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Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> PATRICIA POLLEY AGAINST WEST LOTHIAN COUNCIL AND THE ACCOUNTANT IN BANKRUPTCY [2014] ScotCS CSOH_98 (06 June 2014)
Cite as: [2014] ScotCS CSOH_98

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[2014] CSOH 98






in the cause















Pursuer:  Party

First Defender:  Barne;  Simpson & Marwick

Second Defender:  Ower;  Harper Macleod


6 June 2014

[1]        This is an ordinary action in which the pursuer seeks reduction of five summary warrants, a charge for payment of money and decree of sequestration of the pursuer granted by the sheriff at Hamilton on 22 March 2010.  This action arises out of a dispute about the pursuer's non-payment of council tax going back to 1999.  The first defender is the local authority to whom the tax is said to be due.  The second defender is the Accountant in Bankruptcy.  The pursuer represented herself.


[2]        The pursuer clearly has a deep sense of grievance.  She says that she is not liable to pay the tax.  The first defender takes a different view.  Whether she is right to feel aggrieved I cannot tell and it is not part of this action to determine liability for tax.  The pursuer's sense of grievance is added to by a feeling of injustice;  she considers that she has not had a fair hearing on the issue of her liability to pay council tax.  I found it astonishing that matters had got to this stage with so many summary warrants (there appear in fact to have been 10 in total) and a charge going unchallenged before the first defender took what must be the step of last resort by lodging a petition for sequestration.  As Lord Hodge observed in Aitken v Aitken 2005 CSOH 105 at paragraph 5, if a debtor is seeking to challenge the debt upon which the charge proceeds and suspends the charge, he should do so before the expiry of the days of the charge.  Other challenges should be mounted before the petition for sequestration is initiated.  What is envisaged in this passage and on the authorities is a judicial challenge.  The pursuer said that she did challenge the charges.  On inquiry that appeared to be limited to delivering to the sheriff officers documentation which she said proved that she was not liable for the tax.  At no point did she appeal her liability or otherwise seek to judicially challenge the basis upon which the first defender held her responsible for the payment of council tax.

[3]        On 17 December 2009 the pursuer was served with a charge for payment for council tax owed on a property within their area for the year ending 31 March 2009.  The total amount charged was £1,336.87.  The charge notified the pursuer that if she did not pay the amount within 14 days she was liable to have further action taken against her including sequestration.  It advised her to consult a solicitor, Citizens Advice Bureau or other local advice centre immediately if she was not sure what to do.  The pursuer told me that she believed that she had no right of appeal.  That is wrong;  she did have a right of appeal but she did not exercise it.  I asked her what advice she had sought, if any.  She told me that she had gone to the Citizens Advice Bureau but that they were unable to help.  She was told to go to a solicitor.  She said that she had phoned the Law Society and then got in touch with 52 firms of solicitors.  None of them would assist her.  Since her sequestration the pursuer has researched the law and brought these proceedings for reduction.  She produced a succinct note of argument which she advanced at the procedure roll debate.  She was ably assisted by a friend and supporter, Mrs Stirling.  The second defender has entered into her office and I understand that steps are being taking to take possession of the pursuer's house.  It is sad that matters have progressed to this stage given the ample opportunities which the pursuer had to challenge her liability for tax before sequestration was awarded.

[4]        I record in summary the main submissions for the parties taken from the written notes of argument and the oral submissions.


Submissions for first defender

[5]        Mr Barne submitted that section 15(4) of the Bankruptcy (Scotland) Act 1985 ("the 1985 Act") provided that without prejudice to any right to bring an action of reduction of an award of sequestration such an award was not subject to review otherwise than by recall under sections 16 and 17 of the Act.  Reduction was only available where there were exceptional circumstances, e.g. fraud on the court;  Adair v Caldwell & Sons 1926 SC (HL) 51, Viscount Dunedin at pages 55-56, Lord Shaw at pages 60-62 and Lord Carson at page 67;  Central Motor Engineering Co v Galbraith 1918 SC 755, Lord President at pages 765-766 and 768-769, Lord Mackenzie at pages 769-770 and Lord Skerrington at pages 770-771;  and Smillie v Olympic House Limited 2004 SLT 1244, Lord Drummond Young at paragraphs 6 and 10.  There must be specific averments in support of such a plea;  Smillie per Lord Drummond Young, paragraph 6.  In this case there were no such averments.  There was a reference to fraud in the pursuer's note of argument but nothing more.  The test is a high one.  The remedy is only available in such exceptional circumstances. 

[6]        Reduction is not available where recall has been sought;  Wright v Tennant Caledonian Breweries Limited 1991 SLT 823;  Adair at page 55;  SmillieBain v Hugh L S McConnell Ltd 1991 SLT 691;  McBryde, Bankruptcy (2nd Edition) at paragraph 6-24.  In this case the pursuer had attempted to recall the award of sequestration before the sheriff principal.  In any event the court must scrutinise the averments with particular care. 

[7]        If the award of sequestration could not be reduced it was not competent to reduce the charge and summary warrants.  The pursuer appeared to consider that because the first defender had not responded to a notice of appeal served on them under section 81(4) of the Local Government Finance Act 1992 she had no right of appeal.  That was untrue as section 81(7)(c) provided that if the period of 2 months elapsed without a response from the local authority an appeal may be made to the local valuation committee.  The pursuer also suggested that because the first defender had not taken the enforcement steps listed in Schedule 8 to the 1992 Act they could not proceed to summary warrant.  That again was not correct;  section 209 of the Bankruptcy and Diligence Etc (Scotland) Act 2007.  The summary warrant is the authority to serve the charge. 

[8]        The first defender had a plea of competent and omitted.  Mr Barne referred me to McPhail on Sheriff Court Practice at paragraph 2.112.  In this case it appeared to be that the challenge was made on the basis that the court at Hamilton did not have jurisdiction.  Such a point could have been taken at the sheriff court hearing which made the award of sequestration or indeed at the recall hearing.  It was not.  Accordingly that aspect of the case should be excluded.  Similarly suggestions that the sheriff at Linlithgow did not have jurisdiction to grant summary warrants were not made at the relevant time.

[9]        Insofar as the note of argument contained a plea in terms of section 6 of the Prescription and Limitation (Scotland) Act 1973 that the debt due between 1999 and 2004 had prescribed there was no hint of such a plea in the pleadings.  In any event this was a tax and section 6 did not apply. 


Submissions for second defender

[10]      Ms Ower in a short submission adopted the submission of the first defender.  She advised that the second defender had entered upon her office.  Significant procedure had taken place including proceedings to recover the possession of the pursuer's house.  Eviction was about to take place.  The pursuer had failed to make any averments which addressed the consequences of the remedies which she seeks.  Three years had passed since the award of sequestration had been made.  The longer a sequestration has proceeded the more difficult the consequences of undoing the sequestration;  Arthur v The SMT Sales & Services Company Limited 1999 SC 109 at 115.

Submissions for the pursuer

[11]      The pursuer moved me to repel the preliminary pleas-in-law for the defenders.  She submitted that she was denied the opportunity to appeal the award decision of the sheriff.  She had marked an appeal and a hearing had been set for 20 July 2010.  However on 9 July 2010, while she was on holiday, the temporary sheriff principal had refused the appeal without a hearing.  This was to her prejudice.  She cited Lord Diplock in the Attorney General v Times Newspapers Limited 1974 AC 273 in support of her argument.  This she said amounted to exceptional circumstances supporting reduction. 

[12]      The pursuer referred me to the legislation regarding an occupier's liability to pay council tax set out in the Council Tax (Administration and Enforcement) (Scotland) Regulation 1992.  She did not have a right of appeal to the valuation appeal committee because the first defender failed to give any written response to her notice.  The first defender had obtained 10 summary warrants against her but had failed to comply with the provisions of Schedule 8 of the 1992 Act.  They had created an account in the name of the pursuer and had transferred all of the charges owed by the tenant into this account.  They had done this without reference to her.  She had advised the first defender that the property was leased to tenants in writing on 27 August 2007.  There was nothing in the 1992 Act or in the 1992 regulations which allowed the first defender to transfer the account.  Accordingly their actions amounted not only to malfeasance in public office but to a fraud on the pursuer's estate. 

[13]      Turning to the charge for payment the pursuer said that it was null and void as the first defender had failed to comply with any of the diligences set out in the 1992 Act or the regulations.  Moreover the council tax charges for the years 1999 to 2004 were extinguished under section 6 of the Prescription and Limitation (Scotland) Act 1973.

[14]      So far as the reduction of the award of sequestration is concerned, the pursuer referred me to Lord Hodge's opinion in Aitken v Aitken at paragraph 6.  She submitted that she had been deprived of a remedy.  She submitted that actions of reduction were competent in exceptional circumstances;  Goudie, The Law of Bankruptcy (4th Edition) page 147.  In this case she submitted that the award was "impetrated by fraud because it was based on the fraudulent written statement lodged with the court, by the first defender, when making applications for summary warrants, against the pursuer, given that they had failed to comply fully with the requirements of the 1992 Act and the 1992 regulations.  Further that the courts were misled into believing that the debt, being the liability of the tenant, was that of the pursuer.  What followed after that was clearly a miscarriage of justice".  The pursuer submitted that the court had a wide discretion to reduce a sequestration under section 17 of the 1985 Act and that a remedy was available even where an alleged debtor had failed to take action to prevent the sequestration from being constituted;  Bain  v Hugh L S McConnell LtdWright v Tennant Caledonian Breweries Ltd 1991 SLT 823 per Lord President Hope.  She submitted that the first defender was not a qualified creditor of the pursuer as she did not live within the jurisdiction of West Lothian.  She referred me to a number of cases including Patricia James v Glasgow City Council [2012] CSOH 5. 

[15]      She further submitted that the pursuer had not been given a fair hearing in determination of her civil rights and obligations under article 6 of the Human Rights Act 1998.


Discussion and decision

[16]      The pursuer first complains that the temporary sheriff principal should not have refused the appeal in chambers before the date assigned for the appeal and without giving her an opportunity to submit written material in support of the appeal.  There is no merit in this point.  The problem was that the appeal was incompetent.  The proper course, which the pursuer ultimately took, was to seek recall under sections 16 and 17 of the 1985 Act.  The temporary sheriff principal was quite correct to refuse the appeal as incompetent.  No written material or submissions that the pursuer could make would alter the fact that the appeal was incompetent. 

[17]      The pursuer accepts that in order to make out a case for the reduction of an award of sequestration or of the summary warrants or charge she has to make out a case of exceptional circumstances.  In the written note of argument she alleges fraud and submits that this amounts to exceptional circumstances.  It is certainly clear on the authorities that fraud is one of the recognised, indeed the classic, means of establishing exceptional circumstances that would justify the court in exercising its discretion to reduce an award of sequestration. 

[18]      While these arguments were made in the note of argument and in oral submissions, the pursuer's written pleadings are silent on the issue of fraud.  In Smillie v Olympic House Ltd Lord Drummond Young at paragraph 6 said:

"When fraud is averred specific averments are required to explain precisely how the fraud is said to have taken place.  Those averments must indicate the person or persons responsible and they must be sufficient to support the inference that those persons knew they were making false statements, or were reckless as to the accuracy of the statements they made".


No such averments are to be found within the pleadings.  For this reason alone the first defender' motion must succeed.  However in deference to the submissions that were made I should deal with the argument of fraud that was presented in the pursuer's note of argument and also some of the other submissions in support of the pursuer's case. 

[19]      Fraud is of course a very serious matter;  it is a crime.  Even if no criminal proceedings have been taken or are contemplated averments of fraud are sufficiently serious for the court to exercise great care in dealing with such allegations.  It is for this reason, amongst others, that the court require detailed averments of fraud to be made so that no one is in any doubt of the nature of the allegations that have been made against them. 

[20]      The foundation of the allegation of fraud is a suggestion that the first defender submitted a fraudulent written statement with the court.  There is no basis for this allegation.  The mere fact that the first defender did not accept the pursuer's protestations that she is not liable for payment of the tax does not render a statement that she is liable for payment fraudulent. 

[21]      The pursuer also submits that the summary warrants obtained by the local authority only authorise the diligences narrated in Schedule 8, paragraph 2(4) of the 1992 Act.  Paragraph 2(2) of Schedule 8 provides the sheriff, on the application of the local authority, may grant a summary warrant authorising the recovery by any of the diligences mentioned in paragraph 3.  These are an attachment, a money attachment, an earnings attachment and an arrestment and action of furthcoming and sale.  This argument is essentially on all fours with the argument presented by the petitioner in Chaudhry v The Advocate General for Scotland 2013 SLT 548.  In that case the petitioner sought to suspend the summary warrant, the charge for payment and the petition for sequestration.  His argument was, as Lord Tyre described, straightforward.  HMRC had sought the summary warrant from the sheriff under section 128 of the Finance Act 2008.  Section 128(7) specifies the forms of diligence that may be used by HMRC to recover the sums for which the summary warrant has been granted.  They are similar to those in paragraph 3 of Schedule 8 of the 1992 Act and do not include sequestration.  

[22]      As Lord Tyre points out (paragraph 25) there has been a change which was brought about following the Scottish Law Commission report on Poinding and Warrant Sale (The Stationery Office 2000; Scottish Law Commission No.177).  These changes are encapsulated in the Bankruptcy and Diligence etc (Scotland) Act 2007.  Lord Tyre noted that one of the consequences of the change is to open to summary warrant creditors the additional avenue of sequestration.  He clearly had doubts as to whether or not this was the intention of the Scottish Parliament but he was satisfied for the reasons given by him that this was indeed the effect. 

[23]      I see no reason to differ from Lord Tyre's analysis in Chaudhry.  Section 209 of the Bankruptcy and Diligence Etc (Scotland) Act 2007 clearly provides that a summary warrant is a decree or document of debt for the purposes of serving a charge.  Accordingly I am satisfied that it was open to the first defender, on the strength of the summary warrants, to serve a charge on the pursuer.  Once the days of a charge had expired apparent insolvency was constituted and the first defender were entitled to present the petition for sequestration. 

[24]      The pursuer is correct in saying that the courts have a discretion as to whether or not to grant a reduction of an award of sequestration.  However she is incorrect in saying that the discretion is exercised under section 17 of the 1985 Act.  That refers to recall of the sequestration and not to reduction which is a different process.  She goes on to submit that the fact that the first defender were not a qualified creditor of the pursuer is a factor which should be taken into account in determining the exercise of discretion.  However the authorities which she cites for this proposition all relate to recall of sequestration and not to reduction.

[25]      Even if it were open to the court to consider reduction in this case there are formidable obstacles not least of which is the time which has elapsed since the award of sequestration and what has occurred in the meantime.  The second defender has entered into her office.  Steps have been taken to recover property in order to satisfy the pursuer's debts.  Specifically they have sought and obtained possession of the property and eviction is to follow.  In Arthur v The SMT Sales & Service Co Ltd the First Division held that the lapse of time since the pursuer was made aware of the fact of sequestration was fatal to his attempt to have it reduced.  The time period there was significantly longer than in these proceedings but the observations of the court are significant.  The court referred to the complexity and unfortunate consequences of attempting to undo an award of sequestration.  Here the second defender is substantially into her office and taking steps to recover property.  As the First Division noted in Arthur in those circumstances the court would require averments of wholly exceptional circumstances to make a relevant case for reduction.

[26]      Insofar as part of the pursuer's case is founded on the alleged lack of jurisdiction of the sheriff court in granting the award of sequestration that could and should have been taken at the very least at the time of recall.  In my opinion it is too late now to argue that the court did not have jurisdiction and if it were necessary to do so I would have sustained the first defender' plea of competent and omitted.

[27]      There is no plea that certain of the debts have prescribed under the Prescription and Limitation (Scotland) Act 1973.  In any event the debt is a tax which is ordinarily not caught by the provisions of section 6. 

[28]      I shall sustain the first, second and third pleas-in-law for the first defender and the first plea-in-law for the second defender.  I shall repel the pursuer's pleas-in-law and dismiss the action.  I shall reserve the question of expenses.


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