Inner House case considering whether damages were due in respect of wrongful interdict after an interim interdict was granted on the basis of a deed which was later rectified with retrospective effect.
Background
Mr Mirza was the owner of a shop and yard on Cumberland Road in Glasgow. Mrs Salim took an assignation of a lease of the premises. The parties had intended that only the shop (and not the yard) be let to Mrs Salim. However, due to an error, both the shop and yard were included in her title.
Mr Mirza commenced construction of a new shop in the yard. A dispute then arose as to who had a real right in the yard and, in February 2008, Mrs Salim sought and obtained an interim interdict preventing Mr Mirza from entering the yard and building and operating the new shop. However, in August 2009 the Court found that the yard had been included in the lease as the result of a conveyancing error (for which neither of the parties were responsible) and granted a judicial rectification[1] of the lease removing the yard from the leased subjects (the rectification being retrospective in effect). Mr Mirza then sought damages for wrongful interdict.
In the Outer House Lord Woolman refused to grant damages taking the view that, although rectification altered the deed and the register, “it did not airbrush history. It did not convert a rightful interdict into a wrongful one”.
Decision
By majority decision[2] the Inner house allowed an appeal and found that Mr Mirza was entitled to damages[3].
After construing ss8 and 9 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (which deals with rectification of defectively expressed documents) and s9(3A) of the Land Registration (Scotland) Act 1979[4] (rectification of the Land register), the court found that the clear effect of the legislation was that rectification would act retrospectively (i.e. the rectified entry would take effect from the date the original entry was made)[5].
The court also confirmed that the obtaining of an interim interdict is at the risk of the applicant meaning that, if an application is ultimately found to be unsuccessful, the applicant will be liable for loss caused by the interim interdict. In the words of Lady Dorrian:
“The position in relation to interim interdict is clear, and well understood by practitioners, namely that such an order is sought periculo petentis [at the risk of the perpetrator]. This rule means that, in general, where loss has been caused, damages will automatically follow where an interdict has turned out to be unjustified. A petitioner for interdict perils his case, and places himself at risk of damages if it prove to be otherwise, that he will eventually be vindicated in his claim.”
The full judgement is available from Scottish Courts here.
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[1] In terms of the Land Registration (Scotland) Act 1979 and the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985.
[2] Lady Paton took the view that the question whether or not the interim interdict was wrongous and whether or not damages should be awarded should be left as an open question to be decided by the court, taking into account all the circumstances of the case. And consequently a proof before answer (i.e. an evidential hearing) at large would be required.
[3] A proof was allowed on quantum (i.e. the amount of damages payable).
[4] Although not yet in force, reference was also made to s55 of the Land Registration etc. (Scotland) Act 2012.
[5] Section 9(3) of the 1985 Act also provides protection for persons whose position has been affected to a material extent by acting or refraining from acting in reliance on the face of the register but, in this case it was found that that did not apply to Mrs Salim.
