Accountant In Bankruptcy V. Mohinder Singh Nottay And Rashpal Kaur Nottay
| Jurisdiction | Scotland |
| Judge | Lord Clarke |
| Date | 25 August 2000 |
| Court | Court of Session |
| Published date | 25 August 2000 |
| OUTER HOUSE, COURT OF SESSION | |
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| OPINION OF LORD CLARKE in the cause ACCOUNTANT IN BANKRUPTCY Pursuer; against (FIRST) MOHINDER SINGH NOTAY and (SECOND) RASHPAL KAUR NOTTAY Defenders: ________________ |
Pursuer: Stuart; Beveridge & Kellas
Defenders: Dunlop for the Second Defender; Burnett Christie
25 August 2000
[1]In this case, the pursuer, the Accountant in Bankruptcy, seeks payment from the second defender of two sums, the first being £6,700 and the second £12,000. The first defender has not entered appearance. His estate was sequestrated on 15 April 1997. The defenders are husband and wife.
[2]The claims against the second defender relate to two alleged gratuitous alienations by the first defender to her. The first alienation concerns a disposition by the first defender to the second defender dated 26 August 1996 and recorded in the General Register of Sasines 13 September 1996, of his one-half share in a house at 56 Moat View, Roslin, Midlothian, which had previously been owned by the defenders in common. The second alleged alienation involves the transfer on or about 1 October 1996, by the first defender to the second defender of three photographic machines. In respect of the first alienation the second defender does not deny that it took place nor that, if it were made for no or inadequate consideration, it would be reducible by virtue of the provisions of section 34 of the Bankruptcy (Scotland) Act 1985, being an alienation in terms of section 34 to "an associate" of the first defender, which took place within a period of five years before the first defender's sequestration. The defence to this claim is that the alienation was for adequate consideration.
[3]As far as the second claim is concerned the second defender does not, as far as her pleadings go, admit that an alienation to her took place. The pursuer's averments about the alienation of the goods by the first defender to the second defender are simply met by a general denial. The second defender's substantive averments in answer to this claim are that, in any event, the pursuer is not entitled to seek the sum sought in the second conclusion but should be seeking as his remedy the restoration to him of the property in question.
[4]The case came before me for discussion on the procedure roll of the pursuer's second plea-in-law, which is a general plea to the relevancy of the second defender's averments. Counsel for the pursuer informed me, at the outset of his submissions, that he recognised that there would require to be a proof in this case in respect of the quantum of what might be recoverable by the pursuer in respect of the first claim. He also accepted, apparently, that there would require to be a proof about the facts and circumstances of the alleged alienation by the first defender to the second defender, to which the second claim relates, because of the second defender's general denial which covers the fact of the alienation of the goods in question. What the pursuer was seeking, was exclusion from probation, of certain of the second defender's averments in answer to each of these claims.
The First Claim
[5]It is a matter of admission by the second defender that, as at the date of the disposition of the first defender's share in the heritable property to her there were loans secured over that property in favour of the Halifax Building Society and Cedar Holdings Limited. The extent of these are averred by the second defender to have been £37,647.52 and £14,254 respectively. The second defender avers that upon the transfer to her of the property outright it was remortgaged to the Bank of Scotland in respect of a loan of £53,000.
[6]The pursuer avers in Article 4 of the Condescendence that the disposition in favour of the second defender by the first defender of his share in the house narrated that the consideration was "love, favour and affection". It is further averred by the pursuer that the defenders certified, for the purposes of obtaining exemption from stamp duty, that the conveyance was for no consideration. After referring to the relevant stamp duty regulations the pursuer avers that no stamp duty was paid on the disposition.
[7]The second defender's replies to the specific averments relating to what was said in the disposition are as follows:
"Further explained and averred that, while the disposition narrates that it was 'made for love, favour and affection', that expression is erroneous in the circumstances hereinbefore condescended upon and does not truly reflect the intention of the defenders in granting it. The second defender thus intends to apply for legal aid to seek rectification of the disposition in terms of section 8(1)(b) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 by deleting the words 'love, favour and affection' and replacing them with the words 'certain good and onerous causes'".
[8]Previously in this Answer, the second defender averred how it was that consideration was paid by her in exchange for the disposition in her favour. The averments in question are as follows:-
"Explained and averred that the loans from Halifax and Cedar were in joint names of the defenders. In late 1995, the first defender began to experience financial difficulties. He was unable to finance the payments required on the loans from Halifax and Cedar, in respect of each of which he was jointly liable with the second defender. As a result, the defenders agreed that the house would be transferred into the sole ownership of the second defender, in return for which the second defender would discharge the loans from Halifax and Cedar as well as paying off the first defender's business debts which he also owed to Cedar. The second defender thus obtained a mortgage from the Bank of Scotland which is in her name alone and in respect of which she alone is liable. The second defender has thus discharged the first defender's liabilities for the loans from Halifax and Cedar, which at the time of discharge amounted to one half of £37,647.52 and £14,254 ie. £25,950.76. In addition the second defender paid off the first defender's business debts, also owed to Cedar, at the rate of £250 per month for a period of twelve months. The second defender thus paid consideration of £28,998.76 for the transfer of the one-half pro indiviso share of the house to her. The open market value for one-half pro indiviso share in the house at the date of the transfer would have been less than that sum. The open market value for a one-half pro indiviso share in a property where the other half is not disponed and thus vacant possession cannot be granted is not the same as one-half of the open market value of the house sold as a whole. In these circumstances the conveyance of the first defender's one-half pro indiviso share of the house was made for adequate consideration".
The pursuer's counsel submitted that the second defender's averments, seeking to set up a defence to the first claim, on the basis that adequate consideration had been paid in return for the disposition, were irrelevant in that they were in contradiction of the disposition, which stated that no consideration had been paid, which had been recorded in the General Register of Sasines and which had been neither reduced nor rectified. Reference was made to the decision of the House of Lords in the case of Anderson v Lambie 1954 SC (HL) 43 to support the proposition that as long as a probative deed was not reduced and did not contain a patent error, any alleged error in its terms could not be corrected (see Lord Reid at p. 60). The possibility of rectification of such a deed now arose by virtue of the provisions of section 8 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985, but while the second defender made averments in the present case that she intended to...
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