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Brand New Judgment Enforcement for Scotland! |
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The new enforcement remedy of money attachment was introduced in Scotland on 23rd November 2009. This will enable a creditor holding a decree, or other enforcement document, to attach money, including foreign currency, held in business premises in the same manner as judgment enforcement against other moveable property.
However creditors will be disappointed attachment of money inside a house will be excluded as well as searches against the person.
How Easy is It?
The new measure will probably have a greater impact where there is a commercial debtor, trading from business premises, should there be cash in a till or some other accessible place. And because Sheriff Officers will be able to open shut and lockfast places they will be able to maintain the surprise element by being able to open a cash register themselves, without having to get the courts prior approval.
Scottish landlords will be particularly pleased with money attachment. This is because most leases north of border allow for summary diligence. In effect, the lease, once registered, allows for immediate judgment enforcement for overdue rent, other common charges and reasonable expenses, without having to go to the trouble and expense of initiating court action. So all they will have to do is register the lease, pass it to a Sheriff Officer who can carry out the money attachment once fourteen days after the charge for payment has been executed.
Technical Issues
The diligence (diligence is the generic term for Scottish judgement enforcement) will be competent if the debtor has been:
" Charged, and has failed, to pay the sum due, and
" Provided with a copy of a Debt Advice and Information Package no earlier than 12 weeks before executing the money attachment. Practically speaking the pack may be served at the same time the charge is.
" Section 176 subsections (1) and (2) of the Bankruptcy and Diligence (Scotland) Act 2007, provides that money attachment cannot be carried out on a Sunday, a public holiday in the area in which the attachment is to be carried out or another day designated by rules of court. An attachment must not begin before 8am or after 8 pm and cannot continue after 8pm if is in progress. A Sheriff Officer can apply to the Court for authority to carry out a money attachment outwith these times. So if you want to carry out an attachment in a club at 2.00am you will need to apply to the court to do this. Also the Sheriff Officer may want to be accompanied by Police Officers in those unusual circumstances.
Given that under money attachment the property is removed rather than frozen it is unavailable prior to decree.
The Money Attachment Process
The process of money attachment from the debt being established to payment from the debtor is therefore:
" Decree or document of debt authorises the attachment.
" Creditor provides a debtor with debt advice pack.
" Sheriff Officer instructed by creditor.
" Charge to pay served by Sheriff Officer, and debt not paid.
" Attachment executed and money removed by Sheriff Officer. Section 178 subsection (1) provides that while a Sheriff Officer is carrying out a money attachment, the officer can assume that any money found in the premises where the attachment is being carried out is owned wholly or in part by the debtor. But, before attaching any money, the officer must ask anyone present about the ownership of the money and particularly ask whether it is owned by the debtor in common with someone else. A simple assertion by a person that the money is not owned by the debtor is not enough to override the presumption that the debtor owns the money. The officer would need to be presented with more information or evidence that the money was not the debtors before the officer would be prejudiced from relying on the normal assumption.
" The statutory instrument which has put more flesh on the bones provides opening shut and lock fast places by the officer will be permitted. So getting the officer to open a till should not be an issue.
After the money or other financial instruments (such as cheques) have been removed (covering the debt along with interest and expenses) they will be deposited in a special bank account by the Sheriff Officer and cheques cashed. The Officer then reports the attachment to the court within fourteen days. After that an application is made for a payment order. The court will then give authority for the officer to make over the cash to the creditor subject to certain safeguards.
Money Attachment: The Safeguards
Section 185 provides for the debtor to apply to the court, before a payment order is made or a money attachment ceases, for an order releasing the money attached (or a portion of it) on the grounds that the attachment is unduly harsh to the debtor. It is for the court to decide whether the attachment is unduly harsh. However the effect of subsection (4) is that an order to release money under this section cannot permit the release of any more than £1,000 to the debtor.
Conclusion
Money attachment should be seen as a useful tool for creditors. Whilst the Sheriff Officers fees will be the debtors responsibility, as is always the case, these will have to be paid by creditors should the process be unsuccessful. However with their fees ranging from between £50.20 to £73.45 for arranging and executing the attachment for cash attached up to £2,431 and therefore 10% for values greater than that, creditors should not be unduly concerned. Only time will tell how practical the process will be. Will word get around that money attachment can be defeated if the debtor puts cash in their pocket? Whilst the professional debtor may do this most debtors will be unaware of this possibility and will have to rely on the section 185 safeguards.
Overall creditors should be encouraged to try it. They have everything to gain!
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