One implication of the suggestion that the offside goals rule protects personal rights to the grant, transfer or discharge of real rights is that the rule extends beyond double sale. Someone with a personal right to the grant of a servitude or a lease should be able to invoke the rule too.66 So, if Bert contracts to grant a right of way to Sally but transfers the property to Ernie before Sally is able to register the grant, Sally can invoke the offside goals rule against Ernie if he was in bad faith or the transfer was gratuitous.
Subordinate real rights present difficulties in terms of remedies. If, the holder of the prior personal right hears of the wrongful grant before it is completed, he may be able to obtain an interdict against completion.67 What of the case where the prior rightholder only discovers the grant after the fact? Where the first grantee was entitled to transfer of the asset, there is no difficulty in returning the property to the seller. That is only a short term step, after which it will pass to the first grantee. Where, on the other hand, the first grantee is merely entitled to a subordinate right, setting a transfer aside seems to go too far. If the first grantee is entitled to a servitude, all he needs is an opportunity to complete his real right. He has no interest in the seller being the owner instead of the second buyer.
66 There is express authority to this effect in South Africa Grant v Stonestreet 1968 (4) SA 1 (A). A similar result was reached in Greig v Brown and Nicholson (1829) 7 S 274, although the court’s reasoning is not very clearly expressed.
67 Spurway, Petr (10 December 1986, unreported), OH, available on LexisNexis.
The South African solution is to allow the personal right to be enforced directly against the successor.68 This result has been explained in terms of a broad, equitable approach.69 It seems to come close to collapsing the distinction between real and personal rights and may explain the tendency in South Africa to suggest that the doctrine of notice (their equivalent of the offside goals rule) affords “limited real effect” to personal rights.70 Such an approach is not particularly attractive for Scots law. How then can the problem of the offside goal against a right to a servitude be solved?
One answer is suggested by reflecting on the fact that reduction of a deed granted in breach of inhibition is ad hunc effectum. Everyone also knows that reduction ad hunc effectum means that only the inhibitor is entitled to treat the reduced deed as null. Familiarity with the rule and lack of familiarity with Latin are apt to mask how strange this is. The words ad hunc effectum simply mean “to this effect.” Why should those words have come to signify that the reduction only benefits the inhibitor?
To answer this question, we need to make brief mention of seventeenth-century decisions concerning fraud on creditors by an insolvent debtor. In many of those cases, reduction was granted but the Lords specified the effect of reduction. In some cases this was to allow the reducing creditor to rank pari passu with other creditors;71 in others, the reduction only benefited certain classes of creditor.72 The particular scope was determined by what was necessary to reverse the prejudice caused by the debtor’s fraudulent actions and the rationale is fairly clear. To go further would be to go beyond the purpose of the rule: which is to secure creditors against the debtor’s attempts to frustrate their claims. The limitation was typically introduced by the phrase “to the effect that” or some variation thereon.
68 1968 (4) SA 1 at 20 per Ogilvie JA. The reasoning of the court in Greig v Brown and Nicholson (n 65) in Shaw’s report is limited to the brief and rather surprising suggestion that since both rights were personal “the common owner is divested by the conveyance”
without the need to complete the grant of servitude by taking possession. This analysis would be difficult to maintain light of the clarification of the relationship between real and personal rights and of the race to completion in Sharp v Thomson 1995 SC 455 and Burnett’s Trustee v Grainger 2004 SC (HL) 19.
69 Meridian Bay Restaurant (Pty) Ltd v Mitchell 2011 (4) SA 1 (SCA) at paras 30-1 per Ponnan 70 “Die juiste siening na my mening is dat vanweë die kennisleer aan ’n persoonlike reg JA.
beperkte saaklike werking verleen word”: Associate South African Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckerien (Pty) Ltd 1982 (3) SA 893 (A) at 910 per Van Heerden JA.
71 E.g. Kinloch v Blair (1678) Mor 889 and Brown v Murray (1754) Mor 886.
72 E.g. Cunninghame v Hamilton (1682) Mor 1064 and Bateman & Chaplane v Hamilton (1686) Mor 1076. For further discussion of these cases, see MacLeod “Fraud and Voidable Transfer” 124-26.
Turning back to inhibitions, the import of the phrase ad hunc effectum is readily explicable. The prohibition on dealing was imposed to protect the inhibiting creditor and no one else. Therefore, to allow the reduction to have effect in relation to anyone else would go beyond the purpose of the rule. We can surmise that there was an initial period when the words ad hunc effectum merely introduced the statement of the reduction’s operation and that later the specification was dropped as the Latin tag became detached from its meaning.
What this shows us is that limitation of the effect of reductions is not limited to inhibitions, which raises the possibility of applying it in the third class of fraud on creditors: offside goals.
Reduction of deeds granted in fraud of creditors is about putting assets back in a patrimony so that creditors can obtain rights in them. This is obviously the case with inhibition, or fraud by an insolvent debtor, but it is also the case in a classic double sale of land. Reduction is not an end in itself. Rather, it puts the fraudulent granter in a position to perform by granting a real right affecting the asset. Alternatively, it allows the creditors to get the court to make the grant for the debtor by means of diligence. This endgame is what justifies the reduction.
Where reduction is ad hunc effectum, its effect is specified so it goes no further than necessary to secure the protected interest. Thus reduction ex capite inhibitionis merely operates to render an adjudication against the former owner competent. That being achieved, it has no further value.
In some cases, the practical distinction between ad hunc effectum and catholic reduction is a minor one: if a transfer to Billy is reduced to allow Dan to register his disposition, Dan’s registration will deprive Billy of any right that he has. However, it makes a big difference where an offside goal has been scored and there is a personal right to a servitude. The reduction would be ad hunc effectum to enable a deed of servitude granted by the seller to be registered and constituted a real right, but it would go no further. For all other purposes Billy would remain owner.
Of course, the net result of this approach is very similar to the South African rule. A transferee who was faced with a valid offside goals challenge
in these circumstances could save everyone a lot of time and money simply by agreeing to grant the relevant subordinate real right. In doing so, he would be in no worse a position than if reduction ad hunc effectum had been obtained and the grant had been made from his author. The courts might even be justified in allowing the procedure to be short-circuited and compelling the transferee to make such a grant. Nonetheless, for the sake
of a proper understanding of the relationship between real and personal rights, it is important to grasp why such a short cut might be permitted.