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Cite as: [2005] ScotCS CSOH_31, [2005] CSOH 31

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Aberdeen College v. Youngson & Anor [2005] ScotCS CSOH_31 (25 February 2005)

OUTER HOUSE, COURT OF SESSION

[2005] CSOH 31

A305/04

OPINION OF LORD MENZIES

in the cause

THE BOARD OF MANAGEMENT OF ABERDEEN COLLEGE

Pursuers;

against

STEWART WATT YOUNGSON and ANOTHER

Defenders:

________________

Pursuers: A. F. Stewart; Paull & Williamsons

Defenders: Cowie; Balfour & Manson (for Peterkins, Aberdeen)

25 February 2005

Introduction
[1] This case raises a question of conveyancing law which, although the subject of academic discussion, both counsel appearing before me told me had not been the subject of any authoritative decision. The short question is whether a disposition granted by a disponer in favour of himself can be a valid foundation writ for the purposes of positive prescription in terms of section 1(1) of the Prescription and Limitation (Scotland) Act 1973.

[2] The relevant passages of section 1 of the 1973 Act provide inter alia as follows:

"1(1) If in the case of an interest in particular land, being an interest to which this section applies -

(a) the interest has been possessed by any person, or by any person and his successors, for a continuous period of ten years openly, peaceably and without any judicial interruption, and

(b) the possession was founded on, and followed (i) the recording of a deed which is sufficient in respect of its terms to constitute in favour of that person a title to that interest in the particular land, or in land of a description habile to include the particular land, or (ii) registration of that interest in favour of that person in the Land Register of Scotland, subject to an exclusion of indemnity under section 12(2) of the Land Registration (Scotland) Act 1979,

then, as from the expiration of the said period, the validity of the title so far as relating to the said interest in the particular land shall be exempt from challenge.

(1A) Subsection (1) above shall not apply where -

(a) possession was founded on the recording of a deed which is invalid ex facie or was forged ..."

[3] In the present case, the pursuers aver that certain heritable subjects were conveyed to the City of Aberdeen Council by disposition dated May 1944 and recorded in January 1945. In November 1989 Grampian Regional Council, the statutory successors of the City of Aberdeen Council as education authority, recorded a notice of title to said subjects. The subjects subsequently vested in the pursuers by virtue of the Further and Higher Education (Scotland) Act 1992, the Transfer of Colleges Further Education (Scotland) Order 1992 and a Transfer and Vesting Agreement entered into between the pursuers and Grampian Regional Council dated 1994. Notwithstanding these steps, William Phillip Youngson, Mrs Gladys Watt or Youngson, Stewart Watt Youngson and John Charles Youngson granted to themselves an a non domino disposition of part of these subjects, which was dated 2 July 1993 and recorded on 23 July 1993. William Phillip Youngson and Mrs Gladys Watt or Youngson have since died, and their share of said subjects was conveyed to the defenders by docquets dated October 1999 and February and March 2000. The pursuers aver that the a non domino disposition is not sufficient in its terms to constitute in favour of the defenders a title to the interest in the land purported to be conveyed, because the same parties are named as both disponers and disponees. In any event, the pursuers aver that the defenders have not established their title by prescription. The pursuers accordingly seek reduction of the a non domino disposition and the docquets dated 1999 and 2000 in favour of the defenders. The defenders maintain that the a non domino disposition is a valid foundation writ, and they further aver that they have possessed the subjects openly, peaceably and without judicial interruption in the period from 1993 to 2003. The present action was raised in February 2004. The matter came before me on the Procedure Roll on the pursuers' second and fourth pleas-in-law. Their second plea-in-law is in the following terms:

"The Disposition referred to in the Third Conclusion not having been sufficient to found prescriptive possession, is invalid and decree in terms of said Conclusion should be pronounced."

The fourth plea-in-law was directed at the relevancy and specification of the defences.

Submissions for the pursuers
[4] Mr Stewart for the pursuers moved me to sustain their second and fourth pleas-in-law and grant reduction in terms of the third Conclusion. He accepted that if I was against him on this motion some form of probation would be required, and in that event he invited me to put the case out By Order to enable the scope of any proof to be discussed. (Mr Cowie for the defenders agreed that this was the appropriate procedure in the event that I was with him).

[5] Mr Stewart made his submissions under two broad heads (although they were closely linked); he approached the issue first by applying the general law of contract, and second by applying the principles of conveyancing law. With regard to contractual principles, he submitted that as well as being an executory deed, a disposition is also a contract imposing obligations. In support of this proposition he referred me to Gretton & Reid, Conveyancing (3^rd Edition) at paragraph 11-18. The 1993 disposition by the Youngsons in their own favour contained all the contractual obligations referred to by Gretton & Reid. Put at its simplest, his submission was that a person cannot contract with himself. In support of this proposition he referred me to Kildrummy (Jersey) Limited v Inland Revenue Commissioners 1991 S.C. 1 and to Clydesdale Bank Plc v Davidson 1998 S.C. (H.L.) 51.

[6] Looked at from the perspective of an effective conveyance of title to land, counsel submitted that the 1993 disposition is patently invalid because there has been no transfer of property. Although the law no longer requires the handing over of earth and stone to the disponee, "Scots law has always required a public act of some kind to transfer property inland. This step is the equivalent of traditio in the case of moveables. It is an essential step in the process of transferring ownership, according to the maxim traditionibus non nudis pactis transferuntur rerum dominia" - Sharp v Thomson 1995 S.C. 455 per Lord President Hope at 466. Although the procedures of transfer were modernised and simplified by section 15 of the Titles to Land Consolidation Act 1868, nevertheless it remains the case that transfer is essential - it is delivery, not a bare contract, which transfers ownership. In support of this counsel referred me to Gretton & Reid (op. cit.) at paragraph 7-25, and Watson v Shields 1996 S.C.L.R. 81. Counsel submitted that the opposite view to the effect that the granter of an a non domino disposition may effectively convey the subjects to himself, which view is expressed by the authors of Professor McDonald's Conveyancing Manual (7^th Edition) at paragraph 12.7, is wrong. For completeness, counsel also referred me to an article in the February 1997 edition of the Journal of the Law Society of Scotland (Volume 42, No. 2) by the Director of Legal Services at the Registers of Scotland and Professor Robert Rennie regarding registration of dispositions a non domino.

Submissions for the defenders
[7] For the defenders Mr Cowie invited me to refuse the pursuers' motion and to put the case out By Order to enable discussion to take place as to the scope of a proof before answer. With regard to the pursuers' argument based on the general law of contract, he submitted that the primary function of a disposition is executory. It performs the transfer which parties will have normally agreed earlier by means of missives. Although a disposition may include contractual conditions, it is more than just a contract and its important feature is executory not contractual. In any event, it is frequently the case that a person may be both disponer and disponee in a disposition of heritage - for example, the style frequently seen to evacuate a special destination whereby A and B, pro indiviso proprietors of heritage, dispone the heritage to B alone. This is a legally enforceable and frequently used mechanism notwithstanding that B appears on both sides of the transaction. This highlights the distinction between a contract and a conveyance.

[8] With regard to the conveyancing argument, Mr Cowie submitted that the recording of the disposition equated to transfer. It was clearly the law that a non-owner of land can transfer property in that land to a third party - that is the effect of an a non domino disposition. There is no requirement for traditio or anything equivalent thereto - as result of section 15 of the Titles to Land Consolidation (Scotland) Act 1868 the requirement for any transfer beyond the recording of the disposition has been abolished. He referred me to Craigie's Heritable Rights (1899), and drew my attention to the passage at page 260 which deals with the Act of 1617, wherein it is stated that "it is sufficient to produce a charter, disposition, separate procuratory of resignation, or precept of sasine or sasine propriis manibus, which required no precept of sasine". He also pointed out that the pursuers' purported title depends on the recording of a notice of title, which itself does not involve any transfer.

Reply for the pursuers
[9] In response to the defenders' submissions, Mr Stewart submitted that the argument that a notice of title does not involve transfer was wrong - a notice of title puts on record a series of one or more transfers which previously had not been on the Register; it narrates links in title each of which are transfers and in terms of the relevant style the transfer or series of transfers will be specified. With regard to the contractual nature of a disposition, he pointed out that there were aspects of a disposition, such as the warrandice clause, that were contractual and continued in effect after recording. It was wrong to suggest a disposition was purely executory. With regard to the example of a disposition by A and B to B, this was used in order to evacuate special destinations, and the extent of B's interest as disponer was different from his interest as disponee. Finally, it was clear from Sharp v Thomson (which was not overturned by the House of Lords on this point) that transfer was still a necessary element in constituting title to land.

Decision
[10] I am satisfied that whether one looks at this question from the general perspective of the law of contract, or from the perspective of the requirements of conveyancing law, the pursuers' submissions are sound. A person cannot contract with himself. It appears to me that this is the essence of the argument in conveyancing terms as well as in contractual terms. Transfer of property is essential for an effective conveyance of land. A person cannot dispone a piece of land from himself to himself in exactly the same status or category, because no transfer will have resulted. It may be different if the interest in land which is being disponed is different from that which is received, or where the capacity of the individual changes - for example, a person may dispone land to trustees of whose number he is one, or he may dispone land to a partnership of which he is a partner. In these examples the fact that the disponer's name appears both as disponer and amongst the disponees is neither here nor there, because his capacity is different and (at least in the example of the partnership) there is a separate legal persona involved.

[11] The necessity for a third party in such a transaction was emphasised by the Lord President in the case of Kildrummy (Jersey) Limited at pages 5 and 6 where he observes:

"I have ... no difficulty in the concept by which the title to property and beneficial interest are separated, the title being held by a nominee. There is no reason to doubt the efficacy of this arrangement where the property in question has some independent existence of its own. This may be shares in the issued share capital of a company ... or rights in incorporeal moveable property of some other kind in which some other third party is involved ... But I know of no case, and none was cited to us, where it has been held that a nominee may contract with his principal so as to create new rights and obligations involving no third party whatever which are to be held only on his principal's behalf. That seems to me to conflict with the principle that a man cannot contract with himself. In Church of Scotland Endowment Committee v Provident Association of London Limited 1914 S.C. 165 Lord Dundas said, at page 171, that a man cannot by any deed constitute a debt by himself to himself, and he described such a contract as plainly inept and void as an operative instrument. As Lord Macnaghten put it, in Henderson v Astwood [1894] AC 150 at page 158: 'A man cannot contract with himself. A man cannot sell to himself, either in his own person or in the person of another.'

The whole basis of a contractual obligation is the agreement of two or more parties to the act or thing to be done. This is as true of a lease as it is of any other kind of contract."

The same point was made, again in the context of leases, by the House of Lords in Clydesdale Bank Plc v Davidson, in which Lord Clyde observed (at page 58) that

"It is well established that no person may enter into a contract with himself. If authority is needed for the proposition it can be found most directly in Church of Scotland Endowment Committee v Provident Association of London Limited. ... It is of course possible to create a valid lease where one of the parties is a member of a group comprising the other party, where that group constitutes in itself a separate person in law. Thus a partnership may validly grant a lease to an individual who is a member of the partnership. As was held in Mair v Wood since a partnership is a legal persona distinct from the individuals who compose it, there is no conflict with the doctrine of confusio in allowing a partner to take a decree against the firm of which he is a partner."

[12] Essentially the same point arises when viewed through the prism of conveyancing theory and practice. Although section 15 of the Titles to Land Consolidation Act 1868 removed the necessity to expede and record an instrument of sasine and provided that the recording of the conveyance or deed itself should have the same legal force and effect as if the conveyance or deed so recorded had been followed by an instrument of sasine, this merely simplified and modernised the procedures or mechanisms required - it did not alter the underlying theory. That underlying theory required transfer or delivery of the land by the disponer to the disponee. This theory is set out in Professor Gretton's chapter on the feudal system in Volume 18 of the Stair Memorial Encyclopaedia at paragraphs 87 to 93, which were referred to with approval by the Lord President in Sharp v Thomson. A deed or conveyance whereby a person purports to sell to himself does not involve any transfer nor any delivery. Without some independent third party or separate persona, it is no transaction at all.

[13] It follows that I prefer the view expressed by Gretton & Reid (Conveyancing, 3^rd Edition, paragraph 7-25) to the view expressed by the authors of Professor McDonald's Conveyancing Manual (7^th Edition at paragraph 12.7). Gretton & Reid begin their note on the disposition a non domino as follows:

"It sometimes happens that someone notices that a piece of ground is unoccupied and apparently abandoned. Using prescription, it is possible to acquire ownership. What happens is that the person gets a friend to grant to him a gratuitous disposition of the land, and the disposition is recorded..."

In a footnote they observe that "It is sometimes said that it is sufficient to grant a disposition in favour of oneself but this is somewhat doubtful, for such a writ does not bear to be a transfer". In criticising this view, the authors of McDonald's Conveyancing Manual advance several arguments, but I do not find these persuasive. In each of the examples which they give, they do not take into account the existence of a separate character or interest or a separate legal persona. For example, in commenting on the Kildrummy (Jersey) Limited case, they note "that there is no suggestion in any of the judgments in this case that the disposition by the estate owners as true proprietors in favour of their own nominees was void on the footing that they were contracting with themselves, which would seem to destroy the argument that a disposition by A in his own favour is intrinsically null." This argument treats the veil of incorporation as if it never existed. For the purpose at least of deciding whether a deed is invalid ex facie, it is of considerable importance that the disposition in that case was granted by Mr and Mrs Smith in favour of a limited company incorporated under the laws of Jersey. Whatever the consequences in revenue law, it seems to me that the effect in conveyancing law is to achieve at least an ex facie valid transfer. The same point can be made about the other arguments advanced. None of these arguments appears to recognise that the examples cited involve different feudal interests, or different interests in land, or the existence of a separate legal persona or third party.

[14] In the result, I consider that the disposition by William Phillip Youngson and others in favour of William Phillip Youngson and others recorded 23 July 1993 does not amount to a deed which is sufficient in respect of its terms to constitute in favour of the defenders a title to the interest in the subjects which they claim. I am also of the view that this disposition was a deed which is invalid ex facie for the purposes of section 1(1A) of the Prescription and Limitation (Scotland) Act 1973. As Gretton & Reid observe, "a disposition a non domino must not reveal that the disponer is not the owner, or it will lose its potential status as a foundation writ" (paragraph 7-25) and they explain this in the footnote: "This is because it would be invalid ex facie". Similarly a disposition purportedly granted by four disponers in favour of the same four disponees, involving no third party or separate legal persona nor any difference in feudal interest, extent of subjects or status or character of parties is invalid ex facie. It is not a deed which is sufficient in respect of its terms to constitute in favour of the disponees a title to that interest in the particular land, for the purpose of section 1(1)(b)(i) of the 1973 Act, and moreover it is invalid ex facie and so section 1(1) is excluded by section 1(1A).

[15] Accordingly I consider that the 1993 disposition is not a foundation writ for the purpose of positive prescription in terms of section 1 of the Prescription and Limitation (Scotland) Act 1973. I shall therefore sustain the second and fourth pleas-in-law for the pursuers and grant decree in terms of the third Conclusion.