In November 2010 the Supreme Court in RBS v Wilson found that, in any case where a creditor seeks repayment of a debt, failing which, the sale of the security subjects, it must first serve a calling up notice[1] and thereafter wait two months before repossessing the property. This was contentious as, up until the decision in Wilson, practitioners had believed that the calling up procedure was not necessary[2].
Following the Wilson case, the Scottish Government issued an informal consultation[3] on whether the decision has long term implications requiring mitigation through action of the Scottish Government. The Scottish Government has now issued a report analysing the responses.
A majority of respondents thought that there were negative impacts from the judgement and the Scottish Government should act to mitigate those. Whilst the responses revealed no clear trends, lenders and lender services focused on practical issues resulting from the increased timescales and costs involved in following the calling up procedure. In particular the two month delay in process caused concern and some consultees also commented on a lack of clarity and consistency in the law.
However, a notable minority of respondents felt that there were no long term impacts justifying action by the Scottish Government. The Law Society of Scotland took the view that “the Scottish Government should not take any measures unless or until it is clear that there are long term impacts which require to be addressed.” Professor Gretton saw no reason for emergency legislation pointing out that the calling up procedure was not unreasonable (indeed it was probably what had been intended when the 1970 Act had been drafted) and the 2 month ultimatum procedure not excessively long. He also referred[4] to the Scottish Law Commission’s imminent project on heritable securities which includes enforcement and saw no need for an additional review. Although the decision caused some problems for enforcement proceedings in hand at the time the decision came out, Professor Gretton noted that most had already sorted themselves out and the rest would do so fairly soon.
A summary of the responses is available here.
A full analysis of the responses is available here.
[1] following the procedure in s19 of the Conveyancing and Feudal Reform (Scotland) Act 1970
[2] It had been thought that a creditor had the option of also following the procedures contained in s21 (service of a notice if default) or s24 (an application to the court for an option to exercise remedies which can be followed immediately).
[3] The consultation was issued to 33 consultees from 27 organisations including lenders, law firms public/government bodies, representative bodies, advice agencies and court services.
[4] As did the Law Society of Scotland.
