Scottish Court of Session Decisions

The late Mr John Elder, S.S.C., was trustee on the sequestrated estate of Henri Marie Louis Pompe, 13 Royston Terrace. The sequestration had been awarded by the Sheriff of the Lothians and Peebles at Edinburgh. Mr Elder was elected trustee on the sequestrated estate on January 18, 1893. His election was confirmed by the Sheriff on January 25, 1893. Mr Elder lodged a bond of caution, and proceeded to realise and distribute the estate. On February 9, 1900, a first and final dividend was paid to the creditors whose claims had been duly lodged and admitted.

On May 24, 1901, Mr Elder died undischarged as trustee. Mrs Annie Hurst Whyte or Elder and others, the testamentary trustees of the deceased John Elder, presented a petition to the First Division of the Court praying for their exoneration and discharge as the trustees and representatives of the deceased John Elder of his whole intromissions as trustee, for warrant for delivery of his bond of caution, and for an appointment that the expenses of the petition should be paid out of the sequestrated estate.

The petition, besides narrating the facts above set forth, stated that a meeting of creditors of the sequestrated estate, on

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September 8, 1902, approved of the intention intimated to it by the petitioners to make an application to the Court for their discharge and to have the expenses of the application paid out of the remaining funds of the estate in their hands.

The petition further stated, inter alia, as follows—“No trustee has been appointed in room and place of the said deceased John Elder. The Bankruptcy (Scotland) Act 1856 contains no provisions as to the mode in which the representatives of a trustee dying undischarged after a final division of the sequestrated estates, or otherwise, shall apply for discharge of the intromissions of the deceased trustee; and the said statute contains no provision authorising either the Lord Ordinary or the Sheriff to grant such discharge or warrant for delivery of the deceased's bond of caution to his representatives. The petitioners are thus under the necessity of making the present application to your Lordships.”

The Court having remitted to the Accountant of Court to report on the intromissions of John Elder as trustee in the sequestration, the Accountant, after stating that the accounts showed an unapplied balance of £24, 1s. 8d., which fell to be consigned, stated as follows—“The Accountant is aware of only two applications to your Lordships under similar circumstances ( Brown's Trustees, 1864, 3 Macph. 56; MacEwan's Trustees, 1872, 9 S.L.R. 568). The procedure is expensive, and might entail considerable hardship on the deceased trustee's representatives where the estate was entirely exhausted or where the usual cost of discharge (£5, 5s.) had only been retained. For the last twenty years a more liberal interpretation of section 152 of the Bankruptcy (Scotland) Act 1856 has prevailed, and in numerous cases before the Lord Ordinary and in the Sheriff Court the trustees' representatives have been allowed to take the proceedings directed by that section to be taken by the trustee, and have called meetings and got their discharge in ordinary form. This was pointed out to the petitioners, but though they went the length of calling and holding the final meeting of creditors they have thought it necessary to present the present petition. The Accountant would humbly suggest to your Lordships that on consignation of the unapplied balance of funds the petitioners may be exonered and discharged and the bond of caution directed to be delivered up, and that the expenses of this application may be authorised to be paid out of the funds of the estate, but that only to the extent of £5, 5s., the amount required for a discharge in ordinary form.”

Argued for the petitioners—Section 152 of the Bankruptcy Act contained no provisions authorising the Lord Ordinary on the bills or the Sheriff to grant discharge of the intromissions of a trustee dying during the dependence of the sequestration. In any view the cases of Brown's Trustees, November 17, 1864, 3 Macph. 56, and M'Ewan's Trustees, June 28, 1872, 9 S.L.R. 568, showed that the procedure by petition to the Inner House was competent, and the procedure being competent full expenses should be allowed out of the estate.

The Court granted the prayer of the petition, but in respect that the petitioners in presenting this petition, instead of following the usual practice of proceeding under section 152 of the Bankruptcy Act 1856, had adopted an unnecessarily expensive procedure, authorised the expenses of the application to be paid out of the funds of the estate only to the extent of £5, 5s.

The Court pronounced this interlocutor:—

“Approve of said report, and on consignation by the petitioners of the unapplied balance of funds exoner and discharge them as the trustees and representatives of the deceased John Elder, S.S.C., and all others his heirs and representatives whomsoever, of the whole intromissions and management as trustee mentioned in the petition: Grant warrant to and authorise the Sheriff-Clerk of the county of Edinburgh, or other custodier of the deceased's bond of caution, to deliver up the same to the petitioners as trustees and representatives foresaid, and decern: Find the petitioners entitled to expenses, modifying the amount thereof to £5, 5s., and ordain the same to be paid out of the funds belonging to the sequestrated estate.”