Diligence (Scots law)


Diligence is a term in Scots Law with no single definition, but is commonly used to describe debt collection and debt recovery proceedings against a debtor by a creditor in Scottish courts. The law of diligence is part of the law of actions in Scots private law. Accordingly, it is within the devolved competence of the Scottish Parliament.
Diligence is usually executed by Sheriff Court officers, but may also be carried out by Messengers-at-arms.
There are many forms of diligence, largely involving creditors and debtors. The newest form of diligence, land attachment, will be introduced into Scots law when Part 4 of the Bankruptcy and Diligence Act 2007 is brought into force.

Definition of Diligence

Diligence has no single definition in Scots law, but it is recognised that there were at least four broad forms of 'diligence' proceedings. These include:
The history of diligence is obscure, with the first substantial historical research carried out in the 18th century. Subsequent research was undertaken in the 19th century, and in the 20th century.
In modern usage, the term diligence relates mainly to enforcement of monetary obligations. There are many forms of debt related diligences, but it is common for them to be categorised as either 'seize' diligence or 'freeze' diligence due to the nature of the legal effect of each form of diligence.

Debt related diligence

Debt related diligences, as an enforcement of a monetary obligation owed by a debtor to a creditor, usually form part of the third stage of debt collection. This is often the type of diligence discussed when using the term diligence in Scotland. The three stages of debt recovery in Scotland are:
  1. The 'informal stage' in which a creditor pursuers the debtor for payment of the debt informally.
  2. The 'court stage' in which a creditor sues the debtor for payment of a debt in a Scottish court.
  3. The 'diligence stage'' in which a creditor seeks to recover the debt by raising a subsequent action of diligence against the debtor.
Despite being the final stage in debt recovery proceedings, diligence is commonly used by creditors as a final means falling the exhaustion of obtaining payment of a debt in the first or second stages. Between 2018-2019, 272,692 actions of diligence were carried out in Scotland. These statistics are collected by the Accountant-in-Bankruptcy, on behalf of the Lord Advocate, based on the statutory reporting obligation by Sheriff court officers and Messengers-at-Arms, the court officers of Scotland.

Debtor protections from debt-related diligence

Debt Advice and Information Package (DAIPs)

A debtor who is a natural person is entitled to receive a Debt Advice and Information Package when diligence proceedings are raised against him. First introduced under the , this document sets out the debtor's legal rights and where professional support and guidance on debt issues is available. The current DAIP booklet can be viewed on the Accountant-in-Bankruptcy website. While each form of diligence has specific requirements for the services of a DAIP, they generally must be issued at least 12 weeks prior to the commencement of diligence.

Debt Arrangement Schemes (DAS)

A debtor can avoid diligence by entering into a debt arrangement scheme. This scheme allows a debtor to arrange repayment of debt under a statutory debt payment programme administered by the DAS Administrator, part of the Accountant-in-Bankruptcy. This is the only statutory debt repayment scheme available in the United Kingdom.
However, before a debtor can enter into a DAS, they must have obtained advice from a money adviser. The provides such money advice, as well as other advisory and charitable organisations such as the Citizens Advice Bureau. When a debtor makes a DAS application, it must be accompanied by a declaration from a money adviser that advice has been provided.
A DAS usually must have the consent of the creditor in order to be approved. However where consent by the creditor is not given, the DAS Administrator must approve the application where the proposed programme is "fair and reasonable".
Where a DAS has been approved, the debtor is immune from the commencement of diligence proceedings. The DAS Administrator maintains a DAS Register, recording information relating to debt payment programmes, including the debtor's personal information.

Time to Pay Directions

Another protection available to debtors are Time to Pay Directions. Time to Pay Directions are available to debtors at the commencement of court proceedings, the award of a decree against them through to the service of a charge to pay. They allow a debtor to ask the court for a period of time to repay the debt sued for by instalments or lump sum payments.
The court must take into account a number of factors, including the debtor's financial position, when making a time to pay direction.
Time to pay directions are not available for debts:
Where a court makes the Time to Pay direction/order, the debtor is immune from the commencement of diligence against them.

Forms of debt-related diligence

Diligence Against Property

Attachment

Attachment is a form of diligence that allows a creditor to seize and sell a debtor's corporeal moveable property. Only corporeal moveable property which is owned by the debtor can be seized and removed. However, a sheriff court officer is entitled to proceed on the assumption that any property in possession of the debtor is also owned by them.
Attachment replaced the diligence of poinding, after a sustained political campaign by Scottish Socialist Party leader Tommy Sheridan MSP.
Process of Attachment
Charge to Pay
Prior to the commencement of attachment proceedings, a charge to pay must be served on the debtor calling on them to make payment within a certain number of days. Upon expiry of this charge days without payment, the creditor can launch legal proceedings against the debtor.
Debt Advice and Information Package (DAIP)
A DAIP, discussed above, must be served on the debtor who is a natural person at least 12 weeks in advance of the execution of the attachment.
Valuation and Service of Schedule of Goods
Following service of the charge to pay and DAIP, the creditor can instruct Sheriff Officers to attend a debtor's premises. Thereafter, the Sheriff Officers will attend the debtor's premises in order to value property for sale. Sheriff Officers are allowed to enter shut and locked premises for the purposes of valuation. Property should be valued at the price it could vetch if sold on the open market.
Following valuation of the corporeal moveable property, the Sheriff Officers must immediately make a schedule identifying all corporeal moveable property owned by the debtor. This schedule must then be given to the debtor, or a copy left at the premises. All property listed in the schedule is known as the attached articles. Any person interfering with an attached article is liable to conviction for contempt of court and liable to the creditor for the value of the interfered attached article.
Thereafter, a report signed by the Sheriff Officer must be submitted to the Sheriff Court, including a copy of the Schedule of Goods, within 14 days of execution.
Circumstances where attachment cannot take place
Certain Days
Attachment is not possible on certain days. This includes:
Attachment can only be carried out between 8am to 8pm unless the Sheriff Court has specially authorised attachment outwith these times.
Exempt Articles
Certain property is exempt from being attached. This includes:
Following submission of the valuation report to the Sheriff Court, the Sheriff Officer has six months in which to remove the attached articles from the debtor's premises and sell the attached articles at roup. Following the roup, the Sheriff Officer must submit another report to the Sheriff Court, ending the diligence process.

Attachment of articles inside a dwelling house: Exceptional attachment

A special form of attachment exists in order to recover corporeal movebale property inside a debtor's home. This is known as exceptional attachment and can be legally executed following the creditor obtaining an exceptional attachment order from the debtor's local Sheriff Court. The rules for exceptional attachment are found in Part 3 of the .
Obtaining an Exceptional Attachment Order
In order to obtain articles kept inside a debtor's home, the creditor must raise diligence proceedings in the Sheriff Court. Obtaining an exceptional attachment order allows the creditor to:
  1. Attach, remove and auction at roup any of the debtor's non-essential assets kept in his/her dwellinghouse.
  2. Carry out the attachment process during a specified period of time during the order
  3. Open and shut any lockfast dwellinghouses, or part of it, for the purpose of carrying out the attachment process.
However, in order to grant this order, the Sheriff must be satisfied that there are exceptional circumstances to merit the granting of the order. MacNeil describes these exceptional circumstances in short as "essentially, there must be no other way for the creditor to recoup the debt".
Essential Assets
An exceptional attachment order only allows non-essential assets to be removed from the debtor's home. Schedule 2 of the outlines what is classified as essential goods. Essential assets include the following property that is reasonably required:
Where the above items are reasonably required by the debtor, they are exempt for attachment, removal and auction by the creditor.
Process
Similar to general attachment, exceptional attachment authorises a court officer to open shut and lockfast homes. However, the officer must give at least 4 days notice of the intended time of entry to the home. This notice period can be removed under authorisation of the Sheriff. Importantly, a person must be present in the home at the time of the officer's entry who is over 16 years old and has legal capacity to understand the consequences of the attachment procedure.

Money Attachment

For monies, that is cash and banking instruments, seizure can occur through the diligence of money attachment. The rules for money attachment are found in the .
Money attachment can be raised where a debt has been recognised judicially by a court decree or document and the debtor has been charged to pay. Money attachment cannot take place in relation to monies kept within a debtor's home.
Process of Money Attachment
Charge to Pay
Prior to the commencement of attachment proceedings, a charge to pay must be served on the debtor calling on them to make payment within a certain number of days. Upon expiry of this charge days without payment, the creditor can launch legal proceedings against the debtor. However, the creditor must also wait 12 weeks after the service of a DAIP.
Debt Advice and Information Package (DAIP)
A DAIP, discussed above, must be served on a natural person debtor at least 12 weeks in advance of the execution of the money attachment.
Seizure
Following the making of a money attachment order by the relevant court, court officers can go to a debtor's premises to attach any monies kept there. The officer is entitled to a presumption that the debtor owns any money found in the premises. However, prior to seizing the monies, the officer must make enquiries as to the ownership of the monies sought. The officer is not prevented from relying on the presumption by an assertion is made that the money is not owned by the debtor.
The court officer must deposit any cash attached in a bank account. A court officer is entitled to not attach banking instruments other than cheques unless expressly instructed by the creditor.
Circumstances where money attachment cannot take place
Certain Days
Money attachment is not possible on certain days. This includes:
Attachment can only be carried out between 8am to 8pm unless the Sheriff Court has specially authorised attachment outwith these times.
Schedule of Money Attachment
Following the completion of the seizure of any monies, the court officer must immediately complete a document known as a schedule of money attachment. This must be in a manner stipulated by an Act of Sederunt. It must be signed by the court officer. Following completion of the schedule, a copy must be given to the debtor or left at the debtor's premises.
Report of Money Attachment
Within 14 days of the seizure of the monies, the court officer must send a Report of money attachment to the Sheriff Court. This must be in a manner stipulated by an Act of Sederunt. It must be signed by the court officer. A copy must also be given to the debtor. If the report is refused by the Sheriff, the money attachment ceases to have effect.
Payment Order
Following the lodging of the Report by the court officer, a creditor can apply for an Payment Order allowing the creditor to have the attached monies paid to him. A debtor is entitled to oppose the application and have his representations heard. Without any opposition, and the Sheriff is satisfied there is no material irregularity in the above processes, and is also satisfied the monies are owned by the debtor; the Sheriff must approve the application. Thereafter, the monies attached can be paid to the creditor.

Arrestment

Arrestment is a form of diligence that applies to initially attach and subsequently 'seize' any incorporeal moveable or corporeal moveable property owned by the debtor but is in possession of a third party. Accordingly, there are three parties in this diligence proceedings: the creditor, the debtor and the third party .
Following attachment of the property, importantly including any incorporeal property such as a contractual right to payment, arrestment allows an action of furthcoming'' to be raised in Scottish courts compelling the third party to deliver the property, or make payment to the creditor in place of the debtor. The rules of the diligence of arrestment originate in Scots common law but are largely now found in the .
Process of Arrestment
Basis for Arrestment
Arrestment is only permitted to be raised in execution of court decree or a document of debt.
Decrees permitted include those from Courts of Scotland, as well as judgments of foreign courts that are enforceable in Scotland under Scots private international law.
Documents of debt are typically legal documents such as contracts and deeds registered in the Books of Council and Session, allowing the arrester to avoid the second stage of debt recovery, the court stage.
Arrestment Proceedings Based on a Decree
Following the obtention of a court decree, the creditor can commence diligence provided that certain requirements are met to protect the debtor, see above. For arrestment, this is the service of a charge to pay on the debtor in advance of the commencement of legal proceedings. Upon expiry of this charge days without payment, the creditor can launch legal proceedings against the debtor. Thereafter, the creditor can serve a formal document on the third party known as a Schedule of Arrestment. This document must be in a manner stipulated by the Scottish Ministers, currently found in Schedule 7 of the After receipt of the Schedule of Arrestment, the third party has three weeks in which to complete and send to the creditor and debtor, and any other interested party, a formal document known as Form of Disclosure by Arrestee. This document sets out what property the arrestee holds for the debtor and the value of such property. The Form of Disclosure by Arrestee must be in a manner stipulated by the Scottish Ministers, currently found in Schedule 8 of the .
Property Subject to Arrestment
Two classes of property in Scots law are capable of arrestment, namely corporeal moveable and incorporeal moveable. In practice this means a broad range of property held by a third party can be arrested, such as:
Following arrestment of the corporeal moveable property, the creditor can raise an action of furthcoming to have the Sheriff Court authorise the sale of the property, with the proceeds paid to the creditor.

Diligence Against Earnings

Diligence against earnings allows a creditor to recover debt via the debtor's wages paid by an employer. The rules for diligence against earnings are found in . The rules are similar to arrestment by service of a formal document on the debtor's employer. There are three forms of diligence against earnings, namely:
  1. Earnings Arrestment. This can be launched by a single creditor against a debtor's employer.
  2. Conjoined Arrestment. This form of diligence can be raised by two or more creditors, avoiding the use of sequestration.
  3. Current Maintenace Arrestment. This form of diligence is able to be used where the debtor is liable to pay child maintenance, also known as aliment.
The amount of instalments and proportion of a debtor's wages an employer must pay to the creditor is determined in legislation.
Charge to Pay
Prior to the commencement of arrestment proceedings, a charge to pay must be served on the debtor calling on them to make payment within a certain number of days. Upon expiry of this charge days without payment, the creditor can commence diligence against the debtor. However, the creditor must also wait 12 weeks after the service of a DAIP.
Debt Advice and Information Package (DAIP)
A DAIP, discussed above, must be served on a natural person debtor at least 12 weeks in advance of the execution of the earnings arrestment.

Admiralty Arrestment

Admiralty arrestment allows a creditor to arrest any ships owned by the debtor, including any cargo on board. The ship and cargo will be prevented from leaving a Scottish port until payment of the debt is received by the creditor. The rules for this form of diligence are found in the Bankruptcy and Diligence Act 2007.

Inhibition

Inhibition allows a creditor to inhibit, any real rights a debtor holds in land, such as a right of ownership. There are two forms of inhibition, namely:
The rules for each form of inhibition are similar and regulated by Part 5 of the Bankruptcy and Diligence Act 2007.

Diligence Against the Person

Historic and Miscellaneous Forms of Diligence

Law Reform

The law relating to diligence has been subject of many reports by the Scottish Law Commission, including:
These reports' recommendations have led to reform of the law of diligence. They are available to view for free online at the Scottish Law Commission website.