Sharp v Thomson
| Jurisdiction | UK Non-devolved |
| Judgment Date | 01 January 1997 |
| Date | 01 January 1997 |
| Docket Number | No 51,No 50 |
| Court | Value Added Tax Tribunal |
OUTER HOUSE
Lord Penrose
Heritable property and conveyancingTrustConstructive trustSale of heritageDisposition delivered but not yet recordedFloating charge crystallising after deliveryRights of disponeeWhether disponee had real rightWhether disponee had personal rightWhether disponer held subjects in constructive trust for disponeeReal Rights Act 1693 (cap. 13)1Companies Act 1985 (cap. 6), sec. 462(1)2Insolvency Act 1986 (cap. 45), sec. 53(7)3
Rights in securityCompanyFloating chargeHeritable property and conveyancingCompany granting disposition of subjects prior to appointment of receiverDisposition unrecorded at date of appointmentWhether subjects attached by floating chargeCompanies Act 1985 (cap. 6), sec. 462(1)2Insolvency Act 1986 (cap. 45), sec. 53(7)3
Words and phrasesStatutory Interpretation"Property"Companies Act 1985 (cap. 6), sec. 462(1)2Insolvency Act 1986 (cap. 45), sec. 53(7)3
A couple concluded missives for the purchase of a flat from a company. The conveyancing formalities having been completed, the feu disposition was delivered to the couple's agents on 9th August 1990 and recorded in the Register of Sasines on 21st August 1990, the date of entry being 14th April 1989. Receivers were appointed to the company on 10th August 1990 by instrument of appointment executed by a bank as holders of a floating charge granted by the company and registered on 16th July 1984. The receivers then brought an action against the couple and their building society, in whose favour the couple had granted a standard security which had been recorded at the same time as
the disposition, and argued that the flat had remained the property of the company as at the date of their appointment and was attached by the floating charge which had crystallised on that date. The defenders contended that delivery of the disposition had been effective to remove the subjects from the "property" of the company, as that word was properly understood, and thus from the scope of the floating charge.
Held (1) that a floating charge could attach only to property, however defined, which was held by or for the company at the date of attachment so as to be affected by a fixed security deemed at the material date to have all of the characteristics of a completed and effective security over the class of subjects in question and provided it was so held it was immaterial whether there were limitations or restrictions on the capacity of the company itself to enter into any voluntary transaction which would have that effect; (2) that Scots law held that in a question with third parties the grantor of a disposition remained fully vested with feudal right and title, notwithstanding delivery of the disposition, until it was recorded in the Register of Sasines; (3) that although the grantee had a jus ad rem on delivery of the disposition, the only "property" comprised in that right was the personal contractual right against the grantor; (4) that the company had not held the subjects in a constructive trust for behoof of the couple as there was a well-settled principle that a contractual obligation relative to property, which had not effectually and actually brought about either a security upon it or a conveyance of it, was not, per se, the foundation of a trust or a declarator of trust; and accordingly (5) that, on ordinary principles of property law, the subjects remained in the property of the company until the disposition had been recorded, by which time they were subject to the fixed security in favour of the floating charge holder; and decreede plano granted.
Authorities reviewed.
Observed that the fields of bankruptcy and the Companies Act provisions in question were closely related, so that the same approach had to be adopted to the question of what was the property of a company as to that of the property of a trustee in sequestration or liquidator.
Observed further that it was inaccurate both to define "property" exclusively in terms of beneficial occupation and enjoyment and to make beneficial occupation and enjoyment an essential element of the definition of the word in the present context.
Neil Muir Sharp and Ian Patrick Souter, the joint receivers of Albyn Construction Limited, brought an action against (primo)Steven Thomson and Mrs Carol Thomson; and (secundo) Woolwich Building Society in which they concluded for declarator (a) that a floating charge granted by Albyn Construction Limited in favour of the Governor and Company of the Bank of Scotland dated 2nd July and registered in the Register of Charges on 16th July 1984, which had crystallised on 10th August 1990, attached to subjects known as and forming a basement flat at 10 Whinhill Road, Aberdeen; (b) that that floating charge operated as a fixed security with priority over a standard security executed by the first defenders in favour of the second defenders recorded in the Register of Sasines on 21st August 1990; and (c) that they were entitled to exercise the powers conferred upon them by the charge and by Sched. 2 to the Insolvency Act 1986 and in particular that they were entitled to take possession of the subjects and sell or otherwise dispose of them.
The cause called before the Lord Ordinary (Penrose) in procedure roll on parties' preliminary pleas-in-law.
1 The Real Rights Act 1693 enacts: "That All Infeftments whether of property or annual-rent or other Reall Rights whereupon Sasines for hereafter shall be taken shall in all Competitions be preferable and preferred according to the date and priority of the Registrations of the Sasines without respect of the distinction of Base and publick Infeftments or of being clad with possession or not clad with possession in all time coming."
2 The Companies Act 1985 enacts, inter alia, that: "462.(1) It is competent under the law of Scotland for an incorporated company (whether a company within the meaning of this Act or not), for the purpose of securing any debt or other obligation (including a cautionary obligation) incurred or to be incurred by, or binding upon, the company or any other person to create in favour of the creditor in the debt or obligation a charge, in this Part referred to as a floating charge, over all or any part of the property (including uncalled capital) which may from time to time be comprised in its property and undertaking."
3 The Insolvency Act 1986 enacts, inter alia, that: "53. (7) On the appointment of a receiver under this section, the floating charge by virtue of which he was appointed attaches to the property then subject to the charge; and such attachment has effect as if the charge was a fixed security over the property to which it has attached."
FIRST DIVISION
Lord Penrose
Heritable property and conveyancingTrustConstructive trustSale of heritageDisposition delivered but not yet recordedFloating charge crystallising after deliveryRights of disponeeWhether disponee had real rightWhether disponee had personal rightWhether disponer held subjects in constructive trust for disponeeReal Rights Act 1623 (cap 13)1Companies Act 1985 (cap 6), sec 462(1)2Insolvency Act 1986 (cap 45), sec 53(7)3
Rights in securityCompanyFloating chargeHeritable property and conveyancingCompany granting disposition of subjects prior to appointment of receiverDisposition unrecorded at date of appointmentWhether subjects attached by floating chargeCompanies Act 1985 (cap 6), sec 462(1)2Insolvency Act 1986 (cap 45), sec 53(7)3
Words and phrasesPropertyCompanies Act 1985 (cap 6), sec 462(1)2Insolvency Act 1986 (cap 45), sec 53(7)3
A couple concluded missives for the purchase of a flat from a company. The conveyancing formalities having been gone through, the disposition was delivered to the couple's agents on 9 August 1990 and recorded in the Register of Sasines on 21 August 1990, with date of entry being 14 April 1989. Receivers were appointed to the company on 10 August 1990 by instrument of appointment executed by a bank as holders of a floating charge granted by the company registered on 16 July 1984. The receivers then brought an action against the couple and their building society, in whose favour the couple had granted a standard security which had been recorded at the same time as the disposition and argued that the flat had remained the property of the company as at the date of their appointment and was attached by the floating charge which had crystallised on that date. The defenders contended that delivery of the disposition had been effective to remove the subjects from the property of the company, as that word was properly understood, and thus
from the scope of the floating charge. The Lord Ordinary (Penrose) granted decree de plano. The building society reclaimedHeld (aff judgment of Lord Penrose) (1) that Scots law did not recognise a right which lay between the personal right on the one hand and the real right on the other, so that there was no such thing as a real right which was imperfect or incomplete; (2) that only one title of ownership was recognised in any one thing at any one time, the transfer of ownership in relation to heritable property occurring as at the recording of the disposition in the appropriate register, so that no right of ownership or property passed to the disponee upon mere delivery of a disposition; and (3) that so long as the requisite deed remained unrecorded, its delivery neither divested the grantor of nor constituted in the grantee any right of property, but merely constituted in the grantee an ordinary personal right against the granter; (4) that it was clear from the legislation that, as far as security over heritable property was concerned, a floating charge was equated to a fixed security in the event of crystallisation, the intention being to give companies the widest scope for creating such floating charges over property in terms of sec 70(1), so that there were no grounds for restricting the...
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