Creditors have been reviewing their secured enforcement processes in Scotland following the recent decision of the Sheriff Appeal Court in the case of Royal Bank of Scotland v Jamieson.

In that case, the court decided that the circumstances in which creditors could rely on service to the Extractor of the Court of Session (an official who normally receives service if a debtor’s address is unknown, or if it is returned with intimation that it could not be served) had to be interpreted strictly. Going forward, this will narrow the number of cases in which it is possible for service to be made to the Extractor.

Particular problems arise for creditors where they attempt service by recorded delivery but the packet is neither signed for, nor returned by the Royal Mail. While this situation might seem anomalous, it does in fact apply in practice to a majority of cases subject to the Scottish secured enforcement procedure. What happens to the unreturned packages is something of a mystery!

Nonetheless, the headache this creates is real. Creditors do have the option of simply relying on the fact that the recorded delivery package was sent – though apparently not served. This approach has been validated by certain courts in the past but may yet be subject to further review in the future, given that the package on the face of it does not appear to have reached the customer. A further challenge – relevant to Treating Customers Fairly – is whether it is appropriate to proceed to raise court proceedings in such circumstances.

A better approach may be to try alternative means to find the customer. Service by sheriff officers is the obvious next step, yet that too has proved to be fraught with issues in recent years. While the package can certainly be served by being handed to the customer by a sheriff officer, there are conflicting decisions from the Scottish courts on whether it is acceptable for sheriff officers to serve by posting it through a letterbox.

This means that creditors may end up in a loop where they have sent a recorded delivery envelope that hasn’t been signed for, sent out sheriff officers who can’t locate the person (or at least, get them to answer the door), and yet still believe the person to be resident at the address. In such circumstances, further trace enquiries are likely to be appropriate and it may also prove necessary to go round the loop of further recorded delivery and sheriff officer attempts, before moving on to issue proceedings.

This area of the law is ever more complex. Mark Higgins and Zibya Bashir of Ascent are working with the Scottish Law Commission to make recommendations to government to simplify the law. This new development will certainly be one of the areas to be addressed. In the meantime, if you would like to discuss further, please call Mark on 07795 504476.