Sheriff Appeal Court rejects sequestrated person’s appeal against decree for removal from Edinburgh property

About this case:

• Citation:
  [2024] SAC (Civ) 2
• Judgment:
  External link
• Court:
  Sheriff Appeal Court
• Judge:
  Sheriff Principal S F Murphy KC

Thomas MacLennan, the trustee in sequestration of appellant Derek Drummond, had sought recovery of the property and removal of the Mr Drummond, his family, sub-tenants and dependants. On appeal it was submitted that the sheriff had erred in respect of the facts of the case, particularly in reference to an earlier sequestration of the appellant.

The appeal was heard by Sheriffs Principal Sean Murphy and Gillian Wade, along with Appeal Sheriff Harry Small. Weir, solicitor, appeared for the pursuer and respondent and IG Mitchell KC for the defender and appellant.

Held in trust

On 11 April 2007, the appellant was sequestrated for the first time by order of the sheriff at Edinburgh. An insolvency practitioner was appointed trustee and raised proceedings seeking to recover possession of the subjects at Northfield Drive, Edinburgh. However, these proceedings were dismissed after the appellant’s mother purchased the trustee’s interest in the subjects for the sum of £23,000.

The appellant was sequestrated a second time in January 2012, with the date of the second sequestration being 3 November 2011, and the respondent appointed as trustee in sequestration. Again, an action seeking recovery of the subjects, together with removal of the appellant, was raised and was remitted to the ordinary cause roll in January 2022. However, the appellant denied that the property formed part of his estate as of 3 November 2011.

At a diet of debate in April 2022, the appellant argued that there was a formal requirement for the respondent to aver how and when the trustee in the first sequestration “abandoned” her interest in the subjects, or alternatively that he held the subjects in trust for his mother. The sheriff rejected the latter submission for absence of record, and in any case considered it contradictory to the first line of defence. On that defence, the sheriff held that the appellant had admitted that the first trustee did give up her right to the property.

For the appellant it was submitted that the sheriff had erred and misdirected himself to the facts averred. He failed to take account of the fact that the first trustee gave up her right to the subjects to a third party, the appellant’s mother, not to the appellant, and thus they were not vested in the appellant’s estate. In respect of the second argument, it was submitted that this was an esto position of constructive trust.

Remained in his name

Delivering the opinion of the court, Sheriff Principal Murphy said of the abandonment argument: “We agree with the respondent’s submissions that this position does not stand up to scrutiny. The First Trustee at no time acquired a real right in the property, which remained in the appellant’s name at all times. It follows that she could not sell the equity to the appellant’s mother as she (the First Trustee) had no more than a personal right to acquire ownership which she had not as yet taken up.”

He continued: “The First Trustee’s right to acquire ownership was given up, and in that sense ‘abandoned’, leaving ownership with the appellant unless or until some further conveyancing procedure and subsequent registration was carried out; which in this case was never done. It follows that the sheriff was correct to find this limb of the appellant’s case to be irrelevant.”

Distinguishing the case from Heritable Reversionary Company v McKay’s Trustee (1892), cited in support by the appellant, the Sheriff Principal said: “Mr McKay had been a trustee from the outset; the properties were purchased by him with funds provided by the company; and he issued a back bond or declaration acknowledging that he was a trustee. At no time did he personally possess a real right to any of the tenements which he had purchased. These circumstances are completely different from the present appellant’s situation.”

He concluded: “As the respondent pointed out, the creation, transfer or variation of a real right in land of such a kind requires to be made formally in writing in terms of section 1(2)(b) of the Requirements of Writing (Scotland) Act 1995. No averments of the existence of any such document have been made by the appellant and none has been produced; nor are there any such averments regarding any deed of trust and none has been produced.”

Accordingly, the appeal was refused, and the court adhered to the sheriff’s interlocutor.