WILLIAM CLEGHORN AS TRUSTEE IN THE SEQUESTRATION OF MARK EDWARD FORTUNE AGAINST COOPER WATSON LIMITED
OUTER HOUSE, COURT OF SESSION
[2017] CSOH 74
CA30/15
OPINION OF LORD TYRE
In the cause
WILLIAM CLEGHORN AS TRUSTEE IN THE SEQUESTRATION OF MARK EDWARD FORTUNE
Pursuer
against
COOPER WATSON LIMITED
Defender
Pursuer: Cormack (Solicitor Advocate); Pinsent Masons LLP
Defender: G R Middleton; Aitken Nairn WS
5 May 2017
Introduction
[1] The pursuer is the trustee on the sequestrated estate of Mr Mark Edward Fortune, having succeeded Elizabeth Mackay, who was appointed as the original trustee on 7 February 2011. The date of Mr Fortune’s sequestration was 24 December 2010. This action was raised to seek inter alia reduction of dispositions in 2014 by Mr Fortune in favour of the defender of five properties in Edinburgh at a time when, to the defender’s knowledge, Mr Fortune’s estate remained sequestrated. By interlocutor dated 4 December 2015, Lord Jones granted decree of reduction of four of the five dispositions (see [2015] CSOH 140). On 1 July 2016, the Inner House refused a reclaiming motion by the defender against Lord Jones’s interlocutor (see Fortune’s Tr v Cooper Watson Ltd 2016 SC 824; [2016] CSIH 49).
[2] With regard to the fifth property, to which I shall refer as “the EB property” or “EB”, the defender asserted before Lord Jones and in the Inner House that as at the relevant date (ie the day before the date of his sequestration) it fell within the definition of a “family home” for the purposes of section 39A of the Bankruptcy (Scotland) Act 1985, with the consequence that it had ceased to form part of Mr Fortune’s sequestrated estate three years after the date of sequestration, and before the date of the disposition to the defender. By interlocutor dated 9 November 2016, a proof before answer was allowed on this matter.
[3] It was common ground that the onus of proving that the EB property fell within the statutory definition of a family home rested upon the defender. Evidence was given on behalf of the defender by Mr Fortune and, to a limited extent as explained below, by Mr Fortune’s former partner, Ms Marsha Beveridge. Evidence on behalf of the pursuer was given by the former trustee and members of her staff, and by Ms Yvonne Morgan, a solicitor who in 2014 had prepared an affidavit for execution by Mr Fortune.
The Relevant Law
[4] Section 39A of the 1985 Act, which had been inserted by section 19(2) of the Bankruptcy and Diligence (Scotland) Act 2007, provided inter alia as follows:
“(1) This section applies where a debtor’s sequestrated estate includes any right or interest in the debtor’s family home.
(2) At the end of the period of 3 years beginning with the date of sequestration the right or interest mentioned in subsection (1) above shall –
(a) cease to form part of the debtor’s sequestrated estate; and
(b) be reinvested in the debtor (without disposition, conveyance, assignation or other transfer).
…
(6) If the debtor does not inform the trustee or the Accountant in Bankruptcy of his right or interest in the family home before the end of the period of 3 months beginning with the date of sequestration, the period of 3 years mentioned in subsection (2) above –
(a) shall not begin with the sequestration; but
(b) shall begin with the date on which the trustee or the Accountant in Bankruptcy becomes aware of the debtor’s right or interest.
…
(9) In this section, ‘family home’ has the same meaning as in section 40 of this Act.”
[5] Section 40 of the 1985 Act set out the procedure that required to be followed by a trustee who wished to dispose of a right or interest in the debtor’s family home. It was, as noted by McBryde, Bankruptcy (2nd ed, 1995) at paragraphs 9-70, essentially a measure for protection of the debtor’s family members rather than the debtor himself. The definition of family home in section 40(4)(a) was as follows:
“any property in which, at the relevant date, the debtor had (whether alone or in common with any other person) a right or interest, being property which was occupied at that date as a residence by the debtor and his spouse or civil partner or by the debtor’s spouse or civil partner or former spouse or civil partner (in any case with or without a child of the family) or by the debtor with a child of the family”.
The section also contained definitions of “child of the family”, which term included inter alia any child of the debtor, and of “relevant date”, being the day immediately preceding the date of sequestration. (The material provisions of sections 39A and 40 can now be found in sections 112 and 113 of the Bankruptcy (Scotland) Act 2016.)
[6] It will be apparent that, in relation to a particular debtor, more than one property could fall within the definition of “family home”. Hypothetically, a debtor could at the relevant date own three houses, one of which was occupied as a residence by himself with his child, one by a current spouse/civil partner from whom he was separated, and one by a former spouse/civil partner. All three properties would fall within the definition and could be subject to section 39A. Perhaps less obvious is the answer to the question whether the same person (the debtor himself and/or a current or former spouse/civil partner) could at the relevant date occupy more than one property as a residence. In my opinion it is very unlikely that this could be the case. The focus of the definition is upon the situation as at a particular date. Clearly the benefit of falling within the definition would not be lost by a short‑term absence by the occupier, for example on business or on holiday, or, as in the circumstances of this case, because of detention in custody. But if the reason for absence from Property A was that the person concerned was occupying Property B as a residence, then in my opinion it is unlikely that it could be argued that he or she was nevertheless also still occupying Property A. Even if both properties could reasonably be described as residences, only one or other could at any given time, save in exceptional circumstances, be occupied as such.
The Issue
[7] It is not in dispute that as at 23 December 2010 (ie the day preceding the date of Mr Fortune’s sequestration), the EB property was (i) owned by Mr Fortune and (ii) occupied as a residence by Ms Beveridge and by J, the son then aged 9 of Mr Fortune and Ms Beveridge. Mr Fortune was not and has never been married to Ms Beveridge. Accordingly, in order for section 39A to apply, the defender required to prove that as at 23 December 2010, the EB property was occupied as a residence by Mr Fortune with J.
Mr Fortune’s Evidence
[8] Mr Fortune’s evidence was to the following effect. He acquired the EB property in 2003 and moved into it with Ms Beveridge and J. For some time thereafter it was the residence of all three except when they went on holiday or when he travelled abroad on business. From about 2006, however, issues arose in the relationship between himself and Ms Beveridge, and he spent some periods staying in a hotel or with his father. He, Ms Beveridge and J continued to spend summer and other holidays together abroad. By the beginning of 2008 he was back at EB most of the time. In about April 2008, he purchased a house near Cannes in the south of France, with the intention of using it as a family holiday home. He spent much of the remainder of 2008 there, either on holiday with Ms Beveridge and J or supervising work on the house. By the end of 2008, Mr Fortune’s relationship with Ms Beveridge had deteriorated. She moved out of the EB property on 30 November 2008, living for the next six months in a flat in Edinburgh and thereafter for a time with her mother. J spent most of the time with her.
[9] Mr Fortune spent the first half of 2009 living in the EB property, visited from time to time by J. All three went on holiday together during July and August to the house in France. In September they returned to live together at EB. Mr Fortune went to France from time to time to check the security of the house.
[10] During the first half of 2010, Mr Fortune spent most of his time at the house in France. There was work to be done on it, and he was considering whether all three should relocate there. Ms Beveridge and J spent the Easter and summer holidays in France with him. At the end of August, they all returned to EB for the beginning of the school term. Mr Fortune returned to the house in France during the first week in September. He required to return to Scotland for a business matter at the end of September. During October and the first part of November he stayed at EB with Ms Beveridge and J. On 26 November he was arrested and remanded in custody. He remained in custody until 10 February 2011, when he was released on bail. He returned without warning to EB, where Ms Beveridge and J were living with Ms Beveridge’s mother who promptly left. After two or three weeks at EB, he went to the house in France where he stayed until the beginning of April. His relations with Ms Beveridge were strained at this time, and he returned to Edinburgh mainly to deal with legal issues. He spent most the remainder of 2011 at EB, interspersed with holidays and other visits to the house in France. In 2012 he spent around 60% of his time at EB.
Documentary and Circumstantial Evidence
[11] In support of his account of periods of residence at the EB property, Mr Fortune was referred to a large number of items of correspondence addressed to him at EB during the period from 2004 until after the date of sequestration in December 2010. These included bank statements, business correspondence, communications from HMRC, council tax demands in relation to EB and other properties, and correspondence from J’s school. Some of the items bear dates falling within periods when, according to Mr Fortune’s evidence, he was absent from EB. No documents bearing to have been sent by Mr Fortune from EB were produced.
[12] Other evidence is considerably less supportive of Mr Fortune’s position. He accepted that on two occasions, in 2005 and again in 2008, he was subject to bail conditions which prohibited him from entering the EB property, although he asserted in re‑examination that he nevertheless continued to stay there. A letter dated 7 October 2010 from HMRC noted that a sheriff officer had confirmed that he was satisfied that the EB address was Mr Fortune’s dwelling place, the implication being that Mr Fortune had asserted that it was not. Also produced was a letter dated 23 May 2011 from Ms Beveridge in response to a letter dated 16 May 2011 from Ms Liz Smith (as she then was), the member of the former trustee’s staff who was primarily responsible for dealing with Mr Fortune’s sequestration, attaching a form to enable Ms Beveridge to make a claim in the sequestration. Ms Beveridge stated:
“I have grave concerns Mark has manipulated into his name liability for Council Tax at my residence at [EB]. I have held a lease on this property originally from Feb 2006 – Dec 2008…
Further Edinburgh Council had confirmed within their offices in May 2010 that I was responsible for Council Tax, this meeting was recorded by 2 council officials. I also confirmed to Scott & Co and a company Gateley Wearing [sic – solicitors acting for the Council] in September 2010 that Mark did not stay at my house, Gateley Wearing asked me to return to them papers that had been delivered for Mark.
I continue to stay again at [EB] with my son, having started a new lease late 2009, he removed all his possessions and I struggled to get the house in order…
I can only presume Mark has manipulated this situation, getting the Council to put the tax to him, in order to undermine my tenancy or legal position for his gains. Do you know I had a court order that stopped him coming to the house altogether in 2008 and even now when he calls to see our son he parks his car in the street…”
[13] During the period following Ms Mackay’s appointment as trustee in sequestration, Mr Fortune’s concern, at least on the face of the correspondence produced, appears to have been to deny that he was or had at the material time been resident at the EB property. In an email dated 23 February 2011, his response to the question “Do you reside at any of the properties listed and do you wholly own them?” was “I stay mainly in France, Ex partner lives with my son at [EB]. Not married so all in my name”. He provided an email address and a business address in Edinburgh for correspondence. In a petition for recall of sequestration lodged on 1 March 2011, Mr Fortune’s address was stated as the house in France. There then ensued correspondence with the trustee and her staff, in particular Ms Smith, as to whether the sheriff at Edinburgh had had jurisdiction to award sequestration, with Mr Fortune insisting that he had not as Mr Fortune had been resident in France. For example, in an email to Ms Smith on 19 April 2011, Mr Fortune stated “I did not stay in Edinburgh the year prior to sequestration”.
[14] On 20 May 2011, Mr Fortune attended a meeting at the trustee’s offices. Also present were two members of the trustee’s staff, Mr Scott Milne and Ms Julie Dallas. According to Ms Dallas’s note of the meeting,
“…The Debtor claims that a private investigator was employed by the council to confirm if the Debtor lives/or does not live at the property at [EB] where Ms Beverage [sic] currently resides. He claims that the investigator witnessed him collecting his son for school in the morning and dropping him off at the end of the day. The Debtor commented that he does this every day when he is back in the country as Ms Beverage suffers from MS. The Debtor believes that the council raised the action against him based on this information.”
The inference that I draw from this narrative is that Mr Fortune was again denying living at EB at the time of his sequestration. Ms Dallas’s note also stated:
“…The mortgage is approximately £1,000 per month for the property at [EB] where his ex-partner and son currently reside”.
[15] On 23 May 2011, Mr Fortune sent a letter bearing the date 21 May by email to Mr Milne. The parties have lodged two different versions of this letter. The version lodged by the pursuer is longer and, in most respects, contains information and other material not present in the version lodged by the defender. One example of this is that the defender’s version includes a reference to receipt of an opinion from an advocate regarding council tax, with the observation “I will confirm the advocates name on Monday”, whereas in the pursuer’s version the advocate is named. In this and other respects, the pursuer’s document has the look of the final version of a letter of which the defender’s document was an earlier draft. However, the defender’s version contains the following sentence not present in the pursuer’s version:
“We went through the Questionnaire together, although you kept a copy, I have attached the final (finished as best I can) for my records and audit trail.”
[16] The defender has lodged what is said to be the questionnaire referred to. It is a lengthy document entitled “Supplementary Questionnaire – Bankruptcy (Scotland) Act 1985”. It has been partially completed, apparently electronically. It has electronically inserted signatures by Mr Fortune as debtor and Ms Beveridge as witness, and bears to have been signed and witnessed on 18 May 2011. The debtor’s present address is stated as “My family house [EB]”, and the location of his car is said to be “Parked at family home”. Mr Milne denied having received the questionnaire from Mr Fortune in either hard copy or electronic form, and also denied that any questionnaire had been gone through at the meeting. As this matter is relevant to my assessment of Mr Fortune’s credibility, I return to it below.
[17] In March 2014, in connection with sheriff court proceedings at the instance of the trustee, Mr Fortune instructed Ms Yvonne Morgan, a solicitor in Glasgow, to prepare an affidavit which he swore before a notaire in Nice on 13 March 2014. According to Ms Morgan’s evidence, the substance of the affidavit was based upon information provided to her by Mr Fortune. The affidavit began:
“1. My name is Mark Fortune. I am 45 years of age and reside at [the house near Cannes]. I have lived in France since (2009). I moved to France because of the stress I was suffering and I intend to reside there permanently. I own properties in Scotland all of which I lease to tenants and do not personally maintain a home in Scotland.
2. In September 2010 my ex partner, Marsha Beveridge, advised me that papers had been delivered by Sheriff Officers to the home we had previously shared at [EB]. I had not lived there since about (?) . She told me she had advised them I was not a resident but the papers were left…
3. On or around 1st October 2010 whilst present within Edinburgh Sheriff Court obtaining an Extract for Eviction I was handed a summary warrant by Sheriff Officers in relation an alleged debt for Council Tax on [EB]. I contacted both Zolfo Cooper [the trustee’s firm] who had been named in [papers for a previous petition for sequestration] and HBJ Gateley Wareing who were the agents for Edinburgh City council. I informed them that as per previous correspondence with The City of Edinburgh Council by myself and also Ms Beveridge that I was not resident at the property and that she stayed there with our son. I attended only occasionally to assist her with childcare, she is registered disabled and in receipt of benefits which entitled her to Council Tax relief. I advised them that my residence was mainly in France.”
Ms Morgan explained that the brackets around the date 2009 and the question mark were because she had expected Mr Fortune to revise the affidavit before signing it, but he had sent it back signed and notarised without revision. As time was short and the dates did not seem to be material in the context of the proceedings, she went ahead and lodged it.
Ms Beveridge’s Evidence
[18] Ms Beveridge provided an affidavit in which she stated that she suffered from a neurological illness and from depression. She asserted inter alia that apart from a six‑month period from December 2008, she, Mr Fortune and J had all lived at EB since 2003, and that it had been and remained their family home. She adopted the affidavit as her evidence. However, from the outset of her appearance in court she was extremely distressed. After a few questions in cross-examination she stated that she was unwell and did not want to be there. Following a 20 minute adjournment, an attempt was made to resume her cross‑examination (in Mr Fortune’s absence), and at first she appeared to have recovered sufficiently to answer questions. She disagreed with the proposition that the house in France was Mr Fortune’s home; it was a holiday home but their home was in Edinburgh. She acknowledged that the signature on the letter dated 23 May 2011 was hers but stated that she did not remember it or Ms Smith’s letter of 16 May 2011. At this point she once again became very upset and stated that she was unable to remember circumstances in September 2010. She professed to be unable to continue to give evidence and pleaded to be excused. I formed the view that a further adjournment would not assist matters and, in view of the serious distress that Ms Beveridge was experiencing, excused her from court.
[19] The consequence was that her affidavit, which was generally supportive of the defender’s position, remained largely untested by oral examination. In these circumstances, and having regard to Ms Beveridge’s repeated protestations while in court that she could remember nothing about the critical period, I consider that I can attach little or no weight to the affidavit except in so far as it is corroborated by other evidence which I accept.
Assessment of Evidence
[20] I did not find Mr Fortune to be a credible or reliable witness. Whenever possible, he avoided giving direct answers to questions by providing a great deal of peripheral information that had not been asked for. His explanation for the terms of the correspondence with the trustee’s staff in which he appeared to deny residence at EB was that he was exploring with the trustee ideas for achieving an early end to the sequestration. I do not accept that the trustee or her staff would – or did – collaborate with Mr Fortune in constructing a version of events that would suit him. He sought to explain the provenance of statements of fact in emails such as “I did not stay in Edinburgh the year prior to sequestration” by attributing them to other people, such as solicitors and counsel instructed to act on his behalf. Many of his explanations of matters unhelpful to his cause, such as his description in 2011 of Ms Beveridge as his “ex-partner” gave the impression of being concocted on the hoof. He frequently had to retract or qualify explanations when confronted with a further inconsistency. He attempted without any reasonable basis to construe assertions by him that he did not reside at EB as claims that he was not liable for council tax for EB. His explanation for directing mail in 2011 (though not before then) to his business address was that EB had a defective mail box; also if mail went to EB, Ms Beveridge or J would put it in a cupboard and he would not receive it. At one point he explained that he parked in the street at EB not because of a bail condition but because it was the only way to start the car in the morning. I did not find any of this credible.
[21] The letter of 21 May 2011 and the Supplementary Questionnaire raise a more serious issue. By way of context, Ms Smith had sent an email to Mr Tom Maclachlan, a solicitor then acting for Mr Fortune, on 23 February 2011, seeking his approval of the sending of an email to Mr Fortune. In terms of the email Mr Fortune was asked to provide answers to a number of questions and to complete “the attached questionnaire”, which was a blank Supplementary Questionnaire. Mr Maclachlan responded shortly thereafter stating “I have sent this onto him”. Mr Fortune responded directly to Ms Smith by email later the same day, answering her questions but making no reference to the questionnaire. Leaving aside for the moment the letter of 21 May 2011, there appears to be no further reference to the questionnaire in correspondence until 3 June 2011 when Ms Smith (now Mrs Liz Douglas) emailed Mr Fortune asking him to complete two documents attached, one of which was the Supplementary Questionnaire. On 9 June, Mr Fortune advised by email that the questionnaire had not come through, perhaps because it was too big a file, and asked for it to be sent to a printer. On 13 July, Mrs Douglas inquired whether the questionnaire had reached Mr Fortune’s printer; no response appears to have been made to this question. On 1 August Ms Smith advised Mr Fortune that she had sent the questionnaire to his business address and asked him to “complete and return asap”. He replied “Can’t open but if it’s the form you sent to the printer I already completed it and sent it back”. Mrs Douglas replied that she had never received it and asked for it to be completed and returned again. No further relevant correspondence was produced.
[22] Mr Fortune’s position was that the Supplementary Questionnaire was completed and signed by him and witnessed by Ms Beveridge on 18 May 2011. When it was pointed out that the signatures were electronic he clarified that the form had been completed electronically in Ms Beveridge’s presence. At the meeting on 20 May, he gave a printed version of it to Mr Milne who made a copy. Mr Fortune took his own document away after the meeting but subsequently thought Mr Milne ought to have it because he perceived it to be the principal. He therefore sent it back in hard copy on about 23 or 24 May rather than as another email attachment, using the letter of 21 May as a covering letter. I found this barely comprehensible, let alone credible. It is inconsistent with the fact that a different version of the letter was sent and received electronically on 23 May. It is also inconsistent with emails sent by Mr Fortune to Ms Smith on 13 and 16 May stating that he would be in London from 17 to 19 May in connection with a court action. It is wholly inconsistent with Mrs Douglas’s repeated requests thereafter for the questionnaire to be completed and submitted. At no point in that email correspondence did Mr Fortune question her requests on the ground that the questionnaire had been handed over and discussed at the meeting on 20 May. Finally, the co‑operation between Mr Fortune and Ms Beveridge that Mr Fortune’s account implies is difficult to reconcile with the animosity towards him expressed in Ms Beveridge’s letter to Ms Smith on 23 May.
[23] In addition, the substance of the answers to the questionnaire creates serious doubt that it was completed on 18 May 2011. Approximate answers or no answers at all are provided in respect of many matters which would have been readily ascertainable in May 2011, such as bank account balances, insurance premiums, outgoings, and business details. Ownership of a car of a particular make is disclosed but the registration number is “tbc”. Use of electronic signatures not only for Mr Fortune as debtor but also for Ms Beveridge as witness raises further doubt in my mind that the document was signed and witnessed on the date that it bears.
[24] Having regard to all of these matters, I have no difficulty in accepting the evidence of Mr Milne and Ms Dallas that Mr Fortune did not bring a Supplementary Questionnaire to the meeting on 20 May, that it was not discussed at that meeting, and that it was not sent to Mr Milne with a version of the letter of 21 May. I reject Mr Fortune’s evidence to the contrary. The first reference to the Supplementary Questionnaire in the defender’s pleadings was made by an adjustment intimated on 14 October 2016. The questionnaire was produced on 30 November 2016 and the defender’s version of the letter two days later. I am entirely satisfied that these documents were not created on the dates which they bear but were produced at a much later time by Mr Fortune with a view to misleading the court into accepting that as at 18 May 2011 he was referring to EB as his family home.
[25] Founding a claim on a false narrative of fact supported by fabricated documents was described by the Lord Ordinary (Gill) in Shetland Sea Farms Ltd v Assuranceforeningen Skuld 2004 SLT 30 as clearly an abuse of process. Lord Gill continued (para 146):
“…The court’s disposal of the matter must depend on the question whether the dishonesty has made a fair trial of the issue impossible (Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167, Chadwick LJ at 193g-194h). If it has, the court has a duty to stop the proceedings in order to protect the innocent party from an injustice. But if the dishonesty is found out and desisted from and if, in consequence, a fair trial of the essential claim remains possible, the court ought not to stop the proceedings. To do so in such circumstances would simply be judicial retaliation for the affront to the court.”
In my judgment the present case falls within the second category. The fact, however, that a dishonest attempt has been made to influence the outcome of the case is something that I must take into account as a significantly adverse factor in my assessment of the credibility and reliability of Mr Fortune as a witness.
Conclusions
[26] As noted at the outset of this opinion, the onus of satisfying the court that as at 23 December 2010 EB was occupied as a residence by Mr Fortune with J rested upon the defender. Discharge of that onus requires me to be satisfied that Mr Fortune’s account of the periods during which he stayed at EB during 2010 and the early part of 2011 were (a) credible and reliable, and (b) sufficient to amount to occupation by him of EB as a residence. For the reasons set out above, I am unable to accept any of Mr Fortune’s evidence as credible or reliable unless uncontroversial or corroborated by another source. In particular, I do not feel able to place any weight on the accuracy of his chronology of time spent at EB around the critical date. The fact that he was in custody on 23 December 2010 does not, of course, of itself determine the matter. I am not, however, satisfied that I should accept Mr Fortune’s evidence that he occupied EB as his residence either before or after his spell on remand, uncorroborated as it is by any contemporaneous documentation.
[27] In reaching this conclusion I have been mindful not to place undue weight on the considerable body of evidence, mostly emanating from Mr Fortune himself, that he did not live at EB during the critical period. It would be illogical to reject his evidence to this court as incredible and unreliable, yet uncritically accept everything he said in 2011 and in his 2014 affidavit as credible and reliable. The previous statements are equally tainted as self-serving; it would have been in Mr Fortune’s interest at that time for two separate reasons to establish that he did not reside at EB. In the first place it could have exonerated him from liability to council tax which would instead have fallen on Ms Beveridge and been funded in whole or in part by benefits; in the second place it provided a ground of challenge to the jurisdiction of Edinburgh Sheriff Court to award his sequestration. I do not, therefore, base my opinion to any great extent on acceptance of the truth of any of the assertions as to residence made by Mr Fortune in 2011 or in the 2014 affidavit. At best for him, however, one would have a situation in which it was impossible to make a finding one way or the other, in which case the onus resting upon the defender would not have been discharged.
[28] As regards Ms Beveridge’s evidence, I have already observed that I cannot place weight on disputed assertions in her affidavit which could not be subjected to challenge because of her inability to complete her evidence. I would in any event have treated her use of the phrase “family home” as non-technical, and of little assistance in determining whether on the relevant date EB fell within the statutory definition of that phrase. However, the letter sent by her to Ms Smith on 23 May 2011 appears to me to fall into a different category. The sentiments expressed in it appear to be genuine and not tailored to assist Mr Fortune in his attempts to have the sequestration recalled. Ms Beveridge refers to EB as “my residence” and asserts specifically (i) that she advised sheriff officers and solicitors for the Council in September 2010 that Mr Fortune did not stay at “my house”, and (ii) that she continued to stay there with her son. It is true that Mr Fortune accepts that he was at the house in France during most of September 2010, but I do not read Ms Beveridge’s assertion as limited to that month. Taken as a whole the letter reads as a statement that for a lengthy period before and after the relevant date, Mr Fortune was not a resident at EB. I consider that I am entitled to place some weight upon this letter, despite Ms Beveridge being unable to remember sending it. Taking this into account, along with such weight as I feel able to attach to the many statements made by Mr Fortune before and since the date of his sequestration that he did not live at the EB property at the material time, I find on balance of probabilities that he did not occupy EB with J as a residence on the relevant date. The house was not therefore a “family home” within the statutory definition, and the provisions of section 39A of the 1985 Act are not applicable.
Subsidiary Argument: Section 39A(6)
[29] The pursuer presented a subsidiary argument based upon section 39A(6) (set out at paragraph [4] above). I was invited to hold, if I found that the EB property was a family home at the relevant date, that the three-year period in section 39A(2) had not begun to run until the date when Mr Fortune first asserted to the trustee that the property was a family home. That had not occurred until a minute of amendment to that effect had been intimated in the present action on about 8 July 2015. Time had not accordingly begun to run when the disposition of the EB property was granted in 2014. On behalf of the defender it was contended that the pursuer’s interpretation of section 39A(6) was unsound. The question whether a property was a family home was a matter to be determined by the court and could not be decided by the debtor or the trustee. On a proper construction, the three-year period began to run when the trustee became aware that the debtor had a right or interest in the property, and not, if different, when it was asserted to be a family home.
[30] Had it been necessary to decide this issue, I would have accepted the argument on behalf of the defender. In my opinion the wording of the subsection is clear: subparagraph (b) refers only to the trustee becoming aware of “the debtor’s right or interest”, and has nothing to say about becoming aware of its alleged status as a family home. That, in my view, makes sound practical sense: it might be very difficult for a trustee to identify all of the properties in which a debtor has an interest (which interest may not always be readily identifiable by a search of public registers), and it would be unlikely to accord with Parliamentary intent if a debtor were able to conceal a right or interest until very shortly before the expiry of the three-year period, leaving the trustee no time to apply to the sheriff under subsection (7) for substitution of a longer period. On the other hand, once the existence of the right or interest has been identified, the process of ascertaining whether family home status attaches to it can begin. If that process has not been completed within three years, an application under subsection (7) can be made. I note in passing that this interpretation would accord with the only tenable construction of the equivalent provision under English law (Insolvency Act 1986, section 283A(5)).
Disposal
[31] In accordance with the pursuer’s motion, I shall sustain the pursuer’s second plea in law, to the extent that it has not been dealt with by Lord Jones’s interlocutor dated 4 December 2015, and grant decree in terms of the second conclusion for production and reduction of the disposition granted by Mr Fortune in favour of the defender in respect of the EB property, and I shall repel the defender’s second and third pleas in law. Questions of expenses are reserved.