Heritable property and conveyancing – Warrandice
Morris v Rae: Supreme Court (Lords Hope DP, Walker, Sumption, Reed and Carnwath SCJJ): 7 November 2012
The claimant was the assignee of rights formerly vested in RDL, a company in liquidation. In August 2004, RDL had purchased a plot or area of ground in Ayr, Scotland (the property) from the defendant. The disposition contained a clause of warrandice, warranting the defendant's title as absolute owner of the property. In June 2005, RDL was informed that the defendant had not had title to part of the property (the disputed part of the property).
In November 2005, another company, JCL, asserted its title to the disputed part of the property and threatened to evict RDL from it. In response to that threat, RDL purchased the disputed part of the property for £70,000. The claimant subsequently commenced proceedings to enforce the warrandice clause and recover the sum paid to JCL. It was common ground that a claim for breach of warrandice could be brought on the basis of a threat of eviction if the challenge made by the party with a competing title to the disputed property was unquestionable and would inevitable prevail.
It subsequently became clear that JCL had not, at the material time, held title to the disputed part of the property as it had mistakenly been transferred to a third party, L. The claimant asserted that JCL's claim to title had nonetheless been unquestionable as it would have been able to regain the title from L immediately and without recourse to the courts. In April 2011, an Extra Division of the Court of Session dismissed the claim on the basis that the question whether the evicter had an unquestionable title to the subjects in question had to be judged at the time that eviction was sought or threatened. As JCL had not had a title to the disputed part of the property, there had been no breach of warrandice. The claimant appealed.
The principal questions that fell to be determined were: (i) whether the question of whether the evicter had an unquestionable title to the property in question fell to be judged at the time that eviction was sought or threatened; and (ii) if (i) was answered in the negative, what did the party with the defective title who had incurred loss as a result of a threat need to show in order to establish that the threatened demand had amounted to an eviction. The appeal would be allowed.
It was necessary that the warrander would have had no relevant defence to the threatened eviction. The grantee might act voluntarily to prevent the distress from occurring. He was not required to engage in pointless litigation. It was essential that the grantee transacted voluntarily with the person who had a title and interest to make good the threat, but to insist that the title had to take the form of a real right at the time the threat was made would have been to deprive the remedy of utility. The grantee had to be able to show that the threat had been capable of being made effective (see , ,  of the judgment).
If the purchaser of land was facing the prospect of undoubted eviction, even if it was not imminent, he had an immediate practical problem. It was important for him to be able to resolve the practical problems arising from the defect in his title as soon as he could (see  of the judgment).
In the instant case, the claimant would have been entitled to the remedy he sought if he could prove that, when RDL yielded to the threat, JCL would have been immediately able to secure title to the disputed part in its favour by calling upon L to transfer the title that had been vested in him and that no proceedings would have been required to secure that result. The claimant had offered to prove just that and he was entitled the opportunity of doing so (see , , ,  of the judgment). Holms v Ashford Estates Ltd  SCLR 428 criticised; Watson v Swift & Co's Judicial Factor  SLT 217 distinguished; Clark v Lindale Homes Ltd  SLT 1053 distinguished; Abram Steamship Co Ltd v Westville Shipping Co Ltd  All ER Rep 645 considered; Scammell v Scottish Sports Council  SLT 462 considered; MRS Hamilton Ltd v Baxter  SLT 1075 considered. Decision of the Court of Session  CSIH 30 reversed.
J Gordon Reid QC and David Logan (instructed by Campbell Smith WS LLP, Edinburgh) for the claimant; Roddy Dunlop QC and Jonathan Brown (instructed by HBM Sayers Solicitors) for the defendant.