Competition of title

Question 1

Burnett’s Tr v Grainger

Answer 1

1. “For modern readers at least, the image of a race tends to conjure up a sporting contest played according to rules. Nothing could be more misleading. In Scots law the competition between the trustee and uninfeft purchaser or creditor with an unrecorded heritable security is a struggle in deadly earnest with the aim of destroying the other competitor’s chance to obtain the real right by recording the relevant deed and infefting himself first. Those taking part in this race are no Corinthians and swear no Olympic oath of sportsmanship. If your opponent is slow off the mark, mistakes the way or stumbles, you do not chivalrously wait for him to catch up: you take full advantage of his mistakes. Nice guys finish last and don’t get the real right”

Question 2

Rodger (Builders) Ltd v Fawdry

Answer 2

1. There was a contract for the sale of land
2. Rodger Builders were the buyers and Fawdry was the seller
3. Roger Builders had financial issues and didn’t pay
4. Fawdry gave them some time and then issued an ultimatum
5. If they didn’t pay, he would rescind the contract
6. Fawdry then sold to Mr Bell instead
7. Mr Bell knew about the contract with Rodger Builders
8. Fawdry had ensured Mr Bell that the contract was at an end
9. Mr Bell paid and registered
10. Rodger Builders were ready to pay and were not very happy
11. They sued Fawdry for breach of contract
12. The court held that it was not of the essence of the contract that payment was made on a specific date
13. Therefore, Fawrdy did not have the right to withdraw
14. Because Mr Bell knew about the contract and had not made an inquiry with Rodger Builders, he was regarded as being in bad faith
15. Rodger Builders were able to set aside his title (under the offside goals rule)

Question 3

Wallace v Simmers

Answer 3

1. A farm was owned by a farmer who had a wife, a son, and a daughter
2. The farmer became older so he transferred ownership of the farm to his son
3. He made an agreement with his son that he, his wife and his daughter could live in a cottage on the farm
4. The parents died
5. The daughter was still in the cottage
6. Her brother sold the farm
7. The purchasers knew about the agreement with the sister
8. They still tried to evict her on the basis that that was an agreement between her and her brother
9. It was a personal right, not a real right
10. The sister said the purchasers knew about her presence when they bought the farm
11. The court held that the offside goal rule did not apply here as she only had a personal right

Question 4

Trade Development Bank v Crittall Windows Ltd

Answer 4

1. There was a long-registered lease of land
2. The tenant agreed to transfer the lease to someone else
3. In the period before the assignation, the tenant acquired a standard security over the lease
4. The effect of that is that if there is a fault on the loan the property can be sold
5. The assignee sought to have the standard security reduced
6. The court allowed that
7. The grantee of the standard security (the bank) knew of the agreement to transfer
8. They had been in bad faith and the standard security could be set aside

Question 5

Sharp v Thomson

Answer 5

1. Albyn Construction Ltd were selling a flat to the Thomson siblings
2. Albyn had borrowed money from the Bank of Scotland and in return, they had granted them a security
3. The security was a floating charge
4. The Thomsons paid Albyn for the flat
5. They got the keys and moved in
6. They did not actually get the disposition, for reasons unclear
7. The disposition was delivered after a year
8. The very next day, the floating charge was enforced
9. Mr Sharp was the receiver
10. The Thomson’s registered after the floating charge was enforced
11. The question was whether the floating charge caught the flat
12. The Thomsons became owners despite the floating charge coming down
13. The question was whether their ownership was encumbered by the floating charge
14. The orthodox approach would be: yes
15. At the point of attachment, the Thomsons were not yet owners as they had not yet registered
16. The case was appealed to the House of Lords
17. The argument was that this was really unfair as they had already paid and received the disposition
18. The Bank would get both the money they paid and the flat
19. The floating charge comes down without registration in the Land Register which shows the need for a special rule
20. It was held, overturning the Court of Session, that the buyer’s personal right prevails against the seller’s receiver

Question 6

Burnett’s Tr v Grainger

Answer 6

1. Miss Burnett was selling her house to Ms and Mr Granger
2. The Granger’s solicitors forgot to register the disposition
3. In the meantime, Miss Burnett was sequestrated
4. Her trustee registered ownership and completed title
5. The Granger’s solicitors subsequently also registered
6. The registration of the trustee was earlier
7. This case limited the approach in Sharp v Thomson
8. Sharp v Thomson now only applies to cases that include floating charges