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Bankruptcy and Diligence etc. (Scotland) Act 2007

Status:

This is the original version (as it was originally enacted).

Bankruptcy and Diligence etc. (Scotland) Act 2007

2007 asp 3

The Bill for this Act of the Scottish Parliament was passed by the Parliament on 30th November 2006 and received Royal Assent on 15th January 2007

An Act of the Scottish Parliament to amend the law of sequestration and personal insolvency; to amend the law about floating charges; to establish a Scottish Civil Enforcement Commission and replace officers of court with judicial officers; to amend the law of diligence; and for connected purposes.

Part 1Bankruptcy

Duration of bankruptcy

1Discharge of debtor

(1)Section 54 of the Bankruptcy (Scotland) Act 1985 (c. 66) (in this Act, the “1985 Act”) (automatic discharge of debtor) is amended as follows.

(2)In subsection (1), for the words “3 years” substitute “1 year”.

(3)In subsection (3), the words “2 years and” are repealed.

(4)The heading to that section becomes “Automatic discharge of debtor”.

Bankruptcy restrictions orders and undertakings

2Bankruptcy restrictions orders and undertakings

(1)After section 56 of the 1985 Act, insert—

Bankruptcy restrictions orders and undertakings
56ABankruptcy restrictions order

(1)Where sequestration of a living debtor’s estate is awarded, an order (known as a “bankruptcy restrictions order”) in respect of the debtor may be made by the sheriff.

(2)An order may be made only on the application of the Accountant in Bankruptcy.

56BGrounds for making order

(1)The sheriff shall grant an application for a bankruptcy restrictions order if he thinks it appropriate having regard to the conduct of the debtor (whether before or after the date of sequestration).

(2)The sheriff shall, in particular, take into account any of the following kinds of behaviour on the part of the debtor—

(a)failing to keep records which account for a loss of property by the debtor, or by a business carried on by him, where the loss occurred in the period beginning 2 years before the date of presentation of the petition for sequestration or, as the case may be, the date the debtor application was made and ending with the date of the application for a bankruptcy restrictions order;

(b)failing to produce records of that kind on demand by—

(i)the Accountant in Bankruptcy;

(ii)the interim trustee; or

(iii)the trustee;

(c)making a gratuitous alienation or any other alienation for no consideration or for no adequate consideration which a creditor has, under any rule of law, right to challenge;

(d)creating an unfair preference or any other preference which a creditor has, under any rule of law, right to challenge;

(e)making an excessive pension contribution;

(f)failing to supply goods or services which were wholly or partly paid for which gave rise to a claim submitted by a creditor under section 22 or 48 of this Act;

(g)trading at a time before the date of sequestration when the debtor knew or ought to have known that he was to be unable to meet his debts;

(h)incurring, before the date of sequestration, a debt which the debtor had no reasonable expectation of being able to pay;

(j)failing to account satisfactorily to—

(i)the sheriff;

(ii)the Accountant in Bankruptcy;

(iii)the interim trustee; or

(iv)the trustee,

for a loss of property or for an insufficiency of property to meet his debts;

(k)carrying on any gambling, speculation or extravagance which may have materially contributed to or increased the extent of his debts or which took place between the date of presentation of the petition for sequestration or, as the case may be, the date the debtor application was made and the date on which sequestration is awarded;

(l)neglect of business affairs of a kind which may have materially contributed to or increased the extent of his debts;

(m)fraud or breach of trust;

(n)failing to co-operate with—

(i)the Accountant in Bankruptcy;

(ii)the interim trustee; or

(iii)the trustee.

(3)The sheriff shall also, in particular, consider whether the debtor—

(a)has previously been sequestrated; and

(b)remained undischarged from that sequestration at any time during the period of 5 years ending with the date of the sequestration to which the application relates.

(4)For the purposes of subsection (2) above—

  • “excessive pension contribution” shall be construed in accordance with section 36A of this Act; and

  • “gratuitous alienation” means an alienation challengeable under section 34(1) of this Act.

56CApplication of section 67(9)

(1)Where the sheriff thinks it appropriate, the sheriff may specify in the bankruptcy restrictions order that subsection (9) of section 67 of this Act shall apply to the debtor during the period he is subject to the order as if he were a debtor within the meaning of subsection (10)(a) of that section.

(2)For the purposes of subsection (1) above, section 67(10) of this Act shall have effect as if, for paragraph (c) of that subsection, there were substituted—

(c)the relevant information about the status of the debtor is the information that—

(i)he is subject to a bankruptcy restrictions order; or

(ii)where his estate has been sequestrated and he has not been discharged, that fact..

56DTiming of application for order

(1)An application for a bankruptcy restrictions order must be made, subject to subsection (2) below, within the period beginning with the date of sequestration and ending with the date on which the debtor’s discharge becomes effective.

(2)An application may be made after the end of the period referred to in subsection (1) above only with the permission of the sheriff.

56EDuration of order and application for annulment

(1)A bankruptcy restrictions order—

(a)shall come into force when it is made; and

(b)shall cease to have effect at the end of the date specified in the order.

(2)The date specified in a bankruptcy restrictions order under subsection (1)(b) above must not be—

(a)before the end of the period of 2 years beginning with the date on which the order is made; or

(b)after the end of the period of 15 years beginning with that date.

(3)On an application by the debtor the sheriff may—

(a)annul a bankruptcy restrictions order; or

(b)vary such an order, including providing for such an order to cease to have effect at the end of a date earlier than the date specified in the order under subsection (1)(b) above.

56FInterim bankruptcy restrictions order

(1)This section applies at any time between—

(a)the making of an application for a bankruptcy restrictions order; and

(b)the determination of the application.

(2)The sheriff may make an interim bankruptcy restrictions order if he thinks that—

(a)there are prima facie grounds to suggest that the application for the bankruptcy restrictions order will be successful; and

(b)it is in the public interest to make an interim order.

(3)An interim order may be made only on the application of the Accountant in Bankruptcy.

(4)An interim order—

(a)shall have the same effect as a bankruptcy restrictions order; and

(b)shall come into force when it is made.

(5)An interim order shall cease to have effect—

(a)on the determination of the application for the bankruptcy restrictions order;

(b)on the acceptance of a bankruptcy restrictions undertaking made by the debtor; or

(c)if the sheriff discharges the interim order on the application of the Accountant in Bankruptcy or of the debtor.

(6)Where a bankruptcy restrictions order is made in respect of a debtor who is subject to an interim order, section 56E(2) of this Act shall have effect in relation to the bankruptcy restrictions order as if the reference to the date on which the order is made were a reference to the date on which the interim order was made.

56GBankruptcy restrictions undertaking

(1)A living debtor who is not subject to a bankruptcy restrictions order may offer an undertaking (known as a “bankruptcy restrictions undertaking”) to the Accountant in Bankruptcy.

(2)In determining whether to accept a bankruptcy restrictions undertaking, the Accountant in Bankruptcy shall have regard to the matters specified in section 56B(2) and (3) of this Act.

(3)A bankruptcy restrictions undertaking—

(a)shall take effect on being accepted by the Accountant in Bankruptcy; and

(b)shall cease to have effect at the end of the date specified in the undertaking.

(4)The date specified under subsection (3)(b) above must not be—

(a)before the end of the period of 2 years beginning with the date on which the undertaking is accepted; or

(b)after the end of the period of 15 years beginning with that date.

(5)On an application by the debtor the sheriff may—

(a)annul a bankruptcy restrictions undertaking; or

(b)vary such an undertaking, including providing for a bankruptcy restrictions undertaking to cease to have effect at the end of a date earlier than the date specified in the undertaking under subsection (3)(b) above.

56HBankruptcy restrictions undertakings: application of section 67(9)

(1)A debtor may, with the agreement of the Accountant in Bankruptcy, specify in a bankruptcy restrictions undertaking that subsection (9) of section 67 of this Act shall apply to the debtor during the period the undertaking has effect as if he were a debtor within the meaning of subsection (10)(a) of that section.

(2)For the purposes of subsection (1) above, section 67(10) of this Act shall have effect as if, for paragraph (c) of that subsection, there were substituted—

(c)the relevant information about the status of the debtor is the information that—

(i)he is subject to a bankruptcy restrictions undertaking; or

(ii)where his estate has been sequestrated and he has not been discharged, that fact..

56JEffect of recall of sequestration

(1)Where an award of sequestration of a debtor’s estate is recalled under section 17(1) of this Act—

(a)the sheriff may annul any bankruptcy restrictions order, interim bankruptcy restrictions order or bankruptcy restrictions undertaking which is in force in respect of the debtor;

(b)no new bankruptcy restrictions order or interim order may be made in respect of the debtor; and

(c)no new bankruptcy restrictions undertaking by the debtor may be accepted.

(2)Where the sheriff refuses to annul a bankruptcy restrictions order, interim bankruptcy restrictions order or bankruptcy restrictions undertaking under subsection (1)(a) above the debtor may, no later than 28 days after the date on which the award of sequestration is recalled, appeal to the sheriff principal against such a refusal.

(3)The decision of the sheriff principal on an appeal under subsection (2) above is final.

56KEffect of discharge on approval of offer of composition

(1)This section applies where a certificate of discharge is granted under paragraph 11(1) of Schedule 4 to this Act discharging a debtor.

(2)Subject to sections 56E(3)(a), 56F(5)(c) and 56G(5)(a) of this Act, the debtor shall remain subject to any bankruptcy restrictions order, interim bankruptcy restrictions order or bankruptcy restrictions undertaking which is in force in respect of him.

(3)The sheriff may make a bankruptcy restrictions order in relation to the debtor on an application made before the discharge.

(4)The Accountant in Bankruptcy may accept a bankruptcy restrictions undertaking offered before the discharge.

(5)No application for a bankruptcy restrictions order or interim order may be made in respect of the debtor..

(2)In section 1A(1)(b) of that Act (duty of the Accountant in Bankruptcy to maintain register of insolvencies), after sub-paragraph (ii) insert—

(iia)bankruptcy restrictions orders, interim bankruptcy restrictions orders and bankruptcy restrictions undertakings;.

Effect of bankruptcy restrictions orders and undertakings

3Disqualification from being appointed as receiver

(1)Section 51 of the Insolvency Act 1986 (c. 45) (appointment of receiver) is amended as follows.

(2)In subsection (3), after paragraph (b), insert—

(ba)a person subject to a bankruptcy restrictions order;.

(3)In subsection (5), after “bankrupt” insert “or a person subject to a bankruptcy restrictions order”.

(4)In subsection (6), after “receivers” insert ; and

“bankruptcy restrictions order” means—

(a)a bankruptcy restrictions order made under section 56A of the Bankruptcy (Scotland) Act 1985 (c. 66);

(b)a bankruptcy restrictions undertaking entered into under section 56G of that Act;

(c)a bankruptcy restrictions order made under paragraph 1 of Schedule 4A to this Act; or

(d)a bankruptcy restrictions undertaking entered into under paragraph 7 of that Schedule..

4Disqualification for nomination, election and holding office as member of local authority

In section 31 of the Local Government (Scotland) Act 1973 (c. 65) (disqualifications for nomination, election and holding office as member of local authority)—

(a)after subsection (1)(b), insert—

(ba)he is subject to a bankruptcy restrictions order;; and

(b)after subsection (3A), insert—

(3B)In subsection (1)(ba) above, “bankruptcy restrictions order” means—

(a)a bankruptcy restrictions order made under section 56A of the Bankruptcy (Scotland) Act 1985;

(b)a bankruptcy restrictions undertaking entered into under section 56G of that Act;

(c)a bankruptcy restrictions order made under paragraph 1 of Schedule 4A to the Insolvency Act 1986 (c. 45); or

(d)a bankruptcy restrictions undertaking entered into under paragraph 7 of that Schedule..

5Orders relating to disqualification

After section 71A of the 1985 Act, insert—

71BDisqualification provisions: power to make orders

(1)The Scottish Ministers may make an order under this section in relation to a disqualification provision.

(2)A “disqualification provision” is a provision made by or under any enactment which disqualifies (whether permanently or temporarily and whether absolutely or conditionally) a relevant debtor or a class of relevant debtors from—

(a)being elected or appointed to an office or position;

(b)holding an office or position; or

(c)becoming or remaining a member of a body or group.

(3)In subsection (2) above, the reference to a provision which disqualifies a person conditionally includes a reference to a provision which enables him to be dismissed.

(4)An order under subsection (1) above may repeal or revoke the disqualification provision.

(5)An order under subsection (1) above may amend, or modify the effect of, the disqualification provision—

(a)so as to reduce the class of relevant debtors to whom the disqualification provision applies;

(b)so as to extend the disqualification provision to some or all individuals who are subject to a bankruptcy restrictions order;

(c)so that the disqualification provision applies only to some or all individuals who are subject to a bankruptcy restrictions order;

(d)so as to make the application of the disqualification provision wholly or partly subject to the discretion of a specified person, body or group.

(6)An order by virtue of subsection (5)(d) above may provide for a discretion to be subject to—

(a)the approval of a specified person or body;

(b)appeal to a specified person, body, court or tribunal.

(7)The Scottish Ministers may be specified for the purposes of subsection (5)(d) or (6)(a) or (b) above.

(8)In this section—

  • “bankruptcy restrictions order” includes—

    (a)

    a bankruptcy restrictions undertaking;

    (b)

    a bankruptcy restrictions order made under paragraph 1 of Schedule 4A to the Insolvency Act 1986 (c. 45); and

    (c)

    a bankruptcy restrictions undertaking entered into under paragraph 7 of that Schedule;

  • “relevant debtor” means a debtor—

    (a)

    whose estate has been sequestrated;

    (b)

    who has granted (or on whose behalf there has been granted) a trust deed;

    (c)

    who has been adjudged bankrupt by a court in England and Wales or in Northern Ireland; or

    (d)

    who, in England and Wales or in Northern Ireland, has made an agreement with his creditors for a composition in satisfaction of his debts or a scheme of arrangement of his affairs or for some other kind of settlement or arrangement.

(9)An order under this section—

(a)may make provision generally or for a specified purpose only;

(b)may make different provision for different purposes; and

(c)may make transitional, consequential or incidental provision.

(10)An order under this section—

(a)shall be made by statutory instrument; and

(b)shall not be made unless a draft has been laid before and approved by a resolution of the Scottish Parliament..

The trustee in the sequestration

6Amalgamation of offices of interim trustee and permanent trustee

(1)In section 2 of the 1985 Act (appointment and functions of interim trustee)—

(a)after subsection (2), insert—

(2A)Where the sheriff awards sequestration of the debtor’s estate and an interim trustee has been appointed in pursuance of subsection (5) below, the sheriff may appoint—

(a)the interim trustee; or

(b)subject to subsection (2B) below, such other person as may be nominated by the petitioner,

to be the trustee in the sequestration.

(2B)A person nominated under subsection (2A)(b) above may be appointed to be the trustee in the sequestration only if—

(a)it appears to the sheriff that the person satisfies the conditions mentioned in subsection (3) below; and

(b)a copy of the undertaking mentioned in subsection (3)(c) below has been lodged with the sheriff.

(2C)Where the sheriff does not appoint a person to be trustee in pursuance of subsection (2A) above, the sheriff shall appoint the Accountant in Bankruptcy to be the trustee in the sequestration.;

(b)after subsection (6), insert—

(6A)The interim trustee’s general function shall be to safeguard the debtor’s estate pending the determination of the petition for sequestration.

(6B)Whether or not the interim trustee is still acting in the sequestration, the interim trustee shall supply the Accountant in Bankruptcy with such information as the Accountant in Bankruptcy considers necessary to enable him to discharge his functions under this Act.; and

(c)the heading to that section becomes “Appointment and functions of the trustee in the sequestration”.

(2)The heading to section 3 of that Act becomes “Functions of the trustee”.

(3)Unless the context otherwise requires, any reference in any enactment to—

(a)an “interim trustee”; or

(b)a “permanent trustee”,

is to be construed as a reference to a trustee in the sequestration.

7Repeal of trustee’s residence requirement

(1)In section 2(3) of the 1985 Act (conditions to be met by interim trustee), paragraph (a) is repealed.

(2)In section 24(2) of that Act (eligibility for election as permanent trustee), paragraph (d) is repealed.

8Duties of trustee

(1)In section 3 of the 1985 Act (functions of permanent trustee)—

(a)after subsection (3), insert—

(3A)If the trustee has reasonable grounds to believe that any behaviour on the part of the debtor is of a kind that would result in a sheriff granting, under section 56B(1) of this Act, an application for a bankruptcy restrictions order, he shall report the matter to the Accountant in Bankruptcy.;

(b)in subsection (4), after “(3)” insert “or (3A)”;

(c)in subsection (5), for “subsection (3)” substitute “subsections (3) and (3A)”; and

(d)after subsection (7), insert—

(8)The trustee shall comply with the requirements of subsections (1)(a) to (d) and (2) above only in so far as, in his view, it would be of financial benefit to the estate of the debtor and in the interests of the creditors to do so..

(2)In section 39 of that Act (management and realisation of estate), after subsection (8), insert—

(9)The trustee—

(a)shall comply with the requirements of subsection (4) of this section; and

(b)may do anything permitted by this section,

only in so far as, in his view, it would be of financial benefit to the estate of the debtor and in the interests of the creditors to do so..

(3)In section 49 of that Act (adjudication of claims), after subsection (2), insert—

(2A)On accepting or rejecting, under subsection (2) above, every claim submitted or deemed to have been re-submitted, the trustee shall, as soon as is reasonably practicable, send a list of every claim so accepted or rejected (including the amount of each claim and whether he has accepted or rejected it) to—

(a)the debtor; and

(b)every creditor known to the trustee..

9Grounds for resignation or removal of trustee

(1)In section 13 of the 1985 Act (resignation, removal etc. of interim trustee)—

(a)in subsection (2)(a)—

(i)for “(whether” substitute “for any reason mentioned in subsection (2A) below or”;

(ii)for “a” substitute “any other”; and

(iii)the words “or from any other cause whatsoever)” are repealed; and

(b)after subsection (2), insert—

(2A)The reasons referred to in subsection (2)(a) above are that the interim trustee—

(a)is incapable within the meaning of section 1(6) of the Adults with Incapacity (Scotland) Act 2000 (asp 4); or

(b)has some other incapacity by virtue of which he is unable to act as interim trustee..

(2)In section 28 of that Act (resignation and death of permanent trustee), in subsection (1), for the words from “either” to “he” substitute the trustee—

(a)is unable to act (whether by, under or by virtue of a provision of this Act or from any other cause whatsoever); or

(b)has so conducted himself that he should no longer continue to act,

the Accountant in Bankruptcy.

10Termination of interim trustee’s functions

After section 13 of the 1985 Act, insert—

13ATermination of interim trustee’s functions where not appointed as trustee

(1)This section applies where an interim trustee (not being the Accountant in Bankruptcy) is appointed under section 2(5) of this Act and the sheriff—

(a)awards sequestration and appoints another person as trustee under subsection (2A) or (2C) of section 2 of this Act; or

(b)refuses to award sequestration.

(2)Where the sheriff awards sequestration and appoints another person as trustee, the interim trustee shall hand over to the trustee everything in his possession which relates to the sequestration and shall thereupon cease to act in the sequestration.

(3)The sheriff may make such order in relation to liability for the outlays and remuneration of the interim trustee as may be appropriate.

(4)Within 3 months of the sheriff awarding or, as the case may be, refusing to award sequestration, the interim trustee shall—

(a)submit to the Accountant in Bankruptcy—

(i)his accounts of his intromissions (if any) with the debtor’s estate; and

(ii)a claim for outlays reasonably incurred, and for remuneration for work reasonably undertaken, by him; and

(b)send a copy of his accounts and the claim to—

(i)the debtor;

(ii)the petitioner; and

(iii)in a case where sequestration is awarded, the trustee and all creditors known to the interim trustee.

(5)On a submission being made to him under subsection (4)(a) above, the Accountant in Bankruptcy shall—

(a)audit the accounts;

(b)issue a determination fixing the amount of the outlays and remuneration payable to the interim trustee;

(c)send a copy of the determination to—

(i)the interim trustee; and

(ii)the persons mentioned in subsection (4)(b) above; and

(d)where a trustee (not being the Accountant in Bankruptcy) has been appointed in the sequestration, send a copy of the audited accounts and of the determination to the trustee, who shall insert them in the sederunt book.

(6)Where the Accountant in Bankruptcy has been appointed as the trustee in the sequestration, the Accountant in Bankruptcy shall insert a copy of the audited accounts and the determination in the sederunt book.

(7)The interim trustee or any person mentioned in subsection (4)(b) above may, within 14 days after the issuing of the determination under subsection (5)(b) above, appeal to the sheriff against the determination.

(8)On receiving a copy of the Accountant in Bankruptcy’s determination sent under subsection (5)(c)(i) above the interim trustee may apply to him for a certificate of discharge.

(9)The interim trustee shall send notice of an application under subsection (8) above to the persons mentioned in subsection (4)(b) above and shall inform them—

(a)that they may make written representations relating to the application to the Accountant in Bankruptcy within the period of 14 days after such notification; and

(b)of the effect mentioned in subsection (16) below.

(10)On the expiry of the period mentioned in subsection (9)(a) above the Accountant in Bankruptcy, after considering any representations duly made to him, shall—

(a)grant or refuse to grant the certificate of discharge; and

(b)notify the persons mentioned in subsection (4)(b) above accordingly.

(11)The interim trustee or any person mentioned in subsection (4)(b) above may, within 14 days after the issuing of the determination under subsection (10) above, appeal therefrom to the sheriff.

(12)If, following an appeal under subsection (11) above, the sheriff determines that a certificate of discharge which has been refused should be granted he shall order the Accountant in Bankruptcy to grant it.

(13)If, following an appeal under subsection (11) above, the sheriff determines that a certificate of discharge which has been granted should have been refused he shall revoke the certificate.

(14)The sheriff clerk shall send a copy of the decree of the sheriff following an appeal under subsection (11) above to the Accountant in Bankruptcy.

(15)The decision of the sheriff in an appeal under subsection (7) or (11) above shall be final.

(16)The grant of a certificate of discharge under this section by the Accountant in Bankruptcy shall have the effect of discharging the interim trustee from all liability (other than any liability arising from fraud) to the debtor, to the petitioner or to the creditors in respect of any act or omission of the interim trustee in exercising the functions conferred on him by this Act.

13BTermination of Accountant in Bankruptcy’s functions as interim trustee where not appointed as trustee

(1)This section applies where the Accountant in Bankruptcy is appointed as interim trustee under section 2(5) of this Act and the sheriff —

(a)awards sequestration and appoints another person as trustee under section 2(2A) of this Act; or

(b)refuses to award sequestration.

(2)Where the sheriff awards sequestration and appoints another person as trustee, the Accountant in Bankruptcy shall hand over to the trustee everything in his possession which relates to the sequestration and shall thereupon cease to act in the sequestration.

(3)The sheriff may make such order in relation to liability for the outlays and remuneration of the Accountant in Bankruptcy as may be appropriate.

(4)Within 3 months of the sheriff awarding or, as the case may be, refusing to award sequestration, the Accountant in Bankruptcy shall—

(a)send to the debtor and the petitioner—

(i)his accounts of his intromissions (if any) with the debtor’s estate;

(ii)a determination of his fees and outlays calculated in accordance with regulations made under section 69A of this Act; and

(iii)the notice mentioned in subsection (5) below; and

(b)in a case where sequestration is awarded, send a copy of his accounts, the claim and the notice to all creditors known to him.

(5)The notice referred to in subsection (4)(a)(iii) above is a notice in writing stating—

(a)that the Accountant in Bankruptcy has commenced procedure under this Act leading to discharge in respect of his actings as interim trustee;

(b)that an appeal may be made to the sheriff under subsection (7) below; and

(c)the effect mentioned in subsection (9) below.

(6)The Accountant in Bankruptcy shall, unless the sheriff refuses to award sequestration, insert a copy of the accounts and the determination in the sederunt book.

(7)The debtor, the petitioner and any creditor may, within 14 days after the sending of the notice under subsection (4)(a)(iii) or, as the case may be, subsection (4)(b) above, appeal to the sheriff against—

(a)the determination of the Accountant in Bankruptcy mentioned in subsection (4)(a)(ii) above;

(b)the discharge of the Accountant in Bankruptcy in respect of his actings as interim trustee;

(c)both such determination and discharge,

and the sheriff clerk shall send a copy of the decree of the sheriff to the Accountant in Bankruptcy.

(8)The decision of the sheriff in an appeal under subsection (7) above shall be final.

(9)Where—

(a)the requirements of this section have been complied with; and

(b)no appeal is made to the sheriff under subsection (7) above or such an appeal is made but is refused as regards the discharge of the Accountant in Bankruptcy,

the Accountant in Bankruptcy shall be discharged from all liability (other than any liability arising from fraud) to the debtor, to the petitioner or to the creditors in respect of any act or omission of the Accountant in Bankruptcy in exercising the functions of interim trustee conferred on him by this Act..

11Statutory meeting and election of trustee

(1)Section 21 of the 1985 Act (requirement to call statutory meeting) is repealed.

(2)In section 21A of that Act (calling of statutory meeting where interim trustee is Accountant in Bankruptcy)—

(a)in subsection (1), the words from “where” to “Bankruptcy”, are repealed; and

(b)the heading to that section becomes “Calling of statutory meeting”.

(3)The heading to section 23 of that Act becomes “Proceedings at statutory meeting before trustee vote”.

(4)In section 24 of that Act (election of permanent trustee)—

(a)in subsection (1), for the words “the election of the permanent trustee” substitute a vote at which they shall—

(a)confirm the appointment of the trustee appointed under section 2 of this Act (referred to in this section and in sections 25 to 27 of this Act as the “original trustee”); or

(b)elect another person as the trustee in the sequestration (referred to in this section and in sections 13 and 25 to 29 of this Act as the “replacement trustee”),

such a vote being referred to in this Act as a “trustee vote”.; and

(b)the heading to that section becomes “Trustee vote”.

(5)In section 25 of that Act (confirmation of permanent trustee)—

(a)before subsection (1) insert—

(A1)This section applies where a replacement trustee is elected by virtue of a trustee vote.; and

(b)the heading to that section becomes “Appointment of replacement trustee”.

(6)Schedule 2 to that Act (adaptation of procedure etc. where permanent trustee not elected) is repealed.

12Replacement of trustee acting in more than one sequestration

After section 28 of the 1985 Act, insert—

28AReplacement of trustee acting in more than one sequestration

(1)This section applies where a trustee acting as such in two or more sequestrations—

(a)dies; or

(b)ceases to be qualified to continue to act as trustee by virtue of section 24(2) of this Act.

(2)The Accountant in Bankruptcy may, by a single petition to the Court of Session, apply—

(a)in a case where subsection (1)(b) above applies, for the removal of the trustee from office in each sequestration in which he has so ceased to be qualified; and

(b)for the appointment of—

(i)the Accountant in Bankruptcy; or

(ii)such person as may be nominated by the Accountant in Bankruptcy (being a person who is not ineligible for election as replacement trustee under section 24(2) of this Act) if that person consents to the nomination,

as the trustee in each sequestration in which the trustee was acting.

(3)The procedure in a petition under subsection (2) above shall be as the Court of Session may, by act of sederunt, prescribe.

(4)An act of sederunt made under subsection (3) above may, in particular, make provision as to the intimation to each sheriff who awarded sequestration or to whom sequestration was transferred under section 15(2) of this Act of the appointment by the Court of Session of a trustee in that sequestration..

13Requirement to hold money in interest bearing account

In section 43 of the 1985 Act (money received by permanent trustee) —

(a)in subsection (1)—

(i)for “subsection (2)” substitute “subsections (1A) and (2)”; and

(ii)after “an” insert “interest-bearing account in an”; and

(b)after subsection (1), insert—

(1A)In any case where the Accountant in Bankruptcy is the trustee, subject to subsection (2) below, all money received by the Accountant in Bankruptcy in the exercise of his functions as trustee shall be deposited by him in an interest bearing account in the name of the debtor’s estate or in the name of the Scottish Ministers in an appropriate bank or institution..

Debtor applications

14Debtor applications

(1)In section 1A of the 1985 Act (supervisory functions of the Accountant in Bankruptcy), in subsection (1), after paragraph (a), insert—

(aa)the determination of debtor applications;.

(2)In section 2 of that Act (appointment and functions of interim trustee), after subsection (1), insert—

(1A)Subject to subsection (1C) below, where the Accountant in Bankruptcy awards sequestration of the debtor’s estate and the debtor application—

(a)nominates a person to be the trustee;

(b)states that the person satisfies the conditions mentioned in subsection (3) below; and

(c)has annexed to it a copy of the undertaking mentioned in subsection (3)(c) below,

the Accountant in Bankruptcy may, if it appears to him that the person satisfies those conditions, appoint that person to be the trustee in the sequestration.

(1B)Where the Accountant in Bankruptcy awards sequestration of the debtor’s estate and does not appoint a person to be the trustee in pursuance of subsection (1A) above, the Accountant in Bankruptcy shall be deemed to be appointed to be the trustee in the sequestration.

(1C)Where—

(a)the debtor application is made by a debtor to whom section 5(2B)(c)(ia) applies; and

(b)the Accountant in Bankruptcy awards sequestration of the debtor’s estate,

the Accountant in Bankruptcy shall be deemed to be appointed as trustee in the sequestration..

(3)In section 5 of that Act (sequestration of the estate of living or deceased debtor)—

(a)for subsection (2) substitute—

(2)The sequestration of the estate of a living debtor shall be—

(a)by debtor application made by the debtor, if either subsection (2A) or (2B) below applies to the debtor; or

(b)on the petition of—

(i)subject to subsection (2D) below, a qualified creditor or qualified creditors, if the debtor is apparently insolvent;

(ii)a temporary administrator;

(iii)a member State liquidator appointed in main proceedings; or

(iv)the trustee acting under a trust deed if, and only if, one or more of the conditions in subsection (2C) below is satisfied.; and

(b)after subsection (4A), insert—

(4B)A debtor application shall—

(a)be made to the Accountant in Bankruptcy; and

(b)be in such form as may be prescribed.

(4C)The Scottish Ministers may, by regulations, make provision—

(a)in relation to the procedure to be followed in a debtor application (in so far as not provided for in this Act);

(b)prescribing the form of any document that may be required for the purposes of making a debtor application; and

(c)prescribing the fees and charges which may be levied by the Accountant in Bankruptcy in relation to debtor applications..

(4)In section 6 of that Act (sequestration of other estates)—

(a)in subsection (3), for the words from “on” to the end of that subsection substitute—

(a)by debtor application made by a majority of trustees, with the concurrence of a qualified creditor or qualified creditors; or

(b)on the petition of—

(i)a temporary administrator;

(ii)a member State liquidator appointed in main proceedings; or

(iii)a qualified creditor or qualified creditors, if the trustees as such are apparently insolvent.;

(b)in subsection (4), for the words from “on” to the end of that subsection substitute—

(a)by debtor application made by the partnership with the concurrence of a qualified creditor or qualified creditors; or

(b)on the petition of—

(i)a temporary administrator;

(ii)a member State liquidator appointed in main proceedings;

(iii)a trustee acting under a trust deed; or

(iv)a qualified creditor or qualified creditors, if the partnership is apparently insolvent.;

(c)in subsection (6), for the words from “on” to the end of that subsection substitute—

(a)by debtor application made by a person authorised to act on behalf of the body, with the concurrence of a qualified creditor or qualified creditors; or

(b)on the petition of—

(i)a temporary administrator;

(ii)a member State liquidator appointed in main proceedings; or

(iii)a qualified creditor or qualified creditors, if the body is apparently insolvent.; and

(d)in subsection (8), for “and (8)” substitute “, (6A), (8) and (8A)”.

(5)After section 6A of that Act, insert—

6BDebtor application: provision of information

(1)Where a debtor application is made, the debtor shall state in the application—

(a)whether or not the debtor’s centre of main interests is situated—

(i)in the United Kingdom; or

(ii)in another member State; and

(b)whether not the debtor possesses an establishment—

(i)in the United Kingdom; or

(ii)in any other member State.

(2)If, to the debtor’s knowledge, there is a member State liquidator appointed in main proceedings in relation to the debtor, the debtor shall, as soon as reasonably practicable, send a copy of the debtor application to that member State liquidator..

(6)After section 8 of that Act, insert—

8AFurther provisions relating to debtor applications

(1)Subject to subsection (2) below, a debtor application may be made at any time.

(2)A debtor application made in relation to the estate of a limited partnership may be made within such time as may be prescribed.

(3)The making of, or the concurring in, a debtor application shall bar the effect of any enactment or rule of law relating to the limitation of actions.

(4)Where, before sequestration is awarded, it becomes apparent that a creditor concurring in a debtor application was ineligible to so concur the Accountant in Bankruptcy shall withdraw him from the application but another creditor may concur in the place of the ineligible creditor and that other creditor shall notify the Accountant in Bankruptcy of that fact..

(7)In section 9 of that Act (jurisdiction)—

(a)in subsection (1), at the beginning insert “Where a petition is presented for the sequestration of an estate,”;

(b)after subsection (1), insert—

(1A)The Accountant in Bankruptcy may determine a debtor application for the sequestration of the estate of a living debtor if the debtor had an established place of business in Scotland, or was habitually resident there, at the relevant time.;

(c)in subsection (2), at the beginning insert “Where a petition is presented for the sequestration of an estate,”;

(d)after subsection (2), insert—

(2A)The Accountant in Bankruptcy may determine a debtor application for the sequestration of the estate of any entity which may be sequestrated by virtue of section 6 of this Act, if the entity—

(a)had an established place of business in Scotland at the relevant time; or

(b)was constituted or formed under Scots law, and at any time carried on business in Scotland.; and

(e)after subsection (3), insert—

(3A)Any proceedings under this Act which—

(a)relate to—

(i)a debtor application; or

(ii)the sequestration of a debtor’s estate awarded following such an application; and

(b)may be brought before a sheriff,

shall be brought before the sheriff who would, under subsection (1) or (2) above, have had jurisdiction in respect of a petition for sequestration of the debtor’s estate..

(8)In section 12 of that Act (when sequestration is awarded), in subsection (1), for the words from “petition”, where it first occurs, to the end of paragraph (a), substitute debtor application is made, the Accountant in Bankruptcy shall award sequestration forthwith if he is satisfied—

(a)that the application has been made in accordance with the provisions of this Act and any provisions made under this Act;.

15Debtor applications by low income, low asset debtors

(1)In section 5 of the 1985 Act, in subsection (2B)(c)—

(a)the word “either” is repealed; and

(b)after sub-paragraph (i) insert—

(ia)is unable to pay his debts and each of the conditions in section 5A of this Act is met;.

(2)After section 5 of that Act insert—

5ADebtor applications by low income, low asset debtors

(1)The conditions referred to in section 5(2B)(c)(ia) of this Act are as follows.

(2)The debtor’s weekly income (if any) on the date the debtor application is made does not exceed £100 or such other amount as may be prescribed.

(3)The debtor does not own any land.

(4)The total value of the debtor’s assets (leaving out of account any liabilities) on the date the debtor application is made does not exceed £1000 or such other amount as may be prescribed.

(5)The Scottish Ministers may by regulations—

(a)make provision as to how the debtor’s weekly income is to be determined;

(b)provide that particular descriptions of income are to be excluded for the purposes of subsection (2) above;

(c)make provision as to how the value of the debtor’s assets is to be determined;

(d)provide that particular descriptions of asset are to be excluded for the purposes of subsection (4) above;

(e)make different provision for different classes or description of debtor;

(f)add further conditions which must be met before a debtor application may be made by virtue of section 5(2B)(c)(ia) of this Act; and

(g)where such further conditions are added—

(i)remove; or

(ii)otherwise vary,

those conditions..

Jurisdiction

16Sequestration proceedings to be competent only before sheriff

(1)In section 9 of the 1985 Act (jurisdiction)—

(a)in subsection (1)—

(i)for “Court of Session” substitute “sheriff”; and

(ii)for “Scotland” substitute “the sheriffdom”;

(b)in subsection (2)—

(i)for “Court of Session” substitute “sheriff”; and

(ii)for “Scotland”, in both places where it occurs, substitute “the sheriffdom”;

(c)in subsection (3), for “Court of Session” substitute “sheriff”; and

(d)subsection (4) is repealed.

(2)In section 15 of that Act (further provisions relating to award of sequestration)—

(a)subsection (1) is repealed;

(b)in subsection (2)—

(i)for “Court of Session” substitute “sheriff”;

(ii)for “it”, where it first occurs, substitute “him and subject to subsection (2A) below”; and

(iii)the words from “from” to “remitted” are repealed;

(c)after subsection (2), insert—

(2A)The debtor may, with leave of the sheriff, appeal to the sheriff principal against a transfer under subsection (2) above.;

(d)in subsection (3), for “court” substitute “sheriff”; and

(e)in subsection (5), for “clerk of the court” substitute “sheriff clerk”.

(3)In section 16 of that Act (petitions for recall), in subsection (1), for “Court of Session” substitute “sheriff”.

(4)In section 17 of that Act (recall)—

(a)in subsection (1)—

(i)for “Court of Session” substitute “sheriff”; and

(ii)for “it”, in the first and third places where it occurs, substitute “he”;

(b)in subsection (2)—

(i)for “Court” substitute “sheriff”; and

(ii)for “it” substitute “he”;

(c)in subsection (3)—

(i)for “Court” substitute “sheriff”; and

(ii)in paragraph (c), for “it” substitute “he”;

(d)in subsection (6)—

(i)for “Court” substitute “sheriff”; and

(ii)for “it”, in the second and third places where it occurs, substitute “he”;

(e)in subsection (7)—

(i)for “Court” substitute “sheriff”; and

(ii)for “it” substitute “he”; and

(f)in subsection (8), for “clerk of the court” substitute “sheriff clerk”.

Vesting of estate and dealings of debtor

17Vesting of estate and dealings of debtor

(1)In section 31 of the 1985 Act (vesting of estate in trustee at date of sequestration)—

(a)after subsection (1) insert—

(1A)It shall not be competent for—

(a)the trustee; or

(b)any person deriving title from the trustee,

to complete title to any heritable estate in Scotland vested in the trustee by virtue of his appointment before the expiry of the period mentioned in subsection (1B) below.

(1B)That period is the period of 28 days (or such other period as may be prescribed) beginning with the day on which—

(a)the certified copy of the order of the sheriff granting warrant is recorded under subsection (1)(a) of section 14 of this Act; or

(b)the certified copy of the determination of the Accountant in Bankruptcy awarding sequestration is recorded under subsection (1A) of that section,

in the register of inhibitions.; and

(b)in subsection (8), after paragraph (a) insert—

(aa)any property of the debtor, title to which has not been completed by another person deriving right from the debtor;.

(2)In section 32 (vesting of estate, and dealings of debtor, after sequestration)—

(a)in subsection (8) (dealings with debtor after sequestration to be of no effect), after “under” insert “this section or”;

(b)in subsection (9) (circumstances where post-sequestration dealings with debtor remain valid), after paragraph (b)(iii) insert ; or

(iv)one which satisfies the conditions mentioned in subsection (9ZA) below,; and

(c)after that subsection insert—

(9ZA)The conditions are that —

(a)the dealing constitutes—

(i)the transfer of incorporeal moveable property; or

(ii)the creation, transfer, variation or extinguishing of a real right in heritable property,

for which the person dealing with the debtor has given adequate consideration to the debtor, or is willing to give adequate consideration to the trustee;

(b)the dealing requires the delivery of a deed; and

(c)the delivery occurs during the period beginning with the date of sequestration and ending on the day which falls 7 days after the day on which—

(i)the certified copy of the order of the sheriff granting warrant is recorded under subsection (1)(a) of section 14 of this Act; or

(ii)the certified copy of the determination of the Accountant in Bankruptcy awarding sequestration is recorded under subsection (1A) of that section,

in the register of inhibitions..

Income received by debtor after sequestration

18Income received by debtor after sequestration

(1)Section 32 of the 1985 Act (vesting of estate and dealings of debtor after sequestration) is amended as follows.

(2)In subsection (1), for “subsection (2)” substitute “subsections (2) and (4B)”.

(3)After subsection (2), insert—

(2WA)Subject to subsection (4L) below, no application may be made under subsection (2) above after the date on which the debtor’s discharge becomes effective.

(2XA)An order made by the sheriff under subsection (2) above shall specify the period during which it has effect and that period—

(a)may end after the date on which the debtor’s discharge becomes effective; and

(b)shall end no later than 3 years after the date on which the order is made.

(2YA)An order made by the sheriff under subsection (2) above may provide that a third person is to pay to the trustee a specified proportion of money due to the debtor by way of income.

(2ZA)If the debtor fails to comply with an order made under subsection (2) above, he shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale or to imprisonment for a term not exceeding 3 months or to both..

(4)After subsection (4), insert—

(4A)The sheriff clerk shall send a copy of any order made under subsection (2) above (and a copy of any variation or recall of such an order) to the Accountant in Bankruptcy.

(4B)Where no order has been made under subsection (2) above, a debtor may enter into an agreement in writing with the trustee which provides—

(a)that the debtor is to pay to the trustee an amount equal to a specified part or proportion of his income; or

(b)that a third person is to pay to the trustee a specified proportion of money due to the debtor by way of income.

(4C)No agreement under subsection (4B) above may be entered into after the date on which the debtor’s discharge becomes effective.

(4D)Subsection (2XA) above applies to agreements entered into under subsection (4B) above as it applies to orders made under subsection (2) above.

(4E)An agreement entered into under subsection (4B) above may, if subsection (4K) below has been complied with, be enforced, subject to subsection (4F) below, as if it were an order made under subsection (2) above.

(4F)Subsection (2ZA) above does not apply to an agreement entered into under subsection (4B) above.

(4G)An agreement entered into under subsection (4B) above may be varied—

(a)by written agreement between the parties; or

(b)by the sheriff, on an application made by the trustee, the debtor or any other interested person.

(4H)The sheriff—

(a)may not vary an agreement entered into under subsection (4B) above so as to include provision of a kind which could not be included in an order made under subsection (2) above; and

(b)shall grant an application to vary such an agreement if and to the extent that the sheriff thinks variation is necessary to determine a suitable amount to allow for the purposes specified in paragraphs (a) and (b) of subsection (2) above, being an amount which shall not be included in the amount to be paid to the trustee.

(4J)Where a third person pays a sum of money to the trustee under subsection (2YA) or (4B)(b) above, that person shall be discharged of any liability to the debtor to the extent of the sum of money so paid.

(4K)The trustee shall (unless he is the Accountant in Bankruptcy) send a copy of any agreement entered into under subsection (4B) above (and a copy of any variation of such an agreement) to the Accountant in Bankruptcy.

(4L)If the debtor fails to comply with an agreement entered into under subsection (4B) above, the sheriff, on the application of the trustee, may make an order under subsection (2) above—

(a)ending on the date on which the agreement would, had the debtor continued to comply with it, have ended; and

(b)on the same terms as the agreement..

(5)In section 1A of that Act (supervisory functions of the Accountant in Bankruptcy), after subsection (1)(b)(iia) (as inserted by section 2(2) of this Act), insert—

(iib)orders made under subsection (2) of section 32 of this Act and agreements made under subsection (4B) of that section;.

Debtor’s home and other heritable property

19Debtor’s home and other heritable property

(1)After section 32(9) of the 1985 Act (circumstances where dealings with debtor not challengeable by permanent trustee), insert—

(9A)Where the trustee has abandoned to the debtor any heritable property, notice in such form as may be prescribed given to the debtor by the trustee shall be sufficient evidence that the property is vested in the debtor.

(9B)Where the trustee gives notice under subsection (9A) above, he shall, as soon as reasonably practicable after giving the notice, record a certified copy of it in the register of inhibitions..

(2)After section 39 of that Act, insert—

39ADebtor’s home ceasing to form part of sequestrated estate

(1)This section applies where a debtor’s sequestrated estate includes any right or interest in the debtor’s family home.

(2)At the end of the period of 3 years beginning with the date of sequestration the right or interest mentioned in subsection (1) above shall—

(a)cease to form part of the debtor’s sequestrated estate; and

(b)be reinvested in the debtor (without disposition, conveyance, assignation or other transfer).

(3)Subsection (2) above shall not apply if, during the period mentioned in that subsection—

(a)the trustee disposes of or otherwise realises the right or interest mentioned in subsection (1) above;

(b)the trustee concludes missives for sale of the right or interest;

(c)the trustee sends a memorandum to the keeper of the register of inhibitions under section 14(4) of this Act;

(d)the trustee registers in the Land Register of Scotland or, as the case may be, records in the Register of Sasines a notice of title in relation to the right or interest mentioned in subsection (1) above;

(e)the trustee commences proceedings—

(i)to obtain the authority of the sheriff under section 40(1)(b) of this Act to sell or dispose of the right or interest;

(ii)in an action for division and sale of the family home; or

(iii)in an action for the purpose of obtaining vacant possession of the family home;

(f)the trustee and the debtor enter into an agreement such as is mentioned in subsection (5) below.

(4)The Scottish Ministers may, by regulations, modify paragraphs (a) to (f) of subsection (3) above so as to—

(a)add or remove a matter; or

(b)vary any such matter,

referred to in that subsection.

(5)The agreement referred to in subsection (3)(f) above is an agreement that the debtor shall incur a specified liability to his estate (with or without interest from the date of the agreement) in consideration of which the right or interest mentioned in subsection (1) above shall—

(a)cease to form part of the debtor’s sequestrated estate; and

(b)be reinvested in the debtor (without disposition, conveyance, assignation or other transfer).

(6)If the debtor does not inform the trustee or the Accountant in Bankruptcy of his right or interest in the family home before the end of the period of 3 months beginning with the date of sequestration, the period of 3 years mentioned in subsection (2) above—

(a)shall not begin with the date of sequestration; but

(b)shall begin with the date on which the trustee or the Accountant in Bankruptcy becomes aware of the debtor’s right or interest.

(7)The sheriff may, on the application of the trustee, substitute for the period of 3 years mentioned in subsection (2) above a longer period—

(a)in prescribed circumstances; and

(b)in such other circumstances as the sheriff thinks appropriate.

(8)The Scottish Ministers may, by regulations—

(a)make provision for this section to have effect with the substitution, in such circumstances as the regulations may prescribe, of a shorter period for the period of 3 years mentioned in subsection (2) above;

(b)prescribe circumstances in which this section does not apply;

(c)prescribe circumstances in which a sheriff may disapply this section;

(d)make provision requiring the trustee to give notice that this section applies or does not apply;

(e)make provision about compensation;

(f)make such provision as they consider necessary or expedient in consequence of regulations made under paragraphs (a) to (e) above.

(9)In this section, “family home” has the same meaning as in section 40 of this Act..

Protected trust deeds

20Modification of provisions relating to protected trust deeds

(1)For paragraphs 5 to 13 of Schedule 5 to the 1985 Act (protected trust deeds) substitute—

5(1)The Scottish Ministers may by regulations make provision as to—

(a)the conditions which require to be fulfilled in order for a trust deed to be granted the status of a protected trust deed;

(b)the consequences of a trust deed being granted that status;

(c)the rights of any creditor who does not accede to a trust deed which is granted protected status;

(d)the extent to which a debtor may be discharged, by virtue of a protected trust deed, from his liabilities or from such liabilities or class of liabilities as may be prescribed in the regulations;

(e)the circumstances in which a debtor may bring to an end the operation of a trust deed in respect of which the conditions provided for under sub-paragraph (a) above are not fulfilled;

(f)the administration of the trust under a protected trust deed (including provision about the remuneration payable to the trustee).

(2)Regulations under this paragraph may—

(a)make provision enabling applications to be made to the court;

(b)contain such amendments of this Act as appear to the Scottish Ministers to be necessary in consequence of any other provision of the regulations..

(2)In section 73(1) of that Act (interpretation), for the definition of “protected trust deed” substitute—

“protected trust deed” means a trust deed which has been granted protected status in accordance with regulations made under paragraph 5 of Schedule 5 to this Act;.

Modification of composition procedure

21Modification of composition procedure

(1)Schedule 4 to the 1985 Act (discharge on composition) is amended as follows.

(2)In paragraph 1(1), for “clerk issues the act and warrant to the permanent” substitute “ or, as the case may be, the Accountant in Bankruptcy appoints the”.

(3)In paragraph 4, for sub-paragraphs (c) and (d) substitute—

(c)not later than 1 week after the date of publication of such notice, send to every creditor known to him—

(i)a copy of the terms of offer; and

(ii)such other information as may be prescribed..

(4)For paragraphs 5 to 8, substitute—

5The notice mentioned in paragraph 4(b) of this Schedule shall be in the prescribed form and shall contain such information as may be prescribed.

6Where, within the period of 5 weeks beginning with the date of publication of the notice under paragraph 4(b) of this Schedule, the trustee has not received notification in writing from a majority in number or not less than one third in value of the creditors that they reject the offer of composition, the offer of composition shall be approved by the trustee.

7Where the trustee has received notification within the period and to the extent mentioned in paragraph 6 of this Schedule, the offer of composition shall be rejected by the trustee.

8Any creditor who has been sent a copy of the terms of the offer as referred to in paragraph 4(c)(i) of this Schedule and who has not notified the trustee as mentioned in paragraph 6 of this Schedule that he objects to the offer shall be treated for all purposes as if he had accepted the offer.

8A(1)The Scottish Ministers may by regulations amend paragraphs 4 to 8 of this Schedule by replacing them, varying them or adding to or deleting anything from them.

(2)Regulations made under sub-paragraph (1) above may contain such amendments of this Act as appear to the Scottish Ministers to be necessary in consequence of any amendment made by the regulations to the said paragraphs 4 to 8.

8B(1)Where an offer of composition is approved, a creditor who has not been sent a copy of the terms of the offer as mentioned in paragraph 4(c)(i) of this Schedule or who has notified the trustee of his rejection of the offer as mentioned in paragraph 6 of this Schedule may, not more than 28 days after the expiry of the period mentioned in said paragraph 6, appeal to the Accountant in Bankruptcy against such approval.

(2)In determining an appeal under sub-paragraph (1) above, the Accountant in Bankruptcy may—

(a)approve or reject the offer of composition; and

(b)make such other determination in consequence of that approval or rejection as he thinks fit..

(5)In paragraph 9(3), for “paragraph 9(2) and (3) of Schedule 2 to” substitute “section 53A of”.

(6)In paragraph 10—

(a)for “lodged with the sheriff clerk” substitute “sent to the Accountant in Bankruptcy”; and

(b)in sub-paragraph (a), for “permanent trustee” substitute “trustee (where he is not the Accountant in Bankruptcy)”.

(7)For paragraph 11, substitute—

11(1)Where the documents have been sent to the Accountant in Bankruptcy under paragraph 10 of this Schedule and either—

(a)the period mentioned in paragraph 8B(1) of this Schedule has expired; or

(b)the Accountant in Bankruptcy, in determining an appeal under said paragraph 8B(1), has approved the offer of composition,

the Accountant in Bankruptcy shall grant the certificates of discharge referred to in sub-paragraph (2) below.

(2)Those certificates are—

(a)a certificate discharging the debtor; and

(b)a certificate discharging the trustee.

(3)A certificate granted under sub-paragraph (1) above shall be in the prescribed form.

(4)The Accountant in Bankruptcy shall—

(a)send a certified copy of the certificate discharging the debtor to the keeper of the register of inhibitions for recording in that register; and

(b)send a copy of that certificate to the trustee who shall insert it in the sederunt book or, where the Accountant in Bankruptcy is the trustee, insert a copy of that certificate in the sederunt book..

(8)In paragraph 12, for “An order under paragraph 11” substitute “A certificate granted under paragraph 11(1)”.

(9)In paragraph 14—

(a)the words “the sheriff makes an order approving” are repealed; and

(b)after “composition”, where it first occurs, insert “is approved”.

(10)In paragraph 16—

(a)in sub-paragraph (1), for the words from “an” to “effective” substitute “the granting of a certificate under paragraph 11(1) of this Schedule discharging the debtor”; and

(b)in sub-paragraph (2), for “an order under paragraph 11 above” substitute “the granting of a certificate under paragraph 11(1) of this Schedule”.

(11)In paragraph 17(1)—

(a)the words from “Without” to “decrees,” are repealed; and

(b)for the words from “order” to “and”, where it first occurs, substitute “approval of the offer of composition and the granting of certificates”.

(12)In paragraph 18(1)—

(a)the words from “Without” to “decrees,” are repealed; and

(b)for “an order under paragraph 11” substitute “a certificate granted under paragraph 11(1)”.

(13)In paragraph 4 of Schedule 1 to that Act (determination of amount of creditor’s claim), the words “by the sheriff” are repealed.

Status and powers of Accountant in Bankruptcy

22Status of Accountant in Bankruptcy as officer of the court

In section 1 of the 1985 Act (Accountant in Bankruptcy), after subsection (1), insert—

(1A)The Accountant in Bankruptcy shall be an officer of the court..

23Accountant in Bankruptcy’s power to investigate trustees under protected trust deeds

(1)In Schedule 5 to the 1985 Act (voluntary trust deeds for creditors), after paragraph 1, insert—

Accountant in Bankruptcy’s power to carry out audit

1AThe Accountant in Bankruptcy may, at any time, audit the trustee’s accounts and fix his remuneration..

(2)In section 1A(1)(a) of that Act (supervision of persons by the Accountant in Bankruptcy), after sub-paragraph (ii), insert—

(iia)trustees under protected trust deeds;.

Offences

24Modification of offences under section 67 of the 1985 Act

(1)Section 67 of the 1985 Act (general offences by debtor) is amended as follows.

(2)In subsection (2), after “conceals” insert “, disposes of”.

(3)Subsection (8) is repealed.

(4)In subsection (9), for “to the extent of £100 (or such other sum as may be prescribed) or more” substitute—

(a)to the extent of £500 (or such other sum as may be prescribed) or more; or

(b)of any amount, where, at the time of obtaining credit, the debtor has debts amounting to £1,000 (or such other sum as may be prescribed) or more,.

(5)After subsection (9), insert—

(9A)For the purposes of calculating an amount of—

(a)credit mentioned in subsection (9) above; or

(b)debts mentioned in paragraph (b) of that subsection,

no account shall be taken of any credit obtained or, as the case may be, any liability for charges in respect of—

(i)any of the supplies mentioned in section 70(4) of this Act; and

(ii)any council tax within the meaning of section 99(1) of the Local Government Finance Act 1992 (c. 14)..

(6)In subsection (10)(a)—

(a)the word “or” after sub-paragraph (i) is repealed;

(b)after sub-paragraph (ii) insert ; or

(iii)a person subject to a bankruptcy restrictions order, or a bankruptcy restrictions undertaking, made in England or Wales,; and

(c)for “either case” substitute “the case mentioned in sub-paragraph (i) or (ii) above”.

(7)For subsection (10)(c) substitute—

(c)the relevant information about the status of the debtor is the information that—

(i)his estate has been sequestrated and that he has not been discharged;

(ii)he is an undischarged bankrupt in England and Wales or Northern Ireland; or

(iii)he is subject to a bankruptcy restrictions order, or a bankruptcy restrictions undertaking, made in England or Wales,

as the case may be..

(8)After subsection (11) insert—

(11A)A person shall be guilty of an offence under subsection (1), (2), (4), (5), (6) or (7) above if that person does or, as the case may be, fails to do, in any place in England and Wales or Northern Ireland, anything which would, if done or, as the case may be, not done in Scotland, be an offence under the subsection in question..

Miscellaneous and general

25Debt limits in sequestrations

In section 5 of the 1985 Act (sequestration of the estate of living or deceased debtor)—

(a)in subsection (2B)(a), for “£1,500” substitute “£3,000 or such sum as may be prescribed”; and

(b)in subsection (4), for “£1,500”, in both places where it occurs, substitute “£3,000”.

26Creditor to provide debt advice and information package

In section 5 of the 1985 Act, after subsection (2C), insert—

(2D)No petition may be presented under subsection (2)(b)(i) above unless the qualified creditor has provided, by such time prior to the presentation of the petition as may be prescribed, the debtor with a debt advice and information package.

(2E)In subsection (2D) above, “debt advice and information package” means the debt advice and information package referred to in section 10(5) of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17)..

27Continuation of sequestration proceedings

(1)Section 12 of the 1985 Act is amended as follows.

(2)In subsection (3), for “subsection (3A)” substitute “subsections (3A) to (3C)”.

(3)After subsection (3A) insert—

(3B)Where the sheriff is satisfied that the debtor shall, before the expiry of the period of 42 days beginning with the day on which the debtor appears before the sheriff, pay or satisfy—

(a)the debt in respect of which the debtor became apparently insolvent; and

(b)any other debt due by the debtor to the petitioner and any creditor concurring in the petition,

the sheriff may continue the petition for a period of no more than 42 days.

(3C)Where the sheriff is satisfied—

(a)that a debt payment programme (within the meaning of Part 1 of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17)) relating to—

(i)the debt in respect of which the debtor became apparently insolvent; and

(ii)any other debt due by the debtor to the petitioner and any creditor concurring in the petition,

has been applied for and has not yet been approved or rejected; or

(b)that such a debt payment programme will be applied for,

the sheriff may continue the petition for such period as he thinks fit..

28Abolition of summary administration

(1)The following provisions of the 1985 Act are repealed.

(2)In section 21A of that Act (calling of statutory meeting where interim trustee is Accountant in Bankruptcy), in subsection (3)(b)—

(a)sub-paragraph (ii); and

(b)the word “and” immediately preceding that sub-paragraph.

(3)Section 23A of that Act (summary administration) and Schedule 2A to that Act.

(4)In section 24 of that Act (election of permanent trustee), subsections (3B), (4A) and (5).

(5)In section 25 of that Act (confirmation of permanent trustee), subsection (2A).

29Non-vested contingent interest reinvested in debtor

In section 31 of the 1985 Act (vesting of estate at date of sequestration), after subsection (5), insert—

(5A)Any non-vested contingent interest vested in the trustee by virtue of subsection (5) above shall, where it remains so vested in the trustee on the date on which the debtor’s discharge becomes effective, be reinvested in the debtor as if an assignation of that interest had been executed by the trustee and intimation thereof made at that date..

30Debtor’s requirement to give account of state of affairs

After section 43 of the 1985 Act, insert—

43ADebtor’s requirement to give account of state of affairs

(1)This section applies to a debtor who—

(a)has not been discharged under this Act; or

(b)is subject to—

(i)an order made by the sheriff under subsection (2) of section 32 of this Act; or

(ii)an agreement entered into under subsection (4B) of that section.

(2)The trustee shall, at the end of—

(a)the period of 6 months beginning with the date of sequestration; and

(b)each subsequent period of 6 months,

require the debtor to give an account in writing, in such form as may be prescribed, of his current state of affairs..

31Restriction of debtor’s right to appeal under sections 49(6) and 53(6) of the 1985 Act

(1)In section 49 of the 1985 Act (adjudication of claims)—

(a)in subsection (6), after “debtor” insert “(subject to subsection (6A) below)”; and

(b)after subsection (6), insert—

(6A)A debtor may appeal under subsection (6) above if, and only if, he satisfies the sheriff that he has, or is likely to have, a pecuniary interest in the outcome of the appeal..

(2)In section 53 of that Act (procedure after end of accounting period)—

(a)in subsection (6), after “debtor” insert “(subject to subsection (6A) below)”; and

(b)after subsection (6), insert—

(6A)A debtor may appeal under subsection (6) above if, and only if, he satisfies the Accountant in Bankruptcy or, as the case may be, the sheriff that he has, or is likely to have, a pecuniary interest in the outcome of the appeal..

32Status of order on petition to convert protected trust deed into sequestration

After section 59C(2) of the 1985 Act (content of court order converting protected trust deed into sequestration), insert—

(2A)The provisions of this Act shall apply to an order made by the sheriff under subsection (1) above as if it was a determination by the Accountant in Bankruptcy of a debtor application under section 12(1) of this Act and in relation to which the member State liquidator was a concurring creditor..

33Power to provide for lay representation in sequestration proceedings

In section 32(1) of the Sheriff Courts (Scotland) Act 1971 (c. 58) (power of Court of Session to regulate civil procedure in sheriff court), after paragraph (l) insert—

(m)permitting a debtor appearing before a sheriff under section 12 of the Bankruptcy (Scotland) Act 1985 (c. 66) (award of sequestration) to be represented, in such circumstances as may be specified in the act of sederunt, by a person who is neither an advocate nor a solicitor..

34Treatment of student loans on sequestration

(1)In section 73B(12) of the Education (Scotland) Act 1980 (c. 44) (power to make provision in relation to treatment of student loans upon discharge under the 1985 Act), after “receive,” insert “before, on or”.

(2)In paragraph 6 of Schedule 2 to the Education (Student Loans) Act 1990 (c. 6) (treatment of student loans on sequestration), which, notwithstanding its repeal by section 44 of and Schedule 4 to the Teaching and Higher Education Act 1998 (c. 30), is saved by virtue of article 3 of the Teaching and Higher Education Act 1998 (Commencement No. 2 and Transitional Provisions) Order 1998 (S.I. 1998 No. 2004)—

(a)after “Where,” insert “before, on or”; and

(b)after “before” insert “, on”.

35Certain regulations under the 1985 Act: procedure

In section 72 of the 1985 Act (regulations)—

(a)the existing words become subsection (1);

(b)at the beginning insert “Subject to subsection (2) below,”; and

(c)at the end insert—

(2)No regulations such as are mentioned in subsection (3) below may be made unless a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, the Scottish Parliament.

(3)The regulations are—

(a)regulations made under—

(i)subsection (2B)(a) and (4) of section 5;

(ii)section 5A; and

(iii)section 39A(4),

of this Act; and

(b)the first regulations under paragraph 5 of Schedule 5 to this Act made after the commencement of section 20 of the Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3)..

36Minor and consequential amendments of the 1985 Act

Schedule 1 to this Act, which contains minor amendments of the 1985 Act and amendments of that Act consequential on the provisions of this Part, has effect.

Part 2Floating charges

Registration and creation etc.

37Register of Floating Charges

(1)The Keeper of the Registers of Scotland (in this Part, the “Keeper”) must establish and maintain a register to be known as the Register of Floating Charges.

(2)The Keeper must accept an application for registration of—

(a)any document delivered to the Keeper in pursuance of section 38, 41, 42, 43 or 44 of this Act; and

(b)any notice delivered to the Keeper in pursuance of section 39 or 45(2) of this Act,

provided that the application is accompanied by such information as the Keeper may require for the purposes of the registration.

(3)On receipt of such an application, the Keeper must note the date of receipt of the application; and, where the application is accepted by the Keeper, that date is to be treated for the purposes of this Part as the date of registration of the document or notice to which the application relates.

(4)The Keeper must, after accepting such an application, complete registration by registering in the Register of Floating Charges the document or notice to which the application relates.

(5)The Keeper must—

(a)make the Register of Floating Charges available for public inspection at all reasonable times;

(b)provide facilities for members of the public to obtain copies of the documents in the Register; and

(c)supply an extract of a document in the Register, certified as a true copy of the original, to any person requesting it.

(6)An extract certified as mentioned in subsection (5)(c) above is sufficient evidence of the original.

(7)The Keeper may charge such fees—

(a)for registering a document or notice in the Register of Floating Charges; or

(b)in relation to anything done under subsection (5) above,

as the Scottish Ministers may by regulations prescribe.

(8)The Scottish Ministers may by regulations make provision as to—

(a)the form and manner in which the Register of Floating Charges is to be maintained;

(b)the form of documents (including notices as mentioned in sections 39(1) and 45(2) of this Act) for registration in that Register, the particulars they are to contain and the manner in which they are to be delivered to the Keeper.

(9)Provision under subsection (8) above may, in particular, facilitate the use—

(a)of electronic communication;

(b)of documents in electronic form (and of certified electronic signatures in documents).

38Creation of floating charges

(1)It continues to be competent, for the purpose of securing any obligation to which this subsection applies, for a company to grant in favour of the creditor in the obligation a charge (known as a “floating charge”) over all or any part of the property which may from time to time be comprised in the company’s property and undertaking.

(2)Subsection (1) above applies to any debt or other obligation incurred or to be incurred by, or binding upon, the company or any other person.

(3)From the coming into force of this section, a floating charge is (subject to section 39 of this Act) created only when a document—

(a)granting a floating charge; and

(b)subscribed by the company granting the charge,

is registered in the Register of Floating Charges.

(4)References in this Part to a document which grants a floating charge are to a document by means of which a floating charge is granted.

39Advance notice of floating charges

(1)Where a company proposes to grant a floating charge, the company and the person in whose favour the charge is to be granted may apply to have joint notice of the proposed charge registered in the Register of Floating Charges.

(2)Subsection (3) below applies where—

(a)a notice under subsection (1) above is registered in the Register of Floating Charges; and

(b)within 21 days of the notice being so registered, a document—

(i)granting a floating charge conforming with the particulars contained in the notice; and

(ii)subscribed by the company granting the charge,

is registered in the Register of Floating Charges.

(3)Where this subsection applies, the floating charge so created is to be treated as having been created when the notice under subsection (1) above was so registered.

40Ranking of floating charges

(1)Subject to subsections (4) and (5) below, a floating charge—

(a)created on or after the coming into force of this section; and

(b)which has attached to all or any part of the property of a company,

ranks as described in subsection (2) below.

(2)The floating charge referred to in subsection (1) above—

(a)ranks with—

(i)any other floating charge which has attached to that property or any part of it; or

(ii)any fixed security over that property or any part of it,

according to date of creation; and

(b)ranks equally with any floating charge or fixed security referred to in paragraph (a) above which was created on the same date as the floating charge referred to in subsection (1) above.

(3)For the purposes of subsection (2) above—

(a)the date of creation of a fixed security is the date on which the right to the security was constituted as a real right; and

(b)the date of creation of a floating charge subsisting before the coming into force of this section is the date on which the instrument creating the charge was executed by the company granting the charge.

(4)Where all or any part of the property of a company is subject to both—

(a)a floating charge; and

(b)a fixed security arising by operation of law,

the fixed security has priority over the floating charge.

(5)Where the holder of a floating charge over all or any part of the property of a company has received intimation in writing of the subsequent creation of—

(a)another floating charge over the same property or any part of it; or

(b)a fixed security over the same property or any part of it,

the priority of ranking of the first-mentioned charge is restricted to security for the matters referred to in subsection (6) below.

(6)Those matters are—

(a)the present debt incurred (whenever payable);

(b)any future debt which, under the contract to which the charge relates, the holder is required to allow the debtor to incur;

(c)any interest due or to become due on the debts referred to in paragraphs (a) and (b) above;

(d)any expenses or outlays which may be reasonably incurred by the holder; and

(e)in the case of a floating charge to secure a contingent liability (other than a liability arising under any further debts incurred from time to time), the maximum sum to which the contingent liability is capable of amounting, whether or not it is contractually limited.

(7)Subsections (1) to (6) above, and any provision made under section 41(1) of this Act, are subject to sections 175 and 176A (provision for preferential debts and share of assets) of the Insolvency Act 1986 (c. 45).

41Ranking clauses

(1)The document granting a floating charge over all or any part of the property of a company may make provision regulating the order in which the charge ranks with any other floating charge or any fixed security (including a future floating charge or fixed security) over that property or any part of it.

(2)Provision under subsection (1) above—

(a)may displace in whole or part—

(i)subsections (1) and (2) of section 40 of this Act;

(ii)subsections (5) and (6) of that section;

(b)may not affect the operation of subsection (4) of that section (whether as against subsections (1) and (2) of that section or other provision under subsection (1) above).

(3)Accordingly, subsections (1), (2), (5) and (6) of that section have effect subject to any provision made under subsection (1) above.

(4)Provision under subsection (1) above is not valid unless it is made with the consent of the holder of any subsisting floating charge, or any subsisting fixed security, which would be adversely affected by the provision.

(5)A document of consent for the purpose of subsection (4) above may be registered in the Register of Floating Charges.

42Assignation of floating charges

(1)A floating charge may be assigned (and the rights under it vested in the assignee) by the registration in the Register of Floating Charges of a document of assignation subscribed by the holder of the charge.

(2)An assignation under subsection (1) above may be in whole or to such extent as may be specified in the document of assignation.

(3)This section is without prejudice to any other enactment, or any rule of law, by virtue of which a floating charge may be assigned.

43Alteration of floating charges

(1)A document of alteration may alter (whether by addition, deletion or substitution of text or otherwise) the terms of a document granting a floating charge.

(2)If (and in so far as) an alteration to the terms of a document granting a floating charge concerns—

(a)the ranking of the charge with any other floating charge or any fixed security; or

(b)the specification of—

(i)the property that is subject to the charge; or

(ii)the obligations that are secured by the charge,

the alteration is not valid unless subsection (3) below is satisfied.

(3)This subsection is satisfied if the alteration is made by a document of alteration which is—

(a)subscribed by—

(i)the company which granted the charge;

(ii)the holder of the charge; and

(iii)the holder of any other subsisting floating charge, or any subsisting fixed security, which would be adversely affected by the alteration; and

(b)registered in the Register of Floating Charges.

(4)But paragraph (a)(i) of subsection (3) above does not apply in respect of an alteration which—

(a)relates only to the ranking of the floating charge first-mentioned in that subsection with any other floating charge or any fixed security; and

(b)does not adversely affect the interests of the company which granted the charge.

(5)The granting, by the holder of a floating charge, of consent to the release from the scope of the charge of any particular property, or class of property, which is subject to the charge is to be treated as constituting an alteration—

(a)to the terms of the document granting the charge; and

(b)as to the specification of the property that is subject to the charge.

(6)For the purpose of subsection (5) above, property is not to be regarded as released from the scope of a floating charge by reason only of its ceasing to be the property of the company which granted the charge.

44Discharge of floating charges

(1)A floating charge may be discharged by the registration in the Register of Floating Charges of a document of discharge subscribed by the holder of the charge.

(2)A discharge under subsection (1) above may be in whole or to such extent as may be specified in the document of discharge.

(3)This section is without prejudice to any other means by which a floating charge may be discharged or extinguished.

45Effect of floating charges on winding up

(1)Where a company goes into liquidation, a floating charge created over property of the company attaches to the property to which it relates.

(2)But, in a case mentioned in subsection (7)(a) below, there is no attachment under subsection (1) above until such time as a notice of attachment is registered in the Register of Floating Charges on the application of the holder of the charge.

(3)The attachment of a floating charge to property under subsection (1) above is subject to the rights of any person who—

(a)has effectually executed diligence on the property to which the charge relates or any part of it;

(b)holds over that property or any part of it a fixed security ranking in priority to the floating charge; or

(c)holds over that property or any part of it another floating charge so ranking.

(4)Interest accrues in respect of a floating charge which has attached to property until payment is made of any sum due under the charge.

(5)Part IV, except section 185, of the Insolvency Act 1986 has (subject to subsection (1) above) effect in relation to a floating charge as if the charge were a fixed security over the property to which it has attached in respect of the principal of the debt or obligation to which it relates and any interest due or to become due on it.

(6)Subsections (1) to (5) above do not affect the operation of—

(a)sections 53(7) and 54(6) (attachment of floating charge on appointment of receiver) of the Insolvency Act 1986;

(b)sections 175 and 176A of that Act; or

(c)paragraph 115(3) of Schedule B1 (attachment of floating charge on delivery of a notice by an administrator) to that Act.

(7)For the purposes of this section, reference to a company going into liquidation—

(a)in a case where a court of a member State has under the EC Regulation jurisdiction as respects the company which granted the relevant floating charge, means the opening of insolvency proceedings in that State;

(b)in any other case, is to be construed in accordance with section 247(2) and (3) of the Insolvency Act 1986 (c. 45).

(8)In subsection (7)(a) above—

  • “the EC Regulation” is the Regulation of the Council of the European Union published as Council Regulation (EC) No 1346/2000 on insolvency proceedings;

  • “court” is to be construed in accordance with Article 2(d) of that Regulation;

  • “insolvency proceedings” is to be construed in accordance with Article 2(a) of that Regulation;

  • “member State” means a member State of the European Union apart from the United Kingdom.

46Repeals, savings and transitional arrangements

(1)Part XVIII (floating charges: Scotland) of the Companies Act 1985 (c. 6) is repealed.

(2)Nothing in this Part (except sections 40 and 41 so far as they concern the ranking of floating charges subsisting immediately before the coming into force of this section) affects the validity or operation of floating charges subsisting before the coming into force of this section.

(3)So, despite the repeal of Chapters I and III of Part XVIII of that Act by subsection (1) above, the provisions of those Chapters are to be treated as having effect for the purposes of floating charges subsisting immediately before the coming into force of this section.

(4)In particular—

(a)floating charges subsisting immediately before the coming into force of this section rank with each other as they ranked with each other in accordance with section 464 of the Companies Act 1985 immediately before that section was repealed by subsection (1) above; and

(b)a floating charge subsisting immediately before the coming into force of this section ranks with a fixed security so subsisting as it ranked with the security in accordance with section 464 of the Companies Act 1985 immediately before that section was repealed by subsection (1) above.

(5)Section 140 (floating charges (Scotland)) of the Companies Act 1989 (c. 40) is repealed (but, despite being repealed, is to be treated as having effect for the purposes of subsections (3) and (4) above).

47Interpretation

In this Part—

  • “company” means an incorporated company (whether or not a company within the meaning of the Companies Act 1985 (c. 6));

  • “fixed security”, in relation to any property of a company, means any security (other than a floating charge or a charge having the character of a floating charge) which on the winding up of the company in Scotland would be treated as an effective security over that property including, in particular, a heritable security (within the meaning of section 9(8) of the Conveyancing and Feudal Reform (Scotland) Act 1970 (c. 35)).

Related further provision

48Formalities as to documents

(1)In section 6 (registration of documents) of the Requirements of Writing (Scotland) Act 1995 (c. 7), after subsection (1)(a), insert—

(aa)to register a document in the Register of Floating Charges;.

(2)In section 46 (extract decree of reduction to be recorded) of the Conveyancing (Scotland) Act 1924 (c. 27)

(a)in subsection (2), for the words “This section” substitute “Subsection (1) above”; and

(b)after subsection (2), insert—

(3)This section shall apply in relation to a document registered in the Register of Floating Charges as it applies in relation to a deed or other document pertaining to a heritable security which is recorded in the Register of Sasines (and the references to recording are to be read accordingly)..

(3)In section 8 (rectification of defectively expressed documents) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (c. 73), after subsection (5), insert—

(5A)Subsection (5) above applies in relation to document registered in the Register of Floating Charges as it applies in relation to a document recorded in the Register of Sasines (and the references to recording are to be read accordingly)..

49Industrial and provident societies

(1)For section 3 (application to registered societies of provisions relating to floating charges) of the Industrial and Provident Societies Act 1967 (c. 48) substitute—

3Application to registered societies of provisions relating to floating charges

(1)The provisions of Part 2 of the Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3) (in this section referred to as the “relevant provisions”) shall apply to a registered society as they apply to an incorporated company.

(2)Where, in the case of a registered society—

(a)there are in existence—

(i)a floating charge created under the relevant provisions (as applied by this section), and

(ii)an agricultural charge created under Part II of the Agricultural Credits (Scotland) Act 1929 (c. 13), and

(b)any assets of the society are subject to both charges,

sections 40(1) to (3) (including as subject to section 41(1) to (4)) and 45(3)(c) of the Bankruptcy and Diligence etc. (Scotland) Act 2007 shall have effect for the purposes of determining the ranking with one another of those charges as if the agricultural charge were a floating charge created under the relevant provisions on the date of creation of the agricultural charge..

(2)Section 4 (filing of information relating to charges) of that Act is repealed.

(3)In section 5 (supplemental provisions) of that Act—

(a)for paragraph (b) of subsection (1) substitute—

(b)any security, except a floating charge, granted by a registered society over any of its assets,; and

(b)the references to section 4 of that Act are to be treated as references to that section as it had effect immediately before its repeal by subsection (2) above.

Part 3Enforcement

Scottish Civil Enforcement Commission

50Scottish Civil Enforcement Commission

(1)There is established a body corporate to be known as the Scottish Civil Enforcement Commission (in this Act, the “Commission”) having the functions conferred on it by virtue of this Act and any other enactment.

(2)The Commission must, in the exercise of its functions, act—

(a)in a manner that encourages equal opportunities and in particular the observance of the equal opportunity requirements; and

(b)in accordance with any directions given to it by the Scottish Ministers.

(3)In subsection (2)(a) above, “equal opportunities” and “equal opportunity requirements” have the same meanings as in Section L2 of Part II of Schedule 5 to the Scotland Act 1998 (c. 46).

(4)The Scottish Ministers may, by regulations—

(a)confer functions on;

(b)remove functions from; or

(c)otherwise modify the functions of,

the Commission.

(5)Regulations made under subsection (4) above may—

(a)transfer a function to the Commission which is conferred on another person by virtue of any other enactment; and

(b)make such modifications to any other enactment which the Scottish Ministers consider necessary or expedient in consequence of transferring the function.

(6)The Advisory Council on Messengers-at-Arms and Sheriff Officers is abolished.

(7)Schedule 2 to this Act makes further provision about the Commission.

51Information and annual report

(1)The Commission must provide the Scottish Ministers with information relating to the exercise of the Commission’s functions as the Scottish Ministers consider appropriate.

(2)The Commission must prepare a report on its activities during the whole of each financial year as soon as practicable after the end of the period to which the report relates.

(3)A report prepared under subsection (2) above—

(a)must include a statement of accounts, prepared in accordance with paragraph 33 of schedule 2 to this Act, for the period to which the report relates; and

(b)may include a statistical analysis of the performance by judicial officers of their functions and the undertaking by officers of activities during the period to which the report relates or any other period specified by the Commission in the report.

(4)The Commission may, in preparing the report under subsection (2) above, require a judicial officer to provide any information it considers necessary or proper for the purposes of preparing the report.

(5)The Commission must—

(a)send a copy of each report prepared under subsection (2) above to the Scottish Ministers; and

(b)publish the report.

(6)The Scottish Ministers must lay a copy of a report sent to them under subsection (5)(a) above before the Scottish Parliament.

52Publication of guidance and other information

(1)The Commission may—

(a)prepare and publish information and other materials; and

(b)carry on any other activities,

that it considers appropriate for the purposes of informing and educating the public about the matters mentioned in subsection (2) below.

(2)Those matters are—

(a)the Commission’s functions;

(b)the functions and, subject to section 56(1) of this Act, the activities of judicial officers; and

(c)the law of and procedures and practice relating to diligence.

53Published information not to enable identification

Information—

(a)contained in a report prepared under section 51(2); or

(b)published under section 52(1) or 56(1),

of this Act must not be in a form which identifies or enables the identification of judicial officers or persons against whom diligence has been executed.

54Register of judicial officers

(1)The Commission must keep a register of judicial officers, which is to be open to public inspection at reasonable times determined by the Commission.

(2)The Commission may make rules—

(a)prescribing the particulars and other information to be recorded in the register;

(b)regulating the procedure by which a judicial officer must intimate such particulars and other information to the Commission;

(c)requiring the notification to the Commission of changes in the particulars and other information.

55Code of practice

(1)The Commission—

(a)must prepare and publish a code of practice in relation to the exercise of the functions of; and

(b)may, subject to section 56(2)(a) of this Act, prepare and publish such a code in relation to the undertaking of activities by,

judicial officers.

(2)The Commission may—

(a)revise the whole or any part of a code published under this section; and

(b)publish the revised code.

(3)The Commission must send a copy of each code of practice published under this section to—

(a)the Scottish Ministers; and

(b)the association designated as the professional association for judicial officers under section 63(1) of this Act (in this Part, the “professional association”).

(4)The Scottish Ministers must lay a copy of a code of practice sent to them under subsection (3)(a) above before the Scottish Parliament.

56Publication of information relating to informal debt collection

(1)The Commission may publish information and other materials for the purposes of—

(a)promoting good practice in; and

(b)informing the public about,

informal debt collection.

(2)Information published under subsection (1) above may take the form of—

(a)a code of practice for persons undertaking informal debt collection; or

(b)guidance for those persons.

(3)Where the information published under subsection (1) above takes the form of a code of practice for persons undertaking informal debt collection, subsections (2), (3)(a) and (4) of section 55 of this Act apply as they apply to a code of practice published under that section.

(4)In this section, “informal debt collection” means the collection of debts (including debts which are not constituted by decrees or documents of debt) by methods other than diligence.

(5)In subsection (4) above, “decrees” and “documents of debt” are to be construed in accordance with section 221 of this Act.

Judicial officers

57Judicial officers

(1)There is established an office to be known as judicial officer and any person who holds a commission as officer has the functions conferred by virtue of this Act and any other enactment.

(2)A person may be granted a commission as a judicial officer by the Lord President of the Court of Session but only on the recommendation of the Commission under section 58(1) of this Act.

(3)Where the Lord President grants a person a commission as a judicial officer, the Commission must intimate that decision to—

(a)the person who applied for the commission; and

(b)the professional association.

(4)A judicial officer who holds a commission granted under subsection (2) above may carry out that officer’s functions in the whole of Scotland.

(5)Subject to section 60(2) of this Act, any person who wishes to be a judicial officer must apply to the Commission.

(6)A judicial officer may be deprived of office by the Lord President but only where—

(a)the disciplinary committee of the Commission (in this Part, the “disciplinary committee”) recommends under section 72(5)(a)(ii) or (6)(b) of this Act that the officer be deprived of office;

(b)any time limit within which the officer may appeal under section 74 of this Act has expired; and

(c)no such appeal has been made.

(7)Where the Lord President deprives a judicial officer of office, the Commission must intimate that decision to—

(a)the judicial officer;

(b)the Court of Session;

(c)every sheriff principal; and

(d)the professional association.

58Appointment of judicial officer

(1)Where the Commission is satisfied—

(a)that a person who applies to it is a fit and proper person to be appointed as a judicial officer; and

(b)having regard to—

(i)the number of persons already holding commission as officers; and

(ii)any other matters the Commission considers relevant,

that the appointment is appropriate,

the Commission must, subject to section 63(3) of this Act, recommend that the Lord President of the Court of Session grants that person a commission as an officer.

(2)The Commission must send a copy of its decision on an application for a commission as a judicial officer to the person who applied for the commission.

(3)Where the Lord President grants a person a commission as a judicial officer under section 57(2) of this Act, the Commission must issue an official identity card, in a form determined by the Commission, to the officer.

(4)A judicial officer carrying out an officer’s functions must, on being requested to do so, exhibit the official identity card issued under subsection (3) above.

(5)The Commission may make rules about—

(a)the procedure for applications for a commission as a judicial officer;

(b)the qualifications that a person must have before that person may be granted a commission under section 57(2) of this Act;

(c)the examinations that a person may be required to undertake in pursuance of a qualification prescribed by rules made under paragraph (b) above;

(d)the training that a person must undertake before that person may be granted a commission; and

(e)any other matters in relation to applications as it considers appropriate.

59Annual fee

(1)The Commission may make rules requiring every judicial officer holding a commission to pay an annual fee to the Commission.

(2)Rules made under subsection (1) above may include provision—

(a)specifying the date by which the fee must be paid each year;

(b)specifying the manner in which it must be paid; and

(c)about any other matters in relation to the fee that the Commission considers appropriate.

(3)Anything done by the Commission under this section must be approved by the Scottish Ministers.

Abolition of offices of messenger-at-arms and sheriff officer

60Abolition of offices of messenger-at-arms and sheriff officer

(1)The offices of messenger-at-arms and sheriff officer are abolished.

(2)Any person who, immediately before the day on which this section comes into force, holds a commission as a messenger-at-arms or sheriff officer is deemed, from that day, to hold a commission as a judicial officer as if granted under section 57(2) of this Act.

(3)Notwithstanding subsection (1) above and subject to subsection (4) below, a judicial officer may carry out any function which, under any rule of law, it was competent for a messenger-at-arms or sheriff officer to carry out.

(4)Subsection (3) above applies only in so far as the function is not inconsistent with any provision of this Act or any other enactment.

(5)References in any enactment (other than the references in the enactments mentioned in subsection (6) below) to—

(a)a “messenger-at-arms”;

(b)a “sheriff officer”; and

(c)an “officer of court”,

are to be construed as references to a judicial officer.

(6)Those enactments are—

(a)section 18 of the Confirmation of Executors (Scotland) Act 1858 (c. 56) (power to make Acts of Sederunt for the purposes of the Act);

(b)section 13 of the Heritable Securities (Scotland) Act 1894 (c. 44) (trustees or others to have powers conferred by the Act where debtor incapacitated);

(c)section 18(1) of the Company Directors Disqualification Act 1986 (c. 46) (Secretary of State’s power to require particulars of disqualification orders or undertakings); and

(d)section 127(1) of the Criminal Procedure (Scotland) Act 1995 (c. 46) (Clerk of Justiciary to furnish forms etc. relating to appeals).

Regulation of judicial officers

61Regulation of judicial officers

(1)The Scottish Ministers may, by regulations—

(a)confer functions on;

(b)remove functions from; or

(c)otherwise modify the functions of,

judicial officers.

(2)The Scottish Ministers may, by regulations—

(a)prescribe the types of business association which judicial officers may form in order to carry out their functions;

(b)make provision about the ownership, membership, management and control of those business associations;

(c)prescribe conditions which must be satisfied by those business associations;

(d)make provision regulating the fees and charges which may be levied by an officer in the performance of the officer’s functions.

(3)Before making regulations under subsection (1) or (2) above, the Scottish Ministers must consult the Commission.

(4)The Commission may make rules—

(a)regulating, without prejudice to sections 67 to 73 of this Act, the conduct of judicial officers;

(b)prohibiting the undertaking by officers of activities which appear to the Commission to be incompatible with their functions;

(c)permitting, subject to any conditions the Commission provides for in the rules, the undertaking by officers for remuneration of activities, not appearing to the Commission to be incompatible with their functions;

(d)which make provision—

(i)about the accounts and finances of officers, including the keeping and auditing of officers' accounts;

(ii)for the keeping of records by officers and the inspection of those records; and

(iii)about the finding of caution by officers; and

(e)regulating other matters in relation to officers that the Commission considers appropriate.

(5)A judicial officer must not undertake any activity which is not connected with the officer’s functions for remuneration unless the officer obtains the permission of the Commission.

(6)The Commission must not withhold permission under subsection (5) above unless it appears to the Commission that the undertaking by the judicial officer of the activity would be incompatible with the officer’s functions.

(7)The Commission may—

(a)attach conditions to; or

(b)revoke,

any permission granted under subsection (5) above.

62Duty to notify Commission of bankruptcy etc.

(1)Where, in relation to a judicial officer, any of the events mentioned in subsection (2) below occurs, the officer must, before the expiry of the period of 28 days beginning with the occurrence of the event, notify the Commission in writing of it.

(2)The events referred to in subsection (1) above are—

(a)the sequestration of the judicial officer;

(b)the granting by the officer of a trust deed for creditors;

(c)the making of a bankruptcy restrictions order in respect of the officer;

(d)the acceptance by the Accountant in Bankruptcy of a bankruptcy restrictions undertaking made by the officer;

(e)the making, under the Company Directors Disqualification Act 1986 (c. 46), of a disqualification order against the officer;

(f)where the officer is a partner in a partnership the sole or main business of which is the provision of judicial officer services—

(i)the granting by the partnership of a trust deed for creditors; or

(ii)the sequestration of the partnership;

(g)where the officer is a member in a limited liability partnership the sole or main business of which is the provision of judicial officer services, the commencement of the winding up of that partnership on the ground of insolvency.

(3)In subsection (2) above, “trust deed” has the meaning given by section 5(4A) of the 1985 Act.

Judicial officers' professional association

63Judicial officers' professional association

(1)The Scottish Ministers, by regulations—

(a)must designate an association as the professional association for judicial officers; and

(b)may make provision in relation to the functions, constitution and procedures of the professional association.

(2)The Scottish Ministers may not make regulations under subsection (1) above without first consulting—

(a)the Commission;

(b)representatives of the professional association or, as the case may be, proposed professional association; and

(c)such other bodies or persons who appear to the Scottish Ministers to have an interest.

(3)A person may not hold a commission as a judicial officer unless that person is a member of the professional association.

64Duty of professional association to forward complaints to Commission

Where the professional association receives a complaint about a judicial officer or any services provided by the officer, the association must send details of the complaint and any material which accompanies it to the Commission.

65Information from professional association

The Commission may require the professional association to provide any information the Commission considers necessary or proper for the purposes of—

(a)any inspection under section 66 of this Act;

(b)any investigation under section 67 of this Act; or

(c)the consideration by the disciplinary committee of any matter under section 71 of this Act.

Investigation of judicial officers

66Inspection of judicial officer

(1)The Commission may appoint a person to inspect the work or particular aspects of the work of a judicial officer.

(2)A person appointed under subsection (1) above must, if required to do so by the Commission, inquire into any activities undertaken for remuneration by the judicial officer.

(3)A person appointed under subsection (1) above must submit a report of the inspection and of any inquiry under subsection (2) above to the Commission.

(4)The Commission must pay a person appointed under subsection (1) above—

(a)a fee, unless the person is employed in the civil service and the person carries out the inspection in that person’s capacity as a civil servant; and

(b)any outlays reasonably incurred by the person,

in connection with an inspection, inquiry and report under this section.

67Investigation of alleged misconduct by judicial officer

(1)This section applies where—

(a)a person appointed under section 66(1) of this Act submits a report to the Commission disclosing that a judicial officer may have been guilty of misconduct;

(b)a sheriff or a Senator of the College of Justice (other than the Lord President) makes a report to the Commission alleging misconduct by an officer;

(c)the professional association sends, under section 64 of this Act, details of a complaint about an officer to the Commission;

(d)any other person complains to the Commission alleging misconduct by an officer; or

(e)the Commission otherwise has reason to believe that an officer may have been guilty of misconduct.

(2)The Commission may disregard a report or complaint under subsection (1) above if the Commission considers it to be frivolous or vexatious.

(3)The Commission, after giving the judicial officer an opportunity to admit or deny the misconduct or to give an explanation of the matter, may appoint a person to investigate the matter.

(4)But the Commission may not appoint a person under subsection (3) above if the judicial officer—

(a)admits the misconduct in writing; or

(b)gives a satisfactory explanation of the matter.

(5)The person appointed under subsection (3) above, after carrying out the investigation—

(a)must report to the Commission; and

(b)may, if of the opinion that there is—

(i)a probable case of misconduct; and

(ii)evidence sufficient to justify disciplinary proceedings,

make a recommendation that the matter be referred to the disciplinary committee.

(6)The Commission must, where it receives a recommendation under subsection (5)(b) above, refer the matter to the disciplinary committee to be dealt with under section 71 of this Act.

(7)The Commission must pay the person appointed under subsection (3) above—

(a)a fee, unless the person is employed in the civil service and the person carries out the investigation in that person’s capacity as a civil servant; and

(b)any outlays reasonably incurred by the person,

in connection with an investigation under this section and any hearing under section 71 of this Act.

(8)In a case to which subsection (1)(a) above applies, the person appointed under subsection (3) above may be the same person as was appointed under section 66(1) of this Act.

(9)In this Part, “misconduct” includes—

(a)conduct tending to bring the office of judicial officer into disrepute;

(b)failure to comply with a requirement imposed under section 51(4) of this Act;

(c)where a fee is due by virtue of rules made under subsection (1) of section 59 of this Act and a date has been specified by rules made under subsection (2)(a) of that section, failure to pay the fee within 3 months of that date; and

(d)failure to notify the Commission under subsection (1) of section 62 of this Act of the occurrence of an event mentioned in subsection (2) of that section.

68Suspension of judicial officer pending outcome of disciplinary or criminal proceedings

(1)This section applies—

(a)in any of the circumstances mentioned in section 67(1) of this Act;

(b)where section 70 of this Act applies; or

(c)where a judicial officer has been charged with an offence.

(2)The disciplinary committee may make an order suspending the judicial officer from practice for a period specified in the order.

(3)The disciplinary committee may—

(a)extend the period specified in the order; or

(b)revoke the order.

69Commission’s duty in relation to offences or misconduct by judicial officer

(1)This section applies where—

(a)the Commission becomes aware that a judicial officer has been convicted by a court of any offence; or

(b)an officer admits misconduct under section 67(4)(a) of this Act.

(2)The Commission must refer the matter to the disciplinary committee to be dealt with under section 71 of this Act.

(3)Subsection (1)(a) above and section 72(4) of this Act are without prejudice to section 4(3)(b) of the Rehabilitation of Offenders Act 1974 (c. 53) (non-disclosure no grounds for dismissal etc.); and in those provisions “offence” means any offence of which the judicial officer has been convicted before or after that person was granted a commission as an officer, other than any offence disclosed in that person’s application for such a commission.

70Commission’s power in relation to judicial officer’s bankruptcy etc.

(1)This section applies where the Commission—

(a)becomes aware (whether by the judicial officer notifying it under section 62(1) of this Act or otherwise) that an event mentioned in subsection (2) of that section has occurred; and

(b)considers that the occurrence of that event or circumstances surrounding it, although falling short of misconduct and not involving the commission of an offence, give rise to concerns about—

(i)the officer;

(ii)the exercise by the officer of that officer’s functions; or

(iii)the undertaking by that officer of activities.

(2)The Commission may refer the matter to the disciplinary committee to be dealt with under section 71 of this Act.

Disciplinary proceedings

71Referrals to the disciplinary committee

(1)In dealing with any matter referred to the disciplinary committee under section 67(6), 69(2) or 70(2) of this Act, the committee—

(a)must consider—

(i)any report made to the Commission under section 67(5)(a) of this Act; and

(ii)any other relevant information held by the Commission; and

(b)may, if it considers it appropriate, hold a hearing.

(2)Where the judicial officer to whom a referred matter relates requests a hearing before the disciplinary committee, the committee must hold one.

(3)The disciplinary committee must, when holding a hearing, afford the persons mentioned in subsection (4) below the opportunity to—

(a)make representations (whether orally or in writing); and

(b)lead, or produce, evidence.

(4)Those persons are—

(a)the judicial officer to whom the hearing relates;

(b)where there was an investigation under section 67 of this Act, the person who carried it out; and

(c)any other person the committee considers appropriate.

(5)The disciplinary committee may award expenses in any hearing in favour of or against the judicial officer to whom the hearing relates.

(6)The Commission’s expenses in any hearing include any payments made under section 66(4) and 67(7) of this Act.

(7)Where expenses are awarded under subsection (5) above—

(a)in favour of the judicial officer, the expenses are recoverable by the officer from the Commission; or

(b)against the officer, the expenses are recoverable by the Commission from the officer.

(8)The Commission may make rules in relation to the procedures, including the procedures to be followed during a hearing, of the disciplinary committee.

(9)Any rules made under subsection (8) above must be approved by the Scottish Ministers.

72Disciplinary committee’s powers

(1)This section applies where, after dealing with a matter referred to the disciplinary committee under section 67(6), 69(2) or 70(2) of this Act, the committee is satisfied that it is appropriate to take further action under this section.

(2)Where the disciplinary committee is satisfied that—

(a)the judicial officer is guilty of misconduct; or

(b)the officer has admitted misconduct under section 67(4)(a) of this Act,

the committee may make one or more of the orders mentioned in subsection (5) below.

(3)Where the matter referred to the disciplinary committee is one to which section 70 of this Act applies, the committee may make an order under paragraph (a) or (c) of subsection (5) below.

(4)Where the judicial officer has been convicted of an offence, the disciplinary committee may make an order under paragraph (a), (b) or (c) of subsection (5) below.

(5)Those orders are—

(a)an order—

(i)suspending the judicial officer from practice for a period specified in the order; or

(ii)recommending that the Lord President of the Court of Session deprives the officer of office;

(b)an order censuring the officer;

(c)an order restricting—

(i)the functions which the officer may exercise; or

(ii)the activities which the officer may undertake,

for such period as the committee considers appropriate;

(d)an order imposing a fine on the officer not exceeding level 4 on the standard scale;

(e)if the misconduct consists of or includes the charging of excessive fees or outlays, an order requiring the officer to repay so much of those fees or outlays as is excessive together with such interest as the disciplinary committee considers appropriate.

(6)Where a judicial officer fails to comply with an order under subsection (5)(d) above the disciplinary committee may, if it has not already done so, make an order—

(a)suspending the officer from practice for a period specified in the order; or

(b)recommending that the Lord President of the Court of Session deprives the officer of office.

(7)The disciplinary committee must send a copy of any decision it makes under this section to the judicial officer to whom that decision relates.

73Orders under sections 68 and 72: supplementary provision

(1)An order mentioned in section 72(5)(d) of this Act is enforceable as if it were an extract registered decree arbitral bearing a warrant for execution issued by the sheriff.

(2)The Commission may recover any fine imposed by such an order.

(3)The Commission must intimate any order made by the disciplinary committee under section 68(2) or (3) or 72 (other than an order under section 72(5)(a)(ii) or (6)(b)) of this Act to—

(a)the Court of Session;

(b)every sheriff principal; and

(c)the professional association.

Appeals

74Appeals from decisions under sections 58, 68 and 72

(1)Where the Commission decides under section 58(1) of this Act not to recommend that the Lord President grants a person a commission as a judicial officer, the person who applied may appeal to the Inner House against that decision.

(2)Where the disciplinary committee makes an order under—

(a)section 68(2) or (3)(a); or

(b)section 72(2), (3), (4) or (6),

of this Act, the judicial officer to whom the order relates may appeal to the Inner House against that order.

(3)The decision of the Inner House on an appeal under subsection (1) or (2) above is final.

(4)The Court of Session may, by Act of Sederunt, prescribe the procedure in relation to an appeal under subsection (1) or (2) above.

Miscellaneous

75Judicial officer’s actions void where officer has interest

(1)Anything done by a judicial officer in exercising or purporting to exercise a prescribed function in relation to a matter in which the officer has an interest is void.

(2)A judicial officer has an interest in a matter where the matter—

(a)is one in which the officer has an interest as an individual; or

(b)consists of or includes a debt in relation to which any of the circumstances mentioned in subsection (3) below apply.

(3)The circumstances referred to in subsection (2)(b) above are that the debt is due to or by—

(a)a business associate of the judicial officer;

(b)a member of the officer’s family; or

(c)a company or firm, and the officer, a business associate of the officer or a member of the officer’s family—

(i)is a director or partner of that company or firm;

(ii)holds, either alone or along with an other person, a controlling interest in that company or firm; or

(iii)has a pecuniary interest in that company or firm and the sole or main business of the company or firm is the purchase of debts for enforcement.

(4)Any reference in subsection (3) above to—

(a)a business associate of a judicial officer is to be construed as a reference to a co-director, partner, employer, employee, agent or principal of the officer;

(b)a controlling interest in a company is to be construed as a reference to an interest giving a person control of a company within the meaning of section 840 of the Income and Corporation Taxes Act 1988 (c. 1) (meaning of “control”).

(5)Any reference in subsection (3) above to a member of a judicial officer’s family is to be construed as a reference to—

(a)the spouse of the officer;

(b)a person living together with the officer as husband and wife;

(c)a civil partner of the officer;

(d)a person living with the officer in a relationship which has the characteristics of the relationship between a husband and wife except that the person and the officer are of the same sex;

(e)a parent of the officer;

(f)a brother or sister of the officer;

(g)a child of the officer, including—

(i)a stepchild; and

(ii)any child brought up or treated by the officer or any person mentioned in paragraph (b), (c) or (d) above as a child of the officer or, as the case may be, of that person;

(h)a grandchild of the officer,

and any relationships of the half blood or by affinity are to be construed as relationships of the full blood.

(6)In subsection (4)(a) above, “principal” does not include a principal in a contract for the carrying out by the judicial officer of the prescribed function in relation to the debt concerned.

(7)In subsections (1) and (6) above, “prescribed function” means any function conferred on a judicial officer by virtue of this Act or any other enactment which the Scottish Ministers by regulations specify for the purposes of this section.

76Measure of damages payable by judicial officer for negligence or other fault

For the avoidance of doubt, nothing in this Part—

(a)revives any rule of law whereby, if a messenger-at-arms or a sheriff officer has been found liable to a creditor for negligent delay or failure to execute diligence, or for other fault in the execution of diligence, the damages payable by the messenger or, as the case may be, officer are determined solely by reference to the amount of the debt; or

(b)applies any such rule of law to a judicial officer.

77Effect of code of practice

(1)A judicial officer must, in exercising the officer’s functions or undertaking any activities, have regard to the provisions (so far as they are applicable) of any code of practice published under section 55 or 56 of this Act.

(2)A failure on the part of a judicial officer to comply with any provision of a code of practice does not of itself render the officer liable to any criminal or civil proceedings.

(3)A code of practice is admissible in evidence in any criminal or civil proceedings.

(4)If any provision of a code of practice appears to—

(a)the court or tribunal conducting any civil or criminal proceedings; or

(b)the disciplinary committee holding a hearing under section 71 of this Act,

to be relevant to any question arising in the proceedings, that provision of the code may be taken into account in determining that question.

78Electronic publications and communications

In this Part—

(a)references to “publishing” include publishing by electronic means and cognate expressions are to be construed accordingly; and

(b)any reference to a notification, admission or representation being in writing includes a reference to that notification, admission or representation being an electronic communication.

Part 4Land attachment and residual attachment

Chapter 1Abolition of adjudication for debt

79Abolition of adjudication for debt

(1)The diligence of adjudication for debt is abolished and any enactment or rule of law enabling an action of adjudication for debt to be raised ceases to have effect.

(2)Subsection (1) above does not affect an action of adjudication for debt—

(a)raised before; and

(b)in which decree of adjudication is granted no later than 6 months after,

the day this section comes into force.

80Renaming of the Register of Inhibitions and Adjudications

(1)The Register of Inhibitions and Adjudications is renamed the Register of Inhibitions.

(2)Any reference in an enactment to—

(a)the Register of Inhibitions and Adjudications;

(b)the General Register of Inhibitions; or

(c)the Register of Adjudications,

is to be construed as a reference to the Register of Inhibitions.

Chapter 2Attachment of land

Land attachment

81Land attachment

(1)There is to be a form of diligence over land to be known as land attachment.

(2)Land attachment is competent to enforce payment of a debt but only if—

(a)the debt is constituted by a decree or document of debt;

(b)the debtor has been charged to pay the debt;

(c)the period for payment specified in the charge has expired without payment being made; and

(d)where the debtor is an individual, the creditor has, no earlier than 12 weeks before registering the notice of land attachment, provided the debtor with a debt advice and information package.

(3)A land attachment is, subject to sections 83(6) and 121(1) of this Act, created at the beginning of the day which falls immediately after the expiry of the period of 28 days beginning with the day or, as the case may be, the last day on which a notice of land attachment in relation to the land is registered.

(4)During the period of 28 days referred to in subsection (3) above, the notice has effect as if it were an inhibition—

(a)registered against the debtor in the Register of Inhibitions; and

(b)restricted to the land described in the notice.

(5)A land attachment—

(a)confers on the creditor a subordinate real right over the land described in the notice (in this Chapter, the “attached land”); and

(b)secures the sum (in this Chapter, the “sum recoverable by the land attachment”) mentioned in subsection (6) below.

(6)That sum is—

(a)the sum for the payment of which the charge was served, together with any interest accruing after such service and before the attachment ceases to have effect; and

(b)all expenses which are chargeable against the debtor by virtue of the attachment.

(7)The Scottish Ministers may, by regulations—

(a)substitute for the period of 28 days referred to in subsection (3) above such other period; and

(b)make such amendment of enactments (including this Act) in consequence of such a substitution,

as they think fit.

(8)In this Act, “debt advice and information package” means the debt advice and information package referred to in section 10(5) of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17) (in this Act, the “2002 Act”).

82Attachable land

(1)In this Chapter, “land” means—

(a)land (including buildings and other structures and land covered with water) owned by the debtor; and

(b)a long lease of land in relation to which the debtor is the tenant.

(2)It is not competent to create a land attachment over—

(a)land—

(i)to which a title has never been registered; or

(ii)to which the debtor does not have a registered title;

(b)a proper liferent in relation to which the debtor is the liferenter; or

(c)a long lease which is not assignable.

(3)Subsection (2)(c) above does not apply to a lease which is assignable only with the consent of the landlord, whether or not it is a condition of the lease that consent must not be withheld unreasonably.

83Notice of land attachment

(1)A notice of land attachment must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(b)describe the land to be attached; and

(c)be registered in both—

(i)the property register in which title to the land is registered (in this Chapter, the “appropriate property register”); and

(ii)the Register of Inhibitions.

(2)It is not competent to register a notice of land attachment unless the sum which the debtor has been charged to pay exceeds the sum mentioned in subsection (3) below.

(3)That sum is—

(a)£3,000; or

(b)such other sum as may be prescribed by the Scottish Ministers by regulations.

(4)It is competent to register a single notice of land attachment in relation to two or more sums which, under separate warrants for diligence in execution, the debtor has been charged to pay.

(5)The judicial officer must, on or as soon as is reasonably practicable after the day or, as the case may be, the last day on which the notice of land attachment is registered, serve a copy of the notice on—

(a)the debtor;

(b)any person who owns the land (whether solely or in common with the debtor); and

(c)any tenant under a long lease of the land.

(6)If, before the expiry of the period of 28 days referred to in section 81(3) of this Act, the creditor does not register a certificate of service on the debtor, the notice of land attachment is, and is deemed always to have been, void.

(7)Subsection (1) above applies to a certificate of service as it applies to a notice of land attachment.

Consequences of land attachment

84Debts secured by land attachment not rendered heritable

The creation of a land attachment does not convert any moveable debt, in relation to the enforcement of which the notice of land attachment was registered, into a heritable one.

85Restriction on priority of ranking of certain securities

After section 13 of the Conveyancing and Feudal Reform (Scotland) Act 1970 (c. 35), insert—

13AEffect of subsequent land attachment on ranking of standard securities

(1)This section applies where—

(a)a notice of land attachment, relating to land (or any part of it) which is subject to an existing standard security duly recorded, is registered in accordance with section 83(1)(c) of the Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3);

(b)a copy of that notice is served on the creditor in that existing standard security; and

(c)a land attachment is subsequently created on the expiry of the period of 28 days mentioned in section 81(3) of that Act.

(2)Section 13(1) of this Act shall apply in relation to the effect on the preference in ranking of that existing standard security from the day on which the period referred to in subsection (1)(c) above expires..

86Lease granted after registration of notice of land attachment

(1)This section applies where—

(a)a notice of land attachment is registered;

(b)during the period of 28 days mentioned in section 81(3) of this Act—

(i)the debtor; or

(ii)a tenant of the debtor,

grants a lease of land (or a part of it) specified in the notice; and

(c)a land attachment is, on the expiry of that period, created.

(2)Subject to section 163(2) to (4) of this Act (restriction on reduction of leases granted in breach of inhibition), any such lease is reducible at the instance of the creditor.

(3)In subsection (1)(b) above, “tenant” includes any subtenant of the tenant and “lease” includes a sublease.

87Assignation of title deeds etc.

(1)A land attachment assigns to the creditor the title deeds, including searches and all unregistered conveyances, affecting the attached land or any part of it.

(2)The creditor is, in the event of a sale of the attached land (or part of it) in pursuance of a warrant under section 97(2) of this Act, entitled to—

(a)deliver the title deeds (so far as in the creditor’s possession and subject to the rights of any person holding prior rights to their possession) to the purchaser; and

(b)assign to the purchaser any right the creditor has to have the title deeds made forthcoming.

88Acquisition of right to execute land attachment

(1)This section applies where—

(a)a person acquires a right as mentioned in section 88(1) (acquisition of right to decree, document, order or determination authorising diligence) of the Debtors (Scotland) Act 1987 (c. 18) (in this Act, the “1987 Act”); and

(b)a notice of land attachment has, before that acquisition, been registered in pursuance of that right.

(2)The person acquiring the right may, by registering a notice such as is mentioned in subsection (3) below, take or continue to take any steps necessary to enforce the debt by land attachment as if the appropriate clerk had, under section 88(4) of the 1987 Act, granted warrant authorising the person to do so.

(3)The notice referred to in subsection (2) above must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be registered in—

(i)the appropriate property register; and

(ii)the Register of Inhibitions.

(4)References in this Chapter to a “creditor” include, unless the context otherwise requires, references to a person who registers a notice under subsection (2) above.

89Effect of debtor’s death before land attachment created

(1)This section applies where—

(a)a debtor, in relation to whose land a creditor has taken steps to commence or execute a land attachment, dies; and

(b)a land attachment has not, before the date of death of the debtor, been created.

(2)Any steps taken as mentioned in subsection (1)(a) above cease to have effect and any charge relating to the debt is, from the date of death of the debtor, void.

(3)Nothing in subsection (2) above stops the creditor from subsequently proceeding to raise against any executor or other representative of the debtor an action to constitute the debt.

(4)Any warrant for diligence in an extract of a decree in such an action authorises land attachment.

90Effect of debtor’s death after land attachment created

(1)For the avoidance of doubt, where a debtor, whose land is subject to a land attachment, dies, the land attachment continues to have effect in relation to the attached land.

(2)The Court of Session may, by Act of Sederunt, provide for the operation of this Chapter in a case to which this section applies and may, in particular—

(a)modify the provisions about service of notices of applications for warrant for sale and foreclosure; and

(b)confer power on the sheriff to dispense with or modify procedures under this Chapter.

91Caveat by purchaser under missives

(1)This section applies where—

(a)a person has entered into a contract to purchase land from a debtor; and

(b)ownership has not been transferred to that person.

(2)The person may, for the purpose of receiving intimation of any application, under section 92(1) of this Act, for a warrant for sale of the land, register in the Register of Inhibitions a notice in (or as nearly as may be in) the form prescribed by Act of Sederunt.

Preparations for sale of attached land

92Application for warrant to sell attached land

(1)Where—

(a)a land attachment is in effect;

(b)the period of 6 months, beginning with the day or, as the case may be, the last day on which the notice of land attachment is registered, has expired;

(c)the sum recoverable by the land attachment exceeds the sum mentioned in subsection (3) below (in this Chapter, the “prescribed sum”); and

(d)the sum recoverable has not been paid,

the creditor may, subject to subsection (2) below, apply to the sheriff for a warrant for sale of the attached land or such part of it as may be specified in the application.

(2)The Scottish Ministers may by regulations provide that where attached land, or any part of it, is—

(a)a dwellinghouse; or

(b)a dwellinghouse of such description or class as may be specified in the regulations,

an application under subsection (1) above may be made only in relation to such part of the attached land which is not a dwellinghouse or, as the case may be, such a dwellinghouse.

(3)The prescribed sum is—

(a)£3,000; or

(b)such other sum as may be prescribed by the Scottish Ministers by regulations.

(4)An application under subsection (1) above must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(b)specify—

(i)the attached land (or part of it) in relation to which the warrant for sale is sought; and

(ii)a solicitor who is willing to execute any warrant for sale granted; and

(c)be accompanied by—

(i)a report on a search in the appropriate property register in respect of the land specified in the application;

(ii)a report on a search in the Register of Inhibitions in respect of the debtor and any person who owns the attached land in common with the debtor;

(iii)a copy of the notice of land attachment;

(iv)a copy of the certificate of service of that notice on the debtor;

(v)a declaration signed by the solicitor mentioned in paragraph (b)(ii) above; and

(vi)any other document prescribed by Act of Sederunt.

(5)An application under subsection (1) above must be intimated to—

(a)the debtor;

(b)if the report mentioned in subsection (4)(c)(ii) above discloses that a notice has been registered under section 91 of this Act, the person at whose instance the notice was registered;

(c)any person holding any security or diligence ranking prior to or pari passu with the land attachment;

(d)any occupier of the land;

(e)any person who owns the land in common with the debtor; and

(f)any other person belonging to a class of persons prescribed by the Scottish Ministers by regulations.

(6)A person who receives intimation under subsection (5) above may, before the expiry of the period of 14 days beginning with the day on which intimation is made, lodge objections to the application.

(7)The Scottish Ministers may, by regulations, make further provision about the reports on searches mentioned in subsection (4)(c)(i) and (ii) above which are to accompany an application under subsection (1) above.

(8)Where provision is made by virtue of this Chapter or by any other enactment permitting the application under subsection (1) above to be an electronic communication—

(a)the requirement in paragraph (c) of subsection (4) above that the application be accompanied by the documents mentioned in that paragraph is satisfied by the provision of electronic communications; and

(b)the requirement that the declaration mentioned in sub-paragraph (v) of that paragraph be signed is satisfied by a certified electronic signature.

(9)In this section, “sheriff” means a sheriff of the sheriffdom in which the attached land or any part of it is situated.

93Notice to local authority of application for warrant for sale

(1)Where a creditor (other than a local authority) applies under section 92(1) of this Act for a warrant for sale of attached land which comprises or includes a dwellinghouse, the creditor must give notice of that fact to the local authority in whose area the dwellinghouse is situated.

(2)A notice under subsection (1) above must be given in the form and manner prescribed under section 11(3) of the Homelessness etc. (Scotland) Act 2003 (asp 10).

94Preliminary hearing on application for warrant to sell

(1)The sheriff must, on receiving an application under section 92(1) of this Act and after expiry of the period mentioned in subsection (6) of that section—

(a)hold a hearing; and

(b)give the persons mentioned in subsection (5) of that section the opportunity of making representations.

(2)The creditor must attend the hearing whether or not the application is opposed.

(3)The sheriff must, if satisfied that the application is in order, make an order—

(a)fixing a date for a hearing on the application under section 97 of this Act;

(b)requiring the creditor to intimate that date to the persons mentioned in section 92(5) of this Act;

(c)appointing a chartered surveyor or other suitably qualified person to report on the open market value of the land specified in the application (that surveyor or other person, and their report, being referred to in this Chapter as the “valuer” and the “valuation report” respectively); and

(d)where any security or diligence is held in relation to the land specified in the application and the creditor has been unable to ascertain the amount of the sums secured by that other security or diligence, requiring the holder of that security or diligence to disclose to the creditor—

(i)the amount of the sums secured; and

(ii)where the security holder is obliged to pay any other sums which would be secured by that security to the debtor, the amount of such sums.

95Valuation report

(1)The valuer appointed under section 94(3)(c) of this Act—

(a)may take all steps which are reasonably necessary (including inspecting the attached land) to produce a valuation report; and

(b)must send a copy of the report to—

(i)the creditor; and

(ii)the persons mentioned in section 92(5) of this Act.

(2)The debtor and any other person in occupation of attached land must allow the valuer to inspect the land and carry out any other steps which are necessary to produce the valuation report.

(3)The creditor is liable for the valuer’s reasonable remuneration and outlays incurred in exercising functions under this section.

(4)Such remuneration and outlays are expenses incurred by the creditor in executing the land attachment.

96Creditor’s duties prior to full hearing on application for warrant for sale

(1)The creditor must, no later than 7 clear days before the date fixed for the hearing under section 97 of this Act, lodge—

(a)the valuation report;

(b)a continuation of the report on the search in the appropriate property register mentioned in section 92(4)(c)(i) of this Act;

(c)a continuation of the report on the search in the Register of Inhibitions mentioned in section 92(4)(c)(ii) of this Act; and

(d)a note specifying the amount outstanding under any security or diligence over the land specified in the application.

(2)Where a report lodged under subsection (1)(b) or (c) above reveals a deed registered since the date of the report mentioned in section 92(4)(c)(i) of this Act or, as the case may be, a notice under section 91 of this Act registered since the date of the report mentioned in section 92(4)(c)(ii) of this Act, the sheriff—

(a)must make an order requiring—

(i)the application; and

(ii)the date fixed for the hearing,

to be intimated to the person who registered that deed or, as the case may be, that notice; and

(b)may, if it appears necessary to do so, make an order—

(i)postponing the hearing to a later date; and

(ii)requiring the creditor to intimate that date to that person and to the persons mentioned in section 92(5) of this Act.

(3)Where the sheriff makes an order under subsection (2)(b)(i) above postponing the hearing, the sheriff may make such ancillary orders as the sheriff thinks fit including, without prejudice to that generality, an order requiring fresh continuations of the reports on searches mentioned in subsection (1)(b) and (c) above to be lodged.

(4)Subsection (6) of section 92 of this Act applies to a person who receives intimation under subsection (2) above as it applies to a person who receives intimation under subsection (5) of that section.

(5)The Scottish Ministers may, by regulations, make further provision about the continuations of the reports on searches mentioned in subsection (1)(b) and (c) above which are to be lodged under that subsection.

97Full hearing on application for warrant for sale

(1)At the hearing on an application under section 92(1) of this Act, the sheriff must not make any order without first giving any person who has lodged objections under section 92(6) of this Act an opportunity to be heard.

(2)Subject to subsections (3) and (5) below and to sections 98, 99 and 102 of this Act, the sheriff may, if satisfied that the application is in order, make an order—

(a)subject to subsection (4) below, granting a warrant for sale of the attached land; and

(b)authorising the solicitor specified in the application (or such other solicitor the sheriff specifies) to execute that warrant (in this Chapter, that solicitor being referred to as the “appointed person”).

(3)The sheriff may, if satisfied that granting a warrant for sale would be unduly harsh to the debtor or any other person having an interest—

(a)make an order under subsection (2) above but suspend its effect for a period not exceeding 1 year beginning with the date on which the order is made; or

(b)make an order refusing to grant such a warrant.

(4)The sheriff—

(a)must specify in the warrant granted the period within which the attached land is to be sold; and

(b)may grant warrant—

(i)to sell only part of the attached land;

(ii)to sell the attached land by lots.

(5)The sheriff must make an order refusing the application for a warrant for sale if satisfied that any of the grounds mentioned in subsection (6) below apply.

(6)The grounds referred to in subsection (5) above are that—

(a)the land attachment is invalid;

(b)the land attachment has ceased to have effect;

(c)the attached land (or any part of it) is not capable of being sold;

(d)the sum recoverable by the land attachment does not exceed the prescribed sum;

(e)a warrant for sale of the attached land (or any part of it) has been granted to another creditor of the debtor;

(f)a heritable creditor of the debtor is exercising that creditor’s right to sell the attached land (or any part of it) under the security;

(g)if the attached land (or any part of it) were sold, the likely net proceeds of the sale would not exceed the sum mentioned in subsection (7) below.

(7)The sum referred to in subsection (6)(g) above is the aggregate of—

(a)the expenses of the land attachment chargeable against the debtor; and

(b)whichever is the lesser of—

(i)the sum of £1,000; and

(ii)the sum equal to 10 per cent of the sum mentioned in section 81(6)(a) of this Act or so much of that sum as is outstanding,

or such other sum or percentage as may be prescribed by the Scottish Ministers by regulations.

(8)In subsection (6)(g) above, “likely net proceeds” means the sum likely to be raised by the sale of the attached land less any sums that would be due to a creditor holding a security or diligence over the attached land which ranks prior to or pari passu with the land attachment.

98Application for warrant for sale of sole or main residence

(1)This section applies where—

(a)the creditor applies under section 92(1) of this Act for a warrant for sale of attached land which comprises or includes a dwellinghouse; and

(b)that dwellinghouse is the sole or main residence of—

(i)the debtor;

(ii)where the owner of the dwellinghouse is not the debtor, that owner; or

(iii)any person mentioned in subsection (2) below.

(2)Those persons are—

(a)a non-entitled spouse of the debtor or the owner;

(b)a person living together with the debtor or the owner as husband and wife;

(c)a civil partner of the debtor or the owner;

(d)a person living together with the debtor in a relationship which has the characteristics of the relationship between a husband and wife except that the person and the debtor or the owner are of the same sex;

(e)a person to whom subsection (3) below applies.

(3)This subsection applies to a person where—

(a)the debtor or the owner does not reside in the dwellinghouse;

(b)a child of the debtor or the owner, who is also a child of the person, does so reside; and

(c)the person has lived together with the debtor or the owner as is mentioned in paragraph (b) or (d) of subsection (2) above throughout the period of 6 months ending with the day on which the debtor or the owner ceased to so reside.

(4)Before making, under section 97(2) of this Act, an order granting a warrant for sale, the sheriff must have regard to the matters mentioned in subsection (5) below.

(5)Subject to subsection (6) below, those matters are—

(a)the nature of and reasons for the debt secured by the land attachment;

(b)the debtor’s ability to pay, if the effect of the warrant for sale were suspended by an order under subsection (7) below, the debt outstanding (including any interest and expenses chargeable against the debtor);

(c)any action taken by the creditor to assist the debtor in paying that debt;

(d)the ability of those occupying the dwellinghouse as their sole or main residence to secure reasonable alternative accommodation.

(6)The Scottish Ministers may by regulations modify subsection (5) above to—

(a)add to;

(b)remove from; or

(c)vary,

the matters mentioned there.

(7)Where the sheriff makes, under section 97(2) of this Act, an order granting a warrant for sale, the sheriff may suspend the effect of the warrant for a period not exceeding 1 year beginning with the day on which the order is made.

(8)For the purposes of subsection (1) above, a dwellinghouse may be a sole or main residence irrespective of whether it is used, to any extent, by the debtor or a person mentioned in subsection (2) above for the purposes of any profession, trade or business.

(9)In this section—

  • “child” means—

    (a)

    a child under the age of 16 years; and

    (b)

    includes—

    (i)

    a stepchild; and

    (ii)

    any child brought up or treated by any person to whom subsection (3) above applies or by the debtor or the owner as a child of that person, of the debtor or of the owner;

  • “dwellinghouse” includes any yard, garden, outbuilding or other pertinents; and

  • “non-entitled spouse” is to be construed in accordance with section 1(1) of the Matrimonial Homes (Family Protection) (Scotland) Act 1981 (c. 59).

99Protection of purchaser under contract where creditor applies for warrant for sale

(1)This section applies where—

(a)the creditor applies under section 92(1) of this Act for a warrant for sale of attached land; and

(b)a person, at whose instance a notice was, by virtue of section 91 of this Act, registered (in this section, a “prospective purchaser”), has lodged objections to the application.

(2)At the hearing under section 97(1) of this Act, the sheriff may, if satisfied as to the matters mentioned in subsection (3) below, make an order—

(a)sisting the application;

(b)requiring the prospective purchaser to pay the price under the contract to the creditor; and

(c)making such other incidental or consequential provision as the sheriff thinks fit.

(3)The matters are that—

(a)the prospective purchaser did not, in entering into the contract for the purchase of the land, seek to defeat the rights of creditors of the debtor; and

(b)both the prospective purchaser and the debtor will proceed with the purchase under the contract without undue delay.

(4)Section 116 of this Act applies to the proceeds of sale paid to the creditor in pursuance of an order under subsection (2) above as it applies to a sale in pursuance of a warrant for sale subject to the modification that references to the “appointed person” are references to the “creditor”.

100Protection of purchaser under contract where warrant for sale granted

(1)This section applies where—

(a)a warrant for sale has been granted under section 97(2) of this Act; and

(b)a person (in this section, the “prospective purchaser”) had, before the notice of land attachment was registered, entered into a contract to purchase attached land from the debtor.

(2)The sheriff may, on the application of the prospective purchaser and if satisfied as to the matters mentioned in section 99(3) of this Act, make an order—

(a)suspending the warrant for sale for a period not exceeding 1 year from the day on which the order is made;

(b)requiring the prospective purchaser to pay the price under the contract to the appointed person; and

(c)making such other incidental or consequential provision as the sheriff thinks fit.

(3)Section 116 of this Act applies to the proceeds of sale paid to the appointed person in pursuance of an order under subsection (2) above as it applies to a sale in pursuance of a warrant for sale.

101Provision supplementary to sections 99 and 100

(1)This section applies where an order is made under section 99(2) or 100(2) of this Act.

(2)The sheriff may, on the application of the creditor or the appointed person, as the case may be, if satisfied as to the matters mentioned in subsection (3) below, revoke the order under section 99(2) or, as the case may be, section 100(2) of this Act.

(3)The matters are that—

(a)the prospective purchaser and the debtor entered into the contract for the purchase of the land in order to defeat the rights of creditors of the debtor; or

(b)there has been undue delay in completing the purchase.

102Warrant for sale of attached land owned in common

(1)This section applies where attached land specified in an application under section 92(1) of this Act is a pro indiviso share owned in common by the debtor and a third party.

(2)Subject to subsection (3) below, the sheriff may, under section 97(2) of this Act, make an order granting a warrant for sale of the land specified in the application.

(3)The sheriff must specify in the order whether the warrant—

(a)authorises—

(i)division of the land owned in common; and

(ii)sale of the part, specified in the warrant, which, after such division, would belong to the debtor as sole owner (in this section, the “debtor’s part”); or

(b)sale of the land owned in common and, subject to subsection (5) below, division of the proceeds.

(4)Where the warrant authorises division of the land owned in common—

(a)with effect from the day on which the order granting the warrant is made—

(i)the debtor’s part is subject to the land attachment; and

(ii)the remaining land is disburdened of the land attachment; and

(b)this Chapter applies as if the warrant for sale granted were a warrant for sale of the debtor’s part only.

(5)Where the warrant authorises sale of the land owned in common and division of the proceeds, the appointed person must—

(a)subject to the rights of any creditor of the third party holding a security over the third party’s pro indiviso share of the land, pay to the third party the share of the proceeds of sale due to that person; and

(b)deal, under section 116 of this Act, with the share of the proceeds that is attributable to the debtor’s share in the land as if those proceeds were proceeds from the sale of land owned by the debtor as sole owner.

(6)Where land to which this section applies is divided and sold, or sold, in pursuance of a warrant for sale, the third party who, immediately before that warrant is granted, owned the land in common with the debtor may purchase the debtor’s part or, as the case may be, the land.

(7)Where the third party purchases land which is sold under a warrant authorising sale and division of the proceeds—

(a)the third party need pay to the appointed person only the share of the price attributable to the debtor’s share in the land; and

(b)subsection (5)(a) above does not apply.

103Intimation of sheriff’s decision at full hearing

(1)Where a warrant for sale is granted under section 97(2) of this Act, the creditor must, as soon as is reasonably practicable, send a copy of the warrant to—

(a)the debtor; and

(b)the appointed person.

(2)Where a warrant for sale is refused under section 97(3)(b) or (5) of this Act, the sheriff clerk must, as soon as is reasonably practicable, send a copy of the order to the debtor and to any other person appearing to the sheriff clerk to have an interest.

104Supplementary orders as respects sale

(1)The sheriff may, either when making an order granting a warrant for sale or subsequently, make such order as appears to the sheriff to be appropriate in connection with the sale of the attached land.

(2)In particular, the sheriff may, on the application of the appointed person—

(a)extend the period specified in the warrant granted under section 97(2) of this Act within which the land is to be sold;

(b)remove that appointed person and appoint another solicitor as the appointed person; and

(c)on the application of the creditor, the debtor or any other person appearing to the sheriff to have an interest—

(i)in a case where the appointed person has died, appoint another solicitor as the appointed person;

(ii)in a case where the appointed person is unable to carry out the appointed person’s functions due to ill health or incapacity, remove that person and appoint another solicitor as appointed person;

(iii)in any other case, on cause shown, so remove and appoint.

(3)An order made under this section after the grant of a warrant for sale must be intimated by the creditor—

(a)in such form and manner;

(b)before the expiry of such period; and

(c)to the debtor and such other persons,

as the sheriff may direct.

105Effect of certain refusals of application for warrant for sale under section 97(5)

Where, under section 97(5) of this Act, an order is made refusing an application for a warrant for sale by virtue of a ground mentioned in paragraph (d), (e), (f) or (g) of subsection (6) of that section—

(a)the land attachment does not, by reason only of that refusal, cease to have effect; and

(b)it is competent for the creditor to make a further application under section 92(1) of this Act.

106Termination of debtor’s right to occupy land

(1)Where an order is made granting a warrant for sale, the creditor may, by notice served on—

(a)the debtor; and

(b)any other person having a right, derived from the debtor, to occupy the land to which the warrant relates,

terminate, with effect from such day as the creditor specifies in the notice (being a day not less than 7 days after the date of service), any right of the debtor (or other person) to occupy that land.

(2)A notice under subsection (1) above must be—

(a)in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)served on the debtor or, as the case may be, other person.

(3)Any right of a person (other than the debtor) to occupy land which, before a notice of land attachment relating to the land was registered, would have been binding on a singular successor of the debtor is not affected by subsection (1) above.

(4)A certificate, in (or as nearly as may be in) the form prescribed by Act of Sederunt, of service of a notice such as is mentioned in subsection (1) above may be registered.

107Consequences of giving notice under section 106(1)

(1)From the date on which the creditor gives notice under section 106(1) of this Act until the land attachment ceases to have effect the creditor (in place of the debtor) has the rights and obligations of a heritable creditor in lawful possession of the land.

(2)Without prejudice to the generality of subsection (1) above, those rights and obligations—

(a)include any rights and obligations under any lease, or under any permission or right of occupancy, granted in respect of the land, including the right to receive rent from any tenant;

(b)do not include the power to grant a lease.

(3)Subsection (2)(a) above applies only as respects rent payable on or after the date on which the creditor intimates in writing to the tenant that the notice has been given.

(4)A creditor who has given notice under section 106(1) of this Act—

(a)may apply to the sheriff for an order—

(i)authorising the carrying out of works of reconstruction, alteration or improvement if they are works reasonably required to maintain the market value of the land; and

(ii)to recover from the debtor any expenses and outlays reasonably incurred in so doing;

(b)may bring an action of ejection against the debtor; and

(c)has title to bring any action of removing, intrusion or ejection which the debtor might competently have brought in respect of the land.

(5)Any—

(a)expenses or outlays incurred as mentioned in subsection (4)(a)(ii) above; and

(b)expenses of any action of removing, intrusion or ejection brought by virtue of subsection (4)(b) or (c) above,

are expenses incurred in executing the land attachment.

(6)The reference in subsection (3) above to intimation in writing includes a reference to intimation by electronic communication.

The sale

108Appointed person

(1)The appointed person—

(a)is an officer of the court; and

(b)must act independently of the creditor, the debtor and any other interested person.

(2)Before exercising any functions conferred by virtue of this Chapter, the appointed person must lodge a bond of caution for such amount as may be prescribed by Act of Sederunt.

(3)The appointed person may apply to the sheriff who granted the warrant for sale under section 97(2) of this Act for directions as to how to exercise any of that person’s functions.

(4)In executing a warrant for sale granted under section 97(2) of this Act, the appointed person must—

(a)exercise the functions conferred—

(i)by this Chapter; and

(ii)by the Scottish Ministers under subsection (8) below; and

(b)comply with any directions made under subsection (3) above.

(5)The appointed person is liable to the creditor, the debtor, any person who owns the attached land in common with the debtor and any secured creditor for any patrimonial loss caused as a result of the appointed person’s negligence in executing the warrant for sale.

(6)The creditor is liable for the appointed person’s reasonable remuneration and outlays incurred in exercising functions conferred by virtue of this Chapter.

(7)Such remuneration and outlays are expenses incurred by the creditor in executing the land attachment.

(8)The Scottish Ministers may, by regulations—

(a)confer functions on;

(b)remove functions from; or

(c)otherwise modify the functions of,

appointed persons.

109Method of sale

(1)The land in relation to which a warrant for sale is granted under section 97(2) of this Act must be sold in execution of that warrant by the appointed person.

(2)The land may, unless the sheriff otherwise directs, be sold by private bargain or at auction.

(3)The appointed person must consult the creditor before determining which of the methods of sale mentioned in subsection (2) above is to be used.

(4)The appointed person must—

(a)advertise the sale of the attached land; and

(b)ensure that the price at which the land is sold is the best that can reasonably be obtained.

110Legal incapacity or disability of debtor not to affect title of purchaser

Any legal incapacity or disability of a debtor has no effect on the title passed to a purchaser of attached land which has been sold in execution of a warrant for sale.

111Title of purchaser not to be affected by certain irregularities

(1)Where a disposition bearing to be granted in execution of a warrant for sale is registered in the appropriate property register, the validity of that disposition is not, if the conditions mentioned in subsection (2) below are satisfied, challengeable on the ground—

(a)that the land attachment was irregularly executed; or

(b)that, before the date of settlement of the sale, the land attachment had ceased to have effect.

(2)The conditions are that—

(a)the purchaser acted in good faith in relation to the purchase of the land; and

(b)the appointed person grants a certificate, in (or as nearly as may be in) the form prescribed by Act of Sederunt, to the purchaser confirming that the land attachment was regularly executed.

(3)In subsection (2)(a) above, a purchaser is deemed to have acted in good faith where, immediately before the date of settlement, the purchaser was not aware and could not reasonably have become aware that the land attachment was irregularly executed or, as the case may be, that it had, before that date, ceased to have effect.

112Effect of registration of disposition on securities

Where a disposition of attached land is granted in execution of a warrant for sale to a purchaser, then, on the registration of the disposition, the land is disburdened of—

(a)the land attachment; and

(b)any—

(i)heritable security; or

(ii)diligence,

ranking pari passu with, or after, the land attachment.

113Report of sale

(1)Where attached land is sold in execution of a warrant for sale, the appointed person must, before the expiry of the period of 28 days beginning with the day on which the sale price is paid, lodge with the sheriff clerk for the court which granted the warrant a report of the sale.

(2)A report lodged under subsection (1) above must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)contain—

(i)a description of the land (or part) sold and the sale price;

(ii)a description of any land which is unsold and the price at which it was last offered for sale (or, if offered for sale at auction, the reserve price);

(iii)a statement of the expenses incurred by the creditor in executing the land attachment;

(iv)a statement of the amount due under any security or diligence ranking on the proceeds of sale prior to, or pari passu with, the land attachment;

(v)a statement of the amount due under any security or diligence ranking on the proceeds of sale after the land attachment;

(vi)a note of the amount of any surplus of the sale proceeds payable to the debtor; and

(vii)a note of any balance of the debt due by the debtor to the creditor.

(3)If the appointed person—

(a)without reasonable excuse makes a report of sale after the expiry of the period mentioned in subsection (1) above; or

(b)wilfully refuses to make, or delays making, a report after the expiry of that period,

the sheriff may make an order providing that the appointed person is not entitled to payment from the creditor of the reasonable remuneration and outlays incurred in executing the warrant for sale or so much of such remuneration and outlays as the sheriff specifies.

114Audit of report of sale

(1)Where a report is lodged under section 113(1) of this Act, the sheriff must remit it to the auditor of court for the auditor to report on it within such time as the sheriff may specify.

(2)The auditor must—

(a)tax the expenses of the land attachment chargeable against the debtor;

(b)certify the balance due to or by the debtor following the sale; and

(c)submit a report to the sheriff.

(3)The auditor is not entitled to charge a fee in respect of the report submitted under subsection (2)(c) above.

(4)The report of sale and the auditor’s report must be retained by the sheriff clerk for such period as may be prescribed by Act of Sederunt and during that period must be available for inspection by any interested person on payment of such fee as may be prescribed in an order made under section 2 of the Courts of Law Fees (Scotland) Act 1895 (c. 14).

115Sheriff’s consideration of report

(1)Where the auditor has submitted a report to the sheriff under section 114(2)(c) of this Act, the sheriff may, after considering that report and the report on sale lodged under section 113(1) of this Act—

(a)make an order approving the report of sale subject to such amendments (if any) made—

(i)following a hearing under subsection (2) below, by the sheriff; or

(ii)by the auditor,

as may be specified in the order;

(b)if the sheriff is satisfied that there has been a substantial irregularity in the land attachment, make an order—

(i)declaring the land attachment to be void; and

(ii)making such consequential order as appears to the sheriff to be necessary in the circumstances.

(2)The sheriff may not make an order under subsection (1) above without first giving all interested persons an opportunity to be heard.

(3)The sheriff clerk must intimate the order of the sheriff under subsection (1) above to the debtor and any other person appearing to the sheriff clerk to have an interest.

(4)Any order under subsection (1)(b) above does not affect the title of any person to land sold in execution of the warrant for sale to which the report relates.

116Proceeds of sale

(1)Where attached land is sold in execution of a warrant for sale, the proceeds of the sale must be disbursed by the appointed person in the following order—

(a)subject to subsection (2) below, any expenses due to the creditor by virtue of section 114(2)(a) of this Act;

(b)any sums due to any other creditor holding a security or diligence over the land which ranks prior to the land attachment;

(c)any sums due to—

(i)the attaching creditor in respect of the sum recoverable by the land attachment (other than any such expenses as are mentioned in paragraph (a) above); and

(ii)any creditor under a security or diligence which ranks pari passu with the land attachment;

(d)any sums due to any other creditor under any security or diligence which ranks after the land attachment; and

(e)subject to section 37(8C)(b) of the 1985 Act, any balance due to the debtor.

(2)Subject to section 113(3) of this Act, the appointed person may deduct and retain from the sum mentioned in subsection (1)(a) above such remuneration and outlays incurred by the appointed person in executing the warrant for sale.

(3)Where there is a balance due to the debtor, the appointed person must pay it to the debtor or any person authorised to give a receipt for the balance on the debtor’s behalf.

(4)Where, by virtue of subsection (1) above, a creditor receives the sums due to the creditor under a security or diligence, that creditor must grant a discharge of that security or diligence.

(5)If the appointed person is unable to obtain from—

(a)the debtor; or

(b)any creditor of the debtor;

a receipt or discharge in respect of the disbursement of the proceeds of sale, the appointed person may consign the amount due in the sheriff court for the person having right to it.

(6)Any such consignation discharges the obligation to pay the amount due; and a certificate of the sheriff clerk is sufficient evidence of the discharge.

Foreclosure

117Foreclosure

(1)This section applies where the appointed person—

(a)has exposed to sale the land specified in the warrant for sale; and

(b)has—

(i)failed to find a purchaser; or

(ii)succeeded in selling only part of the land, and that at a price which is less than the sum secured by the land attachment and by any security or diligence ranking prior to, or pari passu with, the land attachment.

(2)The appointed person may apply, in (or as nearly as may be in) the form prescribed by Act of Sederunt, to the sheriff who granted the warrant for sale for a decree of foreclosure.

(3)The application under subsection (2) above must be accompanied by—

(a)a statement setting out the whole amount secured—

(i)by the land attachment; and

(ii)by any other security or diligence ranking prior to or pari passu with the land attachment; and

(b)where part of the land has been sold, a report on that sale under section 113(1) of this Act.

(4)A copy of an application under subsection (2) above must be served by a judicial officer on—

(a)the debtor;

(b)where the debtor does not own the land, the owner;

(c)any occupier of the land specified in the warrant for sale;

(d)any creditor in a heritable security affecting the land, as disclosed in a report of a search in the appropriate property register brought down to a date no later than 3 clear days before the day on which the application is made; and

(e)any other person having a land attachment or other diligence over the land.

(5)The sheriff, after affording any person on whom a copy of the application was served under subsection (4) above an opportunity to make representations, may—

(a)grant the decree of foreclosure applied for;

(b)sist the application for a period not exceeding 3 months to allow the debtor to pay the sum recoverable by the land attachment; or

(c)appoint a valuer to fix a reserve price at which the land (or remaining part of that land) must be—

(i)auctioned; or

(ii)advertised for sale and if unsold auctioned.

(6)The debtor may—

(a)bid and purchase at any auction under subsection (5)(c)(i) or (ii) above; or

(b)purchase at the price advertised under subsection (5)(c)(ii) above.

(7)Where an order has been made under subsection (5)(c) above and the appointed person—

(a)produces an auctioneer’s certificate that the land in question has been duly exposed to sale at the reserve price but is unsold; or

(b)certifies in (or as nearly as may be in) the form prescribed by Act of Sederunt that the land has been advertised at the reserve price but is unsold,

the sheriff may, without further intimation, grant decree of foreclosure.

(8)A decree of foreclosure granted under this section must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(b)describe the land in relation to which it is granted; and

(c)contain a declaration of the price at which, on registration of an extract of the decree, the creditor is deemed to have acquired the land.

(9)Where provision is made by virtue of this Chapter or by any other enactment permitting the application under subsection (2) above to be an electronic communication, the requirement in subsection (3) above that the application be accompanied by the statement and report mentioned in that subsection is satisfied by the provision of electronic communications.

118Registration of decree of foreclosure

(1)On registration of an extract of the decree of foreclosure in the appropriate property register—

(a)any right to discharge the land attachment by payment is extinguished;

(b)the creditor has right to, and is vested in, the land as if an irredeemable disposition of the land, granted in favour of the creditor by the debtor, had been delivered to the creditor and, on the date of registration of the extract of the decree, duly registered;

(c)the land is disburdened of the land attachment and of any security or diligence ranking after the land attachment; and

(d)the creditor has the like right as the debtor to redeem or as the case may be to discharge by payment any security or diligence ranking prior to, or pari passu with, the land attachment.

(2)Notwithstanding the registration of an extract of a decree of foreclosure, any personal obligation of the debtor under any security remains in full force and effect in so far as not extinguished by the price for which the creditor is deemed to have acquired the land and the price for which any part of the land has been sold.

(3)Title acquired by virtue of a decree of foreclosure under this section is not challengeable on the ground of any irregularity in the proceedings for, or in any diligence which preceded, foreclosure.

(4)Notwithstanding subsection (3) above, nothing in this section affects the competency of any claim for damages in respect of such proceedings or diligence as are mentioned in that subsection.

Payments to account and expenses

119Ascription

(1)This section applies where any sums are—

(a)recovered by a land attachment; or

(b)paid to account of the sum recoverable by the land attachment while it is in effect.

(2)Such sums must be ascribed to the following in the order in which they are mentioned—

(a)the expenses which are chargeable against the debtor incurred in the land attachment;

(b)any interest which has accrued, at the day or, as the case may be, the last day on which the notice of land attachment was registered, on the sum for payment of which the charge was served;

(c)any sum for payment of which that charge was served together with such interest as has accrued after the day mentioned in paragraph (b) above.

120Expenses of land attachment

(1)The expenses incurred by the creditor in executing a land attachment are chargeable against the debtor.

(2)Expenses which, in accordance with subsection (1) above, are chargeable against the debtor are recoverable from the debtor by the land attachment but not by any other legal process.

(3)Where any expenses such as are mentioned in subsection (2) above have not been recovered by the time the land attachment is completed, or otherwise ceases to have effect, they cease to be so recoverable.

(4)In subsection (2) above, the reference to expenses does not include a reference to the expenses of service of a charge.

(5)The sheriff may, if satisfied that the debtor has objected on frivolous grounds to—

(a)an application for a warrant for sale; or

(b)an application for a decree of foreclosure,

award expenses, not exceeding such amount as may be prescribed by the Scottish Ministers by regulations, against the debtor.

Termination, discharge etc. of land attachment

121Termination by payment etc.

(1)If the full sum for payment of which the charge was served is, before the expiry of the period of 28 days mentioned in section 81(3) of this Act, either paid or tendered to the creditor, to a judicial officer or to any other person who has authority to receive payment on behalf of the creditor—

(a)the land attachment is not created; and

(b)the notice of land attachment ceases to have effect.

(2)Subject to subsection (3) below, if the full sum recoverable by a land attachment is either paid or tendered to—

(a)any of the persons mentioned in subsection (1) above; or

(b)the appointed person,

the land attachment ceases to have effect.

(3)Subsection (2) above does not apply unless the sum is paid before—

(a)where a warrant for sale of the attached land (or part of it) is granted, a contract of sale of the attached land is concluded; or

(b)an extract of a decree of foreclosure in relation to the attached land (or part of it) is registered.

122Discharge

(1)This section applies where—

(a)under section 121(1)(b) of this Act, a notice of land attachment ceases to have effect; or

(b)under subsection (2) of that section, a land attachment ceases to have effect.

(2)The creditor must discharge—

(a)the notice of land attachment; or

(b)the land attachment,

provided that the expenses of discharge are paid or tendered to any of the persons mentioned in section 121(1) of this Act.

(3)It is competent to register any such discharge.

123Recall and restriction of land attachment

(1)The debtor or any other person having an interest may apply to the sheriff for an order—

(a)recalling a land attachment; or

(b)restricting such an attachment.

(2)An application under subsection (1) above must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be intimated to the creditor.

(3)The sheriff must, if satisfied—

(a)that the land attachment—

(i)is invalid;

(ii)has been executed incompetently or irregularly; or

(iii)has ceased to have effect; or

(b)that the creditor is, under section 122(2)(b) of this Act, obliged to discharge it,

make an order declaring that to be the case and recalling the land attachment.

(4)The sheriff may, if satisfied that a land attachment is valid but—

(a)having regard to the sum recoverable by the land attachment, that significantly more land is attached than need be; and

(b)that it is reasonable to do so,

make an order restricting the effect of the land attachment to part only of the land to which it relates.

(5)An order of recall or restriction must be in (or as nearly as may be in) the form prescribed by Act of Sederunt.

(6)It is competent for a person who obtains an order of recall or restriction to register that order in the appropriate property register.

124Duration of land attachment

(1)Subject to sections 121 to 123 of this Act and to subsection (2) below, a land attachment ceases to have effect on the expiry of the period of 5 years beginning with the day or, as the case may be, the last day on which the notice of land attachment is registered.

(2)The creditor may extend the period mentioned in subsection (1) above for a further period of 5 years.

(3)Such an extension is effected by the creditor registering, during the period of 2 months ending with the day on which the period mentioned in subsection (1) above ends, a notice of extension in (or as nearly as may be in) the form prescribed by Act of Sederunt.

(4)The creditor may extend the period for which a land attachment has effect on more than one occasion and subsections (1) to (3) above apply as if for the reference in subsection (1) above to the day on which the notice of land attachment is registered there were substituted a reference to the day or, as the case may be, the last day on which the notice of extension is last registered.

Land attachment subsequent to reduction of deed granted in breach of inhibition

125Land attachment subsequent to reduction of deed granted in breach of inhibition

(1)Notwithstanding section 82(2)(a)(ii) of this Act, where—

(a)a debtor has granted a deed to a person (in this section, a “third party”) in breach of an inhibition; and

(b)the deed has been reduced by the inhibiting creditor on the ground that it breached the inhibition,

it is competent for the inhibiting creditor to register a notice of land attachment in relation to land to which the reduced deed relates.

(2)A land attachment created following registration of a notice of land attachment in the circumstances mentioned in subsection (1) above enjoys preference in ranking in any competition with—

(a)a security granted over any land described in the notice in favour of; and

(b)a land attachment over any such land executed by,

a creditor of the third party.

(3)Where a notice of land attachment is registered in the circumstances mentioned in subsection (1) above, this Chapter applies with the following modifications (and in those modifications “third party” means a third party within the meaning given by subsection (1) above).

(4)The references mentioned in subsection (5) below to the “debtor” are to be read as references to the debtor and the third party.

(5)Those references are the references in sections 83(5)(a), 92(4)(c)(iv) and (5)(a), 103(1)(a), 104(3)(c), 106(1)(a), 108(5) and 117(4)(a).

(6)The references mentioned in subsection (7) below to the “debtor” are to read as references to the debtor or the third party.

(7)Those references are—

(a)the references in sections 86(1)(b), 91(1)(a), 95(2), 98(1)(b), (2), (3), (8) and (9)(b)(ii), 99(3)(b), 100(1)(b), 106(1) (except the reference in paragraph (a)), 107(1) and (4)(b) and (c), 113(2)(b)(vi), 116(3) and (5), 117(4) and (6) and 120(5); and

(b)the first reference in section 101(3)(a).

(8)In section 114(2)(b), after “to” insert “the debtor or third party”.

(9)In section 116(1), after paragraph (d) insert—

(da)any balance due to the third party;.

General and miscellaneous

126Land attachment as heritable security

For the avoidance of doubt, a land attachment is not a heritable security for the purposes of the Heritable Securities (Scotland) Act 1894 (c. 44).

127Statement on impact of land attachment

(1)The Scottish Ministers must, within 15 months of the commencement of this Chapter, prepare, publish and lay before the Scottish Parliament a statement setting out the impact of land attachment on debt recovery and homelessness.

(2)The statement must specify—

(a)the number of land attachments registered;

(b)the number of warrants for sale—

(i)granted;

(ii)refused; or

(iii)suspended,

under section 97;

(c)the number of persons made homeless as a consequence of this Chapter;

(d)the mean and median sums recovered by land attachment; and

(e)the effect which land attachment appears to have had on debtors' abilities to meet ongoing financial obligations and repay other debts.

(3)In this section, “homeless” has the meaning given in section 24 of the Housing (Scotland) Act 1987 (c. 26).

128Interpretation

(1)In this Chapter, unless the context otherwise requires—

  • “appointed person” has the meaning given by section 97(2)(b) of this Act;

  • “appropriate property register” has the meaning given by section 83(1)(c)(i) of this Act;

  • “attached land” has the meaning given by section 81(5)(a) of this Act;

  • “decree” has the meaning given in section 221 of this Act (except that paragraphs (c), (g) and (h) of the definition of “decree” in that section do not apply) being a decree which, or an extract of which, authorises land attachment;

  • “document of debt” has the meaning given in section 221 of this Act, being a document which, or an extract of which, authorises land attachment;

  • “judicial officer” means the judicial officer appointed by the creditor;

  • “land” has the meaning given by section 82(1) of this Act;

  • “long lease” has the same meaning as in section 28(1) of the Land Registration (Scotland) Act 1979 (c. 33);

  • “notice of land attachment” has the meaning given by section 83(1) of this Act;

  • “prescribed sum” has the meaning given by section 92(1)(c) of this Act;

  • “property register” means the Land Register of Scotland or, as the case may be, the General Register of Sasines;

  • “registering”, in relation to any document, means, unless the context otherwise requires, registering an interest in land or information relating to an interest in land (being an interest or information for which that document provides) in the Land Register of Scotland or, as the case may be, recording the document in the Register of Sasines (cognate expressions being construed accordingly);

  • “sum recoverable by the land attachment” has the meaning given by section 81(5)(b) of this Act; and

  • “warrant for sale” means a warrant granted under section 97(2) of this Act.

(2)In this Chapter—

(a)any reference to a purchase, sale, conveyance or disposition is, in a case where the attached land is a lease, to be construed as a reference to an assignation; and

(b)any reference to the ownership of land in such a case is to be construed as a reference to the right of lease,

and cognate expressions are to be construed accordingly.

(3)The Scottish Ministers may by order modify the definitions of “decree” and “document of debt” in subsection (1) above by—

(a)adding types of decree or document to;

(b)removing types of decree or document from; or

(c)varying the description of,

the types of decree or document to which those definitions apply.

Chapter 3Residual attachment

Residual attachment

129Residual attachment

(1)There is to be a form of diligence over property of a debtor to be known as residual attachment.

(2)Residual attachment may be used to attach property (heritable or moveable) only of such description or class as may be specified by the Scottish Ministers by regulations.

(3)The Scottish Ministers may specify any property but only if—

(a)it is transferable; and

(b)it is not—

(i)attachable by; or

(ii)exempt from,

any other diligence.

(4)The Scottish Ministers may not specify—

(a)a right of a debtor as tenant of a dwellinghouse which is the debtor’s sole or main residence; or

(b)a right of a debtor as tenant of a croft.

(5)Property which is owned in common by a debtor and a third party may be attached by residual attachment in satisfaction of the debts of the debtor.

(6)Regulations under subsection (2) above may—

(a)vary the description of; or

(b)remove property of such description or class from,

the property which may be attached by residual attachment.

(7)Regulations under subsection (2) above may make further provision, in the case of property of a particular description or class, about—

(a)the content and effect of an application for an order under section 132(2) of this Act (in this Chapter, a “residual attachment order”);

(b)the effect of such an order;

(c)the content and effect of an application for an order under section 136(2) of this Act (in this Chapter, a “satisfaction order”);

(d)the effect of such an order and, in particular—

(i)the methods for and procedures involved in satisfying the sum recoverable by the residual attachment out of the attached property which such an order may authorise;

(ii)the duration of such an order; and

(iii)the disbursement of any sums recovered by such an order;

(e)the powers of the court in relation to residual attachment orders, satisfaction orders and other orders made by virtue of this Chapter; and

(f)the termination of residual attachment.

(8)Regulations under subsection (2) above may make further provision—

(a)about the effect of the making of time to pay directions and time to pay orders on residual attachment; and

(b)about the effect of sequestration on residual attachment including, without prejudice to that generality, provision—

(i)that a residual attachment created during such period before the date of sequestration as may be prescribed is not to be effectual to create a preference for the creditor;

(ii)about the effect of sequestration on the rights of a creditor to insist in a residual attachment created before any such period; and

(iii)about the effect of sequestration on the rights of a creditor to create a residual attachment on or after the date of sequestration.

Application for residual attachment order

130Application for residual attachment order

(1)A creditor may apply to the court for a residual attachment order but only if—

(a)the debt is constituted by a decree or document of debt;

(b)the debtor has been charged to pay the debt;

(c)the period for payment specified in the charge has expired without payment being made; and

(d)where the debtor is an individual, the creditor has, no earlier than 12 weeks before applying for the residual attachment order, provided the debtor with a debt advice and information package.

(2)An application for a residual attachment order, must—

(a)be in (or nearly as may be in) the form prescribed by Act of Sederunt;

(b)specify the property which it is sought to attach;

(c)state—

(i)how, were a satisfaction order made, the value of that property would be realised; and

(ii)that doing so would result in the sum mentioned in section 134(3) of this Act being paid off or reduced; and

(d)be intimated to—

(i)the debtor; and

(ii)any other person having an interest.

(3)A person who receives intimation of the application may, before the expiry of the period of 14 days beginning with the day on which that intimation is made, lodge objections to the application.

131Effect of application for residual attachment order

(1)Where an application for a residual attachment order is intimated to a debtor, the debtor must not, during the period mentioned in subsection (2) below, take any of the steps mentioned in subsection (3) below in relation to the property specified in the application.

(2)The period referred to in subsection (1) above is the period—

(a)beginning with the day on which the application is intimated to the debtor; and

(b)ending with the day on which the court—

(i)makes a residual attachment order; or

(ii)dismisses the application.

(3)The steps referred to in subsection (1) above are—

(a)transferring or otherwise disposing of the property;

(b)burdening the property;

(c)granting any licence or sub-licence in relation to the property; or

(d)entering into any agreement to do anything mentioned in paragraph (a), (b) or (c) above in relation to the property.

(4)Any step mentioned in subsection (3) above which is taken in breach of subsection (1) above is void.

(5)Breach by the debtor or any other person of subsection (1) above may be dealt with as a contempt of court.

Residual attachment order

132Residual attachment order

(1)At the hearing on an application under section 130(1) of this Act, the court must not make any order without first giving any person who has lodged objections under subsection (3) of that section an opportunity to be heard.

(2)Subject to subsection (4) below, the court may, if satisfied that the application is in order, make—

(a)a residual attachment order; and

(b)any other order which the court thinks fit in consequence of the residual attachment order.

(3)A residual attachment order must—

(a)specify the property to be attached;

(b)require the creditor to intimate the order to—

(i)the debtor; and

(ii)any other person the court specifies; and

(c)state on whom the schedule of residual attachment must be served.

(4)The court must make an order refusing the application for a residual attachment order if satisfied—

(a)that the property specified in the application (or any part of it) is not capable of being attached by residual attachment; or

(b)that—

(i)were the satisfaction order proposed in the application made, it would not result in the value of that property being realised; or

(ii)were that order made and the value of that property realised, it would not result in the sum recoverable by the residual attachment being paid off or reduced.

(5)Without prejudice to the generality of subsection (2)(b) above, an order under that paragraph may—

(a)prohibit a specified person from acting so as to defeat the residual attachment in whole or in part;

(b)prohibit a specified person from making payments due to the debtor in respect of the property to be attached;

(c)appoint a judicial factor to ingather and manage that property;

(d)require a specified person to produce to the court documents relating to the debtor’s right to that property;

(e)authorise the creditor to complete title in the name of the debtor to that property; and

(f)authorise the creditor to take specified action to preserve the value of that property.

133Schedule of residual attachment

(1)Where the court grants a residual attachment order, the creditor may serve a schedule of residual attachment.

(2)A schedule of residual attachment must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(b)be served on—

(i)the debtor; and

(ii)any person specified in the residual attachment order; and

(c)specify the property which is being attached.

134Creation and effect of residual attachment

(1)A residual attachment is, subject to section 142(1) of this Act, created over the property specified in the schedule of residual attachment (in this Chapter, the “attached property”) at the beginning of the day after the day on which that schedule is served on the debtor.

(2)A residual attachment—

(a)confers on the creditor a right in security over the attached property; and

(b)secures the sum mentioned in subsection (3) below (in this Chapter, the “sum recoverable by the residual attachment”).

(3)That sum is—

(a)the sum for the payment of which the charge was served, together with any interest accruing after such service and before the residual attachment ceases to have effect; and

(b)all expenses which are chargeable against the debtor by virtue of the attachment.

Satisfaction order

135Application for satisfaction order

(1)The creditor may, where a residual attachment is in effect, apply to the court for a satisfaction order authorising the satisfaction of the sum recoverable by the residual attachment out of the attached property.

(2)An application under subsection (1) above must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(b)specify the attached property (or part of it) in relation to which the application is made;

(c)state—

(i)how, were a satisfaction order made, the value of that property would be realised; and

(ii)that doing so would result in the sum recoverable by the residual attachment being paid off or reduced; and

(d)be accompanied by—

(i)a copy of the schedule of residual attachment; and

(ii)any other document prescribed by Act of Sederunt.

(3)An application under subsection (1) above must be intimated to—

(a)the debtor;

(b)any person to whom the residual attachment order was intimated; and

(c)any other person having an interest.

(4)A person who receives intimation under subsection (3) above may, before the expiry of the period of 14 days beginning with the day on which intimation is made, lodge objections to the application.

(5)Where provision is made by virtue of this Chapter or by any other enactment permitting the application under subsection (1) above to be an electronic communication, the requirement in paragraph (d) of subsection (2) above that the application be accompanied by the documents mentioned in that paragraph is satisfied by the provision of electronic communications.

136Satisfaction order

(1)At the hearing on an application under section 135(1) of this Act, the court must not make any order without first giving any person who has lodged objections under subsection (4) of that section an opportunity to be heard.

(2)Subject to subsection (6) below, the court may, if satisfied that the application is in order, make—

(a)a satisfaction order authorising the satisfaction of the sum recoverable by the residual attachment out of the attached property (or part of it) specified in the order; and

(b)any other order which the court thinks fit in consequence of the satisfaction order.

(3)A satisfaction order must—

(a)specify the attached property to which it applies; and

(b)require the creditor to intimate the order to—

(i)the debtor; and

(ii)any other person the court specifies.

(4)Without prejudice to the generality of subsection (2) above, a satisfaction order may authorise—

(a)the creditor to sell the attached property;

(b)the transfer of ownership of the property to the creditor;

(c)the transfer of income derived from the property to the creditor; or

(d)the creditor to lease or licence the property.

(5)Where the court makes a satisfaction order—

(a)authorising the sale of attached property, it must—

(i)appoint a suitably qualified person (in this Chapter, the “appointed person”) who is willing to execute the order; and

(ii)specify in the order the period within which the attached property is to be sold;

(b)it may appoint a suitably qualified person to report on the market value of the attached property.

(6)The court must make an order refusing the application for a satisfaction order if satisfied that any of the grounds mentioned in subsection (7) below apply.

(7)The grounds referred to in subsection (6) above are—

(a)the residual attachment is invalid;

(b)the residual attachment has ceased to have effect; or

(c)that—

(i)were the satisfaction order proposed in the application made, it would not result in the value of that property being realised; or

(ii)were that order made and the value of that property realised, it would not result in the sum recoverable by the residual attachment being paid off or reduced.

(8)The court may, if satisfied that making a satisfaction order would be unduly harsh to the debtor or any other person having an interest—

(a)make a satisfaction order but suspend its effect for a period not exceeding 1 year beginning with the day on which the order is made; or

(b)make an order refusing the application.

137Intimation of court’s decision

(1)Where a satisfaction order is made, the creditor must, as soon as is reasonably practicable, send a copy of the order to—

(a)the debtor;

(b)where the satisfaction order authorises the sale of the attached property, the appointed person; and

(c)any other person the court specifies in the order.

(2)Where the court refuses to make a satisfaction order, the court must, as soon as is reasonably practicable, send a copy of the order to the debtor and to any other person appearing to the court to have an interest.

138Effect of certain refusals of application for satisfaction order

Where, under section 136(6) of this Act, an order is made refusing an application for a satisfaction order by virtue of the ground mentioned in paragraph (c) of subsection (7) of that section—

(a)the residual attachment does not, by reason only of that refusal, cease to have effect; and

(b)it is competent for the creditor to make a further application under section 135(1) of this Act.

Termination, discharge etc. of residual attachment

139Termination by payment etc.

(1)Subject to subsection (2) below, if the full sum recoverable by the residual attachment is either paid or tendered to—

(a)the creditor;

(b)where one has been appointed, the appointed person; or

(c)a judicial officer or any other person who has authority to receive payment on behalf of the creditor,

the residual attachment ceases to have effect.

(2)Subsection (1) above does not apply unless the sum is paid or tendered before—

(a)where a satisfaction order authorising sale of the attached property is made, a contract of sale of the attached property is concluded; or

(b)in any other case, the attached property is otherwise disposed of.

140Recall

(1)The debtor or any other person having an interest may apply to the court for an order—

(a)recalling a residual attachment; or

(b)restricting such an attachment.

(2)An application under subsection (1) above must—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be intimated to the creditor.

(3)The court must, if satisfied that the residual attachment—

(a)is invalid;

(b)has been executed incompetently or irregularly; or

(c)has ceased to have effect,

make an order declaring that to be the case and recalling the residual attachment.

(4)The court may, if satisfied that the residual attachment is valid but—

(a)having regard to the sum recoverable by the residual attachment, that significantly more property is attached than need be; and

(b)that is it reasonable to do so,

make an order restricting the effect of a residual attachment to part only of the property to which it relates.

(5)An order of recall or restriction must be in (or as nearly as may be in) the form prescribed by Act of Sederunt.

141Duration of residual attachment

(1)Subject to sections 139 and 140 of this Act and to subsection (2) below, a residual attachment ceases to have effect on the expiry of the period of 5 years beginning with the day on which the schedule of residual attachment is served on the debtor.

(2)The court may, on the application of the creditor during the period of 2 months ending with the day on which the period mentioned in subsection (1) above ends, extend the period during which a residual attachment has effect.

(3)The court may extend the period for which a residual attachment has effect on more than one occasion and subsections (1) and (2) above apply as if for the reference in subsection (1) above to the day on which the schedule of residual attachment is served on the debtor there were substituted a reference to the day on which the court last extended that period.

142Effect of death of debtor

(1)Where, in relation to a debt—

(a)the creditor has taken any steps towards obtaining a residual attachment order against the debtor; but

(b)has not, before the date of death of the debtor, served a schedule of residual attachment on the debtor,

any such steps cease to have effect; and accordingly any residual attachment order relating to that debt becomes, on that date, void.

(2)Where a residual attachment is created before the death of the debtor, it continues to have effect in relation to the attached property after that death.

(3)The Court of Session may, by Act of Sederunt, provide for the operation of this Chapter in a case to which this section applies and may, in particular—

(a)modify the provisions about intimation of applications for satisfaction orders; and

(b)confer power on the sheriff to dispense with or modify procedures under this Chapter.

General and miscellaneous

143Expenses of residual attachment

(1)The expenses incurred by the creditor in executing a residual attachment are chargeable against the debtor.

(2)Expenses which, in accordance with subsection (1) above, are chargeable against the debtor are recoverable from the debtor by the residual attachment but not by any other legal process.

(3)Where any expenses such as are referred to in subsection (2) above have not been recovered by the time the residual attachment is completed, or otherwise ceases to have effect, they cease to be so recoverable.

(4)In subsection (2) above, the reference to expenses does not include a reference to expenses of service of a charge.

(5)The court may, if satisfied that the debtor has objected to an application for a satisfaction order on frivolous grounds, award expenses, not exceeding such amount as may be prescribed by the Scottish Ministers by regulations, against the debtor.

144Ascription

(1)This section applies where any sums are—

(a)recovered by a residual attachment; or

(b)paid to account of the sum recoverable by the residual attachment while it is in effect.

(2)Such sums must be ascribed to the following in the order in which they are mentioned—

(a)the expenses which are chargeable against the debtor incurred in the residual attachment;

(b)any interest which has accrued, at the date of the making of the residual attachment order, on the sum for payment for which the charge was served;

(c)any sum for payment of which that charge was served together with such interest as has accrued after the day mentioned in paragraph (b) above.

145Interpretation

(1)In this Chapter—

  • “appointed person” has the meaning given by section 136(5)(a)(i) of this Act;

  • “attached property” has the meaning given by section 134(1) of this Act;

  • “court” means—

    (a)

    the Court of Session; or

    (b)

    the sheriff,

    and references to applying to the court are references to applying by petition or, as the case may be, by summary application;

  • “croft” has the meaning given by section 3 of the Crofters (Scotland) Act 1993 (c. 44);

  • “decree” has the meaning given in section 221 of this Act (except that paragraphs (c), (g) and (h) of the definition of “decree” in that section do not apply) being a decree which, or an extract of which, authorises residual attachment;

  • “document of debt” has the meaning given in section 221 of this Act, being a document which, or an extract of which, authorises residual attachment;

  • “dwellinghouse” includes any yard, garden, outbuilding or other pertinents;

  • “judicial officer” means the judicial officer appointed by the creditor;

  • “residual attachment order” means an order under section 132(2) of this Act;

  • “satisfaction order” means an order under section 136(2) of this Act; and

  • “sum recoverable by the residual attachment” has the meaning given by section 134(2)(b) of this Act.

(2)The Scottish Ministers may by order modify the definitions of “decree” and “document of debt” in subsection (1) above by—

(a)adding types of decree or document to;

(b)removing types of decree or document from; or

(c)varying the description of,

the types of decree or document to which those definitions apply.

Part 5Inhibition

Creation

146Certain decrees and documents of debt to authorise inhibition without need for letters of inhibition

(1)Inhibition in execution is competent to enforce—

(a)payment of a debt constituted by a decree or document of debt;

(b)subject to subsection (2) below, an obligation to perform a particular act (other than payment) contained in a decree.

(2)Inhibition under subsection (1)(b) above is competent only if the decree is a decree—

(a)in an action containing an alternative conclusion or crave for payment of a sum other than by way of expenses; or

(b)for specific implement of an obligation to convey heritable property to the creditor or to grant in the creditor’s favour a real right in security, or some other right, over such property.

(3)In section 3 of the Writs Execution (Scotland) Act 1877 (c. 40) (warrant in extract writ to authorise diligence), after paragraph (b) insert—

(ba)in relation to an ordinary debt within the meaning of the Debtors (Scotland) Act 1987, inhibition against the debtor;.

(4)In section 7(1) of the Sheriff Courts (Scotland) Extracts Act 1892 (c. 17) (warrant in extract decree to authorise diligence), after paragraph (b) insert—

(ba)in relation to an ordinary debt within the meaning of the Debtors (Scotland) Act 1987, inhibition against the debtor;.

(5)In section 87(2) of the 1987 Act (warrant in extract decree to authorise diligence), after paragraph (b) insert—

(ba)in relation to an ordinary debt, inhibition against the debtor;.

(6)It is not competent for the Court of Session to grant letters of inhibition.

(7)In a case where inhibition is executed under subsection (1)(b) above—

(a)sections 165 and 166 of this Act do not apply; and

(b)sections 158, 159, 160 and 163 of this Act have effect as if references to a “debtor” or “creditor” were references to the debtor or creditor in the obligation.

(8)In this Part—

  • “decree” has the meaning given by section 221 of this Act, except that paragraphs (c), (g) and (h) of the definition of “decree” in that section do not apply; and

  • “document of debt” has the meaning given by section 221 of this Act.

(9)The Scottish Ministers may by order modify the definitions of “decree” and “document of debt” in subsection (8) above by—

(a)adding types of decree or document to;

(b)removing types of decree or document from; or

(c)varying the description of,

the types of decree or document to which those definitions apply.

147Provision of debt advice and information package when executing inhibition

Where the debtor is an individual, a schedule of inhibition served in execution of an inhibition under section 146(1) of this Act (other than an inhibition such as is mentioned in section 146(2)(b)) must be accompanied with a debt advice and information package.

148Registration of inhibition

(1)An inhibition is registered only by registering—

(a)the schedule of inhibition; and

(b)the certificate of execution of the inhibition,

in the Register of Inhibitions.

(2)References in any enactment to registering or, as the case may be, recording an inhibition must, unless the context otherwise requires, be construed as references to registration in accordance with subsection (1) above.

(3)The—

(a)schedule of inhibition; and

(b)certificate of execution of the inhibition,

must be in (or as nearly as may be in) the form prescribed by the Scottish Ministers by regulations.

149Date on which inhibition takes effect

In the Titles to Land Consolidation (Scotland) Act 1868 (c. 101) (in this Chapter, the “1868 Act”), for section 155 (date on which inhibitions take effect) substitute—

155Date on which inhibition takes effect

(1)An inhibition has effect from the beginning of the day on which it is registered unless the circumstances referred to in subsection (2) below apply.

(2)Those circumstances are—

(a)a notice of inhibition is registered in the Register of Inhibitions;

(b)the schedule of inhibition is served on the debtor after that notice is registered; and

(c)the inhibition is registered before the expiry of the period of 21 days beginning with the day on which the notice is registered.

(3)In those circumstances the inhibition has effect from the beginning of the day on which the schedule of inhibition is served.

(4)A notice of inhibition must be in (or as nearly as may be in) the form prescribed..

Effect

150Property affected by inhibition

(1)Subject to section 153 of this Act, inhibition may affect any heritable property.

(2)Any enactment or rule of law by virtue of which inhibition may affect other property ceases to have effect.

(3)For the purposes of subsection (1) above and section 157 of the 1868 Act, a person acquires property at the beginning of the day on which the deed conveying or otherwise granting a real right in the property is delivered to that person.

151Effect on inhibition to enforce obligation when alternative decree granted

Where—

(a)an inhibition is executed to enforce a decree such as is mentioned in section 146(2)(a) of this Act; and

(b)decree is subsequently granted in terms of the alternative conclusion or crave mentioned in that section,

the inhibition continues to have effect for the purposes of enforcing payment of the debt constituted by that subsequent decree.

152Effect of conversion of limited inhibition on the dependence to inhibition in execution

Where—

(a)a creditor obtains a decree for payment of all or part of a principal sum concluded or craved for in proceedings on the dependence of which warrant for inhibition was granted; and

(b)the warrant was limited to specified property by virtue of section 15J(b) of the 1987 Act (property affected by inhibition on dependence),

any inhibition in execution of the decree is not limited to that property.

153Property affected by inhibition to enforce obligation to convey heritable property

Where a decree such as is mentioned in section 146(2)(b) of this Act is granted, any inhibition executed to enforce that decree is limited to the property to which the decree relates.

154Inhibition not to confer a preference in ranking

(1)An inhibition does not confer any preference in any—

(a)sequestration;

(b)insolvency proceedings; or

(c)other process in which there is ranking.

(2)Subsection (1) above does not affect any preference claimed in—

(a)a sequestration;

(b)insolvency proceedings; or

(c)any other process,

where the inhibition has effect before this section comes into force.

(3)For the avoidance of doubt, in this section, “other process” includes the process, under section 27(1) of the Conveyancing and Feudal Reform (Scotland) Act 1970 (c. 35), of applying the proceeds of sale where a creditor in a standard security has effected a sale of the security subjects.

(4)In this section, “insolvency proceedings” means—

(a)winding up;

(b)receivership;

(c)administration; and

(d)proceedings in relation to a company voluntary arrangement,

within the meaning of the Insolvency Act 1986 (c. 45).

155Power of receiver or liquidator in creditors' voluntary winding up to dispose of property affected by inhibition

(1)The Insolvency Act 1986 (c. 45) is amended as follows.

(2)After section 61(1) (which sets out the process by which a receiver may dispose of property subject to both the floating charge and to another security, other encumbrance or diligence) insert—

(1A)For the purposes of subsection (1) above, an inhibition which takes effect after the creation of the floating charge by virtue of which the receiver was appointed is not an effectual diligence..

(3)After section 166(1) (which applies the provisions of that section to a liquidator nominated by the company in a creditors' voluntary winding up) insert—

(1A)The exercise by the liquidator of the power specified in paragraph 6 of Schedule 4 to this Act (power to sell any of the company’s property) shall not be challengeable on the ground of any prior inhibition..

Termination

156Termination of effect of inhibition

In section 44(3) of the Conveyancing (Scotland) Act 1924 (c. 27) (limitation of effect of certain entries in the Register of Inhibitions and Adjudications)—

(a)in paragraph (a), the word “inhibitions,”, where it second occurs, is repealed; and

(b)after that paragraph insert—

(aa)all inhibitions shall cease to have effect on the lapse of five years from the date on which they take effect..

157Inhibition terminated by payment of full amount owing

(1)This section applies where—

(a)an inhibition executed to enforce payment of a debt has effect; and

(b)a sum is paid, in respect of the debt constituted by the decree or document of debt authorising the inhibition, to the creditor, a judicial officer or any other person who has authority to receive payment on behalf of the creditor.

(2)Where the sum paid amounts to the sum of—

(a)the debt (including any interest due under the decree or document of debt);

(b)the expenses incurred by the creditor in executing an inhibition (referred to in this section and in sections 165 and 166 as the “inhibition expenses”); and

(c)the expenses of discharging the inhibition,

the inhibition ceases to have effect.

(3)Any rule of law to the effect that an inhibition ceases to have effect on payment or tender of the debt constituted by the decree or document of debt is abolished.

(4)This section and sections 165 and 166 of this Act do not apply to an inhibition on the dependence of an action.

158Inhibition terminated by compliance with obligation to perform

Where—

(a)an inhibition executed to enforce an obligation to perform a particular act (other than payment) contained in a decree has effect; and

(b)the debtor has complied with the decree,

the inhibition ceases to have effect.

159Termination of inhibition when property acquired by third party

(1)Notwithstanding section 160 of this Act, an inhibition ceases to have effect (and is treated as never having had effect) in relation to property if a person acquires the property (or a right in the property) in good faith and for adequate consideration.

(2)For the purposes of subsection (1) above, a person acquires property (or a right in the property) when the deed conveying (or granting the right in) the property is delivered to the person.

(3)An acquisition under subsection (1) above may be from the inhibited debtor or any other person who has acquired the property or right (regardless of whether that person acquired in good faith or for value).

(4)For the purposes of subsection (1) above, a person is presumed to have acted in good faith if the person—

(a)is unaware of the inhibition; and

(b)has taken all reasonable steps to discover the existence of an inhibition affecting the property.

Breach

160Breach of inhibition

An inhibited debtor breaches the inhibition when the debtor delivers a deed—

(a)conveying; or

(b)otherwise granting a right in,

property over which the inhibition has effect to a person other than the inhibiting creditor.

161Prescription of right to reduce transactions in breach of inhibition

For the avoidance of doubt, section 8(1) of the Prescription and Limitation (Scotland) Act 1973 (c. 52) (extinction of certain rights relating to property by prescriptive period of 20 years) applies to the right of an inhibitor to have a deed granted in breach of an inhibition reduced.

162Registration of notice of litigiosity and discharge of notice

After section 159 of the 1868 Act insert—

159ARegistration of notice of summons of action of reduction

(1)This section applies where a pursuer raises an action of reduction of a conveyance or deed of or relating to lands granted in breach of an inhibition.

(2)The pursuer shall, as soon as is reasonably practicable after the summons in the action is signeted—

(a)register a notice of that signeted summons in accordance with section 159 of this Act; and

(b)register in the Land Register of Scotland or, as the case may be, record in the Register of Sasines a copy of that notice.

(3)Where a decree of reduction is not obtained in the action to which the notice relates, the pursuer shall, as soon as is reasonably practicable—

(a)register in the Register of Inhibitions; and

(b)register in the Land Register of Scotland or, as the case may be, record in the Register of Sasines,

a discharge of that notice in (or as nearly as may be in) the form prescribed..

163Reduction of lease granted in breach of inhibition

(1)This section applies where an inhibited debtor grants a lease of property affected by the inhibition.

(2)A lease which, on the date an action of reduction of the lease is raised, has an unexpired duration of not less than 5 years is reducible.

(3)A lease which, on the date an action of reduction of the lease is raised, has an unexpired duration of less than 5 years may be reduced only if the Court of Session is satisfied that it would be fair and reasonable in all the circumstances to do so.

(4)In calculating the unexpired duration of a lease for the purposes of subsections (2) and (3) above—

(a)any provision in the lease (however expressed) enabling the lease to be terminated earlier than the date on which the lease would otherwise terminate must be disregarded; and

(b)where the lease includes provision (however expressed) requiring the landlord to renew it, the duration of any such renewed lease must be added to the duration of the original lease.

General and miscellaneous

164Power to prescribe forms in the 1868 Act

(1)In section 159 of the 1868 Act (no litigiosity before date notice of summons is registered), for the words from “set” to “annexed” substitute “be in (or as nearly as may be in) the form prescribed.”.

(2)After section 159A of that Act (which is inserted by section 162 of this Act) insert—

159BPower of the Scottish Ministers to prescribe forms

(1)In sections 155, 159 and 159A of this Act, “prescribed” means prescribed by the Scottish Ministers by regulations.

(2)The power conferred on the Scottish Ministers to make regulations under subsection (1) above is exercisable by statutory instrument.

(3)A statutory instrument containing regulations made under subsection (1) above is subject to annulment in pursuance of a resolution of the Scottish Parliament..

165Expenses of inhibition

(1)Subject to subsection (3) below, the inhibition expenses are chargeable against the debtor.

(2)Inhibition expenses are recoverable from the debtor by land attachment or residual attachment executed for the purpose of enforcing payment of the debt to which the inhibition relates but not by any other legal process.

(3)Where a creditor has executed an inhibition, the expenses of only one further inhibition in relation to the debt to which the first inhibition relates are chargeable against the debtor as inhibition expenses.

(4)For the purposes of a sequestration or other process in which there is ranking, the inhibition expenses must be treated as part of the debt constituted by the decree or document of debt authorising the inhibition.

166Ascription

(1)This section applies where—

(a)an inhibition has effect; and

(b)any sums are paid to account of the sums recoverable from the debtor by virtue of the decree or document of debt authorising the inhibition.

(2)Such sums must be ascribed to the following in the order in which they are mentioned—

(a)the expenses which are chargeable against the debtor incurred in respect of any diligence (other than the inhibition) authorised by the decree or document of debt;

(b)the inhibition expenses;

(c)any interest which has accrued, at the date on which the inhibition takes effect, on the debt constituted by the decree or document of debt;

(d)the debt constituted by the decree or document of debt together with such interest as has accrued after the date on which the inhibition takes effect.

167Keeper’s duty to enter inhibition on title sheet

In section 6 of the Land Registration (Scotland) Act 1979 (c. 33) (content of title sheet)—

(a)in subsection (1)(c), at the beginning insert “subject to subsection (1A) below,”; and

(b)after subsection (1) insert—

(1A)The Keeper shall enter an inhibition registered in the Register of Inhibitions in the title sheet only when completing registration of an interest in land where the interest has been transferred or created in breach of the inhibition..

168Inhibition effective against judicial factor

(1)Notwithstanding the appointment of a judicial factor on a debtor’s estate, an inhibition has effect.

(2)But subsection (1) above does not apply in a case where—

(a)a judicial factor is appointed under section 11A of the Judicial Factors (Scotland) Act 1889 (c. 39) (application for judicial factor on deceased person’s estate); and

(b)the inhibition was effective against the debtor prior to the debtor’s death.

Part 6Diligence on the dependence

169Diligence on the dependence

After section 15 of the 1987 Act, insert—

Part 1ADiligence on the dependence

Availability of diligence on the dependence
15ADiligence on the dependence of action

(1)Subject to subsection (2) below and to sections 15C to 15F of this Act, the Court of Session or the sheriff may grant warrant for diligence by—

(a)arrestment; or

(b)inhibition,

on the dependence of an action.

(2)Warrant for—

(a)arrestment on the dependence of an action is competent only where the action contains a conclusion for payment of a sum other than by way of expenses; and

(b)inhibition on the dependence is competent only where the action contains—

(i)such a conclusion; or

(ii)a conclusion for specific implement of an obligation to convey heritable property to the creditor or to grant in the creditor’s favour a real right in security, or some other right, over such property.

(3)In this Part of this Act, “action” includes, in the sheriff court—

(a)a summary cause;

(b)a small claim; and

(c)a summary application,

and references to “summons”, “conclusion” and to cognate expressions shall be construed accordingly.

15BDiligence on the dependence of petition

(1)Subject to subsection (2) below and to sections 15C to 15F of this Act, the Court of Session may grant warrant for diligence by—

(a)arrestment; or

(b)inhibition,

on the dependence of a petition.

(2)Warrant for—

(a)arrestment on the dependence of a petition is competent only where the petition contains a prayer for payment of a sum other than by way of expenses; and

(b)inhibition on the dependence is competent only where the petition contains—

(i)such a prayer; or

(ii)a prayer for specific implement of an obligation to convey heritable property to the creditor or to grant in the creditor’s favour a real right in security, or some other right, over such property.

(3)The provisions of this Act (other than section 15A), of any other enactment and of any rule of law relating to diligence on the dependence of actions shall, in so far as is practicable and unless the contrary intention appears, apply to petitions in relation to which it is competent to grant warrant for such diligence and to the parties to them as they apply to actions and to parties to them.

15CDiligence on the dependence to secure future or contingent debts

(1)It shall be competent for the court to grant warrant for diligence on the dependence where the sum concluded for is a future or contingent debt.

(2)In this section and in sections 15D to 15M of this Act, the “court” means the court before which the action is depending.

Application for diligence on the dependence
15DApplication for diligence on the dependence

(1)A creditor may, at any time during which an action is in dependence, apply to the court for warrant for diligence by—

(a)arrestment; or

(b)inhibition,

on the dependence of the action.

(2)An application under subsection (1) above shall—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(b)subject to subsection (3) below, be intimated to and provide details of—

(i)the debtor; and

(ii)any other person having an interest;

(c)state whether the creditor is seeking the grant, under section 15E(1) of this Act, of warrant for diligence on the dependence in advance of a hearing on the application under section 15F of this Act; and

(d)contain such other information as the Scottish Ministers may by regulations prescribe.

(3)An application under subsection (1) above need not be intimated where the creditor is seeking the grant, under section 15E(1) of this Act, of warrant in advance of a hearing on the application under section 15F of this Act.

(4)The court, on receiving an application under subsection (1) above, shall—

(a)subject to section 15E of this Act, fix a date for a hearing on the application under section 15F of this Act; and

(b)order the creditor to intimate that date to—

(i)the debtor; and

(ii)any other person appearing to the court to have an interest.

15EGrant of warrant without a hearing

(1)The court may, if satisfied as to the matters mentioned in subsection (2) below, make an order granting warrant for diligence on the dependence without a hearing on the application under section 15F of this Act.

(2)The matters referred to in subsection (1) above are—

(a)that the creditor has a prima facie case on the merits of the action;

(b)that there is a real and substantial risk enforcement of any decree in the action in favour of the creditor would be defeated or prejudiced by reason of—

(i)the debtor being insolvent or verging on insolvency; or

(ii)the likelihood of the debtor removing, disposing of, burdening, concealing or otherwise dealing with all or some of the debtor’s assets,

were warrant for diligence on the dependence not granted in advance of such a hearing; and

(c)that it is reasonable in all the circumstances, including the effect granting warrant may have on any person having an interest, to do so.

(3)The onus shall be on the creditor to satisfy the court that the order granting warrant should be made.

(4)Where the court makes an order granting warrant for diligence on the dependence without a hearing on the application under section 15F of this Act, the court shall—

(a)fix a date for a hearing under section 15K of this Act; and

(b)order the creditor to intimate that date to—

(i)the debtor; and

(ii)any other person appearing to the court to have an interest.

(5)Where a hearing is fixed under subsection (4)(a) above, section 15K of this Act shall apply as if an application had been made to the court for an order under that section.

(6)Where the court refuses to make an order granting a warrant without a hearing under section 15F of this Act and the creditor insists in the application, the court shall—

(a)fix a date for such a hearing on the application; and

(b)order the creditor to intimate that date to—

(i)the debtor; and

(ii)any other person appearing to the court to have an interest.

15FHearing on application

(1)At the hearing on an application for warrant for diligence on the dependence, the court shall not make any order without first giving—

(a)any person to whom intimation of the date of the hearing was made; and

(b)any other person the court is satisfied has an interest,

an opportunity to be heard.

(2)The court may, if satisfied as to the matters mentioned in subsection (3) below, make an order granting warrant for diligence on the dependence.

(3)The matters referred to in subsection (2) above are—

(a)that the creditor has a prima facie case on the merits of the action;

(b)that there is a real and substantial risk enforcement of any decree in the action in favour of the creditor would be defeated or prejudiced by reason of—

(i)the debtor being insolvent or verging on insolvency; or

(ii)the likelihood of the debtor removing, disposing of, burdening, concealing or otherwise dealing with all or some of the debtor’s assets,

were warrant for diligence on the dependence not granted; and

(c)that it is reasonable in all the circumstances, including the effect granting warrant may have on any person having an interest, to do so.

(4)The onus shall be on the creditor to satisfy the court that the order granting warrant should be made.

(5)Where the court makes an order granting or, as the case may be, refusing warrant for diligence on the dependence, the court shall order the creditor to intimate that order to—

(a)the debtor; and

(b)any other person appearing to the court to have an interest.

(6)Where the court makes an order refusing warrant for diligence on the dependence, the court may impose such conditions (if any) as it thinks fit.

(7)Without prejudice to the generality of subsection (6) above, those conditions may require the debtor—

(a)to consign into court such sum; or

(b)to find caution or to give such other security,

as the court thinks fit.

Execution before service
15GExecution of diligence before service of summons

(1)This section applies where diligence by—

(a)arrestment; or

(b)inhibition,

on the dependence of an action is executed before service of the summons on the debtor.

(2)Subject to subsection (3) below, if the summons is not served on the debtor before the end of the period of 21 days beginning with the day on which the diligence is executed, the diligence shall cease to have effect.

(3)The court may, on the application of the creditor, make an order extending the period referred to in subsection (2) above.

(4)In determining whether to make such an order the court shall have regard to—

(a)the efforts of the creditor to serve the summons within the period of 21 days; and

(b)any special circumstances preventing or obstructing service within that period.

Restriction on property attached
15HSum attached by arrestment on dependence

(1)The court may, subject to subsection (2) below, when granting warrant for arrestment on the dependence, limit the sum which may be attached to funds not exceeding such amount as the court may specify.

(2)The maximum amount which the court may specify under subsection (1) above shall be the aggregate of—

(a)the principal sum concluded for;

(b)a sum equal to 20 per cent of that sum or such other percentage as the Scottish Ministers may, by regulations, prescribe;

(c)a sum equal to 1 year’s interest on the principal sum at the judicial rate; and

(d)any sum prescribed under subsection (3) below.

(3)The Scottish Ministers may, by regulations, prescribe a sum which appears to them to be reasonable having regard to the expenses likely to be—

(a)incurred by a creditor; and

(b)chargeable against a debtor,

in executing an arrestment on the dependence.

(4)For the avoidance of doubt, section 73F of this Act applies to any sum attached under this section.

15JProperty affected by inhibition on dependence

Where the court grants warrant for diligence by inhibition on the dependence—

(a)in a case where the action is brought for specific implement of an obligation—

(i)to convey heritable property to the creditor;

(ii)to grant in the creditor’s favour a real right in security over such property; or

(iii)to grant some other right over such property,

the court shall limit the property inhibited to that particular property; and

(b)in any other case, the court may limit the property inhibited to such property as the court may specify.

Recall etc. of diligence on the dependence.
15KRecall or restriction of diligence on dependence

(1)This section applies where warrant is granted for diligence on the dependence.

(2)The debtor and any person having an interest may apply to the court for an order—

(a)recalling the warrant;

(b)restricting the warrant;

(c)if an arrestment or inhibition has been executed in pursuance of the warrant—

(i)recalling; or

(ii)restricting,

that arrestment or inhibition;

(d)determining any question relating to the validity, effect or operation of the warrant; or

(e)ancillary to any order mentioned in paragraphs (a) to (d) above.

(3)An application under subsection (2) above shall—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be intimated to—

(i)the creditor; and

(ii)any other person having an interest.

(4)At the hearing on the application under subsection (2) above, the court shall not make any order without first giving—

(a)any person to whom intimation of the application was made; and

(b)any other person the court is satisfied has an interest,

an opportunity to be heard.

(5)Where the court is satisfied that the warrant is invalid it—

(a)shall make an order—

(i)recalling the warrant; and

(ii)if an arrestment or inhibition has been executed in pursuance of the warrant, recalling that arrestment or inhibition; and

(b)may make an order ancillary to any order mentioned in paragraph (a) above.

(6)Where the court is satisfied that an arrestment or inhibition executed in pursuance of the warrant is incompetent, it—

(a)shall make an order recalling that arrestment or inhibition; and

(b)may make an order ancillary to any such order.

(7)Subject to subsection (8) below, where the court is satisfied that the warrant is valid but that—

(a)an arrestment or inhibition executed in pursuance of it is irregular or ineffective; or

(b)it is reasonable in all the circumstances, including the effect granting warrant may have had on any person having an interest, to do so,

the court may make any order such as is mentioned in subsection (2) above.

(8)If no longer satisfied as to the matters mentioned in subsection (9) below, the court—

(a)shall make an order such as is mentioned in subsection (5)(a) above; and

(b)may make an order such as is mentioned in subsection (5)(b) above.

(9)The matters referred to in subsection (8) above are—

(a)that the creditor has a prima facie case on the merits of the action;

(b)that there is a real and substantial risk enforcement of any decree in the action in favour of the creditor would be defeated or prejudiced by reason of—

(i)the debtor being insolvent or verging on insolvency; or

(ii)the likelihood of the debtor removing, disposing of, burdening, concealing or otherwise dealing with all or some of the debtor’s assets; and

(c)that it is reasonable in all the circumstances, including the effect granting warrant may have had on any person having an interest, for the warrant or, as the case may be, any arrestment or inhibition executed in pursuance of it to continue to have effect.

(10)The onus shall be on the creditor to satisfy the court that no order under subsection (5), (6), (7) or (8) above should be made.

(11)In granting an application under subsection (2) above, the court may impose such conditions (if any) as it thinks fit.

(12)Without prejudice to the generality of subsection (11) above, the court may impose conditions which require the debtor—

(a)to consign into court such sum; or

(b)to find such caution or to give such other security,

as the court thinks fit.

(13)Where the court makes an order under this section, the court shall order the debtor to intimate that order to—

(a)the creditor; and

(b)any other person appearing to the court to have an interest.

(14)This section applies irrespective of whether warrant for diligence on the dependence is obtained, or executed, before this section comes into force.

15LVariation of orders and variation or recall of conditions

(1)Where—

(a)an order restricting warrant for diligence on the dependence is made under section 15K(7); or

(b)a condition is imposed by virtue of—

(i)section 15F(6); or

(ii)section 15K(11),

of this Act, the debtor may apply to the court for variation of the order or, as the case may be, variation or removal of the condition.

(2)An application under subsection (1) above shall—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be intimated to—

(i)the creditor; and

(ii)any other person having an interest.

(3)At the hearing on the application under subsection (1) above, the court shall not make any order without first giving—

(a)any person to whom intimation of the application was made; and

(b)any other person the court is satisfied has an interest,

an opportunity to be heard.

(4)On an application under subsection (1) above, the court may if it thinks fit—

(a)vary the order; or

(b)vary or remove the condition.

(5)Where the court makes an order varying the order or, as the case may be, varying or removing the condition, the court shall order the debtor to intimate that order to—

(a)the creditor; and

(b)any other person appearing to the court to have an interest.

General and miscellaneous
15MExpenses of diligence on the dependence

(1)Subject to subsection (3)(a) below, a creditor shall be entitled to such expenses as the creditor incurs—

(a)in obtaining warrant for diligence on the dependence; and

(b)where an arrestment or inhibition is executed in pursuance of the warrant, in so executing the arrestment or inhibition.

(2)Subject to subsection (3)(b) below, a debtor shall be entitled, where—

(a)warrant for diligence on the dependence is granted; and

(b)the court is satisfied that the creditor was acting unreasonably in applying for it,

to the expenses incurred in opposing that warrant.

(3)The court may modify or refuse—

(a)such expenses as are mentioned in subsection (1) above if it is satisfied that—

(i)the creditor was acting unreasonably in applying for the warrant; or

(ii)such modification or refusal is reasonable in all the circumstances and having regard to the outcome of the action; and

(b)such expenses as are mentioned in subsection (2) above if it is satisfied as to the matter mentioned in paragraph (a)(ii) above.

(4)Subject to subsections (1) to (3) above, the court may make such finding as it thinks fit in relation to such expenses as are mentioned in subsections (1) and (2) above.

(5)Expenses incurred as mentioned in subsection (1) and (2) above in obtaining or, as the case may be, opposing an application for warrant shall be expenses of process.

(6)Subsections (1) to (5) above are without prejudice to any enactment or rule of law as to the recovery of expenses chargeable against a debtor as are incurred in executing an arrestment or inhibition on the dependence of an action.

15NApplication of this Part to admiralty actions

This Part of this Act (other than sections 15H, 15J and 15M) shall apply, in so far as not inconsistent with the provisions of Part V of the Administration of Justice Act 1956 (c. 46) (admiralty jurisdiction and arrestment of ships), to an arrestment on the dependence of an admiralty action as it applies to any other arrestment on the dependence..

170Prescription of arrestment

After section 95 of the 1987 Act, insert—

95APrescription of arrestment

(1)Subject to subsection (2) below, an arrestment which is not insisted in prescribes—

(a)where it is on the dependence of an action, at the end of the period of 3 years beginning with the day on which a final interlocutor is obtained by the creditor for payment of all or part of a principal sum concluded for; or

(b)where it is in execution of an extract decree or other extract registered document relating to a due debt, at the end of the period of 3 years beginning with the day on which the arrestment is executed.

(2)Where the arrestment secures or enforces a future or contingent debt due to the creditor, it prescribes, if not insisted in, at the end of the period of 3 years beginning on the day on which the debt becomes due.

(3)In a case where—

(a)a time to pay direction;

(b)an interim order under section 6(3) of this Act; or

(c)a time to pay order,

has been made, there shall be disregarded, in computing the period at the end of which the arrestment prescribes, the period during which the time to pay direction, interim order or time to pay order is in effect.

(4)Nothing in this section shall apply to an earnings arrestment, a current maintenance arrestment or a conjoined arrestment order.

(5)Subsections (1) to (3) above apply irrespective of whether the arrestment is executed, or warrant for it obtained, before this section comes into force.

(6)For the purposes of subsection (1)(a) above, a final interlocutor is obtained when an interlocutor cannot be recalled or altered and is not subject to review..

171Abolition of letters of loosing

(1)Subject to subsection (2) below, it is no longer competent for any court to loose an arrestment.

(2)Subsection (1) above does not affect—

(a)any enactment or rule of law relating to the loosing of an arrestment of a ship or its cargo; or

(b)the exercise of any other power of the court to recall or restrict an arrestment.

172Abolition of adjudication in security

Any enactment or rule of law enabling adjudication in security to be used ceases to have effect.

Part 7Interim attachment

173Interim attachment

After section 9 of the 2002 Act, insert—

Part 1AInterim attachment

Interim attachment
9AInterim attachment

(1)Subject to sections 9B to 9E below, the court may grant warrant for diligence by attachment of corporeal moveable property owned (whether alone or in common) by the debtor on the dependence of an action (such attachment is to be known as interim attachment).

(2)Warrant for interim attachment is competent only where an action contains a conclusion for payment of a sum other than by way of expenses.

(3)This Part of this Act shall apply to petitions in the Court of Session and to parties to them as it applies to actions and to parties to them.

(4)In this Part of this Act—

  • “action” includes, in the sheriff court—

    (a)

    a summary cause;

    (b)

    a small claim; and

    (c)

    a summary application,

    and references to “summons”, “conclusion” and to cognate expressions shall be construed accordingly;

  • “court” means—

    (a)

    the court before which the action is in dependence; or

    (b)

    where, by virtue of section 9L(1)(a) below, the interim attachment has effect after the creditor obtains a final interlocutor for payment, the court which granted that interlocutor;

  • “creditor” means the party who concludes for payment and who seeks, obtains or executes warrant for interim attachment;

  • “debtor” means the party against whom the conclusion for payment is addressed; and

expressions used in this Part of this Act have, unless the context otherwise requires, the same meanings as those expressions have in Part 2 of this Act.

9BArticles exempt from interim attachment

It is not competent to attach by interim attachment—

(a)any article within a dwellinghouse;

(b)any article which, by virtue of section 11 below, it is not competent to attach;

(c)a mobile home which is the only or principal residence of a person other than the debtor;

(d)any article of a perishable nature or which is likely to deteriorate substantially and rapidly in condition or value; or

(e)where the debtor is engaged in trade, any article acquired by the debtor—

(i)to be sold by the debtor (whether or not after adaptation); or

(ii)as a material for a process of manufacturing for sale by the debtor,

in the ordinary course of that trade.

Application for interim attachment
9CApplication for warrant for interim attachment

(1)A creditor may, at any time during which an action is in dependence, apply to the court for warrant for interim attachment.

(2)An application under subsection (1) above shall—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(b)subject to subsection (3) below, be intimated to and provide details of—

(i)the debtor; and

(ii)any other person having an interest;

(c)state whether the creditor is seeking the grant, under section 9D(1) below, of warrant for interim attachment in advance of a hearing on the application under section 9E below; and

(d)contain such other information as the Scottish Ministers may by regulations prescribe.

(3)An application under subsection (1) above need not be intimated where the creditor is seeking the grant, under section 9D(1) below, of warrant in advance of a hearing on the application under section 9E below.

(4)The court, on receiving an application under subsection (1) above, shall—

(a)subject to section 9D below, fix a date for a hearing on the application under section 9E below; and

(b)order the creditor to intimate that date to—

(i)the debtor; and

(ii)any other person appearing to the court to have an interest.

9DGrant of warrant without a hearing

(1)The court may, if satisfied as to the matters mentioned in subsection (2) below, make an order granting warrant for interim attachment without a hearing on the application under section 9E below.

(2)The matters referred to in subsection (1) above are—

(a)that the creditor has a prima facie case on the merits of the action;

(b)that there is a real and substantial risk enforcement of any decree in the action in favour of the creditor would be defeated or prejudiced by reason of—

(i)the debtor being insolvent or verging on insolvency; or

(ii)the likelihood of the debtor removing, disposing of, burdening, concealing or otherwise dealing with all or some of the debtor’s assets,

were warrant for interim attachment not granted in advance of such a hearing; and

(c)that it is reasonable in all the circumstances, including the effect granting warrant may have on any person having an interest, to do so.

(3)The onus shall be on the creditor to satisfy the court that the order granting warrant should be made.

(4)Where the court makes an order granting warrant for interim attachment without a hearing on the application under section 9E below, the court shall—

(a)fix a date for a hearing under section 9M below; and

(b)order the creditor to intimate that date to—

(i)the debtor; and

(ii)any other person appearing to the court to have an interest.

(5)Where a hearing is fixed under subsection (4)(a) above, section 9M (except subsection (11)) below shall apply as if an application had been made to the court for an order under that section.

(6)Where the court refuses to make an order granting warrant without a hearing under section 9E below and the creditor insists in the application, the court shall—

(a)fix a date for such a hearing on the application; and

(b)order the creditor to intimate that date to—

(i)the debtor; and

(ii)any other person appearing to the court to have an interest.

9EHearing on application

(1)At the hearing on an application for warrant for interim attachment, the court shall not make any order without first giving—

(a)any person to whom intimation of the date of the hearing was made; and

(b)any other person appearing to the court to have an interest,

an opportunity to be heard.

(2)The court may, if satisfied as to the matters mentioned in subsection (3) below, make an order granting warrant for interim attachment.

(3)The matters referred to in subsection (2) above are—

(a)that the creditor has a prima facie case on the merits of the action;

(b)that there is a real and substantial risk enforcement of any decree in the action in favour of the creditor would be defeated or prejudiced by reason of—

(i)the debtor being insolvent or verging on insolvency; or

(ii)the likelihood of the debtor removing, disposing of, burdening, concealing or otherwise dealing with all or some of the debtor’s assets,

were warrant for interim attachment not granted; and

(c)that it is reasonable in all the circumstances, including the effect granting warrant may have on any person having an interest, to do so.

(4)The onus shall be on the creditor to satisfy the court that the order granting warrant should be made.

(5)Where the court makes an order granting or, as the case may be, refusing warrant for interim attachment, the court shall order the creditor to intimate that order to—

(a)the debtor; and

(b)any other person appearing to the court to have an interest.

(6)Where the court makes an order refusing warrant for interim attachment, the court may impose such conditions (if any) as it thinks fit.

(7)Without prejudice to the generality of subsection (6) above, those conditions may require the debtor—

(a)to consign into court such sum; or

(b)to find caution or to give such other security,

as the court thinks fit.

Execution of interim attachment
9FExecution of interim attachment

(1)Sections 12, 13, 15 and (subject to subsection (6) below) 17 below apply to execution of an interim attachment as they apply to execution of an attachment.

(2)The officer shall, immediately after executing an interim attachment, complete a schedule such as is mentioned in subsection (3) below (in this Part of this Act, a “schedule of interim attachment”).

(3)The schedule of interim attachment—

(a)shall be—

(i)in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(ii)signed by the officer; and

(b)shall specify—

(i)the articles attached; and

(ii)their value, so far as ascertainable.

(4)The officer shall—

(a)give a copy of the schedule of interim attachment to the debtor; or

(b)where it is not practicable to do so—

(i)give a copy of the schedule to a person present at the place where the interim attachment was executed; or

(ii)where there is no such person, leave a copy of the schedule at that place.

(5)References in this Part of this Act to the day on which an interim attachment is executed are references to the day on which the officer complies with subsection (4) above.

(6)The application of section 17 below shall be subject to the following modifications—

(a)subsections (3)(b) and (4) shall not apply;

(b)in subsections (1), (5) and (6), the references to the sheriff shall be construed as references to the court; and

(c)in subsection (6)(b), the reference to the sheriff clerk shall, in the case of an action in the Court of Session, be construed as a reference to the clerk of the court.

9GExecution of interim attachment before service

(1)This section applies where an interim attachment is executed before the service of the summons on the debtor.

(2)Subject to subsection (3) below, if the summons is not served on the debtor before the end of the period of 21 days beginning with the day on which the interim attachment is executed, the attachment shall cease to have effect.

(3)The court may, on the application of the creditor, make an order extending the period referred to in subsection (2) above.

(4)In determining whether to make such an order the court shall have regard to—

(a)the efforts of the creditor to serve the summons within the period of 21 days; and

(b)any special circumstances preventing or obstructing service within that period.

Interim attachment: further procedure
9HOrder for security of attached articles

(1)The court may, on an application, at any time after articles have been attached—

(a)by the creditor;

(b)the officer; or

(c)the debtor,

make an order for the security of any of the attached articles.

(2)An application for an order under subsection (1) above shall—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be intimated—

(i)where it is made by the creditor or the officer, to the debtor;

(ii)where it is made by the debtor, to the creditor and the officer.

(3)At the hearing on the application under subsection (1) above, the court shall not make any order without first giving—

(a)any person to whom intimation of the application was made; and

(b)any other person the court is satisfied has an interest,

an opportunity to be heard.

Interim attachment: effects
9JUnlawful acts after interim attachment

Section 21 (except subsections (3) and (15)) below applies to an interim attachment as it applies to an attachment with the following modifications—

(a)in subsections (10) and (11), the references to the sheriff shall be construed as references to the court; and

(b)in subsection (12), the references to sections 51 and 54(1) below shall be of no effect.

9KArticles belonging to or owned in common by a third party

(1)Where—

(a)a third party claims to own an article attached by interim attachment; and

(b)the court, on the application of the third party, makes an order stating that it is satisfied that the claim is valid,

the interim attachment of that article shall cease to have effect.

(2)Where—

(a)a third party claims to own an article attached by interim attachment in common with the debtor;

(b)the court, on the application of the third party, makes an order stating that it is satisfied—

(i)that the claim is valid; and

(ii)that the continued attachment of the article would be unduly harsh to the third party,

the interim attachment of that article shall cease to have effect.

(3)Subsection (2) of section 34 below applies where a third party makes an application for the purposes of subsection (1)(b) above as it applies where a third party makes an application for the purposes of subsection (1)(b)(ii) of that section.

(4)Where the attachment of an article ceases, by virtue of an order under subsection (1) or (2) above, to have effect, the officer may attach other articles which are owned by the debtor and kept at the place at which the original interim attachment was executed.

9LDuration of interim attachment

(1)An interim attachment shall, unless recalled, have effect only until—

(a)subject to subsections (2), (4) and (7) below, where—

(i)the creditor obtains a final interlocutor for payment of all or part of a principal sum concluded for in the action on the dependence of which warrant for interim attachment was granted;

(ii)the creditor obtains a final interlocutor in the creditor’s favour in respect of another remedy concluded for in that action; or

(iii)the final interlocutor is of absolvitor or dismissal and the court grants decree under and for the purposes of section 9Q(1)(b) below,

the expiry of the period of 6 months after the action is disposed of;

(b)where—

(i)the final interlocutor is of absolvitor or dismissal; and

(ii)no decree under and for the purposes of section 9Q(1)(b) below is granted,

the granting of that interlocutor; or

(c)the creditor consents, by virtue of subsection (3) below, to the interim attachment ceasing to have effect in relation to every article attached.

(2)An interim attachment shall have effect in relation to a specific article only until the article is attached by the creditor in execution of any such final interlocutor or decree as is mentioned in subsection (1)(a) above.

(3)The creditor may at any time consent in writing to the interim attachment ceasing to have effect in relation to a specific article attached; and the attachment shall cease to have effect when that consent is notified to the court.

(4)The court may, on an application by the creditor, extend the period mentioned in subsection (1)(a) above but only if—

(a)the application is made before the expiry of the period mentioned in that subsection; and

(b)the court is satisfied that exceptional circumstances make it reasonable to grant the application.

(5)An application under subsection (4) above shall—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be intimated by the creditor to—

(i)the debtor; and

(ii)any other person having an interest.

(6)The court shall order the creditor to intimate any decision under subsection (4) above disposing of the application under that subsection to—

(a)the debtor; and

(b)any other person appearing to the court to have an interest.

(7)Where such an application is made but not disposed of before the date on which the interim attachment would, but for this subsection, cease to have effect, the interim attachment shall continue to have effect until the application is disposed of.

(8)In calculating the period mentioned in subsection (1)(a) above, any period during which—

(a)a time to pay direction under section 1(1) of the Debtors (Scotland) Act 1987 (c. 18); or

(b)an order under—

(i)section 6(3) of that Act (interim order sisting diligence); or

(ii)section 9(4) of that Act (diligence sisted if not recalled on making of time to pay order),

is in effect shall be disregarded.

(9)For the purposes of subsection (1) above—

(a)a final interlocutor is obtained when an interlocutor—

(i)cannot be recalled or altered; and

(ii)is not subject to review; and

(b)an action is disposed of on the date on which the final interlocutor mentioned in paragraph (a) of that subsection is obtained unless, on a later date, the creditor obtains a final interlocutor for expenses in the action, in which case it is disposed of on that later date.

Recall etc. of interim attachment
9MRecall or restriction of interim attachment

(1)This section applies where warrant is granted for interim attachment.

(2)The debtor and any person having an interest may apply to the court for an order—

(a)recalling the warrant;

(b)restricting the warrant;

(c)if an interim attachment has been executed in pursuance of the warrant—

(i)recalling; or

(ii)restricting,

that attachment;

(d)determining any question relating to the validity, effect or operation of the warrant; or

(e)ancillary to any order mentioned in paragraphs (a) to (d) above.

(3)An application under subsection (2) above shall—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be intimated to—

(i)the creditor; and

(ii)any other person having an interest.

(4)At the hearing on the application under subsection (2) above, the court shall not make any order without first giving—

(a)any person to whom intimation of the application was made; and

(b)any other person the court is satisfied has an interest,

an opportunity to be heard.

(5)Where the court is satisfied that the warrant is invalid it—

(a)shall make an order—

(i)recalling the warrant; and

(ii)if interim attachment has been executed in pursuance of the warrant, recalling that interim attachment; and

(b)may make an order ancillary to any order mentioned in paragraph (a) above.

(6)Where the court is satisfied that an interim attachment executed in pursuance of the warrant is incompetent, it—

(a)shall make an order recalling the interim attachment; and

(b)may make an order ancillary to any such order.

(7)Subject to subsection (8) below, where the court is satisfied that the warrant is valid but that—

(a)an interim attachment executed in pursuance of it is irregular or ineffective; or

(b)it is reasonable in all the circumstances, including the effect granting warrant may have had on any person having an interest, to do so,

the court may, subject to subsection (11) below, make any order such as is mentioned in subsection (2) above.

(8)If no longer satisfied as to the matters mentioned in subsection (9) below, the court—

(a)shall make an order such as is mentioned in subsection (5)(a) above; and

(b)may make an order such as is mentioned in subsection (5)(b) above.

(9)The matters referred to in subsection (8) above are—

(a)that the creditor has a prima facie case on the merits of the action;

(b)that there is a real and substantial risk enforcement of any decree in the action in favour of the creditor would be defeated or prejudiced by reason of—

(i)the debtor being insolvent or verging on insolvency; or

(ii)the likelihood of the debtor removing, disposing of, burdening, concealing or otherwise dealing with all or some of the debtor’s assets; and

(c)that it is reasonable in all the circumstances, including the effect granting warrant may have had on any person having an interest, for the warrant or, as the case may be, any interim attachment executed in pursuance of it to continue to have effect.

(10)The onus shall be on the creditor to satisfy the court that no order under subsection (5), (6), (7) or (8) above should be made.

(11)Where—

(a)by virtue of section 9L(1)(a) above, the interim attachment continues to have effect after the creditor obtains a final interlocutor for payment; and

(b)the period of six months mentioned in that paragraph has not expired,

the court shall not make an order under subsection (7) above.

(12)In granting an application under subsection (2) above, the court may impose such conditions (if any) as it thinks fit.

(13)Without prejudice to the generality of subsection (12) above, those conditions may require the debtor—

(a)to consign into court such sum; or

(b)to find such caution or to give such other security,

as the court thinks fit.

(14)Where the court makes an order under this section, the court shall order the debtor to intimate that order to—

(a)the creditor; and

(b)any other person appearing to the court to have an interest.

9NVariation of orders and variation or recall of conditions

(1)Where—

(a)an order restricting warrant for interim attachment is made under section 9M(7) above; or

(b)a condition is imposed under—

(i)section 9E(6) above; or

(ii)section 9M(12) above,

the debtor may apply to the court for variation of the order or, as the case may be, variation or removal of the condition.

(2)An application under subsection (1) above shall—

(a)be in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)be intimated to—

(i)the creditor; and

(ii)any other person having an interest.

(3)At the hearing on the application under subsection (1) above, the court shall not make any order without first giving—

(a)any person to whom intimation of the application was made; and

(b)any other person the court is satisfied has an interest,

an opportunity to be heard.

(4)On an application under subsection (1) above, the court may if it thinks fit—

(a)vary the order; or

(b)vary or remove the condition.

(5)Where the court makes an order varying the order or, as the case may be, varying or removing the condition, the court shall order the debtor to intimate that order to—

(a)the creditor; and

(b)any other person appearing to the court to have an interest.

General and miscellaneous provisions
9PExpenses of interim attachment

(1)Subject to subsection (3)(a) below, a creditor shall be entitled to the expenses incurred—

(a)in obtaining warrant for interim attachment; and

(b)where an interim attachment is executed in pursuance of the warrant, in so executing that attachment.

(2)Subject to subsection (3)(b) below, a debtor shall be entitled, where—

(a)warrant for interim attachment is granted; and

(b)the court is satisfied that the creditor was acting unreasonably in applying for it,

to the expenses incurred in opposing that warrant.

(3)The court may modify or refuse—

(a)such expenses as are mentioned in subsection (1) above if it is satisfied that—

(i)the creditor was acting unreasonably in applying for the warrant; or

(ii)such modification or refusal is reasonable in all the circumstances and having regard to the outcome of the action; and

(b)such expenses as are mentioned in subsection (2) above if it is satisfied as to the matter mentioned in paragraph (a)(ii) above.

(4)Subject to subsections (1) to (3) above, the court may make such findings as it thinks fit in relation to such expenses as are mentioned in subsections (1) and (2) above.

(5)Expenses incurred as mentioned in subsections (1) and (2) above in obtaining or, as the case may be, opposing an application for warrant shall be expenses of process.

9QRecovery of expenses of interim attachment

(1)Subject to subsection (4) below, any expenses chargeable against the debtor which are incurred in executing an interim attachment shall be recoverable only by attachment—

(a)in execution of a decree granted by virtue of—

(i)the conclusion for payment in the action on the dependence of which the warrant for interim attachment was granted; or

(ii)another conclusion in the creditor’s favour in that action; or

(b)where the final interlocutor in the action is of absolvitor or dismissal, in execution of a decree granted under and for the purposes of this subsection.

(2)Where any such expenses cease to be recoverable in pursuance of subsection (1) above, they cease to be chargeable against the debtor.

(3)Subsection (4) below applies where interim attachment is—

(a)recalled under section 2(3), 3(1)(b), 9(2)(cb) or 10(1)(b) of the 1987 Act in relation to a time to pay direction or order;

(b)in effect immediately before the date of sequestration (within the meaning of the Bankruptcy (Scotland) Act 1985 (c. 66)) of the debtor’s estate;

(c)in effect immediately before the appointment of an administrator under Part II of the Insolvency Act 1986 (c. 45);

(d)in effect against property of the debtor immediately before a floating charge attaches all or part of that property under section 53(7) (attachment on appointment of receiver by holder of charge) or 54(6) (attachment on appointment of receiver by court) of the 1986 Act;

(e)in effect immediately before the commencement of the winding up, under Part IV or V of the 1986 Act, of the debtor; or

(f)rendered unenforceable by virtue of the creditor entering into a composition contract or acceding to a trust deed for creditors or by virtue of the subsistence of a protected trust deed within the meaning of Schedule 5 to the 1985 Act.

(4)Where this subsection applies—

(a)the expenses of the interim attachment which were chargeable against the debtor remain so chargeable; and

(b)if the debtor’s obligation to pay the expenses is not discharged under or by virtue of the time to pay direction or order, sequestration, appointment, receivership, winding up, composition contract or trust deed for creditors, those expenses are recoverable in pursuance of subsection (1) above.

9RAscription of sums recovered while interim attachment is in effect

(1)This section applies where—

(a)any amounts are—

(i)secured by an interim attachment; and

(ii)while the attachment is in effect, paid to account of the amounts recoverable from the debtor; and

(b)that interim attachment ceases to have effect.

(2)Such amounts shall be ascribed to the following in the order in which they are mentioned—

(a)the expenses incurred in—

(i)obtaining warrant for; and

(ii)executing,

the interim attachment;

(b)any interest which has accrued, in relation to a sum due under a decree granted by virtue of the conclusion in relation to which warrant for interim attachment was granted, as at the date of execution;

(c)any sum due under that decree together with such interest as has accrued after that date.

(3)Where an interim attachment is followed by an attachment in execution of a decree granted by virtue of the conclusion in relation to which the warrant for the interim attachment was granted, section 41 below shall apply to amounts to which this section applies as it applies to amounts to which that section applies.

9SRanking of interim attachment

For the purposes of any enactment or rule of law as to ranking or preference—

(a)where—

(i)an interim attachment has been executed; and

(ii)the creditor has, without undue delay, obtained an interlocutor for payment of all or part of the sum concluded for,

that interim attachment shall be treated as if it were an attachment by virtue of section 10 below of the property attached, executed when the interim attachment was executed; and

(b)where an interim attachment has ceased to have effect in relation to any article by virtue of section 9L(2) above, the attachment of the article in question shall be taken to have been executed when the interim attachment was executed..

Part 8Attachment of money

Money attachment

174Money attachment

(1)There is to be a form of diligence over money owned by a debtor to be known as money attachment.

(2)Money attachment is competent to enforce payment of a debt but only if—

(a)the debt is constituted by a decree or document of debt;

(b)the debtor has been charged to pay the debt;

(c)the period for payment specified in the charge has expired without payment being made; and

(d)where the debtor is an individual, the creditor has, no earlier than 12 weeks before executing the money attachment, provided the debtor with a debt advice and information package.

(3)Money attachment is not competent in relation to money—

(a)kept within a dwellinghouse; or

(b)in relation to which arrestment is competent.

175Meaning of “money” and related expressions

(1)In this Part—

  • “cash” means coins and banknotes in any currency;

  • “banking instrument” means—

    (a)

    cheques and other instruments to which section 4 of the Cheques Act 1957 (c. 36) applies;

    (b)

    any document (other than one mentioned in section 4(2)(c) of that Act) issued by a public officer which is intended to enable a person to obtain payment from a government department of the sum mentioned in it;

    (c)

    promissory notes (other than banknotes);

    (d)

    other negotiable instruments; and

    (e)

    money orders and postal orders; and

  • “money” means cash and banking instruments but does not include any cash or instrument which has an intrinsic value greater than any value it may have as a medium of exchange; and any reference to the value of money is, unless the context otherwise requires, a reference to—

    (a)

    the amount of cash;

    (b)

    where that cash is in a currency other than sterling, the amount in sterling which that cash would realise on its conversion under section 177(3) of this Act;

    (c)

    the amount in cash which would be obtained were the value of a banking instrument realised; and

    (d)

    in the case where money comprises both cash and instruments, the aggregate of the amounts referred to in, as the case may be, paragraphs (a) to (c) above.

(2)In the definition of “banking instrument” in subsection (1) above, “government department” includes—

(a)any Minister of the Crown;

(b)any part of the Scottish Administration;

(c)the National Assembly for Wales;

(d)the Northern Ireland Assembly, any Northern Ireland Minister or Northern Ireland junior Minister and any Northern Ireland department.

(3)The Scottish Ministers may by order modify the definition of “banking instrument” in subsection (1) above so as to—

(a)add or remove types of instrument to or, as the case may be, from those referred to in that definition; or

(b)vary the descriptions of the types of instrument so referred to.

176When money attachment not competent

(1)It is not competent to execute a money attachment on—

(a)a Sunday;

(b)a day which is a public holiday in the area in which the attachment is to be executed; or

(c)such other day as may be prescribed by Act of Sederunt.

(2)The execution of a money attachment must not—

(a)begin before 8 a.m. or after 8 p.m.; or

(b)be continued after 8 p.m.,

unless the judicial officer has obtained prior authority from the sheriff for such commencement or continuation.

(3)Subject to section 183(12)(b), 186(3)(b) or 191(4) of this Act, where money is attached (or is purported to be attached) at any place, it is not competent to attach other money kept at that place to enforce the same debt unless that other money is brought to that place after execution of the first money attachment.

(4)Money which has been attached by a money attachment may not, if that money attachment ceases to have effect in relation to that money, be attached again for the same debt.

Execution of money attachment

177Removal of money attached

(1)The judicial officer must attach and remove, from the place in which it is found, such money, the value of which in the opinion of the officer does not exceed a sum equal to the sum mentioned in subsection (2) below (in this Part, the “sum recoverable by the money attachment”).

(2)That sum is—

(a)the sum for the payment of which the charge was served, together with any interest accruing after such service and before the money attachment ceases to have effect; and

(b)all expenses which are chargeable against the debtor by virtue of the money attachment.

(3)Where cash in a currency other than sterling is attached, the judicial officer must, as soon as reasonably practicable after attaching it, convert that cash into sterling.

(4)The judicial officer must take all reasonable steps to obtain the highest amount for such cash as is practicable.

(5)The judicial officer must deposit any cash attached and any proceeds of converting cash in a currency other than sterling in a bank account.

(6)The judicial officer—

(a)need not attach any banking instruments other than cheques unless instructed to do so by the creditor; and

(b)is not liable to the creditor for any loss caused by the failure to attach any such instruments unless so instructed.

(7)The judicial officer must, subject to section 180(1) of this Act, value any instruments attached at the price which they are likely to fetch on the open market.

(8)Where any instruments are attached, the judicial officer must ensure that they are kept in a secure place.

(9)In this Part, any reference to money being attached includes a reference to it being removed under subsection (1) above.

178Presumption of ownership

(1)A judicial officer may, when executing a money attachment, assume that the debtor owns, solely or in common with a third party, any money found in the place where the attachment is executed.

(2)The judicial officer must, before attaching any money, make enquiries of any person present at the place in which it is found as to the ownership of it (and in particular must enquire as to whether there is any person who owns it in common with the debtor).

(3)The judicial officer may not make the assumption mentioned in subsection (1) above where the officer knows or ought to know that the contrary is the case.

(4)The judicial officer is not precluded from relying on that assumption by reason only that an assertion has been made that the money is not owned by the debtor.

179Schedule of money attachment

(1)The judicial officer must, immediately after executing a money attachment, complete a schedule such as is mentioned in subsection (2) below (in this Part, the “schedule of money attachment”).

(2)A schedule of money attachment—

(a)must be—

(i)in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(ii)signed by the judicial officer; and

(b)must specify—

(i)the money attached; and

(ii)the value of that money, so far as ascertainable.

(3)The judicial officer must—

(a)give a copy of the schedule to the debtor; or

(b)where it is not practicable to do so—

(i)give a copy of the schedule to a person present at the place where the money attachment was executed; or

(ii)where there is no such person, leave a copy of the schedule at that place.

(4)In this Part, any reference to the day on which a money attachment is executed is a reference to the day on which the judicial officer complies with subsection (3) above.

180Valuation of banking instruments

(1)Where the judicial officer considers that a banking instrument attached in execution of a money attachment is such that it is appropriate for valuation of the price the instrument is likely to fetch on the open market to be carried out by a professional valuer or other suitably skilled person, the officer must arrange for such a valuation.

(2)The creditor is liable for the valuer’s reasonable remuneration and outlays incurred by virtue of subsection (1) above.

181Order for realisation of money likely to deteriorate in value

(1)The—

(a)creditor;

(b)judicial officer; or

(c)debtor,

may, at any time after money has been attached, apply to the sheriff for an order that the creditor or, as the case may be, the officer make arrangements for the immediate realisation of the value of that money (or any part of it).

(2)A person applying under subsection (1) above must at the same time intimate the application to the persons mentioned in that subsection who would otherwise be entitled to apply.

(3)The sheriff may, if satisfied that the money is likely to deteriorate substantially and rapidly in value, make an order such as is mentioned in subsection (1) above.

(4)An order under subsection (3) above authorises the judicial officer—

(a)to act as the irrevocable agent of the debtor in relation to the money; and

(b)to take any of the steps mentioned in section 184(3) of this Act.

(5)Subsection (4) of section 184 of this Act applies to any steps taken by virtue of subsection (4) above.

(6)Any sum realised by virtue of an order under subsection (3) above must be deposited in a bank account.

(7)The sheriff’s decision under subsection (3) above is final.

182Report of money attachment

(1)The judicial officer must, before the expiry of the period of 14 days beginning with the day on which the money attachment is executed (or such longer period as the sheriff on cause shown may, on the application of the officer, allow), make a report to the sheriff.

(2)A report under subsection (1) above must be—

(a)in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)signed by the judicial officer.

(3)The report must specify—

(a)the money attached;

(b)the value of that money;

(c)whether any cash in a currency other than sterling was attached and, if so—

(i)the exchange rate used; and

(ii)any commission incurred,

in converting it into sterling;

(d)whether any person has asserted that any money attached is not owned by the debtor (or is owned in common by the debtor and a third party);

(e)whether the value of any money has been realised under section 181 of this Act; and

(f)whether any money attached has been released by virtue of section 185(3), 186 or 188(1) of this Act.

(4)On making the report, the judicial officer must send a copy of it to—

(a)the debtor;

(b)the creditor; and

(c)any person such as is mentioned in subsection (3)(d) above.

(5)The sheriff may refuse to receive a report on the ground that it has not been made and signed in accordance with subsections (1) and (2) above.

(6)If the sheriff so refuses—

(a)the money attachment ceases to have effect;

(b)the sheriff must require the judicial officer to return the money attached or, where the value of any such money has been realised, a sum equivalent to that value, to the debtor; and

(c)the sheriff clerk must intimate the refusal to—

(i)the debtor;

(ii)the officer;

(iii)the creditor; and

(iv)any person the sheriff thinks has an interest.

(7)In this Part, any reference to the day on which the report of money attachment is made is a reference to the day on which the sheriff receives the report under subsection (1) above.

Release of money attached

183Creditor’s application for payment order

(1)This section applies where—

(a)money has been attached by a judicial officer in execution of a money attachment; and

(b)that money (or part of it) has not been released by virtue of section 182(6)(b), 185(3), 186 or 188(1) of this Act.

(2)The creditor may apply to the sheriff for an order (in this Part, a “payment order”) authorising payment to the creditor out of the money attached of a sum not exceeding the sum recoverable by the money attachment.

(3)An application under subsection (2) above must be—

(a)in (or as nearly as may be in) the form prescribed by Act of Sederunt;

(b)made before the expiry of the period of 14 days beginning with the day on which the report of money attachment is made.

(4)On making the application, the creditor must send a copy of it to—

(a)the debtor;

(b)the judicial officer; and

(c)any person such as is mentioned in section 182(3)(d) of this Act.

(5)Subject to subsections (10) and (12) below, where there is no opposition to the application, the sheriff must make a payment order.

(6)The debtor or a third party who claims ownership (whether solely or in common with the debtor) of any of the money attached may oppose the application under subsection (2) above.

(7)An opposition under subsection (6) above must be—

(a)in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)made before the expiry of the period of 14 days beginning with the day on which the application is made.

(8)Where there is opposition, the sheriff may not make a payment order without first—

(a)giving—

(i)the creditor;

(ii)the debtor; and

(iii)any third party who opposes the application,

an opportunity to make representations; or

(b)holding a hearing.

(9)Where the debtor or, as the case may be a third party, opposes the application on the ground that money attached is not owned by the debtor, it is for the debtor or the third party to prove that fact.

(10)Where the sheriff is satisfied, after considering any opposition or on the sheriff’s own initiative, that there has been a material irregularity in the execution of the money attachment, the sheriff must make an order such as is mentioned in subsection (11) below.

(11)That order is an order—

(a)declaring that the money attachment ceases to have effect; and

(b)requiring the judicial officer to return the money attached or, where the value of any such money has been realised, a sum equivalent to that value, to the debtor or, as the case may be, the person whose money it is.

(12)Where the sheriff is satisfied after considering any opposition or on the sheriff’s own initiative, that any money attached is not owned by the debtor—

(a)the sheriff must make an order such as is mentioned in subsection (11) above restricted to that money; and

(b)after the order is made, the judicial officer may attach other money owned by the debtor and kept at the place at which the original money attachment was executed.

184Effect of payment order

(1)A payment order authorises the judicial officer—

(a)to realise the value of money attached; and

(b)subject to section 37 of the 1985 Act (effect of sequestration on diligence), to dispose of the proceeds of the money attachment by—

(i)retaining such amount as necessary to meet the fees and outlays of the officer;

(ii)paying to the creditor the remainder of those proceeds so far as necessary to meet the sum recoverable by the money attachment; and

(iii)paying to the debtor any surplus remaining.

(2)For the purposes of subsection (1) above, the payment order authorises the judicial officer—

(a)to act as the irrevocable agent of the debtor in relation to any banking instrument attached; and

(b)to take any of the steps mentioned in subsection (3) below.

(3)Those steps are—

(a)presenting the instrument for payment;

(b)if instructed by the creditor to do so, raising any action for payment that would have been open to the debtor to raise against any person liable to honour the instrument;

(c)except where the instrument is not negotiable, negotiating the instrument—

(i)for value; or

(ii)to the creditor for value credited against the sum recoverable by the money attachment;

(d)any other steps the debtor could have taken in relation to the instrument before the money attachment was executed.

(4)The judicial officer must, in taking any of the steps referred to in subsection (3) above, obtain the highest amount for the instrument as is reasonably practicable.

(5)In subsection (1)(b) above, “proceeds of the money attachment” includes any amount—

(a)deposited in a bank account by virtue of section 181(6) or 185(4)(b)(iii) of this Act;

(b)obtained as a result of taking any of the steps mentioned in subsection (3) above; and

(c)received by the judicial officer by virtue of section 191(2)(c) of this Act.

185Release of money where attachment unduly harsh

(1)The debtor may, before—

(a)a payment order is made; or

(b)the money attachment ceases to have effect,

apply to the sheriff for an order such as is mentioned in subsection (2) below.

(2)That order is one—

(a)providing that the money attachment ceases to have effect in relation to—

(i)the money attached; or

(ii)so much of it as the sheriff specifies; and

(b)requiring the judicial officer to return that money or, where the value of the money has been realised, a sum equivalent to that value, to the debtor.

(3)Where the sheriff is satisfied that, in the circumstances, the money attachment is unduly harsh to the debtor, the sheriff must, subject to subsection (4) below, make an order such as is mentioned in subsection (2) above.

(4)Where the value of the money attached exceeds £1,000 or such other amount as the Scottish Ministers may by regulations prescribe, the sheriff—

(a)may not specify money the value of which exceeds that amount; and

(b)may, where the money attached includes or comprises a banking instrument, authorise the judicial officer to—

(i)realise the value of the instrument;

(ii)pay to the debtor from the money and, as the case may be, proceeds of that realisation the sum specified; and

(iii)deposit any surplus remaining in a bank account.

(5)In a case to which subsection (4)(b) above applies, the order under subsection (3) above authorises the judicial officer—

(a)to act as the irrevocable agent of the debtor in relation to the instrument; and

(b)to take any of the steps mentioned in section 184(3) of this Act.

(6)Subsection (4) of section 184 of this Act applies to any steps taken by virtue of subsection (5) above.

(7)Where the amount realised under subsection (4)(b)(i) above is less than the amount specified, the order is to be deemed to have required the judicial officer to pay the amount realised only.

186Invalidity and cessation of money attachment

(1)Where, at any time before a payment order is made or the money attachment ceases to have effect, the sheriff is satisfied that there has been a material irregularity in the execution of the money attachment, the sheriff must make an order such as is mentioned in subsection (2) below.

(2)That order is an order—

(a)declaring that the money attachment ceases to have effect; and

(b)requiring the judicial officer to return the money attached or, where the value of any such money has been realised, a sum equivalent to that value, to the debtor or, as the case may be, the person whose money it is.

(3)Where, at any time before a payment order is made or the money attachment ceases to have effect, the sheriff is satisfied that any money attached is not owned by the debtor—

(a)the sheriff must make an order such as is mentioned in subsection (2) above restricted to that money; and

(b)after the order is made, the judicial officer may attach other money owned by the debtor and kept at the place at which the original money attachment was executed.

(4)An order under this section may be made—

(a)on the application of—

(i)the debtor; or

(ii)a third party claiming an interest; or

(b)on the sheriff’s own initiative.

(5)Where such an order is made on the sheriff’s own initiative, the sheriff clerk must intimate the order to—

(a)the debtor;

(b)the creditor;

(c)the judicial officer; and

(d)any other person the sheriff thinks has an interest.

(6)The sheriff may not make an order under this section without first—

(a)giving—

(i)the debtor;

(ii)the creditor; and

(iii)any other person the sheriff thinks has an interest,

an opportunity to make representations; or

(b)holding a hearing.

(7)The sheriff must give reasons for making, or refusing to make, an order under this section.

187Termination of money attachment

(1)A money attachment ceases to have effect on the expiry of the period of 14 days beginning with the day on which the report of money attachment is made unless, within that period, the creditor—

(a)applies for a payment order; and

(b)sends a copy of the application to the judicial officer under section 183(4)(b) of this Act.

(2)A money attachment ceases to have effect if the sum recoverable by the money attachment is—

(a)paid to—

(i)the creditor;

(ii)the judicial officer; or

(iii)any other person who has authority to receive payment on behalf of the creditor; or

(b)tendered to any of those persons and the tender is not accepted within a reasonable time.

(3)Where a money attachment ceases to have affect by virtue of subsection (1) or (2) above, the judicial officer must return money attached or, where the value of any such money has been realised, a sum equivalent to that value, to the debtor.

188Redemption of banking instrument

(1)The debtor may, before the expiry of the period of 14 days beginning with the date on which the report of money attachment is made, redeem a banking instrument attached by the money attachment.

(2)The debtor may not redeem an instrument in relation to which an order under section 181(3) of this Act has been made.

(3)The amount for which such an instrument may be redeemed is the value of the instrument specified in the report of money attachment.

(4)The judicial officer must, on receiving payment from the debtor for the redemption of an attached instrument—

(a)grant a receipt in (or as nearly as may be in) the form prescribed by Act of Sederunt to the debtor; and

(b)report the redemption to the sheriff as soon as is reasonably practicable.

(5)The money attachment ceases, on the grant of such a receipt, to have effect in relation to the redeemed instrument.

Statement of money attachment

189Final statement of money attachment

(1)The judicial officer must, before the expiry of the period of 14 days beginning with the day mentioned in subsection (2) below, give a statement to the sheriff.

(2)The day referred to in subsection (1) above is the day on which—

(a)the judicial officer made payment to the creditor under a payment order; or

(b)the money attached (or the last part of it) was returned to the debtor or, as the case may be, a third party by virtue of section 182(6), 183(11), 185(3), 186, 187 or 188 of this Act,

whichever is the later.

(3)The statement mentioned in subsection (1) above must be—

(a)in (or as nearly as may be in) the form prescribed by Act of Sederunt; and

(b)signed by the judicial officer.

(4)The statement must specify—

(a)any banking instruments, the values of which have been realised;

(b)the value realised in respect of each such instrument;

(c)any sums paid by the debtor to account of the sum recoverable by the money attachment;

(d)any chargeable expenses;

(e)any sums paid to the creditor;

(f)any surplus paid or instruments returned to the debtor or, as the case may be, a third party; and

(g)any balance due by or to the debtor.

(5)The statement must contain a declaration by the judicial officer that all the information contained within it is, to the best of the officer’s knowledge, true.

(6)If the judicial officer—

(a)without reasonable excuse gives the statement after the expiry of the period mentioned in subsection (1) above; or

(b)wilfully refuses to make, or delays making, the statement after the expiry of that period,

the sheriff may make an order providing that the officer is liable for the chargeable expenses, either in whole or in part.

(7)An order under subsection (6) above does not prejudice the right of the sheriff to report the matter to the Commission by virtue of section 67(1)(b) of this Act (investigation into alleged misconduct by judicial officers).

190Audit of final statement under section 189(1)

(1)The sheriff must remit the statement under section 189(1) to the auditor of court who must—

(a)tax the chargeable expenses;

(b)certify any balance due by or to the debtor; and

(c)make a report to the sheriff.

(2)The auditor of court must not alter the statement without first giving all interested persons an opportunity to make representations.

(3)The auditor of court must not charge a fee in respect of the report made under subsection (1)(c) above.

(4)On receipt of a report made under subsection (1)(c) above the sheriff must make an order—

(a)declaring the balance due by or to the debtor, as certified by the auditor of court;

(b)declaring such a balance after making modifications to the balance so certified; or

(c)where the sheriff is satisfied that there has been a material irregularity in the execution of the money attachment (other than the timing of the statement under section 189(1) of this Act), declaring the attachment void.

(5)An order under subsection (4)(c) above may make such consequential provision as the sheriff thinks fit.

(6)An order under subsection (4)(c) above does not affect the title of a person to any money acquired by that person in good faith.

(7)The sheriff may not make an order under subsection (4)(b) or (c) above without first—

(a)giving—

(i)the debtor;

(ii)the creditor; and

(iii)any third party who claims ownership (whether alone or in common with the debtor or any other person) of any money attached,

an opportunity to make representations; or

(b)holding a hearing.

(8)The sheriff clerk must intimate the sheriff’s order under subsection (4) above to the persons mentioned in subsection (7)(a) above.

General and miscellaneous

191Money in common ownership

(1)Money which is owned in common by a debtor and a third party may be attached in satisfaction of the debts of the debtor.

(2)Where at any time before the disposal of attached money—

(a)a third party claims to own the money in common with the debtor;

(b)either—

(i)the judicial officer is satisfied that the claim is valid; or

(ii)the sheriff, on the third party’s application, makes an order stating that the sheriff is so satisfied; and

(c)the third party pays to the officer a sum equal to the value of the debtor’s interest in the money,

the debtor’s interest in the money is transferred to the third party.

(3)Where the sheriff is satisfied—

(a)that money attached is owned in common by the debtor and a third party; and

(b)that the disposal of the money would in the circumstances be unduly harsh to the third party,

the sheriff may, on the third party’s application made before the money’s disposal, order that the money attachment is to cease to have effect in relation to that money.

(4)Where—

(a)the debtor’s interest in money owned in common by the debtor and a third party is, under subsection (2) above, transferred to the third party; or

(b)the money attachment ceases, in pursuance of an order made under subsection (3) above, to have effect in relation to that money,

the judicial officer may attach other money owned by the debtor and kept at the place at which the original money attachment was executed.

(5)In this section and in section 192 of this Act, references to the “disposal” of attached money (and to cognate expressions) are to be construed as references to the value of that money being realised by virtue of—

(a)an order under section 181 of this Act; or

(b)a payment order.

192Procedure where money owned in common is disposed of

(1)This section applies where—

(a)a third party claimed, before attached money was disposed of, to own the money in common with the debtor;

(b)the debtor’s interest in the money has not transferred to the third party under section 191(2) of this Act;

(c)the money attachment has not, by virtue of an order under section 191(3) of this Act, ceased to have effect in relation to that money;

(d)the third party’s interest in the money has, on the disposal of the money, been—

(i)transferred to another person; or

(ii)extinguished by virtue of the disposal; and

(e)either—

(i)the third party’s claim is, after that disposal, admitted by the creditor and the debtor; or

(ii)where the third party’s claim is not so admitted, the sheriff, on an application by the third party after that disposal, is satisfied that the claim is valid.

(2)The creditor must pay to the third party a sum equal to the fraction of the value of the money which corresponded to the third party’s interest in it.

193Unlawful acts after money attachment

(1)This section applies where—

(a)a money attachment has been executed; and

(b)the debtor—

(i)realises (or purports to realise) the value of an attached banking instrument;

(ii)otherwise relinquishes ownership of such an instrument; or

(iii)obtains (or attempts to obtain), by fraud or other dishonest means, a banking instrument in place of such an instrument.

(2)The debtor is acting in breach of the money attachment.

(3)A person who—

(a)assists a debtor to do anything mentioned in subsection (1)(b) above; and

(b)knows (or ought reasonably to know) that a money attachment has been executed against the debtor,

is acting in breach of the money attachment.

(4)A breach of the money attachment under subsection (2) or (3) above may be dealt with as a contempt of court.

194Appeals

(1)Subject to subsection (2) below, an appeal against any decision of the sheriff made under this Part of this Act may be made only—

(a)to the sheriff principal;

(b)with the leave of the sheriff; and

(c)on a point of law.

(2)This section does not apply to decisions made under section 181(3) of this Act.

(3)The decision of the sheriff principal on such an appeal is final.

195Recovery from debtor of expenses of money attachment

(1)Expenses which, in accordance with schedule 3 to this Act, are chargeable against the debtor are to be recoverable from the debtor by the money attachment but not by any other legal process.

(2)Where any expenses such as are mentioned in subsection (1) above have not been recovered by the time the proceeds of the money attachment are disposed of under a payment order, or the money attachment otherwise ceases to have effect, they cease to be chargeable against the debtor.

(3)The sheriff must grant decree for payment of any expenses awarded by the sheriff against the debtor in favour of the creditor under paragraph 4 of schedule 3 to this Act.

(4)Subsection (5) below applies where a money attachment is—

(a)in effect immediately before the date of sequestration (within the meaning of the 1985 Act) of the debtor’s estate;

(b)in effect immediately before the appointment of an administrator under Part II of the Insolvency Act 1986 (c. 45), in relation to the debtor;

(c)in effect against property of the debtor immediately before a floating charge attaches to all or part of that property under section 53(7) (attachment on appointment of receiver by holder of charge) or 54(6) (attachment on appointment of receiver by court) of that Act of 1986;

(d)in effect immediately before the commencement of the winding up, under Part IV or V of that Act of 1986, of the debtor; or

(e)rendered unenforceable by virtue of the creditor entering into a composition contract or acceding to a trust deed for creditors or by virtue of the subsistence of a protected trust deed within the meaning of Schedule 5 to the 1985 Act.

(5)Where this subsection applies—

(a)the expenses of the money attachment which were chargeable against the debtor remain so chargeable; and

(b)if the debtor’s obligation to pay the expenses is not discharged under or by virtue of the sequestration, administration order, receivership, winding up, composition contract or trust deed, those expenses are recoverable by further money attachment.

196Liability for expenses of money attachment

(1)Schedule 3 to this Act has effect for the purposes of determining the liability, as between the creditor and the debtor, for expenses incurred in serving a charge and in the process of money attachment.

(2)The Scottish Ministers may by order modify that schedule so as to—

(a)add or remove types of expenses to or, as the case may be, from those referred to in that schedule; or

(b)vary any of the descriptions of the types of expenses referred to in it.

197Ascription

(1)This section applies where any sums are—

(a)attached by a money attachment; or

(b)paid to account of the sum recoverable by that attachment while it is in effect.

(2)Such sums are to be ascribed to the following in the order in which they are mentioned—

(a)the expenses which are chargeable against the debtor incurred in the money attachment;

(b)any interest which has accrued, at the day on which the money attachment was executed, on the sum for payment for which the charge was served;

(c)any sum for payment of which that charge was served together with such interest as has accrued after the day the money attachment was executed.

198Interpretation

(1)In this Part—

  • “decree” has the meaning given by section 221 of this Act, being a decree which, or an extract of which, authorises money attachment;

  • “document of debt” has the meaning given by section 221 of this Act, being a document which, or an extract of which, authorises money attachment;

  • “dwellinghouse” has the same meaning as in section 45 of the 2002 Act;

  • “judicial officer” means the judicial officer appointed by the creditor;

  • “money” has the meaning given by section 175 of this Act;

  • “payment order” has the meaning given by section 183(2) of this Act;

  • “schedule of money attachment” has the meaning given by section 179(1) of this Act; and

  • “sum recoverable by the money attachment” has the meaning given by section 177(1) of this Act.

(2)The Scottish Ministers may by order modify the definitions of “decree” and “document of debt” in subsection (1) above by—

(a)adding types of decree or document to;

(b)removing types of decree or document from; or

(c)varying the description of,

the types of decree or document to which those definitions apply.

(3)Where—

(a)a schedule, report or statement under this Part of this Act requires to be signed; and

(b)provision is made by virtue of this Part of this Act or by any other enactment permitting the schedule, report or statement to be an electronic communication,

the requirement is satisfied by a certified electronic signature.

Part 9Diligence against earnings

199Simultaneous operation of arrestments against earnings where net earnings insufficient

(1)In section 58 of the 1987 Act (simultaneous operation of earnings arrestment and current maintenance arrestment), for subsection (2) substitute—

(2)If on any pay-day N is less than S, the employer shall operate both the earnings arrestment and the current maintenance arrestment in accordance with subsection (3) below.

(3)The employer shall—

(a)for the purposes of section 47(1) of this Act, deduct the sum equal to—

(b)for the purposes of section 51(1) of this Act, deduct the sum equal to—

(4)In subsections (2) and (3) above—

  • N is the amount of any net earnings in so far as they exceed the sum mentioned in subsection (2)(b) of section 53 of this Act for the number of days mentioned in subsection (2)(a) of that section;

  • E is the sum which the employer is required to deduct under section 47(1) of this Act;

  • C is the sum which the employer is required to deduct under section 51(1) of this Act; and

  • S is the total of E and C..

(2)In section 63(5)(b) of that Act (sum payable under conjoined arrestment order including both ordinary debts and current maintenance), for “all the debts were current maintenance” substitute “the only debts were the current maintenance debts”.

(3)In Schedule 3 to that Act (disbursement under conjoined arrestment order)—

(a)in paragraph 4, for the words from “priority” to the end substitute “disbursement shall be in accordance with paragraph 4A below.”; and

(b)after that paragraph, insert—

4AWhere—

(a)only one of the debts is an ordinary debt, the creditor in that debt shall be paid the sum equal to—

(b)more than one of the debts is an ordinary debt, each of the creditors in those debts, out of the sum mentioned in sub-paragraph (a) above, shall be paid the same proportion of the amount of that creditor’s debt;

(c)only one of the debts is current maintenance, the creditor in that debt shall be paid the sum equal to—

(d)more than one of the debts is current maintenance, each of the creditors in those debts, out of the sum mentioned in sub-paragraph (c) above, shall be paid the same proportion of the amount of that creditor’s debt,

where—

  • D is the sum deducted under subsection (5) of section 63 of this Act;

  • E is the sum deducted under paragraph (a) of that subsection;

  • C is the sum which would, if the only debts were the current maintenance debts, be deducted under subsection (3) of that section; and

  • S is the total of E and C..

200Arrestment of earnings: deductions from holiday pay

(1)In section 47(1) of the 1987 Act (general effect of earnings arrestment), after “section 49” insert “or 49A”.

(2)In section 49(1) of that Act (method of calculating deduction from earnings), at the beginning insert “Subject to section 49A of this Act,”.

(3)After section 49 of that Act, insert—

49ADeductions where net earnings include holiday pay

(1)This section applies where—

(a)the debtor’s earnings are paid at regular intervals; and

(b)on one pay-day (in this section, the “normal pay-day”) there are paid to the debtor both—

(i)earnings normally payable on that pay-day (in this section, “normal earnings”); and

(ii)earnings such as are mentioned in subsection (2) below (in this section, “holiday pay”).

(2)Holiday pay is earnings which—

(a)are paid in respect of a period of annual leave or public holiday; and

(b)would, were they not paid in respect of such leave or holiday, have been paid on a pay-day other than the normal pay-day.

(3)In arriving at the sum to be deducted under section 47 of this Act on the normal pay-day, subsections (4) to (8) below shall apply.

(4)Calculate in accordance with section 49 of this Act the sum, if any, which would be deducted from the normal earnings if the holiday pay had not been paid on the normal pay-day.

(5)Where—

(a)the debtor’s normal earnings are payable weekly, monthly or at regular intervals of a whole number of weeks or months; and

(b)all of the holiday pay relates to a whole number of weeks or months,

the sum, if any, to be deducted from the holiday pay shall be the sum arrived at by applying sub-paragraphs (i) to (iii) of section 49(1)(c) of this Act to the holiday pay as if it were the net earnings mentioned in that sub-paragraph (i).

(6)Where the debtor’s normal earnings are payable weekly, monthly or at regular intervals of a whole number of weeks or months but part of the holiday pay relates to a whole number of weeks or months and part does not, the sum, if any, to be deducted from the holiday pay shall be the sum arrived at by—

(a)in relation to the part of the holiday pay which relates to a whole number of weeks or months, applying subsection (5) above to that part;

(b)in relation to the part of the holiday pay which does not relate to a whole number of weeks or months, applying paragraphs (a) to (c) of section 49(2) of this Act to that part of the holiday pay as if it were the net earnings mentioned in that paragraph (a); and

(c)aggregating the sums arrived at as mentioned in paragraphs (a) and (b) above.

(7)Where—

(a)the debtor’s normal earnings are payable weekly, monthly or at regular intervals of a whole number of weeks or months but none of the holiday relates to such a whole number of weeks or months; or

(b)the debtor’s normal earnings are payable at regular intervals other than at intervals to which paragraph (a) above applies,

the sum, if any, to be deducted from the holiday pay shall be arrived at by applying paragraph (b) of subsection (6) above to the holiday pay.

(8)Aggregate—

(a)the deduction, if any, calculated under subsection (4) above; and

(b)the deduction, if any, calculated under subsection (5), (6) or, as the case may be, (7) above..

201Provision of debt advice and information package

(1)In section 47 of the 1987 Act (general effect of earnings arrestment)—

(a)in subsection (2)(a), after “shall” insert “, subject to subsection (3) below,”; and

(b)after subsection (2) insert—

(3)An earnings arrestment shall not come into effect unless, no earlier than 12 weeks before the date on which the earnings arrestment schedule is served, the creditor has provided the debtor with a debt advice and information package.

(4)In this section and in sections 51(2A) and 60(3A) of this Act, “debt advice and information package” means the debt advice and information package referred to in section 10(5) of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17)..

(2)In section 51 of that Act (general effect of current maintenance arrestment)—

(a)in subsection (2)(a), after “shall” insert “, subject to subsection (2A) below,”; and

(b)after subsection (2) insert—

(2A)A current maintenance arrestment shall not come into effect unless, no earlier than 12 weeks before the date on which the current maintenance arrestment schedule is served, the creditor has provided the debtor with a debt advice and information package..

(3)In section 60 of that Act (conjoined arrestment orders), after subsection (3) insert—

(3A)It shall not be competent to make a conjoined arrestment order unless, no earlier than 12 weeks before the date of the application under subsection (2) above, the creditor has provided the debtor with a debt advice and information package..

(4)In section 73(1) of that Act (interpretation), after the definition of “current maintenance” insert—

“debt advice and information package” has the meaning given by section 47(4) of this Act;.

202Intimation of arrestment schedule

(1)Section 70 of the 1987 Act is amended as follows.

(2)In subsection (1), for the words “, if reasonably practicable,” substitute “take all reasonably practicable steps to”.

(3)After subsection (4), insert—

(4A)An employer on whom an earnings arrestment schedule or a current maintenance arrestment schedule is served shall, as soon as is reasonably practicable—

(a)intimate a copy of it to the debtor; and

(b)notify the debtor of—

(i)the date on which the first deduction is made; and

(ii)the sum so deducted.

(4B)An employer on whom a copy of a conjoined arrestment order is served shall, as soon as is reasonably practicable, notify the debtor of the matters mentioned in sub-paragraphs (i) and (ii) of subsection (4A)(b) above..

203Provision of information

After section 70 of the 1987 Act, insert—

70AEmployer’s duty to provide information

(1)Where an employer receives, in relation to a debtor—

(a)an earnings arrestment schedule;

(b)a current maintenance arrestment schedule; or

(c)a copy of a conjoined arrestment order,

the employer shall, as soon as is reasonably practicable, send to the creditor or, in the case of a conjoined arrestment order, the sheriff clerk, the information mentioned in subsection (3) below.

(2)The employer shall, provided the debt has not been extinguished, send, on or as soon as is reasonably practicable after the dates mentioned in subsection (4) below, to the creditor or, as the case may be, the sheriff clerk the information mentioned in subsection (3) below.

(3)The information referred to in subsection (1) above is—

(a)how the debtor is paid (whether weekly, monthly or otherwise);

(b)the date of the debtor’s pay-day next following—

(i)where subsection (1) above applies, receipt of the schedule or order; or

(ii)where subsection (2) above applies, the date mentioned in subsection (4) below;

(c)the sum deducted on that pay-day and the net earnings from which it is so deducted; and

(d)any other information which the Scottish Ministers may, by regulations, prescribe.

(4)The dates referred to in subsection (2) above are—

(a)the later of—

(i)6 April next following receipt of the schedule or order; or

(ii)the day falling 6 months after receiving the schedule or order; and

(b)each 6 April thereafter.

(5)Notwithstanding subsections (1) and (2) above, the employer shall, if the debtor ceases for whatever reason to be employed by the employer, give notice, as soon as is reasonably practicable, to the creditor or, as the case may be, the sheriff clerk—

(a)of that fact; and

(b)in so far as is known to the employer, the name and address of any new employer of the debtor.

(6)Where an employer sends information under subsection (1) or (2) above or gives notice under subsection (5) above, the employer shall, as soon as is reasonably practicable, send a copy of that information or notice to the debtor.

70BFailure to give notice under section 70A(5)

(1)Where an employer fails without reasonable excuse to give notice under section 70A(5) of this Act, the sheriff may, on the application of any creditor, make an order requiring the employer—

(a)to provide such information as is known to the employer as to the debtor’s employment after ceasing to be employed by that employer;

(b)to pay to the creditor an amount not exceeding twice the sum which the employer would have been required to deduct on the debtor’s next pay-day had the debtor still been employed by that employer.

(2)Where a sum is paid by virtue of an order under subsection (1)(b) above—

(a)the debt owed by the debtor to the creditor shall be reduced by that sum; and

(b)the employer shall not be entitled to recover that sum from the debtor.

(3)An employer aggrieved by an order under subsection (1) above may, before the expiry of the period of 14 days beginning with the day on which the order is made, appeal, on point of law only, to the sheriff principal, whose decision shall be final.

70CCreditor’s duty to provide information

(1)A creditor who is receiving payment from a debtor by virtue of—

(a)an earnings arrestment;

(b)a current maintenance arrestment; or

(c)a conjoined arrestment order,

shall, provided the debt has not been extinguished, send, on or as soon as is reasonably practicable after the dates mentioned in subsection (2) below, to the employer or, in the case of a conjoined arrestment order, the sheriff clerk the information mentioned in subsection (3) below.

(2)The dates referred to in subsection (1) above are—

(a)t