Prescription and title to moveable property

The Scottish Law Commission’s Report on Prescription and Title to Moveable Property (Scot Law Com no 228, 2012, available at www.scotlawcom.gov.uk/) addresses one of the fundamental gaps in modern Scottish property law – the lack of a clear rule allowing possession of a moveable asset to mature into ownership through the passage of time.

For land, of course, the rules are well known and set out in the Prescription and Limitation (Scotland) Act 1973. The 1973 Act was based on an earlier report of the Commission, which deliberately left the question of moveables for another day. While a consultative memorandum on corporeal moveables was published in 1976, no report or legislation followed, thus leaving a vacuum in law. This makes Scotland contrast badly with most other legal systems, including England and those on the continent.

The Commission has now published a set of recommendations and a draft bill to address the issue. If implemented by the Scottish Parliament, these will improve security of title in relation to long-lived moveable assets such as paintings and antiques.

Good faith possession

Essentially, the Commission proposes two new rules. The first will enable the possessor of a corporeal moveable to be sure of his or her title where the asset was acquired in good faith and without negligence, and possessed peaceably and without judicial interruption for 20 years. It is important to add that the good faith and lack of negligence in believing that a good title has been acquired must continue through the 20 year period.

For example, Nick sells Malcolm’s candelabra to Penelope. Penelope is in good faith and has no objective reason to believe that Nick is not the owner. This continues to be the case for the next 20 years. At the end of the period Penelope becomes owner. If on the other hand, two years following the sale, Nick admits to Penelope that the candelabra was Malcolm’s and that he had no authority to sell, her good faith ceases and prescription cannot run.

The “without negligence” requirement is in effect one of due diligence. This will vary from asset to asset. Thus it would be expected that the acquirer of an “old master” painting would check the Art Loss Register.

The Commission had near unanimity from consultees that there should be a rule of positive prescription for moveables, but views unsurprisingly differed on what the appropriate period of time should be. Comparator jurisdictions have varying periods. The Commission ended up recommending the relatively long period of 20 years. (In England, for example, the effective equivalent is six years.)

This was influenced by the need to protect ownership of “cultural objects”. Increasingly, there is a view internationally that such property should not be able to be acquired through a brief prescriptive period. For example, the Draft Common Frame of Reference provides for longer periods for this type of object. The fundamental difficulty, however, is formulating a clear definition of such property, as views on what is “cultural” differ from one person to another. In the end, the Commission felt that the task was near impossible and opted for a general rule for all corporeal moveable property, but with a long period. In addition the good faith and absence of negligence requirements will also protect owners of such assets.

Untraced owners

The second rule proposed by the Commission relates to corporeal moveable property which the holder knows is owned by someone else, but that person can no longer be traced. It is particularly designed to help museums and galleries, but is of general application. Where property has been deposited with or lent to another person and 50 years pass without any contact from the owner, the holder can acquire ownership, if having exercised reasonable diligence, it is not possible to contact the owner.

The rule addresses a specific problem raised with the Commission back in the 1970s and once again during the present project, namely that museums and galleries cannot safely dispose of items because of lack of certainty of title. Due to space limitations, this acts as a bar on acquiring new things for their collections. The new rule is carefully constructed so as also to protect the rights of owners. Clearly people should be able to lend items secure in the knowledge that they can get them back. The rule thus requires a long period of holding with lack of contact from the owner – at least 50 years – and an inability to contact the owner after this period using reasonable diligence.

For both rules, time which has elapsed prior to the day that the new legislation comes into force would count, provided that the possessor continues to hold the item on that day. As a final protection for owners, the legislation would not come into force until three years after Royal Assent. There was a similar three year delay with the 1973 Act.

The Commission also recommends that because positive prescription will become possible for ownership of corporeal moveables, negative prescription will no longer apply to such property.

Rights of the Crown

A further recommendation is to end the rule whereby corporeal moveable property that is abandoned falls to the Crown. The rule is an indiscriminate one and gives Her Majesty ownership of all sorts of things which she would not want, such as cigarette ends and old sofas.

The effect of abandonment will now be to make such property ownerless. However, the current rules in the Civic Government (Scotland) Act 1982, part 6 will remain. Anyone finding such property and who takes possession of it will only be able to acquire a good title by handing it into the police in the first instance and being given it if no one claims it. Finders will not be able to rely on the doctrine of (occupancy). The rationale is to prevent would-be thieves from having a new argument that they thought the property had been abandoned and was thus ownerless.

An important aspect of the law of corporeal moveable property which was outwith the Commission’s remit is treasure trove, that is to say valuable portable antiquities to which the Crown is entitled. The new rules allowing ownership to be acquired after 20 and 50 years will not apply to treasure trove. Moreover, the abolition of the current negative prescription and abandonment rules which currently give title to the Crown will not affect treasure trove. There are two reasons for this. First, these are rules for the future. Anything which has already become the Crown’s as treasure trove will remain the Crown’s. Secondly, there will be a new 60 year, non-possessory positive prescription rule in favour of the Crown. This will apply where no one else has possessed the property for that period.

Special rules

The Commission has one other recommendation, which relates to intellectual property rather than corporeal moveables. In Fisher v Brooker [2009] UKHL 41 Lord Hope of Craighead raised the issue of whether the general rules of negative prescription in the 1973 Act could apply to copyright, patents etc notwithstanding that these have clear periods under their own statutes. The English limitation legislation expressly provides that it does not apply where other enactments provide for their own periods. The 1973 Act has no equivalent. The Commission proposes that it should have. Since, however, intellectual property is a reserved matter, Westminster legislation would be required to effect such a change.