Scottish Court of Session Decisions

Thomas Aitken, notary public, Edinburgh, an undischarged bankrupt, presented a petition to the Court for his discharge and for reinvestment in his estates.

The petition was as follows:—“That on 22nd November 1906 the petitioner's estates were sequestrated by the Lord Ordinary on the Bills on the petition of William Robson, S.S.C., Edinburgh. On 3rd December 1906 the statutory meeting of creditors for the election of a trustee and commissioners was held conform to certified copy of the minutes of said meeting, which is referred to. On 4th December 1906 said proceedings were duly reported to the Sheriff at Edinburgh in terms of the Bankruptcy (Scotland) Act 1856, section 70. That no security or caution for his intromissions has been found by or for any one as trustee in terms of section 72 of the foresaid statute, nor has the election of a trustee ever been confirmed by the Sheriff: in terms of section 73 of said statute. That in fact no step has been taken in the sequestration since the proceedings at the foresaid meeting of creditors were reported by the preses of the meeting to the Sheriff. That if the sequestration proceedings had followed then normal course the petitioner would now have been entitled to apply for and to obtain his discharge, for although he has not paid his creditors 5s. per £1 on the amount of his indebtedness to them he is prepared to satisfy the Court that his failure to do so has arisen from circumstances for which he cannot justly be held responsible, all in terms of the provisions of the foresaid statute and also of the Bankruptcy and Cessio Act 1881, section 6. That owing to the failure to find security for the trustee's intromissions as resolved on at the said meeting of creditors, and to the failure of the creditors to proceed in the sequestration, the petitioner is deprived of his statutory right to apply in ordinary course for his discharge or to take any step at all in the sequestration, and he is therefore obliged to make the present application

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to your Lordships' nobile officium. Before doing so he wrote the creditor on whose petition sequestration was awarded to inquire whether he was prepared to proceed with the sequestration and in answer received the following reply—‘Thomas Aitken, Esq., 8 Cumberland Street. 25 Queen Street, Edinburgh, 10 th June 1918. Dear Sir—We are in receipt of your letter of 7th. As we explained in our letter of 19th May, in our opinion Mr Robson is not in any way responsible for there being no trustee in the sequestration, and we cannot see that there is any obligation upon him to institute proceedings in the matter at his own expense. Yours truly, (Signed) ROBSON & M'LEAN.’ The said letter is referred to. That the petitioner appeared at the foresaid meeting of his creditors held on 3rd December 1906 and delivered to the clerk a state of his affairs, and he has always been ready and willing to perform all the duties and acts incumbent on him in connection with the sequestration so as to entitle him to his discharge in terms of law. The creditors having declined to accept the diligence (in their favour) which the sequestration creates, it has thus practically run its course, and the petitioner in the circumstances respectfully maintains that he is entitled to be discharged, to have the sequestration declared to be at an end, and to be re-invested in his estates. May it therefore please your Lordships to appoint this petition to be intimated on the walls and in the minute book in common form, and, together with the deliverance hereon, to be served upon the said William Robson, and to allow him to lodge answers, if so advised, within eight days; and also to order a notice of the presentation of this petition to be published in the Edinburgh Gazette requiring all concerned to lodge answers, if so advised, within eight days after such publication; and thereafter, upon resuming consideration of this petition, with or without answers, to find the petitioner entitled to his discharge, and to discharge him accordingly of all debts and obligations contracted by him or for which he was liable at the date of the sequestration of his estates, to declare the said sequestration to be at an end, and to declare the petitioner re-invested in his estates; further, to grant warrant for recording the said deliverance in the Register of Sequestrations and in the Register of Inhibitions; or to do further or otherwise in the premises as to your Lordships shall seem proper.”

The Court appointed intimation and service as craved, and also service “upon the other creditors of the petitioner present or represented at the general meeting of the petitioner's creditors held on 3rd December 1906.”

Answers were lodged by William Robson, which stated, inter alia—“The petitioner has made no offer of any dividend or any composition upon his debts, and has taken no steps to have the said sequestration proceeded with, or to obtain a report in terms of the Bankruptcy Acts, or to obtain his discharge in ordinary course, or to entitle him to be re-invested in his estates. The respondent submits that the prayer of the petition should be refused in respect that—(1) The petition is incompetent. (2) The appropriate procedure for obtaining a discharge under the Bankruptcy Statutes is provided by the said statutes. (3) The petitioner's averments are irrelevant and insufficient to support the application. (4) No offer of any dividend or composition upon his debts has been made by the bankrupt. (5) No report has been obtained by the bankrupt in terms of section 146 of the Bankruptcy Act 1850. (0) The petitioner's averments, so far as material, are unfounded in fact.”

Argued for the petitioner—The bankrupt should be discharged and reinstated in his estates. Owing to the failure to find caution, the trustee had never been confirmed, but by sections 09 and 70 of the Bankruptcy (Scotland) Act 1913 (3 and 4 Geo. V, cap. 20), which now, under section 192, applied to the sequestration, the trustee in order to obtain confirmation must lodge a bond of caution with the sheriff-clerk within seven days of his election, and that period had long ago elapsed. Accordingly it was no longer competent for the trustee to obtain confirmation, and since the bankrupt was thus deprived of his statutory right to obtain a discharge under the Bankruptcy Act, it was competent for him to obtain one from the Court through the exercise of its nobile officium-Steuart v. Chalmers, June 14, 1864, 2 Macph. 1210; Anderson, Petitioner, March 13, 1800, 4 Macph. 577, 1 S.L.R. 217; White, Petitioner, March 18, 1893, 20 R. 600, 30 S.L.R, 528. MacDuff v. Baird, November 26, 1892, 20 R. 101, 30 S.L.R. 109, was different, because in that case the trustee had been duly confirmed, and it was through his own fault that the bankrupt had failed to obtain his discharge before the trustee was himself discharged.

Argued for the respondent—The bankrupt was not entitled to be reinvested in his estates except with the consent of the creditors. Moreover, he was only entitled to obtain his dischaige in the ordinary way. This he could do by petitioning for the appointment of a new trustee, as was done in MacDuff v. Baird ( cit.). In any event, he should onlv be discharged after there had been an inquiry into the facts by a remit to the Accountant of Court.