Scottish Sheriff Court Decisions

ALAN B WRIGHT, PERMANENT TRUSTEE IN THE SEQUESTRATION OF IAN ROY [2000] ScotSC 8 (18th April, 2000)

JUDGMENT OF SHERIFF A.L. STEWART, Q.C.

in the note by

Alan B Wright, Permanent Trustee in the sequestration of Ian Roy

_______________________________

DUNDEE. 18 April, 2000

The sheriff, having heard the noter in person refuses to grant the crave of the note in respect that the remedy sought is one which the court cannot competently grant in terms of the Bankruptcy (Scotland) Act 1985, section 63(1)(a)..

This is a note by the permanent trustee in a sequestration (hereinafter referred to as "the applicant"). In his note the applicant craves the court to cure an alleged "defect in procedure" in terms of section 63(1)(a) of the Bankruptcy (Scotland) Act 1985 (hereinafter referred to as "the 1985 Act"). The circumstances in which the application is made are not fully averred in the note, which is where they should have been. However, the applicant sent a letter dated 29 March 2000 to the sheriff clerk setting out the reasons for the application, and I am prepared to deal with it on the basis that the terms of the letter are effectively incorporated into the note.

The debtor was sequestrated on 19 October 1992. Mr Thomas Dyer, Chartered Accountant, Dundee was appointed trustee in the sequestration. The debtor received his automatic discharge at the end of three years but the sequestration could not be brought to an end as his half share in the matrimonial home (jointly owned with his wife) had not been realised. On 15 April 1997, following a petition by the Accountant in Bankruptcy, the applicant was appointed trustee in place of Mr Dyer.

Section 14 of the 1985 Act contains important provisions whereby a person inspecting the Register of Inhibitions and Adjudications may be warned of the existence of a sequestration. In subsection (1) it is provided that the clerk of court must "forthwith after the date of sequestration" send a certified copy of the relevant court order to the Keeper for recording in the Register. Subsection (2) provides that recording in conformity with subsection (1) "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".

Subsection (3) provides:-

Subsection (4) provides a saving in the following terms:-

In the present case section 14(1) was complied with, and the appropriate certified copy of the sequestration order was duly recorded in the Register. However, no memorandum in terms of section 14(4) was recorded before the expiry of a period of three years from the date of sequestration (i.e. before 18 October 1995) and, indeed, none has ever been recorded. The applicant now asks the court to "issue an interlocutor to enable the trustee to send a memorandum in the prescribed form to the Keeper of the Register of Inhibitions and Adjudications for recording in that register". He seeks to do so in terms of section 63(1)(a) of the 1985 Act. This provides:-

The applicant addressed me in person. He pointed out that if no memorandum were recorded the creditors might be prejudiced as there would be nothing in the Register to prevent any person, including the debtor, intromitting with the property. He informed me that the procedure which he was adopting was that recommended by the Keeper of the Register where there had been a failure to record a memorandum timeously. I confess that this information came as a considerable surprise to me.

In my opinion, it would not be competent for me to make an order under section 63(1)(a) in the circumstances of the present case. What I am being asked to do is not merely to cure a procedural defect, but rather to reinstate something which disappeared from existence almost five years ago.

A sequestration (if the appropriate certified copy order is recorded) is effective as an inhibition and a citation in an adjudication (section 14(2) of the 1985 Act). That effect, however, lasts only three years from the date of sequestration (section 14(3)(b)) unless certain further steps (the recording of a memorandum in terms of subsection (4)) are taken before the expiry of that period. If no such steps are taken the effect expires three years after the date of sequestration. This means that in the present case the effect expired on 18 October 1995.

In my opinion, section 14 read as a whole clearly means that, unless the effect has been kept alive by the timeous recording of a memorandum under section 14(4), it is dead and cannot be revived. The terms of the latter part of subsection (4) reinforce my view that this is so: "and thereafter the said effect shall continue to be preserved only if such a memorandum is so recorded before the expiry of every subsequent period of three years" (emphasis added).

To sustain the competency of an application such as the present would, in my opinion, be to fly in the face of the clearly expressed intention of Parliament. It would render the Register of Inhibitions and Adjudications unreliable in any case where there had been a sequestration. Any person inspecting the Register would run the risk that an old sequestration would suddenly be revived even though no new event relating to the debtor had occurred. This would be at the very least unsatisfactory and could possibly lead to serious injustice.

I accept, as the applicant stated, that the debtor's creditors may be prejudiced by the refusal of this application, but to grant it would be to prejudice the public at large who are entitled to rely on the accuracy of the Register.

For the sake of completeness I should add that, even had I held that the present application were competent, I should most likely have refused it on its merits as coming far too late. In terms of section 14(3)(b) the effect expired on 18 October 1995. The applicant was appointed trustee in 1997. The present application was presented early in 2000. Such a delay for which no explanation was tendered would almost certainly have justified me in refusing to exercise my discretion in favour of granting the application.

Finally, as I have said, I was informed that it is the practice of the Keeper of the Register to recommend that an application under section 63(1)(a) be made in order to allow him to accept the lodging of a memorandum in terms of section 14(4) of the 1985 Act after the expiry of three years from the date of sequestration. If this information is correct, I suggest in the strongest possible terms that the Keeper reconsiders this practice.