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WHAT SHOULD YOU DO IF SCOTTISH EXECUTION IS ABOLISHED?
|The current Bill before the Scottish Parliament seeks to ban poindings and warrant sales (approximating to English execution) for all types of debt. With there being no effective mechanism to legally enforce debts less than £1,500.00 there are steps you can take to protect yourself. The Bill does not discriminate between commercial or consumer debt. So those of you trading with Scottish concerns may want some guidance what to do if the Bill is passed. But you still have time to influence the Parliament so that amending legislation will preserve your right of payment for your goods or services.
YES! YOU CAN STOP THE BILL BEING LAW?WE NEED YOUR SUPPORT
Your support will make a real difference. Even if you are not based in Scotland please write to the Justice Minister, James Wallace, QC, MP, MSP at the Scottish Parliament, Holyrood House, Edinburgh. Say what company you represent and that if the Bill is enacted in its current form your company will be left with no effective remedy in the event of non-payment by Scottish concerns: Spell out clearly that this will lead to either a tightening or withdrawal of credit. Keep the letter simple and to the point. Even if you do not trade with Scotland say the Bill is a bad idea because if, in future, you were to trade with Scotland you would be concerned about the recovery of money following a court?s order and may give credit on less favourable terms.
And in case you think your letter will not influence the outcome you?re wrong! The Bill?s protagonists have mustered support from the most disadvantaged showing enforcement worst case scenarios. This is YOUR opportunity to express your grave concern. If the abolitionists are listened to then so will you.
YOUR CONTRIBUTION NOW IS VITAL!
Lest I be accused of being pessimistic, let me explain Scottish Parliamentary procedure. When the Bill was presented to the Parliament the following events occurred:-
· The Justice Minister, on behalf of the Scottish Executive, (in effect the Scottish Government) referred the matter to the Scottish law Commission asking them to report back to him stating what the effect should be if poinding and warrant sales were to be abolished and to provide an alternative solution to them being no less effective.
· At the same time the Executive referred the Bill to three of the Parliament?s Committees, being the Justice, Social Inclusion and Local Government. They took evidence both written and oral, from various interest groups.
I have to tell you despite some excellent evidence having been submitted to these committees (including that of the Scottish Law Commission?which was clarity in itself!) explaining the dangers of wholesale abolition, politically the committee members were very sympathetic to the Bill?s aims. Whilst much evidence proposed sensible reform to protect society?s most disadvantaged, it was also stressed enforcement should be retained, although modified. But as the politicians are ignoring this the consequences will be disasterous. Evidence focussed on harsh treatment in the recovery of local taxes. But the Committees have ignored evidence that execution has been statistically proven to be effective in commercial debt by the operation of the ?filtering process?, or ,as a ?spur to payment? .I also have to tell you that the Institute of Credit Management has put in a significant effort on your behalf, and will continue to do so, to promote and protect your interests.
The Scottish Parliament operates quite differently from Westminster with much of the power being devolved to the committees. The Scottish Executive cannot control what the committees do and say. Being so new we are in unchartered waters but the following scenarios may apply:-
The Justice Committee, being the lead committee, will collate reports from the other committees, all of which are sympathetic to abolition. Several outcomes may follow:-
a. They can sympathise with the Bill?s sentiments and put to debate before the Parliament whether the Bill?s principles should be accepted. Effectively they are able to by-pass the Executive. If this occurs it will be a political decision whether the Scottish executive will ?whip? its members which way to vote. However, as the political sentiment is for abolition, it is doubted whether the Labour party will ?whip? its members to reject the proposal. This is what I mean by saying the committee system is so powerful. If this happens the Bill as it stands will become law and you may well have difficulty in recovering Scottish cash. the Executive will have lost control of the Bill. The Justice Committee does not even have to wait for the Executive to have seen the Scottish Law Commission?s report before proposing its own Bill! Whilst the Commission?s report will suggest sensible reforms the abolitionists will not want to wait until the Executive considers their report. The abolitionists will want to pressurise the Justice Committee to have the Bill as it stands debated before the House thus taking control away from the Executive.
b. The Justice Committee could refer the matter back to the Executive allowing the Executive to propose its own reforms. This is what I would see as by far the preferred route. It will allow the Executive to propose sensible enforcement reform of the whole system rather than abolishing it with no replacement. However, any reforms the Executive propose will not reflect the draconian measures proposed in the Bill. It is likely the Justice Committee will move for the matter to be debated before the Parliament rather than allowing the Executive to consider it.
BUT WHAT IF?...
Whilst I, as a member of the Law Society of Scotland?s Consumer Law Committee and as an Institute member along with the rest of the Institute?s Council (and, hopefully, you?by writing to Jim Wallace) will do everything that can be done to ensure sensible law reform the possibility has to be faced the Bill will become law. If this happens this is what to do to protect your position:
1. We may only be left with arrestment (garnishee) as an effective enforcement measure. It is absolutely vital for you to record which financial institution your Scottish customers bank with and, if possible, the branch. If the account is overdrawn, which is often the case, and why you have not been paid in the first place, an arrestment will be ineffective.
2. In the event of debts in excess of £1,500.00 you will still be able to take either bankruptcy or liquidation proceedings. You may be forced to do this to get paid! But this will be a lot more expensive than simple court action.
3. If the debt is less than £1,500.00 and arrestments ineffective I am afraid you will be left with no effective remedy.
4. Whilst retention of title is no substitute for financial recovery ensure you have a valid retention of title condition in your contract. Remember to ensure the following:-
a. The clause is legally effective?check this with your lawyer.
b. The clause is actually incorporated into the contract rather than simply appearing in an invoice for the first time after the goods have been delivered.
c. Have a provision to the effect you will be able to enter your customer?s premises and search for and remove the goods. And remember?no matter what the condition says, you will not be able to enforce it unless you have a court order allowing you to do so. The actual contract itself will not allow a court officer to search for and remove the goods.
d. Have a clear method of identifying your goods.
For your benefit I have prepared guides on both ?arrestments? and ?retention of title?. I will be happy to send these to you on request. Please telephone me on 0141-332-7107 or 0141-331-2332, fax 0141-332-4223 or alternatively you can email your request to email@example.com.
Finally, at this stage the best advice I can give you is to write to Jim Wallace. I?m not saying ?Jim?ll Fix It? but it could just do the trick!
Remember English enforcement is currently being reviewed. If the Scottish argument is lost England could easily follow suit!
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