Scottish Court of Session Decisions

Lord President—In this case a motion has been made that the defender should be ordained to find caution as a condition of being allowed to proceed with his reclaiming note. The only reason that was given for the motion being granted was that the judgment in the Outer House was against the defender, and that the defender had executed a trust deed in favour of his creditors. I have looked into the authorities, and it is not easy to extract from them any rule other than the general doctrine that in a case of insolvency a pursuer is usually bound to find caution but a defender is not. There may, of course, be special circumstances, but in this case there are no special circumstances. The defender has been found to be wrong by the Lord Ordinary. He has taken a reclaiming note, which is his right. To compel the defender to find caution would in effect be to force him to acquiesce in the judgment against him. I do not think that we can grant this motion unless your Lordships are prepared to go the whole length of saying that wherever a defender has granted a trust deed for creditors he must as a general rule be ordained to find caution. That does not seem to me to be an expedient general rule. There are obvious distinctions between the position of a person who has been sequestrated and the position of a person who has granted a trust deed. Accordingly, there being no special circumstances brought to our knowledge, I think the reclaiming note ought to be allowed to proceed in the ordinary manner.

Lord Kinnear—I agree. I would only say in addition that it would, in my opinion, require a very exceptional ground to justify an order upon a defender to find caution merely because he has granted a private trust deed for creditors. I know of no authority for so restricting the right of defence. The distinction between an insolvent who has become bankrupt and an insolvent who has granted a private trust deed is vital. In the case of a bankrupt his whole estate vests in the trustee to the entire exclusion of the diligence of creditors, and therefore if a contending litigant obtains a decree for expenses he cannot enforce it against his opponent or his estate unless the trustee in bankruptcy has made himself a party to the suit. But in the case of an insolvent who grants a trust deed his property is not protected in any way but is still open to the diligence of any creditor who may not have acceded, and even to the diligence of the creditors who have acceded so long as any other creditor holds out.

We cannot, in my opinion, compel a defender who has not been divested of his estate, however little, to find caution at the instance of the very person who has called him into Court, merely because his circumstances make it doubtful whether he will be able to meet the pursuer's costs if he is unsuccessful. He is still entitled to say that decree shall not pass against him until he has been heard.

Lord M'Laren—and Lord Pearsonconcurred.