This item was published during the term of a previous administration that ended in April 2007
Poindings and Warrant Sales Discussion Paper published today
ISSUED ON BEHALF OF THE SCOTTISH LAW COMMISSION
Views on the poinding of the debtor's goods in his house or business premises and their sale and on other aspects of debt enforcement procedure are being sought on a Discussion Paper Poinding and Sale: Effective Enforcement and Debtor Protection (No 110) issued by the Scottish Law Commission.
The Commission will hold a news conference to mark the publication of the discussion paper at 1100 hours on Tuesday, 30 November at 140 Causewayside, Edinburgh.
In response to a Bill to abolish poindings and warrant sales introduced by Mr Tommy Sheridan MSP, the Minister for Justice requested the Commission to report (after consulting relevant interests) on whether the conclusion in its 1985 Report on Diligence and Debtor Protection that poinding and sale should not be abolished remains valid, and whether the diligence could be replaced by alternative enforcement measures which would be no less effective.
Poinding and sale involves officers of court going to the debtor's premises and poinding (ie inventorying and valuing) non-exempt goods situated there. If the debt remains unpaid the poinded goods may be sold, with the proceeds being used to pay the debt. For ordinary debts the debtor must first be charged-served with a formal demand to pay, and the creditor has to apply to the sheriff for warrant to sell the poinded goods. These steps are not required where council tax and other taxes are being enforced by poinding and sale under summary warrant.
Poinding and sale is still used extensively against individual and business debtors. In 1998 some 6,300 ordinary poindings were executed and nearly 400 sales carried out. Over 17,000 poindings and 119 sales are used to enforce summary warrants. The sharp drop in numbers from poinding to sale is due partly to debtors paying the debt or the creditors abandoning pursuit.
A survey of 42 other legal systems (22 in Europe and 20 in the Commonwealth) reveals that all allow attachment (equivalent to poinding) and sale of commercial and household goods. Debtors and their families are protected by exemptions of goods needed for a basic if frugal standard of living. The existing case law on the European Convention on Human Rights shows that such procedures, if properly carried out, do not breach the Convention.
Main options for reform
The Commission's provisional view is that poinding and sale should be retained for goods in non-residential premises, such as commercial goods. It has been estimated that about one third of poindings and two thirds of warrant sales under court decrees apply to commercial goods. The considerations of morality and social policy applying to the poinding of goods in dwellinghouses are largely irrelevant. Creditors regard poinding and sale of commercial goods as relatively effective. Its abolition would deprive some creditors of the only available or effective method of enforcement against businesses. Bankruptcy sequestration is not competent if the debts are below £1,500. Moreover, sequestration forces a debtor to cease trading and liquidation of a company dissolves it. These insolvency proceedings are much more expensive than poinding, particularly if proceedings have to be taken in another part of the United Kingdom or a foreign country because the company is registered there.
For domestic premises, the Commission seeks views on whether poinding of goods there should be abolished or retained with reforms to give additional protection to debtors. At present the Debtors (Scotland) Act 1987 exempts a wide range of basic household furnishings. The majority of domestic poindings relate to entertainment items (eg TVs, videos, and hi-fis), microwave ovens and other electrical household appliances (62 per cent of items) as well as furniture (30 per cent of items). A very important issue is whether all or most of these articles should be exempt, thereby restricting poinding to cars, antique furniture or other genuine luxury items. Such a change would increase debtor protection very substantially but at the cost of substantially reducing the effectiveness of poinding as a spur to payment. Another issue on which views are sought
is whether a poinding or a sale should be prohibited unless the likely proceeds of selling the goods are sufficient to pay a substantial proportion of the debt and expenses.
Poinding and sale against individuals is generally a diligence of last resort. It is used where the creditor does not have information as to the debtor's employment or bank account and so cannot use arrestment. The Commission asks whether debtors and others should be required to provide such information and whether debtors should be required to attend court to be questioned about their income and assets. Effective and socially acceptable sanctions to enforce compliance are difficult to devise since arrest and civil imprisonment seem worse than poinding.
The paper puts forward several suggestions for improving time to pay directions and orders. Debtors do not make full use of these measures which give them time to pay their debts by instalments free from the threat of diligence. Increased use could decrease the number of debtors subject to poinding.
In 1985 the Commission recommended the introduction of debt arrangement schemes. These would have enabled an individual or small trader with multiple debts to make regular payments to an administrator who would in turn pay the creditors. The multiple debtor would get time to pay by instalments, and in appropriate cases the debts could be discharged on payment of less than the full amount. Debt arrangement schemes were not included in the Debtors (Scotland) Act 1987. The paper suggests that such schemes should be reconsidered.
Invitation for views
The Commission would welcome views on the questions in the discussion paper. Those wishing to comment may obtain a copy free of charge from the Scottish Law Commission, 140 Causewayside, Edinburgh EH9 1PR (Tel 0131 668 2131, Fax 0131 662 4900, e-mail firstname.lastname@example.org). Consultees should not feel obliged to comment on all the issues. Comments are invited by 28 January 2000.
1. Copies of the discussion paper will be available at the news conference or can be collected thereafter by the media from the Commission's offices at 140 Causewayside, Edinburgh.
2. The Scottish Law Commission was set up by the Law Commissions Act 1965 to promote the reform of the law of Scotland. The Chairman is the Honourable Lord Gill. The other Commissioners are Dr Eric Clive CBE, Mr Patrick Hodge QC, Professor Kenneth Reid and Mr Niall Whitty.
3. Further information can be obtained from Dr David Nichols at the above address, by telephone (0131 668 2131) or by e-mail ( email@example.com.).
News Release: SE1473/1999
30 Nov 1999