Scottish Court of Session Decisions

[1] The pursuer in this action is the permanent trustee on the sequestrated estate of William Burns, the first defender. He seeks the authority of the Court in terms of section 40(1) of the Bankruptcy (Scotland) Act 1985 to sell the house at 18 Shore Road, South Queensferry, the family home, jointly owned by the first defender and his wife, Mrs Frances Mary Stewart or Burns, the second defender. He also concludes for declarator (a) that he is entitled to insist in action of division and sale of the house; (b) that the division of the house is impracticable; and (c) that it is necessary that it be sold and the price divided. He further concludes for warrant to sell.

[2] The pursuer was appointed permanent trustee on the sequestrated estate of the first defender on 23 February 1993. On 15 March 1993 the pursuer requested the consent of the second defender to the sale of the family home. Although the request was addressed to the second defender, the first defender responded indicating that the second defender was refusing her consent and requiring the trustee not to correspond with her but with him. In the absence of the second defender's consent the pursuer raised this action in Edinburgh Sheriff Court in late 1994. Notice of Title in favour of the trustee in respect of the first defender's one-half pro indiviso share of the property was recorded on 16 February 1995. On 12 April 1995 the cause was remitted to the Court of Session. Between May 1995 and June 1996 the cause was sisted to await the second defender's grant of legal aid to be extended to Court of Session proceedings. The first defender lodged lengthy defences. These were held irrelevant on 21 May 1997 and the action proceeded against the second defender alone. She pleads that authority to sell should be withheld or alternatively that it should be postponed for twelve months. I heard proof of the parties' averments. The first part of the proof was heard in late 1998. Regrettably, a continued diet was not available until early 2000, when the proof was concluded.

[3] I found the following facts proved. The original debt on which sequestration proceeded amounted to approximately £975.00, being the expenses of an unsuccessful action raised by the first defender against the Community Charge Registration Officer for Lothian Region. Prior to his appointment as permanent trustee, and in his capacity as interim trustee, the pursuer requested the first defender to provide a list of his assets and liabilities. The first defender refused and has persistently refused to comply with that request, despite an interlocutor of the Sheriff at Edinburgh dated 15 September 1994 ordaining him do so. The subsequent administration of the estate has been hindered by the first defender's deliberate failure to co-operate with the trustee in any way. To make matters worse, the trustee and other officials concerned with the administration of the estate (including myself) have received hundreds of letters from the first defender couched in abusive, offensive and defamatory terms indicating his refusal to co-operate. The result of the first defender's conduct has been that the expenses of the administration of the estate now amount to about £30,000.

[4] The family home at 18 Shore Road, South Queensferry was purchased by the defenders in 1982 and the title was taken in joint names. They have lived in the house in family since that date. They have three children; a daughter aged 26 who lives outwith the family home; a son Michael, aged 18, and a son, Daniel, aged 12. The defenders are both unemployed. The first defender has not worked for 17 years. His last employment terminated because of a disagreement with his employer. In the light of this long period of unemployment and the frame of mind indicated by the contents of his correspondence and defences, there seems to be little or no likelihood of his obtaining employment in the future. There was no suggestion that he is seeking work. The second defender, who is 46 years of age, has not worked since 1985. She formerly worked as a medical secretary, but stopped work in order to devote herself to the upbringing of the children. She has had no training in the advances in secretarial techniques which have taken place in the last 15 years. She would however be able to attend a retraining course without cost to her. Although she wrote to the Edinburgh Royal Infirmary in 1999 enquiring about employment, she feels she should be at home for Daniel, and that, in any event, she would be unlikely to earn a large enough salary to make a significant difference to the family's economic circumstances. In these circumstances it is unlikely that she will readily find employment in her former occupation. It seemed to me that she found the prospect of employment daunting.

[5] The older boy, Michael, is presently attending Telford College, Edinburgh studying for an HNC in computing. He travels to college by bus. He is uncertain as to his next step when his course concludes at the end of the current academic year. I was told that his decision depended on the outcome of the present action. He is in receipt of the maximum student grant and would have considerable difficulty in paying for alternative accommodation out of that grant. He has a part-time job at a local supermarket in South Queensferry. I was given no information as to his income from that source. The younger boy, Daniel, attends St Augustine's School in the Sighthill area of Edinburgh. St Augustine's is a Roman Catholic school with a large catchment area comprising the whole of the western part of the City of Edinburgh Council area. A number of children from South Queensferry attend the school and the Council runs buses to and from the school for their benefit. Daniel has lived all his life in South Queensferry and has indicated that he would not like to stay anywhere else. He plays football for a local boys' club. Most of his friends live in South Queensferry although he is beginning to make friends from other parts of the city who attend St Augustine's. He is presently in his first year of secondary school there. He plays for a school football team and has to travel to both home and away matches. The family is clearly settled in South Queensferry.

[6] The defenders are in receipt of state benefits of £261.30 per fortnight. The second defender pays £100 per month in interest on the building society loan secured over the family home. £80 of this sum is met by housing benefit and the second defender makes up the additional £20 from her other income. In December 1999 the house was worth approximately £60,000. There is little doubt that the value has risen somewhat since that time. At the present time the building society loan stands at approximately £21,000. The free proceeds of any sale would therefore be likely to be about £40,000, one half of which would go to the second defender. A share of the expenses of sale would of course require to be deducted from that figure. Since the first defender has refused to give details of his assets and liabilities, the trustee has no knowledge of any other assets. So far as is known neither the first nor the second defenders have any other assets.

[7] Although her consent to the sale of the property was first sought in 1993 the second defender has found herself unable to take any steps to find alternative accommodation in the intervening period, or to make any plans for the future. She was frank in her evidence that she has been unable to face up to her predicament. She does not know what she would do if the house was sold. Although she professes not to share her husband's views she is powerless to influence them, and has been unable to persuade him to co-operate with the pursuer or to take any action independent of him. In about May 1995 the second defender's mother became aware of her predicament and offered to find the sum of around £900 to keep a roof over the second defender's head. The second defender, without the knowledge of her husband, consulted her solicitor who enquired of the trustee's agent whether he would consider accepting an offer of the principal debt in return for the release of the first defender's pro indiviso share. The second defender was advised at the time of the enquiry that it was unlikely that the offer would be acceptable. When it was communicated to the trustee it was immediately rejected. For some reason, whether by failure on the part of the trustee's solicitor to intimate the rejection, or on the part of the second defender's solicitors to communicate with her, the second defender was not informed of the rejection of the offer until June 1996. Whatever the explanation may be I am satisfied that an offer in the region of £900 was not acceptable in May 1995 or at any time thereafter. As at May 1995, a sum of about £10,000 would have been necessary to secure settlement. The second defender's mother would not have been in a position to find such a sum at any stage.

[8] The second defender suffers from mild to moderate hypertension for which she receives continuing treatment. It seems likely that this is contributed to by the stress which she finds herself under as a result of the uncertainty as to the future created by her husband's behaviour. The condition is, however, under control. She also suffers from psoriasis which varies in severity from time to time and for which she takes medication. It appears from the medical records however that she has suffered from psoriasis since at least the 1970s. The condition is known to be exacerbated by stress or emotional factors.

[9] As I have indicated the second defender has found herself unable to make any enquiries as to alternative accommodation. If decree were to be awarded against her she would require to do so. She would probably have capital in the region of £15,000 as her share of the proceeds of the house. She would clearly be unable to purchase alternative accommodation with that sum, and she would be unlikely to be able to afford private rented accommodation for any length of time. In those circumstances she would require to apply to the City of Edinburgh Council Housing Department for accommodation. On doing so she would be assessed in order to establish whether she and her sons were homeless in terms of the Housing (Scotland) Act 1987. If they fulfilled the criteria the Council would have a legal obligation to secure permanent accommodation for them. There are four stages in the assessment. It is firstly established whether the applicant is in fact homeless or threatened with homelessness. In the second stage it is established whether the applicant has a priority need. An applicant with a child under sixteen years of age is assessed as having a priority need. The second defender clearly meets that criterion. In the third stage it is established whether the homelessness was intentional, that is, caused by deliberate acts or omissions on the part of the applicant. One example of intentional homelessness would be where the applicant had failed to pay rent or mortgage repayments. All the circumstances are looked at in order to assess whether the applicant is culpable. An impecunious applicant who was unable to pay rent would not be regarded as intentionally homeless. The final stage in the assessment is to ascertain whether the applicant has a local connection with Edinburgh. Again the second defender clearly meets that criterion.

[10] It seems to me that there is a reasonable prospect that the second defender would be assessed as homeless. In that situation she would be provided with temporary accommodation and advice and assistance on how to obtain permanent accommodation. The Council's target is that an applicant should remain for no more than sixty days in temporary accommodation. The location of any temporary accommodation is entirely dependant upon availability and might be in areas of the city such as Clermiston and Wester Hailes. No temporary accommodation is available in South Queensferry. The applicant would be placed on a waiting list for permanent accommodation which is operated on the basis of need. Applicants are invited to choose an area but there is no certainty that they will be allocated a house in the area of their choice. The Council hopes to offer permanent accommodation within 28 days of the applicant being made homeless and the allocation depends on the availability at that time. The applicant would then receive an offer of accommodation. If that offer were refused, the applicant's name would remain on the list but no second offer would be made for another six months. After six months the application would be looked at again by the Council, but the applicant would not be treated as a homeless person. The areas of the city which were mentioned in evidence as the possible location of available permanent housing were Wester Hailes, Oxgangs, Broomhouse in the west of the city; Muirhouse and West Pilton in the north; Niddrie, Greendykes and Craigmillar in the east; and Gracemount and Hyvots in the south. The principal housing officer of the Council who gave evidence accepted that most families would prefer not to be allocated houses in those areas. It is clear that any accommodation provided by the Council would be in a much less attractive area than South Queensferry.

[11] Attention was drawn in the course of the proof, by counsel for the second defender to the fact that a sequestration which had proceeded upon a debt of about £975, had given rise to many thousands of pounds worth of expenses of administration. The suggestion was made, as I understood it, that in the light of the first defender's attitude, there had been no justification for incurring that level of expenditure on administration. Once sequestration was granted the trustee had a duty to take possession of the debtor's estate, to realise it and to distribute it to creditors. Mr MacGillivray, the correspondence manager from the Accountant in Bankruptcy' office who gave evidence, said that the Accountant in Bankruptcy was not in a position to waive the trustee's obligation to realise the estate. If he failed to do so the Accountant in Bankruptcy would not discharge him. A trustee could only be authorised to refrain from realising the estate if the creditors instructed him so to do. The escalation in the expenses of administration of this case was occasioned entirely by the failure of the debtor to co-operate. A large of amount of time was spent by the trustee's staff in patiently answering the points raised in his offensive and defamatory letters. Ultimately in 1997 the Accountant in Bankruptcy authorised the trustee simply to acknowledge such letters. The trustee's outlays in the meantime have been met by the public purse and the Accountant of Court is bound to recoup these outlays. If the authority of the Court were to be refused in the present action, the trustee would seek the authority of the Court at a later date when the circumstances had changed. In the absence of any more specific or detailed criticism of the trustee's actings, there are, in my view, no grounds for finding that the trustee has acted improperly or incurred unnecessary expense. In these circumstances there is nothing in the trustee's conduct which affects my determination of this application.

[12] Section 40(2) of the 1985 Act enjoins me, in determining whether to refuse or grant the application to have regard to all the circumstances of the case, including - (a) the needs and financial resources of the second defender; (b) the needs and financial resources of any child of the family; (c) the interests of the creditors; and (d) the length of the period during which the family home has been used as a residence by the second defender and her children.

[13] This is a profoundly regrettable case the need for which could have been avoided had the first defender chosen to co-operate with the pursuer in the administration of the sequestrated estate. His refusal to do so is apparently based on a conviction that the community charge was an unlawful and unjust tax and that all connected (however remotely) with its administration are "politically corrupt". The first defender has chosen to put what he describes as his "noble struggle against extortionists and racketeers" before the interests and welfare of his wife and family. As a result, the second defender has had to live in very difficult circumstances and it is impossible not to feel considerable sympathy for her in her predicament.

[14] The specific factors detailed in section 40(2) can be dealt with briefly. The second defender, Michael and Daniel clearly need a roof over their heads. It is perhaps possible that Michael could find and pay for alternative accommodation with a student grant and any earnings that he might make. That however is speculation. Daniel on the other hand requires to stay with his mother. The first and second defenders are dependent in state benefits and there is no prospect of any improvement in their financial circumstances except that the second defender could expect a payment of about £15,000 from the sale of the family home. The second defender suffers from hypertension and psoriasis. She receives medication for both conditions but neither is severe.

[15] Whatever happens the creditors will receive no benefits. The expenses of administration exceed the potential free proceeds of the house and that is a situation that has obtained for a considerable time. The expenses of administration have been met by the public purse and will require to be recouped. If the application is refused the trustee will have no alternative but to return to the Court in the future when circumstances have changed.

[16] Section 40(2) enjoins me to have regard to all the circumstances of the case. I consider that these include both the public interest and the first defender's behaviour. In my view it is in the public interest that sequestration should be brought to an end within a reasonable time and should not be allowed to drift on for an indeterminate period. It is also in the public interest that expenses of administration paid for by the public purse should be recouped. As was submitted by counsel for the pursuer, it would not be in the public interest if the first defender were to be seen to benefit from his recalcitrance.

[17] The principal concern is the effect of the sale of the house on Daniel and to a lesser extent the pursuer. He will lose the home he has lived in all his life and will have to move with his mother to a less pleasant environment. He will however be able to continue at the same school where he is settling down and beginning to make new friends. On the assumption that Daniel intends to complete his secondary education he will continue at school for another five or six years. In these circumstances the stark choice facing me is whether the house should be sold now or at some time in the future. In all the circumstances I do not consider it to be in the interests of any party to allow the present state of uncertainty to continue. The second defender is still of an age at which she is able to make a new life. As the years go by that will become more difficult. Any important examinations which Daniel may want to sit in the future are some years away and it is to be hoped that by that time the family will have been able to settle down. In these circumstances, making the best assessment I can, it seems to me that the bullet should be bitten now. It is clear that steps will require to be taken by the second defender to obtain alternative accommodation and I think it appropriate to give her time in which to do that. In the circumstances I shall grant the application but postpone the grant for a period of six months.