Scottish Court of Session Decisions

The Courts (Emergency Powers) Act 1914 (4 and 5 Geo. V, cap. 78), sec. 1 (1) ( a) and (7), is quoted supra in rubric.

N. G. Fergusson & Company, limited, iron and mineral merchants, London, pursuers, brought an action of furthcoming against Brown & Tawse, iron, steel, and metal merchants, Dundee, arrestees, and Eisenwerk Kraft Aktien Gesellschaft, Duisberg, Germany (against whom arrestments had been used ad fundandam jurisdictionem), principal debtors, for payment of sums arrested by the pursuers in the hands of the arrestees and due by them to the principal debtors.

The arrestees appeared and lodged answers.

The arrestees pleaded—“7. The present action cannot proceed in respect that the sanction of the Court has not been obtained in terms of the Courts (Emergency Powers) Act 1914.”

The facts of the case appear from the opinion of the Lord Ordinary ( Cullen), who, on 6th February 1917, found that (1) the action was a proceeding in execution of a judgment of the Court within the meaning of the Courts (Emergency Powers) Act 1914 (4 and 5 Geo. V, cap. 78), sec. 1 (1) ( a), and (2) leave of the Court to proceed with the action had not been obtained by the pursuers as required by the said Act, and continued the cause and granted leave to reclaim.

Opinion.—“This is an action of furthcoming which proceeds on arrestments used by the pursuers on 23rd March 1916 and 23rd May 1916 in the hands of the compearing defenders as arrestees. The earlier arrestment was used on the dependence of an action in this Court by the pursuers against a German firm or company called the Eisenwerk Kraft Aktien Gesellschaft, and the later was used in execution upon a decree in absence obtained by the pursuers in said action on 3rd May 1916. The debt in respect of which the pursuers so obtained decree was as alleged contracted prior to August 1914. The principal debtors do not compear.

The first question raised at the hearing in the procedure roll is whether, under the Courts (Emergency Powers) Act 1914 (4 and 5 Geo. V, cap. 78) the present action is one for which leave from this Court is required in order to its proceeding. I answer this question in the affirmative.

Section 1 (1) ( a) of the Act provides—… [ quotes, v. sup. in rubric.] …”

Now the present action is a proceeding to execution of a judgment of this Court; and it does not seem to me a good answer to say, as the pursuers do, that the party ultimately interested is an enemy subject. This may represent an available argument to the pursuers in any application they may make for leave from this Court to proceed. But the object of the pursuers in the action is to obtain payment of a sum of money, under the decree they hold, from the defenders, who are His Majesty's subjects; and the generality of the terms of the enactment which I have quoted seems to me plainly to apply to such a case.

From what passed at the procedure roll discussion I gathered that the defenders did not urge that the action should be dismissed in default of leave to proceed hitherto obtained, but that they would be satisfied if, the cause being sisted or continued, the pursuers should procure such leave before the action proceeded further. On this footing I propose to find that the action is one which under the said Courts (Emergency Powers) Act 1914 needs the leave of the Court in order to its proceeding, and meantime to continue the cause.

On the basis of such an interlocutor I should logically say nothing more at this stage. But as I had a full argument on another question arising in the case I think it may be desirable that I should express the view which I have formed regarding it.

Section 5 (1) of the Trading with the Enemy Proclamation No. 2, dated 9th September 1914, is directed, inter alia, against paying any sum of money ‘to or for the benefit of an enemy.’ Section 7 says—‘Nothing in this Proclamation shall be deemed to prohibit payments by or on account of enemies to persons resident carrying on business or being in our dominions, if such payments arise out of transactions entered into before the outbreak of war or otherwise permitted.’

There are provisions in subsequent legislation providing for the sequestration of assets belonging to enemy subjects in this country. But there is no general sequestration of such assets.

On a review of the recent legislation to

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which reference was made at the hearing, it appears to me that that legislation does not preclude such an action as is now before me. There is a British creditor A. There is an enemy debtor B. There is a British subject C, holding as alleged funds of the enemy debtor B available pro tanto for the payment of the British creditor A. The payment of the funds which may be held by C to A in order to satisfaction of A's claim against the enemy debtor B does not seem to me to be a payment ‘for the benefit of’ B in the sense of the legislation referred to. No doubt the payment of the funds to A would, pro tanto, discharge B's debt to A. But the funds to be applied belong, ex hypothesi, to B. It does not appear to me on the terms of the legislation referred to that payment of the funds held by C to A in respect of A's claim against his enemy debtor B would fall to be regarded on a due construction of the legislation referred to as being a payment made by C ‘for the benefit of’ B. Such a payment would in my opinion fall to be regarded as a payment ‘for the benefit of’ A, the British creditor, seeking to obtain payment of a debt due to him by an enemy subject.”

The pursuers reclaimed, and argued—The Courts (Emergency Powers) Act 1914 (4 and 5 Geo. V, cap. 78), section 1 (1), was limited in application and did not apply to alien enemies—section 1 (1). Here the only decree was the decree against the principal debtors who were alien enemies, and upon it the present proceedings were based. Leave to proceed was therefore not required for the initiation of the action. The question of whether or not the pursuers were entitled to payment from the arrestees was the question in the present action: only if and when that was decided in favour of the pursuers would there be a decree against the arrestees; to proceed upon that decree leave would be necessary. The case was analogous to an action of maills and duties in which it had been held that no leave was necessary to bring the action— City of Glasgow Friendly Society v. Bruce, 1916 S.C. 267, 53 S.L R. 199. The present contention must have been the view of the Court in framing the Act of Sederunt of 28th September 1914, the terms of which showed that the Lord Ordinary's interlocutor was unworkable—section 3 and Schedules I and III.

Argued for the arrestees (respondents)—The present action was a diligence—Bell's Comms., M'Laren's edn., ii, pp. 18 and 63; Stewart, Diligence, p. 275; Lucas's Trustees v. Campbell and Scott, 1894, 21 R. 1096, at p. 1103, 31 S.L.R. 788. If the pursuers were allowed to proceed there was no proper contradiction, for the principal debtors could not appear, and if no debt was due or the diligence was irregular and decree went out against the arrestees they would have to pay twice over— Wightman v. Wilson, 1858, 20 D. 779, per Lord Curriehill at p. 785. The action was accordingly really a diligence against both the principal debtors and the arrestees. Leave to proceed was therefore required—section 1 (1) ( a). Bruce's case ( cit.) was distinguished, for it was an action of maills and duties and was founded on section 1 (1) ( b).