Clark -v- Lindale Homes Limited; SCS 1994

The court set out the conditions to found a claim for breach of warrandice on a land purchase: ‘Although eviction did not mean physical removal, it did involve the emergence of a real or threatened burden on the property which had to come from a competing title – holder, that title itself being beyond doubt.’ Where the pursuer did not aver that any action had been taken by the party with the competing title, the pursuer had no relevant case.
Lord President Hope said: ‘As I understand the statement of principle in that paragraph, eviction occurs when there is a loss to the buyer due to the fact that someone else has a competing title which is beyond doubt. This is a fact which can be demonstrated judicially, or by the seller’s action admitting that there is such a defect, or by proof that the defect is unquestionable.’ and
‘The significance of the warning in sec 895 of Bell’s Principles that warrandice is an obligation to indemnify, not to protect, is that the mere possibility that there may be an eviction, where the defect is unclear, will not do. There must be eviction of the subject from the grantee so that the defect in his title is placed beyond doubt. But there seems to me to be no more in this point than that there is no right to an indemnity until there has been a clear breach of the absolute warrandice which has caused loss to the grantee. The warrandice is breached when there is shown to be a competing title which will inevitably prevail in competition with that which has been given to the purchaser. Actual eviction, or the threat of eviction which occurs upon a challenge being made by the party with the competing title, will enable the grantee to make a claim on the warrandice’.
Though actual eviction in the sense of ejection or removal from the property is not required: ‘This still leaves open, however, the question whether it is essential, in order to bring the obligation to indemnify into existence, that a challenge to the pursuer’s title has been made by the party with the prevailing title or whether it is sufficient that there is a defect in the title which has caused loss to the grantee and would, if it had been insisted upon, have been unquestionable . . more is required to justify a claim under the warrandice clause than a mere deficiency in the title of the grantee’. And
‘As Lord McLaren observed in Welsh v Russell at p. 773, the obligation of warrandice remains latent until the conditions that give it force and effect have come into existence. The fact that the pursuer did not acquire a good title to the flat is in itself not sufficient to give rise to the obligation to indemnify. She was not entitled to incur expense to remove the defect simply in order to protect herself against the possibility of loss on its re-sale. Something else was required, and according to expressions used in the authorities it is eviction which gives rise to the claim. The word ‘eviction’ might be thought to imply that the loss is in some respect due to action by the party who has the competing title to assert his rights’.
Lord Morison said: ‘It is of course obvious that ‘eviction’ does not mean physical removal. But it is in my view equally clear on these authorities, and confirmed by the case of Welsh v Russell, that it does involve the emergence of a real or threatened burden on the property. The word itself in any event clearly indicates this to be the case. If such a burden has been judicially established, the position is clear. If it has not been judicially established the warrandice clause may still be invoked if eviction in the strict sense is threatened, provided that the threat is based on an unquestionable right. Such a threat could only come as a result of a demand from the competing title-holder, for no one else has any right, let alone an unquestionable right to make it. In my opinion the absence of any averment by the pursuer that she suffered loss either as a result of the constitution of a real burden by judicial decree or as a result of a demand by the competing title-holder, renders her case irrelevant’.

Court: SCS
Date: 01-Jan-1994
Judges: Lord President Hope, Lord Morison
References: 1994 SC 210,
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