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Sender:
Lionel Smith
Date:
Mon, 15 Mar 2004 16:19:03 –0500
Re:
From Martin Hogg: Burnett's Trustee v Grainger

 

From Martin Hogg:

Perhaps I may be permitted to make a comment on the recent discussions in this group concerning the House of Lords' decision in Burnett's Trustee v Grainger. The comments posted to date appear all to have come from Common Lawyers. As a Scots Private Law academic perhaps I may be permitted to add my tuppence.

The decision in this case appears to have produced a lot of hand wringing and anguished cries from Common lawyers. In Scotland, the decision has been welcomed by property lawyers (and indeed other private lawyers) with a sigh of relief. The decision represents a firmly hammered nail in the coffin of the prior, and much lamented, decision of the House of Lords in Sharp v Thomson 1997 SC (HL) 66, which came dangerously close to fatally undermining the well accepted unified notion of ownership in Scots property law, and the integrity of the property register. It has always been a basic principle of the Scots legal system that one either is, or isn't, the owner of something. There is nothing in between. In particular there is no concept of "beneficial ownership" in Scots law - this is a Common Law concept wholly alien to Scots Law. Sharp v Thomson undermined the long accepted orthodoxy, and came perilously close to intruding beneficial ownership into our law. It was rightly lamented by Scottish property academics. Burnett's Trustee v Grainger has restricted the application of Sharp. One hopes that such restriction will continue in future decisions, and that (one day) their Lordships will recognise Sharp as having been wrongly decided. Burnett's Trustee helps to restore the notion of the sanctity of the property register: ownership proceeds from registration.

The decision of the Lords in Burnett's Trustee was NOT about unjustified enrichment. It was an orthodox application of Scots property law. The only judge to raise concerns about unjustified enrichment was one of the English judges hearing the appeal, Lord Hoffmann. Neither of the two Scottish judges who gave leading opinions in the case saw the appeal as pled as raising any matter of unjustified enrichment. Indeed, as one of them, Lord Rodger, a former President of the Court of Session (Scotland's highest civil court), notes in his speech, questions of unjust enrichment were "not argued in the appeal".

No doubt one may feel a great deal of sympathy for the appellants, the Graingers. It may be that there ought to be some remedy available to them (and indeed, I think there may, see below). But many Scots lawyers are thankful that this was not achieved by attacking the integrity of the property Register, and continuing the prior attack begun in Sharp on the principles of Scots Property Law. I should also add that the English concept of a constructive trust is, like beneficial ownership, a device of the Common Law, and a solution in Scotland to any perceived injustice in a case like this would not properly lie through utilisation of this device.

Given what I have said above, it may be superfluous to add that I disagree with a previous poster who talked of the regrettable consequences of "a registration statute so inexplicit about the consequences, vis-a-vis creditors, of non-registration". In my opinion, there is no need for the relevant statutes concerning land registration to deal with the question raised in Burnett's Trustee. If there is an injustice which needs resolving, then it is one which might perhaps be addressed in the relevant bankruptcy laws. However, a simpler solution suggests itself. A solicitor who fails to take immediate steps to register a disposition of heritable property, and thus imperils his client's ownership of the relevant property, seems to me to be (arguably) negligent. I would have thought that in a case such as this the best solution would be for the person who finds themselves short- changed by events (in this case the Graingers) to sue their solicitor for negligence. If, as was the case in Burnett's Trustee, there were ongoing negotiations about a transfer of garden ground, the solicitor ought either to have refused to settle with the client's money on the settlement date, or have insisted on registering the disposition leaving open the possibility of amending conveyancing following on later. In some cases, of course, prescription may prove problematic in a case against the solicitors, or bankruptcy of the firm of solicitors involved, but my gut-feeling is that this is an 'injustice' which we have to live with.

Unjust enrichment is really a red herring so far as I can see in relation to this case. The trustee in sequestration, from what I can see, acted wholly in accordance with his powers, and by quite properly exercising his duties as trustee he cannot be said to be "unjustifiedly" enriched. Enrichment perhaps, but quite in accordance with the law and thus not unjustified.

I hope this adds something to the ongoing debate, especially for those members of the group who may be unfamiliar with Scots law.

 

Martin Hogg
University of Edinburgh Law School

----------------------------------------------
Martin A Hogg LLB, LLM, NP, FRSA
Convener of Undergraduate Studies
The School of Law
University of Edinburgh
Old College
South Bridge
Edinburgh EH8 9YL
Scotland

Office (+44) (0)131 650 2071
Fax (+44) (0)131 662 0724

**The University is on Easter vacation from 13th March until 11th April 2004. Summer Term beings on Monday 12th April.


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" These messages are all © their authors. Nothing in them constitutes legal advice, to anyone, on any topic, least of all Restitution. Be warned that very few propositions in Restitution command universal agreement, and certainly not this one. Have a nice day! "


     
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