Diligence on the Dependence - Inhibition Available in Sheriff Court
1 April 2008

The use of diligence on the dependence was severely curtailed after the Karl construction case. Court rules were amended to lessen the severity of the restrictions that had been imposed by that decision. The method of application and justification for grant of warrant on the dependence has now been formalised in the 2007 Act. This has been achieved by inserting new sections 15A-15N into the Debtors (Scotland) Act 1987

Warrant to Inhibit in the Sheriff Court and Warrants Generally

One major restriction of the use of Inhibition on the Dependence was that it was only competent in Court of Session actions. Creditors suing in the Sheriff Court had to wait until their writ was served and then go through the expensive process of applying for Letters of Inhibition and having these served. The 2007 Act swept that way by making inhibition on the dependence competent in Sheriff Court actions. The process is accordingly cheaper and also quicker as the sheriff officer can serve the inhibition and immediately forward the execution for registration. This ensures that the Inhibition takes effect as soon as possible.

The 2007 Act now makes it clear that warrant to arrest or inhibit on the dependence can be granted both in the Sheriff Court and Court of Session. Warrant may also now be granted in a Court of Session petition. THe only restriction is that the action must have a conclusion for payment of money excluding expenses.

Application for Warrant for Diligence on the Dependence

It is no longer competent to ask for a warrant in the crave of the writ or conclusion of the summons. Court rules now provide the procedures for applications for warrant. In brief, the Sheriff Court procedure is as follows. The warrant may be granted without a hearing if the court is satisfied of the following:

  • the creditor has a prima facie case on the merits of the action
  • there is a real and substantial risk enforcement of any decree in the action in favour of the creditor would be defeated or prejudiced by reason of
    • the debtor being insolvent or verging on insolvency; or
    • the likelihood of the debtor removing or disposing of assets prior to any hearing
  • that it is reasonable in all the circumstances

The onus is on the creditor throughout the process to satisfy the court that the warrant should be granted. If the court decides that a hearing is required the warrant may still be granted at that hearing. A certified copy of the interlocutor granting the warrant is authority to officers of court to execute the diligence.

Diligence on the Dependence Before Service

Where diligence on the dependence has been used before service of the writ or summons, that writ or summons must be served within 21 days or the diligence on the dependence falls. This brings uniformity to the time for service to the various types of civil court action

Arrestment on the Dependence - Sum Attached

Practice varied between firms of officers as to how much was arrested for in an arrestment on the dependence. Account was taken of a future award of expenses and interest that would accrue. There was no statutory test and it is understood firms added around 10% to 20% to arrive at a figure for arrest. The new section 15H of the Debtors (Scotland) Act 1987 now provides that when the court grants warrant to arrest it can set a sum to be arrested. Parameters are provided for calculating a maximum sum to be arrested and AMA will be using that formula to calculate the sum, unless otherwise instructed. The sum is calculated as follows

  • Sum sued for
  • 20%of that sum
  • a sum equal to one years interest
  • any other sum specified by Ministers (Ministers have not yet added any sums to be added in to the calculation but have reserved the right to do so.)

This provision should bring uniformity to calculations of sums to be attached and clarity of the position for both creditors and debtors.

Statutory Recall - Should we mention it.

A new statutory procedure has been brought into force to allow application for recall or restriction of arrestment on the dependence. Recall or restriction cannot be awarded without the creditor having an opportunity to be heard at a Hearing. The onus remains on the creditor at such a hearing to justify the diligence on the dependence remaining in force.

Expenses of Diligence on the Dependence

There was always an elemewnt of dubiety as to whether expenses of diligence on the dependence could be recovered from debtors. This was clearly a discouragement for creditors. The situation is clarified by the 2007 Act in that expenses of diligence on the dependence are now recoverable from the debtor.