Scottish Court of Session Decisions

SECOND DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 49

CA29/15

CA30/15

Lord Justice Clerk

Lord Bracadale

Lord Malcolm

OPINION OF LADY DORRIAN, the LORD JUSTICE CLERK

in the RECLAIMING MOTIONS

by

WILLIAM CLEGHORN AS TRUSTEE ON THE SEQUESTRATION OF MARK FORTUNE

Pursuer and respondent;

against

MEDWIN INVESTMENTS LIMITED

Defenders and reclaimers:

and

WILLIAM CLEGHORN AS TRUSTEE ON THE SEQUESTRATION OF MARK FORTUNE

Pursuer and respondent;

against

COOPER WATSON LIMITED

Defenders and reclaimers:

Act:  J Cormack, sol adv; Pinsent Masons

Alt:  D MacLean; Aitken Nairn, WS

 

1 July 2016

Introduction

[1]        These reclaiming motions arise out of the grant by a discharged bankrupt to the reclaimers of a number of dispositions and standard securities of property forming part of his sequestrated estate.  They concern the effect of (an unexplained) failure to record the sheriff’s warrant to cite in the register of inhibitions and adjudications in terms of sec. 14(1)(a) of the Bankruptcy (Scotland) Act 1985; whether the deeds granted by the bankrupt attracted the protection of sec. 44(4)(c) of the Conveyancing (Scotland) Act 1924; and whether the rule against “offside goals” (Rodger (Builders) Ltd v Fawdry 1950 SC 483) was engaged.

[2]        The respondent sought production and reduction of the dispositions and standard securities.  After debate, the Lord Ordinary by interlocutors dated 8 December 2015 granted the orders sought by the respondent in relation to all deeds save on in the Cooper Watson action, where there remains an outstanding issue that the property to which the deed relates may qualify as the debtor’s family home under sec. 39A of the 1985 Act.  Those are the interlocutors reclaimed against.

 

Legislation

[3]        At the relevant time, sec. 12(2) of the 1985 Act provided:

“Where a petition for sequestration of a debtor’s estate is presented by a creditor … , the sheriff to whom the petition is presented shall grant warrant to cite the debtor to appear before him on such date as shall be specified in the warrant, being a date not less than 6 nor more than 14 days after the date of citation, to show cause why sequestration should not be awarded”.

[4]        Sec. 14 of that Act provides:

“(1)      The sheriff clerk shall forthwith after the date of sequestration send –

(a)        a certified copy of the order of the sheriff granting warrant under section 12(2) of this Act to the keeper of the register of inhibitions and adjudications for recording in that register …

(2)        Recording under subsection (1)(a) … above shall have the effect as from the date of sequestration of an inhibition and of a citation in an adjudication of the debtor’s heritable estate at the instance of the creditors who subsequently have claims in the sequestration accepted under section 49 of this Act.

(3)        The effect mentioned in subsection (2) above shall expire –

…

1. … at the end of the period of 3 years beginning with the date of sequestration.

(4)        The trustee may, if not discharged, send a memorandum in a form prescribed by the Court of Session by act of sederunt to the Keeper of the Register of Inhibitions for recording in that register before the expiry of—

 

(a)        the period of 3 years mentioned in subsection (3)(b), or

 

(b)        a period for which the effect mentioned in subsection (2) has been renewed by virtue of subsection (4A).

 

(4A) The recording of a memorandum sent in accordance with subsection (4) renews the effect mentioned in subsection (2) for a period of 3 years beginning with the expiry of—

 

(a)        the period mentioned in subsection (3)(b), or

(b)        as the case may be, the period mentioned in subsection (4)(b).”

 

[5]        Sec. 31(1), so far as material, provides:

“… the whole estate of the debtor shall, by virtue of the trustee’s appointment, vest      in the trustee as at the date of sequestration for the benefit of the creditors …”.

[6]        So far as material, sec. 32(8) provides:

“… any dealing of or with the debtor relating to his estate vested in the trustee … shall be of no effect in a question with the trustee”.

[7]        Sec. 63 provides:

“(1)      The sheriff may, on the application of any person having an interest –

(a)        If there has been a failure to comply with any requirement of this Act …, make an order waiving any such failure and, so far as practicable, restoring any person prejudiced by the failure to the position he would have been in but for the failure;

(b)        If for any reason anything required or authorised to be done in, or in connection with, the sequestration process cannot be done, make such order as may be necessary to enable that thing to be done.

(1A)     An order under subsection (1) may waive a failure to comply with a requirement in section 63A(1)(a) or (b) only if the failure relates to –

(a)        a document to be lodged with the sheriff,

 

(b)        A document issued by the sheriff, or

 

(c)        A time limit specified in relation to proceedings before the sheriff or a document relating to those proceedings…”.

 

[8]        Sec. 44(4)(c) of the 1924 Act provides:

 

“No deed, decree, instrument or writing granted or expede by a person whose estates have been sequestrated under … the Bankruptcy (Scotland) Act 1985 … relative to any land … belonging to such person at the date of such sequestration … shall be challengeable or denied effect on the ground of such sequestration if such deed, decree, instrument or writing shall have been granted or expede, or shall have come into operation at a date when the effect of recording … (b) under subsection 1(a) of section 14 of the Bankruptcy (Scotland) Act 1985 the certified copy of an order shall have expired by subsection 3 of that section, unless the trustees in such sequestration shall before the recording of such deed, decree, instrument or writing in the appropriate Register of Sasines have completed his title to such land … by recording the same in such register or have recorded a memorandum in such register in the form provided by Schedule O to this Act”.

 

Background

[9]        The respondent was appointed trustee on the sequestrated estate of Mark Edward Fortune (“the debtor”) on 7 February 2011.  By virtue of that appointment, the debtor’s whole estate vested in the respondent for the benefit of creditors as at 24 December 2010.  However, no certified copy of the warrant to cite was recorded in the register of inhibitions and adjudications in terms of sec. 14(1) of the 1985 Act.  Parties were not able to explain what had happened in that regard.  The debtor was discharged on 24 December 2011, but his trustee continued in office.  At all material times the reclaimers were aware of this.  The failure to record the warrant to cite came to light only on 10 December 2013, when the respondent sought to record a memorandum for extension of the period in terms of sec. 14(4).

[10]      On 6 February 2014, the sheriff, having heard an application for relief under sec. 63 of the 1985 Act, pronounced an interlocutor allowing the warrant to cite to be amended regarding the address of the debtor and ordaining the sheriff clerk to intimate to the keeper of the register of inhibitions and adjudications certified copies of the interlocutors dated 24 December 2011 and 6 February 2014 “reserving to pronounce further”.  On 11 February 2014, the keeper recorded the interlocutors dated 24 December 2011 and 6 February 2014.

[11]      On various dates in March and April 2014, whilst his estate continued to be vested in his trustee, the debtor granted a number of dispositions and standard securities in favour of the reclaimers.  All of the various deeds were registered after the expiry of three years from the date of sequestration.  The respondent had not completed title to the debtor’s estate.

[12]      On 12 May 2014, the sheriff pronounced a further interlocutor authorising the keeper to record the certified copy of the order of 24 December 2010 (although the keeper had already done so) and ordained the sheriff clerk to send to the keeper the trustee’s memorandum in terms of sec. 14(4) for recording and the keeper to record it, notwithstanding the expiry of the period of 3 years from the date of sequestration.

[13]      Before the Lord Ordinary, the reclaimers sought dismissal of the action.  They submitted (i) that the properties were no longer vested in the trustee when the dispositions had been registered, three years having expired after the date of sequestration without the trustee having completed title thereto; and (ii) that the deeds granted by the debtor were protected from challenge on the basis of section 44(4)(c).

[14]      The respondent submitted that the sheriff’s interlocutor of 6 February had not authorised recording of the warrant, which was only authorised by his interlocutor of 12 May.  Accordingly, the three year period relied upon by the reclaimers had never started to run.  Since the certified copy of the granting warrant to cite had not been recorded prior to the challenged deeds being registered, it could not have expired by the date of registration of the challenged deeds.  Further, the reclaimers knew of the debtor's sequestration when the deeds had been executed in their favour.  Since they were in bad faith the “offside goals” rule applied and the deeds were not protected by sec. 44(4)(c).

 

The Lord Ordinary’s opinion

[15]      The Lord Ordinary rejected the argument that the properties were no longer vested in the trustee at the time of the relevant dispositions.  What he described as “the prohibitory effect”, under section 14, of recording the warrant to cite, expired after three years.  However, there could be no effect unless and until the certified copy had been recorded.  A debtor’s deed could only attract the protection of section 44(4)(c) where the prohibitory effect had both commenced and expired. 

[16]      Although it might not have accorded with the sheriff's intention, the certified copy order had been recorded on 11 February 2014, thus the prohibitory effect of the recording had expired when the impugned deeds had been recorded in March and April 2014, three years having elapsed since the sequestration.  On the face of it, the deeds would attract the protection of section 44(4)(c) from any challenge “on the ground of sequestration”.  However, in the present case, the reclaimers were aware of the sequestration, and that the rustee continued to have a prior right to the subjects.  The challenge which was open to the trustee was not “on the ground of such sequestration” but on the ground that the purchaser had acquired his right in bad faith.  The rule against offside goals was engaged (Rodger (Builders) Ltd v Fawdry and Burnett's Trustee v Grainger [2004] UKHL 8, 2004 SC (HL) 19).  The Lord Ordinary noted:

“In my judgment, there is no legal or practical difference between the position of a disponee who takes title knowing that the property disponed is the subject of a prior contract for sale, and that of a disponee who takes title knowing that the property has vested in a trustee in sequestration, in terms of section 31 of the 1985 Act.  In both cases, the disponee knows that another party has a prior right to the subjects. “

 

[17]      The Lord Ordinary ordered production and reduction of the deeds on this basis.

 

Submissions

Defenders and reclaimers

[18]      The Lord Ordinary erred in granting decree of production and reduction de plano.  Instead, he ought to have sustained the defenders’ plea to the relevancy and dismissed the action.   

[19]      Whether the warrant was recorded or not, sec. 44(4)(c) of the 1924 Act limited the operation of the prohibitory effect of section 14 to three years from the date of sequestration.  In any event, the recording of the entry on 11 February 2014 resulted in the prohibitory effect expiring (albeit retrospectively) on 23 or 24 December 2013.

[20]      The offside goals rule had no application to the facts of the case.  The trustee in sequestration was not to be equiparated with a good faith purchaser for value (Heritable Reversionary Co Ltd v Millar (1892) 19 R (HL) 43 per Lord Herschell at p.45).  There was no antecedent contract or other obligation affecting the debtor.  The offside goals rule was restricted to situations of conflict between the law of contract and the law of property.  Were the offside goals rule to apply, any purchaser should know that a trustee might not have been discharged from office and that there was a possibility that they continued to assert a right to the debtor’s property.  That being so, not even a purchaser for value could safely deal with the debtor without making inquiries of the trustee.  The effect of sec. 44(4)(c) would be undermined.  The Lord Ordinary ought to have concluded that this was a straight race to the register.  The defenders won that race.  It was not implicit in section 44(4)(c) that only transactions in good faith were protected.

[21]      Esto the offside goals rule applied, the Lord Ordinary erred in holding that the respondent’s challenge was not “on the ground of … sequestration” but “on the ground that the purchaser has acquired his right in bad faith”.  Since the trustee only acquired the personal right to the debtor’s property as the result of his appointment, the challenge was indeed “on the ground of …sequestration”.  The effect of sec. 44(4)(c) was to preclude that challenge and the deeds were not voidable at the instance of the debtor’s trustee.

 

Pursuer and respondent

[22]      The reclaimers’ construction of sec. 44(4)(c) was correctly rejected.  That provision only applied where the warrant to cite had been recorded, and the prohibitory effect had commenced and then expired.  The prohibitory effect of section 14 arose not from the warrant but from the act of recording.  However, the Lord Ordinary erred in holding that the prohibitory effect of the recording had expired by the time at which the purported deeds were granted by the debtor.  The act of the Keeper in making the entry in the Register dated 11 February 2014 did not amount to the warrant to cite being recorded in terms of the 1985 Act.  If that was wrong and the recording on 11 February 2014 retrospectively triggered the prohibitory effect, the effect was renewed from the end of the three year period by the later recording of the memorandum as authorised by the sheriff in terms of the interlocutor dated 22 May 2014.

[23]      The offside goals rule was engaged.  Sec. 44(4)(c) did not operate to exclude a challenge by a trustee based upon that rule.  It was both permissible and necessary to read sec. 44(4)(c) as not granting immunity against such a challenge.  That reading resolved what would otherwise be a direct conflict between sec. 32(8) of the 1985 Act and sec. 44(4)(c) of the 1924 Act.  It could not have been Parliament’s intention to give immunity to a deed granted to a party who had actual knowledge of the fact of sequestration and the vesting of the estates in the trustee.  Such a party had no need of the protection of notice by means of an entry in the registers.  That was a simple reading of the legislation. If that approach was not accepted, then it was necessary to read words in to sec. 44(4)(c) to avoid clear injustice to the trustee and the creditors.

 

Decision

[24]      At the time of the dispositions and standard securities which are the subject of this litigation, the debtor’s estate was vested, and remained vested, in his trustee, who holds a personal right to the estate, which can be converted into a real right by completion of title.

[25]      Where the trustee has not completed title, and the title remains in the name of the debtor, the effect of sec. 14(2) is to put all the world on notice of the sequestration, and thus of the impediment that the trustee in sequestration has a personal right to the property in question.  An individual with such knowledge is no longer entitled in safety to rely on the face of the register. 

[26]      Where recording in terms of sec. 14(2) has taken effect, a trustee will not require to prove actual knowledge of the impediment on the part of a third party in order to challenge any transaction.  The knowledge is effectively deemed by operation of statute, as a consequence of the sequestration.  Once the effect of sec. 14(2) has expired, such individuals are no longer deemed to have that knowledge, and transactions with such individuals cannot be challenged merely on the basis of the sequestration.

[27]      However, the fact that the effect of sec. 14(2) has expired does not affect individuals who, as a matter of fact, have knowledge of the trustee’s prior personal right.  Such an individual is not entitled to rely on the expiry of public notification of the sequestration to transact with the debtor to the prejudice of the trustee and the creditors.

[28]      Sec. 44(4)(c) does not entitle such a person to transact with the debtor in relation to the sequestrated estate in a way which deprives the trustee of his rights.  Rather, in relation to such a person, the provisions of sec. 32(8) remain operative.  In such cases, counsel for the reclaimers was wrong to submit that the effect of sec. 44(4)(c) was to impose a temporal restriction upon sec. 32(8).

[29]      I agree with the solicitor advocate for the respondent that it cannot sensibly have been the intention of Parliament under sec. 44 to grant immunity to a deed which is in favour of a party who has actual knowledge of the fact of sequestration and the vesting of the estate on the trustee for the benefit of the creditors of the debtor.  The argument for the reclaimers was that even a clearly fraudulent transaction could not be challenged under sec. 44(4)(c) if the prohibitive effect of sec. 14(2) had expired.  That in my view would lead to a result which, in the context of the law of bankruptcy as a whole, would be absurd. There would be, as Lord Malcolm observed during the hearing, a statutorily-sanctioned fraud on the creditors.  That is sufficient to dispose of the reclaiming motions.  Had it been necessary to go further, I would have concluded that, in any event, the Lord Ordinary was correct to conclude that the matter came within the scope of the rule against “offside goals”.  He was correct to treat the trustee as being in a position equivalent to that of a bona fide purchaser for value: the trustee had a personal right which could be completed by registration.  The solicitor advocate for the respondent was correct to say that the statutory provisions regarding vesting were equivalent to a statutory conveyance to the trustee, on a par with a voluntary conveyance to an individual in good faith and for value.

[30]      Given the consensus in the court the reclaiming motions will be refused. During the hearing, counsel for the reclaimers conceded that expenses should follow success in the usual way.  Accordingly the reclaimers will be liable to the respondent in the expenses of the reclaiming motions.  In the Cooper Watson action only, the case will be remitted to the Lord Ordinary to deal with the outstanding matter referred to at para 2 above.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 49

CA29/15

CA30/15

Lord Justice Clerk

Lord Bracadale

Lord Malcolm

OPINION OF LORD BRACADALE

in the RECLAIMING MOTIONS

by

WILLIAM CLEGHORN AS TRUSTEE ON THE SEQUESTRATION OF MARK FORTUNE

Pursuer and respondent;

against

MEDWIN INVESTMENTS LIMITED

Defenders and reclaimers:

and

WILLIAM CLEGHORN AS TRUSTEE ON THE SEQUESTRATION OF MARK FORTUNE

Pursuer and respondent;

against

COOPER WATSON LIMITED

Defenders and reclaimers:

Act:  J Cormack, sol adv; Pinsent Masons

Alt:  D MacLean; Aitken Nairn, WS

 

1 July 2016

[31]      I have had the benefit of reading the opinions of your Ladyship in the chair and Lord Malcolm.  For the reasons given in them, to which I have nothing to add, I agree that the reclaiming motions should be refused, with expenses to the respondent.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 49

CA29/15

CA30/15

Lord Justice Clerk

Lord Bracadale

Lord Malcolm

OPINION OF LORD MALCOLM

in the RECLAIMING MOTIONS

by

WILLIAM CLEGHORN AS TRUSTEE ON THE SEQUESTRATION OF MARK FORTUNE

Pursuer and respondent;

against

MEDWIN INVESTMENTS LIMITED

Defenders and reclaimers:

and

WILLIAM CLEGHORN AS TRUSTEE ON THE SEQUESTRATION OF MARK FORTUNE

Pursuer and respondent;

against

COOPER WATSON LIMITED

Defenders and reclaimers:

Act:  J Cormack, sol adv; Pinsent Masons

Alt:  D MacLean; Aitken Nairn, WS

 

1 July 2016

[32]      The question at the heart of these reclaiming motions (appeals) concerns the proper construction of section 44(4)(c) of the Conveyancing (Scotland) Act 1924, and in particular of the words

“No deed … granted or expede by a person whose estates have been sequestrated under … the Bankruptcy (Scotland) Act 1985… relative to any land … belonging to such person at the date of such sequestration … shall be challengeable or denied effect on the ground of such sequestration if such deed … shall have been granted … at a date when the effect of recording … (b) under subsection (1)(a) of section 14 of the Bankruptcy (Scotland) Act 1985 … shall have expired by virtue of subsection (3) of that section, unless the trustees in such sequestration shall before the recording of such deed … in the appropriate Register of Sasines have completed his title to such land … by recording the same in such register or have recorded a memorandum in such register in the form provided by schedule O to this Act.”

 

The focus of the argument concerns, in particular, the words “… no deed … shall be challengeable or denied effect on the ground of sequestration…”.  The reclaimers argue that, when it applies, section 44(4)(c) means that a disposition granted by a bankrupt to someone with knowledge of his sequestration is immune from challenge if recorded before the trustee completes title. 

[33]      The concentration on section 44(4)(c) has tended to distract from the terms of section 32(8) of the 1985 Act, which, subject to the exceptions provided in subsection (9), have the effect that any dealing of or with the bankrupt relating to his estate vested in the trustee shall be of no effect in a question with the trustee.  While this seems a very broad provision, the debate before both the Lord Ordinary and this court proceeded upon the basis that the terms of section 14 of the 1985 Act, when taken with section 44(4)(c) of the 1924 Act, contemplate that, until the trustee completes title to any heritable estate, there remains the possibility of a third party recording a valid title enforceable against the trustee to part or all of the sequestrated heritable estate.  During the hearing there was no discussion as to the potential overlap between these provisions and section 32(8) of the 1985 Act.  The consequence is that the following analysis may be vulnerable to the proposition that it largely ignores the potential relevance of the latter provision, which in a sense is more expansive than section 14, not being restricted to a particular type of diligence over heritable property; though in another sense it is more restrictive, being limited to questions with the trustee.  The explanation for the overlap may be a concern that notice of the sequestration should be given to those who might otherwise rely on the registers.  In any event, the interplay between the two sets of provisions, whatever may be the correct analysis, affords no support for the sweeping effect of section 44(4)(c) of the 1924 Act as contended for by the reclaimers. 

[34]      Reverting to the issue focussed in these reclaiming motions, and for the moment speaking generally, if a third party transacts with a bankrupt for value and in good faith in respect of heritable property, then, other things being equal (and leaving aside section 32(8)), he is entitled to proceed on the faith of the registers.  By contrast, anyone with knowledge of an impediment in the granter’s title, of which sequestration is an example, cannot do so.  This is because he is aware that his author has no power to grant the disposition (National Bank v Union Bank (1885) 13 R 390, Lord Rutherfurd Clark at 394).  The statutory scheme laid down in section 14 is that, on the recording of the first order, as from the date of the sequestration this has the effect of an inhibition and a citation in an adjudication of the bankrupt’s heritable estate at the instance of creditors (section 14(2)).  It operates as publication of the sequestration to the world at large, with everyone then put on their inquiry.  Thereafter, third parties acting in good faith are in no better position than someone with knowledge of the sequestration. 

[35]      In terms of section 14(3), what has been described as “the prohibitory effect” of section 14(2) expires on the happening of certain events, including the end of the period of three years beginning with the sequestration, unless in the meantime a memorandum under subsection (4) has been recorded.  Once the prohibitory effect has expired, section 44(4)(c) of the 1924 Act, when read short, provides that, unless the trustee has recorded a prior title, no deed granted by the bankrupt in respect of property subject to the sequestration “shall be challengeable or denied effect on the ground of such sequestration”.  The reclaimers’ argument is that this renders the transactions entered into between them and the bankrupt immune from challenge. 

[36]      If the reclaimers’ submission is correct the words “on the ground of sequestration” add nothing.  However, I suggest that they do serve a particular purpose.  Section 44(4)(c) addresses the consequences of removal of the deemed inhibition and adjudication over the relevant property.  Prior to its expiry (and again leaving section 38(2) to one side) the prohibitory effect of recording the warrant alters the status of third parties giving value and acting in good faith.  When in operation, it means that deeds granted to such parties can be struck down simply “on the ground of the sequestration”.  However, once the benefit of section 14(2) expires, something more is required for a deed to be challengeable, for example lack of value paid, or actual knowledge of the impediment in title.  The prohibitory effect allows a challenge solely on the basis that the deed relates to sequestrated subjects.  It is a statutory innovation designed to give added protection to the bankrupt’s creditors;  a protection which could operate to the detriment of parties who might otherwise take the benefit of a prior recorded title flowing from an onerous transaction, if in good faith they have relied on the state of the registers.  As Lord Jauncey said in Sharp v Thomson 1997 SC (HL) 66 at 69G:

“… The purpose of registration is … to enable third parties to deal with a registered proprietor safe in the knowledge that there are no hidden qualifications or impediments in his title.”

 

The expiry of the prohibitory effect simply restores this advantage to such third parties.  It does not present a new opportunity to those well aware of the problem. 

[37]      It would be wholly artificial to construe the terms of section 44(4)(c) without regard to its context and purpose.  The reclaimers’ submission would carry the outcome that a disposition which both parties know amounts to a fraud on the creditors, would be beyond challenge if recorded before the trustee completed title.  Such a surprising result would require clear wording in the statutory provision.  In my view Parliament’s intention did not extend beyond that which was necessary to recreate the position pertaining before the prohibitory effect of a recording under section 14 came into being – and the wording is habile to that limited consequence. 

[38]      The result is that I agree with the Lord Ordinary’s opinion at paragraph 37 that the trustee’s challenge to these deeds is not “on the ground of the sequestration”, but on the ground that the purchasers are in bad faith.  The expiry provisions in section 44(4)(c) can benefit only parties who have acted in good faith in reliance on the register.  Once the effect of the recording of the warrant has stopped, subsequent deeds of the bankrupt will not be open to reduction simply because of the sequestration, but will remain vulnerable if, for example, the grantee is in bad faith.

[39]      As I understand it, the reclaimers presented a separate argument which did not depend upon an analysis of section 44(4)(c).  The submission was that, what is sometimes called “the offside goals rule”, is restricted to cases where the registered proprietor has granted conflicting deeds to two separate parties.  If the beneficiary of the later deed is aware of the earlier, he cannot win “any race to the register.”  His registration is “offside”, in the sense that it is disallowed.  In so far as the submission was that, in the absence of a relevant statutory prohibition, the current deeds can be validly recorded notwithstanding the as yet uncompleted title of the trustee, I demur.  The double sale cases are merely examples of a broader prohibition against reliance on the register by anyone who is in bad faith by virtue of being aware of prior obligations or claims affecting the subjects – see, for example, Stodart v Dalzell (1876) 4 R 236, and Burnett’s Trs v Grainger 2004 SC (HL) 502, Lord Rodger of Earlsferry at paragraph 105.  As put by Professor Reid: “… what is required is the breach by the granter of an antecedent obligation which was binding upon him.” (Stair Memorial Encyclopaedia, volume 18, paragraph 695)  In the present case the source of the binding antecedent obligation is the statutory vesting of the bankrupt’s heritable property in the trustee.  Again to use the professor’s phraseology (paragraph 698), the deeds were “in the face of an obligation prohibiting (their) making”.

[40]      The above renders it unnecessary to discuss issues specific to the, hopefully, unusual facts of the present cases.  For example, there was no recording of the first order until after the expiry of the three year period laid down in section 14(3).  In the event an interlocutor of 6 February 2014 was recorded on 11 February, and a subsequent interlocutor allowed the recording of a memorandum under section 14(4).  All of this occurred by virtue of an application to the sheriff by the trustee inviting him to operate his powers under section 63 of the 1985 Act.  The reclaimers argued that the late recording of the warrant to cite had retrospective effect, which allowed the submission that a prohibitory effect under section 14(2) had expired, thereby triggering operation of section 44(4)(c) of the 1924 Act.  On the face of it this seems a somewhat artificial argument, but it is not necessary to dwell upon it.  Nor need the court ponder whether the recording of the recent orders of the sheriff cures all potential problems in that the challenged deeds are caught by an ongoing prohibitory effect. 

[41]      I consider that the above reasoning is broadly consistent with that of your Ladyship in the chair.  It follows that I agree that the reclaiming motions should be refused, with expenses to the respondent.