Scottish Court of Session Decisions

This is an action brought in the Sheriffdom of Grampian Highland and Islands at Stonehaven, in which the pursuers craved interdict against the defenders from entering a property known as 'Norden' at Newtonhill, Stonehaven. By interlocutor of 6 January 1999 the sheriff granted summary decree in terms of the first crave, interdicting the first and second named defenders "from encroaching on the property known as and forming 'Norden'.... subsequent to the eviction of the first and second defenders scheduled to take place at 10.00 a.m. on 14 October 1998.... to which the pursuers have right as heritable creditors in possession by entering there." The second defender appeals.

The pursuers are holders of a Standard Security granted in their favour by the defenders in respect of 'Norden', recorded on 7 November 1984. On the basis that the defenders were in default with payments, the pursuers obtained decree, on 14 August 1996, ordaining the defenders to vacate the subjects, and granting warrant to the pursuers to enter into possession and to exercise powers under the Conveyancing and Feudal Reform (Scotland) Act 1970, including the power of sale. After an appeal to this court on a procedural matter, which was refused on 13 February 1998, the sheriff by interlocutor of 29 June 1998 granted warrant for ejection. Acting on the warrant, the pursuers evicted the first and second named defenders from the property on 6 October 1998. Thereafter the defenders broke back into the property. Further evictions and break-ins are said to have occurred at subsequent dates in 1998.

The pursuers' case is thus a simple one, based upon the decrees pronounced by the court in the original action for possession. The appellant does not dispute the fact of eviction on 6 October 1998, nor the fact that the defenders have broken back into the property. Nor has it been suggested, either in the written pleadings or in the submissions advanced to the sheriff or this court, that there would be any valid defence to summary decree and interdict if the warrant to eject, and the interlocutor which preceded it, were valid. The grounds of appeal proceed rather upon the basis that the decree and warrant granted by the sheriff were obtained "on an improper basis". The contention is that the action of possession should have been brought against the trustee on the sequestrated estates of the defenders, in whom the property is said to be vested. It is argued that despite the existence of the decree against the defenders, the pursuers and respondents are not in possession of the property, since possession cannot be obtained from the defenders - they themselves no longer being in possession, by virtue of their bankruptcies. The existence of the decrees of sequestration being known to the pursuers and respondents, they had failed to follow the proper process in terms of the Bankruptcy (Scotland) Act 1985. Put shortly, the original action having been against the wrong defenders, the decree and warrant were invalid and unenforceable, and correspondingly any interdict which depended on their validity should not have been granted.

Miss Sutherland referred us in particular to sections 31 and 39 of the Bankruptcy (Scotland) Act 1985. In addition, she referred us to two articles in 1991 S.L.T. News at pages 195 and 219 and certain annotations in the Parliament House Book. Reference was also made to Meek v Thomson (unreported 13 November 1990). Miss Sutherland also addressed us on the question of the pursuers' and respondents' knowledge of the sequestration. Having obtained the decree and warrant in question in the knowledge that they were going against the wrong party, they should not be allowed to rely on what they had done, in order to seek interdict. They had simply abstained from recognising the default which had resulted in bankruptcy, because it suited them to recognise only the default in relation to the Standard Security. While they were entitled to found upon rights which were preferable to the rights of the trustee in bankruptcy, they should have gone against him, rather than against the defenders personally.

In reply, counsel for the pursuers and respondents submitted that the decree of ejection was valid on its face, and remained in force until reduced. The appellant was not entitled to challenge that decree in this process, and the sheriff had been right in saying that he could not overturn or disregard the interlocutor in question. That was enough to dispose of the matter.

However, counsel submitted that in any event, the appellant's contentions were ill-founded. Under reference to section 33 of the 1985 Act, he submitted that sequestration did not affect the rights of the pursuers and respondents. It was not necessary for a creditor in such a position to vindicate rights against the trustee in bankruptcy. That indeed was at least one purpose of taking a security in this form. While it might be prudent for such a creditor to make intimation to a trustee in bankruptcy of any proceedings against a debtor, in case the trustee wished to contend that the security did not confer any valid prior right, there was no requirement to do so. In the present case, the pursuers had taken proceedings against the debtors themselves, and had obtained the remedy which the statute envisaged.

We see no need to go into detail. Procedurally, the decree and warrant have not been reduced, and could not appropriately be reduced in this process or at this stage. But in any event, we are satisfied that the appellant's contentions are unsound on the point of substance. In terms of section 33(3) of the 1985 Act, sections 31 and 32 of the Act "are without prejudice to the right of any secured creditor which is preferable to the rights of the permanent trustee". As the Lord Justice Clerk observed, when delivering the Opinion of the Court in disposing of the Appeal by the present appellant in the earlier action, "the rights of the pursuers as heritable creditors were not in any way dependent on whether the debtor was or was not divested of the subjects or of any residual right to the free proceeds of their sale". We reject the contention that the decree and warrant were obtained on an improper basis, or are invalid and unenforceable. The appeal is refused.