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Lord Morison put the point at p 224C-D in this way: If [eviction] has not been judicially established, the warrandice clause may still be invoked if eviction in the strict sense is threatened, providing that the threat is based on an unquestionable right. PRE |
Such a threat could only come as a result of a demand from the competing title-holder, for no one else has any right, let alone an unquestionable right, to make it. PRE |
Taken at their face value, these observations may be said to point clearly to the conclusion that, although there was a demand in this case, the pursuer cannot invoke the warrandice clause as he is not able to show that JCL, who made the demand, had a competing title to the disputed part when the threat was made. PRE |
According to his averments, the registered title to the disputed part was vested at that time in Mr Lynch. PRE |
But the question which had to be decided in Clark v Lindale Homes Ltd was not directed to the problem that has arisen in this case. PRE |
The submission for the pursuer in Clark was that warrandice was a warranty of indemnity for all losses which the purchaser might sustain arising out of a defect in title, whether or not the purchasers had been dispossessed of the whole or any part of the property. PRE |
It was sufficient for a prevailing right to have been identified by the Keeper of the Registers which resulted in loss to the purchaser: see p 213B-C. PRE |
This argument was rejected on the ground that there had at least to be the threat of an eviction, provided it was based on an unquestionable right. Ratio |
The proposition that such a threat could only come from a party who, at the time of the threat, was the competing title holder went further than it was necessary to go for the disposal of the action. Ratio |
I think that it is open to us to consider whether it went too far. Ratio |
The first authoritative treatment of the effect of warrandice is in Stair, Institutions of the Law of Scotland (1693), II, iii, 46: The effect of warrandice is, the up-making of what is warranted, in so far as it is evicted, and the ordinary procedure in it is, when any suit is moved whereon eviction may follow, intima... |
Also it is effectual for decerning the warrander to free the thing warranted of that which will undoubtedly infer a distress, though it hath not actually done it Yea, warrandice will take effect where there is unquestionable ground of distress, though the fiar transacted voluntarily to prevent the distress. Ratio |
And though no intimation be made of the plea inferring distress, yet the warrandice taketh effect, unless the warrander had a relevant defence, and could instruct the same. Ratio |
The situation relevant to this case is described in the last two sentences. Ratio |
There was an unquestionable ground of distress, it being accepted that the defender had not given RDL a valid title to the disputed part. Ratio |
There was also the threat of an eviction, as JCL had called upon RDL to remove from the disputed part. Ratio |
RDL then transacted voluntarily with JCL to prevent the distress of an eviction. Ratio |
The fact that there was no intimation to the defender is no answer to the claim. Ratio |
The warrandice takes effect unless the defender had a relevant defence to JCLs claim. Ratio |
The pursuer offers to prove that there was no relevant defence as, if the fact that JCL did not have a title to the disputed part had been discovered when the threat was made, JCL would have been immediately able to secure title to it with the co-operation of Mr Lynch. Ratio |
On these facts, if they can be established, it would seem that the claim that the pursuer makes is within the scope of the remedy as described by Stair. Ratio |
There must, on his description of it, be an unquestionable ground of distress. Ratio |
But it is not said to be an essential requirement, assuming that a threat must be made, that the party who makes the threat must himself have an unquestionable title at the time when he makes it. Ratio |
What is needed is that the warrander would have had no relevant defence to the threatened eviction. Ratio |
That would seem to be the case if there was an unquestionable defect in the grantees title, and the party who made the threat was, as the pursuer avers, in a position by the exercise of a personal right that was vested in him at that time to obtain a real right to the subjects in question immediately. Ratio |
I do not think that any guidance on this point is to be found in Erskine, An Institute of the Laws of Scotland, II, iii, 30, although in Welsh v Russell (1894) 21 R 769, 773 Lord McLaren said that there could be no better authority on the subject. Ratio |
Erskine makes it clear that the remedy is not one of restitution but of indemnification. Ratio |
But he does not appear to accept that warrandice may be effectual where eviction has been threatened but has not actually occurred other than in the case of inconsistent deeds of the granter. Ratio |
As authority for the exception in the case of inconsistent deeds, reference may be made to Smith v Ross (1672) M 16596, in which the court sustained a submission that warrandice may take effect where there is no actual eviction, if the cause inferring eviction be evident and clear, especially if the same be the deed of... |
It does not appear from the discussion of the point by the institutional writers, however, that there is any compelling reason why the cause inferring the eviction, if it be an unquestionable defect against which the grantee would have had no defence until the expiry of the prescriptive period, must be drawn to his att... |
This suggests that the law as to the requirements for there to be a relevant threat of eviction, in cases other than those arising from inconsistent deeds of the granter, was not fully developed at that stage. Ratio |
In Bells Principles 10th ed (1899), section 121 eviction is said to include the emerging of an unquestionable burden on the subjects purchased, which the buyer is compelled to discharge. Ratio |
In section 895 the point is again made that warrandice is not an obligation to protect but only to indemnify in case of eviction. Ratio |
Out of this peculiarity there are said to arise several important consequences: Thus there is no action of warrandice till judicial eviction, unless the ground of demand be unquestionable, and proceeding from the fault of the seller; or the obligation to relieve be disputed, in which case the action may be brought when... |
The first of these two exceptions arises where the grantees lack of title is due to a second inconsistent deed of the seller, as was noted in Smith v Ross. Ratio |
That is not this case. Ratio |
The second arises where the threat of eviction is settled before a judicial eviction takes place. Ratio |
Here too there is no examination of the requirements that must be satisfied for there to be a relevant threat, other than that the ground of demand must be unquestionable. Ratio |
There must, as Lord Morison observed in Clark v Lindale Homes Ltd at p 224B, be compulsion exerted by a demand. Ratio |
But the discussion so far seems to leave open the question whether the person who makes the demand must at that time have a real right to the disputed subjects, or whether it is enough that he can demonstrate that he has an unquestionable right to obtain one. Ratio |
As Bell refers in support of his description of the obligation in section 121 to Pothiers Treatise on the Contract of Sale (translated 1839), it is perhaps worth noting that in para 83 Pothier observes that the term eviction is applied in practice both to the sentence which orders the abandonment and to the demand whic... |
In para 86 he states: The term eviction is applicable, strictly speaking, to those cases only in which the buyer is deprived of the thing sold by a sentence. Ratio |
It is used, however, in a sense less proper, to include cases in which the buyer is deprived, without any sentence, of the power to retain the thing, in virtue of the sale. Ratio |
In para 95, describing the circumstances that could constitute a threatened eviction, he states that where the buyer of the thing sold has to abandon it to a third party who at the time of the contract was the owner or had at least an inchoate right to compel the buyer to abandon it, this gives rise to a warranty provi... |
The situation that he contemplates is one where the buyer has no power to retain the subjects but abandons it to forestall the expense of a sentence against him, provided that party to whom he abandons has the right to compel the abandonment. Ratio |
Brown, Treatise on the Law of Sale (1821), makes the same point in para 330, stating that the eviction must take place in consequence of a right existing in a third party. Ratio |
The question whether that right must be a real right to the disputed subjects, vested in the third party at the time of the demand, is not discussed. Ratio |
In Welsh v Russell at p 773 Lord McLaren said that the obligation of warrandice differed from all other obligations, in that it was not intended that it should be performed immediately, or within a definite time, or even within what the law describes as a reasonable time: It remains latent until the conditions come int... |
That was a case where a servitude right of way had been established judicially over the garden of subjects purchased by the pursuer, but the pursuer was not able to aver that he had suffered any loss through the existence of the servitude. PRE |
It is an important authority on the question whether more is needed to justify a claim under the warrandice than a mere unquestionable deficiency in title. PRE |
But it does not deal with the question as to the nature of the right that must be shown to be vested in the third party at the time when he makes his threat or demand. PRE |
The first modern case in which it was held that a claim under warrandice was competent where there was no eviction, other than in the case of an absence of title caused by a second inconsistent deed of the granter, is Watson v Swift & Cos Judicial Factor 1986 SC 55. PRE |
Lord Morison held at p 61 that an unquestionable burden on the subjects had emerged and that this situation had been created by the grant to the pursuers of a disposition which contained an unjustified warrant of its effectiveness. PRE |
The property was subject to redemption under a decree of adjudication, and an action had been raised by a party who was entitled to decree ordaining the pursuers to discharge the adjudication and remove from the flat. PRE |
They had no defence to the action, which was sisted for negotiations which resulted in the pursuers obtaining a valid and marketable title to the flat. PRE |
As in Clark v Lindale Homes Ltd, there was no need in that case to examine the question which is before us in this case. PRE |
In his essay in A Scots Conveyancing Miscellany (1987) (ed Cusine) entitled Warrandice in the Sale of Land Kenneth G C Reid, as he then was, said at p 158 that there are a number of circumstances in which eviction is not required for a claim to be brought. Ratio |
Two of them, he said, were well established and the possibility of additional categories was not excluded. Ratio |
Those that were well established were (1) where the buyers absence of title was caused by a second, inconsistent deed of the seller, and (2) where an action against the buyers title is raised but then settled without proceeding to decree, provided that the buyer had no stateable defence, as in Watson v Swift & Cos Judi... |
He observed that Stair, II, iii, 46 had reached substantially the same conclusion as Lord Morison did in that case 300 years earlier. Ratio |
The circumstances of the present case differ from those in Watson, because no action was raised before the negotiations were concluded. Ratio |
It does not fall within either of the two categories that, writing in 1987, Professor Reid recognised as well established. Ratio |
But it was held in Clark v Lindale Homes Ltd that the warrandice clause may still be invoked if eviction in the strict sense is threatened, provided that the threat is based on a right which is unquestionable. Ratio |
As for the question what the phrase a right which is unquestionable means, the editors of Professor McDonalds Conveyancing Manual 7th ed (2006), para 10.09 state that the warrandice obligation does not indemnify against loss or damage which the grantee may suffer from any cause, other than actual or constructive evicti... |
But they cite no authority for this statement, and in his title on Property in the Stair Memorial Encyclopaedia Restatement, para 707, Professor Reid states that what is required is that the true owner of the property successfully assert his right against the transferee, adding in footnote 4 the words or, in the case o... |
This formulation suggests that, while the existence of an adverse real right is of course an essential requirement, the person who asserts that right need not actually be in possession of it when he leads the reduction or otherwise asserts the right against the grantee. Ratio |
Discussion Ratio |
As I said in para 12, above, it seems to me that the first question that needs to be addressed is whether, as the majority in the Extra Division held, the person who makes the threat has to have an unquestionable title to the subjects in other words, a right in rem at the time when he makes his threat. Ratio |
As I have indicated in my examination of the authorities, they do not appear to me to impose such a rigid requirement on the grantee. Ratio |
Some of the dicta in Clark v Lindale Homes Ltd might be taken as having that stark effect, but they can properly be regarded as obiter. Ratio |
Such discussion of the remedy as there is in the previous authorities concentrates on the point that, in order to bring the obligation into effect, there has to be an eviction or at least the threat of an eviction. Ratio |
Clearly, the party who seeks eviction or who threatens to do so must be in a position to make good his challenge to the title of the grantee. Ratio |
But there would seem to be no good reason why the way in which that challenge may be made good cannot be worked out, in the ordinary way, according to the circumstances of each case. Ratio |
To insist that the right on which the party who makes the threat has to found when he makes his threat must be a real right overlooks the fact that parties who have an undoubted interest in seeking to challenge the title of the grantee may not yet, for a variety of reasons, have registered a title to the subjects in th... |
Where proceedings are raised to obtain an order for eviction, the party who brings those proceedings will need to show that he has a title and interest to make the claim. Ratio |
But I do not see why, so far as the question of title to sue is concerned, that cannot take the form of an undoubted personal right against the person in whom the title to the land is vested by which that person can be required to transfer his real right to the party who has brought the proceedings or, if the proceedin... |
Mr Reid QC for the pursuer accepted that the obligation of warrandice was a contractual remedy. Ratio |
But he submitted that, in a general sense, it was equitable in nature and that, for this reason, it should be accorded a degree of flexibility. Ratio |
I think that to adopt that approach would be to introduce too much uncertainty, and it sits uneasily with an underlying concept of the law of obligations. Ratio |
Contractual remedies are based on what the parties are to be taken to have agreed to, not what the court thinks just and equitable. Ratio |
But there is force in the idea that, in the working out of the contractual remedy, the law seeks to find practical solutions to the problems that the case gives rise to. Ratio |
That is why it does not insist on actual eviction as the only precondition for a claim under the obligation of warrandice. Ratio |
It accepts that, as Stair II, iii, 46 puts it, the grantee may act voluntarily to prevent the distress. Ratio |
He does not have to engage in pointless litigation. Ratio |
It is, of course, essential that the grantee transacts voluntarily with the right person with the person who has a title and interest to make good the threat. Ratio |
But to insist that the title must take the form of a real right at the time when the threat is made would be to deprive the remedy of utility in circumstances such as in this case, where it is said that the party who made the threat was nevertheless in as good a position to make good the threat as he would have been if... |
I would hold that to insist on this does not give full weight to the underlying purpose of the obligation as described by Stair, and that it is wrong in principle. Ratio |
As for what the grantee needs to show in order to establish that the threatened demand amounted to an eviction, he must, as I have just said, be able to show that he transacted with the right person. Ratio |
There must, of course, be a competing title which will prevail in a question with the grantee. Ratio |
And the party who makes the threat must be in a position to make it good if negotiations were to break down and the dispute were to proceed to the stage of an actual eviction. Ratio |
The grantee must, then, be able to show that the threat was capable of being made effective. Ratio |
But an incomplete title to the disputed subjects will be good enough if the party who makes the threat is undoubtedly in a position to compel the party in whom the real right is vested to transfer the title to him or, if the threat is compromised, to the grantee. Ratio |
I do not see this approach as undermining the principle that parties are entitled to transact with each other on the faith of the register, as the defender suggested. Ratio |
It is, of course, to the register that one must go to determine who has the real right. Ratio |
That does not mean, however, that a personal right against the holder of the real right must be left out of account when one is seeking a practical solution to problems of the kind that are illustrated by this case. Ratio |
Although the analogy is not precise, it is perhaps worth noting what is needed for there to be judicial interruption of prescription for the purposes of section 4 of the Prescription and Limitation (Scotland) Act 1973. Ratio |
This is because it could be said that there is an affinity between the judicial interruption of prescription, which if it were to be allowed to run on for the prescriptive period would provide the grantee with an unchallengeable title, and the obligation of warrandice. Ratio |
Warrandice remains latent until the conditions come into existence that give it force and effect. Ratio |
But it continues to affect the grantee until the possibility of adverse claims has been extinguished by the positive prescription. Ratio |
It is plain that a challenge to the possession which gives force and effect to the warrandice will interrupt the running of the prescription. Ratio |
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