MacKay v Medwin Investments Ltd [2015] ScotCS CSOH_139 (21 October 2015)

MacKay v Medwin Investments Ltd [2015] ScotCS CSOH_139 (21 October 2015)

The immunity from challenge under section 44(4)(c) of the 1924 Act only applies where the purchaser acts in good faith. Where the purchaser knows of the trustee's prior right due to sequestration, the deeds are voidable at the instance of the trustee, even if the prohibitory effect of inhibition has expired. The defender was aware of the sequestration, so the deeds are reducible.

Citation
[2015] ScotCS CSOH_139
Parties
Pursuer: Elizabeth G Mackay as trustee in the sequestration of Mark Edward Fortune; Defender: Medwin Investments Limited
Jurisdiction
Scotland
Judgment Date
21 October 2015
Procedural Posture
Civil Property/bankruptcy / Outer House, Court of Session Opinion After Debate
Outcome
Decree granted in favour of the pursuer; challenged deeds reduced; questions of expenses reserved.
Legal Topics
Sequestration, Trustee's Title to Heritable Property, Effect of Inhibition, Challenge to Deeds Post Sequestration, Good Faith in Property Transactions
Bankruptcy Property Law Conveyancing Sequestration Trustee's Title to Heritable Property Effect of Inhibition Challenge to Deeds Post Sequestration Good Faith in Property Transactions

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Parties

Elizabeth G Mackay as trustee in the sequestration of Mark Edward Fortune

Pursuer

Medwin Investments Limited

Defender

Procedural Posture

Civil Property/bankruptcy / Outer House, Court of Session Opinion After Debate

Legal Issues

  1. 1 Whether deeds granted by a sequestrated debtor after expiry of the prohibitory effect of inhibition are unchallengeable under section 44(4)(c) of the Conveyancing (Scotland) Act 1924 if the trustee has not completed title
  2. 2 Whether knowledge of sequestration by the purchaser affects the validity of such deeds

Ratio Decidendi

The immunity from challenge under section 44(4)(c) of the 1924 Act only applies where the purchaser acts in good faith. Where the purchaser knows of the trustee's prior right due to sequestration, the deeds are voidable at the instance of the trustee, even if the prohibitory effect of inhibition has expired. The defender was aware of the sequestration, so the deeds are reducible.

Court Disposition

Decree granted in favour of the pursuer; challenged deeds reduced; questions of expenses reserved.

Orders

  • Sustain the pursuer’s seventh plea-in-law.
  • Grant decree de plano reducing the standard security and dispositions.