''Sharp v Thomson'' 1997 SC(HL) 66 is a United Kingdom

House of Lords The House of Lords, also known as the House of Peers, is the upper house of the Parliament of the United Kingdom. Membership is by appointment, heredity or official function. Like the House of Commons, it meets in the Palace of Westminster ...

decision regarding the status of an unrecorded disposition in

Scots Property Law Scots property law governs the rules relating to property found in the legal jurisdiction of Scotland. As a hybrid legal system with both common law and civil law heritage, Scots property law is similar, but not identical, to property law in South A ...

. The case was brought by Sharp as receivers for Albyn Construction Ltd, a building company who had sold a house in

Aberdeen Aberdeen (; sco, Aiberdeen ; gd, Obar Dheathain ; la, Aberdonia) is a city in North East Scotland, and is the third most populous city in the country. Aberdeen is one of Scotland's 32 local government council areas (as Aberdeen City), ...

to the Thomsons, a brother and sister. Albyn had agreed to sell the house to the Thomsons leading to the completion of the missives and the delivery of the disposition and the payment of the purchase price. However, before the disposition was registered by the Thomsons, Albyn defaulted on a loan taken by them from the

Bank of Scotland The Bank of Scotland plc ( Scottish Gaelic: ''Banca na h-Alba'') is a commercial and clearing bank based in Scotland and is part of the Lloyds Banking Group, following the Bank of Scotland's implosion in 2008. The bank was established by t ...

. The default lead to the attachment of a

floating charge A floating charge is a security interest over a fund of changing assets of a company or other legal person. Unlike a fixed charge, which is created over ascertained and definite property, a floating charge is created over property of an ambulat ...

held by the bank over all of Albyn's "Property and Undertaking", and Sharp was appointed Receiver to collect this for the Bank. Sharp raised an action before the

Court of Session The Court of Session is the supreme civil court of Scotland and constitutes part of the College of Justice; the supreme criminal court of Scotland is the High Court of Justiciary. The Court of Session sits in Parliament House in Edinburgh a ...

contesting that, since the disposition hadn't been registered, the ownership of the house remained with Albyn at the time of attachment and that it and the purchase price was available to the Bank as holder of the charge. The Thomsons responded that the act of delivering the disposition divulged Albyn of any "Beneficial Interest" in the house and that this was enough to remove it from the scope of the charge. The Inner House of the Court of Session found in favour of Sharp. In giving the leading opinion, The Lord President (

Hope Hope is an optimistic state of mind that is based on an expectation of positive outcomes with respect to events and circumstances in one's life or the world at large. As a verb, its definitions include: "expect with confidence" and "to cherish ...

) drew on historical sources to argue that Scotland has, and has always had, a unitary system of property law and that ownership could only lie with the holder of the recorded title. As the Thomsons had not recorded the disposition, title remained with Albyn and so the house was available to Sharp. The Thomsons appealed to the House of Lords. The Court overruled the

Inner House The Inner House is the senior part of the Court of Session, the supreme civil court in Scotland; the Outer House forms the junior part of the Court of Session. It is a court of appeal and a court of first instance. The chief justice is ...

and found in favour of the Thomsons. The House gave two main reasons for its decision. Lord Jauncey upheld the Thomsons' argument that, because in delivering the disposition, Albyn could no longer make use of or sell the house, it had no "Beneficial Interest" in the house and this was enough to remove it from being part of its property.

Lord Jauncey Charles Eliot Jauncey, Baron Jauncey of Tullichettle, PC (8 May 1925 – 18 July 2007) was a British judge and advocate. He was often praised as one of the finest legal minds of his generation in Scotland, and his legal opinions - both as a pract ...

commented that the ability to sell the house in fraud of the disposition did not amount to a right in property. Lord Clyde offered different reasoning. He said that the term "Property and Undertaking" used in the Charge Agreement and the legislation had to be construed in its context. He said the Court of Session was wrong to ascribe it a technical meaning. He said that a proper construction of the term was to include only what the company could make use of in its day-to-day business dealings and not all its property in a strict legal sense. The case caused great confusion in Scottish Conveyancers and academics who saw it as over-turning the long established Scots law principle that ownership could not be divided. However, the effect of the case was greatly reduced by the House of Lords in 2004 in Burnett's Trustee v Grainger

004 004, 0O4, O04, OO4 may refer to: * 004, fictional British 00 Agent * 0O4, Corning Municipal Airport (California) * O04, the Oversea-Chinese Banking Corporation * Abdul Haq Wasiq, Guantanamo detainee 004 * Junkers Jumo 004 turbojet engine * Lauda ...

UKHL 8 where the Court held that Sharp v Thomson was authority only for holders of floating charges. For all other sales of property where the seller goes bankrupt or into sequestration, the rule that applies is that owner is the holder of the registered title.

References

{{reflist Scots property law House of Lords cases 1997 in British law 1997 in case law United Kingdom property case law