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Damages for interim interdict allowed following rectified title
A party who obtains interim interdict based on a registered title to land which is subsequently rectified against that party's interest with retrospective effect, is liable in damages to the interdicted party unless able to found on possession of the land in question, the Inner House of the Court of Session has ruled.
A majority of judges in an Extra Division (Lady Dorrian and Lord McGhie, Lady Paton dissenting) allowed a reclaiming motion by Mohammed Mirza and allowed a proof restricted to quantum in his action against Fozia Salim for damages in respect of losses caused by wrongful interdict.
The defender was the assignee of a 21-year lease intended to be of shop premises but which by mistake referred to the leased subjects as also including an adjacent yard. The lease was registered in the Land Register. The pursuer acquired title to the shop and yard. In 2006 he obtained planning permission to build a shop and flats on the yard. The defender's solicitors entered into correspondence about who had right to the yard, but the defender did not attempt to halt construction until early 2008 when the building was nearly complete. She then obtained interim interdict. In August 2009 the lease and Land Register were rectified without any modification in relation to date, the sheriff having found that the defender was not someone who could establish reliance on the lease as it originally stood.
The Lord Ordinary dismissed the subsequent action for damages. The pursuer reclaimed, arguing that section 9(3A) of the Land Registration (Scotland) Act 1979, which allowed rectification with retrospective effect, was clear in its effect and the defender had failed to bring herself within the protections provided by the Act. The defender argued that rectification alone did not render the interim interdict wrongous, and there had been no misleading of the court which had granted the order having taken the relevant factors into account.
Lady Dorrian held that Parliament's intention had been that the result of retrospective rectification should be that the right relied on by the defender had been deemed never to have existed, and that “by seeking interim interdict in the first place she exposed herself to a risk of liability in damages, were loss to have resulted from the existence of the interdict”. To hold otherwise would be to deny the effect of the amendment introducing section 9(3A). In cases founded on by the defender, possession had been considered to be “an interest sufficiently important to justify a departure from the rule”, but in such cases the interdict proceeded “on the basis of possession, not mere title”.
Agreeing, Lord McGhie added: “Unless an interim interdict can be shown clearly to have the character of a possessory judgment, the ordinary rule is that recall conclusively demonstrates that the judgment was wrongfully obtained.”
Lady Paton, dissenting, said that there were cases involving an alteration in rights which protected a petitioner for interim interdict which had not been obtained in bad faith. Parliament had not intended to override the common law to that effect, and “it would be an unfortunate outcome if the present case were to provide an unduly restrictive precedent, namely that – no matter what the circumstances – rectification of a prima facie valid deed, upon which a party had relied for the purpose of obtaining interim interdict, must automatically result in that party being liable in damages for any loss suffered by another as a result of the interim interdict”. She would have allowed proof before answer at large.
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