Vol. 8.1, March 2004


Comparative Case Notes: Burnett's Trustee v. Grainger as an Example

The EJCL has not yet published any case notes under leading decisions in which the facts are summarised, a summary of the decision is given and the case is put in a more general or comparative perspective. So far, we have published articles aimed at analysing a particular field of law or specific legal problems. Why not also examine a particular area of the law from the viewpoint of a court decision?

A good beginning would be the recent case of Burnett's Trustee v. Grainger, a Scottish case, decided by the House of Lords on 4 March of this year (http://www.parliament.the-stationery-office.co.uk/pa/ld200304/ldjudgmt/jd040304/burnet-1.htm). In this decision, a sharp distinction is made between personal and real rights, particularly the personal right of a buyer resulting from a contract of sale, which entitles the buyer to transfer of an immovable, and the real right that the buyer acquires after transfer. Before the transfer the seller is the owner and the property remains part of his estate in the case of insolvency even if the buyer already paid the purchase price. From the viewpoint of a civil lawyer whose property law is based on the delivery system this is nothing strange. For English lawyers, this is different. Lord Hoffmann, e.g., remarked:

3. I am however by no means satisfied that this state of the law is either desirable or a necessary consequence of fundamental principles of Scots law. In Heritable Reversionary Company Ltd v Millar (1892) 19 R (HL) 43, 52 Lord Macnaughten began his opinion with the words:
'My Lords, if this House were compelled to uphold the decision under appeal, I rather think I should be inclined to doubt whether the law of bankruptcy in Scotland was in a condition altogether satisfactory.'
4. In the present case, I do feel compelled to uphold the decision of the Extra Division but share the view of its consequences which Lord Macnaughten expressed with such studied understatement. It results in the creditors of Mrs Burnett being unjustly enriched at the expense of the Rev. and Mrs Grainger and I can see no compelling ground of logic or policy which justifies such a result.

Burnett's Trustee v. Grainger shows a close resemblance to Sharp v. Thomson, decided by the House of Lords on 27 February 1997 (http://www.parliament.the-stationery-office.co.uk/pa/ld199697/ldjudgmt/jd970227/sharp01.htm). In that case, it was decided that when the buyer had paid the purchase price, but the property had not yet been transferred to him, the beneficial interest with regard to the immovable property no longer belonged to the seller and that, consequently, the buyer was not affected by the crystallisation (fixation) of a floating charge (a general non-possessory security interest, which covers all assets, present and future). After crystallisation, the buyer could still become the owner upon registration of the deed of transfer. What is the difference between the two cases? From a strictly formal point of view, the difference is that Burnett's Trustee v. Grainger is about the interpretation of Section 31(1) Bankruptcy (Scotland) Act 1985, whereas Sharp v. Thomson is about the meaning of Section 53(7) Insolvency Act 1986. From a substantive viewpoint much more is at stake. For a brief comment, see Scots Law News (http://www.law.ed.ac.uk/sln/) page 338 (on the views of Lord Hobhouse, one of the Law Lords who decided Burnett's Trustee v. Grainger).

The Scottish legal system is 'mixed', which means that some areas of the law are rooted in Roman law, whereas other areas are influenced by English law. From the viewpoint of English law, the law of Scotland, although expressed in English, is as remarkable as any continental civil law system. See, e.g., Lord Hobhouse's remarks (paragraph 53) in Burnett's Trustee v. Grainger: 'But what does surprise me is that Scotland, now a highly developed economy, should have a land law which is still based on the judicial development, albeit sophisticated, of the laws of Rome and the mediaeval Feudal system.' With regard to immovable property law, Scottish law - unlike English law - uses the concept of dominium. After 28 November 2004, those who have dominium utile will become full owners; see Section 2 of the Abolition of Feudal Tenure (etc.) Scotland Act 2000 (http://www.scotland-legislation.hmso.gov.uk/legislation/scotland/acts2000/20000005.htm). The fragmentation that exists in the common law - legal entitlements next to equitable entitlements - is unknown in both old and new Scottish property law. The reference in Sharp v. Thomson to 'beneficial ownership' therefore gave rise to strong criticism, resulting in a consultation paper published by the Scottish Law Commission (Discussion Paper No. 114 on Sharp v. Thomson, July 2001; http://www.scotlawcom.gov.uk/index-1.htm Publications Discussion Papers No. 114). A summary of the proposals (abolishing the rule in Sharp v. Thomson and remedying the problems, which the House of Lords tried to solve by introducing the law of equity in Scottish law) can be found in paras. 1.9 ff. of this Discussion Paper.

An editorial is not the right place to analyse this case in more depth, but I hope to have made clear that the case deserves such an analysis, very much like so many other cases. I would like to invite authors to send us case notes, in which new (but also older) decisions are discussed and put in a comparative perspective.

Editorial announcements

The editorial board of EJCL would like to thank the law faculties of Tilburg, Utrecht and Maastricht for extending their financial support. To make clear that we greatly appreciate the continued support, from now on you will find links to these faculties on our home page.

Our sponsoring faculties are so enthusiastic about EJCL that we have been asked to broaden our aim and scope even further and include not only the methodology of comparative law, comparative private law, as well as (comparative) IT and law, but also comparative public law. Very good arguments can be put forward for doing so. First of all, the boundary between private law and public law will frequently be blurred even within a given legal system; an example are government contracts and the legal consequences of privatisation and deregulation. Furthermore, where this boundary lies may differ from system to system. Private and public law complement one another. Finally, modern private law undergoes the influence of what is called 'constitutionalisation': the horizontal effect of basic human rights. We therefore decided to further extend our aim and scope and hope that our journal will also become a platform for comparative public law discussions.

In this issue, we publish four articles: 'Le droit social comparé' by Otto Kaufmann, 'The Limits of the Duty to Perform in the Principles of European Contract Law' by Richard Backhaus, 'The Constitutionalization of Contract Law: Something New under the Sun?' by Olha Cherednychenko and 'Executive Discretion and Article 356 of the Constitution of India: A Comparative Critique' by K. Jayasudha Reddy and Joy V. Joseph. We also publish three book reviews.

Sjef van Erp,

To Issue Archives Search Comments Help EJCL home