Scottish Court of Session Decisions

The Bankruptcy (Scotland) Act 1856 (19 and 20 Vict. c. 79), section 26, enacts—“When a petition for sequestration is presented without the consent of the debtor … the Lord Ordinary or Sheriff to whom it is presented shall grant warrant to cite the debtor … to appear within a specified period, if he be within Scotland, by delivering to him personally, or by leaving at his dwelling-house or place of business, or the dwelling-house or place of business last occupied by him, a copy of the petition and warrant, and if the debtor or his successor be furth of Scotland, to cite him to appear within a specified period by leaving such copy at the Office of Edictal Citations, at the dwelling-house or place of business last occupied by him … to show cause why sequestration should not be awarded; and the Lord Ordinary or the Sheriff shall, if desired, grant diligence to recover evidence of the notour bankruptcy or other facts necessary to be established.”

On September 9, 1904, Miss Isabella Train, residing at Wesley Cottage, Eskbank, presented a petition for sequestration against William Charles Steven, C.A., Edinburgh.

The petitioner stated that she was a creditor of Steven to the extent of £61, 13s. 10d.,

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conform to the state of debt and vouchers produced; that Steven was on 16th August 1904 made, and still was, notour bankrupt, conform to decrees dated 17th May and 11th June 1904 and execution of charge dated 1st August 1904; that he had within a year previous to the petition resided in and had a place of business in Scotland; and that his estates were liable to be sequestrated in terms of the Bankruptcy (Scotland) Act 1856 and Acts amending the same.

The circumstances in which the petition was presented were stated by the respondent in a minute which he lodged pendente processu to be as follows:—By decree dated 11th June 1904 pronounced in another process the respondent had been decerned to pay £59, 7s. 4d. of expenses to A. W. Gordon, solicitor, as agent-disburser for a compearer, and on 1st August he (Steven) was charged at Mr Gordon's instance to pay him that amount with £1, 12s. as dues of extract. On 13th June and 13th August, before the sum in the decree had been paid, arrestments were lodged in the respondent's hands for £12 and £60 respectively by two creditors of Mr Gordon. On 15th August the respondent was requested by Mr Gordon to pay the said sums of £59, 7s. 4d. and £1, 12s. to the petitioner. On 30th August the respondent raised in the Sheriff Court at Edinburgh an action of multiple-poinding calling the arresters, the petitioner, and A. W. Gordon, the fund in medio being the sum in the decree. On 7th September the respondent lodged in the Bill Chamber a note of suspension against Mr Gordon for suspension of the said charge, and whole grounds and warrants thereof, in respect of the double distress created by the arrestments and also in respect of the action of multiplepoinding. On 9th September the present petition was presented by Miss Train, to whom on 11th August the said decree had been assigned by Mr Gordon.

The prayer of the petition craved the usual warrant to cite the respondent, and the usual order directing notice of the warrant and diet of appearance to be made in the Edinburgh Gazette, &c.

Caveats having been lodged in the Bill Chamber, the Lord Ordinary officiating on the Bills ( Stormonth Darling) heard parties both in the sequestration process and in the suspension, and on 9th September pronounced this interlocutor—“The Lord Ordinary having heard parties on the caveat, in respect the voucher produced with the petition is under suspension, dismisses the petition.”

The petitioner reclaimed.

In his minute the respondent averred—“The sum stated in the petition as £61, 13s. 10d. is incorrect.… The respondent is perfectly solvent and is prepared to pay the amount in the decree to the person or persons having just right thereto. Ex facie of the taxed account on which the decree proceeded, £25, 4s. or twenty-four guineas thereof consists of counsel's fees, besides £2, 10s. of their clerks' fees, which the respondent avers have not been paid to counsel or their clerks by Mr Gordon, and the decree for which is not assignable by Mr Gordon, he being personally bound to account to counsel and their clerks therefor when recovered. That these fees have not been paid has been admitted by Mr Gordon. The petitioner did not give any consideration for the assignation of said fees to her, the consideration set forth in her assignation being only £25. The petitioner is thus not a creditor of the respondent, whose debt amounts to not less than £50, as required by section 14 of the Bankruptcy (Scotland) Act 1856. The petition is therefore incompetent.” He further averred—“He is willing and hereby offers to consign said amount in the present process if your Lordships should be of opinion that such consignation can be competently and appropriately made, and is necessary for the affirmance of the interlocutor reclaimed against.”

Argued for the petitioner and reclaimer—The usual first order ought to have been pronounced. The statute was peremptory, and warrant to cite ought to have been granted— Hope v. Macdougall, November 7, 1893, 21 R. 49, 31 S.L.R., 47.

Argued for the respondent—No proper voucher, as required by section 21 of the Bankruptcy (Scotland) Act 1856, had been produced, as the decree was under suspension. Further, the sum in the decree had been claimed by several parties and was the subject of a multiplepoinding. [ Lord Kinnear—Section 26 is the section that deals with procedure, not 21]. The debt was below the statutory value, for it partly consisted of counsel's fees, and these were not assignable. [ Lord President—But the assignation is ex facie valid]. To constitute notour bankruptcy there must be concurrence of an expired charge and insolvency—section 6 of the Debtors (Scotland) Act 1880—and the respondent was perfectly solvent. [ Lord Kinnear—That is just the same question in another form; the point is, what is the proper time to prove all that?] There had been satisfaction of the debt by consignation—section 30 of the Bankruptcy Act 1856—and the petition should therefore be dismissed—Goudy on Bankruptcy (3rd ed.), p. 154; Alexander v. Barclay, January 14, 1845, 7 D. 264. [ Lord Kinnear—Any discretion which existed under the Act of 1839 was put an end to by the Act of 1856.]