Scottish Court of Session Decisions

Guy Duke, estate office, Braehead, Kilmarnock, formerly judicial factor and trustee in sequestration on the estate of James Somervell, of Sorn, presented this petition in the Bill Chamber, craving the Court to ordain the respondent Francis More, chartered accountant, Edinburgh, trustee on the said estate, “to account for his intromissions as trustee foresaid with the said balance handed over to him by the petitioner, and to pay to the petitioner the sum of £861, 13s. out of the funds of said sequestrated estate, all in terms of sec. 86 of the Bankruptcy (Scotland) Act 1856.”

The petition set forth, inter alia, as follows:—On November 23, 1900, the petitioner was appointed judicial factor, under sec. 16 of the Bankruptcy (Scotland) Act 1856, upon the estates of James Somervell, Esquire of Sorn, in the county of Ayr, and thereafter he was appointed trustee on the sequestrated estates of the said James Somervell, conform to act and warrant in his favour, dated 6th March 1901. The petitioner resigned the said office of trustee, and his resignation was accepted at a meeting of creditors held on 14th June 1902. At a meeting of creditors held on 25th June 1902, Francis More, chartered accountant, Edinburgh, was elected trustee in room of the petitioner, and his election was thereafter confirmed, conform to act and warrant, dated 30th June 1902. In the course of his managemen t of the said estate the petitioner found it necessary to employ certain law-agents. The business accounts incurred to these law-agents were duly taxed in the presence of the agents of the said Francis More, as against the sequestrated estate, by the Auditor of the Court of Session, conform to reports by him dated 12th February 1903, 27th March 1903, and 4th May 1903. The amount of the taxed accounts incurred up to the date of the petitioner's resignation was £861, 13s. The petitioner duly accounted to the said Francis More, as trustee foresaid, for his whole intromissions, and handed over the whole moneys in his hands, including the amount which had been retained to meet the legal expenses incurred. The petitioner stated that he did so upon the footing that the said Francis More would at once pay these expenses so soon as the accounts thereof had been taxed, but the said Francis More, in spite of repeated application by the petitioner, refused to account to the petitioner for the amount of said legal expenses, and further had stated his intention of using the moneys at present in his hands as trustee on said sequestrated estates in payment of costs of recent litigation incurred by him as trustee foresaid, to the prejudice of the petitioner's right to have said balance handed over by him to the said Francis More applied primarily in payment of the legal expenses incurred by the petitioner.

The respondent lodged answers in which he admitted that the petitioner in the course of his management of the estates employed the law-agents named and that their accounts were taxed on the dates stated. He also stated that objections to their accounts had been lodged in answer to the petitioner's petition for discharge, pending in the Bill Chamber, and that he declined to pay the full amount of the accounts until these objections were disposed of and the approval of the Court obtained to the expenditure objected to. He also admitted that the petitioner handed over to him the whole moneys in his hands at the date of his resignation.

On August 12, 1903, the Lord Ordinary officiating on the Bills ( Pearson) dismissed the petition as irrelevant.

The petitioner reclaimed, and argued—The petitioner was a “party interested,” and the dealings of the respondent with the moneys handed over to him were “intromissions” and acts of “management,” within the meaning of sec. 86 of the Bankruptcy Act 1856. Accordingly the petition was competent— Burt v. Bell, February 3, 1863, 1 Macph. 382, per L. J. C.

Page: 157↓

Inglis, at p. 385; Bell v. Gow, November 28, 1862, 1 Macph. 84; White v. White's Trustee, March 19, 1879, 6 R. 854, per L. P. Inglis, at p. 857. The law-agents' accounts were charges against the sequestrated estate, and the specific act of management complained of by the petitioner was the omission of the respondent to pay these accounts. The petitioner's averments were relevant to base a claim by him that the respondent should account for the specific moneys handed over to him by the petitioner—these moneys being in part earmarked in the hands of the respondent for payment of the law accounts in question.

Argued for the respondent—The petition was incompetent and irrelevant. It was only in respect of a right of relief that the petitioner was entitled to demand payment of this sum, and he had not set forth—as was necessary to base a right of relief—that the sum had been demanded. What the petitioner craved was not merely an account of the moneys handed over by him—over which he had a right of retention while they were in his possession—but payment out of the whole estate, and such a claim could be made good only by ordinary action. The procedure by petition under sec. 86 of the Bankruptcy Act was incompetent, as the purpose of that section was merely to bring under the review of the Court intromissions or acts of management of a trustee which were of the nature of acts of malversation— Henderson v. Henderson's Trustee, November 22, 1882, 10 R. 188, per L. J. C. Moncreiff, at p. 191, 20 S.L.R. 145; M'Adam v. Martin's Trustee, December 18, 1884, 12 R. 358, 22 S.L.R. 235.