Entitlement to compensation
Section 109 – Liability of Keeper
463.This section provides for the Keeper to compensate any person who has suffered a loss in consequence of a matter specified in subsection (1). Liability under subsection (1) is strict, in that the person does not have to show that the Keeper is at fault (as opposed to, say, arising from an unavoidable malfunction of the Keeper’s automated systems). However, subsection (2) limits the losses that can be recovered by excluding certain types of claim.
464.Subsection (3) provides more information about what is meant in subsection (1)(a) by “an inaccuracy which is attributable to the making up, maintenance or operation of the register”. It provides that an inaccuracy in information included in an entry in the statutory pledges record when the entry is made up, revised for an amendment document or corrected is not covered by subsection (1)(a) to the extent that the Keeper has been misled into making the inaccuracy and reasonably believed the information to be accurate. Subsection (4) provides that circumstances in which the Keeper is entitled to reasonably believe information to be accurate include if it is provided in connection with an application to which the entry relates, or by the court. As such, if the Keeper faithfully replicates the information provided in an application form and that information proves to be incorrect, that is not an inaccuracy for which the Keeper is liable, though the person who submitted the application may be liable under section 110. Subsection (4) is not exhaustive of the circumstances in which the Keeper is entitled to reasonably believe that information is accurate.
Section 110 – Liability of certain other persons
465.This section provides for certain persons to be liable, on fault being shown, for losses suffered by another person in consequence of a matter specified in subsection (1).
466.Subsection (1)(a) applies where a person suffers loss as a result of an inaccuracy in an entry. It applies where the person who made the application which led to the entry did not exercise reasonable care or where the person notified the Keeper of an apparent inaccuracy without taking reasonable care.
Example
Alan maliciously registers a forged constitutive document bearing to be granted by Bruce over property owned by Claire. Claire has a claim against Alan for any loss.
467.Subsection (1)(b) applies, where as a result of a failure to take reasonable care, there is an inaccuracy in responding to an information request under section 107 of the Act. It should be read with section 108 of the Act, which provides for certain pledges to be extinguished where property is acquired within 3 months after faulty information is given to an entitled person.
Example
Information is supplied to Ailsa by Brendan that certain property is not pledged. Brendan does not take reasonable care, and the information is wrong. Ailsa takes a pledge over the property in reliance on that information. She expects that the pledge will be a first-ranked security, but it is in fact subject to the existing pledge. Ailsa will have a claim against Brendan.
468.Subsection (1)(c) applies where a person has failed, without reasonable cause, to provide information under section 107 of the Act.
469.Subsection (2) imposes the same restrictions on liability as those set out in section 109(2) of the Act.
