The Royal Bank Of Scotland Plc+the Royal Bank Of Scotland Plc V. Francis John Wilson And Mrs Annette Wilson+john Patrick Mccormack Wilson And Mrs Norma Wilson
| Jurisdiction | Scotland |
| Judge | Lord Nimmo Smith,Lord Drummond Young,Lord Reed |
| Date | 05 May 2009 |
| Court | Court of Session |
| Published date | 05 May 2009 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Nimmo Smith Lord Reed Lord Drummond Young | [2009] CSIH NO. OPINION OF THE COURT delivered by LORD NIMMO SMITH in Appeals from the Sheriffdom of Lothian and Borders at Edinburgh in the causes (1) THE ROYAL BANK OF SCOTLAND PLC Pursuer and Appellant against (FIRST) FRANCIS JOHN WILSON and (SECOND) MRS ANNETTE WILSON Defenders and Respondents and (2) THE ROYAL BANK OF SCOTLAND PLC Pursuer and Appellant against (FIRST) JOHN PATRICK McCORMACK WILSON and (SECOND) MRS NORMA WILSON Defenders and Respondents _______ |
Alt: Summers; Jardines
5 May 2009
Introduction
[1] These are appeals by the pursuer ("the Bank") from decisions of the sheriff at Edinburgh following proof before answer in two actions by the Bank as holder of standard securities over houses at 98 Dalum Grove and 100 Dalum Grove, Loanhead. In each action the Bank seeks (1) warrant in terms of section 24(1) of the Conveyancing and Feudal Reform (Scotland) Act 1970 ("the 1970 Act") to enter into possession of the security subjects and (2) ejection of the defenders with a view to selling the security subjects.
[2] In the first action (the Francis Wilson action), the Bank sues Francis John Wilson and his wife, Mrs Annette Wilson. The action relates to their house at 100 Dalum Grove. In the second action (the John Wilson action), the Bank sues John Patrick McCormack Wilson and his wife Mrs Norma Wilson. The action relates to their house at 98 Dalum Grove. Francis Wilson and John Wilson are brothers.
[3] The standard security in the Francis Wilson action was granted by Francis Wilson and his wife on 12 July 1991 in consideration of a loan for the purchase of their house. The standard security in the John Wilson action was granted by John Wilson and his wife on 28 November 1991 in consideration of a loan for the construction of a conservatory. The standard securities were granted in security for all sums of money due and that might become due to the Bank by the grantors thereof. They were recorded in the Division of the General Register of Sasines for the County of Midlothian respectively on 3 December 1991 and 4 December 1991.
[4] These actions have already had a lengthy history. They were raised as long ago as 1998 and have been the subject of previous appeals to this court, whose decision is reported at 2004 SC 153. In the course of subsequent procedure, a proof before answer took place before the sheriff. Thereafter, by interlocutor dated 2 May 2007 in each action, the sheriff inter alia assoilzied the defenders in that action from the craves of the initial writ. The sheriff found in fact and in law that the Bank had failed to prove that the defenders were in default of their obligations under the standard security in question, in terms of standard condition 9(1)(b) of Schedule 3 to the 1970 Act. He also held that the Bank was not entitled to the remedy of ejection as craved. By interlocutor dated 29 May 2007 in each action the sheriff found the Bank liable to the defenders in the expenses of that action, so far as not already dealt with,
[5] The Bank has now appealed to this court against both interlocutors of the Sheriff. Since the same issues arise in each of the two actions, mutatis mutandis, we shall discuss the issues together and without distinction between the two actions; and we shall, for convenience, refer to all the defenders collectively as "the Wilsons".
The statutory framework
[6] By Part II of the 1970 Act standard securities were created as a new form of heritable security. It should be noted in passing that the 1970 Act, including Part II thereof, has been amended by a number of later statutes, most notably the Abolition of Feudal Tenure etc. (Scotland) Act 2000. Given the dates of the standard securities in the present case, however, the Act applied to them in its unamended form; and in any event the amendments did not affect the provisions set out below.
[7] Since the coming into force of the Act, by section 9(3) thereof a grant of any right over an interest in land for the purpose of securing any debt by way of a heritable security has only been capable of being effected at law if it is embodied in a standard security. By section 9(8)(c) the word "debt" is defined as meaning inter alia any obligation due, or which would or might become due, to repay or pay money, and "creditor" and "debtor", in relation to a standard security, are to be construed accordingly. By section 11(1), where a standard security is duly recorded, it operates to vest the interest over which it is granted in the grantee as a security for the performance of the contract to which the security relates. The remainder of section 11 contains provisions relating to the standard conditions which regulate every standard security, either as set out in Schedule 3 or with such variations as have been agreed by the parties. Standard condition 9(1) provides:
"The debtor shall be held to be in default in any of the following circumstances, that is to say -
(a) where a calling-up notice in respect of the security has been served and has not been complied with;
(b) where there has been a failure to comply with any other requirement arising out of the security;
(c) where the proprietor of the security subjects has become insolvent."
[7] Section 19(1) provides that where a creditor in a standard security intends to require discharge of the debt thereby secured and, failing that discharge, to exercise any power conferred by the security to sell any subjects of the security or any other power which he may appropriately exercise on the default of the debtor within the meaning of standard condition 9(1)(a), he shall serve a notice calling-up the security in conformity with Form A of Schedule 6 ("a calling-up notice"). Further provision about calling-up notices is made by the remainder of section 19, including the provision by sub-section (2) that a calling-up notice shall be served on the person last infeft in the security subjects and appearing on the record as the proprietor.
[8] Section 20 provides by sub-section (1):
"Where the debtor in a standard security is in default within the meaning of standard condition 9(1)(a), the creditor may exercise such of his rights under the security as he may consider appropriate, and any such right shall be in addition to and not in derogation from any other remedy arising from the contract to which the security relates or from any right conferred by any enactment or by any rule of law on the creditor in a heritable security."
By sub-sections (2) and (3) the creditor has the right to sell or to let the security subjects.
[9] By section 21:
"(1) Where the debtor in a standard security is in default within the meaning of standard condition 9(1)(b), and the default is remediable, the creditor may, without prejudice to any other powers he may have by virtue of this Act or otherwise, proceed in accordance with the provisions of this section to call on the debtor and on the proprietor, where he is not the debtor, to purge the default.
(2) For the aforesaid purpose the creditor may serve on the debtor and, as the case may be, on the proprietor a notice in conformity with Form B of Schedule 6 to this Act (hereinafter in this Act referred to as a "notice of default") which shall be served in the like manner and with the like requirements as to proof of service as a calling-up notice."
[10] Section 23(1) provides inter alia that where a person does not object to a notice of default, it shall be his duty to comply with any requirement, due to be performed or fulfilled by him, contained in the notice. By section 23(2), where a person fails to comply as aforesaid, the creditor may proceed to exercise such of his rights on default under standard condition 10(2), (6) and (7) as he may consider appropriate.
[11] Section 24 provides:
"(1) Without prejudice to his proceeding by way of notice of default in respect of a default within the meaning of standard condition 9(1)(b), a creditor in a standard security, where the debtor is in default within the meaning of that standard condition or standard condition 9(1)(c), may apply to the court for warrant to exercise any of the remedies which he is entitled to exercise on a default within the meaning of standard condition 9(1)(a).
(2) For the purposes of such an application as aforesaid in respect of a default within the meaning of standard condition 9(1)(b), a certificate which conforms with the requirements of Schedule 7 to this Act may be lodged in court by the creditor, and that certificate shall be prima facie evidence of the facts directed by the said Schedule to be contained therein."
[12] Section 27(1) provides that, where the creditor in a standard security has exercised his power of sale and has received money arising from the sale, the money is to be held by him in trust to be applied by him in accordance with a specified order of priority. Of relevance for present purposes are payment of all expenses properly incurred by the creditor in connection with the sale, and payment of the whole amount due under the standard security.
[13] Section 32 provides that the provisions of any enactment relating to a bond and disposition or assignation in security are to apply to a standard security, except in so far as such provisions are inconsistent with the provisions of Part II of the 1970 Act, with the exception of the enactments specified in Schedule 8 (which is not otherwise relevant for present purposes).
[14] By Schedule 7 the contents of a certificate stating a default for the purposes of section 22 or 24 are to be statements of the name and address of the creditor, specification of the standard security in respect of which the default is alleged to have occurred by reference to the original creditor and debtor therein and to the particulars of its registration, and "the nature...
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