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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Lochrie v. M'Gregor. Lochrie Petitioner [1910] ScotLR 41 (09 November 1910)
URL: http://www.bailii.org/scot/cases/ScotCS/1910/48SLR0041.html
Cite as: [1910] SLR 41, [1910] ScotLR 41
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SCOTTISH_SLR_Court_of_Session
Page: 41↓
Court of Session Inner House First Division.
[Sheriff Court at Stirling.
[Lord Ordinary Officiating on the Bills.
v.
Bankruptcy — Sequestration — Sequestration Improperly Refused — Sequestration Awarded on a Later Petition — Recal of Going Sequestration.
Facts:
The Bankruptcy (Scotland) Act 1856 enacts — Section 14—“Petitions for sequestration may be at the instance or with the concurrence of any one creditor whose debt amounts to not less than fifty pounds….” Section 26—“When a petition … is presented … for the sequestration of the estate of a debtor who is dead without the consent of the successor, the Lord Ordinary or Sheriff to whom it is presented shall grant warrant to cite
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… his successor 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 … a copy of the petition and warrant. …” A creditor presented a petition for the sequestration of the estates of a deceased debtor. His petition was in respect that he was a creditor for £55 conform to oath and IOU therewith produced. The copy of the petition served upon the debtor's successor stated the amount of the debt as £45.
Held that the clerical error in the service copy of the petition was not a good ground for refusing to award sequestration.
When a trustee has been appointed in a sequestration and has ingathered the estate, the Court, even though it is of opinion that sequestration has been wrongly refused in an earlier petition, will not recal the sequestration granted in the later petition where no Specific preferences, which would be cut down under the first petition, but would be left standing under the second, are alleged to exist, and where the trustee avers that there are none.
Robert Lochrie, labourer, Kilsyth, appealed against an interlocutor of the Sheriff-Substitute ( Mitchell) at Stirling dismissing his petition for the sequestration of the estates of Duncan M'Gregor deceased.
Robert Lochrie also reclaimed against an interlocutor of the Lord Ordinary officiating on the Bills ( Ardwall), of 1st September 1910, dismissing a petition at his instance for recal of the sequestration of M'Gregor's estates awarded on the subsequent petition of another creditor.
The appeal and the reclaiming note were heard together.
The facts of the two cases are narrated in the opinion ( infra) of the Lord President.
The opinion of the Lord Ordinary appended to his interlocutor of 1st September 1910 was as follows:—
Opinion.—“This petition is presented, not on the ground of any irregularity in the sequestration sought to be recalled, but on the ground that a petition for sequestration had been presented on 14th July 1910 by the petitioner, and that although the Sheriff-Substitute had dismissed the same an appeal had been taken against dismissal, which, if successful, would have the result of permitting the said sequestration to proceed. The only practical ground for recall or sist suggested is “That the petitioner believes that there are preferences granted by the deceased Duncan M'Gregor, and that the purpose of the second petition was to obtain an award of sequestration dated more than seven months after the death of the said Duncan M'Gregor and thus deprive the general body of creditors of the benefit of section 110 of the Bankruptcy (Scotland) Act 1856, and it is of the utmost importance that the date of the deliverance first granted should be held to rule the proceedings.
But counsel for the petitioner could not specify any preferences, and the respondent's agent put in a letter from the trustee in which he denies that there are any such preferences. In these circumstances, and on the authority of the decision in Tennent v. Martin & Dunlop, 6 R. 786, I am of opinion that the petition ought to be dismissed.
I would strongly impress on the petitioner's advisers the propriety of considering most carefully whether, if there are no preferences, they ought to incur expense by proceeding with the appeal, and if successful therein again petitioning for recal of the present sequestration, a proceeding which, unless they could aver preferences, would probably follow the fate of the petition for recal in the case I have quoted.”
Argued for the appellant and the reclaimer—The Sheriff should not have dismissed the original petition. The Court should either conjoin the petitions, though there was some doubt whether that could be competently done— Love v. Anderson, July 4, 1846, 8 D. 1016; Goudy on Bankruptcy (3rd ed.), p. 141—or remit to the Sheriff to award sequestration and recal the Lord Ordinary's interlocutor— Blair & Co., Ltd. v. Mackenzie, April 7, 1899, 1 F. 854. 36 S.L.R. 638; Jarvie v. Robertson, November 25, 1865, 4 Macph. 79; Kellock v. Anderson, December 14, 1875, 3 R. 239, 13 S.L.R. 161. Reference was also made to sections 14, 26, 32, and 110 of the Bankruptcy (Scotland) Act 1856.
Argued for the respondent—The Sheriff was right in dismissing the original petition, but even assuming he was wrong the Court ought not to recal a going sequestration where no real benefit would accrue to the creditors. Reference was made to Fleming v. Yeaman, 21 S.L.R. 164; Simpson v. Myles, November 8, 1881, 9 R. 104, 19 S.L.R. 64, and Fletcher v. Anderson, March 20, 1883, 10 R. 835, 20 S.L.R. 564; Tennent v. Martin & Dunlop, March 6, 1879, 6 R. 786, 16 S.L.R. 441.
At advising—
The appellant in an appeal from the Sheriff Court of Stirling, one Robert Lochrie, presented a petition in that Sheriff Court for the sequestration of the estates of a certain Duncan M'Gregor, grocer in Kilsyth, deceased. His petition was in respect that he was a creditor for £55, conform to oath and IOU therewith produced. As the petition was for the sequestration of the estate of a deceased debtor, and was not presented with the concurrence of the representatives of the deceased debtor, it was necessary, in terms of section 26 of the Bankruptcy Act 1856, to cite the successors of the debtor. Accordingly
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I think that interlocutor is clearly wrong. It seems to me quite out of the question to say that because there is a clerical error in the service copy of the petition the whole proceedings are thereby invalidated. Of course unless the debt was for more than £50 the petition was incompetent, but the debt itself was for more than £50, and the oath and voucher were all perfectly right, and the matter was one which could be instantly verified on the compearing objector coming into Court. If the compearing objector had said, “Now I see that the petition is competent, but I have been brought here by the petitioner's mistake,” she would have stated a good ground for claiming the expenses of that appearance, but I cannot see that there was further cause for complaint. She has shown no prejudice except that of having been brought into Court, and that prejudice can be dealt with in awarding expenses. I think the Sheriff in giving effect to her contention has confused the requirements of the citation with those of the petition. He says—“No petition setting forth a sufficient creditor qualification has reached the defender.” The petition has not to reach the defender, it has to remain in Court. What the Sheriff has decided is that a clerical error in the service copy of the petition is enough to vitiate the whole proceedings, and in that I think he is clearly wrong.
If no sequestration had ever been awarded, then the matter would be plain enough; we should remit to the Sheriff to award sequestration. But the matter did not end there, for within two days of the dismissal of that petition the same compearing successor concurred with another creditor in asking for the sequestration which she had formerly opposed. There was no answer to that application; sequestration has been awarded, and the trustee who has been appointed has proceeded to ingather the estate. The gentleman who has been appointed trustee was originally judicial factor on the estate, and has therefore had the administration of the estate for about a year, since Mr M'Gregor's death. Matters being in this position the petitioning creditor in the original petition (the appellant in the case with which I have just dealt) has presented a petition for the recal of the sequestration in order that that sequestration may be got out of the way, and that a deliverance may be pronounced in the appeal in his own petition.
If all your Lordships had to do was to consider the question at issue between the two parties now before us it would no doubt follow that the second sequestration should be recalled, and the appeal in the first case sustained. But it has been laid down and decided again and again by a series of decisions that, although in the first instance in matters of this kind you begin by considering the antagonistic position of the petitioners and respondents, when the question emerges of the actual interests of the general body of creditors this interest is paramount. You must therefore be guided in this matter by the general interest of the creditors. Now in a small estate of this kind—it is said that the assets are only about £180 — it is obviously vital that no more should be spent on litigation than is absolutely necessary, and it would therefore seem prima facie to be useless to cut down this sequestration that has gone so far, the trustee who has been appointed having ingathered the estate, and to begin all over again. We should only do that if it were shown to be to the general advantage of the creditors. Now the only advantage to the general creditors is said to be in this, that the first petition was presented within seven months of the death of Mr M'Gregor, the second after that date, and consequently certain preferences which, under section 110 of the Bankruptcy Act, were cut down under the first sequestration would be available under the second. That would be sufficient ground for recalling the second sequestration if it could be shown that there are any such preferences. But we have not been told that there are any such, and there is in process a letter from the trustee in which he says that he has not been able to discover that any such exist. In these circumstances I think that it would be going too far to cut down this sequestration and to alter its date because certain preferences might emerge.
On the whole matter I think we should recal the interlocutor of the Sheriff-Substitute appealed against in so far as it finds the pursuer liable in payment to Miss Jeanie M'Gregor of 30s. of expenses, and instead thereof find the said Jeanie M'Gregor liable to the pursuer in 30s. of expenses; quoad ultra adhere to that interlocutor, and find the pursuer entitled to the expenses of the appeal against the said Jeanie M'Gregor.
In the second case we should refuse the reclaiming note and find neither party liable in or entitled to expenses.
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But within a few days after the Sheriff had dismissed the petition the daughter of the deceased man whose estates had been sought to be sequestrated, although she had appeared and opposed the original petition, concurred in a new petition for sequestration brought by another oreditor, and on that petition sequestration was awarded.
The logical course would have the effect of sweeping away as ill-founded all the proceedings which have followed upon the award of sequestration in the later petition.
But following upon the second petition a trustee was appointed who had already been for some time in the saddle as judicial factor, and he has been in administration and has ingathered the estate. To set aside all that procedure and to start a new sequestration would expose the insolvent estate to unnecessary expense and inconvenience.
There would have been strong grounds for following that course if we had seen reason to suppose that proceedings under the second petition for sequestration instead of under the first would leave the estate open to the preferences of particular creditors which would be cut down under the first but left standing by the second.
There are two different principles running through the cases cited. In the first place, the Court says it cannot assume that the date of sequestration is of no importance, for even in the ordinary case it is of importance that preferences should be cut down from the earliest possible date, while in such cases as the present, where the sequestration is that of a deceased debtor the importance is greater, for it is only within seven months of the deceased's death that preferences can be cut down at all.
The other principle upon which the Court has acted is that where there is no reasonable apprehension of creditors getting preferences to which they are not entitled, the Court ought not to interfere with a going sequestration.
In the present case I think that the balance between the two principles is turned by the statement of the trustee that there are no such preferences, and as he has informed the Lord Ordinary officiating on the Bills that there is no risk of preferences, I think it is right that we should take the most convenient and least expensive course—that is, should recal the Sheriff's interlocutor to the extent indicated by your Lordship and adhere to that of the Lord Ordinary.
The Court recalled the interlocutor of the Sheriff-Substitute dated 27th July 1910 in so far as it found the pursuer liable in payment to the defender Jeanie M'Gregor in thirty shillings of expenses, and in lieu thereof found the said defender Jeanie M'Gregor liable to the pursuer in thirty shillings of expenses; quoad ultra affirmed said interlocutor, and decerned; found the pursuer entitled to the expenses of the appeal against the said defender.
The Court adhered to the interlocutor of Lord Ardwall dated 1st September 1910, and refused the reclaiming note.
Counsel for Robert Lochrie (Appellant and Reclaimer)— Blackburn, K.C.— J. A. Christie. Agent— E. Rolland M'Nab, S.S.C.
Counsel for Jeanie M'Gregor (Respondent)— Lyon Mackenzie. Agent— Norman Macpherson, S.S.C.