Scottish Sheriff Court Decisions

Submissions on behalf of the defender

[6] Mr Cannon commenced his submissions by referring me to a certified copy of the trust deed executed by the pursuer on 30^th July 2007. He explained that the pursuer had not been sequestrated. Her trustee is acting in terms of the trust deed.

[7] The structure of Mr Cannon's submissions was to ask five questions (a) did the pursuer agree any restrictions in her trust deed relating to the hire purchase agreement entered into between the parties on 28^th April 2007? (b) What powers had the pursuer conferred upon her trustee in terms of the trust deed in order that the trustee could recover her estate? (c) Do the claims made in this action vest in the pursuers trustee? (d) Is the pursuer acting in competition with her creditors, or her trustee, and (e) did the pursuer seek the consent or concurrence of the trustee before the raising of this action?

[8] Did the pursuer agree any restriction in her trust deed relating to the hire purchase agreement entered into between the parties on 28^th April 2008? The trust deed was signed on 30^th July 2007. I was referred to the first paragraph of the trust deed which states that the pursuer assigns, dispones, conveys and makes over to Maureen Hyslop Roxburgh, her trustee her "whole estate such as would vest in a Permanent Trustee in terms of sections 31,32 and 33 of the Bankruptcy (Scotland) Act 1985".

[9] The trust deed did not reserve to the pursuer any rights in respect of the hire purchase agreement entered into between the parties.

[10] The pursuer's estate vested in her trustee in terms of the trust deed in a similar manner as if the trustee had been appointed upon the sequestrated estates of the pursuer.

[11] What powers had the pursuer conferred upon her trustee in terms of the trust deed in order that the trustee could recover the estate? In terms of the trust deed, the pursuer had conferred upon her trustee "all powers I could have exercised in relation to my estate had this trust deed not been granted including without prejudice to the foregoing generality the following powers to be used as and when my trustee thinks fit" (foot of page 1 to page 2). The trust deed then goes on to list powers which include power to (i) to take possession of [the pursuer's] estate and (v) "to defend or bring any court action or any other legal proceedings".

[12] I was also directed to the clause on page 3 in relation to payment of creditors. In terms of this clause payment to the pursuer's creditors will be made in accordance with the order of priority in distribution as provided for by section 51 of the Bankruptcy (Scotland) Act 1985. The trustee is to determine the time when payment should be made, what notice of payment should be given and whether payment should be made by way of interim or final dividend. Accordingly, the pursuer assigned title to her full estate and has given authority to her trustee to defend or bring any court action or legal proceedings so as to ingather her estate and distribute it.

[13] Do the claims made in this action vest in the pursuer's trustee? In this action the pursuer seeks to open up a hire purchase agreement entered into prior to her signature of the trust deed. The pursuer seeks repayment of money paid in terms of that contract and ownership of the vehicle which is the subject matter of the hire purchase agreement.

[14] Prior to her signature of the trust deed on 30^th July 2007 the pursuer had the legal right to raise court action against the defenders to seek to open up and vary the hire purchase agreement. She had not done so.

[15] In particular, in terms of the Consumer Credit Act 1974 section 140A and B the pursuer could have raised proceedings for repayment of sums paid by the pursuer under and in terms of the hire purchase agreement; to require the defenders to do or not to do anything in terms of the hire purchase agreement; to reduce or discharge any sums payable to the defenders under the hire purchase agreement or to alter the terms of the hire purchase agreement.

[16] As at the date the pursuer had signed the trust deed, she had not raised proceedings against the defenders. As a consequence of her signature to the trust deed, the pursuer's right to do so was assigned to her trustee. I was referred to McBride on Bankruptcy (second edition) relating to extortionate credit transactions at paragraph 10.107 at page 272 and to section 61(5) of the Bankruptcy (Scotland) Act 1985 also relating to extortionate credit transactions in support of the proposition that the right to recover money or property vests in the pursuer's trustee. Mr Cannon submitted that a trustee, whether acting in terms of a trust deed or in a sequestration, would not require to adopt the hire purchase agreement to acquire the right to pursue claims in terms of it.

[17] I was also referred to McBride paragraph 9.9 at page 210. The rights which the pursuer seeks to assert have been assigned to the trustee. Therefore the pursuer has no title to pursue claims herself because title now vests in the pursuer's trustee who has obligations both to the debtor and to creditors.

[18] There are certain categories of claims which a pursuer could pursue independently of her trustee but this type of claim under a contract did not fall into one of those permitted categories. Examples of claims which a debtor might pursue are given within McBride at paragraph 10.86 at page 266. These include actions affecting status, actions for damages or an action seeking reduction of the decree which had led to the sequestration of the debtor. I was referred to Thom v Andrew 1888 (I5R) 780; Cooney v Kilpatrick, 1989 SLT 457 and Dickson v United Dominions Trust Limited 1988 SLT 19.

[19] Might the pursuer be acting in competition with her creditors or the trustee? I was referred to McBride, paragraph 10.84 at page 265 and Douglas Thomson v Yorkshire Building Society 1994 S.C.L.R 1014 and in particular the judgement of Sheriff Principal Nicholson at page 1016F - 1017C. In Thomson a debtor was merely seeking to suspend a creditors rights. By doing so the pursuer in Thomson could have competed with the rights his creditors or those of his trustee and therefore the pursuer had no title to sue without the consent or concurrence of his trustee.

[20] The remedies being sought by the pursuer in the current case include an order to set aside the debt owed, a repayment of money and the transfer of ownership of the vehicle. The pursuer is therefore competing with the rights of her trustee to preserve her estate and the rights of creditors, including the defenders. The pursuer seeks to reduce her level of indebtedness which is, in itself, a competitive act and an effort to reduce the claim by the defenders against the estate of the pursuer, which now vests in her trustee.

[21] Did the pursuer seek the consent or concurrence of her trustee before raising this action? The pursuer does not seek to prove that she obtained the consent or concurrence of the trustee prior to raising court action. It was submitted that the test for title to sue is whether the pursuer had title when the court action was raised.

[22] There are no averments that the pursuer had the consent of her trustee when the writ was warranted or served. Indeed, the pursuer failed to disclose that she had signed a trust deed until comparatively late in the proceedings when the defenders became aware that the pursuer had executed a trust deed.

[23] In his concluding submissions, Mr Cannon submitted that having followed these steps, the logical conclusion to draw is that the pursuer has no title to sue and could not do so without the prior consent of her trustee.

Submissions on behalf of the pursuer

[24] On behalf of the pursuer, Mr O'Donnell indicated that he would deal with the no title to sue point, with dispatch. I was referred to an affidavit of the trustee number 6 (7) of process. This affidavit was sworn by the trustee, Maureen Hyslop Roxburgh, on 21^st May 2008. In terms of numbered paragraph 3 the deponent swears she has "no intention of joining in the court action that Mhairi Nichol has raised against Nine Regions Limited as trustee"

[25] I was advised, on behalf on the pursuer, that the affidavit indicated an intention by the trustee to abandon any claims vesting in her at the time of the trust deed.

[26] I was also referred (without objection) to an exchange of e-mails which had been lodged in court which, it was submitted, had the same meaning as the affidavit to which I was referred.

[27] Mr O'Donnell invited the court to answer one further question: can it be said that the trustee has abandoned any entitlement to pursue her rights under the Consumer Credit Act 1974, section 140? It was submitted that the answer to this question is yes and that her trustee can be cited to give evidence to this effect. She has abandoned the rights vested in her and accordingly the pursuer is entitled to pursue the action. I was referred to Goudy on the Law of Bankruptcy (3^rd edition) at pages 364 to 366 for the proposition that in certain circumstances it is possible for a debtor to pursue a matter which his or her trustee declines to litigate. I was also referred to McBride at paragraph 10.83 and again to paragraph 10.84 at page 265.

[28] I was advised that neither party had managed to locate a reported case where title to sue had involved a trust deed. That said, both parties accept that this is analogous to sequestration. Mr O'Donnell submitted that the vehicle is this case would not have been an asset belonging to a debtor who had been sequestrated because the car had been transferred to the defenders as part of the hire purchase arrangement. If the vehicle is not an asset over which a trustee in sequestration would have had rights vested in him or her, then there is nothing to exclude the pursuer in this case from proceeding in the manner in which she has. It was not a requirement for the pursuer to have the consent or concurrence of the trustee when the action was raised. Mr O'Donnell extended this proposition to submit that it was not required for the pursuer to have an indication from her trustee of her intention to abandon (or not pursue) a claim at the time when the action was raised. It was sufficient for the trustee to indicate her position when the debtor's title to sue is challenged. If correct the pursuer's title survives attack.

[29] I was referred to the opinion of Lord McCluskey in Dickson against United Dominions Trust 1988 SLT 19 at page 22 B to I and McBride at page 209, paragraph 9.93 through to page 211, paragraph 9.99 and at page 214, paragraph 9.112. The pursuer does not say that this is a claim personal to her. This is a claim which her trustee could have pursued but has abandoned.

[30] Accordingly, the trustee, having abandoned her right to pursue the matter, gives the pursuer title to do so.

[31] Finally, I was referred to McPhail, Sheriff Court Practice, second edition, at page 184, paragraph 4.111. If it is correct that the pursuer is entitled to proceed with her action, she may do so by being designed in the normal manner which is what has happened here.

Reply by defenders

[32] In a brief reply on behalf of the defenders, Mr Cannon explained that there were no averments on record that the trustee had abandoned her claim and therefore it was not open to the pursuer to prove what was not on record.

[33] More importantly, a decision on behalf of the trustee not to sist herself to the action is not a decision to abandon a right to pursue a claim. In a second affidavit dated 9^th June 2008 (number 6/10 of process) the trustee makes it clear that the pursuer never advised her trustee that she intended to or had raised court action against the defenders. Accordingly, the pursuer had not sought consent before court action was raised. The pursuer is not in a position to acquire title during the currency of the action.

Decision

[34] In this case the pursuer signed a hire purchase agreement on 28^th April 2007. She signed a trust deed on 30^th July 2007. Unbeknown to her trustee, the pursuer has subsequently raised proceedings to set aside or vary the hire purchase agreement with ancillary craves. I have to determine whether the pursuer has title to pursue these proceedings.

[35] The starting point must be the terms of the trust deed. In this case the pursuer has assigned to her trustee her whole estate as such would vest in a permanent trustee in terms of sections 31, 32 and 33 of the Bankruptcy (Scotland) Act 1985. In particular, she confers upon her trustee the power to defend or bring any court action or other legal proceedings.

[36] The current action proceeds under the Consumer Credit Act 1974 arising from a contract, namely, a hire purchase agreement. It is not a claim relating to status or damages.

[37] It is a matter of concession that the pursuer did not have the consent or concurrence of the trustee prior to the raising of these proceedings. Indeed, there are no averments that she sought the consent or concurrence of the trustee and, at the time she had raised proceedings, there had been no indication that the trustee had abandoned her entitlement to raise these proceedings. I do not accept that the affidavits state, in terms, that the trustee has subsequently abandoned her right to pursue a remedy under the Consumer Credit Act 1974. She may disassociate herself with the pursuer's court action, but that is another matter.

[38] I say this because in her e-mails, the trustee makes it clear that should the pursuer recover sums as a result of litigation the trustee would treat this recovery as acquirenda and if the pursuer were to successfully acquire the vehicle this would also vest in the trustee. Accordingly the trustee may have decided not to pursue the issue (and I make no criticism of that decision) but I have nothing before me to suggest that she has abandoned her right to pursue the matter. On the contrary the trustee appears to have made her position quite clear, namely, that she has not abandoned her right to pursue the matter nor has she consented to the pursuer proceeding in her stead.

[39] Even if I am wrong and the trustee states unequivocally that she abandons any claim, in my opinion the pursuer's action must nevertheless fail. This is because it is not appropriate for the pursuer to obtain consent or to argue abandonment of a claim ex post facto. This is not a situation where the pursuer had raised proceedings prior to her execution of the trust deed which the trustee could then decide whether to continue or abandon.

[40] Furthermore if the trustee has abandoned her right to pursue such claims, it is clear that she had not done so at the time these proceedings were raised.

[41] Finally, I respectfully agree with the opinion of Lord McCluskey in Dickson v United Dominions Trust Ltd at page 22F to G that the bankrupt "cannot be allowed to litigate in such a way that he competes with the creditors, or the trustee as representing them, for any part of the assets sequestrated; and accordingly where such a competition exists or may exist the bankrupt will have no title to sue. That principle protects both the creditors and the party sued, whose interest is to be protected from the risk of double distress in the form of claims by a bankrupt and by the trustee in sequestration".

[42] The current case is not a case where a debtor might be entitled to raise proceedings at his or her own hand such as, divorce. The trustee has not abandoned her right to pursue the action. She has not consented to the action. By continuing with this action, the debtor is in competition with her creditors. The pursuer has no title to sue. The action must be dismissed.

[43] The parties were agreed that craves one and two of the counterclaim would be granted of consent in the event that I sustained the defender's first preliminary plea and found that there was no title to sue. The parties were also agreed that expenses should follow success. Accordingly I have made the appropriate orders.

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Sheriff