In this case, a trustee sought reduction of certain dealings by a debtor in relation to properties he owned at the time of his sequestration.  Those dealings included granting a standard security over four of his properties in favour of the defender company, Medwin Investments Limited, and granting dispositions in favour of the same company in relation to three other properties. 

The properties had all vested in his trustee in terms of the Bankruptcy (Scotland) Act 1985.  However, and very unfortunately, the trustee’s appointment wasn’t recorded in the register of inhibitions.  I say “unfortunately”, because that led to confusion about whether, and if so when, the three year statutory protection broadly equivalent to an inhibition had started to run.  Without that confusion, the dispute might not have ended up in court.

In the course of resolving the dispute, Lord Jones interpreted the relevant provisions of the 1985 Act and the Conveyancing (Scotland) Act 1924.  His examination is interesting in that regard, and worth closer consideration (or at least filing away in a handy place for future reference).  On the particular facts of the case, he ultimately concluded that the trustee had lost the statutory protection by the time the debtor sold his properties to the defender company.

However, the defender had been aware of the debtor’s sequestration at the time of the various transactions.  On that basis, and without having to rely on the statutory protection which had been lost, Lord Jones ordered the reduction of the transactions on the grounds that the defender was not a bona fide purchaser.

What began and proceeded through the courts as a complicated factual and legal dispute in relation to statutory interpretation, was ultimately decided by a very simple and famously expressed legal principle – “offside goals are disallowed”.

Elizabeth G Mackay v Medwin Investments Limited [2015] CSOH 139