The recently reported case of Jones v Wood GWD 2005 17-304
concerned an action for rectification of a disposition which contained
an inaccurate plan, under the provisions enabling rectification of
defectively expressed documents contained in sections 8 and 9 of the
Law Reform (Miscellaneous Provisions) (Scotland) Act 1985.
Although there have been a number of actions for rectification under these
provisions since they were enacted, there is very little reported authority
on the proper interpretation of section 9 of the Act, which concerns the protection
of persons who may have acted or refrained from acting because of the terms
of the document, and this case is helpful for the detailed reasoning set out
by Lord Macfadyen for the basis of his decision under that provision.
Mr and Mrs Jones purchased property at Dunscore, Dumfries, from Mr and Mrs
Wood in 1997. It transpired that the plan of the property, which was attached
to the disposition by the Woods in favour of Mr and Mrs Jones, was inaccurate,
as it excluded from the property an area of ground, of slightly under an acre,
that the parties had agreed should be sold to the Joneses.
The following year, Mr and Mrs Wood sold an adjoining piece of land
to Mr and Mrs Kinnaird, described in the disposition in their favour by
reference to a plan in the same terms as the inaccurate plan in the
Joneses' title. Consequently both the Kinnairds' title and the Joneses'
title contained the same error as to the boundary between the two
properties. The land which should have been included in Mr and Mrs
Jones' title but was shown in the disposition plans as excluded from
it, was thus included in the title to the land sold to Mr and Mrs
Kinnaird. The Kinnairds sold their property to Mr Bogie later that same
year.
On discovering the error the Joneses
applied to have their title rectified under the provisions of Section
8. Rectification in this way may be sought when a written document does
not accurately express the common intention of the parties to an
agreement, and will usually have retrospective effect, unless the court
determines otherwise. In the case of Shaw v William Grant (Minerals) Limited 1989 SLT 121, the court stated that rectification under section 8 may be ordered only if six points are satisfied, and these are that:
- There is a document to be rectified;
- that document was intended to express or give effect to an already existing agreement arrived at between the parties;
- there was such a pre-existing agreement when the document was executed, (whether enforceable or not);
- that agreement itself embodied and was an expression of one or more
intentions common to (that is to say, shared by) the parties; - the intentions were actual (not deemed) intentions; and
- the agreement itself must have been reached at a definite point in time
Rectification was sought in this case of the disposition in favour of Mr and
Mrs Jones, by changing the inaccurate plan for a plan which accurately shows
the boundaries of the land which they had agreed to purchase, which would include
the disputed area. They also wanted declarator that they are in possession
of the property outlined in the proposed new plan, and have been since their
original date of entry in 1997, and for their title sheet in the Land Register
to be amended to show the position as reflected in the proposed new plan.
Mr Bogie entered the proceedings in reliance of the provisions of section
9 of the 1985 Act, to which section 8 is subject, and which provide that in
certain circumstances, the interests of third parties which may be adversely
affected by rectification going ahead, may be protected. Although he accepted
that the disposition should be rectified in the way the Joneses were seeking,
he argued that the rectification should not be effective any earlier than his
date of entry in October 1998 (or the earlier date of entry of the Kinnairds)
to preserve the priority of his title to the disputed area in preference to
the Joneses' title to that area in terms of the rectified disposition and new
plan.
Section 9 provides that the court will order a document to be
rectified under section 8 only where it is satisfied that the interests
of a person (other than a party to the agreement) who has acted or
refrained from acting in reliance on the terms of the document or on
the title sheet in the Land Register of Scotland, would not be
adversely affected to a material extent by the rectification. Section 9
does not apply to someone who, at the time when he acted or refrained
from acting, knew, or ought in the circumstances known to him at that
time to have been aware, that the document or the title sheet failed
accurately to express the common intention of the parties to the
agreement or whose reliance on the terms of the document or on the
title sheet was otherwise unreasonable, and the court has power when
ordering rectification to provide that it will have effect as at a
particular date to protect the interests of anyone to whom the
provision applies if appropriate.
Mr Bogie's position depended upon
whether he was a person to whom section 9 of the Act applied. There are
essentially three elements which require to be considered when
identifying whether or not someone is such a person, that is:
- that he is a person other than a party to the agreement mentioned in section
8; - that he has acted or refrained from acting in reliance on the terms of the document of which rectification is sought; and
- that as a result his position has been affected to a material extent.
It was suggested by counsel in this case that the matter can be
tested by identifying whether the party placing reliance on the
document would have acted in the same way as he actually did, if the
document had at that time been expressed in its rectified terms. If he
would not have acted in the same way, then he can be regarded as having
acted in reliance on the un-rectified document, and conversely, if he
would have acted in the same way, in those circumstances, then he
cannot be regarded as having acted in reliance on the document.
There was no evidence in this case that Mr Bogie had relied on the
terms of the Joneses' disposition, which was the document for which
rectification was sought. There was nothing to show that he had any
awareness that the Joneses' title excluded the disputed area and in
fact Mr Bogie had conceded that he was not aware that the area was
apparently included in his title, and so far as having his position
materially affected there was nothing in evidence to show that that was
the case. Mr Bogie had bought the land as a forestry investment without
carrying out any survey or detailed inspection and at a price that
reflected the forestry acreage, whereas the disputed area was not
concerned with the forestry aspect of the property, so the court found
that Mr Bogie's position could not be said to have been affected to any
material extent, and therefore in all the circumstances his appeal was
refused.
The full opinion of the Extra Division of the Inner House of the
Court of Session in this case is available from the Scottish courts
website at: https://www.scotcourts.gov.uk/