Scottish Court of Session Decisions

The affairs of James Robertson, tailor and clothier, Glasgow, who traded under the name of James Robertson & Company, became embarrassed in the beginning of 1885, and in June 1886 he granted a trust-deed in favour of Benjamin Nicholson, accountant, London, who acted on behalf of certain of his English creditors; on 16th July following he granted a second trust-deed for behoof of all his creditors in favour of Nicholson and Robert Kedie, warehouseman, Glasgow. Nicholson, as a professional accountant, acted under these trust-deeds, and took the chief part in the realisation of Robertson's estate. In May 1887 Robertson's estates were sequestrated on the petition of a Glasgow creditor, and Walter Galbraith, accountant, Glasgow, was appointed trustee. Nicholson appeared by counsel and opposed the granting of sequestration.

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Galbraith, as trustee on Robertson's estate, raised the present action of count, reckoning, and payment against Kedie and Nicholson, concluding that they should be ordained to produce an account of their whole intromissions with Robertson's estate.

The pursuer averred that the trust-deeds were executed in Glasgow, and that the whole trust-estate was situated in Scotland; that on his requesting delivery from Nicholson of the trust papers these had been refused him, and that great expense and delay were thus being caused. The pursuer further averred that Nicholson, after the present action was raised, lodged £500 in the Court of Chancery in England in order to prevent or impede the present accounting, and that in this English proceeding an order for service on Kedie was asked by Nicholson, but refused, after hearing parties, by the Court.

The defender Kedie averred that he left the management of Robertson's trust practically in Nicholson's hands, but that he never approved of or sanctioned proceedings being taken in the Courts in England.

The defender Nicholson averred that the £500 had been paid into the Court of Chancery to abide the orders of Court in an action against him by one of Robertson's English creditors; that this money was part of the funds realised by him under the trust-deeds already referred to, and that it was paid into Court prior to the raising of the present action.

The defender Nicholson pleaded, inter alia, no jurisdiction.

On 20th March 1888 the Lord Ordinary ( Fraser) pronounced the following interlocutor: —“Repels the first plea-in-law for the defender Nicholson, and appoints the case to be put to the roll for further procedure: Finds the defender Nicholson liable in the expenses of the discussion on the plea now repelled; modifies the same to six guineas, and decerns.

“ Opinion.—The estates of James Robertson, a tailor and clothier in Glasgow, now deceased, were sequestrated by the Court of Session in May 1887, and the pursuer was appointed trustee upon the estate. It is averred on behalf of the pursuer that the whole estate is situated in Scotland. No counter averment is made by the defender Nicholson. He admits ‘that the said James Robertson was a domiciled Scotchman, and lived and carried on business in Glasgow.’

“Robertson, before the sequestration, executed two deeds conveying over his property to the defenders in this action in trust for the benefit of his creditors. The defenders accepted the office of trustees under these deeds, and proceeded to ingather the estate. No dividend was paid by the trustees to the creditors. The defender Kedie intromitted with it only to a very small extent (£27, 10s.), which he has paid over to the pursuer, the other defender Nicholson having taken the chief management, which Kedie says he allowed him to do, as being an accountant, and therefore better fitted to discharge the duty as trustee. The pursuer now asks an accounting with these persons for their intromissions, and this upon the footing that the sequestration put an end to the trust in their favour. One of the trustees is resident in Scotland, where the estate is situated, and the other, Nicholson, is resident in England, and no arrestment to found jurisdiction has been used against him. The first plea-in-law for the defender Nicholson which falls now to be disposed of is that this Court has no jurisdiction to entertain the action as regards him. If this plea be sustained the alternatives would be that the pursuer must sue the defenders in an English Court, when the plea of Kedie would be that he is not subject to the jurisdiction, or that the pursuer must proceed with this action against Kedie in the Court of Session, letting Nicholson out of it: to which Kedie's answer would be, that he cannot be sued without calling his co-trustee; and in like manner the same answer would be open to Nicholson in an English Court if he was sued there alone without Kedie. Nicholson, after this action was in Court, instituted a suit in the Chancery Division of the High Court of Justice in England in name of Kearsley & Company (creditors for whom he is acting), to have the trusts under the two deeds carried into execution under the direction of that Court, and to have an account taken of the moneys received by the defenders. This proceeding was taken against the protest of the defender Mr Kedie. An order for service of the writ upon Kedie and the pursuer was obtained, but upon 21st December 1887 this order was discharged with costs by Mr Justice North, who said—‘It seems to me that on the grounds of both convenience and expense it is very much better that the matter should be litigated in Scotland.’ His Lordship referred to the present action, and said—‘There is a proceeding going on in Scotland by Galbraith, as trustee representing the estate of the debtor, against the other two persons who are the trustees of these deeds, in which proceeding Nicholson, the English trustee, has entered an appearance. He therefore is properly before the Court with respect to those deeds. … It seems to me that every question between these parties can be fairly and conveniently dealt with there.… Under these circumstances it seems to me that the cost and convenience are both in favour of their being tried in Scotland, and there is nothing in them in any way to prevent their being so tried, because, although the two deeds are said to be in English form, they are in a form which is perfectly intelligible. … I do not see anything in them whatever to prevent their being equally well administered by the Court in Scotland as by the Court in England. Further than that, there are questions which it appears to me must necessarily arise relating to Scotch law, with respect to which it is far more convenient and far better as regards the evidence that they should be dealt with by a Scotch Court which knows what the Scotch law is, than that they should be dealt with by an English Court which is not at any rate familiar with Scotch law, and which cannot know anything whatever of it except as a matter to be proved by the attendance here of experts to state what the Scotch law is. Convenience and expense in my opinion require that I should not allow the two defendants who are resident in Scotland to be brought here to litigate the question in dispute, though, as I have said, I can conceive a state of things possible hereafter—though I do not think it likely to arise—in which some proceedings might be necessary in England

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in which these persons might be served and made defendants here, so as to litigate the matter here.’

“Thus, then, so far as regards the English Court, there is no action pending as against Kedie, and the question now arises whether the present action against both defenders can be allowed to proceed. It would certainly be a case of great hardship if the pursuer were obliged to raise two actions—one against Kedie in Scotland, and another against Nicholson in England—in regard to an accounting for intromissions with an estate of which both parties were trustees, and this all the more that, as pointed out by Mr Justice North, the first question to be determined is one of Scotch law, as to the effect of a Scotch sequestration on the prior trust-deeds. The case of the Magistrates of Wick v. Forbes, &c., December 11, 1849, 12 D. 299, shows that an action may be competent in the Scottish Courts against executors, although a number of them may be resident abroad, and no arrestment to found jurisdiction be used. On the other hand, the case of Gillon & Co., v. Dunlop and Collett, February 27, 1864, 2 Macph. 776, is an illustration of the rule that the Court will not entertain an action against an executor resident abroad where a more convenient forum for trying the case exists in England. But in that case no part of the executry estate was situated in Scotland; it was under distribution in terms of a will executed in India, and under the authority of the foreign court. This distinguishes that case from the present one.

According to the practice of the Court of Chancery the objection to the jurisdiction in such a case as this would be repelled, as is illustrated by the case of Seymour v. Seymour, January 27, 1888, 84 Law Times, 242, and 4 Times Law Reports, 250, before Mr Justice Chitty. There were there several defendants, some residing in England and some residing in Ireland. Two parties in Ireland, interested in the matter as sub-mortgagees, moved to discharge the order for service out of the jurisdiction, on two grounds—(1) That the cause of action against them was one in which no parties within the jurisdiction were interested, and that consequently there was no jurisdiction to make the order; and (2) that any question, so far as they were concerned, might effectually be raised in proceedings pending for sale of the mortgaged estates in the Land Court in Ireland, and consequently that the Court ought not to exercise the jurisdiction, even if it possessed it. Mr Justice Chitty, in delivering judgment, said that, ‘with regard to the defendant's first ground of objection, in his opinion all the defendants were necessary parties to the action, wherever it might be tried. The cause of action was the same against all, although the remedies against and the liabilities of the different defendants were different. With regard to the second objection, if he were to uphold it, either the parties resident in England would have to be served with the proceedings in Ireland, or two sets of proceedings would have to be carried on, one in England and the other in Ireland. In the first alternative the parties resident in England would raise exactly the same objection in the Irish courts, to be taken to Ireland, and the result would be a deadlock. In the second alternative there would also be two sets of proceedings, one in England and the other in Ireland, in each of which all the same evidence would have to be gone through. Therefore on the ground of comparative cost and convenience he came to the conclusion that the action in this Court should continue as at present constituted, and that the defendants were properly served.’ Upon the whole matter, the Lord Ordinary is satisfied that this Court has jurisdiction to try this case, and that it is immaterial to say that the defender Nicholson had taken the chief part in the management with the concurrence of the other defender.”

The defender Nicholson reclaimed, and argued—The Lord Ordinary had dealt with this matter, and sustained the jurisdiction of the Scottish Courts substantially on the ground of forum conveniens, but in such cases an important question was, where was the estate situated? Here £500 of it was in England, and had been ingathered by the English trustee, and was lodged in the English Court for the purpose of division among the English creditors, who thought it unreasonable that money ingathered for their special behoof should be allowed to fall into the Scotch sequestration— Black v. Duncan, December 18, 1827, 6 S. 261; Goudy on Bankruptcy, pp. 477–78; Charles v. Charles' Trustees, May 19, 1868, 6 Macph. 772; Mackenzie v. Drummond's Executors, June 19, 1868, 6 Macph. 932; Kyd v. Waterson, June 5, 1880, 7 R. 884; Thomson v. Tough's Trustees, June 26, 1880, 7 R. 1035. There could be no doubt that ultimately these two trustees would require to be convened before one court, the only question being which court. It was by no means certain, as stated by the Lord Ordinary, that the questions involved in this case would fall ultimately to be determined by Scots law, as there were certain large questions involved both of English and international law. On the question of reconvention—All that Nicholson did was to appear to oppose the sequestration, and then he disappeared from the proceedings. He was liable to be called to account in England by Kearsley &Company, and so if he gave up the money he had ingathered he might be called upon to pay it twice— Gillon & Company v. Dunlop, February 27, 1864, 2 Macph. 776; Magistrates of Wick v. Forbes, December 11, 1849, 12 D. 299; Orr Ewing v. Orr Ewing's Trustees, July 24, 1881, 13R. (H. of L.) 1; Holiday's Executor, December 17, 1886, 14 R. 257; Richmond, Guthrie's Sheriff Court Cases, 241; Snow's Practice, p. 192.

Argued for the respondent-All considerations of convenience pointed to this question being tried in the Scottish Courts. The bankrupt was a domiciled Scotsman; his estate (except the portion which had been wrongously carried into England) was in Scotland; and one of the trustees was subject to the jurisdiction of this Court. In such circumstances the Scottish Court had jurisdiction over the other trustee— Magistrates of Wick, supra cit. The sequestration superseded both the trust-deeds, and thereafter the proper forum for the determination of all matters in dispute was in the first place the mind of the trustee, and after that the courts of law might interfere. The present question could only be determined by the law of Scotland. With reference to the alleged proceedings in England, two of the three English creditors had disclaimed all

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benefit from the trust-deed, while the third creditor, Kearsley, was a friend of the defender Nicholson. The pursuer was hampered in his duties by the actings of Nicholson, who appeared in the Bill Chamber as mandatary for Kearsley. Besides, Nicholson had submitted himself to the jurisdiction of this Court (1) by appearing to oppose the granting of sequestration, and (2) because Kearsley & Company were claimants in the sequestration, and Nicholson was clearly their agent. The Court had jurisdiction over Nicholson ex reconventione—Ord v. Barton, January 22, 1847, 9 D. 541; White v. Spottiswoode, June 30, 1846, 8 D. 952; Barr v. Smith and Chamberlain, November 18, 1879, 7 R. 247; Kennedy v. Kennedy, December 9, 1884, 12 R. 275; California Redwood Company v. Merchant Banking Company, July 20, 1886, 13 R. 1202.

At advising—