Clive Joseph Aronson Against The Keeper Of The Registers Of Scotland And Others
| Jurisdiction | Scotland |
| Judge | Lord Doherty |
| Neutral Citation | [2014] CSOH 176 |
| Court | Court of Session |
| Published date | 19 December 2014 |
| Year | 2014 |
| Date | 19 December 2014 |
| Docket Number | CA53/14 |
OUTER HOUSE, COURT OF SESSION
[2014] CSOH 176
CA53/14
OPINION OF LORD DOHERTY
in the cause
CLIVE JOSEPH ARONSON
Pursuer;
against
(FIRST) THE KEEPER OF THE REGISTERS OF SCOTLAND; (SECOND) FIRSTPLUS FINANCIAL GROUP PLC; (THIRD) PROGRESSIVE FINANCIAL SERVICES LIMITED; and (FOURTH) STEVEN WILLIAM ALEXANDER
Defenders:
Pursuer: Young QC; Simpson & Marwick
Defender: Lake QC; Scottish Government Legal Directorate
19 December 2014
Introduction
[1] The fourth defender is the former heritable proprietor of a flatted dwelling house in Dean Street, Kilmarnock (“the property”). He granted a standard security over the property in favour of the Bank of Scotland (“the Bank”) which was registered in the Land Register (“the register”) on 19 March 1998. That date was also the date of first registration of the property. Thereafter the fourth defender granted three further standard securities, one in favour of the second defenders which was registered on 6 December 2002, and two in favour of the third defenders which were registered on 27 October 2003 and 12 October 2004 respectively. The Bank’s standard security secured all sums due and to become due by the fourth defender to the Bank.
[2] Repayments on the fourth defender’s home loan with the Bank fell into arrears. The Bank did not serve a calling-up notice. It proceeded on the basis that the default in repayment of the home loan was a default in terms of standard condition 9(1)(b) of Schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970 (“the 1970 Act”). It commenced proceedings against the fourth defender in Kilmarnock Sheriff Court. It sought warrant to sell the property in terms of s. 24 of the 1970 Act. The fourth defender did not defend the action. On 6 April 2010 the Sheriff pronounced decree in absence against him. The Sheriff (i) found and declared that the fourth defender was in default within the meaning of standard condition 9(1)(b); (ii) granted warrant to the Bank in terms of s. 24 inter alia to enter into possession of the property and to sell it; (iii) ordained him to vacate the subjects and to remove, under pain of ejection. The pursuer obtained extract of that decree on 26 May 2010.
[3] On 24 November 2010 the Supreme Court delivered its judgment in Royal Bank of Scotland plc v Wilson 2011 SC (UKSC) 66. Professor Gretton described it as “a bombshell decision” (“Enforcing Standard Securities”, Conveyancing 2010, 129 at p 130). “[A]n issue that had been subject to forty years of uniform interpretation, an issue on which land titles beyond count have been settled…all this was overturned…” (Upsetting the Apple-Cart: Standard Securities in the Supreme Court, Edin LR Vol 15 p. 251)
[4] Having obtained warrant from the court to sell the property under the power of sale in the standard security, the Bank duly advertised it and concluded missives for sale with the pursuer. In implement of the missives the property was disponed to the pursuer on 25 February 2011. The disposition narrated that sale had been in exercise of the Bank’s power of sale as creditor in the standard security and that the price had been the best that could reasonably be obtained. The dispositive clause set forth that the subjects disponed were “ALL and WHOLE the subjects known as and forming [X] Dean Street, Kilmarnock, KA3 1EL being the subjects registered in the Land Register of Scotland under the said Title Number AYR8760; the whole right, title and interest of the said Steven Alexander and ourselves the said Bank of Scotland plc in and to the said subjects”. The Bank granted warrandice from its own facts and deeds only “but excepting therefrom any exclusion of indemnity from the answers given to Question 6 in the Form 2”. It bound the fourth defender in absolute warrandice.
[5] On 1 March 2011 the pursuer applied to the first defender to register the disposition. His solicitors completed a Form 2 Application (Land Registration (Scotland) Rules 2006, Rule 9(1)(b)). Question 6 of Form 2 enquired:
“Is the dealing in implement of the exercise of a power of sale under a heritable security?
If YES
Have the statutory procedures necessary for the proper exercise of such power been complied with?”
The pursuer answered the first question in the affirmative and the second question in the negative (because by then it was apparent, following Royal Bank of Scotland plc v Wilson, supra, that the fourth defender’s default in repayment had not been a default within the meaning of standard condition 9(1)(b); and that in order for the Bank to have had a right to sell it ought to have served a calling-up notice which the debtor then failed to comply with).
[6] On 2 March 2011 the first defender registered the disposition and updated the Title Sheet and the Land Certificate. The Proprietorship Section of the Title Sheet was updated to show the pursuer as proprietor. Note 3 to that entry stated:
“2. The title of the said Clive Joseph Aronson is founded on a Disposition by Bank of Scotland Plc to the said Clive Joseph Aronson registered 2 Mar. 2011 in implement of the power of sale under a standard security by Steven Alexander to the Governor and Company of the Bank of Scotland registered 19 Mar. 1998.
Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss arising as a result of the Disposition being reduced or declared or found to be void because of any defect or failing in the exercise of the statutory procedures necessary for the proper exercise of the power of sale.”
The Charges Section of the Title Sheet was updated by removing the listing of the Bank’s standard security. The entries for the second and third defenders’ standard securities were not removed from the Charges Section, but they were renumbered as entries 1, 2, and 3. Notes were appended to each of those entries excluding indemnity
“in respect of any loss arising from rectification of the register to delete the above standard security or from the subjects in this title being declared or found not to have been disburdened of the above standard security in terms of section 26(1) of the Conveyancing and Feudal Reform (Scotland) Act 1970.”
In this action the pursuer seeks rectification of the Register in terms of s. 9(1) of the Land Registration (Scotland) Act 1979 (“the 1979 Act”) by deleting entries 1, 2, and 3 in the Charges Section. The first defender is the only defender to have lodged defences. The position adopted in the defences is that there is no inaccuracy in the Title Sheet. The matter came before me for a Debate on the Commercial Roll.
[7] The parties entered into a Joint Minute agreeing that productions 6/1 to 6/11 are true and accurate copies of original documents and may be taken as an accurate record of their contents without being spoken to by any witness. Quoad ultra the parties renounced probation.
[8] I was not advised of the terms of the missives of sale between the Bank and the pursuer or the date those missives were concluded. Neither the principal nor a copy of the Bank’s standard security was produced. However, both Mr Young and Mr Lake proceeded on the basis that the Schedule 3 standard conditions had been incorporated in the Bank’s security; and that the security did not contain any other terms or conditions which were material to the discussion.
The relevant statutory provisions
[9] Part II of the 1970 Act provided at the material times:
“11.— Effect of recorded standard security, and incorporation of standard conditions.
(1) Where a standard security is duly recorded, it shall operate to vest in the grantee a real right in security for the performance of the contract to which the security relates.
(2) Subject to the provisions of this Part of this Act, the conditions set out in Schedule 3 to this Act, either as so set out or with such variations as have been agreed by the parties in the exercise of the powers conferred by the said Part (which conditions are hereinafter in this Act referred to as ‘the standard conditions’), shall regulate every standard security….
…
24.— Application by creditor to court for remedies on default.
(1) Without prejudice to his proceeding by way of notice of default in respect of a default within the meaning of standard condition 9(1)(b), a creditor in a standard security, where the debtor is in default within the meaning of that standard condition or standard condition 9(1)(c), may apply to the court for warrant to exercise any of the remedies which he is entitled to exercise on a default within the meaning of standard condition 9(1)(a).
…
26.— Disposition by creditor on sale.
(1) Where a creditor in a standard security has effected a sale of the security subjects, or any part thereof, and grants to the purchaser or his nominee a disposition of the subjects sold thereby, which bears to be in implement of the sale, then, on that disposition being duly recorded, those subjects shall be disburdened of the standard security and of all other heritable securities and diligences ranking pari passu with, or postponed to that security.
(2) Where on a sale as aforesaid the security subjects remain subject to a prior security, the recording of a disposition under the foregoing subsection shall not affect the rights of the creditor in that security, but the creditor who has effected the sale shall have the like right as the debtor to redeem the security.
27.— Application of proceeds of sale.
(1) The money which is received by the creditor in a standard security, arising from any sale by him of the security subjects, shall be held by him in trust to be applied by him in accordance with the following order of priority—
(a) first, in payment of all expenses properly incurred by him in connection with the sale, or any attempted sale;
(b) secondly, in payment of the whole amount due under any prior security to which the sale is not made subject;
(c) thirdly, in payment of the whole amount due...
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Ge Money Secured Loans Ltd Against (first) Brian Bissell Macbride And (second) Linda Rae Macbride
...could not enforce the decree obtained as a result of that decision. Reliance was placed upon Aronson v Keeper of the Registers of Scotland 2015 SLT 122 where Lord Doherty held that a similar decree was valid unless and until it was reduced: para 29. Averments as to advice from the Council o......