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LORD WALLACE OF TANKERNESS QC THE ADVOCATE GENERAL FOR SCOTLAND FOR AND ON BEHALF OF THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMERS AGAINST JAMES KING

 

2015SCSTRAN5

SHERIFFDOM OF SOUTH STRATHCLYDE, DUMFRIES & GALLOWAY

AT STRANRAER

 

SQ30/14

 

JUDGMENT

 

of

 

SHERIFF PRINCIPAL B A LOCKHART

 

in Petition for Sequestration

 

by

 

Lord Wallace of Tankerness Q.C., THE ADVOCATE GENERAL FOR SCOTLAND, for and on behalf of The Commissioners for Her Majesty’s Revenue and Customs

Petitioner and Appellant;

 

against

 

JAMES KING

Respondent:

 

_________________

 

 

 

Stranraer, 20 January 2015

Act: Ms A Pitcairn, Solicitor, Edinburgh, for the Petitioner and Appellant

Alt: Ms M Nicholson, Solicitor, Stranraer, for the Respondent

The Sheriff Principal, having received written submissions from parties, allows the appeal and recalls the sheriff’s interlocutor of 18 December 2014 complained of;  having considered the petition, together with the productions lodged therewith, and being satisfied that the petition has been presented in accordance with the Bankruptcy (Scotland) Act 1985 and that proper citation has been made to the debtor and the requirements of the Bankruptcy (Scotland) Act 1985 relating to apparent insolvency has been fulfilled, sequestrates the estate now belonging or which shall hereafter belong to the debtor, James King before the date of the debtor’s discharge and declares the same to belong to the debtor’s creditors for the purposes of the said Act;  appoints the Accountancy in Bankruptcy, 1 Pennyburn Road, Kilwinning, KA13 6SE to be trustee;  the whole estate of the said James King at 22 September 2014 is vested and now belongs to the said trustee, for the benefit of the creditors of the said James King; finds the respondent liable to the petitioner in the expenses of the petition restricted to £667.10 and finds the petitioner entitled to their expenses out of the respondent’s estate; finds no expenses due to or by either party in respect of the appeal.

 

Note:

  • [1]In this petition for sequestration the sheriff was satisfied that the requirements of section 12(3) of the Bankruptcy (Scotland) Act 1985 had been satisfied.On 23 October 2014, in terms of section 12(3B) he continued the petition for 42 days until 4 December 2014 to allow the defender the opportunity to pay or satisfy the debt.
  • [2]On 4 December 2014 the petition called before a visiting sheriff.He was told that settlement would be made by the end of the day and it was suggested to him that the matter be continued until the end of the day.The sheriff suggested the petition might be continued to the next civil court day.The solicitor representing the petitioners took the view that, although the 42 day period had ended, he did not wish to inconvenience the court.He informed the visiting sheriff that, if he was minded to do so, he would not object to this continuation.The interlocutor of 4 December 2014 records “on motion of respondent, there being no opposition thereto, on cause shown continues the cause until 18 December 2014”.
  • [3]That was an incompetent interlocutor.Section 12(3) of the 1985 Act provides that where the sheriff is satisfied that the five essentials set out in the section – which the sheriff records was the case in this action – the sheriff “shall, subject to subsections (3A) to (3C) below, award sequestration forthwith.”The important words are “shall” and “forthwith”.Subsections (3A) and (3C) are not relevant in this action.Subsection (3B) allows the sheriff to continue the petition for the debt to be paid or satisfied for a period of no more than 42 days.That period had expired on 4 December 2014.
  • [4]Be that as it may, on 18 December 2014 the solicitor for the petitioner moved the court for sequestration.The solicitor for the respondent moved for a further continuation to allow the debt to be paid or satisfied.The sheriff took the view that the interlocutor of 4 December 2014 was incompetent.He thus concluded that to award sequestration on 18 December 2014 would be to grant an order in a process in which the court was acting ultra vires.He therefore dismissed the petition.
  • [5]In my opinion the sheriff erred in taking that course.I agree with the submission for the appellant that “The correct course for the sheriff, in finding the case had gone off the rails, was to award sequestration 14 days late rather than dismissing the petition altogether.”I am fortified in this view by a consideration of the case of Kessack v Garden (1869) 7M 588. The interlocutor of 4 December 2014 was incompetent. That means it was of no power or effect. However, it did not taint the process. In the words of the Lord Justice Clerk in Kessack v Graham supra, it would be a “startling result” if dismissal of the entire process should necessarily follow. The respondent has suffered no prejudice as a result of the incompetent interlocutor. In fact he benefitted, as he was not sequestrated then and gained additional time to secure funds to repay the debt.
  • [6]In the exchange of written submissions which took place on 20 January 2015, solicitor for the respondent indicated that, if I took the view the sheriff erred in dismissing the petition on 18 December 2014, and I was proceeding to consider whether sequestration should be granted, she had no further submissions to make as the petition debt remained due and outstanding by the respondent as at 20 January 2015.
  • [7]The requirements of section 12(3)(a) to (e) have been met.The defender has not fulfilled his promises to settle.I consider that the correct course at appeal is for me, as was submitted on behalf of the petitioner and appellant, to (i) recall the sheriff’s interlocutor of 18 December 2014 dismissing the petition and (ii) award sequestration of the respondent in terms of craves 2 to 5 of the appellant’s petition.
  • [8]As far as expenses are concerned, the respondent is clearly liable for the expenses of the petition up to and including 18 December 2014.I award £667.10, which sum was not disputed by solicitor for the respondent. It will be payable from the respondent’s estate. Standing the terms of section 12(3) of the 1985 Act, the sheriff ought to have refused the defender’s motion on 18 December 2014 to continue the petition.He should have granted sequestration then.It was the sheriff who erred in concluding that he could not grant an order in a process in which the court was acting ultra vires.He was not invited to take this course. Although with some hesitation, standing the fact that the respondent had in fact moved the court to grant a further continuation on 18 December 2014, I consider the fair conclusion regarding the expenses of the appeal is to find no expenses due to or by either party.