[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Souter v Aberdeen City Council [1999] ScotCS 297 (15 December 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/297.html Cite as: [1999] ScotCS 297

[New search] [Help]

The party of the second part were formerly the owners of a dwellinghouse in Aberdeen. Mrs. Dorothy McDonald ("the debtor") was the tenant of the house and applied to purchase the house in terms of the Housing (Scotland) Act 1987. The necessary procedures were gone through and the Council disponed the subjects to the debtor by feu disposition dated 17 February 1994 and recorded in the General Register of Sasines on 2 March 1994. The discounted purchase price in accordance with the terms of the Act was £13,500 and the market value was assessed at £45,000. The amount of the discount is therefore £31,500. On 17 March 1994 the debtor granted a voluntary trust deed for creditors in favour of the party of the first part and this deed was registered in the Books of Council and Session on 5 May 1994.

A question has arisen as to whether the granting of the trust deed constituted a disposal within the meaning of section 72 of the Act so that the party of the second part are entitled to claim repayment of the discount. The original question in the stated case referred to the granting of the trust deed by the debtor, but during the course of the argument the question was amended by agreement of both parties to the following:

The reason for the change in the question was that counsel for the second party accepted that the original grant on 17 March 1994 was revocable and that accordingly it could not constitute a disposal within the meaning of the Act, but that that situation changed when the trust deed was registered in the Books of Council and Session thus making it irrevocable.

The trust deed granted by the debtor was in fairly standard terms and provided that she assigned, disponed, conveyed and made over to the first party, as trustee for her whole lawful creditors, all and sundry her whole estate heritable and moveable, real and personal of whatsoever kind or nature. She bound and obliged herself on being required so to do to execute and deliver all writs and deeds required for vesting in the person of the trustee. It was further provided that the trustee should have all powers which could have been exercised by the debtor in relation to her estate if the trust deed had not been granted, including power to sell the estate or any part thereof by public roup or private sale, all such as the trustee should think fit, and to grant such dispositions, conveyances or other deeds which may be required in connection with the management and realisation of her estate. Finally it was provided that the trustee should, after implementing the purposes of the trust, reconvey to the debtor such of her estate as might not have been realised and pay to her any remaining surplus. The trustee has in fact entered into missives for the sale of the subjects, but because the present dispute arose nothing further has been done in respect of the sale and in particular no disposition of the property has been granted by the trustee to any third party.

Section 72(1) of the Act provides:

Section 73 provides that there shall be no liability to make a repayment under section 72(1) where the disposal is made by the executor of the deceased owner acting in that capacity, or as a result of a compulsory purchase order, or is to a member of the owner's family who has lived with him for a period of 12 months before the disposal and is for no consideration. The question, therefore, is a simple one, namely, what constitutes disposal within the meaning of section 72(1). The answer, however, to that question is not so simple to find.

Counsel for the first party argued that the word "disposal" must be given its ordinary meaning. This would mean that it is the equivalent of sale, namely, divesting of all beneficial interest. Notwithstanding the granting of a trust deed the property remains the property of the debtor. It continues to remain the property of the debtor until such time as the trustee sells the property or, alternatively, takes the steps envisaged to have the property conveyed to him formally by the debtor. This is not the same as the position of a trustee in bankruptcy because under section 31(1) of the Bankruptcy (Scotland) Act 1985 the whole estate of the debtor "shall vest" as at the date of sequestration. It is well-settled that a non-acceding creditor can execute diligence if the property has not been conveyed to a trustee under a voluntary trust deed. The true position is that the granting of the voluntary trust deed only creates a burden on the title of the debtor. In Gilmour v. Gilmours 1873 11 M. 853 it was said that it is settled that an infeftment under a trust disposition for payment of the creditors of the debtor does not divest the granter of the feudal title to the subjects conveyed but only creates a burden on that title. Again in Smith v. Stuart 1894 22 R. 130 it was said by Lord Kinnear that there can be no question that a conveyance in trust for creditors with a power of sale, subject to a reconveyance to the truster if the power is not exercised, does not absolutely divest the truster but operates merely as a burden on his radical right of property. Accordingly, because the debtor retained a radical right in the property she cannot be said to have disposed of it by conveying her whole estate to the trustee under a voluntary trust deed even after that trust deed has been registered and become irrevocable. Counsel conceded that if the trustee had called on the debtor to dispone the property to him within the relevant period then the discount would have become repayable, but in the absence of any such call there has been no disposal.

Counsel for the second party contended that the purpose of section 72 was to prevent a purchaser making a quick profit on resale. Any transfer of ownership would defeat that purpose and allow the purchaser to realise the full value of the property. If the first party's argument is correct the effect would be to increase the estate available for creditors by £31,500. It is unlikely that Parliament intended the creditors of imprudent purchasers to get the benefit of the discount. Although the property may not be formally vested in the trustee, as would be the case if a disposition was granted by the debtor, nevertheless the trustee has power to sell and to grant title. He would be able to deduce title from the voluntary trust deed, having power to sell under that deed. He does not require to have the consent of the debtor in order to sell the property. As far as the radical right of the debtor is concerned, reference was made to White v. Stevenson 1950 S.C. 84. In that case, which involved sequestration, it was said that the sequestration is for a limited and temporary purpose. It does not necessarily involve the final and revocable separation of the bankrupt from his estate. The radical right, however, is a dormant and unenforceable one until the trustee is discharged. The bankrupt has no right against the trustee to claim any part of his estate, all he can do is to obtain what may be left over after the sequestration has been completed. It is a right of accounting and not a right to a specific piece of heritage. In the same way the debtor, under a voluntary trust deed, cannot require the trustee to return heritable property even though the value of the residue after payment of all creditors may exceed the value of the heritable property. If the trustee chooses to sell the heritage there is nothing the debtor can do about it. Counsel contended that section 72 should be given a purposive construction rather than a narrow construction which might be attractive to a feudal conveyancer. There is no definition in the Act of the words "sells or otherwise disposes". Sale is merely an example of a form of disposal as would be gift or disposal to an ordinary trust. In considering the word disposal it is not necessary to import any idea of transfer of ownership or divestiture of title. When the trust deed has been registered the debtor has no power of disposal because it is the trustee who decides on the further disposal of the property. If the trustee has complete power of disposal of the property that can only be because the debtor has disposed of the property to the trustee. The granting of a voluntary trust deed is, as it says, a voluntary act. The only cases where discount is not recoverable under section 73 are cases where the disposal is made by reason of a non-voluntary act, either death or compulsory purchase order, or where the disposal is to a member of the owner's family and for no consideration which is no doubt inserted for reasons of policy. There is no policy consideration which would allow for non-recovery of the discount where the owner enters into a voluntary trust deed.

In my opinion it is important to note that the issue in this case is one of interpretation of a statutory provision and I agree with counsel for the second party that the provision should be given a purposive construction. The intention of the section is to prevent a profit being made by the owner by reason of a quick sale and for repayment to the former landlord of the discount if such an event occurs. The decision as to what is the meaning to be given to the word "disposes" may depend upon whether one is looking through the eyes of a feudal conveyancer or whether one is endeavouring to construe the word in its normal sense within the context of the statute in which it appears. In my opinion the second approach is preferable and it is not appropriate to enter into the difficult questions that arise in considering precisely what right, if any, a debtor has to his heritable property when he has irrevocably assigned and conveyed that property to a trustee under a voluntary trust deed. There can be no doubt that as a result of the transfer of the whole of the debtor's estate to the trustee the debtor has completely lost any control over that estate. He has no right to demand any specific part of it back after the intromissions of the trustee have been terminated. All he has is a right of accounting for any surplus that may remain. He has no right to prevent the trustee from disposing of the property and the trustee can, by deduction of title, dispose of the heritage without any further act being required of the debtor. I do not regard as significant the fact that the debtor may have some radical right remaining in the property in the hypothetical situation that the trustee does not further dispose of it. That radical right is of no value to the debtor unless the trustee eventually reconveys the property. Counsel for the first party conceded, in my opinion rightly, that if the trustee had called on the debtor to dispone the property formally to him within the relevant period the discount provisions would then be triggered. That, however, might be done not because the trustee was intending to make any further disposal of the property but simply to protect his position against diligence by any non-acceding creditor. At the end of the day it might be found that it was not necessary for the trustee to sell the property and it would eventually be returned to the debtor. For practical purposes I see no distinction between the position where the trustee has called on the debtor to convey the property formally to him and the position where he has a title under the trust deed to convey the property at his own hand by deduction of title. It is no doubt true that the radical right remaining in the debtor would be transferred under a formal disposition, but from a practical point of view it would be no more or less a disposal than the assignation and conveyance under the terms of the trust deed. In endeavouring to give a purposive construction to the word "disposes" in section 72 I have come to the conclusion that as the debtor has handed over all power to control the property to the trustee that constitutes a disposal of the property. For that reason I would answer the question of law in the affirmative.

Section 72(1) of the 1987 Act provides, inter alia, as follows:

Section 72(3) relates the proportion of the discount to the date of the disposal.

Section 73(1) provides that the discount is not recoverable where the disposal is made:

The provisions of subsection (2) are not relevant to this case.

The trust deed confers upon the trustee the usual powers in relation to the debtor's estate. It is in the following terms:

The purposes for which the trust deed is granted include the following:

The trustee contends that the granting of the trust deed did not constitute a disposal of the subjects by the debtor within the meaning of section 72 and that therefore no part of the discount is repayable to the City Council.

Counsel for the trustee argued that the trust deed could not constitute a disposal because the debtor did not convey the house to the trustee. The radical right to the house remained with the debtor (Sharp v Thomson, 1997 SC (HL) 66, Lord Jauncey, at p. 72F, Lord Clyde, at p. 83I-84C; Gibson v Wilson, (1841) 3 D 974). The trust deed obliged her "to execute and deliver all writs and deeds required for vesting in the person of [the] trustee and his assignee" her estate or any part thereof. She therefore could not be said to have disposed of the house.

For this submission counsel for the trustee relied on the general propositions that the trust estate remains the debtor's property unless and until the trustee sells it (Doughty v Wells, (1906) 14 SLT 299); that no common law or statutory vesting occurs in the trustee when there is a voluntary trust deed (cp. Bankruptcy (Scotland) Act, 1985, s. 31(1)); that so long as the subjects have not been conveyed to the trustee a non-acceding creditor can execute diligence against the debtor's property (Gibson v Wilson, supra; Ogilvie v Taylor, (1887) 14 R 399); that the truster can revoke the deed at any time before the creditors become aware of it and in that event does not require any re-conveyance (Carmichael v Carmichael's Exx, 1920 SC (HL) 195; Synnot v Simpson, (1854) 5 HLC 121, Lord Cranworth at p. 133); that if the trustee under a trust deed for creditors applies for formal sequestration of the debtor under the Bankruptcy (Scotland) Act 1985 there is no statutory provision for the transfer of property from the trustee under the trust deed to the trustee in sequestration; that where the property is held by a trustee on a title that is in the trustee's name, it cannot be regarded as forming any part of the trustee's own estate (Millar v Heritable Reversionary Co., (1892) 19 R (HL) 43); and that overall the truster retains a radical right in the estate even after the granting of the trust deed (Gilmour v Gilmours, (1873) 11 M 853, Lord Justice-Clerk Moncreiff at pp. 857-9; Edmond v Dingwall's Trs., (1860) 23 D 21; Smith v Stewart, (1894) 22 R 130; Byres' Trs v Gemmell, (1895) 23 R 332). In short, in granting the trust deed the debtor burdened her interest in the house, but she did not divest herself of it and therefore could not be said to have disposed of it.

If the trustee's contention were correct, the result would be that the full value of the discount, which could not otherwise have been realised by the debtor, would be available to her creditors, and might even become available, in whole or in part, to the debtor herself under purpose (Third) (supra).

The City Council contends that the granting of the trust deed constituted a disposal of the house within the meaning of section 72 and that accordingly the amount of the discount is repayable in full to the City Council.

Counsel for the City Council argued that the purpose of section 72 was to prevent a public sector tenant who exercised the right to buy from making a quick profit by re-selling the subjects at market value within a short time after the statutory purchase (cf. Clydebank DC v The Keeper of the Registers, 1994 SLT (L Tr) 2, at p. 5B-C). Since it was not open to the debtor to realise this profit within the claw-back period, that profit ought not by virtue of the trust deed to become available to the creditors. The trustee in this case was free at any time to sell any asset of the estate, including any specific item of heritage, at any date and on such terms and conditions as he might choose. If the asset were heritable, the trustee could sell it using the trust deed as a link in title (Conveyancing (Scotland) Act 1924, s. 5). The debtor was powerless to prevent this. The trustee's position was similar to that of a permanent trustee under the Bankruptcy (Scotland) Act 1985. He received a right to the heritable estate, but he did not receive a real right (cf. McBryde, Contract, para. 9-33). The debtor could demand only count and reckoning with the trustee and in due course claim whatever was left over after satisfaction of the trust purposes. The debtor could not claim any particular asset of the estate and in particular had no right to any specific item of heritage that the estate might contain (cf. White v Stevenson, 1956 SC 84, Lord President Clyde at p. 90). In the circumstances of this case the granting of the trust deed constituted a disposal by the debtor of the house.

In my opinion, by granting the trust deed the debtor has disposed of the house within the meaning of section 72. It is unnecessary in this case to define the precise nature of the right of a debtor who has granted a trust deed for creditors. It is sufficient to construe the section and to identify the effects of this particular deed. The section speaks of the purchaser's selling or otherwise disposing of the house. It is apparent therefore that selling is merely one type of disposal. Other types of disposal would include, for example, the making of a gift or the granting of an ordinary trust.

In my view a disposal under section 72 need not involve a formal conveyance. It is sufficient that the former tenant puts it out of his power to deal with the house as owner.

In this case the debtor has put her entire estate into the hands of a third party as trustee for her creditors and has conferred upon him all the powers that she could have exercised in relation to the estate if she had not granted the deed. Such is the extent of the trustee's powers that the debtor is entitled only to an accounting from him and, after the trust purposes have been fulfilled, to a reconveyance of any unrealised assets and the repayment of any remaining surplus.

The debtor has a prospect, but no more than that, that after satisfaction of the debts, part of the trust estate may revert to her either in cash or in specie; but that consideration emphasises that so long as any asset of the estate does not revert to her, the debtor has no control over it and cannot prevent its being sold (White v Stevenson, supra). The trust deed specifically empowers the trustee to sell any asset of the estate without reference to the debtor.

I cannot see why for the purposes of section 72 a disposal must involve an outright transfer of the house with no prospect of return. In my view, the decisive consideration is that on granting the trust deed the debtor had no right to have the house returned to her. She merely had the hope that in a specified, and normally unlikely, event the right to deal with the house freely as owner would revert to her.

For these reasons I consider that the effects of the granting of the trust deed were such that the debtor "disposed of" the house within the meaning of section 72.

I am confirmed in my interpretation of section 72 by the unlikelihood that Parliament intended that the benefit to the sitting tenant, which depended on her not disposing of the house within the specified period, should nonetheless, in consequence of the trust deed, accrue to her creditors, and perhaps even to her, on a sale by the trustee at any date within that period.

There is also some support for this view in section 73, which refers to certain specific transactions which are exempted from the provisions of section 72. It is not disputed that each of these transactions would otherwise constitute a disposal. The granting of a trust deed for creditors is not included in the list of exempted transactions.

I would therefore answer the question proponed in the affirmative.

Mrs. Dorothy May McDonald ("the debtor") was for some years prior to February 1994 the tenant of a flatted house in Aberdeen to which section 61 of the Housing (Scotland) Act 1987 applied. Her landlord was the City of Aberdeen District Council ("the Council"), the statutory predecessor of the second party to this special case. Following an application by her to purchase the house the Council, in accordance with section 63 of the Act, served on the debtor an offer to sell it to her on certain terms and conditions. On 9 October 1993 the debtor, in satisfaction of section 66 of the Act, served on the Council a notice of acceptance of that offer. A contract of sale of the house was thus duly constituted. The market value of the subjects was determined in accordance with section 62(2) of the Act to be £45,000. The discount, calculated in accordance with section 62(3) was £31,500, the maximum discount. The purchase price payable by the debtor was accordingly £13,500. On 17 February 1994, in implement of that contract, a Feu Disposition of the subjects was executed by the Council and delivered to the debtor. It was duly recorded in the Division of the General Register of Sasines for the County of Aberdeen on 2 March 1994.

On 12 March 1994 the debtor granted a trust deed for creditors. The trustee named therein is the first party to this special case. The trust deed included a clause whereby the debtor consented to its registration for preservation and execution. It was so registered in the Books of Council and Session on 5 May 1994.

The trust deed provides:

A declaration followed concerned with income received by the debtor during that period of three years. The trust deed continued:

There followed a declaration that the deed was granted in trust for certain purposes. Purpose (First) was for the payment of the costs and expenses connected with the Trust and with the recovery and realisation of the Estate. Purposes (Second) and (Third) were in the following terms:

The remaining provisions included a declaration that

Although the first party entered into missives for the sale of the subjects, those did not, because of the emergence of the current dispute, proceed to implementation. No disposition of the house has been granted by him to any third party.

The question of law on which the parties ask the opinion of this court is (as amended at the bar) in the following terms:

Upon the answer to that question turns whether or not the discount of £31,500 is repayable to the second party as successor of the Council.

The 1987 Act, in addition to making other provisions, consolidated provisions formerly contained in the Tenants' Rights Etc. (Scotland) Act 1980 (as amended) relative to the right of a secure tenant of a public sector landlord to purchase his dwellinghouse at a price fixed under the statutory scheme. The right to purchase is conferred by section 61 of the 1987 Act. Section 62 makes provision for determination of the price and section 66 for the notice of acceptance of the landlord's offer to sell. Section 72 provides:

Section 73 provides:

Mrs. Smith for the first party invited the court to answer the question in the negative. She submitted that the words "disposes of" in section 72(1) should be given their ordinary meaning having regard to the statutory context in which they occurred. The phrase "sells or otherwise disposes of" connoted a getting rid of a house in the sense of the owner divesting himself of all beneficial interest in it. If, notwithstanding the grant of the trust deed, the house remained the property of the debtor it was not "disposed of" by her. The grant of the trust deed was to be contrasted with the delivery of a disposition of the house. The trust deed obliged the debtor to execute and deliver all writs and deeds required for vesting in the person of the trustee the Estate or any part of it. The debtor could thus have been obliged to execute and deliver to the trustee a disposition of the house. She had not been so required. She remained the proprietrix of it. Reference was made to Sharp v. Thomson 1997 SC (HL) 66, per Lord Jauncey at page 72 and per Lord Clyde at pages 83-4. All that was effectively conferred on the trustee was a power of management for the creditors. Nothing had occurred in relation to the heritage equivalent to the delivery of moveables. Reference was made to Gibson v. May (1841) 3 D. 974. In the event of sequestration of the debtor, including sequestration on the petition of a trustee acting under a trust deed for creditors, it was the estate of the debtor which vested in the permanent trustee (Bankruptcy (Scotland) Act 1985, sections 5(2)(c) and 31(1) and (8)); there was no indication that, where a trust deed for creditors had earlier been granted, any transfer from the trustee thereunder to the permanent trustee was required. The whole estate, subject to the trust deed for creditors, remained the property of the debtor unless and until realised to pay the creditors. A non-acceding creditor was able to do diligence on the debtor's property (Gibson v. May; Ogilvie & Son v. Taylor (1887) 14 R. 399; Doughty (Spratt's Tr.) v. Wells & Others (1906) 14 S.L.T. 299). A debtor could revoke the appointment of a trustee at any time before the creditors were aware of it (Carmichael v. Carmichael's Ex. 1920 SC (HL) 195, per Lord Dunedin at page 201, quoting with approval Lord Cranworth in Synnot v. Simpson (1854) 5 H.L.C. 121 at page 133). On such revocation no reconveyance of property would be necessary or appropriate. A trust deed for creditors merely created a burden on the debtor's right and on fulfilment of its purposes that burden was extinguished (Gilmour v. Gilmours (1873) 11 Macph. 853). It was in relation to heritage analogous to a standard security or a bond and disposition in security. Even where the trustee took title in his own name, the heritage became no part of his estate but remained the property of the debtor (Heritable Reversionary Co. Ltd. v. Millar (1892) 19 R (HL) 43). The truster retained the radical right and accordingly the beneficial interest in the property held in trust. Reference was made to Edmond v. Dingwall's Trs. (1860) 23 D. 21, per Lord Benholme at pages 26-7. Reference was also made to Smith v. Stuart (1894) 22 R. 130, per Lord Kinnear at page 135 and to Rigby v. Fletcher (1833) 11 S. 256, per Lord Balgray at page 258. It was settled that a trust for the administration of the granter's affairs in his lifetime, including the payment of his debts, did not divest the granter (Byers' Trs. v. Gemmell (1895) 23 R. 332, per Lord McLaren at page 337). The purpose of section 72 was to prevent tenants who had exercised the right to buy at a price determined at a discount to market value abusing that advantage by making an early resale. No such a

Mr. Ferguson for the second party invited the court to answer the question in the affirmative. The objective of section 72 was to discourage early resales of recently acquired property with a view to making a quick profit (Clydebank District Council v. Keeper of the Registers of Scotland 1994 S.L.T. (L.T.) 2 at page 5). The statutory intention was to limit and control a purchaser's ability at his own hand to take full economic benefit of the discount. It was unlikely that Parliament intended the financially prudent purchaser to be so limited and controlled but the granter of a trust deed for creditors not to be so. Realisation at full market value would accrue equally to the latter's benefit, whether by payment of or towards his debts or even by the creation of a surplus to be paid to him. Nor was it even necessary for a person to be insolvent to grant a trust deed for creditors. If the first party was correct, a device would be opened up to circumvent fulfilment of the statutory purpose. In practice, in the event of the trustee wishing to realise the house, there would be no question of his exercising the power to require the debtor to execute and deliver a disposition to him. Without reference to the debtor, the trustee could exercise his power to grant deeds, deducing title in the disposition under the powers conferred by sections 3 and 5 of the Conveyancing (Scotland) Act 1924. The trustee would exercise the power to require the debtor to grant a disposition to him as trustee only if he were concerned about the exercise of diligence against the property or the like. The legal position in relation to a trust deed for creditors was well explained in McBryde on Bankruptcy (2nd edition). Reference was made to chapter 20 and in particular to sub-paragraphs 10, 18, 19, 36, 39 and 40 thereof. It was not suggested that the granting of a trust deed for creditors itself affected the debtor's title to the property but it nonetheless constituted a disposal for the purposes of section 72. It was important to understand the true character of the debtor's radical right (whether in a sequestration or under a trust deed for creditors). Such a right was dormant and unenforceable at the stage of the grant. Moreover in a question with the trustee the debtor could not claim any particular item of property. Reference was made to White v. Stevenson 1956 SC 84, per Lord President Clyde at pages 90-1. The observations there made were equally applicable to a trust deed for creditors. Even in a sequestration the permanent trustee did not by virtue of section 31 of the 1985 Act obtain a real right of property in the heritage but rather the benefit of the effect of a decree of adjudication. Reference was made to McBryde on Bankruptcy (2nd edition) paras. 9-30, -32 and -33. The very existence of a radical right in the debtor itself indicated that a prior disposal in favour of the trustee had occurred. Section 72 should be given a purposive construction. The section was concerned with disposal, sale being one species of disposal. Other species included absolute gift or transfer into trust. Disposal as a word of English included the power to control or manage. Reference was made to the Oxford Dictionary sub. nom. "disposal" and "dispose". The voluntary transfer by the debtor of the power to manage and control property, once irrevocable, constituted a disposal. Once the deed was granted, the house was no longer at the granter's disposal. The concept of a voluntary act by the purchaser was pointed by the statutory provisions as originally enacted. Under section 6 of the 1980 Act the only disposals excepted from the application of the section were what were now contained in section 73(1)(a) and (b) (disposal by the executor of the deceased owner or disposal as a result of a compulsory purchase order). The exception now contained in section 73(1)(c) an

The issue which arises for determination in this case is the interpretation and application of a statutory provision. The context is the grant of a trust deed for creditors by a person who, under the 1987 Act, had exercised the right to buy the house of which she was secure tenant. Issues concerning the legal character and incidents of a trust deed for creditors (including issues touching on property law and on the truster's "radical right") potentially give rise to formidable difficulties. These are learnedly discussed by Mr. (now Professor) George Gretton in [1986] Jur. Rev. at pages 51 et seq. Some of the authorities referred to in that article and in its sequel at pages 192 et seq were cited by Mrs. Smith. Mr. Ferguson did not find it necessary to examine those authorities in detail nor to cite other authorities which are potentially relevant in this difficult field. He was content largely to approach the question as one of interpretation of section 72 in the context of the relevant statutory scheme. In these circumstances it is unnecessary and would, in my view, be unwise to attempt in this case any judicial solution to the problems to which a trust deed for creditors and doctrines associated with it give rise.

The general object of the "right to buy" provisions was, by facilitating the purchase by secure tenants of their homes, to promote home ownership. To encourage the exercise of the right to buy a tenant is entitled to purchase the house at a discount to its market value. Section 72 and its predecessor are clearly designed to discourage the taking of a quick capital profit by the early disposal of the purchased house.

The words "disposes of" are not defined for the purposes of the statute. However, in the statutory context, and in particular where "sells" is given as the leading instance of the set "disposes of", they suggest to me the notion of an outright transfer without prospect of return. They further suggest something more than the act of granting to another an irrevocable power for defined purposes to dispose of property. The grant of a standard security or, under the former law, of a bond and disposition in security, each with a power of sale, would not, in my view, satisfy the statutory concept contained in section 72; nor would the grant of a factory and commission with extensive powers, including that of sale. It is true that the opening words of the trust deed ex facie bear to transfer the debtor's estate from the debtor to the trustee and that purpose (Third) envisages that the trustee will "reconvey" to the debtor such of the estate as may not have been realised. It seems, however, clear on authority that, in the event of the trust purposes being completed without the house being realised, no formal deed of reconveyance by the trustee would be necessary or appropriate albeit he had taken infeftment (Gilmour v. Gilmours, following Campbell v. Edderline's Creditors (1801) Mor. Adjud. App. No. 11). Moreover, under this deed the debtor has, in such circumstances, the right to the return of the house as such, in contrast with the more limited right of a bankrupt as described by Lord President Clyde in White v. Stevenson at page 91. The exact nature of the personal right in respect of heritage passing to and from a trustee for creditors remains obscure. Whatever it be, the transfer to him for the declared purposes hardly seems outright in character. Such purposes can be contrasted with those commonly found in donative inter vivos trust deeds, where care is ordinarily taken, at least in modern times, to avoid reversion to the truster.

Mr. Ferguson submitted that the purpose of section 72 was to limit or control a purchaser's ability to take the full economic benefit of the discount. He also submitted that to answer the question in the negative would frustrate that purpose. I accept the first but not the second of those submissions. Where a trust deed for creditors is granted, the statutory purpose is met if disposal under section 72 occurs not on the grant of the trust deed within the statutory period but in the event of the power of sale under it being exercised within that period. This would also appear to square with the position on sequestration. Section 72, it seems, applies only to voluntary disposals, not to involuntary transmissions, such as those on death or sequestration; if the house was "disposed of" on death, there would be no point in excepting a disposal by the executor of the deceased owner (the claw-back having already occurred). If on sequestration vesting in the permanent trustee does not itself trigger recovery of the discount, it is difficult to see why on policy grounds a transfer to a trustee under a trust deed for creditors should. In each case, of course, a subsequent sale by the trustee would, if within the statutory period, trigger recovery, whether such sale be regarded as a disposal by the owner or as a disposal by his successor in title.

Apart from the inference drawn above in relation to involuntary transmissions, I do not find the other provisions now contained in section 73 (whether introduced by the 1980 Act or subsequently) as of assistance in the issue of statutory construction. The exceptions appear to be devised on particular policy grounds.

Although I have the misfortune to differ from your Lordships, I would answer the question of law in the negative.