Stephen Cowan Examines Changes to Court Procedures in Scotland when Recovering Debts
ON the 28 November 2016, Scotland’s court procedure to recover debts of less than £5,000 was radically altered. The old Summary Cause and Small Claims procedure has been swept away by new, more simple rules, with unrepresented litigants in mind. The new rules will allow the Sheriff to ‘take an interventionist approach to identify the issues, assist parties to settle if possible, and to determine how the case progresses.’
The genesis of the rules are contained in the Courts Reform (Scotland) Act 2014. The Scottish Civil Justice Council is responsible for developing the rules of Court for the new procedure. And to make the most of the new rules, which are easy to read and use, advantage is to be taken of the new IT system for online interaction with the Court. This is being developed by the Scottish Courts and Tribunals Service. With the statutory instrument that introduced the rules running to over 250 pages a cursory glance may lead to an early conclusion that the foregoing objectives have not been achieved. However, the bulk of the instrument is taken up with court forms that have to be used. There are, in fact, only 65 pages of rules which are short and straightforward to read.
So, from what can be seen, the impact on legal debt recovery will focus on defended litigation. The rules will also provide an opportunity to ‘flush out’ irrelevant defences. This will potentially lead to an early resolution of a disputed claim far earlier in the Court process than is currently possible, to the benefit of the creditor.
Much of the new procedure will be very familiar. Innovation is, however, introduced in part 1 of the rules, setting out their principle objective. Those participating in a simple procedure case will be expected to adopt this philosophy. By way of an illustration Rule 1.2 provides:
(1) Cases are to be resolved as quickly as possible, at the least expense to parties and the Courts.
(2) The approach of the Court to a case is to be as informal as is appropriate, taking into account the nature and complexity of the dispute.
(3) Parties are to be treated even-handedly by the Court. Parties are to be encouraged to settle their disputes by negotiation or alternative dispute resolution, and should be able to do so throughout the progress of a case.
(4) Parties should only have to come to court when it is necessary to do so to progress or resolve their dispute.
Further, in terms of Rule 1.11, the Sheriff is required ‘to encourage cases to be resolved by negotiation or alternative dispute resolution where possible and in circumstances where this is not possible then the Sheriff ‘must decide the case’.
So, from what can be seen, the impact on legal debt recovery will focus on defended litigation. The rules will also provide an opportunity to ‘flush out’ irrelevant Defences. This will potentially lead to an early resolution of a disputed claim far earlier in the Court process than is currently possible, to the benefit of the creditor.
With the vast majority of court actions being undefended, it is worthwhile exploring how the creditor (known as the ‘claimant’) actually achieves the Court’s award. And for those who remember this as the decree, creditors will now have to get used to the new terminology with the claimant making an ‘Application for Decision’ as opposed to ‘minuting for decree’.
To commence the action the claimant completes a 12- page ‘Claim Form’. This is sent to the appropriate Sheriff Court (there are 39 of them), usually the Court where the respondent lives or carries out business. The claim form should contain the following information:
• The identity of the claimant, including the claimant’s address and whether the claimant is an individual, a company or another type of organisation.
• The identity of the respondent, including the respondent’s address (where known) and whether the respondent is an individual, a company or another type of organisation.
• The essential factual background to the dispute.
• What the claimant wants from the respondent if the claim is successful – for debt recovery payment actions this will be the sum due along with interest and expenses?
• Why the claim should succeed?
• What steps the claimant has already taken (if any) to try to resolve the dispute with the respondent? This will no doubt detail what pre-sue activity has taken place between the creditor and debtor.
(2) The claimant must list in the Claim Form any documents or other evidence that the claimant thinks support the claim. Creditors should note that there does not appear to be an obligation to actually produce copy invoices. Merely listing what there are should suffice.
(3) The claimant must list in the Claim Form any witnesses (other than the claimant and the respondent) that the claimant thinks support the claim.
After the claimant’s solicitor sends the form to the Court, the Court checks that the form accords with the rule’s requirements and sends the claimant a timetable. The timetable sets out the last date for service of the claim on the respondent (not less than 21 days) and the last date for the Response Form to be sent by the respondent to the court.
The Respondent can respond in three ways by:
• Admitting the claim and settling the claim before the last date for a response.
• Admitting the claim and asking the court for time to pay.
• Disputing the claim - the least favourable situation for the claimant.
If the respondent disputes the claim the following must be set out in the Response Form:
(a) Which facts (if any) set out in the Claim Form the respondent agrees with (b) Which facts (if any) set out in the Claim Form the respondent disagrees with and why. (c) Why the respondent thinks that the claimant should not get what is being asked for in the Claim Form, or why the claimant should only get some of what is asked for in the Claim Form? (d) What steps the respondent has already taken (if any) to try to resolve the dispute with the claimant?
OUT WITH THE OLD
This is where the new procedure differs from the old. This is because the starting point requires that the Sheriff has to consider the case in private if the Respondent disputes the claim. Thereafter the Sheriff has to send parties ‘first written orders’ within two weeks from the date the court has received the Response Form.
The first written order may do one of five things: refer the parties to alternative dispute resolution; arrange a case management discussion; arrange a hearing; if the Sheriff thinks that a decision could be made without a hearing, indicate that the Sheriff is considering doing so; and use the Sheriff’s powers to dismiss a claim or decide a case under the rules.
It is, perhaps, this last option that will be attractive to claimants if they are faced with a wholly irrelevant defence. The rules provide that ‘if a response obviously will not succeed because it is incompetent, the Sheriff may decide a case...at any time.’
The corollary to this is that if the claim has obviously no prospect of success, or it is incompetent, then the Sheriff may also dismiss it. Accordingly, it will be incumbent upon claimants, or their solicitors, to ensure that their Claim Form details a relevant case. As such it should refer to productions (such as copy invoices, statements and contracts) and details of witnesses who can ‘speak’ to the claim in the event of its being disputed. Failure to do so could result in the claim being dismissed in the event of the respondent disputing it.
As mentioned, the Sheriff, can decide to hold a ‘case management discussion’ as an option. At such a discussion, the Sheriff may:
(a) Discuss the claim and response with the parties and clarify any concerns the sheriff has.
(b) Discuss negotiation and alternative dispute resolution with the parties.
(c) Give the parties, in person, guidance and orders about the witnesses, documents and other evidence which they need to bring to a hearing.
(d) Give the parties, in person, orders which arrange a hearing.
In addition, the Sheriff may refer parties to dispute resolution. The Court’s wide ranging powers are amplified by the rules which provide that ‘the Sheriff may do anything at a case management discussion that can be done at a hearing, including making a decision in a case or part of a case.’
Claimants will be pleased to learn that the case management discussion can take place in Court, by video conference, conference call or in any other form ordered by the Sheriff. This is where development of the new IT systems should benefit litigants.
HARD OF HEARING
Whether to hold a hearing, and what sort of hearing should take place, is entirely at the Sheriff’s discretion. Indeed, as already stated, the Sheriff is empowered to propose that a decision should be made without any hearing at all. Also, the Sheriff can refer the dispute to mediation. It will, of course, depend upon the nature and complexity of the dispute.
It is likely that the Sheriff will either order a case management discussion or a hearing with evidence. If it is decided to hold a hearing, the purpose of which will be to resolve the dispute, then it will be critical for all documentary evidence to be lodged timeously with the court. This has to be done at least two weeks before the Hearing. If productions are lodged after that date the sheriff may refuse to consider them.
The Sheriff has four options to resolve the dispute at the hearing. The Sheriff’s role at the hearing is interventionist. This is articulated by the Sheriff having to identify what the dispute is, both legally and factually as well as establishing the parties’ attitude towards settling matters.
• The parties may be referred to alternative dispute resolution.
• The parties should attempt to negotiate settlement if this is possible.
• If negotiation is not possible then the Sheriff must resolve the dispute by deciding it at the hearing.
• The sheriff can continue the hearing to another day without the dispute having been resolved but only if it is necessary to do so. If evidence is to be given then the Sheriff must explain to the litigants the way in which the Sheriff has decided the way in which evidence has to be given. This power will generally be used where the litigants are unrepresented. So, for example, the sheriff may explain that he will expect the claimant to lead evidence and to justify why he is entitled to what is being asked for in the claim.
Thereafter the Sheriff will probably explain to the Respondent that he can question the claimant once the claimant’s evidence has been led. The rules provide that the Sheriff may impose conditions on how witnesses are questioned as well as setting time limits on how long witnesses may be questioned. The Sheriffis also empowered to ask questions to the parties or to witnesses.
Whilst the Sheriff may make the decision at the end of the hearing failing this it must be made within four weeks from the date of the hearing. In all cases the Sheriff’s decision must be set out in a ‘Decision Form’. The decision may be appealed within four weeks from the Decision Form being sent. If either of the parties want to appeal then an Appeal Form has to be completed and sent to the Court as well as to the other party. The Form must detail the legal points which the applicant wants the Sheriff Appeal Court to answer.
Once the decision has been made the Sheriff will make an expenses order. As one would expect, expenses follow success so as a general rule will be that expenses will be awarded to the successful party. However, normally the amount of expenses will be limited as follows:
• If the claim’s value is £200 or less there will be no award of expenses
• If the claim’s value is between £200 and £1,500 the maximum expenses awarded will be £150
• If the claim’s value is between £1,500 and £3,000 the successful party will be awarded ten percent of the claim’s value
• Claims over £3,000. These expenses are block fees set by the Court and are fairly generous to the claimant. If the claimant instructs a legal representative and expenses are awarded in favour of the claimant then if the sum claimed is less than £3,000 it is unlikely the expenses will cover the costs of legal representation.
Whilst this article is not concerned about Scottish judgment enforcement Simple Procedure has introduced a new step which will be required before enforcement can commence. This will not affect the Scottish Pre-Judgment remedies the provision of which is fully addressed by the rules. Accordingly, before a decision for payment of a sum of money can be enforced the successful party must formally serve a ‘charge’ on the party. The Charge must demand payment within two weeks if the party is in the UK. Once this time has elapsed then Sheriff Officers may be instructed to enforce the decision. It is slightly puzzling why there is reference to the charge because this is what creditors have been doing anyway.
It is likely that the new procedure will have its greatest impact when there is a dispute. The new rules should provide greater opportunity for matters to be resolved at an earlier stage in the court’s process rather than for cases to ‘trundle along’ aimlessly without resolution at an increased cost.
Much in the rules has to be commended, particularly the objective for the Sheriff to have matters resolved without the requirement to have evidence being led. The issue will be that with there being 39Sheriff Courts will all the Sheriffs be singing the same tune despite them having identical hymn sheets?
The Sheriff has four options to resolve the dispute at the hearing. The Sheriff's role at the hearing is interventionist. This is articulated by the Sheriff having to identify what the dispute is, both legally and factually as well as establishing the parties' attitude towards settling matters.
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