Marley Tile Company Ltd v Burrows
| Jurisdiction | England & Wales |
| Judgment Date | 01 February 1977 |
| Judgment citation (vLex) | [1977] EWCA Civ J0201-3 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 February 1977 |
| Docket Number | 1975 M. No. 329 |
[1977] EWCA Civ J0201-3
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Queen's Bench Divison
Nunbridge Wells District Registry
Deputy District Registrar R. H. Eradfield
The Master Of The Rolls
(Lord Denning)
Lord Justice Stephknson and
Lord Justice Waller
MR. R. GRIFFITHS (Instructed by T. P. Burton Esq., Solicitor, Sevenoaks) appeared on behalf of the Plaintiffs (Appellants).
MR. T. SHIELDS (instructed by Messrs. Buss, Stone & Co. Solicitors, Tunbridge Wells) appeared on behalf of the Sheriff of Cornwall.
MR. V. VALLAT (instructed by Messrs. Bond, Pearce & Co., Solicitors, Plymouth appeared on behalf of the Claimant.
THE-MASTER OF THE ROLLS: Bankruptcy is a specialist subject. This case raises a point of practice in it.
Mr. Burrows is a builder at St. Ives in Cornwall. He ordered materials from the Marley. Tile Co. The bill came to £1, 045. 95. He did not pay. In July 1975 Marley Tile issued a writ against him. He did not enter any appearance. On the 22nd August, 1975 judgment was entered against him for the sum of £1, 045. 95 and £34. 45 costs.
On the same day, the 22nd August, Marley Tile issued a well of execution - a writ of fieri facias. Marley Tile are in Kent They sent the writ down to the Under Sheriff of Cornwall at St. Austell. He received it through the post on the 3rd September, 1975. On the 12th September, 1975 the Sheriff's officer, a Mr. Forrester, went to the builder's yard. He found a lot of woodworking machinery there. It was enough to cover the debt. He took walking possession and made a report. It was sent to Marley Tile. On the 25th September, 1975 Marley Tile wrote to the Under Sheriff and said "Get on with the execution1'. The Under Sheriff was going to do this, but before any sale took place, the builder, Mr. Burrows, paid money on account. On the 10th November, 1975 the builder paid the Sheriff's officer £575 on account of the total debt. The Under Sheriff on the 25th November, 1975 paid it to Marley Tile. So they got £575. On the 11th December, 1975 Mr. Burrows paid the Sheriff's officer another £500. So altogether he paid £1, 075 out of a total of £1, 080. 04. That left only about £4. 86 outstanding.
It is the last £500 which is in question. The builder paid it on the 11th December, 1975. But the Sheriff's officer for some reason kept it in his own hands. He did not pay it over to the Under Sheriff or tell the Under Sheriff about it.On the 6th January, 1976 Marley Tile asked the Under Sheriff about the position. The Under Sheriff then found out that his officer had received the £500 leaving a small amount outstanding.
A few days later on the 13th January, 1976 the builder Mr. Burrows filed his own petition in bankruptcy, and a receiving order was made on that day. The Sheriff's officer was told of it: and, on hearing of it, he paid over the £500 to the Under Sheriff. He said that his charges came to £44. 80.
The question then arose as to who should have the £500 in the hands of the Under Sheriff. Were Marley Tile to have it? Or was the trustee in bankruptcy of Mr. Burrows to have it? If the Trustee had it, it would of course have to be divided amongst all the creditors: and Marley Tile would only get a small proportion. But Marley Tile say that they should have it all, less of course the charges.
The Deputy District Registrar held that the £500 should be paid to the Trustee in Bankruptcy. Marley Tile applied to this court. The question depends on sections 40 and 41 of the Bankruptcy Act, 1914. The best way of applying those sections to this case is to start at the end with section 41(2). It says: "Where under an execution in respect of a judgment for a sum exceeding twenty pounds" - that is this case - "the goods of a debtor are sold" - that is not this case - "or money is paid in order to avoid sale:' - that is this case, the £500 was paid on the 11th December, 1975 in order to avoid sale - "the sheriff shall deduct his costs of the execution from the proceeds of sale or the money paid" - that is what he has done, he has deducted £40 - "and retain the balance for fourteen days" - that is what he did, he retained it from the 11th December, 1975 for fourteen days and longer - "and if within that time" - those fourteen days - "notice is served on him of a bankruptcy petition having been presented by or against thedebtor, and a receiving order is made against the debtor, thereon or on any other petition of which the sheriff has notice" - that was not done within the fourteen days - "the sheriff shall pay the balance to the official receiver or, as the case may be, to the trustee, who shall be entitled to retain it as against the execution creditor".
In this case section 41(2) did not come into operation because no notice was served on the Sheriff within the fourteen days of a bankruptcy petition That section, 41(2), only deals with the position if notice of a petition is given within the fourteen days. In that case the money is to be paid to the trustee in bankruptcy and not to the execution creditor. The section does not say what the position is if the notice is not given within the fourteen days but only afterwards. It seems to me clearly implicit that in that case the money is to be paid to the execution creditor and not to the trustee in bankruptcy. That was the view taken by Lord Justice Russell in Hellver v. Sheriff of Yorkshire (1975) Chancery at page 20 C. After reading the corresponding section in the Companies1 Act, it he said this: "There is involved in that, that if an appropriate notice is not given in the appropriate manner within the 14 days, the sheriff is entitled and indeed obliged to pay over to the judgment creditor the amount of the judgment debt".
Applying therefore section 41(2), no notice having been served within fourteen days, it would look as if the £500 less costs should have been paid to the execution creditor.
In answer to this argument Mr. Vallat said that this case fell to be decided, not under section 41(2), but under section 41(1). It says: "Where any goods of a debtor are taken in execution" - that is this case - "and before the sale thereof, or the completion of the execution by the receipt or recovery of the- full amount of the levy" - that is this case, the fullamount of the levy £10. 80. 04 has not been recovered, as there is £4. 86 outstanding - "notice is served on the sheriff that a receiving order has been made against the debtor" - that was done on the 13th January, 1976 - "the sheriff shall, on request, deliver the goods and any money seized or received in part satisfaction of the execution to the official receiver, but the costs of the execution shall be a first charge on the goods or money so delivered, and the official receiver or trustee may sell the goods or an adequate part thereof, for the purpose of satisfying the charge".
So there it is. Mr Vallat says that section 41(1) applies. He relies on these words "any money seized or received in part satisfaction of the execution". He says that this £500 was received "in part satisfaction of the execution": so it is within section 41(1): So the £500 must be paid to the official receiver in part satisfaction and the goods sold to satisfy the balance of £4. 86.
We are told that, until the year 1960, Mr, Vallat's argument prevailed in some counties and with some sheriffs. It was supported by an observation which was made by Mr. Justice R. S. Wright in re Ford (1900) 1 Queen's Bench at page 269.
But in 1960 there was a case which countered Mr, Vallat's argument. It was re Walkden Sheet Metal Co. Ltd. (1960) 1 Chancery 170, a decision of Mr. Justice Wynn-Parry on the corresponding section of the Companies Act. He drew a distinction between the words in section 41(1) "money received in part satisfaction of the execution" and the words in section 41(2) "money paid in order to avoid sale". He said (at page 177): "In my view money paid in order to avoid sale is not money paid in or towards satisfaction of the execution, but money paid to prevent or halt the execution, and therefore, when the section refers to money received, it is not talkingof money received to avoid sale but of money received in the carrying out of the execution". Applying that distinction to the present case, it follows that the £500 was "money paid in order to avoid sale" within section 41(2). It was not "money received in part satisfaction of the execution" within section 41(1).
In my opinion that dictum of Mr. Justice Wynn-Parry was correct. It has been acted on by the sheriffs ever sisnce that time. If money is paid in order to avoid sale and notice of bankruptcy is not received within the fourteen days, then the sheriffs have regarded that as being the money of the execution creditor and not the money of the trustee in bankruptcy, nor should it go to the general body of creditors. It only goes to the trustee in bankruptcy if notice of bankruptcy is received within the fourteen days.
The underlying principle is to be found stated in re Pearson (1886) III Morell's Bankruptcy Cases 187 and in re Pearson (1895) 2 Chancery 217 where Mr. Justice Chitty, at page 221, said: "The result of the...
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Jet West Ltd and Another (Plaintiffs) v Bernard Haddican and Others
...had been annulled." 25 In more recent days, the Court of Appeal has affirmed those authorities. In Marley Tile Company Limited v Burrows (1978) QB 241 at page 250A, Lord Denning MR, having cited Re Greer, summarised the matter in this way: "It comes to this: when the money is paid in order ......