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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Blair v. North British and Mercantile Insurance Co. [1889] ScotLR 26_213 (8 January 1889)
URL: http://www.bailii.org/scot/cases/ScotCS/1889/26SLR0213.html
Cite as: [1889] SLR 26_213, [1889] ScotLR 26_213
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SCOTTISH_SLR_Court_of_Session
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Court of Session Inner House First Division.
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v.
Facts:
The affidavit of a petitioning creditor in a sequestration was ex facie conform to statute, but it appeared on a proof that he had never been put upon oath. The Court, holding that this irregularity was a ground for recal of the sequestration, pronounced an interlocutor recalling it, on being satisfied that no rights or preferences of creditors would be affected by the recal.
The estates of William Blair, bookseller, in Dundee, were sequestrated on 28th August 1888 at the instance of the North British and Mercantile Insurance Company. He thereafter presented a petition to the Court craving recal of the sequestration, in which he averred, inter alia—“The affidavit and claim produced with the said petition by the said company bears it was deponed to by Mr Philip Robert Dalrymple Maclagan, secretary of the said company, and that the oath was administered by Mr Frederick William Carter, one of Her Majesty's Justices of the Peace for the county of the city of Edinburgh. Notwithstanding that the said affidavit and claim bears that Mr Maclagan was solemnly sworn and interrogated by Mr Carter, it is believed and averred that Mr Carter did not put Mr Maclagan upon oath or interrogate him in any manner of way in relation to the contents of the said affidavit.”
In answers lodged for the North British and Mercantile Insurance Company it was replied that the petitioner's averments were irrelevant, and ought not to be admitted to probation.
The Lord Ordinary ( Wellwood) pronounced the following interlocutor:—“Finds that the petitioner has set forth no relevant or sufficient grounds for recal of sequestration: Therefore refuses the petition, and finds the respondents entitled to expenses, &c.
“ Opinion.—The first ground upon which the petitioner maintains that the sequestration should be recalled is that the affidavit on which sequestration was awarded was not made upon oath. He states that he believes and avers that the Justice of Peace before whom it bears to have been made did not put Mr Maclagan, the respondents' secretary, upon oath, or interrogate him in any manner of way in relation to the contents of the said affidavit. This is denied by the respondents, and the affidavit is ex facie regular, and sets forth that the compearer was ‘solemnly sworn and interrogated.’
Now, the proceedings being ex facie regular, it is in the discretion of the Court to allow or refuse inquiry. The petitioner asks for a proof at large to contradict the formal document on which sequestration was awarded. Such averments are easily made, and it would manifestly lead to great inconvenience and expense to
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creditors if an inquiry were granted in every case in which the bankrupt chose to assert that, contrary to the statement on the face of the affidavit, the petitioning creditor had not in point of fact sworn to the verity of the oath. But I am clearly of opinion that if inquiry is ever to be allowed in such cases it must be upon averments much more specific than those made in the present case. To use the words of the Lord President in Gillon v. Cæsar, November 1, 1882, 10 R. 61, ‘the petitioner would require to state what are his means of knowledge of the alleged fact that there is something wrong, and in what manner he proposes to prove his averments.’ In the course of the discussion in the present case I invited the counsel for the petitioner to give some further information upon these points, but he was unwilling to do so, and preferred to take a judgment upon the petition as it stood.” … . The petitioner reclaimed, and was allowed a proof of his averment that the petitioning creditor had never been put on oath, after he had made the following addition thereto—“Mr Maclagan did not attend before Mr Carter to get the oath administered, but after signing the affidavit sent it along to Mr Carter to be signed by him. Mr Maclagan and Mr Carter never met with reference to this matter.”
The result of the proof was to show that no oath had been administered, but that the Justice of Peace (Mr Carter) had merely put some such question as the following to Mr Maclagan, secretary of the Insurance Company—“Is this all true?” Mr Maclagan and Mr Carter both declared that in their experience it was not the practice to administer the oath to a creditor.
It appeared from the book containing the proceedings in the sequestration that there was only £25 available for distribution, and that the balance of the heritable debt chargeable against the bankrupt amounted to £17,000, and that the sequestration had had no effect in creating or cutting down preferences or in equalising diligence.
Argued for the petitioner and reclaimer—The sequestration must be recalled on account of the omission to administer the oath as the statute required. The omission of a statutory requisite made the recal of the sequestration necessary—Bankruptcy Act 1856, sec. 21; Wylie v. Kyd, June 21, 1884, 11 R. 968; Gillon v. Cæsar, November 1, 1880, 10 R. 61; Scottish Widows v. Buist, July 4. 1876, 3 R. 1078, per Lord President, p. 1081; Ersk. Inst. iii. 5, 10; Ballantyne v. Barr, January 29, 1867, 5 Macph. 330; Hall v. Colquhoun, June 22, 1870, 8 Macph. 891; Campbell v. Myles, May 27, 1853, 15 D. 685; 28 and 29 Vict. c. 9; Gibson v. Greig, December 17, 1853, 16 D. 233, per Lord Ivory, 239; Turnbull v. M'Naughton, June 27, 1850, 12 D. 1097. Assuming that the Court had a discretion to recal or not, this was a case in which they would recal, as the sequestration was injurious to the petitioner without being of any benefit to the creditors.
Argued for the respondents—There was clearly a discretion in the Court here, the proceedings being ex facie regular— Ballantyne v. Barr, supra; Lawrie v. Motherwell, November 22, 1888, 26 S.L.R. 98. The Court in the exercise of its discretion would not recal unless the awarding of the sequestration had caused injustice to someone. Recal would affect not only the rights of the petitioning creditor, but also of the others who had relied on the sequestration granted at his instance. The practice followed here was a prevalent one, and the validity of numerous sequestrations might be affected by recal in this case. Probably there was no more solemn attestation than that contained in a notary's protest, and yet the Court had sustained protests where the procedure set forth in the protest had not really taken place— Macartney v. Hannah, February 11, 1817, Hume, 76.
At advising—
The distinction which has been established in a number of cases that have been referred to at the bar between objections arising ex facie of the proceedings, and objections which require to be established on proof, is now perfectly well settled in practice. In the one case the failure to observe the statute on the face of the proceedings is fatal; in the other case, where the defect in the proceedings or the objection to the proceedings requires to be verified by evidence, it is in the discretion of the Court to say whether they will sustain the objection or no. Now, in the present case it has been established that there was no oath taken at all, but the petitioning creditor, who appears as secretary of the North British and Mercantile Insurance Company, subscribed the paper which is also subscribed by one of Her Majesty's Justices of the Peace for the county of the city of Edinburgh, in which it is set out that the claiming creditor was solemnly sworn and interrogated, and that he deponed to the verity of the debt, and the paper winds up with these words—“All which is truth as the deponent shall answer to God.” Now, it is no longer disputed—it cannot be disputed—that in so far as the paper sets forth that the secretary of this company was put upon oath, and that he deponed to the truth and verity as he should answer to God—so far as these statements are concerned this paper is entirely false, because no oath was administered. The lodging of an oath in a petition for sequestration is by no means a light or unimportant matter in the view of the Bankruptcy Act. There are several sections bearing upon it, as showing very clearly what the purpose and object of requiring the oath is. The 21st section provides that such a petition shall be accompanied by “an oath to the effect hereinafter specified,” and “the effect hereinafter specified” is this, that the deponent shall swear to the verity of the debt claimed by him—that is in the 22nd section—and shall set out the security which he-holds for the debt, if any. Now, it must be kept distinctly in view that this is an
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Now, looking at these provisions in the statute, one cannot fail to see that the Legislature have attached very great importance to the making of this oath, and it cannot in the least derogate from the importance of this oath that by another Act of Parliament it is provided that in certain cases an affirmation may be substituted for an oath in cases of this description, because that statute makes very special provisions as to the conditions on which affirmation shall be allowed to take the place of an oath. The 2nd section of the Statute 28 and 29 Vict. cap. 9, provides that if a person called as a witness, or required or desiring to make an affidavit or deposition in course of civil or criminal proceedings, shall “refuse or be unwilling from alleged conscientious motives to be sworn, it shall be lawful for the court or judge, or other presiding officer or person qualified to take affidavits or depositions, upon being satisfied of the sincerity of such objection, to permit such person, instead of being sworn, to make his or her solemn affirmation or declaration in the words following—‘I do solemnly, sincerely, and truly affirm and declare that the taking of any oath is, according to my religious belief, unlawful, and I do also solemnly, sincerely, and truly affirm and declare,’” and so on, which is the substance of his affidavit. Now, the first observation I make here is that it is not merely the expression of a desire on the part of the person who seeks to affirm in place of swear that entitles him to do so. The judge or judges or magistrate must be satisfied of the sincerity of his objection to take the oath, and the party himself who proposes to make an affirmation instead of an oath must use the very words of the statute. There is no alternative form—nothing in the shape of an affirmation but “the words following” must be used, and among “the words following” are these, “that the taking of any oath is, according to my religious belief, unlawful.” But still further, the next section provides that any false statement made in such an affirmation will subject the party making it to the pains of perjury. Now, if an affirmation of this kind, made under this statute, and with all these conditions and safeguards, had been laid before us, of course we should have sustained it. But what have we got? We have got a paper which is neither an oath nor an affirmation, and which therefore does not bind the conscience of the party, and does not subject him, if false, to the pains of perjury. It is therefore quite impossible to say that this paper can be taken as coming in place of or serving the purpose of an oath as required by the terms of the Bankruptcy Act.
Now, except for one consideration that would be conclusive of the whole matter, but no doubt we have here power to exercise a discretion for the reasons I have already stated, and in the exercising of that discretion we are bound to look at the circumstances of the case. If there had been a sequestration here, the awarding of which had had the effect of reducing undue preferences, or equalising diligences, or creating a right or cutting down a right, or of preferring one or more creditors, that might have been a reason for considering whether it was necessary in the circumstances of the case, for doing justice between the parties, absolutely to recal this sequestration. But in the present case it is not said—and obviously cannot be said—that the awarding of this sequestration, or the first deliverance on the petition, has had any of these effects. There has been no diligence cut down, no undue preference created, no equalising of diligence—nothing in short that yields to any particular creditor a right, or has deprived any particular creditor of a preference, which he would otherwise have had, and therefore I think this case is a very simple case under the Act of Parliament. It is said that in exercising our discretion we should not interfere with the sequestration unless its existence is to work some injustice to some person—in short, unless it is necessary, in order to do justice between the parties in Court, that the sequestration be recalled. I do not think that is the proper view. I think there are many considerations which ought to operate with us in exercising this discretion, and one of those which operates chiefly on my mind in the present case is this, that the recalling of this sequestration will be a most excellent example, and that if we were in the circumstances of this case to refuse to recal it that would be pessimi exempli, and would tend to perpetuate a practice which is utterly illegal, and I think is also immoral. Therefore I am for recalling the sequestration.
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Accordingly, I think the question here is, whether in the discretion of the Court this sequestration ought or ought not to be recalled? It is a sequestration in which everything would appear to a third party to be ex facie regular. Now, in that aspect of the case, if it had appeared, now that we have the sederunt-book and the whole proceedings, that the recal of the sequestration would be a serious injury to the creditors generally, because it would leave or make preferences granted by the bankrupt unchallengeable which might otherwise have been set aside, I should have had the utmost difficulty in saying that the sequestration should be recalled. As was pointed out in the case of Motherwell v. Lawrie, section 42 of the Bankruptcy Act contains this important provision—“In all questions under this Act or preceding Acts regarding sequestration of the estates of debtors, the sequestration shall be held to commence and take effect on and from the date of the first deliverance on any petition for sequestration, which shall be held to be the date of the sequestration, although the sequestration be not actually awarded until a later date;” and again, under the title of “effect of sequestration on ranking of creditors,” there are very important provisions in sections 107 to 111, both inclusive, of the statute which all take effect from the time when the first deliverance in the sequestration is granted. One of these is to the effect that the order shall operate as “a decree of adjudication of the heritable estates of the bankrupt for payment of the whole debts of the bankrupt, principal and interest.” The second is that sequestration “shall be equivalent to an arrestment in execution and decree of forthcoming, and to an executed or completed poinding.” There is an interruption of prescription by section 109, and cutting down of preferences by sections 110 and 111 of the statute.
Now, if the case had presented this aspect—that there were creditors here ranking who had relied on the sequestration in ignorance of the fact that the alleged deponent, the petitioning creditor, had not taken an oath, as he ought to have done, and their interests had therefore been prejudiced, because they had been induced to rest satisfied with this sequestration, and so had not taken proceedings themselves—then I should have said that in its discretion the Court ought not to recal the sequestration.
But in the cirumstances I entirely concur with your Lordship. I am of this opinion because the question is now one entirely between the bankrupt and the petitioning creditor. The bankrupt maintains that this creditor who seeks to maintain the sequestration is not in a position to do so, and neither the trustee nor any other creditor has resisted the recal. Your Lordship has gone fully into the provisions of the statute in regard to the necessity for an affidavit. Nothing could be more express than the enactment of section 22, which refers back to section 21 — requiring that there shall be an oath taken—and that such oath shall be taken before the judge ordinary, magistrate, or justice of the peace. That is because these are the only parties who are in use or are entitled to administer oaths. The purpose for which the party goes before the judge ordinary, magistrate, or justice of the peace is, that he shall take an oath as the statute requires. Then, as your Lordship has pointed out, both under a declaration in terms of provisions of the Act 28 and 29 Vict. cap. 9, and under an oath duly made, a person who has made any false statement is, in the first place, liable to prosecution for perjury, and in the next place, is liable to forfeiture of his claim on the estate. These are circumstances showing the importance of the oath to be administered, but we do not require these circumstances, for section 21 makes it clear that an oath must be administered.
We have had previous cases of this kind. There was one in which in a competition for a trusteeship one of the parties stated that all the oaths on the other side were open to objection on this ground ( Wyllie v. Kyd, 11 R. 968). I confess I was impressed with the conviction that the averment could only be stated to delay the case, or at least as a mere haphazard statement. I could not have believed that such an intolerable practice as appears from this proof could have existed. There is this to be said for the person appearing before the Justice on this occasion, that apparently business men had got lulled into the view that they may call a thing an oath which is not an oath, and I concur in thinking that the sooner business men are taught that this is an unsound view the better, and that we should recal this sequestration, if for no other reason with the view of marking decisively the
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I should like to add that I put my judgment on the general question, and not on the specialities of this sequestration. There may be little, if any, estate for division amongst unsecured creditors, but I can understand that the heritable creditors may find the sequestration valuable in enabling them to give a title. In cases of sale it is notorious that a title by the trustee in a sequestration is a valuable title, for it is generally free from exception, and I can understand why creditors should resort to sequestration in order to be able to give such a title. But if they do so they must comply with the provisions of the statute, which in this case I am satisfied has not been done.
The Court recalled the sequestration.
Counsel for the Petitioner— Watt. Agent— William Officer, S.S.C.
Connsel for the Respondents— Balfour, Q.C.— Low— Maconochie. Agents— J. & F. Anderson, W.S.