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OUTER HOUSE, COURT OF SESSION
[2007] CSOH 210
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A73/07
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OPINION OF LORD HODGE
in the cause
STRATHCLYDE ASSOCIATED PROPERTY HOLDINGS
LIMITED
(IN LIQUIDATION) AND CAMERON KING
RUSSELL
Pursuers;
against
KAH LIMITED AND RONALD HANNAH
Defenders:
ญญญญญญญญญญญญญญญญญ________________
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Pursuers: Barne, Advocate; Shepherd & Wedderburn
Defenders: No Appearance;
19
December 2007
[1] This
is an action by the liquidator of Strathclyde Associated Property Holdings
Limited ("Strathclyde") to have five leases of vacant residential property in Glasgow in favour of the first
defenders declared null and void and for interdict against the second defender
from changing or attempting to change the locks on those properties.
[2] The
second defender was formerly a director of
Strathclyde and was company secretary at the commencement of the winding
up of that company in May 2006. His
son was then the only director but had taken no part in the day to day running
of the company and it had been the second defender who had managed the
company. The two shares in Strathclyde
were held by the second defender and Fiona Gibbons, his former wife. Fiona Gibbons is the sole director of
the first defenders, KAH Limited.
[3] The
Pursuers aver that the five leases, which were purportedly entered into in
October 2005, are shams to alienate assets from Strathclyde after
liquidation and that in particular the signing pages of each of the copy
leases, which are the only extant documentary evidence of the leases, are in
fact copies of the same page appended to each of the leases. The first defenders, which alone defended the
action, aver that the original leases were destroyed by the second
defender. Each of the purported leases
provides for an annual rent of ฃ1 and each purported lease is stated to
endure until 31 March 2024.
[4] The
Pursuers have alternative conclusions for reduction of the purported leases as
gratuitous alienations under section 242 of the Insolvency Act 1986
if the leases were granted before the commencement of the winding up. They aver that the first defenders and second
defender, Fiona Gibbons and the sons of the second defender and
Fiona Gibbons were associates of Strathclyde. The only explanation of the transactions
which the first defenders have proponed in their defences is that the leases
were granted in consideration of Fiona Gibbons' claim for financial
provision on divorce. That is not a
relevant defence to a claim by Strathclyde under section 242 of the
Insolvency Act 1986.
[5] The
action was raised on 13 February 2007 and defences were lodged on
behalf of the first defenders on 20 March 2007. While the pursuers have adjusted their
pleadings since then, no adjustments have been made to the defences. On 27 June and again on 1 November 2007 the Court ordained the
first defenders to intimate whether they insisted in their defences after their
solicitors, who were initially Allan McDougall and then Kerr Brown,
withdrew from acting. On 26 November 2007 Kerr Brown intimated
to the Court that they had received instructions from the first defenders which
intended to insist on their defences.
Thereafter the Pursuers sought to lodge a Closed Record and the case was
put out on the By Order (Adjustment) Roll for further procedure.
[6] At the
hearing on the By Order (Adjustment) Roll on 19 December
2007
the pursuers were represented by counsel but there was no appearance for the
defenders. Mr Barne informed the
court that Kerr Brown had telephoned the pursuers' solicitors on the previous
evening and had intimated that the only instructions which they had received
were to oppose further procedure in the action, that they could not act on
those instructions and that they proposed to withdraw from acting for the first
defenders. No intimation was made in terms
of Rule of Court 30.1 to the Deputy Principal Clerk and no arrangement was
made for representation at the hearing.
[7] The
pursuers moved for decree by default and for expenses. While the hearing is not one of the hearings
listed in Rule of Court 20.1(1), the court has a wider power to grant
decrees by default. The defenders have
failed to state relevant defences to the action. The first defenders' agents have withdrawn or
expressed an intention to withdraw on three occasions and on the latest
occasion the reason for the expressed intention to withdraw appears to have
been the inappropriate instructions which Fiona Gibbons had given on
behalf of the first defenders. No
representation has been arranged for the hearing on further procedure. In the circumstances I see no point in
requiring the pursuers to invoke again the Rule of Court 30.2 procedure
requiring the first defenders to intimate whether they insist in their
defences. I therefore grant decree in
terms of the first, third, fifth, seventh and ninth conclusions, declaring the
purported leases null and void, and also decree of interdict against the second
defender in terms of the eleventh conclusion and I award expenses against the
first defenders.
