Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Johnstone v. Henderson [1906] ScotLR 43_486 (15 March 1906)
URL: http://www.bailii.org/scot/cases/ScotCS/1906/43SLR0486.html
Cite as: [1906] ScotLR 43_486, [1906] SLR 43_486

[New search] [Printable PDF version] [Help]

SCOTTISH_SLR_Court_of_Session

Page: 486↓

Court of Session Inner House First Division.

Thursday, March 15 1906.

[ Lord Ardwall, Ordinary.

43 SLR 486

Johnstone

v.

Henderson.

Subject_1Process
Subject_2Caution for Expenses
Subject_3Reclaiming Defender
Subject_4Trust Deed for Behoof of Creditors Granted after Reclaiming.
Facts:

A defender in an action reclaimed and subsequently executed a trust deed for behoof of creditors. On the trustee's refusal to sist himself in the action, the pursuer, in a note, craved the Court to ordain the reclaimer to find caution for expenses. The Court refused the prayer of the note.

Headnote:

On 17th May 1905 Alfred Johnstone, stockbroker, 10 St Andrew Square, Edinburgh, raised an action against William Henderson, 12 Affleck Street, Aberdeen, to recover a sum of £499, 2s. 5d., which he averred and pleaded was the balance due to him on the purchase and sale of certain stocks which he had carried through for the defender. By interlocutor dated 1st December 1905 the Lord Ordinary ( Ardwall) granted decree in favour of the pursuer for the sum sued for with interest and expenses. Against this judgment the defender reclaimed on 15th December 1905, and on 29th December he granted a trust deed for behoof of creditors. On 30th January 1906 the trustee intimated to the respondent's agents that he would not proceed with the reclaiming note nor sist himself as a party thereto.

The respondent presented a note asking the Court to ordain the reclaimer to find caution for expenses.

In the Single Bills the reclaimer argued—The general rule was that a defender was not bound to find caution— Weir v.Buchanan, October 18, 1876, 4 R. 8, 14 S.L.R. 18; Buchanan v. Stevenson, December 7, 1880, 8 R. 220, 18 S.L.R. 132—although it might be more stringent when the defender was in reality insolvent as he was not in the present case— Stevenson v. Lee, June 4,1886, 13 R. 913, 23 S.L.R. 649. But even in the case of an insolvent defender caution was not invariably required— Taylor v. Fairlie's Trustees, March 1, 1833, 6 W. and S. 301—but the matter was one of circumstances. Here the pursuer was the only non-acceding creditor, and the decree reclaimed against had been greatly instrumental in bringing about the defender's financial difficulties; caution should not be ordered.

Argued for the respondent—The whole matter lay in the discretion of the Court. In the present case the reclaimer was practically bankrupt, and in spite of inhibition had disponed to a trustee who refused to sist himself in the action. The respondent's position was not that merely of a pursuer as he was in possession of a judgment. The reclaimer should find caution.

At advising—

Judgment:

Lord President—In this case a motion has been made that the defender should be ordained to find caution as a condition of being allowed to proceed with his reclaiming note. The only reason that was given for the motion being granted was that the judgment in the Outer House was against the defender, and that the defender had executed a trust deed in favour of his creditors. I have looked into the authorities, and it is not easy to extract from them any rule other than the general doctrine that in a case of insolvency a pursuer is usually bound to find caution but a defender is not. There may, of course, be special circumstances, but in this case there are no special circumstances. The defender has been found to be wrong by the Lord Ordinary. He has taken a reclaiming note, which is his right. To compel the defender to find caution would in effect be to force him to acquiesce in the judgment against him. I do not think that we can grant this motion unless your Lordships are prepared to go the whole length of saying that wherever a defender has granted a trust deed for creditors he must as a general rule be ordained to find caution. That does not seem to me to be an expedient general rule. There are obvious distinctions between the position of a person who has been sequestrated and the position of a person who has granted a trust deed. Accordingly, there being no special circumstances brought to our knowledge, I think the reclaiming note ought to be allowed to proceed in the ordinary manner.

Lord Kinnear—I agree. I would only say in addition that it would, in my opinion, require a very exceptional ground to justify an order upon a defender to find caution merely because he has granted a private trust deed for creditors. I know of no authority for so restricting the right of defence. The distinction between an insolvent who has become bankrupt and an insolvent who has granted a private trust deed is vital. In the case of a bankrupt his whole estate vests in the trustee to the entire exclusion of the diligence of creditors, and therefore if a contending litigant obtains a decree for expenses he cannot enforce it against his opponent or his estate unless the trustee in bankruptcy has made himself a party to the suit. But in the case of an insolvent who grants a trust deed his property is not protected in any way but is still open to the diligence of any creditor who may not have acceded, and even to the diligence of the creditors who have acceded so long as any other creditor holds out.

We cannot, in my opinion, compel a defender who has not been divested of his estate, however little, to find caution at the instance of the very person who has called him into Court, merely because his circumstances make it doubtful whether he will be able to meet the pursuer's costs if he is unsuccessful. He is still entitled to say that decree shall not pass against him until he has been heard.

Lord M'Laren—and Lord Pearsonconcurred.

The Court refused the note with expenses modified to two guineas.

Counsel:

Counsel for the Reclaimer and Defender— Aitken, K.C.—Wilton. Agents— Mackay & Young, W.S.

Counsel for the Respondent and Pursuer— Morison—Ballingall. Agents— P. Morison & Son, S.S.C.
1906