Outer House case in which Santander sought to recover losses from the Keeper of the Registers of Scotland after the Keeper accepted a forged discharge (discharging a security held by Santander) for registration. The discharge was subsequently reduced and the Land Register was rectified to show Santander’s security. However, the security only took effect as at the date of rectification meaning that a second security registered in favour of the Bank of Scotland (after the discharge was registered but before the rectification took effect) received prior ranking to the Santander security. The Bank of Scotland later sold the property in terms of their security and no proceeds went to Santander (who were still owed more that £240k in terms of the loan secured). Santander claimed that their loss arose as a result of the fault and negligence of the Keeper.

Lord Boyd found in favour of the Keeper. After deciding that the Keeper’s decision to register the discharge was a matter on which the court could adjudicate (i.e. it was not a policy decision purely at the Keeper’s discretion), the question for the court was whether the Keeper owed a duty of care to the Bank. This would depend on whether the Caparo test was satisfied. In order to satisfy the Caparo test Santander had to show that the loss was foreseeable, the relationship between Santander and the Keeper was sufficiently proximate and that it was fair just and reasonable to impose a duty of care on the Keeper. It was the last of these requirements on which Santander’s claim failed. Lord Boyd (after noting that the Bank had assumed certain risks in lending to its client whereas the Keeper had made no assessment of the fraudster’s creditworthiness or honesty or whether the value of the property would fully secure the loan), found that in the circumstances: where the loss was caused by the criminal acts of Santander’s client, it was not fair, just or reasonable that the Keeper should be liable.

The full decision is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Sheriff Court case concerning the sale of Harwood Estate near Bonchester Bridge in Hawick. In 2002 the trustees sought to sell part of the estate with the exception of Harwood Mill, which was being retained as a residence for Andrew Lubbock, and the lodge, which was the subject of a liferent to Georgina Lauder.   However, no mention was made of the exception of the lodge in the narrative to the disposition and title to the lodge was included within the estate title registered in favour of the purchaser, Mr Feakins in the Land Register for Scotland.

When this was discovered some years later, the trustees sought declarator that the lodge had not been included in the subjects of sale and an order that the Land Register be rectified. The trustees argued that, as the scale of the plan attached to the disposition meant it was impossible to determine whether the lodge was part of the subjects of sale, regard should be had to the intention of the parties in determining the effect of the disposition.

Although no mention was made of the exceptions in the missives or disposition, the trustees had instructed their estate agents and solicitors that the estate was to be sold with the exceptions and the trustee’s solicitors had sent a fax to the purchaser’s solicitors indicating that the mill and lodge were not included in the sale (a fact that had not been brought to Mr Feakins attention, his solicitors believing it unnecessary as he had been content with the plan which represented the subjects being purchased). The draft sales particulars had also been drawn up in a manner which neither specifically included or excluded the mill and lodge (the estate agents having taken the view that specific mention may have deterred purchasers and was unnecessary as the buildings were not within the body of the estate).

Sheriff Daniel Kelly QC found that the Register was not inaccurate as the lodge had been transferred in the disposition. Even if the disposition had been ambiguous, the lodge was amongst the property transferred in the missives. The missives had been agreed to be final[1] and it was not open to have regard to the prior intention of the parties. Further, even if the parties’ intentions had been considered, their intensions were not ‘as one’ as Mr Feakins did intend to purchase the lodge.

Finally, even had there been an inaccuracy in the Register, it would not have been open to order rectification as Mr Feakins was ‘a proprietor in possession’[2] who would have been prejudiced by the rectification. Although Miss Lauder was in natural or direct possession of the lodge, neither she nor the trustees held a registered title. Mr Feakins held title to and possessed the estate as a whole (living on it with his family and having a sheep farm there too). Mr Feakins also understood that, following the sale, Miss Lauder’s liferent was with him as fiar and he allowed her to continue to occupy the lodge. Although the Sheriff found there was difficulty in construing Miss Lauder’s occupation of the lodge as being civil possession on behalf of Mr Feakins, he nevertheless tended towards the view that Mr Feakins might be construed as a proprietor of the whole estate including the lodge.

The full report is available from the Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.