Scottish Court of Session Decisions

Robert Stewart, farmer, Elibank, near Peebles, raised an action of count, reckoning, and payment against John Thomas North, residing near London, against whom arrestments had been used ad fundandam jurisdictionem.

The arrestments were used in the hands of a Mr Welsh, and the fund arrested consisted of a sum of £419, 11s. 4d., due by Mr Welsh to the defender under a decree of the High Court of Justice in England, Queen's Bench Division, for costs. That decree was pronounced on 25th April 1887. The arrestments ad fundandam were executed on 26th May 1887, and the summons in the present action was signeted on 27th May, and on the same day the said fund was again arrested on the dependence of the action. A certificate of the judgment in the English suit, dated 31st May, was registered in the Books of Council and Session on 1st June under the Judgments Extension Act 1868. On 13th June Messrs Eldred & Bignold, solicitors in London, who had acted for the defender Colonel North in various litigations in England, including the action before the High Court of Justice already referred to, obtained from the English Court a charging order upon the costs recovered in that action, and this was intimated to the arrestee on June 14th.

The defender averred, inter alia—“The sum in the said decree was not arrestable or attachable in respect of claims against the defender. Messrs Eldred & Bignold are in right of the whole fund, which is due and payable only to them in respect of their costs as solicitors to the defender North in the said cause, which costs exceed the said fund of £419, 11s. 4d., and have not been otherwise paid or satisfied. They hold the said judgment or decree as from the date of the same being signed, and instructed registration thereof to recover their said costs, consisting chiefly of outlays. According to the law of England, so long as the costs of the solicitors of the party found entitled to costs by decree of Court are not otherwise paid or satisfied, the debtor in the said decree is not entitled to pay or satisfy the decree except with their assent or through their hands, and they have a lien on the decree, and all costs payable to their client in the cause, for the full amount of their costs as between solicitor and client, which lien attaches ipso jure on judgment being signed, and is preferable to the claim of any assignee or creditor of their client. The said solicitors are held as creditors in the said debt quoad their unpaid or unsatisfied costs substantially to the same effect as law-agents who have obtained decree for expenses in the Courts of Scotland in their own names as agents-disbursers. The said Messrs Eldred & Bignold on or about 13th June 1887 obtained a charging order for their said costs upon the said fund, which is produced and referred to, and which declares their pre-existing right as aforesaid.”

The defender pleaded—“(1) The said debt not being arrestable by a creditor of the defender, no jurisdiction has been founded against him. (2) The alleged arrestments not having affected any property of the defender, the jurisdiction ought not to be sustained, and the present action should be dismissed, with expenses.”

On 2nd December the Lord Ordinary ( Lee) repelled the plea of no jurisdiction, and allowed parties a proof of their averments on the merits.

Against this interlocutor the defender reclaimed to the First Division, and on 20th December their Lordships recalled the interlocutor of the Lord Ordinary, and remitted to him to allow the defender a proof of his averments (above quoted) in support of the plea of no jurisdiction.

At the proof Mr Eldred, of the firm of Eldred & Bignold, who was the only witness examined, gave evidence to the effect that Colonel North had been due from 25th April 1887, and still was due, to his firm in respect of their account in the action before mentioned, a sum exceeding £419, 11s. 4d., which was the amount of costs found due by Welsh to North.

A case was thereafter prepared for the opinion of English counsel, on the assumption that from and after April 25th 1887 there had been due by

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North to Eldred & Bignold in respect of their account in the said action a sum exceeding £419, 11s. 4d., which, after a recital of the facts narrated, proceeded as follows—“The question between the parties to the present action, viz., Stewart and North, is whether the arrestments used by Stewart attached anything. The answer to that question depends upon whether Welsh was or was not under an obligation to account to North for the £419, 11s. 4d. of costs in the action which had depended between them, and it is on this latter point that the opinion of counsel is desired. It is said by North that the solicitors are the creditors in the debt instituted by the judgment for their unpaid costs, and that the debtor is not entitled to pay this debt to the other party in the action, except through the hands of the solicitors, or with their assent. Stewart, on the other hand, founds upon the terms of the judgment as constituting a debt by Welsh to North, which Welsh is bound to pay to North, unless it is regularly assigned to some other creditor.”

The opinion of counsel is desired on the following queries—“(1) Was North, before his solicitors obtained the charging order, entitled, while his solicitors' account for the costs of the action remained unpaid, to demand payment to himself of the amount of costs found due in the action, or were the solicitors the true creditors to the exclusion of their client? (2) What was the effect, if any, either at common law or under the provisions of the 28th section of 23 and 24 Vict. c. 127, upon the respective rights of the solicitors and North of the charging order, and in particular, had it any retrospective effect upon their respective rights?”

The opinion of Mr Finlay, Q.C., to whom the case was referred, was in these terms—“I assume from my instructions, and the terms of the charging order of 13th June 1887, that Colonel North is still indebted to Messrs Eldred & Bignold in a sum not less than £419, 11s. 4d., in respect of the costs of the action in which he obtained judgment for that sum as costs.

“Query 1. Colonel North was, before his solicitors obtained the charging order, entitled to demand payment to himself of the amount of costs found due to him by Mr Welsh, and could have given a good receipt for it— Mercer v. Graves, L.R., 7 Q.B. 499—but Messrs Eldred & Bignold, in virtue of their particular lien for costs in that action, might, at any time while the money remained unpaid, have given notice to Mr Welsh not to pay Colonel North, and if, after such notice, Mr Welsh had paid Colonel North, he might have been compelled to pay again to Messrs Eldred & Bignold— Omerod v. Tate, 1 East 464. To this extent, but no further, were Messrs Eldred & Bignold the true creditors to the exclusion of Colonel North. In virtue of this lien, as it has been called, the claim of Messrs Eldred & Bignold in respect of their costs would have priority over an attachment obtained by a judgment creditor of Colonel North against Mr Welsh as garnishee, if notice of their lien had previously been given to the garnishee— Eisdale v. Conyngham, 28 L.J. Ex. 213; Simpson v. Prothero, 26 L.J. Chan. 671—and I think even where notice had not been so given, though on this last point there does not appear to be any direct authority. In the case of Hough v. Edwards, 1 H. and N. 171, the solicitor had no lien for costs in the proceedings in which the judgment had been recovered.

Query 2. I am of opinion that the charging order of the 13th June 1887 conferred a valid title upon Messrs Eldred & Bignold under the statute, and that such charging order had a retrospective effect. This order was properly made, as costs are ‘property recovered,’ within the meaning of the section ( per Brett, M.R., in Dallow v. Garrold, 14 Q.B.D. 545, 546). A charging order under the statute 23 and 24 Vict., c. 127, sec. 28, gives the solicitor priority over a judgment creditor who has previously served a garnishee summons— Dallow v. Garrold, 14 QBD 543. As Mr Stewart was of course aware that the sum which he arrested was payable under a judgment, he had constructive notice of the lien of Colonel North's solicitors— Faithful v. Ewen, 7 Ch D 495. I am of opinion that the charging order converted the inchoate right of Messrs Eldred & Bignold at common law into an actual charge, and made them the owners in equity of the sum due from Mr Welsh to the extent of their claim against Colonel North.”

On 3rd November 1888 the Lord Ordinary ( Kinnear) (to whom the case had been transferred) found the arrestments used by the pursuer were inept to found jurisdiction; therefore dismissed the action, and decerned.

“ Opinion.—The question whether the arrestments used by the pursuer are effectual to found jurisdiction depends upon the relative rights of Colonel North and his solicitors Messrs Eldred & Bignold in the debt which is said to have been attached.

Before the date when the arrestments were used, Colonel North had obtained judgment against the arrestee for the sum of £419, 11s. 4d. as the taxed costs of a suit in the High Court of Justice in England. At the date when the defences in the present action were lodged, Messrs Eldred & Bignold had obtained a charging order, the legal effect of which is explained in Mr Finlay's opinion. It was held in Walls' Trustees v. Drynan, 15 R. 359, that the question raised by a plea to jurisdiction is not whether the Court had jurisdiction over the defender at any antecedent time, but whether it has jurisdiction de presenti at the time when the objection is stated, and if it were to be held in accordance with that judgment that the question is to be determined with exclusive reference to the state of rights at the time when defences are lodged, it would appear to me to follow from Mr Finlay's opinion that the jurisdiction is not well founded, because at that time the arrestments were according to the opinion ineffectual. Mr Finlay says not merely that the charging order ‘conferred a valid title upon Messrs Eldred & Bignold,’ but also that it had a retrospective effect, so as to give them a priority over an attachment previously obtained by a creditor of Colonel North.

It is enacted by the statute to which the learned counsel refers, sec. 28, that ‘all conveyances and acts done to defeat or which shall operate to defeat such charge or right, shall, unless made to a bona fide purchaser without notice, be absolutely void and of no effect as against such charge or right.’ It seems to be clear enough, both from the opinion and from the case of Dallow v. Garrold, cited by Mr

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Finlay, that the pursuer, as arresting creditor, does not fall within the exception in favour of purchasers without notice, and accordingly it was hardly disputed that in the multiplepoinding Messrs Eldred & Bignold must be preferred, because in a question with them the arrestments used by the pursuer are absolutely void.

But it is said that the true point of time to be considered is the date when the arrestment was used to found jurisdiction, because if that arrestment were effectual at the time no subsequent event could displace the jurisdiction thereby established. It may be that is a sound proposition—and I do not think there is anything to the contrary in the judgments delivered in the case of Walls—but I think the arrestment was inept from the beginning, because I must hold, in accordance with Mr Finlay's opinion, that it was ineffectual to attach the debt. It is true that before his solicitors obtained the charging order Colonel North could have demanded payment, but Messrs Eldred & Bignold might at any time while the money remained unpaid have given notice to Mr Welsh not to pay to Colonel North. Colonel North therefore had at no time an exclusive right to recover, and his right, such as it was, could not be made available to attach the debt so as to exclude Messrs Eldred & Bignold, because they could defeat the attachment so long as the money remained unpaid. They have in fact defeated the arrestment, and they must obtain decree in the multiplepoinding for payment of the money alleged to have been well arrested by Mr Stewart. It appears to me impossible to give effect to their claim in that action, and at the same time to hold in the present action that the money was effectually arrested by the competing claimant in the multiplepoinding.

It is said that the arrestment to found jurisdiction is in a totally different position from an arrestment in execution, because it does not impose a nexus. It may not be a lasting nexus, and there may be a question how long it continues. But still, like any other arrestment, it must be effectual to attach the subject arrested for the purpose for which it is used or else it must be inept.

The nexus must be capable of subsisting until the time when the objection to jurisdiction can be pleaded or else it is of no effect. This appears to me to be very clearly brought out in the Lord President's judgment in the case of Lindsay, where he explains the meaning of an arrestment to found jurisdiction. ‘It means this, that it fixes a subject in the country, and the subject being in the country the party is answerable to the jurisdiction of this Court.’ On this principle it was held in the case of Trowsdale's Trustee v. The Forcett Railway Company, 9 R. 89, that in order to found jurisdiction by arrestment the subject arrested must be capable of attachment by diligence in execution; and Lord Neaves states the reason very much in the same way as the Lord President does in Lindsay's case. The principle rests on the fact that there is something within the jurisdiction of the Court which can be specifically taken in execution of any decree which may be pronounced…. But must not extend the fiction beyond the limits already recognised. I am not aware of its having been extended beyond circumstances where the arrestment shows that the decree will not be a brutum fulmen from there being a subject within the jurisdiction of the Court which can be attached.’ It is true that the effect of the decree is not to be measured by the value of the subject arrested. But the subject, whatever be its value, must be effectually seized by the arresting creditor, although the seizure may be only temporary, and although it may cease to operate without the procedure which is necessary to determine the effect of an arrestment in execution.

In the present case the arrestment has fixed nothing within the country. There is no subject attached which could be taken in execution of a decree against the defender. The arrestment is therefore in my opinion inept.

No other ground of jurisdiction is alleged.”

The pursuers reclaimed, and argued—(1) If arrestments were valid at their date to found jurisdiction their validity could not be affected by the fact that the fund arrested was subsequently carried away through the intervention of a vis major. If that were not so, all that would be required to defeat the jurisdiction of the Court would be to break the arrestments, and it would follow that the view of the Court varied according to the time looked at. Defeasible debts and contingent debts were arrestable—Bell's Law Dict. voce Arrestment; Corse v. Masterton, January 31, 1705, M. 767. The nexus, if it could be called a nexus, imposed by arrestments ad fundandam was of a very different kind from that constituted by arrestments in execution. The former could never be the basis for an action of furthcoming— Malone and M'Gibbon, v. Caledonian Railway Company, May 28, 1884, 11 R. 853; Carlbey v. Borjesson, November 21, 1877, 5 R 188, per Lord President, 192. When the arrestment used in this case was laid on, North was the creditor in the fund arrested, as was clear from the opinion of English counsel. The arrestment was therefore valid to found jurisdiction against him, and the fact that a charging order was subsequently obtained could not affect the jurisdiction which had been validly constituted, even on the assumption that the fund arrested was carried away by the charging order— Baines & Tait v. Compagnie Générale des Mines d'Asphalte, March 15, 1879, 6 R. 846; Lothian v. M'Cree, November 27, 1828, 7 S. 72; Douglas v. Jones, June 30, 1831, 9 S. 856; Lindsay v. London and North-Western Railway Company, January 27, 1860, 22 D. 571, per Lord President (M'Neill) 585— aff. February 1858, 3 Macq. 99. (2) Further, the decree for costs had been made a Scotch decree by registration, and the fund arrested was thus due under a Scotch decree. The arrestments would not therefore be defeated by the preference given by an English statute to the charging order, the effect of which was necessarily local.

The defender and respondent argued—An arrestment ad fundandam was a realis vocatio in jus. It was necessary that the subject arrested should be within the territory of the Court in which it was intended to found jurisdiction, and should not be moved therefrom till caution be found judicio sisti, or till the defender prorogated the jurisdiction of the Court. The time at which the question of jurisdiction fell to be

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decided was when defences were lodged. If the arrestments did not impose a nexus till then, they failed altogether—Ersk. i. 2, 19; Walls' Trustees v. Drynan, February 1, 1888, 15 R. 359. Arrestments ad fundandam did not differ from other arrestments with regard to the subject arrestable— Trowsdale's Trustee v. Forcett Railway Company, November 4, 1870, 9 Macph. 88, 92; Cameron v. Chapman, March 9, 1838, 16 S. 907. The judgment following on arrestments could only affect the property arrested— Lindsay v. London and North-Western Railway Company, per Lord Cranbourne, 3 Macq. In this case North's right was from the beginning a qualified one, the fund arrested being ex facie of the decree subject to all the rights under that decree, and to the rights of North's agents. It was clear from the opinion obtained that the effect of the charging order was to transfer the right to the fund arrested from North to his agents. The effect of the arrestments had thus been defeated— Ellis v. Muckersie & Rose, May 12, 1831, 9 S. 585; Chambers' Trustees v. Smith, April 15, 1878, 5 R. (H. of L.) 151; Wyper v. Carr & Company, February 2, 1877, 4 R. 444. (2) The registration of the decree did not make it a Scotch decree. It was only to be treated as a Scotch decree for the purposes of execution. If the action were still pending in the English Court, so that the charging order could be pronounced; its effect must be judged of by English law, and the right of the arresting creditor measured by the rights of the English solicitors under the charging order—Judgments Extension Act (31 and 32 Vict. cap. 54), sec. 2.

At advising—