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Detailed plans have been announced for seven councils in the west of Scotland to pool services to save money.  It would mean most of the former Strathclyde region councils sharing support services of finance, payroll, revenues and benefits, HR and IT.  Between 2,000 and 3,400 staff could transfer to the new shared body.

The councils involved are North Lanarkshire, Renfrewshire, East Renfrewshire, Glasgow, Inverclyde and West and East Dunbartonshire.

Reports from the BBC can be found here and the Herald here.  These reports also point out that concerns have been raised with this proposal from a trade union and some councillors.  The main concern appears to be the potential job losses.  The difference in tone in these reports is also interesting.

Sheriff court case concerning an action for damages for failure to pay the purchase price timeously in terms of missives for the purchase/sale of a house in Saltcoats.

The missives provided for a date of entry of 4^th July 2008. However, settlement did not take place and the purchase price was not paid until the 28^th November 2010. No formal amendment was made to the missives. However, there was correspondence between the parties in which the sellers indicated that they were reserving the right to recover losses in terms of the original missives. There were also various references to the date of entry and date of settlement in the correspondence between the parties which led to debate in court as to whether the missives had been varied.

As is normal, the missives contained a supersession clause providing that they ceased to have effect after two years from the date of entry.  The sellers served an action for claims on 24 of November 2010. I.e. less than 2 years after entry was taken but more than 2 years after the date of entry provided in the missives.

The sellers claimed that the date of entry in the missives had been changed in the correspondence whereas the purchasers argued it had not.

Sheriff Livingstone found that the exchange of correspondence did not change the date of entry which in his view had a technical as well as a practical meaning.

 “In other words…the date that a party actually pays over the price i.e. the settlement date or the date that a party actually moves in both of which might lay claim to being the date of entry will not affect the date of entry in the missives in the absence of parties agreeing same. It might be more apt to describe the date of entry as being the agreed date for the seller to deliver a disposition in return for the buyer paying over the purchase price no matter when these things actually happen. There is no doubt in this case that the date of entry was 4^th July 2008 and it seems to me that this was a contractually agreed date of entry and could only be changed by agreement and further such an agreement would have to adhere to certain formalities. It is clear to me from the correspondence that although the Defenders solicitors asked the Pursuers to agree to a new date of entry the Pursuer never agreed to that. What the Pursuer did do was agree to settle on 28^th November 2008. That does not constitute an agreement to change the date of entry. The Pursuer did sign a disposition which refers to “WITH ENTRY and vacant possession as at 28^th November 2008 notwithstanding the date or dates hereof” but it seems to me that again that does not change the date of entry but effectively uses entry in a different sense referring to the date from which the [purchasers] became the heritable proprietor.”

 As a result the date of entry was 4 July 2008 meaning the proceedings should have been raised by 3^rd July 2010 and sellers were time barred from raising the action.

 A full report of the judgement is available from Scottish Courts here

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Inner House case considering whether a contractual clause constituted a penalty and was therefore unenforceable.

The clause in question was contained in an agreement between Stewart Milne Group, Bett Limited and Stewart and Robert Hill which related to the development of two sites in Wishaw.  Basically, the agreement provided that Stewart Milne and Bett would install sewerage and surface water drainage systems at the site they were developing which the Hills would be able to connect their site to the systems at no cost. If the drainage systems were not completed by the 28 March 2008 the Hills were entitled to receive payment from Bett and Stewart Milne of a penalty of £5,000 per calendar month until the systems were completed.

The works were not completed by 28 March 2008 and payments were made to the Hills until December 2008 but then stopped leading to the court action being raised by the Hills.

The temporary sheriff principal held that the clause imposed a liability to make payment on the occurrence of what was a breach of contract.  Whilst it was for the party seeking to show that the clause is a penalty to raise the issue, it was then for the party relying on the clause to demonstrate that it was a genuine pre-estimate of losses and damage caused by the breach.  In this case Stewart Milne and Bett had raised the issue and the Hills had put themselves in a position to show that the provision was a genuine pre-estimate of their loss. However, as the Hills had not shown that, but for the failure to complete the system by 28 March, they would have been able to complete their site, sell it and realise the return, they could not succeed.

However an Extra Division of the Inner House agreed with the submissions made on behalf of the Hills to the effect that it was for Stewart Milne and Bett as the parties claiming that the provision was an unenforceable penalty clause to show that this was the case and they had failed to do so.

In coming to his decision, the key question the sheriff principal had failed to consider was whether Stewart Milne and Bett had provided any argument in support of their contention that the provision was an unenforceable penalty. It appeared from the sheriff principal’s decision that he considered that it was not only for the Hills to show that the provision was a genuine pre-estimate of damages but also that the supposed breach of contract had given risen to a loss of the sort that the pre-estimate had been directed at quantifying.  There was no such requirement. The whole purpose of a provision such as the one used in this case is to avoid the need for proof; not only proof as to quantification of the loss but also proof that the loss had occurred.

The Inner House therefore allowed the appeal against the sheriff principal’s decision.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

HMRC has updated its guidance on “Payments to overseas bodies”.   The guidance outlines what constitutes “charitable expenditure” and gives a number of useful examples. 

The updated guidance can be found here.

Excellent report by the House of Commons Treasury Select Committee on HMRC’s standards of service.

The findings will not be a surprise to those who have had to deal with HMRC over the last few years.   Just trying to contact HMRC, or to get someone from HMRC to respond to correspondence, is a challenge in itself.

A statement form the Select Committee and its report can be found here.

Sheriff Court case concerning the maintenance of part of an archway over a pend on Constitution Street in Edinburgh. The pend is a passage running through a tenement giving access to a courtyard and premises to the rear.  The issue for the court was whether the owner of the pend was liable for a share of the cost of repairs to the archway above it.

Sheriff Morrison found that the pend was not part of the tenement and, although it could be described as a “connected passage”, there were no stairs or landings within it meaning that it did not satisfy the definition of a “close” in the Tenements (Scotland) Act 2004. As a result, the owners of the tenement were unable to recover a share of the costs from the owner of the pend.

Sheriff Principal (Stephen), however, allowed an appeal finding that, whilst the pend was not a close, it was nevertheless a “sector” of the tenement in terms of s29 (1) of the Act.  The sheriff principal also took account of the fact that the pend was enclosed from the streetby large ornate gates and concluded that the pend did form part of the tenement. As such, the obligations (to provide support and shelter) contained s8 (1) to (3) of the Act, applied to it.

In finding that the owner of the pend was liable for a share of the repairs the sheriff principal noted:

“It would also offend against common sense to hold otherwise. The requirement to repair the pediment was accepted. The pediment relates to the archway over no 123. The viability and soundness of the pediment and archway must clearly be a matter of common concern to the owners of the flats and also the pend. There would be serious implications for all if there were to be a fall of masonry or a collapse of the pediment/archway. The sheriff’s judgment would excuse or exonerate the owners of the pend from responsibility for maintenance of the archway or other common parts. This cannot be a proper or reasonable outcome in the circumstances. The archway forms the roof and boundary of the pend and the owner of the pend has a common interest along with the owners of flats in 121 and 125 in maintaining the archway.”

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

In part 2 of this series of articles I looked at the Dilnot Commission and its recommendations on how to fund social care in England.

In this article I will look at the: “Independent Review of Free Personal Care in Scotland”, often referred to as the Sutherland Review.  Although not as wide-ranging as Dilnot, the Sutherland Review is important as although it concentrates on Scotland’s Free Personal and Nursing Care (FPNC) policy other connected issues are covered.

Lord Sutherland was asked in the summer of 2007, shortly after the SNP minority administration took office, to carry out an independent review of FNPC.   The findings of the Sutherland Review were published in April 2008.  More information, including a complete copy of the Sutherland Review. can be found here.

Before I look at the Sutherland Review in more detail it is probably useful to remind ourselves what FPNC actually is.   FPNC was introduced across Scotland on 1st July 2002.  Free Personal Care is a legal entitlement for people aged over 65 or over who have been assessed as having personal care needs that require services to be put in place.

Any personal care service which does not fall into this definition will continue to be charged for.   Subject to an assessment by the Social Work Service, Personal Care can include:-

• Personal hygiene (e.g. bathing/showering).
• Continence management (e.g. toileting/bed changing).
• Food and diet (e.g. assistance with food preparation).
• Problems of immobility (e.g. help to move around).
• Counselling and support (e.g. reminder device).
• Simple medication (e.g. creams/ eye drops).
• Personal Assistance (e.g. dressing/going to bed).

Free Nursing Care is similar but is available to people of all ages who are assessed as requiring nursing care services.

The remit for the Sutherland Review was in four parts.

1. The funding available for FPNC.
2. The distribution of resources between local authorities.
3. The impact of the withdrawal by the UK Government of Attendance Allowance from people receiving FPNC.
4. How to ensure that funding for the long-term care of older people is sustainable.

Before I list the Review’s recommendations it is worth noting the concerns that had arisen over the first 5 years of the operation of FPNC.   There are:

1. Questions had been raised about the consistency of provision between different local authorities.   This included the use of waiting lists with different eligibility criteria from one authority to the next.
2. There has been continuing debate about specific issues such as food preparation.
3. Questions had been raised about the practical implications of the legal ruling in the “Macphail” case. [i]
4. Allowances for residential care have not been raised in line with inflation.

The recommendations were set out in a twelve point plan.  

The first 9 recommendations are described as “short-term”.  These recommendations were deemed necessary to stabilise the policy and address difficulties in funding and the variability of provision across the country.

1. Address the Funding Gap.  The Scottish Government should provide additional funding to stabilise the policy in the short-term, i.e. for the next 5 years.    It is estimated that the shortfall in funding is around £40 million.
2. Up-rate fixed allowances.  The Residential and Nursing Care Fixed Rate Allowances should in future be up-rated annually in line with inflation.
3. Standardise assessment and delivery.   There should be clear “entitlement” for all those assessed as needing personal and nursing care, analogous with the NHS, and in line with that, local authorities and their partners should consolidate standardisation of assessment  for and delivery of services, to common processes and clearly stated target times.
4. Establish clear national priorities and outcomes for older people.  There should be a specific reference to securing the wellbeing of older people included within the Scottish Government’s 15 National Outcomes set out in its National Performance Framework.
5. Ensure costs are accurately monitored and reported.  The current failings in information systems identified should be addressed and more accurate systems to collect comprehensive and accurate cost information set in place.
6. Improve local accountability.  A performance framework for long-term care services for older people should be built into the Single Outcome Agreement Model.
7. Address imbalance in funding streams.  The UK Government should not have withdrawn the Attendance Allowance funding in respect of self-funding clients in care homes, currently amounting to £30 million a year.  That funding should be reinstated in the short-term while longer-term work to re-assess funding streams takes place.
8. Clarify expectations.  Renew efforts to improve public information and understanding of the policy.  A clear understanding of shared responsibility needs to be fostered.
9. Address cross-border/boundary issues.  Conclude work to ensure greater consistency in interpretation and application of Ordinary Residence legislation and guidance without further delay.

Recommendations 10 and 11 are described as for the “short to medium-term” and are aimed at securing the policy and keeping it under review within the next 5 years.

1. Review and re-model.  The uncertainty associated with projecting future costs of long-term care means demand must be reviewed and re-modelled regularly and be reflected accurately in future local government finance settlements and capacity planning by local authorities and their health partners.
2. Review public funding arrangements.  There should be a holistic review over the next few years of all the sources of public funding for long-term care of older people, including health, social care and housing support, but also UK Government benefit funding, in particular through Attendance Allowance and Disability Living Allowance.

Recommendation number 12 is for the longer-term and which requires more strategic long-term policy planning and vision.

1. Review public funding arrangements.  Government at all levels should seek to establish a new vision for dealing with the challenge of demographic change, not just looking at long-term care, but also pensions, transport, etc.

There was relatively little initial reaction to the Sutherland Review.   Almost every comment made at that time was a positive one.   The lack of reaction can be explained both by the lack of real opposition to the policy in Scotland and also the financial crisis that had already began when the Sutherland Review was published.   The recent reaction to this policy is therefore of more relevance.

Since April 2008 we have had the Independent Budget Review.   More information on the IBR can be found here.  The IBR recommended that immediate work should be undertaken to review whether all free or subsidised universal services should be retained in their current form.  This is an indirect reference to the policy of FPNC.

We have also had a Scottish General Election.  Helpfully Age Scotland has outlined how each of Scotland’s main political parties how they would prioritise “older people issues” in the next Parliament.   The full report is called “Party Positions for the Scottish Parliamentary Elections 2011”.  [ii]

Scottish National Party

The SNP guaranteed the future of Free Personal Care by filling the £40m shortfall left by the previous administration.   See recommendation 9 of the Sutherland Review.

Labour Party

The Labour party pledged to establish a new “National Care Service” that combines health and care services.   No direct mention of FPNC is made but an indirect mention indicates that the Labour party supports the policy.

Conservative Party

The Conservative party pledged to protect funding for FPNC.

Scottish Liberal Democrats

The Scottish Liberal Democrats pledged their continued support for Free Personal Care.

Two points in particular are worth commenting on.

The first concerns an issue that is not mentioned.  The UK Government’s decision to withhold Attendance Allowance funding due to the introduction of FPNC in Scotland.  That issue is of course dealt with in the Sutherland Review.  Again see recommendation 9 of the Sutherland Review.

The second is the Labour party policy of a “National Care Service”.   Also interested to note that the Labour Party had appointed an expert group , including Age Scotland Chief Executive and former Labour party councillor in London and Campaigns Officer for the Labour Party in London, David Manion.

Also interesting to note that the policy seems broadly similar to what has been proposed by the “Christie Commission”.   More on the funding of the Christie Commission can be found here.

Since the Scottish General Election COSLA has called for a review of FPNC.  In response, both Henry McLeish, First Minister when FPNC was introduced, and Age Scotland have argued strongly for continuing the policy.  The President of COSLA has also in a personal capacity called for FPNC to means-tested.   [iii]

Conclusion

The world we live in seems very different from April 2008.  Public spending in Scotland is declining after many years of year on year increases.  FPNC was the flagship policy of the first Scottish Executive when introduced in 2002 and is still well supported by our main political parties.  How long will this continue remains to be seen.

In my next article I will look at some of the issues raised in the Sutherland Review in more detail and in particular the UK Government’s withholding of the Attendance Allowance funds.

James Aitken

Legal Knowledge Scotland

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.

Sheriff Court case concerning the competency of service of a calling up notice under the Conveyancing and Feudal Reform (Scotland) Act 1970.

After having failed to find Mr Gallagher, Sheriff Officers instructed by Santander, purported to serve the notice on Mr Gallagher by putting it through his letter box.

Santander sought to argue that service in this way satisfies s19 (6) of the 1970 Act which says:

“For the purposes of the foregoing provisions of this section, the service of a calling-up notice may be made by delivery to the person on whom it is desired to be served or the notice may be sent by registered post or by the recorded delivery service to him at his last known address, or, in the case of the Lord Advocate, at the Crown Office, Edinburgh, and an acknowledgment, signed by the person on whom service has been made, in conformity with Form C of Schedule 6 to this Act, or, as the case may be, a certificate in conformity with Form D of that Schedule, accompanied by the postal receipt shall be sufficient evidence of the service of that notice; and if the address of the person on whom the notice is desired to be served is not known, or if it is not known whether that person is still alive, or if the packet containing a calling-up notice is returned to the creditor with an intimation that it could not be delivered, that notice shall be sent to the Extractor of the Court of Session, and shall be equivalent to the service of a calling-up notice on the person on whom it is desired to be served.”

Santander referred to the unreported decision Household Mortgage Corporation plc-v-Diggory (1997)in which it was found that physical delivery to the debtor was not required where service by recorded delivery post was employed.

However, Sheriff Mackie found that Santander’s calling up notice had not been competently served.  In terms of s19 (6) service can be made:

1. by delivery in person (which means the creditor has to place the document in the hands of the debtor);
2. by recorded delivery at the last known address of the debtor (no personal delivery is required and, so long as the document is not returned  with intimation that it could not be delivered, then it can be presumed to have been served); or
3. by notice to the Extractor of the Court of Session (which refers to a situation in which the notice is valid even though the debtor knows nothing about it).

Whilst service by recorded delivery does not require that the document is physically delivered, that does not mean that alternative modes of service do not require to involve physical delivery.

Sheriff Mackie also made reference to Rule 5.4 of the Sheriff Court Rules which provides that a Sheriff Officer can serve a document by depositing it at an address after making due enquiries.  She noted, however, that this only applies to official functions carried out under Act of Sederunt (Messengers-at-Arms and Sheriff Officers Rules) 1991. When serving the calling up notice, the Sheriff Officers were carrying out an extra official function (i.e. not an official function) and, as such, the calling up notice required to be served in accordance with s 19(6) of the 1970 Act.

A full report of the decision is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.