Looking over the horizon, there are two challenges that may soon engage the attention of the Land Register of Scotland: the automation of the register and the privatisation of its operation. These have increasingly preoccupied Australasian and Canadian registries over the last ten to twenty years.
In the first of a two-part posting, Rod Thomas, an academic visitor to Edinburgh Law School, considers how automation of the register has unfolded in Australia and New Zealand.
Automation challenges
The New Zealand and Australian land registries are Torrens in origin. This is important for automation as under Torrens principles, the registration result is final, being guaranteed by the State, except in the case of fraud. This has consequences where the act of registration is in effect undertaken and controlled by the conveyancers as users of the system, instead of being a result of an acceptance of dealings by staff employed by a centrally controlled registry.
The New Zealand registry was the first to “fully” automate in 2002, by introduction of “Landonline”. This system is now some 18 years old and showing its age, but provides an example of what is possible. Registration under Landonline is divided into two broad categories.
The first is “AUTOREG” which consists of a registration of transfers, mortgages, discharges of mortgages, easements and the such, when submitted for registration on the basis of pre-approved standard wording. This consists of the vast majority of lodged dealings. These are registered by licensed conveyancers populating “boxes” found on the online system and certifying that the “dealing” being submitted meets all necessary legal requirements. In effect, by doing this, the conveyancers act as de facto registrars. This being done, those conveyancers, or conveyancer (as one conveyancer can act for all parties) can press the “enter” button on their personal computer and create, transfer or surrender the appropriate legal interest, creating a fresh Torrens certified title.
“LODGE” is the second function. Here dealings are again created online, but acceptance is dependent on registry staff’s approval either because bespoke additional terms have been added to existing templates, or off-line authorisations are needed. Once these registry checks have occurred, the conveyancers can then release the dealings online for registration to occur.
To the surprise of some (including this writer) so far the system has been largely successful with no known significant abuses by licensed conveyancers. One may reflect in this regard that the issue of abuse covers not only intentional operator fraud but user incompetence. A more detailed discussion of the way the Landonline system operates, and whether this low risk of abuse will continue, is provided in “The New Zealand Experience: The Risks and Implications of Automation” soon to be published in D Grinlinton and R Thomas Land Registration and Title Security in the Digital Age: New Horizons for Torrens (Routledge, London, forthcoming, April 2020).
What then, of Australian registries? It suffices to say that nearly all (six States and associated territories) are undergoing automation, but to date, none have followed the exact path of Landonline.
Lessons learned
Although in geographical size New Zealand approximates to the area of the United Kingdom, it is a small jurisdiction with a population of some 4.8 million. The New Zealand registrar co-opted the New Zealand Law Society as a co-venturer in designing the Landonline system. Given this, there were few independent commentators who had the time (or perhaps the inclination) to critically comment on the design of the new system as being either credible or desirable. This made its introduction virtually free from criticism, including the extent to which risk was transferred from the State to conveyancers as licenced users of the online system under its Torrens guarantee of the registration result. Secondly, Landonline was introduced as a compulsory system, so there was no debate as to the merits of the continuing use of the manual system over the new automated system. Instead, the emphasis was on the extent to which its introduction made the registration exercise more straightforward, expeditious and less expensive. Finally, from Australian experiences, it appears a truism that if major lending institutions support the introduction of automation, then it will be successful, notwithstanding any design shortcomings. The flip-side of this proposition is also true. If key financiers do not back the system, its introduction will fail. One may reasonably expect that in considering the merits of such a system, financiers will make a risk assessment in terms of operating efficiencies and anticipated profits over losses, rather than focus on whether individual transactions are safely registered.
The writer would suggest that if automation is introduced, it is not presently reasonable to consider that the operation of the system remains the same. To date, automated systems are bent to the tolerances of what is presently possible in terms of linear programming. This does not mean such a system should not be introduced, but that its strengths and weaknesses should be frankly appraised, rather than promoted to conveyancers (as consumers) as simply being more efficient and easier to operate. In terms of responsible design, the success of a system should surely be judged by the way it handles the tough issues (such as fraud or other user abuse) and not with the way “low lying fruit” is successfully “picked” (i.e. increased volume of low risk transactions being successfully processed at speed). In closing, it should be noted that while it is clearly the case that both manual and automated system are able to be abused, the risk parameters are different. Whilst a manual system may be abused from time to time, an automated system is only as good as its weakest link. Once such a link is exposed, this may result in systematic abuse.
Possible lessons for Scotland
In many ways the Scottish land register appears better suited to automation than Australasian Torrens registers. At least in theory, a deferred indefeasibility regime allows more room for rectification of error before a title is confirmed.
See further Rod Thomas, Rouhlshi Low and Lynden Griggs “Automating State Guarantee of Title Systems: System Design, and Possible Outcomes – Australasian thoughts” in A Goymour, S Watterson and M Dixon (eds) New Perspectives on Land Registration; Contemporary Problems and Solutions (Hart Publishing, Oxford, 2018). Also Rod Thomas, Rouhshi Low and Lynden Griggs “Australasian Torrens Automation, Its Integrity, and the Three Proof Requirements” [2013] New Zealand Law Review 715.
Read ‘Future Challenges for the Land Register of Scotland: Automation and privitisation (Part Two)’
Associate Professor Rod Thomas
Auckland University of Technology, New Zealand
Academic visitor to Edinburgh Law School
