Scottish Court of Session Decisions

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Cite as: [1879] ScotLR 17_117_1, [1879] SLR 17_117_1

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SCOTTISH_SLR_Court_of_Session

Page: 117↓

Court of Session Inner House First Division.

Saturday, November 15. 1879.

Lord Curriehill, Bill Chamber.

17 SLR 117_1

Weldon

v.

Ferrier (Weldon's Trustee).

Subject_1Bankruptcy
Subject_2Bankruptcy (Scotland) Act 1856 (19 and 20 Vict. cap. 79), secs. 139 and 169
Subject_3Consent of Commissioners to Offer of Composition by Bankrupt.
Facts:

The consent of the commissioners is, by section 139 of the Bankruptcy Statute 1856, necessary before the trustee can call a meeting of creditors to consider an offer of composition made by a bankrupt subsequent to
Page: 118↓
the meeting held after his examination; but in the event of the trustee or commissioners abusing their office in refusing such consent, a remedy is open under the 169th section of the statute, either by appeal or by petition and complaint. Circumstances where in such an appeal at the instance of the bankrupt the Court declined to interfere, and refused the appeal, there being no evidence that the commissioners had abused their office.

Headnote:

Charles Weldon became bankrupt, and his estates were sequestrated in March 1879, a trustee (Mr Ferrier) and two commissioners being appointed. At the first general meeting of the creditors on 19th March there was submitted a written offer by the bankrupt of a composition of 2s. 6d. per £1, and suggesting the name of one or other of two gentlemen as security. This offer was subsequently rejected, as the gentlemen named did not consent to give caution. At the second general meeting of creditors on 8th April a state of affairs of the bankrupt shewed assets nil, liabilities (preferable) £530 and (ordinary) £1022. On 11th August the bankrupt wrote to the trustee offering a composition of Is. per £1, to be paid by instalments, and to this letter was appended—“I hereby become security for the composition above offered.—George Weldon, 33 Montague Street, Edinburgh.” The trustee and the commissioners subsequently held a meeting on 20th August, the minute of which bore that “George S. Ferrier, the trustee, laid before the meeting an offer of composition of 1s. per £, dated 11th August 1879, from the bankrupt, with an offer by the bankrupt's brother Mr George Weldon of security for the said composition. The meeting after due consideration refused to give their consent to the trustee to call a meeting of the creditors to consider and decide upon that offer, in respect, first, of the inadequacy of the offer, and second, of the insufficiency of the cautioner.”

On August 26th the bankrupt's law-agent wrote to the Accountant in Bankruptcy requesting him to “require the trustee to call the necessary meeting of creditors to have the offer and security disposed of in terms of the statute.” The Accountant replied (on August 27th) that under section 139 of the Act, the commissioners having refused their consent, “I do not find that I can order the trustee to call such a meeting. It is for the bankrupt's consideration whether he should not, under the provisions of the 169th section of the said Act, appeal against the deliverance of the trustee and commissioners in regard to this matter.”

The bankrupt appealed, and on 15th September the Lord Ordinary officiating on the Bills ( Currie-Hill) refused the appeal, adding to his interlocutor the following note:—

“ Note.—The consent of the commissioners is by section 139 of the Bankrupt Statute necessary before the trustee can call a meeting of creditors to consider an offer of composition made by a bankrupt subsequent to the meeting held after his examination. It appears to me that it is absolutely within the discretion of the commissioners to grant or withhold their consent. In this case not only do the commissioners withhold their consent, but it was stated at the hearing, and not denied, that the trustee concurs with the commissioners in thinking that the offer is not one which should be submitted to the creditors. I can see no grounds for holding that the commissioners are abusing their discretionary powers, and, on the whole, I think the note of appeal must be refused, with expenses.”

The bankrupt reclaimed, and argued—The commissioners were not entitled at their own hand to prevent the calling of a meeting of creditors to consider an offer of composition made in proper form and on sufficient caution. As to the offer being too small, the assets were nil, and the composition offered would be found money to the creditors. The proceedings had, in fact, been actuated by private and interested motives.

Judgment:

At advising—

Lord President—It is important to observe at what stage of the sequestration this question arises, and at what stage only it can arise under the statute. It is only after several meetings, after the bankrupt has been examined and his affairs investigated by the trustee and commissioners, and after the meeting held subsequently to the bankrupt's examination, at which the creditors are called on to consider his conduct and the state of his affairs—it is only after all that is done that the bankrupt in offering composition requires to do so at a meeting to be called by the trustee with consent of the commissioners. Before this time he can do so without anyone's consent down to and inclusive of the meeting held after his examination. If he loses all these opportunities, then he must have the consent of the commissioners. There may be excellent reasons—more than one—for this; but it is unnecessary to enter into them, as the statute is quite clear in its terms. One distinction is that at any previous meeting the offer of composition requires to be accepted by a majority in number and nine-tenths in value of the creditors; but at such a meeting as is here asked to be called, a majority and four-fifths in value is sufficient. We must obey the precise rule of the statute, and we cannot put ourselves into the position of the commissioners when they refused consent without being in full possession of the facts as they were. The examination of the bankrupt, for example, is very important, and it is not before us. Again, we have a general statement made about vindictive and personal motives, but what does that mean? If it means that the commissioners were disappointed and indignant because of the largeness of the debts and the assets being nil, we can hardly wonder at it.

But what we have to consider is that there has been no allegation even at the bar that the commissioners have abused their office for the purpose of oppressing the bankrupt. If they had done so, a remedy might have been had from the Accountant in Bankruptcy, who can come to this Court for aid; and further, section 169 of the statute authorises a petition and complaint against any deliverance of the trustee or commissioners. We cannot therefore entertain this appeal against the commissioners; and as to the trustee, the absence of his consent renders it incompetent for him to call the meeting, I am therefore for refusing the reclaiming note.

Lord Deas—I agree with the Lord Ordinary and with your Lordship. The Lord Ordinary in his note says—“The consent of the commissioners is by section 139 of the Bankrupt Statute necessary before the trustee can call a meeting of creditors to consider an offer of composition made by a bankrupt subsequent to the meeting held after his examination.” He has no power to call the meeting without it. But the Lord Ordinary does not say that if the trustee and commissioners abuse their office there is no remedy for it; he says he sees no evidence that they have done so; and we have had no intelligible statement from the bar to that effect. It must be remembered that these meetings involve expense—that the other one had failed for want of proper caution, and that this one bade fair to do so also. All that is legal and reasonable; and I am for refusing the appeal.

Lord Shand—I concur in the result at which your Lordships have arrived. The commissioners here gave what I take to be a deliverance. The bankrupt applied for their consent, and after due consideration they refused it on specified grounds. The Accountant in Bankruptcy then suggested that it was for the consideration of the bankrupt whether he should not appeal under section 169; and I think this was the right course. The deliverance is one which may fairly be brought under the notice and review of this Court by appeal, and if the bankrupt could show that there had been any abuse I think the Court might on an appeal of this kind interfere and order the required meeting to be called. But I do not think this case discloses any such abuse. On the statement we have heard the bankrupt had no estate, but, on the other hand, no sufficient caution was offered; we know nothing of “George Weldon,” and the trustees and commissioners probably had information on the subject. I am clearly of opinion that we should refuse the appeal. What might be done in the case of a bona fide offer of composition being made with sufficient caution by a person having means, in the event of the trustee and commissioners refusing to entertain such an offer, is a different matter.

The Court refused the appeal.

Counsel:

Counsel for Appellant and Reclaimer— Mair. Agent— James Barton, S.S.C.

Counsel for Respondents— Rhind. Agents— J. & W. C. Murray, W.S.
1879