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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Sinclair (Turners' Trustee) v. Edinburgh Parish Council and Another [1909] ScotLR 973 (17 July 1909) URL: http://www.bailii.org/scot/cases/ScotCS/1909/46SLR0973.html Cite as: [1909] SLR 973, [1909] ScotLR 973 |
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The Revenue Act 1884 enacts, sec. 7 (2)—“No moveable goods and effects belonging to any person in Scotland at the time any of the duties” ( i.e. assessed taxes) “or land tax became in arrear, or were payable, shall be liable to be taken by virtue of any poinding, sequestration, or diligence whatever, or by any assignation, unless the person proceeding to take the said goods and effects shall pay the duties or land tax so in arrear or payable, provided such duties or land tax shall not be claimed for more than one year.…” The remedies and provision for the recovery of land and assessed taxes are, under the Poor Law Act 1845, section 88, applicable to the recovery of poor rates.
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Held that the word “sequestration” was not intended to denote a sequestration under the Bankruptcy Acts, but meant the diligence of sequestration available to a landlord for recovery of his rent, and accordingly that a poinding of effects executed within sixty days of the debtor's sequestration by a parish collector for poor and school rates was ineffectual against the trustee in the sequestration—the collector's remedy being to claim in the sequestration the preference given him by the Poor Law Act 1845.
The Revenue Act 1884 (47 and 48 Vict. c. 62), sec. 7, enacts—“The Taxes Management Act 1880 shall be amended as follows—… (2) … no moveable goods and effects belonging to any person in Scotland at the time any of the duties ( that is assessed taxes) or land tax became in arrear or were payable, shall be liable to be taken by virtue of any poinding, sequestration, or diligence whatever, or by any assignation, unless the person proceeding to take the said goods and effects shall pay the duties or land tax so in arrear or payable, provided such duties or land tax shall not be payable for more than one year; and in case the duties or land tax shall be claimed for more than one year, then the party proceeding to take the said goods and effects, after paying the duties and land tax for one whole year, may proceed as he might have done if no duties and land tax had been so claimed. But if the said party refuses to pay the duties and land tax for one year, the duties and land tax so claimed shall be recovered by poinding, distraining, and selling the said moveable goods and effects notwithstanding, under warrant obtained in conformity with the provisions contained in section 97”—[that is, section 97 of the Taxes Management Act 1880.]
On 15th March 1909 James Oraig, C.A., Edinburgh, judicial factor on the sequestrated estate of William Turner & Sons, builders, Edinburgh, brought a note of suspension and interdict against the Parish Council of the City of Edinburgh and Alexander Fraser, collector of poor and school rates for the Parish, in which he craved the Court to interdict the respondents from selling certain goods belonging to Turner & Sons which they (the respondents) had poinded for payment of poor and school rates for the year ending Whitsunday 1909. Craig was succeeded by Spiers Paton Sinclair as trustee on the sequestrated estate, and he insisted in the action.
The complainer pleaded, inter alia—“(2) As the respondents insist on their right to carry out a poinding and sale, and as the said diligence is in terms of the Bankruptcy Act 1856 ineffectual, interdict should be granted as craved.”
The respondents, inter alia, pleaded—“(2) The said poinding, and the respondents' right to sell thereunder, not being affected by sequestration, interdict should be refused.”
The facts are given in the opinion ( infra) of the Lord Ordinary ( Johnston), who on 16th June 1909 recalled the interim interdict formerly granted and refused the note.
Opinion.—“William Turner & Sons, builders, Edinburgh, were due to the Parish Council of Edinburgh in respect of heritable properties belonging to them the sum of £323, 16s. for poor and school rates for the year to Whitsunday 1909. These not having been paid, the Parish Council, on 3rd March 1909, executed a poinding of stone-dressing machines and other plant at Westfield Street, Edinburgh, belonging to the firm. The estates of William Turner & Sons were sequestrated on 12th March 1909, and James Craig, C.A., Edinburgh, was appointed judicial factor thereon. This factory was superseded on 14th April 1909 by the appointment of Speirs Paton Sinclair as trustee in the sequestration.
On 15th March 1909 James Craig, as judicial factor foresaid, raised a suspension and interdict against the Parish Council proceeding with the poinding, and this suspension is now insisted in by Mr Sinclair the trustee.
The question raised is one of considerable general importance as affecting the preferable right of recovery of poor and school rates where the debtor is bankrupt.
The respondents, the Parish Council, insist on their right to carry out their poinding, notwithstanding the sequestration, unless they are paid the rates which are due, though ex gratia they have intimated that they will not press their extreme right provided the trustee gives them an undertaking that he will pay the rates due to them ‘out of the first proceeds of the estate’ of the bankrupts. The trustee as complainer, on the other hand, while admitting that the Parish Council are entitled to a preference for their rates, maintains that the poinding fell with the sequestration, having been executed within sixty days of its date, and that the Parish Council are bound to claim and be ranked like other preferable creditors.
The question at issue depends upon a series of statutory enactments.
The Poor Law Act of 1845, section 88, provides that all ‘remedies and provisions’ for the recovery of the ‘land and assessed taxes or either of them, and other public taxes, shall be held to be applicable to assessments imposed for the relief of the poor … provided always … and all assessments for the relief of the poor shall, in case of bankruptcy or insolvency, be paid out of the first proceeds of the estate, and shall be preferable to all other debts of a private nature due by the parties assessed.’
The Education Act 1872, section 44, which imposed on parochial boards, now parish councils, the duty of collecting the school rates along with the poor rates, placed the school rates in the same position in all respects as regards recovery as the poor rates.
The Taxes Management Act 1880, by section 97, specially regulated the recovery in Scotland of the assessed taxes and land tax by poinding of the effects of any
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defaulter in payment. These regulations it is unnecessary to consider in detail. But it was found necessary to amend the Taxes Management Act 1880 by the Inland Revenue Act 1884. This statute, section 7, sub-section 2, provides that … ( quotes, v. sup.).
Now, as by section 88 of the Poor Law Act all remedies and provisions enacted for recovering the land and assessed taxes and other public taxes are to be held applicable to poor rates, poor rates, however otherwise they might be recoverable, after 1880 became recoverable by poinding conducted under the special regulations provided by the Taxes Management Act of that year, section 97, above referred to, and to such poor rates the amending provision of the Inland Revenue Act 1884, section 7, subsection 2, also became applicable. Accordingly, after 1884, no moveables belonging to any person in Scotland who was in arrear with his poor rates could be taken ‘by virtue of any poinding, sequestration, or diligence whatever, or by any assignation,’ unless the person proceeding to take them should first pay the poor rates in arrear at least for one whole year, which in practice would necessarily mean for the current year. Any ordinary poinding creditor, or any ordinary assignee, must therefore pay poor rates in arrear due by his debtor or cedent before prosecuting his poinding or taking benefit by his assignation. And the only question is whether the trustee on a sequestrated estate takes the moveables of the bankrupt by virtue of ‘sequestration’ or ‘assignation’ in the sense of the amending provision of the Inland Revenue Act 1884, section 7, subsection 2. It is maintained for the trustee on Messrs Turners’ sequestrated estate that ‘sequestration’ must be construed as meaning merely landlord's sequestration. I cannot, however, see any ground for this limitation. The word ‘sequestration’ in the provision in question is found in the collocation, ‘poinding, sequestration, or diligence.’ It is true it would cover landlord's sequestration. But I see no reason for excluding sequestration in bankruptcy. It is quite common to speak of the diligence of sequestration, and it is quite correct so to do, in respect that sequestration in bankruptcy is a general diligence the benefit of which enures not to an individual creditor but to the whole creditors. And that it is emphatically a diligence is established by a consideration of the terms of the vesting section of the Bankruptcy Act of 1856. That section (section 102) is so familiar that I need not quote it. It follows, by virtue of the Inland Revenue Act 1884, sec. 7 (2), that it is a condition of the vesting of the moveable estate in the trustee in bankruptcy under that vesting clause that he should ante omnia pay all poor rates, as well as all assessed and land taxes in arrear. He cannot touch such moveable estate without doing so. If he refuses to do so such rates can still be recovered by poinding, &c., under warrant obtained in conformity with the provisions of section 97 of the Taxes Management Act 1880. It so happens that such poinding was already executed when sequestration was awarded, but that poinding is as good for recovery on failure of the trustee to pay as if it had been executed after sequestration and refusal or failure of the trustee to make payment.
Even if the term ‘sequestration’ in the provision in question were to receive the limited meaning put upon it by the trustee in the sequestration, there is still the term ‘assignation’ to be encountered, and the vesting clause of the Bankruptcy Act, 1856, imports as complete an assignation as could well be devised.
It is of no importance or effect that section 108 of the Bankruptcy Act 1856 annuls any poinding executed on or after the sixtieth day prior to the sequestration. As I have pointed out, the amending provision of the Inland Revenue Act 1884 does not contemplate that poinding will be necessary for recovery of taxes and rates in arrear. These are made payable as a condition of the trustee taking the move-able estate of the bankrupt. It is only in event of the trustee failing to pay them that a resort to poinding is contemplated, and it is clear that such a poinding cannot be affected by section 108 of the Bankruptcy Act.
Mr Graham Stewart was, I think, justified in saying that this is not an academic question, for rates are imposed for the service of the year, and payment within the year is a necessity of the situation. It would disorganise the administration of the parish council if they were obliged to be content with a preferable ranking, and to await the convenience of a trustee in sequestration before that preferable claim was made good to them. Hence this apparently somewhat drastic provision for putting them in funds.
I was referred to the following cases:— Lindsay v. Paterson, 2 D. 1373; Gordon v. Millar, 4 D. 352; Borthwick v. Lord Advocate, 1 Macph. 94; Donaldson v. White, 9 S.L.R. 63; North British Property Investment Company v. Paterson, 15 R. 885, 25 S.L.R. 641; Allan v. Cowan, 20 R. 36, 30 S.L.R. 114; and County Council of Argyll, 1909 S.C. 107, 46 S.L.R. 107. These cases, where they do not actually confirm, are not inconsistent with the conclusion at which I have arrived on a consideration of the statutory provisions.
I shall, therefore, refuse the suspension with expenses, leaving the trustee to arrange for the poinding being withdrawn, if the Parish Council are still willing, on an undertaking by him to make payment out of the first proceeds of the estate.”
The complainer reclaimed, and argued—The respondents' poinding being executed within sixty days of sequestration was ineffectual—Bankruptcy Act 1856 (19 and 20 Vict. c. 79), secs. 102 and 108. Section 7 (2) of the Revenue Act 1884 (47 and 48 Vict. c. 62), founded on by the respondents, did not apply to mercantile sequestrations. The word “sequestration” was there used in the same sense as in section 163 of the Companies
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Act 1862 (25 and 26 Vict. c. 89), and meant an impounding in security—viz., a landlord's sequestration for rent—not a mercantile sequestration, which was an absolute transference. Section 7 (2) of the Revenue Act 1884 was intended to amend section 88 of the Taxes Management Act 1880 (43 and 44 Vict. c. 19) where the suit of the landlord for rent was excepted, and that showed that “sequestration” meant the landlord's sequestration for rent. To hold that it meant a mercantile sequestration would be to defeat the whole policy of the Bankruptcy Acts. The word “assignation” occurring in section 7 (2) was no stronger than “sequestration,” and if the reclaimer's contention as to the latter word was right its use was immaterial. The rate collector was no doubt given a preference on the estate of a bankrupt, but it was a preference on the estate in the hands of the trustee. The Revenue Act did not intend to supersede the trustee's management. Repeal by implication of a leading provision of the Bankruptcy Acts would not be readily presumed where, as here, the word in question might fairly be read in a sense consistent with these statutes. The respondent's remedy was not to sell at his own hand but to claim his preference through the trustee in bankruptcy— Donaldson v. White, September 8, 1871, 9 S.L.R. 65; Lindsay v. Paterson, July 10, 1840, 2 D. 1373; Gordon v. Millar, January 12, 1842, 4 D. 352; The Crown v. Magistrates of Inverness, January 29, 1856, 18 D. 366, per Lord Mackenzie at p. 373; Allan v. Cowan, November 15, 1892, 20 R. 36, 30 S.L.R. 114. Argued for respondents—The Lord Ordinary was right. Esto that poinding had occurred within sixty days of sequestration, the respondents were entitled to sell the poinded goods, for their diligence was not affected by the sequestration—Poor Law (Scotland) Act 1845 (8 and 9 Vict. c. 23), sec. 88; Taxes Management Act 1880 ( cit. supra), sec. 97; Revenue Act 1884 ( cit. supra), sec. 7 (2); North British Property Investment Company, Limited v. Paterson, July 12, 1888, 15 R. 885, 25 S.L.R. 641. The case of Donaldson ( cit. supra), founded on by the complainers, was not in point, for it was prior to the Act of 1884, and the case of Allan ( cit. supra), also founded on by them, was equally inapplicable, being the case of a liquidation. The Revenue Act intended that the year's assessments should pay for the year's expenditure, and that was why the rate collector was preferred. To hold that he was to await the convenience of a trustee in bankruptcy would be to defeat the spirit of the Act. Words in a statute were to receive their ordinary meaning, and the ordinary meaning of sequestration was a mercantile sequestration. Had another meaning been intended, qualifying words, e.g., landlord's sequestration, or sequestration for rent, would have been used. The provisions of the Bankruptcy Act did not affect the Crown— Borthwick v. Lord Advocate, December 5, 1862, 1 Macph. 94—and a poinding of the ground was preferable to a sequestration, so that there was nothing extraordinary in providing that a rate collector should exclude a trustee in bankruptcy.
At advising—
If the question were to be treated as one of first impression—which is a legitimate method where the words used are so familiar to the Court—I should have no hesitation in holding that this section was not intended to cover bankruptcy proceedings at all. I think that this construction of it is plainly evidenced not only by the purposes of the statute but also by the collocation in which the word is found in the section. This provision of the Act is intended to prevent any person from taking goods by poinding, sequestration, or diligence. Now, if Parliament had intended to describe anything so different from the ordinary forms of diligence as proceedings under the Bankruptcy Acts, I think it would have done so in plain language, and would not have used a term which at best is so ambiguous as sequestration. That is a technical term for describing a certain form of diligence. It is said that sequestration under the Bankrupty Act is also a diligence. But that is inaccurate. A petition for sequestration is not a diligence; it is an action, as was pointed out by Lord President Inglis in Kinnes v. Adam & Sons (8th March 1882, 9 R. 698); and then he goes on to say—“And though where it is granted it has the force of diligence (and that of the strongest kind), that does not take away from the petition its nature as an action.” It is a totally different thing to say that a trustee who has been confirmed
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But whether, in an accurate use of the term, sequestration under the Bankruptcy Statutes should or should not be called a diligence is really not material. It is merely a question of terminology. For it is clear that the procedure in a sequestration under the Bankruptcy Acts is of a different kind and has totally different effects from the diligences with which the word is associated in this section. The diligence referred to there is a process of execution set on foot by an individual creditor for the purpose of seizing some specific property belonging to the debtor for payment of his individual debt. But a sequestration under the Bankruptcy Acts is quite different; it is a judicial process for rendering litigious the whole estate of the bankrupt in order that no part of it may be carried away by a single creditor for his own benefit, but that the whole may be vested in the trustee, to be administered by him and distributed among the creditors according to certain fixed rules of distribution. Nothing could be more different from a diligence carried out by an individual creditor for his own benefit than a statutory process of that kind. The whole language of the clause in question seems to show that that was the kind of proceeding in the mind of the Legislature. It begins by saying that “No moveable goods or effects belonging to any person in Scotland at the time any of the duties or land tax became in arrear or were payable shall be liable to be taken by virtue of any poinding, sequestration, or diligence whatever, or by any assignation, unless the person proceeding to take the said goods and effects shall pay the duties or land tax.” It assumes that some person—that is, quivis ex populo—may interpose and use diligence against the ratepayer's estate which may compete with the collector. But that is a very inept form of words for describing the operation of the Bankruptcy Act. No person can touch the sequestrated estate by diligence. It is the trustee in bankruptcy alone who can deal with it; and if he were to be excluded from the performance of his statutory duty, I think he would have been described in express terms by his statutory character.
That is the first view of this matter, but the Lord Ordinary makes a sound observation when he says that this Act was intended to amend the Taxes Management Act 1880, and therefore it is legitimate to refer to the Taxes Management Act to see what amendment was required. Now that Act, by section 88, provides, in much the same terms as in the section we are considering, that no goods of a person who is in arrear as to duties or land tax shall be taken “by virtue of any execution or other process, warrant, or authority whatever, or by virtue of any assignment, on any account or pretence whatever, except at the suit of the landlord for rent, unless the party at whose suit” the execution, &c. is made shall pay the arrears of duty or land tax. Now there is a very marked exception there from the prohibition against the taking of goods which does not occur in the later Act. The intention of the earlier Act was that the landlord's right to enforce payment of rent should not be disturbed by the privilege given to the collector of rates; and accordingly sequestration, which is the proper diligence of the landlord, is not mentioned among the diligences which are not to compete with the collector. But this is altered by the Act of 1884. The landlord is now put in exactly the same position as other creditors; and to make that perfectly clear, not only is the former exception in his favour omitted in the new enactment, but his peculiar diligence of sequestration is specified as one of the processes by which goods are no longer to be taken, to the collector's prejudice. This is the amendment to which the Lord Ordinary refers; and it is quite sufficient to account for the introduction of the word sequestration into the Act of 1884.
If, therefore, we construe the clause by itself and are to say whether it uses the word sequestration to cover bankruptcy proceedings or only to cover diligence done by a landlord, I should have no hesitation in preferring the latter construction.
But then we must go further and see how far that section, according to either construction, is in conformity with the standing provisions of the Bankruptcy Act in force at the time when it was passed. And if we do so, I think it will be found that, if it had been held to cover proceedings in bankruptcy, the competing rights of the trustee and the rate collector would be brought to a deadlock. The collector of rates is entitled, under the Poor Law Act 1845, to be paid out of the first proceeds of the estate of a bankrupt, and his debt is made a preferable debt. But that assumes that he comes into the sequestration and claims on the whole estate of the bankrupt; and that would have been in accordance with the Bankruptcy Act, for the whole estate is vested in the trustee, and anyone who claims must come in and claim as a creditor against the trustee on the whole estate. Now I do not know if the respondent's argument does or does not imply that that provision in favour of the rate collector is repealed by the later section.
I do not think that the argument was carried out to its logical conclusion. But at all events the two provisions are brought into discordance if the Lord Ordinary's view is right. By the one provision the collector is to claim on the whole estate; by the other he is to take away part of the estate at his own hand. If he takes away less than he requires to satisfy his debt,
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But when we go further and look at the provisions of the Bankruptcy Act itself we find a still more obvious and serious conflict. For if the respondents' argument is right, the clause on which they found necessarily repeals by implication the direct provisions of the Bankruptcy Act. And, first, it repeals the vesting clause so far as it carries to the trustee the kind of property now in question. For we are considering the case of corporeal moveables, and the way in which corporeal moveables are carried to the trustee is by the enactment in section 102, that the effect of confirmation is to vest in the trustee the debtor's moveable estate and effects “so far as attachable for debt, to the same effect as if actual delivery or possession had been obtained or intimation made.” Now that covers two kinds of moveable estate—the kind that can be transferred by an intimated assignation, and corporeal moveables, which can only be transferred by delivery; and it is with regard to the latter that the Act provides that they shall vest in the trustee as if they had actually been delivered to him. Now what is the operation of the section of the Inland Revenue Act we are here considering? It provides that no goods and effects “shall be liable to be taken.” If that means that they shall not be taken by a trustee in bankruptcy, it is a repeal of the vesting clause in the Bankruptcy Act I have just referred to. You cannot stop a man taking what has already been delivered to him; and if the clause has the effect the Lord Ordinary ascribes to it, it is thus a direct repeal of the vesting clause in the Bankruptcy Act by the mere repugnance of a new enactment. And if that is so, I recur to what I said before, that I know of no statutory provision by which the trustee can take these goods which are thus excluded from him.
But another difficulty arises when we consider the provisions of the 108th section of the Bankruptcy Act. That section provides that “no arrestment or poinding executed of the funds or effects of the bankrupt on or after the sixtieth day prior to the sequestration shall be effectual; and such funds or effects, or the proceeds of such effects, if sold, shall be made forthcoming to the trustee.” Now if that clause is still in operation it cuts down the poinding of the rate collector, and even if he had sold it would have made the proceeds forthcoming for the trustee. But it is said that it is repealed by the clause of the 1884 Act providing that poinding, sequestration, or diligence is not to interfere with the rights of a rate collector. I think, if Parliament intends to repeal by means of an inconsistent enactment a clause of an Act in operation, it must do so by means of language as clear as the language employed in the clause to be repealed. Therefore I do not think it can be maintained that Parliament intended to repeal this most important general provision by the use of an ambiguous word introduced into a clause in a subsequent Act, the purpose of which is entirely satisfied by another construction of the word which is consistent with the provisions of the previous enactment. Accordingly, I cannot agree with the Lord Ordinary in the interpretation that he has put upon this word.
But it has been argued to us that, although the word sequestration will not do, there is another word used in this clause, the word “assignation,” and that that word is so wide that it must be held to cover the vesting clause in the Bankruptcy Act. I think the objection to that argument is the same as I have already stated, and I do not intend to repeat what I have said with regard to the word sequestration. Nor do I think that the argument is in any way advanced by asserting that sequestration and assignation are convertible terms. If they were, there would be no additional force in the use of the latter. But an assignation is a totally different thing from sequestration. An assignation is a written document by which rights of a certain class are voluntarily transferred from one person to another. It is perfectly true that the Bankruptcy Act says that the effect of the trustee's title is to be the same as if he had an intimated assignation in his favour. But that only makes the assumption of the argument all the more singular, for it assumes that the framer of the Act, intending to exclude the rights of a trustee in bankruptcy, and considering that the word sequestration was not sufficient for that purpose, proposed to achieve it by picking out one of a great variety of processes to all of which in combination the trustee's title is by statute equivalent, and so leaving him the benefit of all the other equivalents, since ex hypothesi they are not covered by the word “sequestration.” I think this only brings out more clearly what is after all the strongest point in the reclaimer's argument, that if Parliament had intended to interfere with a trustee's rights, it would have done so in plain words, as, for example, by enacting that “notwithstanding anything contained in the Bankruptcy Acts” a trustee should not take these goods. The powers of a trustee under the Bankruptcy Act of 1856 are much too well known, as in daily operation, and the beneficial operation of the Act as a well-considered scheme for the distribution of insolvent estates has been too well recognised for half-a-century, to allow of our supposing that Parliament would be likely to disturb it by the use of indirect and ambiguous language. If it were thought necessary to amend it, this would be done in language as clear as that of the Act itself.
Accordingly, on the whole matter, I am
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The
The Court recalled the Lord Ordinary's interlocutor except in so far as it recalled the interim interdict formerly granted; affirmed the said interlocutor in so far as it recalled said interim interdict; found that in a question with the respondents the trustee in bankruptcy was entitled to the poinded articles, and that the respondents were not entitled to the same; and found it unnecessary to dispose of the conclusion for interdict.
Counsel for Complainer (Reclaimer)— Morison, K.C.— Mair. Agent— James Ayton, S.S.C.
Counsel for Respondents— Graham Stewart, K.C.— Kemp. Agents— R. Addison Smith & Co., W.S.
