JUDGMENT OF SHERIFF PRINCIPAL JAMES A TAYLOR
in the cause
EILEEN BLACKBURN
PURSUER
against
ELIZABETH COWIE
DEFENDER
Glasgow, May 2006.
The Sheriff
Principal, having resumed consideration of the appeal, Answers the first and
second questions in the Stated Case in the negative; Refuses the appeal and
Reserves meantime the question of expenses.
NOTE:
[1] The pursuer in this
action is the permanent trustee on the sequestrated estate of
William Cowie. The defender is
Elizabeth Cowie, the former spouse of William Cowie. Mr Cowie was sequestrated on 13 June 1989 and Mr Alan O'Boyle
appointed his trustee. Eileen Blackburn,
the pursuer in this action, was appointed the permanent trustee in succession
to Mr O'Boyle by virtue of Act and Warrant granted in this court on 8 July 2002. Mr O'Boyle had recorded a notice of title in
his favour as permanent trustee on 30 January
1990. Ms Blackburn raised a
summary cause action for recovery of the heritable property at 41 Westbourne
Gardens, Glasgow
which was the former matrimonial home and now formed part of the bankrupt's
estate. Ms Blackburn had not recorded a
notice of title.
[2] The appeal proceeds by way of Stated
Case. The Stated Case contains five
questions of law. Only questions one and
two were argued before me by Mr Kinnear, Advocate, who appeared on behalf of
the defender. Mr Cameron, Solicitor,
appeared on behalf of the pursuer.
[3] In support of the first question of law,
Mr Kinnear submitted that in order for a pursuer to succeed in an action for
recovery of heritable property the pursuer had to be infeft. In support of this position he cited the Stair
Memorial Encyclopaedia, Volume 18 at paragraph 142, the Stair Memorial
Encyclopaedia, Volume 13 at paragraph 494, the Report of the Scottish Law
Commission entitled "Recovery of Possession of Heritable Property"
(Scot Law Com No. 118 (1989)), Erskine
Title VI, Paton & Cameron at pp 254 and 255 and Walker v Henry 1925 SC 855.
The pursuer was not infeft as she had not recorded a notice of
title. She did not benefit from the
notice of title recorded by her predecessor as permanent trustee.
[4] Mr Cameron accepted that the pursuer was
not infeft at the time when the sheriff granted decree in favour of the
pursuer. A notice of title had been
expeded in favour of the pursuer after decree.
In support of his opposition to the appeal he reminded me that Sheriff
Scott had heard an argument when the case first called to the effect that the
pursuer did not have title to sue. He
refused to dismiss the action. Reference
was made to his Note of 20 July 2004. Mr Cameron submitted that Walker v Henry could be distinguished. That
case and all the other works to which I had been referred related to an
uninfeft landlord seeking to eject a tenant from the landlord's property. In each case the defender had title to occupy
by virtue of a lease. In this case the
defender has no such title. At one point
she had a right under the Matrimonial Homes Act but following her divorce that
flew off. Mr Cameron equated her
position to that of a squatter. I was
referred to Professor McBryde's Bankruptcy at paragraphs 9-30 to
9-36. From the foregoing Mr Cameron
submitted that the Act and Warrant placed the Trustee in the position of a
creditor holding an adjudication and that such a creditor need not be infeft in
order to remove the debtor from the property.
It followed that if an uninfeft permanent trustee could remove a debtor
the same permanent trustee could remove a third party. This had been considered by the Inner House
in the case of White v Stevenson 1956 SC 84. Reliance was placed on the
opinion of Lord President Clyde at pp 89, 90 and 91. It is clear from the opinion that the debtor
in a sequestration is without right to occupy the property which forms part of
the estate. The Trustee relied upon the
Act and Warrant to eject him.
Accordingly the Act and Warrant allowed appropriate steps to be taken to
remove the debtor from the property.
[5] When first considering the submissions
made to me, I doubted if what had been submitted by Mr Cameron in relation to
the first question was sound. I also
questioned if the concession which he made that Ms Blackburn was not infeft in
the property was properly made. That was
why I invited further submissions on whether Mr Cameron wished to maintain that
concession. After assigning a further
hearing, Mr Cameron informed the court that he did not wish to make further submissions. The concession stood. I therefore had to decide the case on the
basis of the submissions made to me at the original hearing.
[6] Mr Cameron accepted that the pursuer in
an action of removing required to be infeft at the time decree was granted. The question which was focused by Mr Cameron
was whether the pursuer in an action of ejection required to be infeft
at the time decree was granted. He
placed much reliance upon the opinion of Lord Clyde in White v Stevenson. The
difficulty with that case is that the question which falls to be answered in
the instant case was not before the court in quite such a focused proposition
as here arises. The best Mr Cameron
could take from the case was that neither the judge, nor counsel, at any time
raised the question of the need for the trustee in bankruptcy, who was the
pursuer in an action of ejection, to be infeft before the granting of
decree. I accept that, given the
eminence of the bench, and indeed those appearing, it might be surprising if
such a basic point was overlooked.
However I was a little unhappy about deciding the case on the basis of
what was not said in White v Stevenson
regardless of the identity of the judge and counsel. Furthermore I did not consider that the
passages in McBryde on Bankruptcy took the pursuer much further. The issue in question did not appear to me to
be what the learned author was addressing when he wrote paragraphs 9-30 to
9-36. On the other hand, the authorities
and other works cited by the appellant were not entirely in point either. The case of Walker v Henry was an action of removing and
not an action of ejection. Paragraph 494
of Volume 13 of the Stair Memorial Encyclopaedia is clearly written in the
context of an action for the removing of a tenant by his landlord. That is hardly surprising as the section of
the Enclyclopaedia in which paragraph 494 appears is entitled "Landlord
and Tenant". The Report of the
Scottish Law Commission "Recovery of Possession of Heritable
Property" also does not deal with the precise question in issue here. At paragraph 6.18 it is said:-
"The pursuer in any action may be required to establish his title to
sue. In an action for recovery of
possession of heritable property this generally means the pursuer's title must
be completed by infeftment ie by recording in the Register of Sasines or
registration in the Land Register."
[7] It should be noted that the authors only
say what is "generally" required.
The title to paragraph 6.18 is "Debtor under ex facie absolute disposition." The remainder of the paragraph refers to a
landlord's title to sue. In my opinion
the authors are here addressing the situation where an action of removing would
be required as opposed to an action of ejection. Both actions are covered by the term "an
action for recovery of possession of heritable property". The paragraph is thus not an authority for
the proposition that in an action for ejection the pursuer requires to be
infeft. Furthermore, paragraphs 6-20 to
6-23 of the Law Commission Report, upon which Mr Kinnear also relied, are in my
opinion addressing the situation where an action for recovery of heritable
property requires to be raised by a landlord against his tenant. In other words, the comments probably apply
to actions of removing only.
[8] The passage in paragraph 142 of Volume
18 of the Stair Memorial Encyclopaedia does take the appellant further. There the author writes "Except in the
case of actions of removing and ejection, however, there is probably no
requirement that his (the pursuer's)
title be completed by registration or as the case may be, by possession, and an
action lies equally in one who is uninfeft..." However the author cites as his authority for
the proposition that both actions of removing and ejection require that the
pursuer is infeft, paragraph 494 from Volume 13 of the Stair Memorial
Encyclopaedia and the aforementioned Report by the Scottish Law
Commission. I have already explained
that in my opinion these writings do not vouch the stated proposition.
[9] I found it helpful to examine the
difference between removing and ejection.
The distinction has become less significant in recent years perhaps due
to both actions of removing and ejection being raised by means of a summary
cause summons for the recovery of possession of heritable property. A very clear exposition of the differences
can be found in Maher & Cusine "The Law and Practice of
Diligence" at paragraph 9.51:-
"The term "removing" has a general meaning which covers
any surrender of heritable property and it is usually applied to the surrender
of a lease by a tenant. However, it has
the more specific meaning of an action by which a landlord seeks to recover
possession of property from a tenant.
The tenant's right is terminated by a judicial process. By contrast, "ejection" is used of
an action whereby the owner or possessor of heritable property seeks to recover
possession from someone who has no right or title, the typical example being a
squatter."
[10] Looking at the issue from first principles
one can see that in a situation where a right to occupy heritable property
flows from a lease, the tenant might be entitled to be satisfied that the
person seeking his removal has title so to do.
In other words, the pursuer must satisfy the court that the pursuer's
title is better than the defender's. In
most cases the issue will be clear in that the pursuer will be the landlord who
granted the lease. But should the
landlord have sold his interest in the lease the tenant would be entitled to be
satisfied, before decree of removing was granted against the tenant, that the
new landlord's title had been perfected.
In other words, the new landlord has to be infeft before he can remove a
tenant whose title is derived from the lease.
In a sense one has a competition of titles. But when an owner of heritage seeks to eject
a person with no title to occupy, there is no such competition. The occupier has no lease or other legally
derived form of occupation. There is
then no competition of titles. One can
see how in such circumstances there is no need for the owner to establish to
the occupier that he is infeft. Thus on
reconsidering the authorities cited in argument I formed the view that there
was greater merit in the pursuer's submissions than I had first thought.
[11] Reading further I noted that at paragraph
9.83 in Maher & Cusine, when
dealing with actions of removing, the authors state that the pursuer
must be infeft. Walker v Henry is cited as the authority. At paragraph 9.88, when dealing with actions
of ejection, the authors offer the view that "In principle, an action or
(sic) ejection would be available to a bone
fide possessor whose right is challenged by someone with no right to
possess." While in no way wishing
to doubt the reliability of what is said in Maher & Cusine I then
considered what was said in Gordon Scottish Land Law 2nd
Edition being a text where one might find an issue such as infeftment more
fully discussed. I found at paragraph
14.23 a comment very similar to that found in Maher & Cusine and
quoted supra. The author states "...it seems that a
party with a prima facie title may
bring an action of ejection against a squatter alleging no title." One of the authorities cited is Mather v Alexander 1926 SC 139. That case vouches the proposition that where
a pursuer sues for ejection and avers that he has a habile title he will
succeed in his action if the defender does not aver a competing title. In that report, as also in Gordon at
para 14-23, one sees the concept of competing titles clearly focused. In Johnston v Fairfowl (1901) 8 SLT 480, the other
authority referred to in Gordon, Lord Stormonth Darling said "...a
squatter is bound to remove so soon as he is challenged by a person having an ex facie valid title."
[12] In this case the defender is, as Mr
Cameron submitted, in the same position as a squatter. As the divorced wife of the bankrupt she has
no right to occupy the subjects:-
"The vesting in the permanent trustee does have the consequence that
subject to any rights which the debtor may have in a family home or a
matrimonial home the debtor is without any right to remain in his former
house." (McBryde, Bankruptcy (2nd edition) paragraph
9-36).
[13] Furthermore, the pursuer, by virtue of her
act and warrant has title to the property of the bankrupt.
"The act and warrant gives the permanent trustee a title to
heritable estate in Scotland. This would be the effect of the provision
that "the whole estate" of the debtors vests in the
trustee." (McBryde, Bankruptcy
(2nd edition) paragraph 9-30).
[14] Thus by considering Maher & Cusine,
Gordon, Mather v Alexander, Johnston v Fairfowl and McBryde the view to which I had come
on reconsidering the authorities was reinforced. The pursuer in an action for ejection of a
squatter does not require to be infeft.
Accordingly, the first question posed in the Stated Case falls to be
answered in the negative. However even
if I am wrong in the answer to which I have come, it is not altogether clear to
me that the concession that the pursuer was uninfeft was properly made.
[15] Although both parties referred me to the
second edition of McBryde on Bankruptcy neither party referred me to
paragraph 1-06. There the learned author
offers the view that a sequestration "does not depend on there being
someone in office to administer the estate". This must be implied at common law. It is also consistent with the 1985 Act (see
for example Section 29(5)). When a new
trustee is appointed he succeeds to all the rights enjoyed by the original or
immediately preceding trustee. Thus, if
prior to demitting office, Mr O'Boyle had entered into missives for the sale of
part of the bankrupt's heritable estate, Ms Blackburn would be under the same
obligations and be the beneficiary of the same rights as her predecessor. The incoming trustee succeeds to the rights
of the outgoing trustee by operation of law.
Similarly if Mr O'Boyle appeared on the Share Register of a quoted company
with a Registered Office in England
as the holder of shares in that company in his capacity as permanent trustee,
Ms Blackburn as his successor would have title to the shares. Exactly the same position would hold in
respect of heritage or real estate outside Scotland.
[16] Such an approach would appear to be
consistent with the scheme of the 1985 Act.
The estate vests in the trustee not from the date of the act and warrant
but from the date of sequestration (Section 31(8)). It is also significant that in terms of
Section 31(1) the estate vests in the permanent trustee. It is a clear reference to the singular. In other words the estate vests in the office of the permanent trustee
which office can be held by different individuals from time to time.
[17] In so far as question two in the Stated
Case is concerned, I answer that in the negative. The point was well focused in the argument
before me. Section 40(1) of the 1985 Act
requires the permanent trustee to obtain relevant consents before the debtor's
family home is sold. If consent cannot
be obtained, the authority of the court is required instead. It was not in dispute that by interlocutor of
14 November 1990 the court
dispensed with the consent of Mrs Cowie to the sale of 41 Westbourne
Gardens, Glasgow. The court attached certain conditions to the
dispensation. For example missives were
not to be concluded prior to 31 May
1991 and Mrs Cowie was to be given 21 days notice of the date of
entry. There is no finding-in-fact that
the trustee had concluded any sale. It
is apparent by virtue of the raising of this action however that the trustee
now wishes vacant possession. I
understood this was in preparation for exposing the heritable subjects for sale
on the open market. Section 40(3) of the
1985 Act is in the following terms:-
"Subsection
(2) above shall apply -
(a) to an
action for division and sale of the debtor's family home; or
(b) to
an action for the purpose of obtaining vacant possession of the debtor's family
home,
brought by the
permanent trustee as it applies to an application under subsection (1)(b) above..."
[18] For the defender it was submitted that
properly construed this meant that the permanent trustee required to make two
applications to the court. In the first
place, application required to be made before the trustee could enter into a
bargain for the sale of the property.
The permanent trustee then required to have recourse to the court if an
order was requested to obtain vacant possession. I was referred to Section 40(3). That, said Mr Kinnear, was the only way
in which the Act could be interpreted given the use of the words "as it
applies to an application under sub-section (1)(b) above".
[19] In my opinion this gives rise to an
absurdity. It could mean that the court
grants authority to the permanent trustee to enter into missives to sell the
property. To grant such authority the
court has to have regard to the factors set out in Section 40(2)(a) - (d). The permanent trustee then implements that
authority and enters into a contract for the sale of the property with vacant
possession. If the spouse of the
bankrupt then declines to remove him or herself from the property in time for
vacant possession to be given to the purchaser, the permanent trustee would
require to come back to the court for an order under Section 40(3) to obtain vacant
possession. The court would again
require to have regard for the considerations set out in Section 40(2)(a) -
(d). Thus in deciding whether to
authorise the sale and to grant vacant possession the court would require to
weigh in the balance the same considerations at two separate points in
time. In reaching a view the court will
on each occasion be exercising a discretion.
It is not inconceivable for a sheriff to exercise his discretion in
favour of the permanent trustee when deciding whether the property should be
sold and for a different sheriff to exercise his discretion in favour of the
family of the bankrupt when exercising his discretion as to whether to grant
vacant possession. Indeed the facts
might have changed between the two points in time at which the discretions have
to be applied. If two consents were
required the trustee could be placed in a position whereby he is unable to
fulfil the contract which the court has authorised that he enter into. It is almost inconceivable that a trustee
would sell heritable property without an obligation to give vacant
possession. If the court then refuses to
sanction vacant possession the trustee will have been placed in breach of
contract.
[20] If there are two interpretations available
to the court the court should avoid an interpretation which gives rise to an
absurdity. Accordingly in my opinion
Section 40 falls to be interpreted as meaning that if the permanent trustee is
successful in persuading the court to dispense with the consent of the spouse
of the bankrupt to the sale of the property further consideration of the
factors set out in Section 40(2)(a) - (d) is not required. The provisions of Section 40(3) come into
play in circumstances where the debtor's spouse has consented to the sale, the
trustee then enters into missives and the debtor's spouse then declines to
remove from the property to enable the trustee to give vacant possession to the
purchaser. In those circumstances the
trustee can come to the court and seek the removal of the family albeit in
coming to its decision the court has to have regard to exactly the same
considerations when exercising its discretion as it would have required to
consider had the permanent trustee required to have the consent of the spouse
dispensed with.
[21] Given the answers which I
have arrived at in relation to the first two questions and the position of the
defenders that they did not wish to argue any of the remaining questions in the
Stated Case, I refuse the appeal. As
requested I have reserved the question of expenses.
