Bankruptcy and Diligence (Scotland) Act 2024

Arrestment and action of furthcoming

Section 14 – Service of documents and arrestee’s duty of disclosure

46. Section 14(2) inserts a new section 73CA into the 1987 Act. Subsection (1) of that new section provides that documents must be served on the arrestee either by being sent to the proper address of the arrestee, or by being transmitted to the arrestee electronically. However, if it is impossible or impracticable for the documents to be served as described, documents may instead be effected by any other competent mode of service (see subsection 2). The proper address of the arrestee for postal purposes is defined in subsection (3) as the address of the registered or principal office of the body corporate (in the case of a body corporate), the address of the principal office of the partnership (in the case of a partnership), or the last known address of the arrestee (in any other case). Any posted document is considered to be received 48 hours after it is sent unless the contrary is shown (subsection (4)). Provisions relevant to electronic service are set out in subsection (5), and include that electronic transmission must be done in a way that the arrestee has indicated to the creditor or officer of the court that they are willing to receive the document. An indication of willingness may be specific to the particular document in question (or documents of that kind), expressed specifically to the creditor or officer of the court or more generally (e.g. on a website), or inferred from past conduct with no indication of unwillingness to receive documents in such a way again. Electronic transmission of a document may also be by uploading a document to an electronic storage system for download by the arrestee, as long as the arrestee is sent a notification that the document has been uploaded. Documents transmitted electronically are taken to have been received on the day of transmission (unless the contrary is shown).

47. Section 73G of the 1987 Act includes a duty on arrestees to disclose to an arresting creditor the existence of and the value of assets attached by an arrestment. Arrestment is a form of diligence which can be used to recover debt owed by a debtor to a creditor. A reference to an “arrestee” is a reference to the legal person who holds assets (property or funds) on behalf of the debtor. This may, for example, be a bank or other financial institution. In this section a reference to an “arrestee” may also mean a person who is a potential arrestee, i.e. they are referred to using the label arrestee whether or not any property (which includes funds) is actually attached. Where nothing is attached, there is currently no requirement for the arrestee to provide a “nil” return. The modifications made by section 14(3) of this Act change that so, where nothing attaches, the arrestee is required to confirm to the creditor the reasons why. For example, nothing may have attached because the arrestee has no connection with the debtor and does not hold an account for them, or the arrestee does hold an account but the sum held is less than the protected minimum balance (see section 73F of the 1987 Act). The new disclosure being required is to be submitted in the same way that existing disclosures are required to be made under section 73G. The prescribed form must be sent within 3 weeks of the date on which the schedule of arrestment is served on the arrestee. A copy of the disclosure must be sent to the debtor. There will however be no requirement to send a copy of the form to any other person under section (5)(b) in such cases since no property or funds will have attached.

48. Section 73H(1) of the 1987 Act provides that, where an arrestee fails to make a disclosure under section 73G(2), the sheriff may, on the application of the creditor, order the arrestee to pay the creditor the lesser of either the sum due by the debtor to the creditor or the amount which represents the minimum protected balance in bank accounts which are subject to an arrestment (currently £1,000). This section reduces the amount payable to £500. This applies to all failures of disclosure equally (i.e. any of the information required under section 73G(4) which, in other words, covers failure to respond in relation to both a “successful” and an “unsuccessful” arrestment). The existing provision regarding the minimum protected balance (section 73F(3) of the 1987 Act) remains as it is, but the figure mentioned in that section now has no relevance in terms of the sum payable for failure to disclose information under section 73H. Section 73H(3) provides that payment of the sum under subsection (1) will reduce the debt owed to the creditor by the same amount and the arrestee is not entitled to recover that sum from the debtor. An arrestee aggrieved by an order under section 73H(1) may appeal in terms of section 73H(4) (see also section 109 of the Courts Reform (Scotland) Act 2014 which applies changes to the appeal procedure). This section also inserts a power for the Scottish Ministers to amend the sum in the future through negative procedure regulations.

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See the glossary in the Policy Memorandum for definition of terms.