If I were to mention the term ‘Summary diligence’ most of you would attempt to stifle a yawn. But if I were to say that ‘summary diligence’ could avoid you in having to take court action to recover a debt because it’s the equivalent of a court’s decree then wouldn’t you sit up and listen?
So what is Summary Diligence?
Scots law has a unique remedy allowing parties to agree to expedited enforcement of their financial obligations under a contract without having to take court action. The document containing the agreement has to contain the ‘Magic’ words “consent to registration for execution’ or ‘consent to registration for summary diligence’. (Diligence, for those of you who don’t know is the generic term in Scotland for judgment enforcement).
If the contract contains these words then it can be registered in a public register in Edinburgh known as ‘the Books of Council and Session’ which are the court books of the Court of Session – Scotland’s’ highest civil court. Registration is near enough automatic and only costs a few pounds.
Once the document is sent to them they retain the principal and return the registrant with an official extract. If the debtor is in default of a financial obligation then the creditor simply sends the extract to Sheriff Officers who will enforce it. So essentially the whole process of taking court action its costs and delays will be avoided.
To enforce a financial obligation in these circumstances the creditor has to be able to quantify the debt from the deed itself. For example, there may be an obligation to repay a loan with periodic instalments of principal and interest. All the creditor needs to do to start enforcement is to send an extract of the loan agreement to the Sheriff Officers along with a statement of the unpaid loan and interest.
What happens if the debt is disputed?
You are probably wondering what happens if the debt is disputed? If the debtor questions the sums due to the creditor then an application will have to be made to the Court of Session seeking an order to interdict the creditor from taking further enforcement measures. In addition, an application may also have to be made to have enforcement already carried out set aside. It is unlikely that the court will have much sympathy with a debtor who makes such an application unless there is a substantial dispute.
Can you take advantage of this in England?
If you are an English creditor trading with a Scottish company, and you want to ‘guarantee’ payment, it is possible to have written into the contract the ‘consent to registration’. Make sure the contract is signed, dated and if at all possible witnessed. In the event of default all that you will need to do is to send the contract to the Books of Council and Session. Ask them to register it and to send you an extract. Once you get the extract send it to the Sheriff Officer’s to enforce along with a statement of the outstanding debt. It’s as simple as that.
Of course, if the creditor is Scottish and the debtor is domiciled in England, then the Civil Jurisdiction and Judgements Act 1982 allows for reciprocal recognition of judgements within the UK’s three law districts. Because a deed registered in the Books of Council and Session is the equivalent of a court’s decree then such an ‘authentic instrument’ will have to be recognised as such in England. Once the appropriate procedure has been followed in England there is no reason why it cannot be enforced by a high court enforcement officer.
How many times have we heard the expression that ‘cash is king’? Whilst there will be no argument with this sentiment actually getting that cash can often be costly and time consuming. In these scenarios where summary diligence is available there can be little doubt that the expedited enforcement which it offers should allow for reduced costs and shorter delays.
Stephen Cowan, Director at Yuill + Kyle