Corrections
Section 96 – Application by secured creditor for correction of statutory pledges record
402.There are many ways in which the register could become inaccurate – see paragraphs 369 and 433 of these Notes for discussion of some of them.
403.Subsection (1) enables a relevant person to apply to the Keeper for correction of an entry for a statutory pledge in the statutory pledges record. A “
404.The secured creditor does not for that purpose need to be identified as such in the entry in the statutory pledges record. There are a number of reasons why the creditor might not be so identified, including an error at the time of registration, a change of name, or an assignation of the pledge (see section 57 of the Act). So, for example, an assignee as a successor in title to the right of the secured creditor (see section 113(1) of the Act) may apply for correction. Alternatively, subsection (4)(b) has the effect that the assignor of a pledge (i.e. the previous secured creditor) can also apply for a correction.
405.The Keeper must accept an application that meets the requirements of paragraphs (a) and (b) of subsection (2), and, under subsection (3), must reject one that does not.
Section 97 – Correction of record in response to application under section 96
406.This section deals with what happens once an application for a correction is accepted under section 96.
407.Subsection (1) provides that the Keeper must, on accepting an application, correct the entry. See also section 102(2) and (3), which sets out the procedure that the Keeper must follow depending upon the nature of the correction (but, for example, in every case the Keeper must note in the register that a correction has been made). However, subsection 102(4) does not apply here, as notification requirements are dealt with by means of the issue of a verification statement.
408.Under subsection (2), the Keeper must issue both the applicant and provider with a verification statement, but only if their email addresses have been provided in the application. Subsection (3) makes provision about the content of the verification statement. Under subsections (4) and (5), there is an ability for the provider to obtain a copy of the verification statement from the applicant (i.e. the secured creditor) if the statement is not received by provider but is received by the secured creditor. Given that the secured creditor will be the one submitting the application, it is to be expected that they will supply their own email address correctly and will therefore receive the statement, but if they make a mistake in supplying the provider’s email address then this will allow the provider a means of obtaining a copy.
Section 98 – Demand that application for correction be made under section 96
409.This section enables a person with a specified interest in the accuracy of the statutory pledges record, and who maintains that the record is inaccurate, to be able to:
demand that the person showing on the register as being the secured creditor in respect of a pledge apply to the Keeper for a correction of the record under section 96 of the Act, and
if no such application is made, apply for the correction themselves.
410.Subsection (1), read with subsections (2) and (3), has the effect that a person identified in the record as the provider or a co-provider can make a demand on the registered secured creditor if the person making the demand asserts either that they are not in fact a provider despite being identified as such, or that property identified as being the subject of the pledge is not in fact encumbered property. In addition, a person with a right in property which is identified as the encumbered property can make a demand on the registered secured creditor if the person making the demand believes that the property is not in fact encumbered property.
411.In both cases, it may be that the record was once accurate but has become inaccurate due to supervening events (e.g. the pledge has been restricted or discharged off-register), or it may be that the entry in the record has had incorrect information in it from the moment it was created.
Example 1
An entry states that a statutory pledge has been created over the car with VIN 12345. In fact, the statutory pledge was created over the car with VIN 12335. The owner of the car with VIN 12345 can demand a correction.
Example 2
An entry states that a statutory pledge has been created over a car with VIN 12335. This was accurate as at the date of registration, but the secured creditor has subsequently been discharged off-register. The provider can demand correction.
412.Subsection (4) sets out how a demand can be made. It must be in the form prescribed by the Scottish Ministers in regulations. In addition, it must specify a period within which an application is sought, and that period must be at least 21 days from the date of receipt.
413.Subsection (5) provides that no fee can be charged by the person registered as the secured creditor for complying with a demand.
414.In the event that the demand is not complied with within the period specified, the person becomes entitled to make an application themselves under subsection (6).
415.The person identified as the secured creditor in the entry in the statutory pledges record may no longer be the creditor because the pledge has been assigned. However, if they were once the secured creditor but subsequently assigned their interest, they would remain entitled to request a correction by virtue of section 96(4)(b). Alternatively, they could ask the new secured creditor to apply for a correction (by virtue of section 96(4)(a)) both in respect of the identity of the secured creditor and in respect of the change requested by the provider. The assignation document under which the identity of the secured creditor changed may well also make provision as to what the previous secured creditor is obliged to do in these circumstances.
Section 99 – Response to application for correction under section 98(6)
416.This section makes provision about what happens where an application is made to the Keeper for a correction under section 98(6) (i.e. following a failure by the registered secured creditor to comply with a demand under section 98(1)).
417.The Keeper must accept an application that meets the requirements of paragraphs (a) and (b) of subsection (1), and, under subsection (2), must reject one that does not.
418.On accepting an application, subsection (3) requires the Keeper to serve a notice on the registered secured creditor intimating that the record will be corrected on a specified date (at least 21 days from the date of the notice) unless action is taken by them. The Keeper must also note on the entry the details of the pending application, acknowledge receipt of the application and, in the event that the person showing on the entry as the provider is not the applicant, notify that person that notice of intention to correct the register has been served on the registered secured creditor.
419.Under subsection (4), the registered secured creditor may apply to the court before the date specified by the Keeper, opposing the making of the correction. They must notify the Keeper if they make any such application (so that the Keeper knows not to proceed with making the correction when the deadline passes).
420.Subsection (5) provides that where the registered creditor is not the secured creditor, the registered creditor must (to the extent that it is reasonable and practicable to do so) promptly notify the secured creditor of receipt of a notice from the Keeper under subsection (3). Subsection (4) will also apply to the secured creditor as it applies to the registered creditor – meaning that the secured creditor may apply to the court objecting to the making of the correction.
421.Where an application is made to the court, subsection (6) provides for the court to determine matters. However, subsection (7) recognises that if the Keeper was not told about the court action then the correction may already legitimately have been made. As such, no direction is to be made unless the court is satisfied that, before the date the Keeper had said was the intended date for making the correction, the Keeper received notice from the registered secured creditor of the court application. In establishing the date on which the Keeper received any such notice, the (rebuttable) presumptions as to service provided for in section 26 of the Interpretation and Legislative Reform (Scotland) Act 2010 may be relied upon. The Keeper can, if desired, enter the court process (see section 103 of the Act).
422.If the Keeper does not receive any notification of a court application before the date that the Keeper had said was the intended date for making the correction, the Keeper is required to make the correction on that date arriving (subsection (8)).
423.See also section 102, which sets out the procedure that the Keeper must follow, depending upon the nature of the correction being made (though in every case, the Keeper must note in the register that a correction has been made). That section also provides for notification to be given to interested parties of the entry having been corrected.
Section 100 – Correction of the statutory pledges record at instance of the court or the Keeper
424.This section deals with corrections which do not emanate from an application for a correction.
425.Subsection (1) ensures that the courts can (where appropriate) direct the Keeper to correct an entry in the RSP. The Keeper would be required to comply with any direction, as to do otherwise would risk the Keeper being found to be in contempt of court.
426.Court proceedings might arise in a number of ways. The Act does not provide for an express right of appeal against, or review of, any decision by the Keeper. However, an issue relating to the accuracy of the register might be raised in other proceedings, such as a judicial review of a decision by the Keeper, or proceedings in which it is alleged that a constitutive document is a forgery. The Keeper can, if desired, enter the court process (see section 103 of the Act).
Example 1
A constitutive document is reduced by the court because it has been forged by one of the apparent parties. The court can direct the Keeper to correct the entry in the statutory pledges record.
Example 2
An entry has been created in the statutory pledges record for a security by Andrew in favour of Bruce. But in the application form for registration of the assignation, Bruce erroneously states that Carol is the creditor. Carol could seek removal of the entry by the court (as an alternative to a demand for a correction).
427.Subsection (2) of this section sets out circumstances in which the Keeper will (under subsection (3)) be required to take action upon becoming aware of a manifest inaccuracy in the statutory pledges record. Subsection (3) will not apply where—
that awareness comes from a court direction (as the matter will be dealt with under subsection (1))
that awareness comes from an application having been made (as the matter will be dealt with under the application process), or
the Keeper considers that the appropriate way of addressing the inaccuracy is to make an application (as the matter would then be dealt with under the application process) – but only where the inaccuracy is not the Keeper’s fault.
428.As such, if the inaccuracy is something that has been introduced by the Keeper then it is not open to the Keeper to redirect parties to the application route. However, an inaccuracy would not be attributable to the Keeper simply because the Keeper has taken information from an application and entered it on the register.
429.Where the Keeper becomes aware of such an inaccuracy, other than in the cases set out above, subsection (3) requires the Keeper to correct the manifest inaccuracy where what is needed to correct the inaccuracy is also manifest and to note any inaccuracy that cannot be corrected.
430.See also section 102, which sets out the procedure that the Keeper must follow, depending upon the nature of the correction being made (though in every case, the Keeper must note in the register that a correction has been made). That section also provides for notification to be given to interested parties of the entry having been corrected.
Section 101 – Meaning of “inaccuracy” and how a correction is made
431.This section sets out the meaning of “inaccuracy”, as well as providing more information about corrections.
432.There is an “inaccuracy” in the statutory pledges record whenever the record mistakes the true position (in law or in fact) in relation to a pledge.
433.Where there is an inaccuracy, a correction can be sought. Subsection (2)(a) clarifies that a need for a correction may arise because the record has always been wrong, or because supervening facts have meant that it has become wrong. For example, legally there is no requirement to register restrictions or discharges of statutory pledges. These can take effect without any requirement as to registration. However, if a pledge is discharged, it would then be the case that the record misstated the position as regards that pledge, so a correction could be sought if desired. There are a number of other reasons why the record could become incorrect, including the pledge being extinguished by the encumbered property being destroyed or as a result of one of the good faith protections in the Act.
434.Subsection (2)(b) sets out what the correction of the statutory pledges record may involve (which will depend on the nature of the correction).
435.Subsection (3) makes provision about the date and time of a correction. This is particularly important as regards sections 91 and 92 of the Act, under which an ineffective registration may be made effective by correction (thereby creating the pledge).
Section 102 – Correction of statutory pledges record: procedure
436.This section applies where the Keeper corrects the statutory pledges record by virtue of any of the provisions of the Act under which it can be corrected.
437.Subsection (2) provides that where the Keeper corrects the statutory pledges record by removing an entry, the Keeper must transfer the entry to the archive record. The Keeper must also note on the transferred entry the section by virtue of which the transfer is made.
438.Subsection (3) provides that where the Keeper corrects the statutory pledges record by restoring, removing or amending information included in an entry, the Keeper must note on the entry that it has been corrected. In the case of the replacement of a copy document, the Keeper must also transfer the replaced copy to the archive record.
439.In both instances, the Keeper must give details of the correction including the date and time of the removal or (as the case may be) the correction of the entry. The Keeper must also include in the archive record a copy of any document which discloses or contributes to disclosing the inaccuracy which is the subject of the correction.
440.Subsection (4) provides that once the record has been corrected the Keeper must, to the extent that it is reasonable and practicable to do so, notify every person required by RSP rules and any other person who appears to the Keeper to be affected by it materially that a correction has been made. This is not an objective test and will be confined to facts within the Keeper’s knowledge. This section does not apply to corrections under section 97(1), as in such cases a verification statement will instead have been issued.
441.Subsection (5) provides that the validity of a correction of the record will not be affected if the Keeper fails to include in the archive record a copy of any document which contributes to disclosing the correction or fails to notify any person of the correction.
Section 103 – Proceedings involving the accuracy of the statutory pledges record
442.This section provides that the Keeper is entitled to appear and be heard in any civil proceedings where a question arises regarding the accuracy of the statutory pledges record, or what is needed to correct it.
