Scottish Court of Session Decisions

Mitchell & Muil Limited, bakers, Aberdeen, pursuers, brought an action in the Sheriff Court at Aberdeen against The Feniscliffe Products Company, Limited, Blackburn, England, and another, defenders, concluding for decree for £194, 10s. Arrestments to found jurisdiction had been used.

The parties averred, inter alia—“(Cond. 5) The defenders have been rendered subject to the jurisdiction of this Court by arrestment ad fundandam jurisdictionem. ( Ans. 5) Not known and not admitted.”

The defenders pleaded, inter alia—“1. No jurisdiction.”

The Sheriff-Substitute ( Laing) having allowed and taken a proof on the question of jurisdiction pronounced the following interlocutor:—“Finds in fact (1) that on 4th February 1919, the date on which the pursuers used arrestments in the hands of William Watt Hepburn, produce merchant, Aberdeen, for the purpose of founding jurisdiction against the defenders, the said William Watt Hepburn was not due and indebted to them in any sum whatever; and (2) that said arrestment ad fundandam jurisdictionem did not attach any sum belonging to the defenders in the hands of the arrestee the said William Watt Hepburn; Therefore sustains the first plea-in-law for the defenders and dismisses the action.”

Note—“The evidence given by Mr Hepburn, the arrestee, shows (1) that on 4th February 1919 he was due to the defenders a sum of £286, 16s.; and (2) that at the same date the defenders were due to him a much larger sum, which was finally adjusted at £525. That being the state of the accounts between them it is plain, as Mr Hepburn stated, that he was as at 4th February not due to the defenders a single penny. It was, however, maintained for the pursuers that it was sufficient to found jurisdiction if at the date when the arrestment was used Mr Hepburn as the arrestee was under an obligation to account to the defenders, even although as a result of an accounting between them it should be found that they were really debtors to him. On the authority of Napier, Shanks, & Bell v. Halvorsen ( 1892, 19 R. 412), it seems to me clear that the mere fact that at the date when the arrestment was used there existed an obligation on the part of the arrestee to account to the defenders, is not sufficient to found jurisdiction when it is in point of fact proved that at that date there was no sum whatever due by the arrestee to the defenders. The parties here have joined issue upon the question whether at 4th February 1919 Mr Hepburn had in his hands any sum of money belonging to the defenders, and as result of the proof it is clear that that question must be answered in the negative. The legal result therefore is that jurisdiction cannot be found to have been constituted. As Lord Adam in Napier's case, supra, said—‘I know of no case in which jurisdiction has been sustained where it is ascertained in point of fact as here that nothing is covered by arrestment’; and referring to the argument founded on a claim to an accounting, Lord President (Robertson) said—‘There is nothing in the cases to countenance the argument that the arrestments will be good wherever there is a claim of accounting between the parties, no matter on which side the balance may be, and even admitting (or it being proved) that the balance is against the party asserting such claim. The argument is repugnant to common sense, and I cannot assent to it.’ In short, in view of the result of the proof

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in this case, the judgment in Napier's case is, I think, conclusive on the legal question here raised for decision.”

The pursuers appealed, and argued—The onus of proof was in the first instance on the pursuers, but having proved an apparent debt due by the arrestee to the defenders it was for the defenders to show that that debt had been wiped out. That they had failed to do. Arrestment ad fundandam being merely an attestation that there were visible funds within the jurisdiction, the only visible funds were the debt of £286 entered in the arrestee's books as being due to the defenders. The counter claim did not appear in the books till after the arrestment. On the proof it was established that there was a liquid debt of £286 due by the arrestee to the defenders. On the other hand the arrestee had an illiquid and contingent counter claim against the defenders. If there had been an instantly verifiable counter claim exceeding the debt jurisdiction would not have been founded, for there would have been nothing to arrest. Here the counter claim was not instantly verifiable. In point of fact it was not adjusted in amount till months after the arrestment. Further, at the date of the arrestment the counter claim was not for money but for the delivery of beef. It could have been satisfied by the delivery of beef, and might never have become due as a money debt. In those circumstances jurisdiction had been founded. The date of arrestment was the critical punctum temporis, and if there was then a debt due jurisdiction was validly founded though that debt was subsequently wiped out— North v. Stewart, 1890, 17 R. (H.L.) 60, per Lord Watson at p. 63, 28 S.L.R. 397. Here there was a debt due, for the counter claim had not been established till after arrestment. But it was not necessary to go so far. It was enough if there was a present liability to account— Shankland & Company v. M'Gildowny, 1912 S.C. 857, per Lord President Dunedin at p. 861, and Lord Kinnear at p. 866 and p. 868, 49 S.L.R. 564. A contingent debt might be arrested to found jurisdiction— Riley v. Ellis, 1910 S.O. 934, per Lord President Dunedin at p. 941, 47 S.L.R. 788; Ersk. iii, 6, 6. A fortiori a debt subject to a counter claim could be arrested. It was enough if it appeared that the defender was asserting a claim against the arrestee whatever the ultimate liability might turn out to be, so long as no counter debt had been established or the books had not been balanced at the date of arrestment— Lindsay v. London and North-Western Railway Company, 1860, 22 D. 571, per Lord Curriehill at p. 593, and Lord Deas at p. 595. Napier, Shanks, & Bell v. Halvorsen, 1892, 19 R. 412, 29 S.L.R. 343, was distinguished, for it was not immediately ascertainable in the present case that the admitted debt due by the arrestee had been extinguished by a counter liability to him. Baines & Tait v. Compagnie Generale des Mines d'Asphalte, 1879, 6 R. 846, 16 S.L.R. 471, and Douglas v. Jones, 1831, 9 S. 856, decided that where there was, as here, prima facie evidence of indebtedness which could not be disproved immediately or without a collateral litigation that was sufficient to found jurisdiction—see Lord President Robertson at p. 414 and p. 415, and Lord Kinnear at p. 416, in Napier, Shanks, & Bell v. Halvorsen, ( cit. sup.). Wyper v. Carr & Company, 1877, 4 R. 444, 14 S.L.R. 299, was distinguished. In view of the cases of Shankland and Riley the statement of the law in Graham Stewart on Diligence, p. 256, was no longer accurate.

Argued for the defenders—It was clear upon the proof that the arrestee was not due the defenders anything. If the cheque had been entered in the arrestee's books there could have been no question. The arrestee admitted the debt of £286, but he did so subject to the qualification that he had a larger claim of debt. The pursuers could not approbate the statement and reprobate the qualification of it. In a matter like the present where jurisdiction rested upon a fiction the application of the rule must not be extended— Shankland's case ( cit.), per Lord President Dunedin at p. 861 and Lord Kinnear at p. 869. To sustain jurisdiction where it was proved that nothing had been arrested was to go beyond the limits of the rule as fixed in the decided cases. The present case was covered by Wyper's case, Napier's case, and the Union Bank of Scotland v. Duke of Norfolk, 1901, 8 S.L.T. 404. Graham Stewart on Diligence correctly stated the law. Those cases were supported by Moore & Weinberg v. Ernsthausen, 1917 S.C. (H.L.) 25, per Lord Shaw at p. 33, 54 S.L.R. 78.