Scottish Court of Session Decisions

The Lord Justice-Clerk said—This resolves into a mere matter of expenses. The question, however, is one of considerable importance in practice, because it has a direct bearing upon the trustee's duty under the 126th section of the Bankrupt Act, and the manner in which he ought to deal with claims of creditors needing explanation or examination to support them. The claim in the present case was a very peculiar one, made after the lapse of a long time. The cashier had managed to deceive his employers, and to blind them to such an extent that no suspicion arose of the fraud that had been practised upon them till his death. In these circumstancess it was certainly incumbent upon the persons claiming to give the trustee every assistance and explanation in their power It occurs to me that the case was of a nature to be more suited for investigation by the trustee than for judicial inquiry. The affidavits lodged by the claimants gave all the explanations which the Court now have in the proof upon which the trustee can no longer resist the claim. It may be that they are in more general terms; but if amplication or detail was all that was required, these would have been obtained under an investigation by the trustee. The policy of the statute was to encourage extra-judicial investigation whenever competent and likely to lead to a settlement of the claim. The trustee is empowered to require further evidence, and power is given him under the Act for the first time to put the creditor or any other party on oath. I can't think that this power was conferred upon trustees but for the purpose of enabling them to get all the light which a judicial investigation would afford. The trustee ought to take all the evidence he can before he rejects a claim and throws a claimant into Court. Had the trustee done so in this case, what would have been the result? The partners of the firm and their clerks would have given him explanations of the cashier's duties, the way in which he had discharged them, and the way in which his work was carried on. That investigation would not have been attended with any expense. It would be hard to say that if the trustee chose, without calling for this evidence, to reject the claims, and put the parties to the expense of constituting it in an appeal, that he should not pay their expenses if they were successful.

Lord Benholme dissented on the ground that the course adopted by the trustee was not beyond the discretion conferred upon him by the statute, considering the peculiar nature of the case, and that he could not be held to have been guilty of rash litigation, more particularly as the claimants had been in fault in not attending to their interests for a period of seven years after the cashier had left their employment.

The other Judges concurred.