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ENFORCEMENT OF CIVIL OBLIGATIONS IN SCOTLAND: ANALYSIS OF CONSULTATION RESPONSES
PART 5 TYPES OF ENFORCEMENT
A DILIGENCE ON THE DEPENDENCE
Q5A.1 Consultees are invited to comment or to indicate their support for the reforms proposed.
5.1 There is substantial support for the reforms proposed, with a variety of comment from respondents across all sectors. The Committee of Scottish Clearing Banks support the reforms but are concerned that the reform proposed at paragraph 5.63 in the consultation document may mean that banks will incur additional costs in processing arrestments. They propose that pursuers using such remedies should be obliged to contribute towards these costs.
5.2 Differing views are offered on reducing the days between service of the arrestment and action. Whilst one advice organisation support the reduction to five days, finance and legal organisations wish to see either 14 days or a 21 day period allowed.
5.3 Whilst supporting the proposed reforms, a number of legal sector bodies call for increased resources for the courts which will be necessary arising from the reforms.
Q5A.2 In the event that alternative arrangements for attachment of corporeal movable pass into law, should provisional and protective measures be applied?
5.4 The consensus view is that provisional and protective measures should be applied.
B ADMIRALTY ARRESTMENT
Q5B.1 Consultees are invited to comment or to indicate their support for the reforms proposed.
5.5 There was broad support from respondents for the proposed reforms, however some respondents indicated that questions of detail remain to be answered. While respondents did not consider that the pursuer should be responsible for the safety of the ship or the upkeep of the crew, they did consider that specific measures were needed to address this point.
5.6 Legal sector respondents raised the following questions:
"With regard to 5.85, the demise charter could be for six months and the ship worth 1 million pounds. The debt owed during the demise charter could be for 100,000 and could be defended with the case carrying on for a number of months.
1. Does the ship remain arrested when the charter runs out?
2. Can the ship be arrested during this period for a debt of the real owner?
3. Can an arrestment fail not to be oppressive to the real owner if the demise charter's debt is small in relation to the value of the ship.
4. What happens to the ship at the end of the charter, if still under arrestment.?"
5.7 Comments were also made from three separate sources that at paragraph 5.81 the first option being service on master of the vessel was supported.
C DILIGENCE AGAINST EARNINGS
Q5C.1(a) Should current maintenance arrestments rank equally with earnings arrestments?
(b) Or should current maintenance arrestments involving child maintenance have priority over earnings arrestments?
5.8 There was broad support for current maintenance arrestments ranking equally with earnings arrestments with the exception of maintenance arrestments involving child maintenance, which should have priority.
5.9 A few respondents were of the view that the provisions of the Child Support Act 1991 are sufficient to ensure that the policy of affording priority to maintenance of children is properly protected. One individual respondent stated "most child maintenance arrestments are earnings orders served by the CSA which have priority in any event".
Q5C.2 Should student loan DEOs be treated as earnings arrestments for the purpose of a conjoined arrestment order?
5.10 There was almost universal agreement to this proposal which was seen as fair and administratively sensible.
Q5C.3 Should the fee which may be deducted from earnings by employers operating an arrestment against earning be increased to 1?
5.11 Whilst a majority of respondents were in favour of increasing the fee to 1, to at least bring the amount in line with that in England and because it was an improvement on 50 pence, most of these respondents were of the view that the sum of 1 was in itself an inadequate amount which did not reflect the true cost of operating the arrestment.
5.12 The minority of respondents, from the advice, finance and legal sectors, took the view that it would be better to abolish the fee since many employers do not in fact deduct it, and in any event the amount is such as to be of little consequence to most employers, but can be of some consequence to poorly paid debtors.
Q5C.4 Should the definition of the place of execution of an earnings arrestment or current maintenance arrestment for the purposes of a conjoined arrestment order be clarified in the 1987 Act?
5.13 There was unanimous support for clarification of this definition, in particular to assist sheriffs and sheriff clerks. A particular area where clarity is sought is the situation where a central payroll office is located outwith Scotland.
Q5C.5 Should holiday pay be aggregated in a single pay period for the purposes of determining deductions from earnings?
5.14 The majority of respondents were opposed to holiday pay being aggregated on the grounds that this has been an unfair system in the past which has caused hardship to debtors. A few respondents suggested that in addition to an amendment to the 1987 Act to prevent aggregation of holiday pay the amendment should be extended to include multiple pay situations e.g. over the Christmas period or where bonuses are applied to an employee's earnings which reflect a number of months.
Q5C.6 Are current arrangements for confidentiality marking of schedules transmitted by post satisfactory?
5.15 There was a majority view that current arrangements are not satisfactory and that mentioning earnings arrestment on the envelope can compromise confidentiality.
5.16 Suggestions were made either that a simple reference on the envelope, that it contains a court document might be made, or that it should simply say "private and confidential", and should state that if it cannot be delivered it should be returned to the sender immediately. The creditor could then instruct hand delivery.
Q5C.7 Should the copy schedule of arrestment served on the debtor provide details of the debtor's right to apply for time to pay and an application form?
5.17 Most respondents, in particular those from the advice sector, are in favour of this proposal, with some wishing to see it extended to earnings arrestments instigated through summary warrant procedure. It is also thought useful for debtors to be given information of where to go for debt advice.
5.18 Those who oppose this proposal, mainly from the legal and enforcement organisations, do so on the grounds that the debtor will already have been given adequate opportunity to apply for Time to Pay following the service of the Charge for Payment. At that time the debtor should also have been sent information about where to seek assistance.
Q5C.8 Should information about arrestments against earnings be included within a general education programme about enforcement?
5.19 There was universal agreement with this proposal which was seen as being important for debtors or potential debtors and also as possibly enabling legal proceedings to be less confusing and less prone to adjournment.
Q5C9(a) Should the arresting creditor be required to report to the court details of the efforts made when service of the copy schedule could not be effected on the debtor?
(b) Or should employers be required to transmit a copy of the schedule to their employee notifying the employee of the date on which the first deduction is to be made and the amount?
(c) Or is neither measure necessary?
5.20 The weight of responses to Q5C9 favour employers transmitting a copy of the schedule to their employee notifying them of the date on which the first deduction is to be made and the amount. The arguments for this are that this is the most effective method for ensuring that employees are aware that an earnings arrestment is in place and about to proceed. A small number of respondents favour the belts and braces approach of (a) and (b).
5.21 A minority of respondents, mainly from the legal and local authority sectors oppose (b) on the grounds that this is imposing an extra burden on employers, and also oppose (a) on the grounds that this will make no difference to the debtor and is burdening the court.
5C.10(a) Should arrestment schedules include more detailed information about the identity of the employee?
If so, what additional information should be specified where known?
5.22 There is substantial support for arrestment schedules to include more detailed information about the identity of the employee, where possible it is argued however, that no creditor should be disadvantaged through not having this information to give employers and there is therefore a view from creditor agencies that it should not be obligatory on the creditor to provide additional information.
5.23 It is reported by a number of creditor organisations that at present additional information such as work number and location, date of birth and NI number is normally given to employers where this is known, and this is stated to be useful detail. The majority of respondents to questions (b) also stated that such additional information should be specified where known. Respondents also suggested additional information could include previous addresses or positions held with employers.
Q5C.11 Should the debtor, employer and creditor be required to exchange a flow of information amongst themselves regarding employment status, earnings, deductions made and the debt outstanding?
5.24 There is not a clear cut position on this question. The arguments for making more information available centre on the view that this will improve the efficiency and effectiveness of the system and ensure that debtors, creditors, and employers are all equally aware of the situation with regard to the debt at any point in time. The arguments against change, or against certain elements of proposed change, centre on issues of privacy and confidentiality on the part of the debtor, and what is seen as an unnecessary administrative burden being put onto both creditor and employer.
5.25 There are a substantial number of organisations in favour of the exchange of a flow of information. However, the respondent's area of interest impacts on the type of information they wish to see made available.
5.26 Overall, the advice sector wish the debtor to be informed regarding the diminution of the debt, and to be able to check that deductions are being made correctly. Advice agencies do not see why employers need any more information than is already available to them, nor do they believe that it should be an absolute obligation on debtors to inform their creditors when they change employment, although some advice organisations do accept that employers should have a duty on them to notify creditors that the employee had left their employment. One advice organisation opposed any further exchange of information and questioned whether this proposal might contravene Data Protection and Human Rights legislation.
5.27 The majority of enforcement agencies and other legal sector respondents wish to see the debtor and the employer being required to inform creditors when the debtor's employment is terminated and to provide, where known, details of the new employment. Other enforcement agencies believe the current system works adequately without the need for further exchange of information.
5.28 Most of the local authority respondents support the view that creditors and employers should share information with regard to the reduction in debt and that debtors should be obliged to inform creditors of change in their employment status. There is a minority view from some local authorities that any further exchange of information would be too administratively onerous on employers. The Institute of Payroll and Pensions Management, propose that employers inform the court of a change in employment, to bring Scotland into line with England and Wales, but strongly oppose any other changes to the exchange of information which would only add to the already heavy workload of employers.
5.29 Amongst those who favoured increasing the exchange of information, views varied as to the frequency for producing a statement of debt, with six months or an annual statement being suggested. There was a view that requesting six monthly statements from creditors is too burdensome.
Q5C.12 Should efforts be made to devise arrangements for arrestments against earnings in cross-border situations?
5.30 There is general support for arrangements for arrestments against earnings in cross-border situations, which is seen as aiding recovery efforts. Only one respondent opposed this suggestion on the grounds that it was probably unnecessary given the procedures for transfer of the decree.
Q5C.13 Should non-fisherman seamen's wages continue to be exempt from arrestments against earnings?
5.31The consensus response to this question is that in a time of instant communication there is no longer any compelling reason why these wages should continue to be exempt.
Q5C.14 Should occupational pensions continue to be exempt from arrestments against earnings?
5.32 There is a majority view that it would be discriminatory to continue to exempt public sector pensions from arrestments against earnings and that therefore such exemption should cease. Some respondents questioned whether given the recent and current developments relating to pensions, the definition of earnings for attachment might need to be clarified in relation to all types of pensions. The Institute of Payroll and Pensions Management referred the Scottish Executive to the review by the Court Service in England which is updating the employer's manual on attachment of earnings - "this most useful guide for employers."
5.33 The small number of respondents in favour of continuing with the exemption argue a specific case that for those individuals on very low occupational pensions, any deduction on their pension might bring their income below income support levels but they would have no entitlement to benefits because they would be assumed to be in receipt of the pension.
Q5C.15 Should local authorities' existing ability for benefit deductions orders be adjusted to enable applications to be made prior to obtaining a summary warrant?
5.34 Most respondents supported this proposal on the grounds that it would avoid any further charges being applied to the debt, principally the 10% surcharge, and would thus help to reduce costs to those who are on the lowest benefit levels.
5.35 A minority alliance of advice agencies and enforcement agencies oppose the proposal on the ground that the requirement to obtain a warrant provides a protection for the debtor and obliges the council to evidence the debt. This gives the debtor an opportunity to enter into voluntary arrangements or to dispute liabilities. The case is argued that having "legislation guarantees a universal approach to the deductions without variation at local levels caused by political interference or differing local priorities." (William Dolier).
D ARRESTMENT AND ACTION OF FURTHCOMING
Q5D.1 Should the amount of property attached by an arrestment in execution be restricted in the manner proposed?
5.36 There is complete agreement with the proposal across all respondents in recognition of the argument that it is inequitable to attach an amount greater than that owed. A suggested figure of 5% for expenses was given by a small number of respondents.
Q5D.2 In cases where an arrestment is served in relation to an account of a debtor who is already subject to an earnings arrestment or is in receipt of social security benefits, should reform be introduced
(a) as indicated in option 1
(b) as indicated in option 2
(c) as indicated in option 3
(d) by alternative means?
5.37 Most respondents were of the view that, whilst something had to be done, this is a complex and difficult area to which there is no obvious or easy solution.
5.38 Option 1 is regarded as acceptable by the respondents from the advice sector and from some local authorities, the general position is summed up by one respondent, on the grounds that "it would appear to be the only workable solution in practical terms" (North Lanarkshire Council). A number of respondents suggested that the onus should be on the debtor to provide details of all bank accounts, with penalties for misleading information. There is also a view that setting a simple threshold figure which cannot be arrested would address practical difficulties of checking numerous bank accounts.
5.39 The weight of responses from the financial and business sector and the legal sector was opposed to all three options on the grounds that none of the three options would in their view be workable in practice. The view was put that banks in particular may find the proposals difficult to operate. A number of local authorities also questioned the practicalities of implementing options 2 and 3. There was a somewhat grudgingly expressed view from some respondents unhappy with all three options, that if any option were to be introduced it should be option 1.
5.40 Many respondents who accepted option 1 also believe option 2 is worth pursuing as "benefits paid direct into bank accounts can be clearly identified" (Glasgow Anti-Poverty Project). Advice agencies point out however that this option does not address the situation of individuals or families on low incomes who are not in a position to claim benefits.
5.41 Option 3 is also seen as workable by a small number of respondents, and as giving some protection to those on benefits and those currently having their earnings arrested. Advice sector respondents regard this option as helping avoid the situation of "double diligence" which some of their clients currently experience.
5.42 An additional proposal not contained within the consultation document was raised by some respondents, that the information regarding the earnings arrestment is made available on a register, possibly held by the Commission. In terms of "other options", some respondents suggest that combining all three options would be advantageous.
Q5D.3 Should the law relating to actions of furthcoming be reformed to provide for automatic release of property to a creditor following service of an arrestment in execution subject to a 28 day period of objection?
5.43 There was substantial agreement to this proposal, supporting the savings in time and expense it would bring about and the simplification of the process. Respondents are generally satisfied with the 28 day period for objection. Several respondents raised matters of detail which they considered needed to be addressed.
5.44 A small number of organisations objected to the proposal on differing grounds. The Committee of Scottish Bankers regard it as administratively onerous, whilst two advice sector agencies do not wish to see the powers of local authorities using the summary warrant procedures increased and believe that a separate action is the correct way to proceed.
Q5D.4 Should all forms of schedule of arrestment, in execution and otherwise, be modernised and prescribed by rules of court?
5.45 There is unanimity of response to this question, with virtually all respondents calling for clear and concise language and straightforward layout.
5.46 One respondent suggested making the schedules accessible in different minority ethnic languages and to people with visual impairments.
E DILIGENCE CONCERNING HERITABLE PROPERTY
Q5E.1 Consultees are invited to comment on the reforms proposed for (a) inhibition (b) adjudication for debt (c) land attachment (d) attachment orders.
5.47 There is general support for the proposed reforms across all respondents, although a majority of local authorities would wish to see the retention of the preference on the inhibiting creditor in respect of post-inhibition debts incurred by the debtor
5.48 The majority of respondents agreed that the diligence on adjudication for debt be abolished. A respondent from the academic sector was of the opinion that legislation could not improve matters and that no change to the current law be made.
5.49 Whilst there is overall support for (c) and (d) a number of respondents seek further clarification on this area, particularly in relation to the difference between land attachments and attachments orders. Advice agencies are concerned that there does not appear to be sufficient protection for debtors in the proposals as they stand.
Q5E.2 Should sequestration for rent be abolished?
5.50 Of the respondents who support the abolition of sequestration for rent it is principally on the grounds that it is a remedy they rarely if ever use.
5.51 Legal academics and legal sector organisations draw the Justice Department's attention to the distinction between sequestration for rent and the landlord's hypothec, and suggest that the proposal being put does not take sufficient account of this distinction. There is a suggestion that this issue might benefit from being revisited.
5.52 Respondents against abolition in particular, local authorities, regard sequestration for rent as a useful and important remedy, specifically for cases of tenants in commercial properties.
5.53 A few respondents suggested that changes in the law are required in respect of items belonging to a third party.
Q5E.3 Should residual availability of mails and duties be abolished?
5.54 As with sequestration of rent, those who support abolition do so on the grounds that this remedy is little used.
5.55 Comment from the academic and legal sectors advises the Justice Department that there are links with the issues raised under sequestration of rent and this issue should be carefully re-considered and perhaps referred to the Scottish Law Commission for deliberation.
Q5E.4 Should service of a charge prior to execution of a warrant for ejection
(a) be necessary in all cases?
(b) if so should there be a uniform period of charge of 14 days?
(c) should the form of charge be revised to include information about source of assistance and support?
5.56 There is almost total support for service of a charge prior to execution of a warrant for ejection, with the exception of instances where those being ejected have no right, title or interest in the property e.g. squatters.
5.57 Fourteen days is considered to be a reasonable period overall, allowing for a shortened period on cause shown.
5.58 Support for revising the form of charge is almost universal, to simplify it and to allow for information on sources of assistance and support.
Q5E.5 Should the procedure for executing a warrant for ejection be reformed to:
(a) dispense with the requirement to chalk the doors or post a notice of ejection?
(b) clarify the hours during which an ejection may take place?
(c) prohibit ejection on specified days such as Sundays, Christmas day or any other day?
5.59 The weight of comment is in favour of dispensing with what are seen to be humiliating practices of chalking and notices, although there is a minority view that a notice might be useful in the case of commercial premises. There is also support for clarifying the hours during which an ejection may take place to provide consistency. Some respondents request that the court be able to use discretion to extend the hours if the circumstances of a case require it.
5.60 There is general agreement to prohibiting ejection on Sundays and over the Christmas and New Year period.
Q5E.6 Should provision be made for
(a) disposal of any possessions left in the premises?
(b) if so, what requirement should be introduced?
5.61 Advice agencies and enforcement agencies wish to see a situation where proprietors or creditors are required to store possessions for a specified time at a set rate. There is a suggestion that the best practice of building societies and banks in this regard might be taken as the model and, the SMASO suggest "removing from the law that an officer is meant to leave the premises "void and redd", so that the practices of heritable creditors do not in fact, expressly contradict the terms of the warrant."
5.62 Those in favour of this proposal do recognise the point made by opponents of the proposal, that there will need to be clarification as to whether a creditor who either leaves property in the premises, or stores it elsewhere has a duty of care which could make the creditor liable to the debtor for any damage or loss.
5.63 All respondents agree that, should possessions be put in store, storage costs should be borne by the debtors.
5.64The small number of respondents opposed to this proposal do not wish to see any further obligation on landlords in this regard.
Q.5E.7 To what extent does the need to clarify and modernise the law and procedures, in relation to recovery of possession of heritable property, identified by the Scottish Law Commission, remain necessary and appropriate?
5.65 The consensus from respondents is that the views of the Commission remain relevant and clarification is still necessary and appropriate.
F. ATTACHMENT OF MONEY
Q5F.1 Consultees are invited to comment on the reforms proposed for attachment of money
5.66 Of the thirty three respondents who commented on attachment of money, all approved of the proposed reform. Advice agencies wished to see absolute confirmation that money attachment procedures relate only to commercial cases and can only be used in business premises, and that individuals could not be searched.
5.67 Enforcement agencies offer strong support for the proposal, with one wishing to see officers of the court having the right to search individuals, e.g. market traders. They also proposed that it is essential that "the warrant contain power to open shut and lockfast places including strong boxes and rooms, cash registers, safes and other receptacles of places where money may be kept." An additional protection for the debtor was suggested, that "after the sums are lodged in Court along with a copy of the receipt, to allow the debtor an opportunity to object to the money being paid over to the creditor". Another detailed comment, from the SMASO, is that statue should "regulate the position where, after the officer has taken possession of the cheques, the payment of the cheque is topped by the drawer." This would be to prevent collusion between the debtor and the drawer.
5.68 Another enforcement agency expressed a common view that "the operational mechanisms require careful consideration".
G. CIVIL IMPRISONMENT
Q5G.1 Should civil imprisonment continue to be available for failure to pay aliment for a child?
Or Q5G2. for failure to pay aliment for a spouse?
5.69 There is a majority view in favour of maintaining the possibility of civil imprisonment for failure to pay aliment for both children and spouses. Proponents of civil imprisonment continuing to be available come mainly from the legal sector, the UK government, and local authorities. It is argued that having imprisonment as final sanction can be a useful "last resort" motivator for uncooperative parents in particular.
5.70 Opponents of civil imprisonment, from the advice sector, and from some local authorities, argue that there are alternative diligences and that little purpose is served in imprisoning for debt of any sort.
H. DELIVERY
Q.5H.1 Should an order protecting the identity of a child always accompany an order granted by the court for delivery of a child?
5.71 There is almost universal support for this proposal in the interest of protecting the child. Those with day to day experience of undertaking this work make the practical point that in searching for children it is often necessary to identify the child to those who might know of his/her whereabouts, but they are in agreement that the child's identity should be protected from the media and the public at large. It is pointed out that in England and Wales the court has discretion to allow for the identification of the child if satisfied that the welfare of the child requires it.
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