Scottish Court of Session Decisions

This is an action of damages brought by the pursuer in the Sheriff Court at Glasgow. In terms of the crave, he seeks an order against the defender for payment of damages amounting to the sum of £50,000, with expenses. Having heard the defender's solicitor and the pursuer himself, the Sheriff was satisfied that the action was wholly irrelevant and by interlocutor of 5 November 1999 sustained the defender's first plea in law, and granted decree of dismissal. He also found the pursuer liable in expenses. The pursuer has appealed.

It is a matter of admission that the pursuer is a trustee of the estate of the late Mrs. Janet McLanachan, and that funds of Mrs. McLanachan's estate were deposited by the pursuer in an account in the joint names of himself and his wife Elizabeth Bell. Mrs. Bell died in May 1998, and at that time there were certain accounts in joint names of the pursuer and Mrs. Bell.

In his second article of condescendence, and his first plea in law, the pursuer deals with what he calls the "freezing" of the funds of Mrs. McLanachan's estate. In his third article of condescendence and his second, third and fourth pleas in law, he turns to what he calls the second subject-matter of this action, the fact that the defender invoked section 32(6) of the Bankruptcy (Scotland) Act 1985, and caused the estate of Mrs. Bell to be frozen. Putting matters simply, he submitted to us that the subject of this action is to "de-freeze" these two separate accounts, and in his pleadings, his grounds of appeal and his submissions he sets out the reasons for saying that this should be done. Procedurally, what he asked was that we should accept the grounds of appeal, and remit the case to the Sheriff Court, for the Sheriff to proceed as accords and to fix a date for a proof concerning the freezing of the estates.

It is common ground that the defender was appointed as interim trustee to the pursuer's estate on 28 January 1998. (The defender avers in addition that the date of sequestration was 29 December 1997, and that he is the Permanent Trustee on the pursuer's sequestrated estate, referring to an Act and Warrant dated 9 March 1999). As the pursuer informed us in the course of his submissions, he applied to the Sheriff in terms of section 31(6) of the Bankruptcy (Scotland) Act 1985, to have the funds of both the McLanachan estate and Mrs. Bell's estate excluded from his sequestrated estate; but the Sheriff refused this, in respect of each of these estates, on separate dates early in 1999.

The pursuer's Crave indicates that what he is seeking is damages. His sixth plea in law confirms this. But nothing in his other pleas in law, and nothing in his articles of condescendence is indicative of the kind of legal duty or contractual obligation which may give rise to a claim for damages, on the basis of delict or breach of contract. Similarly, there are no averments or pleas in law indicating that loss has flowed from any such wrong, or quantifying such loss. While one would not wish to be over strict in construing pleadings which have not been drafted professionally, it is clear that the pleadings do not contain what is required in order to support a claim of damages, either by averment of a legal wrong or by averment of loss caused by that wrong. It is clear from the sheriff's note that it is upon that basis that he describes the pursuer's action as "wholly irrelevant". The point is one which cannot be elaborated. We are satisfied that the sheriff is correct. That being so, the appeal must inevitably fail.

It is not, however, appropriate for us to leave matters there. As we have indicated, what the pursuer wants in this action is not apparently damages - despite the terms of his Crave and sixth plea in law. As is clear from his second written ground of appeal, he sees the "freezing" of the funds of the two estates as a wrong, for the purposes of a claim in damages. And he sees "the loss of administering these two estates and the resultant non-pecuniary loss of a good name" as damnum. Setting on one side the fact that he has raised the issue as one of damages, which we regard as entirely misconceived, we think it right to comment upon the criticisms which he makes, in his pleadings and submissions, of the "freezing" of these funds. Even if well-founded, these criticisms would not render his pleadings relevant, in the absence of any appropriate crave. But like the Sheriff, we think it right for us to consider the issues raised by the pursuer.

In relation to the McLanachan funds, the pursuer in his first plea in law relies upon section 23 of the Trusts (Scotland) Act 1921, which deals with the removal of trustees. Comparing the removal of trustees from a trust to the removal of a trust from its trustees, the pursuer submitted that he had been deprived of the administration of this trust, and that this was in conflict with the principle that the administration should be left where the testator has placed it: Orr-Ewing v. Orr-Ewing's Trustees 1884 11 R. 600, Lord President Inglis at page 627. But the issue here is not analogous to that of a trustee being removed from office, and we see no force in this submission.

Again in relation to the McLanachan estate, the pursuer relied upon section 33(1)(b) of the Bankruptcy (Scotland) Act 1985, referring also to his unsuccessful application in terms of section 31(6) of the Act for exclusion of these funds from his estate. The pursuer submitted that we should order release of the fund. Quite apart from the fact that no such order is sought in this action, and the fact that the application under section 31(6) has been dealt with by refusal, it appears from what the pursuer tells us that he placed the funds which he had received as trustee on Mrs. McLanachan's estate into an account in the Halifax Building Society in the name of himself and his wife. There does not appear to be any explanation as to why what had been trust funds thus passed into that joint account; but in any event it would not be appropriate at this stage for this court to enter further into the merits of the issue between the parties in that respect.

Turning to the separate matter of Mrs. Bell's estate, the pursuer relied upon the terms of section 1 of the Married Women's' Policies of Assurance (Scotland) Act 1880. It appears that Mrs. Bell had had such a policy, which matured in 1995. The proceeds were deposited as cash in a deposit account with the Bank of Scotland, in the joint names of Mr. and Mrs. Bell. The appellant acknowledged that deposits and withdrawals were made on this account, but submitted that in the main what was in the account represented the proceeds of the policy. The defender's position is that Mrs. Bell died in May 1998, after the pursuer had been sequestrated. To the defender's knowledge, she died intestate, and prima facie the pursuer would be entitled to succeed to her estate. In these circumstances, the trustee was entitled to invoke section 32(6) of the Bankruptcy (Scotland) Act 1985. We see no force in the argument based upon the 1880 Act, in relation to funds which were on deposit account in this way; and again, having regard to the Sheriff's disposal of the application under section 31(6) of the 1985 Act, it is not for us to enter into the merits of that matter.

A further submission was advanced, to the effect that Mrs. Bell's estate was a "non-income bearing estate", and that as such it was not within the scope of section 32(6) of the 1985 Act. This submission was based upon the fact that section 32(1) is concerned with income. But that has no bearing on the scope of section 32(6); and in any event, it appears that the funds on deposit account were interest bearing. A further argument was advanced in relation to section 32(6), based on certain observations of Lord Macfadyen in Rankin's Trustee v. Somerville & Russell 1999 S.C. 166 at 175H. It is not necessary to go into the details of this argument: what Lord Macfadyen says there confirms that the trustee's right depends on the terms of section 32(6), and not on matters of the machinery of obtaining heritable title as submitted by the pursuer.

Finally, we would note an argument advanced by the pursuer in terms of his fourth plea in law, to the effect that the funds in joint names were "fiduciary" and thus protected by the terms of section 33 of the Bankruptcy Act from the pursuer's trustee in bankruptcy. Reliance was placed upon the terms of section 14(2) of the Trusts (Scotland) Act 1921. That section is clearly not in point. But in any event, and more generally, the right to funds in a joint account involves issues of fact, and standing the refusal of the application in terms of section 31(6), this is not a matter for this court.

In these circumstances, the various submissions of the pursuer are in our opinion ill-founded, even in the context of his wish that the funds in question should be released. But as we have indicated, such release of funds is not what is craved in this action, and we are entirely satisfied that whether one looks to the crave, the condescendences or the pleas, this action is irrelevant and must be dismissed. The appeal is refused, and the Sheriff's interlocutor confirmed.