JOHN HALL v. MARK CRAWFORD
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION |
| Lord Cameron of Lochbroom Lord Marnoch Lord Nimmo Smith | XA4/01 OPINION OF LORD CAMERON OF LOCHBROOM in APPEAL From the Sheriffdom of Lothian & Borders at Edinburgh in summary cause JOHN HALL Pursuer and Appellant; against MARK CRAWFORD Defender and Respondent: _______ |
Act: Davies; Balfour & Manson
Alt: Party
17 January 2002
[1]This appeal concerns a summary action for payment of the principal sum of £1063.83 which is claimed by the pursuer and appellant as due to him as part of his outlays and remuneration while acting as permanent trustee appointed in the sequestration of the defender and respondent.
[2]The circumstances giving rise to the claim, and to a related counter claim with which this appeal is not concerned, are fully set out in the sheriff's note of 4 April 2000 and in the case stated by the sheriff following his determination by interlocutor dated 4 April 2000 to grant decree for payment by the defender to the pursuer of the sum claimed. The defender appealed to the sheriff principal. On 26 September 2000 the sheriff principal, after hearing parties, allowed the appeal by answering certain questions in the stated case in the negative and finding it unnecessary to answer the other questions, and thereafter by recalling the interlocutor of 4 April 2000.
[3]I take what I consider to be the facts relevant to the appeal in large part from the sheriff principal's note appended to his interlocutor of 26 September 2000.
[4]On 8 July 1998 the defender was sequestrated under the Bankruptcy (Scotland) Act 1985 upon an application by a creditor, Portobello Printers Limited. The award of sequestration was not opposed by the defender. The sheriff who dealt with the matter appointed the Accountant in Bankruptcy as interim trustee. In exercise of his powers under section 1B(2) of the 1985 Act, the Accountant in Bankruptcy then appointed the pursuer, who carries on business as an insolvency practitioner, to perform his functions as interim trustee. In due course the creditors elected the pursuer as permanent trustee at a statutory meeting which took place on 31 July 1998. The sheriff thereafter confirmed the pursuer as permanent trustee by act and warrant dated 17 August 1998. This declared that the whole estate of the defender trading as Sulfer Quay at 16 June 1998 "is vested in and now belongs" to the pursuer for the benefit of the creditors of the defender trading as Sulfer Quay.
[5]In due course, and in terms of section 16 of the 1985 Act, the defender petitioned the Court of Session for recall of the award of sequestration. The pursuer chose not to enter that process. On 23 February 1999 the Lord Ordinary recalled the award. The terms of that interlocutor are set out in full in the sheriff principal's note but, so far as it is material, it reads as follows: "The Lord Ordinary having considered the Petition and proceedings, no answers having been lodged, recalls the sequestration of (the defender): Directs that payment of the outlays and remuneration of the interim trustee and permanent trustee as the same may be determined by the Accountant in Bankruptcy, shall be made out of the debtor's estate....". It is the effect of that direction, made under section 17(3)(a) of the 1985 Act, with which the present appeal is concerned.
[6]Following on recall of the award of sequestration, the pursuer prepared his final accounts. These were in due course audited by the Commissioners. These accounts bear to show that there was a sum of £1,063.83, which the sheriff principal terms "a shortfall", in respect of the fees due to the pursuer as permanent trustee. The pursuer then demanded payment of that sum from the defender. When payment was not forthcoming, the present action was raised.
[7]From the sheriff's note it appears that in August 1998 the defender deposited with the pursuer the sum of £15,000. This sum was thereafter held in a specific interest bearing trust account in the pursuer's name as permanent trustee. There followed correspondence between the parties. In the course of this correspondence it was accepted for the defender that the sum so deposited was not sufficient to discharge all liabilities together with statutory interest and the costs of the sequestration process. On 15 February 1999 the pursuer wrote to the solicitor acting for the defender acknowledging receipt of a copy letter from the Halifax Building Society confirming that the Halifax had irrevocable instructions to forward £6000 to the pursuer once recall had been granted. In that letter the pursuer confirmed that in his view the defender as debtor had "now" satisfied the requirements of section 17(1)(a) of the 1985 Act. By this time the pursuer had produced to the defender an estimate in writing of the financial position as at 9 February 1999. This document set out that as at 29 January 1999 the pursuer held funds in trust amounting to £15,135.06. The estimate included, amongst other things, provision not only for the pursuer's fee to 15 December 1998, but also the interim trustee's outlays, as well as the pursuer's "unbilled costs to date" and the pursuer's fee "to close case (estimated)". There was also a stated sum for statutory interest "to 28 February 1999" on the creditors' claims, which claims amounted to £10,897.24. The estimated "shortfall" was given as "£6,387.78" to which was added, as a note, that the estimate included VAT of £776.23 "which should be recoverable".
[8]It is not in dispute that the sum of £6,000 was provided to the pursuer. While no information is given as to the exact date when the sum was paid into the hands of the pursuer, the correspondence clearly indicates that it was only to be paid after the recall of the sequestration had been awarded. Accordingly, at the date of recall of the sequestration the pursuer had available funds of £15,000 to which interest fell to be added and security in the form of the irrevocable authority given to the Halifax to pay over the sum of £6000 to the pursuer. The sheriff in the stated case refers to "the funds provided of £21,000". On the other hand, in his note the sheriff principal states that "at the time when the defender's petition for recall was before the Court of Session (the defender's) estate, vested in the pursuer as the permanent trustee, amounted to £21,000 to which there fell to be added a further sum of £219.65 as statutory interest". This statement, strictly speaking, is incorrect since it was only the deposited funds of £15,000 which were actually in the pursuer's hands prior to recall.
[9]It is not in dispute that upon recall of the award of sequestration the defender, as the debtor, and any other person affected by the sequestration was restored, so far as practicable, to the position he would have been in if sequestration had not been awarded (section 17(4)). Thus any funds which would have vested in the pursuer as permanent trustee but had not then been ingathered by him, would automatically be vested once more in the debtor. Furthermore, it appears from the correspondence that the sum of £6,000 was to be provided not by the defender but by his wife.
[10]The sum decerned for in this action is said to be part of the outlays and remuneration of the pursuer in his capacity as permanent trustee, to which outlays and remuneration reference is made in the Lord Ordinary's interlocutor. It is vouched by a document appended to the claim which bears to set out the "trustee's receipts and payments account for the whole period of the sequestration". The sheriff in the stated case observed that the pursuer could only succeed by demonstrating that the direction in the interlocutor of 23 February 1999 that payment of those outlays and remuneration shall be made out of the debtor's estate, is equivalent to a requirement on the defender to pay the outlays and remuneration. He decided that the pursuer had done so on the basis that the expression "the debtor's estate" in the Lord Ordinary's interlocutor meant "all the property owned by the defender". His decision is succinctly set out in a passage where he considers the meaning of that phrase. He began by stating that in his opinion it is not possible to interpret the phrase as meaning the estate in the hands of the trustee. Looking to the provisions of the 1985 Act, and in particular sections 31(1) and 33, he observed that with certain specific exceptions, the whole of a debtor's estate vests at the date of sequestration in the permanent trustee. He then dismissed the argument for the defender that what was meant by the phrase, as it appeared in the Lord Ordinary's interlocutor, was that it was such part of the defender's estate as was in the hands of the permanent trustee at the time. He did not consider that that was a possible interpretation of the phrase. He concluded by saying this:
"Accordingly, I hold that what is meant by that direction in the interlocutor of 23 February 1999 is that payment of the outlays and remuneration of the interim trustee and permanent trustee shall be made out of the defender's whole property. That appears to me to be another way of saying that the defender shall make it. I appreciate that this is a somewhat involved way of saying that the defender shall pay the whole outlays and remuneration. I am aware of the argument that it could have been simpler for the Court simply to say that. Nevertheless, I think that is what the direction means. It follows that I am against the argument of the defender that these outlays and remuneration can only be paid out of estate in the hands of the trustee at the time."
The sheriff went on to note that the present action was one for payment. He considered that it was probably correct that such an action was the appropriate way to recover the outlays and remuneration outstanding, since "the direction of the Lord Ordinary as to payment of the outlays and remuneration is not equivalent to an award of expenses" (my emphasis).
[11]The sheriff principal, on the other hand, put the matter slightly differently. He said that the central question in the case was whether the Lord Ordinary's interlocutor is to be construed simply as providing authority for the pursuer to satisfy his own claims in respect of outlays and remuneration "out of the defender's estate as vested in him prior to repaying any surplus which there might have been to the defender" or "as entitling the pursuer to seek payment of the sum from the defender at any time thereafter", as the sheriff appeared to have determined. In reaching his view that the sheriff reached a wrong conclusion in the matter, the sheriff principal reviewed certain sections of the 1985 Act, not least section 51(1). He appreciated that section 51 was probably of no direct relevance in a case like the present one where an award of sequestration was being recalled on the ground set out in section 17(1)(a). Nonetheless he considered that it provided a helpful guide to a sound construction of section 17 (3) and, in particular, to that part of it which makes reference to payment being made out of the debtor's estate. Like the sheriff, he noted that the terms of paragraph (a) of section 17(3) were mandatory. He noted that the court could give effect to its statutory duty in one or other of the two options available to the court, one of which was by way of direction and the other of which by way of a requirement that a person who was party to the petition for sequestration was to pay the whole of part of the outlays and remuneration. That is to say, the two options offered to the court meant different things. He disagreed with the sheriff's view that the two options were merely two ways of saying substantially the same thing. He then said:
"In my opinion, the paragraph makes perfectly acceptable sense if one reads the first alternative offered to the court as in effect authorising the trustee to recoup the amount of his outlays and remuneration out of the funds currently vested (my emphasis) in him, and the second alternative as dealing with what ...would be an unusual situation where the court considered that a party to the petition, other than the debtor, should be liable for that payment. All of that, of course, assumes that there are sufficient funds vested (my emphasis) in the trustee to enable him to pay the debts and to satisfy his own claim in respect of outlays and remuneration. In the present case it appears that that was not so. In other cases, of course, there may be funds vested (my emphasis) in the trustee which are more that sufficient to pay the debts and to satisfy his claim in respect of outlays and remuneration. In such a case, and by analogy with what is provided in section 51(5) it will be the duty of the trustee to satisfy those claims and then to repay any surplus to the debtor."
The sheriff principal thereafter makes mention of two considerations which bore on the matter, the first of which related to the matter of an action for payment for recovery of outlays and remuneration against the debtor. He observed that normally an interlocutor established some sort of liability, particularily when it contained contained, as here, an express decerniture, which is itself enforceable without the necessity of raising an entirely separate action in order to seek performance of the liability that has been established. The absence of such an established liability served to reinforce his opinion that "the Lord Ordinary's interlocutor is not a finding of personal liability on the part of the defender but instead is merely an administrative direction entitling the trustee to satisfy his claim for outlays and remuneration out of the estate which was at that time vested in him." On that view of matters, the sheriff principal observed:
"No doubt it will sometimes be difficult for a trustee to calculate with accuracy whether or not funds in his hand ( my emphasis ) will be sufficient to meet all demands. In my view, however, the trustee will simply have to bear the loss if he calculates wrongly, and if, as here, he takes no steps to oppose the debtor's petition for recall of an award of sequestration".
Before this court the issue was presented for the pursuer on the basis that the direction found in the Lord Ordinary's interlocutor sufficed to make the defender personally liable for payment of the interim trustee's and permanent trustee's outlays and remuneration. Since the direction was made following on and as a consequence of the Lord Ordinary having been satisfied that grounds for the purposes of section section 17(1)(a) had been established, the immediate effect of the recall was to restore the estate to the debtor, vest it in him and return management of it to him. It followed that upon recall the debtor became personally liable for payment from his whole estate of all the outlays and remuneration of the pursuer as interim trustee and permanent trustee and remained liable for the balance of them, even if part of those outlays and remuneration were to be taken from funds already in the pursuer's hands at the time when the sequestration was recalled. Such a consequence did no violence to the language used in the 1985 Act. The estate "vested" in a permanent trustee on grant of the act and warrant did not merely mean the estate in his hands but extended to the entire property of which the debtor was divested at the date of sequestration and thereafter and which was transferred automatically to the permanent trustee, including acquirenda (sections 32(6) and (10)). It was the whole of that estate which it was his function to recover, manage and realise during the course of the sequestration (section 3). On recall, his functions ceased and with that cessation, any funds in his hands ceased to be vested in him. Section 51 was concerned only with a sequestration which had not been made subject to recall. The sheriff principal had erred in fact in proceeding on the basis that direction in the Lord Ordinary's interlocutor related only to the estate of the debtor in the pursuer's hands at the moment of recall as being the estate then vested in him and that the only estate of the debtor then vested in the pursuer was the sum of £21,000 with interest. In the case of a solvent debtor, the direction was equivalent to a direction that the debtor was personally liable for the outlays and remuneration of the pursuer and such a direction could be enforced by means of an action for payment against the debtor.
[12]While much of the argument for the pursuer was concerned with the meaning to be given to the direction in the Lord Ordinary's interlocutor, it was only late in the course of the debate that any attention was paid to the terms of the petition which was considered by the Lord Ordinary. The terms of the petition find no place in the sheriff's note nor in the stated case nor, indeed, in the sheriff principal's note. However, the petition was produced to us. From its terms it is clear that the petition proceeded on the basis, as set out in article 5.1 of the petition, that the defender, as petitioner, had put the pursuer "in funds in the sum of £15,000 on behalf of the Petitioner, which sum is sufficient to meet the undisputed liabilities of the Petitioner including statutory interest together with the fees and outlays of the first and second named Respondents" (i.e. the pursuer and the Accountant in Bankruptcy). The article continued as follows, "in terms of section 17(1)(a) of the 1985 Act, the Petitioner has given sufficient security for the payment of his debts in full". The prayer of the petition contained a request that the sequestration be recalled and that the court "make such provision for the payment of the fees, outlays and expenses of (the pursuer)" as to the court should seem proper. The petition was served upon pursuer and the Accountant of Bankruptcy. Neither chose to lodge answers and thus challenge the averments in the petition and oppose recall. Nor did the pursuer seek to enter the petition process and, without opposing recall, seek to secure that the defender was made personally liable for payment of any balance of those outlays and remuneration in the event that the funds in pursuer's hands were insufficient to meet them. Such might have been done by an order pronounced in terms of section 17(3)(c) or otherwise, for instance, by a personal undertaking upon which the pursuer could have sued for the balance if unpaid. Section 17(3)(c) provides the court with the power to make "any further order that it considers necessary or reasonable in all the circumstances of the case". In my opinion, the Lord Ordinary must be presumed to have proceeded to grant recall on the basis that the pursuer had sufficient funds in his hands at the time to cover all the claims by way of payment of the creditors and others and the outlays and remuneration of the interim trustee and permanent trustee. It was clearly in the defender's interests that the court declared, as was already the case in respect of the pursuer's fee to 15 December 1998, that the final account should be audited by the commissioners and that that account be subject to a right of appeal by any party to the Accountant in Bankruptcy. But, in my opinion, this does not thereupon make the defender personally liable for payment of the whole or any part of the sum in the final account as audited. Unlike the sheriff principal, however, I do not consider that the provisions of section 51 are of any assistance in a determination in this case. That section is concerned with the distribution of the debtor's estate by the permanent trustee during the currency of the sequestration. Contrary to a submission for the defender, the order of priority in distribution provided for in section 51 cannot, in my opinion, bear upon the circumstances arising under section 17(1)(a). That last subsection envisages that payment of the debtor's debts has already been made in full or that sufficient security has been provided for their payment, without reference to any prior payment of the outlays or remuneration of the interim or permanent trustee. I do, however, accept that it is perhaps difficult to see why the reference in section 51(1) to "the debtor's estate" in its context, including the succeeding provisions of the Act, should have any different meaning from the same phrase as it is used in section 17(3)(a), namely, as being the funds immediately available to the permanent trustee.
[13]While much ground was traversed in the course of the submissions, it does not appear to me to be helpful to take this case beyond its own facts and circumstances. I would, however, express my agreement with the distinction which the sheriff principal makes between the alternative options open to the court in relation to section 17(3)(a). If it is granting recall the court must make provision for payment of the fees and outlays of an interim trustee and permanent trustee. It is plain that the first call is to be made on the debtor's estate as provided for by the direction. This can only be considered as an administrative direction to the permanent trustee on the basis that out of the estate which was vested in him by the award of sequestration there may be sufficient in his hands or immediately available to him at the moment of recall to pay those fees and outlays. However, I do not consider that such a direction can be equated to an order for payment to be made by the debtor personally. The very fact that the court is given power to make further or ancillary orders in terms of section 17(3)(c) emphasises the difference between the purpose and extent of such a direction and those of an order upon a person other than an interim or permanent trustee, to meet all or any of such fees and outlays.
[14]I am fortified in the conclusion which I have reached in this appeal by reference to the Report on Bankruptcy and Related Aspects of Insolvency and Liquidation (Scottish Law Commission No. 68 of 1982) and to the draft Bill appended to the Report. Section 17, and in particular sub-section 3 of that section, of the 1985 Act as enacted, follows very precisely the provisions of clause 17 of the draft Bill. In paragraph 8.16 of the Report the Scottish Law Commission recommended, amongst other things with regard to the general effects of recall, that it should be provided that the court had power to make orders relating to the payment out of "the estate" of the outlays and remuneration of the interim and permanent trustee. Plainly what was envisaged there was payment from "the estate" which became available to the permanent trustee by virtue of the sequestration and not an order for payment by the debtor personally.
[15]For the above reasons, I consider that the sheriff principal reached a right conclusion in the circumstances of the case. In the result, I would move your Lordships to refuse the appeal and to adhere to the interlocutor pronounced by the sheriff principal on 26 September 2000 whereby he answered questions 3, 4,8 and 9 in the stated case in the negative and found it unnecessary to answer the other questions in the stated case, allowed the appeal and recalled the interlocutor of the sheriff dated 4 April 2000. The defender intimated at the conclusion of the hearing before us that he did not seek to disturb the finding by the sheriff principal in the interlocutor dated 9 November 2000 making the pursuer and respondent liable to the defender and appellant of the expenses both in respect of the appeal procedure and in the cause, modified by 10%, and thereafter remitting the cause to the sheriff clerk for assessment of those expenses.
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION |
| Lord Cameron of Lochbroom Lord Marnoch Lord Nimmo Smith | XA4/01 OPINION OF LORD MARNOCH in APPEAL From the Sheriffdom of Lothian & Borders at Edinburgh in summary cause JOHN HALL Pursuer and Appellant; against MARK CRAWFORD Defender and Respondent: _______ |
Act: Davies; Balfour & Manson
Alt: Party
17 January 2002
[1]My Lords, on the view I take of matters the only question which arises in this Appeal is what is meant by that part of the Interlocutor pronounced by the Lord Ordinary on 23 February 1999 which, after recalling the sequestration of the present defender and respondent, hereinafter referred to as "Mr. Crawford", directs that "payment of the outlays and remuneration of the interim Trustee and Permanent Trustee...shall be made out of the debtor's estate".
[2]In that regard I do not dissent from the views expressed by your Lordship in the chair and Lord Nimmo Smith that, whatever be the general law, this particular interlocutor should, for the reasons given by your Lordships, be construed as excluding personal liability on the part of Mr. Crawford and, thus, as precluding the present action which assumes such liability.
[3]However, in so far as the interlocutor in question reflects the provisions of section 17(3)(a) of the Bankruptcy (Scotland) Act 1985, I would, in common with your Lordship in the chair, have reached that conclusion even without the benefit of the contextual argument referred to by your Lordships.
[4]In my opinion, an administrative direction by the court that payment shall be made "out of the debtor's estate", particularly when juxtaposed with "requiring any person...to pay the whole or any part of the said outlays and remuneration", can only mean that the trustee, interim or permanent, should deduct what is due from the funds in his hands prior to accounting with the debtor for the balance. Where, however, as in the present case, that proves to be impossible, I would not, for myself, read any such interlocutor as imposing personal liability on the former debtor. On this point, therefore, I must respectfully disagree with the views expressed by Lord Nimmo Smith, although I do so only in reference to the particular statutory provision with which we are here concerned. Where, on the other hand, I am able to agree with Lord Nimmo Smith is that, if the situation were doubtful, the court could certainly require that any balance of the outlays and remuneration be paid personally by the debtor by way of a supplementary order made under section 17(3)(c) of the Act.
[5]In the result, I respectfully agree with your Lordship in the chair that a direction made under section 17(3)(a) is not apt to impose personal liability on the debtor, whatever may be the precise ambit of "the debtor's estate" as referred to in that subsection. It follows, I think, that the real "moral" to be derived from this case is that a trustee should oppose a motion for recall of sequestration unless and until he is satisfied that, in addition to discharging his other responsibilities, he will be in a position to pay for his outlays and remuneration "out of" the funds in his hands or, alternatively, that he has made some other secure arrangement for their payment.
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION |
| Lord Cameron of Lochbroom Lord Marnoch Lord Nimmo Smith | XA4/01 OPINION OF LORD NIMMO SMITH in APPEAL From the Sheriffdom of Lothian & Borders at Edinburgh in summary cause JOHN HALL Pursuer and Appellant; against MARK CRAWFORD Defender and Respondent: _______ |
Act: Davies; Balfour & Manson
Alt: Party
17 January 2002
[1]Your Lordship in the Chair has set out the circumstances in which this appeal has come before this Court. Insofar as its outcome turns on the proper construction of the Lord Ordinary's interlocutor of 23 February 1999, in terms of which the sequestration was recalled and a direction was made that "payment of the outlays and remuneration of the interim trustee and Permanent Trustee...shall be made out of the debtor's estate" I agree that, for the reasons given by your Lordship, the present claim fails. The interlocutor must be read in conjunction with the petition to which it referred. In paragraph 5.1 of the petition it was averred that the permanent trustee (the present pursuer and appellant) had been put in funds in the sum of £15,000 on behalf of the present defender and respondent, which sum was said to be sufficient to meet inter alia the fees and outlays of the permanent trustee. The prayer invited the Court inter alia "to make such provision for the payment of the fees, outlays and expenses of the [permanent trustee] as to your Lordships shall seem proper". The interlocutor was in the same terms as the style given in McBryde on Bankruptcy, 2nd ed., p. 122, and obviously reflected the provisions of section 17(3)(a) of the Bankruptcy (Scotland) Act 1985; but, as I have said, its proper construction depends also on the terms of the relative petition. In the circumstances of the present case I am satisfied that the pursuer and appellant is not entitled to payment of more money than was in his hands at the date of the interlocutor. He did not choose to oppose the granting of the prayer of the petition or take any other step to protect himself should his outlays and remuneration prove to exceed his estimate thereof, even though this was a subject which featured in correspondence between the parties after the petition had been lodged and before the interlocutor was pronounced. In exercising his discretion to make provision for these fees and remuneration in the terms set out in the interlocutor, the Lord Ordinary must be taken to have had regard to the averments in the petition, and there is no reason to suppose that it was within his contemplation that the outlays and remuneration of the pursuer and appellant might exceed what was already in his hands. The phrase "the debtor's estate" must, in its context, be taken to mean such of the debtor's estate as was in his hands at the date of the interlocutor.
[2]While this is sufficient to dispose of the appeal, I wish to add a few words about the provisions of section 17(3) of the 1985 Act. The phrase "the debtor's estate" (or "the estate of the debtor") is used in many sections of the Act. In my opinion, it means the same wherever it is used. The effect of section 31(1) is to vest the whole estate of the debtor as at the date of sequestration in the permanent trustee for the benefit of the creditors. By section 31(8) the phrase "the whole estate of the debtor" is given a very wide definition, and includes estate wherever situated. This is subject to certain exceptions, which are not relevant for present purposes, and subject also to the completion of title to heritable estate, registration in respect of shares in a company, and similar formalities. The debtor does, however, retain what is sometimes called a radical right to his estate. As Lord Jerviswood said in Mackenzie &c v. Smith (1861) 23 D. 1201 at p. 1203, in a passage quoted with approval by Lord President Inglis in Kirkland v. Kirkland's Trustee (1886) 13 R. 798 at p. 803:
"The statutory conveyance to a trustee under the law of bankruptcy is ex facie absolute; but, after all, it is a conveyance for the limited purpose of paying the bankrupt's own debts. It thus, in reality, only operates as removing from him, for a special purpose, the control of what is still radically his own."
The principal functions of the permanent trustee are to recover, manage and realise the debtor's estate so far as vesting in him under the Act, and to distribute it among the debtor's creditors according to their respective entitlements: section 3(1)(a) and (b), and see also section 138. There may, for various reasons, be property belonging to the debtor which has not yet been recovered by the permanent trustee at any given time, particularly in the early stages of a sequestration, but which has nevertheless vested in him and is properly to be regarded as part of "the debtor's estate" for the purposes of the statute. I am unable to agree with the Sheriff Principal, whose view appears, in certain passages of his opinion, to be that the only estate which vests in the permanent trustee is that which has in fact been recovered by him. Of course, in many cases, most obviously those where the estate is insolvent, the permanent trustee will proceed to recover such of the estate as he reasonably can in order to distribute it in accordance with the order of priority provided by section 51, where the outlays and remuneration of the interim trustee and of the permanent trustee come before all other debts. For practical purposes, in such a case, the debtor's estate is that which is recovered by the permanent trustee, and it is out of this that he will expect his outlays and remuneration to be met.
[3]The situation arising under section 17, however, is different. Under subsection (1) thereof an award of sequestration may be recalled for various reasons, one of which is that the debtor has paid his debts in full or has given sufficient security for their payment. Under subsection (4) the effect of the recall of an award of sequestration is (in general), so far as practicable, to restore the debtor and any other person affected by the sequestration to the position he would have been in if the sequestration had not been awarded. I can see no reason either in principle or in the terms of section 17(3)(a) why provision by the Court, on recalling the award, for the payment of the outlays and remuneration of the interim trustee and permanent trustee, by directing that such payment shall be made out of the debtor's estate, should necessarily be construed as relating to such only of the debtor's estate as may be in the hands of the permanent trustee at the date of the Court's interlocutor. In my opinion such provision may extend to such of the debtor's estate as was not in fact recovered by the permanent trustee and which, on recall of the sequestration, by virtue of section 17(4), as well as the debtor's radical right, must be taken to have remained vested in the debtor. A right to payment of this kind gives rise to a correlative obligation in the form (except in the case of a debitum fundi) of a personal obligation. Thus, a direction under section 17(3) for payment out of the debtor's estate may in my view be apt to impose a personal obligation on the debtor.
[4]As has been seen, however, an interlocutor falls to be construed in its context, in particular in light of the averments in the relative petition and any other matters which the Court may properly take into account in deciding how to exercise its discretion. It may be perfectly clear, in some cases, that a direction for payment out of the debtor's estate is intended to render the debtor personally liable to make payment; and, in others, such as the present, that it is intended only to extend to such of the debtor's estate as is in fact in the hands of the permanent trustee. Any ambiguity could be avoided by the addition of an express provision to the appropriate effect; while the terms of section 17(3)(a) may be sufficient for this purpose, the Court is in any event empowered under section 17(3)(c) to make any further order that it considers necessary or reasonable in all the circumstances of the case. I would recommend that thought be given to this in future in the drafting of interlocutors of this kind.