Falkirk couple have appeal against bankruptcy sale order on family home refused

Sheriff Appeal Court
Sheriff Appeal Court

A couple from Falkirk has failed to appeal the grant of decrees for division and sale of their family home following the sequestration of the husband’s estate.

Glyn Brooks and Martha Brooks, who were the first and second defenders respectively in the action by the Accountant in Bankruptcy, argued that the sheriff had made errors in his consideration of relevant bankruptcy legislation and had failed to balance their interests alongside those of the pursuer.

The appeal was heard in the Sheriff Appeal Court (Civil Division) by Sheriff Principal Murray, sitting with Appeal Sheriff Cubie and Appeal Sheriff Holligan.

No other assets

The pursuer was appointed trustee of the sequestrated estate of the first defender in March 2018. The defenders were the pro indiviso heritable proprietors of a family home in Falkirk where they resided along with their adult son, aged 46. The defenders had resided in the subjects since December 1982.

The pursuer sought the consent of the second defender as required by section 113(7) of the Bankruptcy (Scotland) Act 2016 to sell the subjects. She refused to give her consent for sale, necessitating the raising of a Sheriff Court action to obtain decree for division and sale.

The subjects were valued at around £200,000, with equity of £94,777 after the deduction of monies secured by two standard securities. The first defender’s debts were estimated by the AIB to be approximately £20,893, with the pursuer unable to identify any other assets he had from which payment of a dividend to the creditors could be made.

The first defender denied that he had debts in the amount specified and averred he was discharged from bankruptcy in March 2019. His wife had not agreed to the sale of the property as it would result in two elderly persons and their son being homeless. With an incorrect assertion of his debts, an intended loan from other family members to pay the pursuer prior to his discharge could not be obtained.

The sheriff accepted that the pursuer could insist on an action of division as a one-half pro indiviso proprietor. He held that the defenders gave no information about any income or capital they or their son may have had, and their averments regarding homelessness lacked specification. Further, the general public had an interest in having the expenses of the sequestration met from sale of proceeds rather than public funds.

On appeal, the defenders submitted that the sheriff should not have proceeded to hear the debate on the certified record lodged by the pursuers as it omitted the pleas-in-law for the defenders. Further, the sheriff had failed to consider factors such as the elderly age of both defenders, the ill health of the second defender, and the failure to state the amount of the administration costs.

Bald averments

The opinion of the court was delivered by Appeal Sheriff Holligan. The issue of the missing pleas-in-law was dealt with briefly, with the Appeal Sheriff saying: “The absence of the pleas from the record is not mentioned in the sheriff’s note nor in his disposal. The debate proceeded on the basis of the pleas in the defences. Counsel for the appellant conceded that there was no real prejudice to the defenders in the debate proceeding in the absence of the pleas in the record.”

On the correct approach to section 113 of the 2016 Act, he said: “It is up to a defender to aver with sufficient particularity the facts which the defender says will enable the court, if they are proved, to exercise its powers in terms of section 113(2). Each case is fact specific; the adequacy of averments fall to be tested on their own merits. There have to be sufficient averments to satisfy the court that, if proved, authority to the trustee to sell or dispose of the debtor’s interest in the family home should be tempered in one of the ways set out in section 113(2).”

Appeal Sheriff Holligan then turned to the defenders’ averments, of which he said: “The defenders aver issues as to the amount owing by the first defender; a rather unusual admission as to how long the defenders have resided in the subjects (a fact one would have thought would have been a matter of express averment on the part of the defenders); and the prospect of homelessness for them and for their adult son. There is a vague averment as to debts without any adequate specification as to the significance thereof or the correct quantification.”

He continued: “The discharge of the debtor is irrelevant; the trustee is not discharged and his duties continue. Proving those bald averments would not make it unreasonable for the family home to be sold. Nothing else is averred. Given what we have said as to the correct approach to section 113, on no view could these averments amount to a relevant case for the defenders.”

For these reasons, the appeal was refused.

© Scottish Legal News Ltd 2021