Burnett’s Trustee v Grainger and Another: HL 4 Mar 2004

A flat was sold, but before the purchasers registered the transfer, the seller was sequestrated, and his trustee registered his own interest as trustee. The buyer complained that the trustee was unjustly enriched.
Held: The Act defined the estate of the person sequestrated, and vested those assets in his trustee for the benefit of the sequestrator. The purchaser who failed to register his interest lost it. ‘In the present case the respondent has done nothing more than take advantage of the mistake or error of his rivals, the appellants, in failing to get off their mark and record the disposition from Mrs Burnett promptly. Even once their agents had become aware that her estate had been sequestrated and that the respondent had been appointed as permanent trustee, for whatever reason, they failed to act. In retrospect at least, that was a mistake, since it allowed the respondent to record his notice of title before the appellants. As the authorities show, even although the respondent was well aware that the appellants held a disposition from Mrs Burnett, he was fully entitled to take advantage of their mistake by recording the notice of title and so completing the diligence by acquiring the real right in the subjects for the creditors.’
References: 2004 SCLR 433, 2004 SC (HL) 19, 2004 SLT 513, 2004 GWD 9-211, [2004] UKHL 8, Times 08-Mar-2004, [2004] 11 EGCS 139
Links: House of Lords, Bailii
Judges: Lord Bingham of Cornhill, Lord Hoffmann, Lord Hope of Craighead, Lord Hobhouse of Woodborough, Lord Rodger of Earlsferry
Statutes: Bankruptcy (Scotland) Act 1985 31(1), Abolition of Feudal Tenure etc (Scotland) Act 2000, Conveyancing (Scotland) Act 1924 5
Jurisdiction: Scotland
This case cites:

  • Cited – Heritable Reversionary Company Ltd v Millar HL 9-Aug-1892 ((1892) 19 R (HL) 43, , [1892] AC 598, [1892] UKHL 2)
    Where the bankrupt had been the trustee of property, the bare legal title to that property did not form part of ‘the whole property of the debtor’ and so did not vest in the permanent trustee in bankruptcy under the section. ‘My Lords, if this House . .
  • Cited – Allan’s Trustes v Lord Advocate HL 1971 (1971 SC (HL) 45, , [1970] UKHL 7, [1970] TR 417, 1971 SLT 62)
    The House set out the requirements for a declaration of trust. The truster must have an intention to make himself trustee of his own property and must also do something equivalent to delivery or transfer of the trust fund. The origin of trusts in . .
  • Distinguished – Sharp v Thomson HL 1997 (1997 SC (HL) 66, , [1997] UKHL 60, [1998] BCC 115, 1997 SC (HL) 66, 1997 SCLR 328, 1997 GWD 9-364, [1997] 1 BCLC 603, 1997 SLT 636)
    A floating charge was given over the whole of a company’s property which might from time to time be ‘comprised in our property and undertaking’. The charge terms echoed the section which allows a company to create a charge ‘over all or any part of . .
  • Cited – Rodger (Builders) Ltd v Fawdry 1950 (1950 SC 483)
    Where the owner of land sells it, but, knowing the purchaser not to have registered the title sells it again to a purchaser who then knowingly seeks to register the second transfer, the court will disallow the transfer: ‘offside goals are . .
  • Cited – Bell v Gartshore IHCS 1737 (2 Ross’s LC 410, (1737) M 2848;)
    The court adopted the principle that unrecorded personal deeds, such as a disposition, could not affect feudal rights. . .
  • Cited – Douglas v Adjudging Creditors of Kelhead and sub nom Douglas v Stewarts 1765 ((1765) 3 Ross’s LC 169, M 15616)
    In 1705 Sir William Douglas bound himself on marriage to provide the estate of Kelhead in favour of himself and the heirs-male of his body. He did not carry out that obligation, but in 1724 he executed a strict entail of the lands, which was . .
  • Cited – Young v Leith IHCS 1844 ((1848) 2 Ross’s LC 81, (1844) 6 D 370)
    Unrecorded instruments of sasine were nullities, but the granter of the sasine was not entitled to plead the nullity: ‘. . I am very glad that the result is such as my noble friend proposes, and that now, on the authority of this House, it will be . .
  • Cited – Earl of Fyfe v Duff IHCS 1861 ((1861) 23 D 657)
    The Earl of Fife and his trustees sought a declarator that they had power to sell certain lands and to receive the price and use it at their pleasure. The defenders included the heirs called to the succession by various deeds. Some of the heirs . .
  • Cited – Earl of Fyfe v Duff HL 1862 ((1862) 24 D 936, (1863) 4 Macq 469)
    The Earl sought a declarator to allow the sale of land. Others said it was subject to rights of ntail. The court referred to an uninfeft proprietor as a ‘personal fee’. Voluntary transmission of feudal subjects is effected by a dispositive act . .
  • Cited – M’Adam v M’Adam IHCS 1879 ((1879) 6 R 1256)
    The house referred to ‘the owner of a personal right to land’ to describe the position of an uninfeft proprietor. . .
  • Cited – Stewart v Jarvie IHCS 1938 (1938 SC 309)
    The permanent trustee acts under the statute for each and every one of the creditors of the sequestered individual, not for himself as an individual. . .
  • Cited – Young v Leith HL 1847 ((1847) 9 D 932)
    The only way in which a disponee can be sure of preventing a third party, such as an adjudging creditor, from acquiring a real right to the lands which will prevail against his right is by registration. ‘The proper object and effect of every valid . .
  • Cited – Orr v Mitchell 1893 ((1893) 20 R (HL) 27)
    Until the interest of the purchaser has been recorded or registered the seller remains vested in the real right. His relationship with the purchaser is controlled by the rights and obligations which were created by their contract. When the . .
  • Cited – Henderson v Dawson 1895 ((1895) 22 R 895)
    An inhibition which is laid on after the missives have been concluded but before the date of the disposition, apparently striking at the sale, may cause difficulty in a question with a subsequent purchaser . .
  • Cited – Dryburgh v Gordon 1896 ((1896) 24 R 1)
    A search against land which produces an adverse entry ex facie of the record, even if it relates to an inhibition which was laid on after the missives were entered into, is not a clear search. . .
  • Cited – Bell of Blackwoodhouse v Gartshore 1737 (1737 M 2848, 5 Br Suppl 198, 2 Ross’s LC 410)
    Alexander Oliphant bought a tenement in Kelso which was being sold by the adjudging creditors of William Chatto. Without becoming infeft, in 1730 Oliphant disponed the decree of sale to Chatto’s son, who also was not infeft. Two years later Chatto . .
  • Cited – Mitchells v Ferguson 1781 (3 Ross’s LC 120, 1781 M 10296, Hailes 879)
    In 1768 William Donald sold his house to Agnes Carson but, pending payment, the disposition was held by Donald’s man of business. As found by the Lord Ordinary (Monboddo), the price was paid by a certain William Ferguson, on the basis that Carson . .
  • Cited – Wylie v Duncan 1803 (1803 M 10269, 3 Ross’s LC 134)
    Wylie sold certain tenements to Archibald who took infeftment on the disposition. On the same day as he received the disposition Archibald granted a letter to Wylie binding himself to resell the tenements to Wylie on six months’ notice. The . .
  • Cited – Mansfield v Walker’s Trustees; Inglis v Mansfield 1833 ((1833) 11 S 813, (1835) 1 S and Macl 203)
    The bankrupt had undertaken to grant a bond in security of a loan over lands of which he was the proprietor. The description of the lands in the bond was of a part of the lands only, with the result that the security was inadequate. The question was . .
  • Cited – Buchan v Farqhuarson 1797 (1797 M 2905)
    . .
  • Cited – Colquhouns’ Trustee v Campbell’s Trustees 1902 ((1902) 4 F 739)
    Law agents had failed to record two bonds and dispositions granted by the owner of a property in Glasgow in security of loans which their clients had made to him. They then obtained and recorded an ex facie absolute disposition of the same subjects . .
  • Cited – Forbes’s Trustees v Macleod 1898 ((1898) 25 R 1012)
    The trustee asserted title in the sequestration of Mr Carrick, to whom a bond and disposition in security granted by a third party had been assigned in security of an advance which he had made to the trustees. Mr Carrick’s title to the subjects . .
  • Cited – Bank of Scotland v Hutchison Main (in liquidation) HL 6-Feb-1914 (1914 SC (HL) 1, , [1914] UKHL 3, [1914] AC 311, (1914) 1 SLT 111)
    A mere declaration of intent is not sufficient to create a trust, as there must be a clear and identifiable declaration of trust – an express declaration. . .
  • Cited – Gibson v Hunter Home Designs Limited SCS 7-Nov-1975 (1976 SC 23, , [1975] ScotCS CSIH – 1)
    A disposition had been executed but not delivered.
    Held: Entry to the subjects and payment of the price, referable to the terms of the missives, did not instruct the existence of a trust pending delivery of the disposition to the purchaser. . .
  • Cited – Ireland v Neilson 1755 ((1755) 5 Br Supp 828)
    A debtor had acquired the land by fraud.
    Held: the adjudgers were affected by the debtor’s fraud, even if a purchaser would not have been. . .
  • Cited – Gibb v Livingston 1763 ((1763) 4 Br Supp 897)
    . .
  • Cited – In re Re Rose, Midland Bank Executor and Trustee Company Limited v Rose ChD 1949 ([1949] Ch 78)
    The testator handed a transfer of the relevant shares to the donee, Mr Hook, together with the relevant certificates. The transfer had not been registered by the date of his death.
    Held: Equity will not compel an imperfect gift to be . .
  • Cited – Russell v Ross’s Creditors; Pierse v Ross 31-Jan-1792 (31 January 1792 FC, 1792 M 10300, 3 Ross’s LC 177)
    . .
  • Cited – Black and Grant v Gordon HL 1794 ((1794) 3 Pat 317)
    An entail had been recorded in the register of tailzies but infeftment had not followed. The House rejected the appellants’ argument that the adjudging creditors could not claim to have relied on the title as it stood in the register of sasines. . .
  • Cited – Thomson v Douglas, Heron and Co 15-Nov-1786 (15 November 1786 FC, 1786 M 10229)
    Thomson had disponed land to a man of business to sell and apply the proceeds for the behoof of Thomson. The disponee omitted to insert this qualification in the procuratory of sasine and it did not appear on the register. He then proceeded to . .
  • Cited – Buchan v Farquharson 24-May-1797 (24 May 1797 FC, 1797 M 2905, 3 Ross’s LC 137)
    On 28 June 1788 Robert Gordon assigned a personal bond for 3000 merks to the Reverend Robert Farquharson. Gordon was sequestrated on 19 July and the assignation was intimated on 4 August, but Gordon’s estate did not vest in the trustee in bankruptcy . .
  • Cited – Cormack v Anderson 1829 ((1829) 7 S 868)
    . .
  • Cited – Tod’s Trusteess v Wilson 1869 ((1869 ) 7 M 1100)
    A trustee’s right and the right of the purchaser, heritable creditor or assignee were ‘simply two independent rights running a race against each other’ . .
  • Cited – Lord Melville v Paterson 1842 ((1842) 4 D 1311)
    A question arose about the application of the vesting provisions of the 1839 Act in a case where the debtor had died. Citing Bell in support, the Lord Ordinary (Ivory), whose decision was affirmed by the Second Division, referred to the position in . .
  • Cited – Alex Brewster and Sons v Frank Mitchell Caughey and others SCS 2-May-2002 (, , [2002] ScotCS 123, 2002 GWD 15-506)
    If a purchaser becomes aware ‘that there may be a prior purchaser in the same queue for Register House he must ask the latter if he be such a purchaser and in the event of a positive, correct answer yield place to him’ . .
  • Appeal from – Michael James Meston Reid (Permanent Trustee on the Estates of Carlene Rose Burnett) v Harvey Leighton Grainger and Moira Elizabeth Grainger SCS 15-May-2002 (,
    . .

This case is cited by:

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Last Update: 22 September 2020; Ref: scu.194162