Reid v. Grainger & Anor [2002] ScotCS 139 (15th May, 2002)

Reid v. Grainger & Anor [2002] ScotCS 139 (15th May, 2002)

The House of Lords' decision in Sharp v Thomson is confined to the interpretation of 'property and undertaking' in the context of floating charges and does not extend to sequestration under the Bankruptcy (Scotland) Act 1985. Accordingly, only property to which the debtor has a real right at the date of sequestration vests in the trustee, and the trustee's recorded title prevails over an unrecorded disposition. Scots law does not recognise an intermediate proprietary right between real and personal rights.

Citation
[2002] ScotCS 139
Parties
Pursuer and Appellant: Michael James Meston Reid (permanent Trustee on the estates of Carlene Rose Burnett); Defender and Respondent: Harvey Leighton Grainger; Defender and Respondent: Moira Elizabeth Grainger
Jurisdiction
Scotland
Procedural Posture
Appeal From Sheriff Principal (civil) / Judgment of the Extra Division, Inner House, Court of Session
Outcome
Appeal allowed. Interlocutor of the Sheriff Principal recalled. Decision of the Sheriff restored.
Legal Topics
Effect of Unrecorded Disposition, Vesting of Heritable Property in Sequestration, Interpretation of 'whole Estate of the Debtor', Priority of Recorded Titles, Application of Sharp V Thomson
Property Law Insolvency Law Bankruptcy Effect of Unrecorded Disposition Vesting of Heritable Property in Sequestration Interpretation of 'whole Estate of the Debtor' Priority of Recorded Titles Application of Sharp V Thomson

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Parties

Michael James Meston Reid (permanent Trustee on the estates of Carlene Rose Burnett)

Pursuer and Appellant

Harvey Leighton Grainger

Defender and Respondent

Moira Elizabeth Grainger

Defender and Respondent

Procedural Posture

Appeal From Sheriff Principal (civil) / Judgment of the Extra Division, Inner House, Court of Session

Legal Issues

  1. 1 Whether heritable property subject to an unrecorded disposition is included in the 'whole estate of the debtor' for sequestration purposes under section 31(1) of the Bankruptcy (Scotland) Act 1985
  2. 2 Whether the reasoning in Sharp v Thomson applies to sequestration cases or is confined to floating charges
  3. 3 Whether Scots law recognises a right intermediate between real and personal rights in property

Ratio Decidendi

The House of Lords' decision in Sharp v Thomson is confined to the interpretation of 'property and undertaking' in the context of floating charges and does not extend to sequestration under the Bankruptcy (Scotland) Act 1985. Accordingly, only property to which the debtor has a real right at the date of sequestration vests in the trustee, and the trustee's recorded title prevails over an unrecorded disposition. Scots law does not recognise an intermediate proprietary right between real and personal rights.

Court Disposition

Appeal allowed. Interlocutor of the Sheriff Principal recalled. Decision of the Sheriff restored.

Orders

  • Declarator granted that the heritable subjects at 94 Malcolm Road, Peterculter, vested in the permanent trustee as at the date of sequestration.
  • Respondents not entitled to occupy the subjects.