Scottish Court of Session Decisions

Question, Whether the trustee could have been removed solely on the petition of the son, who was not a creditor?

In 1861 George Hally, designing himself writer in Glasgow, was elected trustee on the sequestrated estate of George Lang, cattle dealer and flesher. A petition was now presented by Robert Lang, a son of the bankrupt, praying for the removal of the trustee. He put forward a variety of statements in support of his application.

Answers were lodged for the trustee, and eventually the Court, before answer, directed the proceedings to be laid before the Accountant in Bankruptcy for his consideration. On 28th February 1870 the Accountant (Mr Esson) gave in the following report:—

“The proceedings were laid before the accountant in bankruptcy on July 9, 1869, in obedience to the interlocutor, of which a copy is prefixed. The accountant examined these proceedings, and afterwards heard the agents for the parties, and he now begs leave humbly to report to the Court as follows:—

“1. It is averred by the petitioner that the respondent has not transmitted to the accountant in bankruptcy an inventory and valuation of the estate, as is required by section 80 of the Bankruptcy (Scotland) Act, 1856, nor his accounts as required by the 84th section, and that he has not made the annual returns required by section 158 of that Act.

“This is denied by the respondent. The accountant found that the trustee has not transmitted to him a copy of the inventory and valuation of the estate; and that lie has not transmitted certified copies of his accounts; but he found that the respondent had made annual returns to the sheriff-clerk.

“2. It is averred by the petitioner that the respondent was at the period of his election as trustee on 22d May 1861, and still is, a clerk in the office of Charles Reddie, writer in Glasgow, who was law-agent in the sequestration; that Mr Reddie was proposed as his cautioner, and approved of by the creditors; and that Mr Reddie was elected a commissioner on Feb. 9, 1868.

“The respondent admits that Mr Reddie was at one time law agent in the sequestration, and that he is the cautioner for the trustee, and a commissioner; but he denies that he is Mr Reddie's clerk, and alleges that he is in business on his own account; and he does not admit that this personal objection, even if correct in point of fact, would be a disqualification under the Act or otherwise. The accountant called on the respondent to explain his position in relation to Mr Reddie, and it was stated on his behalf, at a meeting before the accountant, on Nov. 29,1869, as follows;—‘That he left Mr Reddie's employment as a clerk in 1858, before his appointment as trustee, since which time he has not acted as his clerk; but that occasionally, when Mr Reddie, who generally keeps two clerks, has had a pressure of business, he has drawn and engrossed papers for him; and that he has also attended to anything particular, at Mr Reddie's request, during his absence; but he has received no payment, and has no claim therefor.’ It appears to the accountant, from this admission, and from the fact of Mr Reddie being cautioner for the respondent, that the respondent is on a footing of confidentiality with Mr Reddie, who was admittedly for a long period the agent in the sequestration, and who still is a commissioner, which is not favourable to independent and disinterested action on his part in the discharge of his duties as trustee.

“3. It is averred by the petitioner that the respondent is an undischarged bankrupt.

“It is admitted by the respondent that he was sequestrated under the Bankruptcy Acts on 7th June 1862, and that he had not been discharged' when the revised answers for him were lodged; but it is averred that no disqualification attaches to the respondent under the Act or otherwise on this account. The accountant found that although the respondent was an undischarged bankrupt at the date of the presentation of the petition, he was discharged on 6th March 1869, without composition.

4. No complaint has been made to the accountant in regard to the conduct of the respondent under the 159th section of the foresaid Act. At a meeting on Dec. 24, 1868, at which the respondent submitted the petition and complaint for the consideration of the creditors, they ‘resolved and approved of the whole actings of the trustee on the estate of the bankrupt from the date of his election to the present time; and further resolved to continue him as trustee on the estate, and instruct him specially to oppose, on every ground competent in law, both the action and complaint for his removal as trustee, and the action of interdict against the sale of the lands.’

“5. The accountant, notwithstanding of there being no complaint at the instance of creditors, is entitled, under the 159th and 161st sections of the said Act, to report to the Court any failure in duty on the part of a trustee, if not satisfied with the explanation given by the trustee.

“With reference to the failures in this case to transmit copies of his inventory and valuation, and of his accounts, the accountant would in ordinary circumstances have been satisfied to have accepted copies of these documents, and would have considered it unnecessary to report the case. Looking, however, to the confidentiality between the respondent and Mr Reddie before pointed out; to the fact of the former having been an undischarged bankrupt; and also to the fact of the proceedings at the instance of the petitioner of which the Court have caused intimation to be made to him; the accountant considered that this was a case which ought to be reported under the 159th and

Page: 433↓

161st sections of the Bankruptcy Act. There being no provision made by that Act for the necessary expense of such proceedings in Court, the accountant presented a memorial to the Lord Advocate, submitting that a prosecution should be raised at the public expense. This memorial was laid before the law officers of the Crown, who, on 11th February 1870, advised the accountant as follows:—‘We are of opinion that in present circumstances it is not expedient and proper that any proceedings should be taken at the public expense. But the accountant in bankruptcy will, we believe, hold it to be his duty to report the circumstances of the case to the Court.’ The accountant considers it to be his duty to report the circumstances of the case to the Court.”

Burnet for petitioner.

Thoms in answer.

At advising—