SD1363/04

 

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.