Scottish Court of Session Decisions

The Bankruptcy Act 1883 (46 and 47 Vict. c. 52) enacts—Section 2—“This Act shall not, except so far as is expressly provided, extend to Scotland or Ireland.”

Section 44—“The property of the bankrupt divisible amongst his creditors, and in this Act referred to as the property of the bankrupt, … shall comprise the following particulars—(1) All such property as may belong to or be vested in the bankrupt at the commencement of the bankruptcy, or may be acquired by or devolve on him before his discharge; and (2) The capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge, except the right of nomination to a vacant ecclesiastical benefice.”

Section 54—“(1) … Immediately on a debtor being adjudged bankrupt the property of the bankrupt shall vest in the trustee.… (4) The certificate of appointment of a trustee shall, for all purposes of any law in force in any part of the British dominions requiring registration, enrolment, or recording of conveyances or assignments of property, be deemed to be a conveyance or assignment of property, and may be registered, enrolled, and recorded accordingly.”

Section 168—“(1) In this Act, unless the context otherwise requires—… ‘Property’ includes money, goods, things in action, land, and every description of property, whether real or personal, and whether situate in England or elsewhere; also obligations, easements, and every description of estate, interest and profit, present or future, vested or contingent, arising out of or incident to property as above defined.”

On 26th October 1910 Frederick Seymour Salaman, chartered accountant, London, the trustee in bankruptcy, conform to Order

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of the High Court of Justice in England, dated 28th June 1910, of William Tod, of Durrant's Hotel, Manchester Square, London, then residing furth of the United Kingdom, as such trustee, pursuer, brought an action of declarator against (1) The said William Tod, and (2) Mrs Jessie Mary Ross, afterwards Tod, now Tattersall, of Littlebrook, Maidenhead, England, formerly widow of David Tod, Kingsburgh, Skye, then wife of Rupert Reeve Tattersall, of Tattersalls, Knightsbridge; and others, the testamentary trustees of the said David Tod, defenders. The conclusions in the action were to have it found and declared that “the whole right, title, and interest, present and future, absolute and contingent, of the defender William Tod in and to the estate and succession of his father the said deceased David Tod, under his said trust-disposition and settlement and codicil or otherwise, has been assigned, conveyed, and transferred to, or is otherwise vested in, the pursuer, as trustee aforesaid.”

The pursuer pleaded—“(1) In respect that by the law of the country in which the defender William Tod has been rendered bankrupt his contingent right and interest in and to the estate of his deceased father has been transferred to and is vested in the pursuer, decree should be granted as concluded for. (2) The contingent right and interest of the bankrupt in his father's estate having been transferred to and vested in the pursuer as trustee by the Bankruptcy Act 1883, the pursuer is entitled to decree as concluded for. (3) Separatim, in respect that by the law of Scotland the contingent right and interest of the bankrupt in his father's estate belongs to his creditors in bankruptcy, the pursuer is entitled to decree as concluded for. (4) The Orders of the High Court of Justice in England founded upon, until the same are reduced or recalled, are binding on the Scottish Courts, and cannot be set aside ope exceptionis. (5) Esto that the High Court of Justice in England had no jurisdiction to pronounce the Orders founded on, it is ultra vires of the Court of Session to deal with the question of the jurisdiction of the said High Court of Justice. (6) In any event, the said Orders are not examinable as regards their merits by the Court of Session. (7) In respect that within three months before the date of presentation of the said petition the defender William Tod ( a) according to the law of England, had committed an act of bankruptcy in England, and ( b) according to said law was at the date of presentation of said petition subject to the jurisdiction of the High Court of Justice in England in bankruptcy, the said Court had jurisdiction to pronounce the said Orders, and the same are valid and binding. (8) In any event, the defenders David Tod's trustees not having shown any title or interest to defend, should be found personally liable for the expenses caused by their appearance.”

The facts are given in the opinion of the Lord Ordinary ( Skerrington) who on 6th April 1911 pronounced an interlocutor repelling the first, second, and third pleas-in-law for the pursuer and dismissing the action.

Opinion.—“The pursuer is an accountant in London, and was on 28th June 1910 appointed trustee in the bankruptcy of the defender William Tod by order of the High Court of Justice in England. Mr Tod, who attained majority on 26th February 1910, will, in the event of his attaining the age of twenty-five years, become entitled to a share of the residue of his late father's estate. The remaining defenders are the trustees under the trust-disposition and settlement of Mr Tod's father. Although they have lodged defences, their counsel explained that they did so because they were not aware whether the principal defender Mr Tod would appear and defend. Their counsel took no active part in the discussion, but watched the case on behalf of his clients.

It is quite clear that the bequest in favour of the defender Mr Tod is so expressed that vesting is postponed until he attains the age of twenty-five. It is not a case of contingent or conditional-vesting, or vesting subject to defeasance, but of no vesting at all. Accordingly, he has nothing more than a spes successionis or protected right of succession. It is trite law in Scotland that such a right cannot be attached by any form of diligence, and does not pass to a trustee in bankruptcy under the vesting clause of the Bankruptcy (Scotland) Act 1856. The pursuer, however, maintains that as a trustee in an English bankruptcy he is in a better position than a Scotch trustee, and he alleges that according to the law of England the bankrupt's contingent interest in the residue of his father's estate was transferred to and vested in him as trustee for his creditors. The pursuer's counsel argued that, according to the principles of private international law as administered in Scotland, it was settled that the law of the forum awarding sequestration is (except in questions relating to real estate) conclusive as to what is included within the judicial transference effected by bankruptcy, and he referred to the leading cases of Goetz v. Aders, &c., November 27, 1874, 2 R. 150, 12 S.L.R. 121; Phosphate Sewage Company v. Lawson & Son's Trustee, July 5, 1878, 5 R. 1125, 15 S.L.R. 666; Obers v. Paton's Trustees, March 17, 1897, 24 R. 719, 34 S.L.R. 538. I can find nothing in these decisions to justify the contention that the trustee in a foreign bankruptcy ought to be recognised as standing in a more favourable position than a Scottish trustee. On the contrary, the observations of Lord Rutherfurd-Clark in the case of Reid v. Morrison, March 10, 1893, 20 R. 510, p. 516, 30 S.L.R. 477, suggest that the Scottish rule of law excluding mere expectancies from attachment for debt is founded on perfectly intelligible reasons of public policy, and ought not to be infringed upon in the absence of some express statutory direction. Accordingly I refused the pursuer's motion for a proof as to the law of England, and if the record had not been amended I should

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have dismissed the action. Before referring to the amendment, I may mention that the defenders' counsel pleaded that the action was incompetent, in respect that the summons was purely declaratory and did not contain any operative conclusion. He did not, however, argue that the question upon which the pursuer desired to obtain a decision was a speculative one, and I am of opinion that the objection is unfounded. He further asked me to disregard the English bankruptcy altogether, and to hold that the pursuer had no title to sue, in respect that the creditor who presented the bankruptcy petition had wrongfully induced the English Court to adjudge his client a bankrupt, although he was neither domiciled in England nor had resided nor carried on business in that country within a year before the presentation of the petition, as required by section 6, (1) ( d) of the Bankruptcy Act 1883 (46 and 47 Vict. c. 32). I am of opinion that it is out of the question to ask me to decide whether an English Court has or has not rightly exercised its powers under an English statute. See Wilkie v. Cook and Cathcart, November 19, 1870, 9 Macph. 168, 8 S.L.R. 349; and Wotherspoon, &c. v. Connolly, February 10, 1871, 9 Macph. 510, 8 S.L.R. 349.

The action as originally laid was founded upon the general principles of private international law as administered in Scotland, and it proceeded upon the assumption that in matters of bankruptcy England must be regarded as a foreign country like France or Germany. Prima facie, however, the rights of an English trustee in bankruptcy depend upon the terms of an Act of Parliament which, to-some extent at least, is binding in Scotland. Accordingly, the pursuer's pleadings were amended so as to found upon certain sections of the Bankruptcy Act 1883 (46 and 47 Vict. c. 32). Section 54 (1) and (2) vests the ‘property’ of the bankrupt in the trustee, and (4) enacts that ‘… [ quotes, v. sup.]…’ Along with this section there must be taken section 168, which defines ‘property’ as including ‘… [ quotes, v. sup.] …’ Section 44 enacts that ‘the property of the bankrupt divisible among his creditors, and in this Act referred to as the property of the bankrupt … shall comprise the following particulars—(1) ‘… [ quotes, v. sup.] …’ By section 2 it is enacted that the statute ‘shall not, except so far is expressly provided, extend to Scotland or Ireland.’ That does not mean that Scotland must be expressly named, although there are certain sections (117 and 118) in which Scotland is so mentioned—see Rattray v. White, March 8, 1842, 4 D. 880; and Callender, Sykes, & Company v. Colonial Secretary of Lagos and Davies, [1891] AC 460. While I see no reason to doubt that the English Bankruptcy Act must receive judicial notice and effect in Scotland, I cannot construe it as vesting in the trustee property which was not vested even contingently in the bankrupt at the date of the bankruptcy, or which was not acquired by him before his discharge. Neither party asked me to invoke the assistance of English lawyers as to the construction of the Act of 1883, and neither party quoted any English decision or text-book which suggested that on this important question there is any difference between the law of the two countries. I accordingly dismiss the action with expenses, but seeing that two sets of defenders appeared, I shall reserve meanwhile the question as to the pursuer's liability for the expense of more than one defence.”

The pursuer reclaimed, and argued—The bequest in favour of Mr Tod was a contingent “incident to property” within the meaning of section 168 of the Bankruptcy Act 1883 (46 and 47 Vict. c. 52). The property which vested in an English trustee in bankruptcy was not necessarily so limited as that which vested in a Scotch trustee — Scottish Provident Institution v. Cohen & Company, November 20, 1888, 16 R. 112, 26 S.L.R. 73. A spes successionis was carried to an English trustee— Galbraith v. Grimshaw, [1910] AC 508; Johnson v. Smiley, May 21, 1853, 17 Beaven 223, per Romilly, M.R., at p. 228; Iligden v. Williamson, 1731, 3 Peere Williams, 132; Davidson v. Chalmers, March 4, 1864, 33 Beaven 653; Robson's Bankruptcy (7th ed.), 479; Williams' Bankruptcy (9th ed.), 215. The Bankruptcy Act 1869 (32 and 33 Vict. c. 71) vested in the trustee property outside England, and section 168 defined property in very general terms, viz., “land, and every description of property whether real or personal”— Callender, Sykes, & Company v. Colonial Secretary of Lagos, [1891] AC 460. The reclaimer also cited Rattray v. White, March 8, 1842, 4 D. 880, and Riley v. Ellis, 1910, 1910 S.C. 934, 47 S.L.R. 788.

Argued for the respondent (defender) — Esto that by English law a trustee in bankruptcy was vested in a spes successionis, nevertheless an English trustee could not make such a claim effective by Scots law. A spes successionis was not property within the meaning of the Bankruptcy (Scotland) Act 1856 (19 and 20 Vict. c. 79) — Reid v. Morrison, March 10, 1893, 20 R. 510, 30 S.L.R. 477. Section 2 of the Bankruptcy Act 1883 (46 and 47 Vict. c. 52) provided that that Act should not, except so far as expressly provided, extend to Scotland. It did not vest in the trustee property which would not vest in a Scotch trustee— Phosphate Sewage Company v. Lawson & Son's Trustee, July 20, 1878, 5 R. 1125, 15 S.L.R. 666, per Lord President; Goetze v. Aders, &c., November 27, 1874, 2 R. 150, 12 S.L.R. 121; Reid v. Morrison ( supra); Hunter & Company v. Palmer & Wilson, February 25, 1825, 3 S. 586, 402 (N.E.); Galbraith v. Grimshaw ( supra); Stocksley v. Parsons, 45 Ch D 51; Baldwin's Bankruptcy (10th ed.), 300.

At advising—