Scottish Court of Session Decisions

In August 1899 John Wilson, C.A., Glasgow, was appointed trustee on the estate of James Colquhoun, writer, Glasgow, who was sequestrated on 31st July 1899. He had previously been employed by certain creditors to make an examination of the affairs of Colquhoun's firm.

In January 1900 Wilson, as trustee, raised an action in the Court of Session against Daniel Macaulay Stevenson, merchant, Glasgow, concluding for reduction of a transfer of certain shares in a company known as J. M. Smith, Limited, bearing to be granted by Colquhoun's wife and daughter in favour of Stevenson. In this action Wilson averred that the shares in question, although in the name of Mrs and Miss Colquhoun, were really the property of James Colquhoun the bankrupt. He also averred as follows:—“The said transfer in favour of the defender Daniel Macaulay Stevenson was made over and delivered voluntarily in security of prior debt and within sixty days of the bankruptcy of the said James Colquhoun. Moreover, at the date of said transfer the said James Colquhoun was insolvent, and was known by the defender Daniel Macaulay Stevenson to be insolvent. The said transfer was obtained by him for the purpose of obtaining security for the advances made by him, and so securing a preference over the other creditors of the said James Colquhoun. The said transfer was an attempt to constitute a fraudulent and illegal preference in favour of the said Daniel Macaulay Stevenson.” “Moreover, the said transfer is not signed by Mrs Colquhoun and her daughter. Both of their signatures, or at all events that of the said Jessie Macdonald Colquhoun, are false and fabricated, and were not made or adhibited by them. The pursuer believes and avers that the signatures in question were written or fabricated by the bankrupt James Colquhoun, or by some one acting in concert with him. Or otherwise, if the signatures are genuine, they were adhibited after 1st June 1899, the pretended date of said transfer.”

The third plea-in-law was as follows:—“The said transfer having been obtained by the said Daniel Macaulay Stevenson in the knowledge of the said James Colquhoun's insolvency and for the purpose of securing an illegal or fraudulent preference over the other creditors of the said James Colquhoun, the pursuer is entitled to decree in terms of the second conclusion of the summons.”

In this action of reduction, after a proof, the defender was assoilzied.

Thereafter Stevenson brought the present action against Wilson concluding for £1000 damages for slander alleged to have been contained in the record in the action of reduction. In this action, after quoting the passage from the record and the plea-in-law above quoted, the pursuer made the

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following averments:—“Said statements are of and concerning the pursuer, and are false and calumnious. They were intended by defender to represent, and did represent, that the pursuer was a dishonest person, that in stating that the transfers were delivered to him duly signed on 1st June 1899 the pursuer had deliberately stated what was untrue, that he conspired with the said James Colquhoun to defraud the latter's unsecured creditors, that he was guilty of forgery or connivance at forgery, that he had uttered or connived at the uttering of forged documents, and that he had knowingly made use of a document which he knew to be false.” “In making said statements of and concerning the pursuer the defender had no reasonable or probable cause for believing them to be true; on the contrary, he well knew them to be false, and the said statements were made by him maliciously and for the purpose of intimidating the pursuer (who is a prominent citizen and a magistrate and councillor of the city of Glasgow, and naturally reluctant to see such charges, however unfounded, appearing against him in the public prints, especially when made by a professional accountant on his responsibility as a trustee in a notorious bankruptcy), and compelling him to relinquish said shares and rank as an ordinary creditor on the estate of James Colquhoun. The defender some months before the action was raised had satisfied himself by inquiry that the pursuer had actually advanced to the said James Colquhoun said sums of £3000 and £1200 on the dates mentioned against said transfers, and also that said transfers were not an attempt to constitute a fraudulent and illegal preference in favour of the pursuer. The defender had also satisfied himself that immediately prior to 1st June 1899 the said James Colquhoun was not indebted to the pursuer in any sum. The pursuer had on 1st August a meeting with the defender at the defender's own request, when he gave him full particulars of the advances, and on the same date he wrote a letter to the defender, also at the defender's request, confirming these particulars in the following terms:—‘1st August 1899.—Dear Sir— Colquhoun—Referring to the conversation I have just had with you (5.30 P.M.), the exact dates of the advances are June 1st £3000, June 26th £1200. On the former date Dr Colquhoun called here and asked the loan of £3000, tendering in security the “ Evening News” shares, and promising to repay the money within a month or two and in no case later than the beginning of September. The loan on 26th was given on his assurance that it would be repaid within three days. He gave me a cheque for the amount, but asked on the 29th that it be not presented until he saw me. On the 30th he telephoned to me that he had not been able to call, but would do so shortly, and meantime not to cash the cheque. He never called.—Yours truly,’ (Signed) ‘ D. M. Stevenson.’ The defender had also before raising said action made an examination of the said James Colquhoun's books and bankaccounts, and had satisfied himself that the statements complained of were false.” “The proof in said action of reduction was set down for 17th December 1901, and before that date the pursuer, through his agents, approached the defender and requested him to withdraw the statements complained of, as he had no evidence to lead in support of them. The defender, in pursuance of his scheme of intimidation already referred to, declined to accede to that request, and the case accordingly went to proof on the whole of the defender's averments. Having failed, however, in his object to intimidate the pursuer as aforesaid, and knowing that he had no evidence whatever to lead in support of his charges against the pursuer, the defender at the proof abandoned that part of his case.”

In his defence Wilson pleaded—“The statements complained of being made by a party litigant without malice and on probable cause, and being relevant to the cause, the defender is entitled to absolvitor.”

On 5th July 1902 the Lord Ordinary ( kincairney) pronounced the following interlocutor:—“Finds that the averments made in the action referred to in the summons were pertinent to the questions raised in that action, and were therefore privileged: Finds that there are no relevant averments of malice on the part of defender in making the said averments: Finds therefore that the averments of the pursuer are irrelevant to support the conclusions of the action: Therefore disallows the issue proposed by the pursuer, and assoilzies the defender from the conclusions of the summons, and decerns.”

“ Opinion.—This is an action of damages for judicial slander, brought by D. M. Stevenson, merchant, Glasgow, against John Wilson, C.A. The slander is said to have been uttered in an action by Mr Wilson, as trustee on the sequestrated estate of John Colquhoun, against, inter alios, the present pursuer D. M. Stevenson. That action concluded for reduction of a transfer of certain shares bearing to be dated 1st June 1899, and bearing to be granted by the wife and daughter of James Colquhoun in favour of Mr Stevenson. It was averred in that action that these shares, although in the name of Mrs and Miss Colquhoun, were really the property of James Colquhoun, and it was averred that the transfer in favour of Mr Stevenson was delivered to him ‘voluntarily in security of prior debt, and within sixty days of the bankruptcy of the said James Colquhoun, when he was insolvent and was known by the defender Stevenson to be so. It was averred that ‘the said transfer was obtained by him for the purpose of obtaining security for the advances made by him, and so securing a preference over the other creditors of the said James Colquhoun. The said transfer was an attempt to constitute a fraudulent and illegal preference in favour of the said Daniel Macaulay Stevenson.’

It was further averred that the transfer was not signed by Mrs Colquhoun or her daughter, but that their signatures, or at

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least the signature of Miss Colquhoun, were ‘false and fabricated, and were not made or adhibited by them. The pursuer believes and avers that the signatures in question were written or fabricated by the bankrupt James Colquhoun, or by some one acting in concert with him. Or otherwise, if the signatures are genuine, they were adhibited after 1st June 1899, the pretended date of said transfer.’

In that action the pursuer of it—that is, Mr Wilson the present defender—pleaded, ‘The said transfer having been obtained by the said Daniel Macaulay Stevenson in the knowledge of the said James Colquhoun's insolvency, and for the purpose of securing an illegal or fraudulent preference over the other creditors of the saidJames Colquhoun, the pursuer is entitled to decree in terms of the second conclusion of the summons.’

The transfer in question bore date 1st June, and Colquhoun's estates were sequestrated on 31st July following. The present pursuer Stevenson lodged defences in the action, and a proof was led. I do not know whether any question was raised as to the computation of the sixty days before bankruptcy, but in any case the defence was successful, Mr Stevenson was assoilzied, and I suppose his character was cleared from all the imputations made against him in that action. He has, however, raised the present action of damages, and has been allowed to lodge issues, which allowance, however, leaves open to the defender his plea that the action is irrelevant.

The issue lodged by the pursuer is whether the statements which have been quoted above were made concerning him, and were false, calumnious, and malicious.

The pursuer has not suggested any innuendo, but has merely quoted the record.

The defender has maintained that the action is irrelevant, and that no issue can be allowed.

He maintained that the record contained nothing defamatory of the pursuer. I understood him to maintain that the averment in the first passage quoted, that the transfer was an attempt to constitute a fraudulent and illegal preference in favour of the pursuer, and that the language of the plea-in-law, quoted in the record, imputed no blame or dishonesty to the pursuer, but truly imported nothing except that he had brought himself within the scope of the Act 1696, and that the words used were words of style, not words charging dishonesty or fault. I do not concur in that view, and think that this part of the record clearly and unambiguously imputed dishonesty to the pursuer, and would have been actionable had the defender not been in a position of privilege.

With regard to the allegation of forgery, the defender maintained that it was not directed against Stevenson at all but only against Colquhoun, and that it is quite impossible to read the words as conveying any charge of that kind against Stevenson. I agree in that, and would in any view disallow this branch of the issue as it is framed, that is, without an innuendo. But in condescendence 7 the statements are innuendoed as representing that the pursuer had conspired with Colquhoun to defraud Colquhoun's unsecured creditors and was guilty of forgery or connivance at forgery, that he had uttered or connived at the uttering of forged documents, and that he had knowingly made use of a document which he knew to be false; and I understood the pursuer's counsel to ask to be allowed to add this innuendo or some such innuendo to his issue, if he could not get an issue without an innuendo. Not without hesitation I have come to think that the words might be stretched to cover this innuendo or some innuendo of a similar kind, and I have no doubt that the words used so innuendoed would undoubtedly be defamatory in an unprivileged cause. In order to add this innuendo, however, it would be necessary to recast the whole issue. But I am unable to assent to the argument for the defender that the record in the action of reduction contained nothing which was defamatory. I am of the contrary opinion.

But the defender had another objection to the issue which is of more importance, and arises from the circumstance that this is a case of judicial slander, and that the defender is in a highly privileged position. His privilege arises not only from the fact that he used the words complained of with the privilege of a litigant, but also that he was in an exceptionally privileged position. Because he was not pleading for himself but for Colquhoun's creditors, and was without any personal interest in the averments which he made and the pleas which he submitted to the Court. In an ordinary action it is the privilege of the litigant to put on record the averments and pleas which he believes to be true and sound and for his advantage, but in an action by a trustee in bankruptcy that is not only his privilege but his duty. Hence I think that the action complained of had as much privilege as any action could have. Further, the peculiar character of the case is not to be overlooked. Colquhoun's bankruptcy was notoriously of a very scandalous and dishonest character, and called for the most stringent, severe, and searching scrutiny by the trustee. In these circumstances, and seeing that no doubt is or could be suggested as to therelevancy and pertinency of the statements complained of as defamatory, there can be no question about the obligation of the pursuer to prove malice, and that obligation has not been disputed, and the pursuer has accordingly put malice in his issue. But the real question in this case is not whether malice must be proved but whether malice is sufficiently averred.

It is, I think, settled in practice that an action of damages for judicial slander is one of these actions in which it is necessary not only to aver malice generally but also to aver the facts and circumstances by which the defender's malice has been evinced and evidenced. The following authorities appear to establish this rule of practice conclusively:— Scott v. Turnbull, July 18, 1884, 11 R. 1129; Gordon v. British

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and Foreign Metaline Company, November 16, 1886, 14 R. 75; Beaton v. Ivory, July 19, 1887, 14 R 1057, per President; Williamson v. Umphray, 17 R. 905, 913; Selbie v. Saint, November 8, 1890, 18 R. 88.

The real and somewhat difficult question in this case is whether the pursuer has averred such facts and circumstances, looking to the peremptory and exigent duty of the trustee in bankruptcy, the character of the bankrupt, and the suspicious nature of the whole circumstances. I am of opinion that the facts averred by the pursuer afford no indication at all of malice in the mind of the defender, and that on that ground, viz., that malice is not relevantly averred, the action must be held to be irrelevant, and the defender must be assoilzied.

Another question was argued, with which, however, I do not require to deal, viz., whether, if an issue had been allowed it would have been proper to put in issue want of probable cause. It is, I think, not usual to insert these words in an action of damages for judicial slander of an ordinary sort. But if the litigant whose language is complained of acts in the fulfilment of a duty as well as in the exercise of a right the point may be a doubtful one, although I do not think it of importance.”

The pursuer reclaimed, and argued—It was not disputed that the pursuer in an action like the present must not only aver malice but set forth circumstances from which it could reasonably be inferred. But it was sufficient to aver that the pursuer had made the statements complained of knowing them to be untrue and from an ulterior motive— Williamson v. Umphray, June 11, 1890, 17 R. 905, 27 S.L.R. 742. That was clearly averred here, the ulterior motive being to induce the pursuer to desist from a just claim.

Argued for the respondent—This was a case of judicial slander, and the defender was therefore entitled to a high decree of privilege. It was not enough for the pursuer merely to say that the defender had no grounds for his statement— Beaton v. Ivory, July 19, 1887, 14 R 1057, 24 S.L.R. 744. That was all that was really averred, because in the circumstances the question at issue in the action of reduction was a question of law, and not of fact. A trustee in bankruptcy, in circumstances like the present, was entitled to attempt to reduce a security obtained within a short time before bankruptcy, even if his own opinion was that it had been granted outside the sixty days' limit.