Head 8: Competition of title

Question 1

A grants a disposition to both B and C. Who becomes owner?

Answer 1

B or C, depending on who is first to register the disposition.

Question 2

S 56 and 57 LRA 2012

Answer 2

Provide for a system of “advance notices”

Question 3

When can an advance notice be put on the Land / Sasine Register?

Answer 3

Where a disposition or other deed is to be granted.

Question 4

What does an advance notice do?

Answer 4

Gives the grantee a priority of 35 days (s 58 + 59). If a competing deed is registered in this window prior to the grantee followed by the grantee registering, the grantee will be deemed to have registered first.

Question 5

How does the offside goals rule work?

Answer 5

If A concludes missives with B then C, if C knows about this but still registers the disposition first (bad faith) then C’s title is voidable at the instance of B.

Question 6

Two remedies from the offside goals rule?

Answer 6

1. B can obtain a reduction of the disposition registered by C
2. B can sue A for breach of contract for damages

Question 7

Why is the offside goals rule awkward?

Answer 7

C has a real right of ownership, B merely has a contractual right, but B’s contractual right is allowed to trump C’s real right.

Question 8

How many requirements are there for the offside goals rule to operate?

Answer 8

KR thinks there are 4

Question 9

First requirement for the offside goals rule to operate?

Answer 9

The rival grant is in breach of the terms, express or implied, of an obligation binding on the granter - the paradigm case is breach of warrandice in a contract of sale.

Question 10

Second requirement for the offside goals rule to operate?

Answer 10

The obligation must pre-date any right to the grant, personal or real, in the grantee.

Question 11

Third requirement for the offside goals rule to operate?

Answer 11

The creditor in the obligation (Betty) must either hold an existing real right in the same property, or be entitled to obtain such a right

Question 12

Wallace v Simmers

Answer 12

Owner of a piece of land entered into a contractual relationship with a relative whereby they could live in a cottage on the land. NOT a lease. Owner sold to third party who told the relative to leave. The relative litigated and argued the offside goals rule applied because the buyer was acting in bad faith.

Held that the offside goals rule could not apply because the relative only had a contractual right, rather than a an entitlement to obtain a real right.

KR thinks this is CORRECTLY DECIDED

Question 13

Gibson v RBS

Answer 13

Held that Wallace should not be regarded as a rigid rule - in the end it is a matter of court discretion.

KR thinks this is WRONGLY DECIDED

Question 14

Fourth requirement for the offside goals rule to operate?

Answer 14

The grantee (Colin) must either know of the personal right at the time of obtaining his real right or be a donee. Constructive knowledge counts (Rodger (Builders))

Question 15

Rodger (Builders)

Answer 15

The second purchaser was told the first contract (w/ the first purchaser) was off and simply assumed this was true - he didn’t make any independent inquires and was held to have constructive knowledge of the other contract and thus the offside goals rule applied

Question 16

What are the two main areas where the offside goals rule is complicated?

Answer 16

1. Options

2. Mortgages

Question 17

Advice Centre for Mortgages v McNicoll

Answer 17

Held that an ‘option’ to purchase a property cannot trigger the offside goals rule

Question 18

Gibson v RBS

Answer 18

Held that an ‘option’ should trigger the offside goals rule (contrary to Advice Centre for Mortgages)

Question 19

Trade Development Bank v Crittall Windows

Answer 19

Court held that where ‘Alan grants a disposition to Betty, before Betty can register, A grants a standard security to Colin who promptly registers it’, the offside goals rule cannot apply.

Question 20

What is the serious practical problem when buying a house in between paying and registering the disposition?

Answer 20

That the seller will go bankrupt and there will be a competition of title with the trustee in sequestration, settled according to “first in time, first in right”

Question 21

How was the problem involving bankruptcy in the time between payment and registration tackled?

Answer 21

Solicitors of the seller granted a personal letter of obligation that to the effect that the buyer would be protected

Question 22

Sharp v Thomson

Answer 22

Tried to improve the solicitors letter of obligation (to protect against bankruptcy) to the effect that the buyer’s personal right prevailed against the seller’s receiver (in relation to floating charges, not bankruptcy) - in effect upgrading the buyer’s right to a QUASI REAL RIGHT known as beneficial interest.

Question 23

Burnett’s Trustees v Grainger

Answer 23

Effectively reversed the controversial decision in Sharp. However, Sharp remains goods law in relation to FLOATING CHARGES, ONLY

Question 24

Now, how are problems relating to bankruptcy and receivership solved primarily

Answer 24

Advance notices.

Question 25

What was the previous practice in Scotland to protect a buyer during the disposition being delivered and registration?

Answer 25

Solicitor acting for the seller guaranteees for 14 days that noone else would register in this time.