute is about the law, sometimes about the facts, and sometimes both. In some cases the Keeper can see that the Register is indeed inaccurate and then rectification can go ahead, albeit over the protests of the person against whom the rectification is made. But often the Keeper feels unable to rectify, not because it is clear that the Register is accurate, but because it is not clear that the Register is not accurate. In other words, if the matter is doubtful, no rectification happens. If the person seeking rectification is unhappy, an appeal to the Lands Tribunal is possible, or an action in the ordinary courts. The Keeper is not well placed to hear and determine disputes – very often neighbour disputes – either in relation to law or in relation to facts. The Keeper is not a member of the judiciary. There is no power to cite witnesses or to compel the production of documents. In a nutshell, the Keeper's position is that the Department of the Registers of Scotland is not a court of law.

18.7The legislation says nothing as to who may apply for rectification. The matter has been considered judicially once, in Wilson v Keeper of the Registers of Scotland.5 Here the Scottish Development Agency was the registered owner of property. Inverclyde District Council was the trustee of a trust, and certain beneficiaries of that trust considered that the property really belonged to the Council (as trustee) and not to the Scottish Development Agency. They raised an action for rectification. It was held that they had no title to sue. Only the Council had the right to apply for rectification. It is however worth noting that this was a case of (alleged) bijural inaccuracy, so that if the Register had been rectified, ownership would have passed from the Agency to the Council, and this was evidently a major factor in the court's decision. By contrast, under our new scheme there would be no bijural inaccuracies, only actual inaccuracies, and the rectification of an actual inaccuracy alters no rights.

Our provisional proposals in DP 128

18.8 In DP 128 we proposed some modifications to the current law. There would be two bridges to cross, rather than three, before the Register could be rectified. One bridge would disappear because in our new scheme all inaccuracies – not just some – would be rectifiable. As for the third bridge, there would be still be three lanes, but one of them – the second – would be different from the 1979 Act:6 We proposed:

•In the absence of an order by the court or Lands Tribunal, and in the absence of an application for rectification, the Keeper would have a discretion as to whether to rectify or not.

•In the case of an application, the Keeper would be bound to rectify.

5 2000 SLT 267.

6 DP 128, para 6.32 (proposal 24).

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•In the case of an order from the court or the Lands Tribunal, the Keeper would be bound to rectify.

18.9We also proposed rules about who could apply for rectification: "Only the following should be able to apply for rectification –

(a)the person who holds the right in respect of which the application is being made; and

(b)any person who holds a real right in the same land or who has a right to acquire such a real right."7

The way forward: procedure

18.10Although these proposals were broadly supported by respondents, further study of the issues has led us to the conclusion that, whilst these proposals would certainly represent an improvement, a more radical approach is possible and is to be preferred, not least for its simplicity. The Keeper ought to maintain an accurate Register. That implies that inaccuracies should be rectified.8 That being the case, there seems to us to be no basis for any discretion in the Keeper to choose to retain an inaccuracy. In turn, that means that we see no role for applications to rectify inaccuracies. That in turn means that there is no need for rules to determine who may apply for rectification. It means that there is no place for any official form that has to be submitted to the Keeper, though it may be that a non-official form will be made available as a convenient method of informing the Keeper about alleged inaccuracies.

18.11The Keeper may discover inaccuracies in all sorts of way. Information from those directly concerned is one. Another is when work is done, for any reason, on a title sheet and an inaccuracy comes to light. The way in which the truth is discovered is irrelevant: if an inaccuracy comes to light the Keeper must rectify. The draft Bill thus simply provides that the Keeper must rectify inaccuracies. The question of what happens if the Keeper declines to rectify and someone is aggrieved by that decision is considered below.

18.12Occasionally it might not be clear what form the rectification should take. In that case we consider that the solution should be for the Keeper not to rectify the Register but instead to add a note to it explaining the position. The effect of such a note would be that anyone then dealing with property would know of the inaccuracy. That is relevant both in relation to the Keeper's warranty9 and in relation to the realignment rules.10

18.13In DP 128 we were concerned that an unqualified duty to rectify would create problems in relation to cases where positive prescription is running.11 The issue is indeed a genuine one. Our approach is that in such cases the Keeper must not rectify unless there has been a decree, or there is consent.12

18.14We recommend:

7 DP 128, para 6.32 (proposal 24(5)).

8 For the evidential standard to be applied by the Keeper in forming a judgment as to whether there is an inaccuracy, see paras 18.16 to 18.25 below.

9 See Part 22.

10See Part 23.

11DP 128, para 6.26.

12Draft Bill, s 54(5) and (6).

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75.(a) The Keeper should be under an obligation to rectify any inaccuracy in the Register, without being so requested.

(b)But where it appears to the Keeper that rectification would prevent the acquisition of a prescriptive title, rectification should not take place unless there has been a judicial determination of the fact of the inaccuracy.

(c)Where an inaccuracy has been identified but it is not yet clear what the correct entry should be, the Keeper should not at that stage rectify but should add an explanatory note.

(Draft Bill, s 54(1), (5) and (6))

18.15 Where rectification takes place the question of compensation arises. That issue is considered in Part 22.

The way forward: the evidential standard

18.16It was noted above that over time the Keeper has gradually come to apply a high evidential standard to applications for rectification. We think that the approach is a sound one.13 Almost all applications for rectification involve title disputes. Such disputes belong in the courts. Only the courts have the means to hear and determine such disputes. The Department of the Registers of Scotland is not a court and simply lacks the capacity to hear and determine disputes about land titles. When there is a title dispute the Keeper's role should be that of scorekeeper, not umpire. We would stress that the high evidential standard that the Keeper applies de facto at present and would apply de jure under our recommendations has no implications for the evidential standard in civil litigation. That standard would be unaffected: it would continue to be balance of probabilities.

18.17At one stage we considered the possibility of providing that the Keeper must never rectify the Register unless the fact of inaccuracy has been judicially determined (or unless there is the consent of those concerned). However, that seems too rigid a position. There are sometimes cases where the fact of inaccuracy is so clear that to require the issue to be settled by litigation14 would be too formalistic and would give rise to unnecessary expense. Accordingly, we think that the rule should be more or less what it has de facto become in recent years: the Keeper should rectify an alleged inaccuracy only where the fact of the inaccuracy is perfectly clear, or not reasonably disputable. The term the draft Bill chooses is "manifest", an adjective that has occasionally been used in other enactments.15

18.18A court will determine a title dispute – as other disputes in civil law – on a lower evidential standard, that of a balance of probabilities. But once the court has made its decision, the matter is settled, and from the standpoint of the Keeper a matter which was,

before the litigation, uncertain, is now certain.16 In short, a decree is a good basis for

13The issue of evidential standard was not raised in the discussion papers.

14In those cases where it can be settled by the consent of those concerned there is of course no problem.

15For example the Adults with Incapacity (Scotland) Act 2000, sch 3, para 6, the Child Abduction and Custody Act 1985, Sch 1, Art 27, the Treasury Bills (Amendment) Regulations 1998 (SI 1998/1450), reg 2 and the Environmental Information (Scotland) Regulations 2004 (SSI 2004/520), reg 10(4).

16Suppose that Claudia and Vincent have a boundary dispute. The disputed area is currently in Vincent's title sheet. And suppose that if the Keeper were to apply a balance-of-probability test, the area would be transferred

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rectifying an inaccuracy. That does not mean that the decree has to take the external form of an order for rectification. A decree in such terms would, it is true, remain possible. But any decree which clearly (whether expressly or not) said that the Register was inaccurate would normally amount to evidence at the "manifest" standard. For example, there is a boundary dispute. Luke claims that a certain area that is in his neighbour Martha's title sheet belongs to him. He raises an action of declarator to that effect. He is successful. Even though the decree does not state in terms that the Register is inaccurate, the decree implies that, and on seeing the extract decree the Keeper must rectify the Register.

18.19It is true that even an extracted decree may not always be unchallengeable, especially if the decree is not granted in foro. The draft Bill does not enter into the question of what does or does not meet the "manifest" standard. Our expectation is that the Keeper would normally regard any extracted decrees as meeting that standard.17 Otherwise a person aggrieved by an inaccuracy might be in an impossible position. That person could raise an action of declarator, but the proper contradictor could stymie the rectification by the simple ruse of not entering appearance. That would be an absurd situation.

18.20The need for the high evidential standard for rectification is supported by another point. If the evidential standard to be applied by the Keeper were merely one of balance of probabilities then a title sheet could become a seesaw, according to how the balance tipped from time to time.

18.21Experience shows that those dissatisfied with what the Register says often seek to apply considerable pressure on the Keeper to rectify the Register in their favour. But such cases usually represent title disputes, very often between neighbours.18 The use of rectification applications as a backdoor way of avoiding the proper resolution of title disputes in open court is inappropriate.19 It is true that litigation can be slow and costly. But that is a general issue for the civil justice system, an issue that arises for disputes of all sorts, not only disputes about land titles. Whether the civil justice system is slow or quick, dear or cheap, the Department of the Registers of Scotland is not a court of justice and the Keeper is not a judge. 20

18.22The evidential standard for registration decisions should be the balance of probabilities. That follows existing practice. Thus the existing difference between the evidential standards for registration and for rectification will continue.21 We consider that to

to Claudia's title sheet. But her case does not meet the higher evidential standard. Accordingly the Keeper must leave things as they are. Now suppose that Claudia raises an action against Vincent. The test to be applied is that of balance of probability. The result will be decree for Claudia or decree for Vincent. Suppose that the result is decree for Claudia. The effect is that now her position has been established to the higher evidential standard, and accordingly the Register must be rectified.

17There could be exceptions. Suppose that three properties meet at a corner, the owners being Albert, Charlotte and Werther. Albert raises an action of declarator against Werther that an area at the corner belongs to him, Albert, and obtains decree in absence. In fact the area is registered to Charlotte, who has not been called as a defender. Such a decree would not be a good basis for the Keeper to rectify the Register by transferring the area in question from Charlotte's title sheet to Albert's.

18The commonest reasons are (a) boundary disputes and (b) disputes over private rights of way (servitudes of way).

19For the specific issue of the recognition on the Register of servitudes said to have been constituted by prescriptive use, see Part 10.

20For the Keeper's position in litigation see Part 31.

21The 1979 Act is silent as to the evidential standards in both cases. The draft Bill sets out the standard expressly for rectification. It is, like the 1979 Act, silent as to the evidential standard for registration. It is our view

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be appropriate. To make the registration standard a high one would be to make the system too difficult to operate in practice. And in cases where the Keeper, after considering an application for registration, concludes that it is on balance a valid one, but some doubt exists, there is a procedure in place: the application is to be accepted but subject to a qualification of the warranty. Finally, there are occasionally cases where the acceptance of an application would imply that the Register is in some way inaccurate. In such cases there may be a conflict of the two evidential standards. The registration decision is to be made on a balance of probabilities, but the rectification decision is to be made on the higher evidential standard. Such cases will happen seldom, but they are possible. Here is one. Janet owns Whitemains, her title being in the Register of Sasines. There is a standard security over it, held by Keith. Janet sells to Larry. By human error the existence of the security is not noticed by the Keeper or by Larry's solicitors.22 Later Keith assigns the standard security to Morag and she applies for the registration of the assignation. If the Keeper accepts this application - a decision to be taken on balance of probabilities - that would require rectification by inserting of the security into the C Section - a decision to be taken at the high evidential standard. The obvious solution to the conflict is that the higher (manifest) evidential standard has to be applied to the registration application.23 We think this sufficiently apparent and so the draft Bill does not have an express provision on the point.

18.23It has been suggested to us that if the inaccuracy arose on first registration (ie when the property switched from the Register of Sasines to the Land Register), the evidential standard for rectification should be the lower one, ie the balance of probabilities. The argument is that first registration is a major source of errors, and that it is unfair to expect those who suffer to have to litigate to vindicate their rights. For example there are two neighbouring properties, Yellowmains and Greenmains, both in the Register of Sasines. Yellowmains is then registered in the Land Register. The registered boundary is one that the owner of Greenmains disagrees with. We have some sympathy with this view of matters, but nevertheless do not think that an exception should be made for inaccuracies that arose on first registration. It is indeed unfair to the owner of Greenmains that litigation should, in the absence of an amicable settlement, be required, but that is merely one aspect of an imperfect world: it is always unfair to those who are wronged that they should have to seek the aid of the courts to vindicate their rights. That is true whether the error arises on first registration or not. It is also true in contexts other than property law. If the "manifest" standard is right, then we consider that there is no basis for distinguishing between inaccuracies according to the occasion on which they arose.

18.24Finally, a few words to recapitulate the logic. The higher evidential standard is a sufficient condition for rectification (if the inaccuracy is established on the higher standard, then the Keeper must rectify) but also a necessary condition (if the inaccuracy is not established to the higher evidential standard, then the Keeper must not rectify).

18.25We recommend:

that the point is too clear to need any express statutory provision. Where statutory clarification is needed – to back up the Keeper's practice – is in relation to rectification.

22The latter may well have relied on the Keeper's search of the Register of Sasines.

23In the example given no doubt Morag could satisfy the Keeper at that higher standard.

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76.The Keeper's obligation to rectify the Register where there is an inaccuracy should arise only where the fact of the inaccuracy is manifest.

(Draft Bill, s 54(1))

Litigation

18.26If the Keeper does not rectify an alleged inaccuracy, it will of course always be possible for someone who is aggrieved thereby to go to court to compel the Keeper to rectify, calling the Keeper as defender. But in practice such an action will seldom make sense. The complaint will almost invariably prove to have been made against the wrong person and will be dismissed accordingly. If a title dispute between X and Y goes to court, for instance about the ownership of a boundary area, the proper parties are X and Y, not X and the Keeper. In other words, if X is unhappy about what the Register says, and thinks that it is inaccurate, and thus that it should be rectified, the solution is (in the absence of an amicable settlement) to litigate the substantive dispute itself, ie the boundary dispute. That means litigating it with Y. If that is done, and if X is successful, the decree will constitute manifest evidence of the fact of the inaccuracy, and the Keeper will rectify accordingly. The stronger X's case is (and the Xs of this world usually assert their case to be irrefragable) the more likely that Y will agree to an amicable settlement. If Y refuses such a settlement, then that in itself is often evidence that X's case is not quite so strong as is confidently asserted in X's letters to the Keeper.

18.27There could in theory be cases where the fact of inaccuracy had been established to the higher evidential standard but the Keeper nevertheless refused - unlawfully - to rectify. In such cases an action against the Keeper would be appropriate and would be successful. But such cases would tend to be cases where X is saying "I have offered you evidence meeting the high standard" and the Keeper is saying "high, perhaps, but not high enough". The obvious way to resolve such cases is simply for X to litigate the title dispute with Y, and we think that that is what courts would expect X to do.

Prescription

18.28 The question of whether the Keeper's duty to rectify an inaccuracy should be subject to negative prescription is considered in Part 35.

Intervention by the Keeper

18.29 In Part 31 we recommend that in any litigation in which the accuracy of the Register is called into question the Keeper should have the right to appear and be heard.

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Part 19 The guarantee of title: (A) general

19.

Overview of this group of parts

19.1 This is the first part of a group of parts dealing with the title guarantee in the new scheme. The present part is introductory. The next (Part 20) considers the title guarantee as it applies to voidable titles. The next (Part 21) considers the difficult question of when the guarantee should mean (i) that an error should not be reversed, but instead the rights of the parties should be made to conform to what the Register says they are (with compensation to those who suffer loss as a result), or (ii) that the Register should be put right and compensation paid. These options we dub "mud" or "money" and the conclusion is that sometimes the guarantee should take the one form and sometimes the other. The following part (Part 22) discusses the details of the money side of the guarantee. Part 23 then discusses the mud side of the guarantee. Part 24 looks at the Keeper's right of recovery in the event that compensation has to be paid out. And finally Part 25 gives some worked examples.

Defects in title: the general law

19.2When someone buys something,1 there is always a risk – generally a very small risk - of some defect in the title. That is true whether what is bought is corporeal moveable property, such as a car or a painting or a loaf of bread, or heritable property, or incorporeals such as company shares or bonds or intellectual property rights. The defect may be in the seller's title, or it may be created by the sale itself. As an example of the first, Fiona owns a bicycle. Gordon steals it and sells it to Harriet. Harriet's title is void.2 As an example of the second, Robert owns a car. He succumbs to senile dementia and when in that condition sells the car to Susan. Susan's title is void. The problem in this latter case is not that there was anything wrong with the seller's title: Robert's title was perfectly good. The problem arises from the transaction being defective. The distinction between these two cases is the same as the distinction drawn in Part 17 between Register error and transactional error.

19.3The general law says that good faith does not protect Harriet or Susan against such nullities. But there are exceptions. One of these is section 25 of the Sale of Goods Act 1979 which in some cases enables a good faith buyer to acquire a valid title from a non-owning seller. We mention this particular exception because, as will be seen, it has had an influence on our thinking about land registration.

19.4Where the seller's title is not void, but merely voidable, good faith does protect the grantee. If Donald owns a car and Eve by fraud induces him to sell it to her, and she then sells it to Fred, and he is in good faith, his title is perfect.3 The reason is that Eve's title is not void but voidable, and assuming that it has not been avoided by the time she sells to Fred,

1 For simplicity we speak of sale, but parallel issues arise for other transactions.

2 Sale of Goods Act 1979, s 21. This states for the sale of goods the general principle of property law, that nemo plus juris ad alienum transferre potest, quam ipse haberet (D 50.17.54 (Ulpian)), one of the foundation stones of property law. The same proposition is often expressed as nemo dat quod non habet.

3 This is general law, and for the sale of goods it is confirmed by s 23 of the Sale of Goods Act 1979.

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his good faith protects him. Had he been in bad faith, he still would have acquired ownership from her, but his title would have been voidable.

19.5These principles apply equally to property in the Register of Sasines. A good faith buyer is protected from voidability in the seller's title, but not from its invalidity, nor from the invalidity of the transfer itself.

19.6Although a deeds registration system, such as the Register of Sasines, gives no positive guarantee of title, it offers a valuable negative guarantee. If a title is in the Register of Sasines, a buyer can check that register and know that only deeds that appear in it have to be reckoned with.4 This was the reason why the Register was set up in the first place,5 for without it a buyer is faced with the problem that the property may be affected by unknown deeds. Inevitably, there are some exceptions, ie cases where a buyer is affected by an unrecorded deed,6 but in its main outlines the negative guarantee works well.

19.7Another form of title defect is the omitted encumbrance. Suppose that Fay owns land worth £300,000 and it is subject to a standard security that secures a debt of £100,000. Fay forges a discharge of the security and registers it. She then immediately sells the property to Gary. He acts in good faith and the price he pays her is the unencumbered value, namely £300,000. She pockets the whole £300,000 and vanishes, gaining £100,000 by her fraud. As far as the general law is concerned, the discharge, being a forgery, is a nullity, and so the bank's security still encumbers the property.7 In the Register of Sasines Gary's position is therefore unenviable.

Defects in title: the general law about compensation

19.8 Under general law, and hence in the Sasine system, a buyer who suffers as a result of a title defect will normally have a personal claim against the seller, based either on the contract of sale or on the clause of warrandice in the deed. In some cases there may also be a claim against prior owners.8 The claim is typically a damages claim, but can be a claim based on the law of unjustified enrichment.9 If the buyer's solicitors are at fault, there would also be the possibility of a claim against them. Given that title defects are not common and, where they exist, are likely to be detected by the buyer's solicitors, and given the right to compensation in the rare cases where a title defect did emerge, in practice buyers have been reasonably well protected. Another factor to be mentioned is the excellence of the indexing system in the Register of Sasines, superior to the indexing in the deeds registration systems of many other countries. The indexing system means that the chances of overlooking a recorded deed are slight.10

4 The Register is well indexed.

5 Registration Act 1617.

6 For example short-term leases.

7 We are dealing here with the general law. The general law was modified by s 41 of the Conveyancing and Feudal Reform (Scotland) Act 1970, but that modification applies only to discharges more than five years old and will not be considered here.

8 The latter because of the doctrine of the transmission of warrandice. If X dispones to Y, with warrandice, and Y dispones to Z, Y's warrandice right against X is normally assigned to Z. See eg Reid, Property, para 712.

9 If Susan has to return the car to Robert, she is entitled to be repaid the price. This is not a damages claim.

10 But it does occasionally happen, either because of the inherent limitations of indexing in a system that is not map-based, or because of human error.

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