HC Deb 21 May 1982 vol 24 cc602-11

A person may be sued in Scotland:

  1. (a) if any moveable property belonging to him has been arrested there; or
  2. (b) if he has any beneficial interest in any immovable property situated there.'.

Mr. Deputy Speaker

With this it will be convenient to take amendment No. 39, in schedule 8, page 83, line 16, leave out `where he is not domiciled in the United Kingdom'.

Mr. Dewar

I approach this matter with some trepidation. I have not been involved in the earlier stages of the bill. I did not serve on the Standing Committee, although I have read the short debate on these matters. I do not imagine that I shall delay the House for a great length of time, but a number of fairly substantial points have been canvassed in lengthy correspondence between the Solicitor-General for Scotland and his officials and the Law Society of Scotland. My right hon. and learned Friend the Member for Warley, West (Mr. Archer), who bravely raised these issues at an earlier stage, remarked upon terminology which he did not readily appreciate. I have a fellow feeling for him at this moment, although I am thankful for the fact that the initial disputes about actions of forthcoming and multiplepoinding have been disposed of and that we do not have to wrestle with those conundrums on this occasion.

It is clear that strong feelings are maintained by the Law Society of Scotland on the questions raised in these amendments. I notice that Mr. Robert Brodie, writing for the Scottish Courts Administration to the Law Society of Scotland on 14 May, said: Both the Lord Advocate and the Solicitor-General are very grateful indeed for the time and care devoted by the Society to examining this technical but important Bill. It is a disagreement—I would not say a dispute—over some highly technical matters, which has been maintained with great good humour on both sides. I think that the Solicitor-General will appreciate that the arguments were put shortly in Committee—in fact, referred to rather than put—and the matter almost by common consent postponed until the Report stage in the hope that the parties could reach agreement or that one would decide that it was no longer worth while or necessary to maintain its position.

My understanding is that the Law Society does not take that view. It has made representations not only to myself but to a number of my right hon. and hon. Friends. The amendments were originally put down in the name of the hon. Member for Dundee, East (Mr. Wilson), who, I know, for good reasons, cannot be present today. I am grateful to the hon. Gentleman for the initiative that he took in tabling the amendments, beating my right hon. and learned Friend the Member for Warley, West and myself by a short head. We were, however, glad to add our names.

The most important amendment is the one that would add article 5B to schedule 4. It will mean that a person may be sued in Scotland if any movable property belonging to him has been arrested there or if he has any beneficial interest in any immovable property situated there. I should like to start with (b) and then move to (a). I understand that (a) is the main subject for concern and perhaps the rather more important of the two. I wish to know, in relation to the suggested (b), what is the current situation and what the Government propose. I am conscious of the fact and make no apology for the possibility that I may have got matters wrong. Although trained as a solicitor, I am no expert in civil jurisdiction. I leave these matters to real lawyers and confine myself to other fields.

I understand that under the Bill it will be possible to found civil jurisdiction in Scotland self-evidently if the potential defender against whom the action is to be raised has a principal domicile in Scotland. In other words, if he owns heritage or a house and lives in that house, jurisdiction can be founded upon that fact. In terms of article 3 in schedule 1 concerning countries within the European Economic Community, one can found only if the principal residence is in this country. One cannot found on the fact that a person owns heritage generally if he does not live in it. I hope that that is clear. It is important to make sure that I am arguing basically on the right premise.

I accept that the Government have made a concession in the sense that for an action that is raised against a national who is not within the EEC against a potential defendant who lives outwith the EEC domain, there has been an extension to the sheriff court of jurisdiction which hitherto lay merely with the Court of Session. That seems to me to be a rational extension. But the important loss to which the Law Society draws attention, and the reason for the amendment, is the situation in which an Englishman does not have his principal residence in Scotland. Let us say that he is a man of style who has a shooting box or a Highland estate but lives in Godalming or darkest Surrey. Presumably he could not found in Scotland a civil action on the basis of the ownership of that heritage. I trust that this reflects the position, but no doubt the Solicitor-General will inform me if I am wrong. It seems to me, and I am supported by the Law Society, that it would be better if a beneficial interest in immovable property situated in Scotland gave a right to found a civil action.

The real issue in the amendment, which has been very much canvassed, is the arrestment of movables to found jurisdiction. The amendment suggests that if one can arrest movables in Scotland as one can arrest a bank account, one should be able to found jurisdiction on that. That right would survive if the amendment were adopted but will, I understand, die under the terms of the Bill as drafted.

I hope that the House will allow me to go back to my dim, and I was going to say and almost boyhood, memories, but that cannot be right. I shall say simply my dim memories of instruction in civil law. If my memory is correct, the relevant section is section 6 of the Sheriff Courts (Scotland) Act 1907. I believe that the jurisdiction that we are considering is contained in section 6(c). It says: Where the defender is a person not otherwise subject to the jurisdiction of the courts of Scotland, and a ship or vessel of which he is owner or part owner or master, or goods, debts, money, or other movable property belonging to him, have be en arrested within the jurisdiction one can found jurisdiction on that. It is a section with which all hon. Members are familiar because of the romance associated with nailing notices to masts of ships, beloved by the press when it occasionally happens.

I believe that this survives in some other part of the Act, although I shall not try to trace it. What goes, however, is the other movable property in section 6(c). This is open to serious debate and argument. Perhaps the easiest approach is to take examples. It is always difficult to construct models. I believe, however, that I want an explanation and some exposition from the Solicitor-General of how the system will work.

Let us suppose that I have bought from an English firm a washing machine which turns out to be seriously defective—so defective that I have, in the law of Scotland, a good action for damages. Let us suppose that I go back to the shop where I bought it only to discover that the shop has closed, but I find that there are movables, say a bank account, that I could arrest. As the law of Scotland stands, I could arrest the money in the bank account and trot along to the sheriff court and raise my action. As the Bill envisages the law, I should presumably have to sue in an English court. The Solicitor-General shakes his head. It is a fundamental point. The hon. Gentleman will perhaps inform me if I am wrong.

The Solicitor-General for Scotland

I should like to deal with this matter in more detail, but part of the savings, and part of the grounds of jurisdiction, in the Bill make specific provision for consumer contracts. In the example that the hon. Gentleman puts forward the situation would, as I see it, be covered by consumer contracts which would enable the consumer to sue in the courts of his own jurisdiction.

12 noon

Mr. Dewar

I noticed the provision on consumer conracts in one of the schedules. There is the rather strange concept of a consumer as distinct from a normal pursuer. Article 14 in schedule 4 states: A consumer may bring proceedings against the other party to a contract either in the courts of the part of the United Kingdom in which that party is domiciled or in the courts of the part of the United Kingdom in which he is himself domiciled. I assume that that is the Solicitor-General's point. I accept that that may have to be taken into account in the balance of the argument. It is an important point. Ministers argue strongly that there are means of founding, for example, on contract—on the basis of where the contract is made and where it is to be carried out. Therefore, the grounds raised by the Law Society are largely covered. I accept that it may be possible to cover many of the cases. I am not pretending that there are not several innovations—particularly in the schedule to which the Minister referred—which would remove some of the difficulty. Many practitioners in this area have put it to me—not frivolously—that there is a simplicity and usefulness about the arrestment of movables and the founding thereon which will be a distinct loss to practitioners in that part of the law of Scotland.

The Minister will no doubt argue in the same way as Mr. Brodie argued in a letter to the Law Society on 14 May. It will be argued that there is little danger of the provision being an embarrassment, because the number of actions in sherrif courts based on letters of arrestment is very small. It is suggested that out of 17,761 ordinary actions in 1979, only 54 were based on the issue of letters of arrestment. The figures for 1980 and 1981 are 101 and 69 respectively. Perhaps that puts the dispute in perspective. However, that is always a double-edged weapon, because both sides could give way if the matter were not very important.

I am sceptical about the figures, because I am not sure whether they relate to actions raised or decrees obtained. Perhaps the Minister will clarify that point. I have been told—it is a carried story, but from a good source—that often actions to do not get as far as decrees. However, the fact that an action can be raised concentrates the mind of the debtor greatly. As a result, the matter is settled before the expense of litigation has been undertaken. Therefore, we are losing a substantial advantage in terms of simple and comprehensive civil jurisdiction in Scotland.

Let us assume that the law is as the Solicitor-General would wish. Let us also assume that I have decided to raise an action in Manchester as the result of some dispute. Let us further assume that there are movables in Scotland which I would normally have arrested in order to found my action, and that I am looking forward—having got my decree—to getting hold of the movables to settle the debt. Clearly, there is a grave danger that the movables in Scotland will move. They have a habit of doing that, particularly in such stress situations.

Presumably, there must be some machinery to arrest on the dependence of the action in England. It has been suggested, and it seems reasonable, that I would look to clause 27 for that purpose. That clause begins with the following pregnant line: The Court of Session may, in any case to which this subsection applies". Therefore, I assume that any action to arrest on the dependence would have to be taken in the Court of Session. No one has more respect than I for the grace of life in that court. However, there are difficulties about litigating in the Court of Session. I refer, for example, to the problems of employing agents and counsel, although they no doubt welcome the opportunity to make a living. However, the procedure is expensive and a little cumbersome. Does the Solicitor-General not accept that there is some value in the argument that if the arrestment on the dependence—often an important part in the process of genuine recovery—must be made in the Court of Session, there will be considerable expense and difficulty?

If we are to arrest on the dependence, what about the lower limit on Court of Session actions? Presumably there is a bottom line beneath which it is impossible to litigate in the Court of Session. If I am pursuing for £300 or £400 in a county court in England and want to arrest in Scotland, is there any difficulty in going to the Court of Session? Will I be met with the objection that the court is not interested in matters as small as £300 or £400? Will I discover that the arrestment is not possible? The gap may not be very important, but, if it exists, the Minister should deal with it.

These are matters of some importance and moment. I shall listen carefully to the Solicitor-General's response. I recognise that the Solicitor-General will argue that these jurisdictions are exorbitant and have always been objected to. He will argue that they are incompatible with the scheme set out and that, like it or lump it, the Scots will have to do without it.

The hon. Gentleman will not be surprised to know that that view does not commend itself to the Law Society of Scotland. For example, a contract might be concluded not in Scotland, but on delivery to a haulier in England. In such circumstances, the arbitrary terms of the contract, or the fact that it has a standard clause saying that it is actionable only under English law, might reduce the apparent comprehensive cover of the provision in the schedule, which gives a jurisdiction based on the law of contract. I refer to article 5(1) as set out in schedule 4.

There are difficulties and anxieties about the way in which we are removing well-established Scottish procedures. I hope that the Solicitor-General will consider the matter sympathetically. I do not suggest that this is a head-on nationalist case. I do not think that the Law Society imagines that there will be a great rush of litigation in English courts. That would greatly overstate the position. However, there is a feeling that we are not receiving effectual consideration from Ministers.

Mr. A. J. Spencer-Kennedy said in his letter: We really do no more than acknowledge gratefully the Lord Advocate's explanation of the two provisions That is article 5(1) and clause 25. We accepted that they went some way towards filling the gap left by the abolition of arrestment to found jurisdiction. If our cake is to be taken away we naturally welcome any crumbs that are left behind. The point is that they are crumbs that do not properly fill the gap. There will still be difficulties.

I have said enough to demonstrate the concern that is felt over this matter. I hope that I have not made my case too imperfectly, but I do not have any particular expertise in this field. Despite various references, this is the first opportunity that we have had to debate the subject at any length, because of the difficulties of time, and because negotiations are still in progress.

The hon. Member for Moray and Nairn (Mr. Pollock)—who is also a member of the Faculty of Advocates and therefore, presumably, a man of skill—made a brief speech. Indeed, in the solicitor's trade, we are always told that such a person is a man of skill. He said that it is important that the Law Officers appreciate that concern is not confined to the Opposition Benches but is shared on the Conservative side … I hope that the Government will have a well-reasoned view to put to the House on Report if they ultimately reject those submissions."—Official Report, Standing Committee B; 9 April, 1982; c. 32–33. The hon. Member for Moray and Nairn was broadly taking the same view as the Law Society of Scotland.

Mr. Brodie seems to have shut the door, presumably acting on behalf of the Minister. In the letter that I have already quoted he said: The re-introduction of the Scottish exorbitant jurisdictions would compel the Government to reconsider the terms of the Bill. That is true, because if something is popped into the Bill, that means that its terms have been reconsidered. I am not convinced that it is the wrecking matter that Ministers suggest.

We are at the end of the Bill's progress. Normally there is a get-out, because both Ministers and the Opposition can promise to reconsider and in another place or at a later stage table further amendments. It is difficult for Ministers to adopt inexpertly drawn amendments. I make no criticism of those who drafted the amendments under discussion. I hope that the Minister will not have a closed mind.

May I raise one further point? During the debate on new clause 1 the Solicitor-General for Scotland referred to the possibility of orders in connection with specialised jurisdictions. Is there any machinery, apart from further primary legislation, to open the door to meeting some of the points genuinely expressed by the Law Society of Scotland and other Scottish legal interests?

12.15 pm
The Solicitor-General for Scotland

I welcome the opportunity to debate the issues originally raised by the Law Society of Scotland. I fear that, subsequent to the Bill's Committee stage, there has been a misunderstanding of my attitude to what was said in Committee to the right hon. and learned Member for Warley, West (Mr. Archer). When I mentioned that it was only during the recess we had received the views of the Law Society for Scotland, I was not criticising. My remarks arose because earlier I had promised to provide those views to Opposition spokesmen as soon as they were available. We did not have an opportunity to debate the views in Committee, and I am happy that we can do so today.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) should go back a stage further. What is important and at the centre of the Bill is that problems are caused by jurisdictions throughout the convention countries continuing to adopt bases for jurisdiction which other jurisdict ions do not recognise. At present, if a country, be it within the United Kingdom or elsewhere, purports to exercise a jurisdiction that is not recognised by other countries, whenever one goes to that other country to attempt to enforce a judgment, it is necessary to look behind that judgment to ensure that the country exercising jurisdiction did so on a proper basis, on grounds which are recognised. The Bill's purpose is to simplify that. If there is a common basis for the exercise of jurisdiction, once the judgment is obtained, enforcement in another jurisdiction becomes much simpler.

The hon. Member for Garscadden and the Law Society of Scotland appear to recognise that. They say that it is important and desirable, and a valid reform of the law, but that in Scotland there should be a basis for jurisdiction which is convenient and helpful in their daily business. They want an enforcement procedure which is simpler throughout the convention countries but, notwithstanding that, within the United Kingdom they want to keep jurisdiction which is otherwise regarded as exorbitant. That cannot be done between the convention's member States.

There are three categories—the countries that are within the convention, those that are outwith the convention, and the United Kingdom. It is clear from schedule 1(3) that in no circumstances could this country continue to exercise jurisdiction simply on the basis of the presence within the United Kingdom of property belonging to the defendant or the seizure by the plaintiff of property situated in the United Kingdom. That cannot be done between convention countries because it is specifically excluded.

In relation to third countries outwith the convention the arrestment opportunity still exists. That is not altered. Another set of circumstances relates to where the jurisdiction applies to Scotland when a Scottish pursuer seeks to have judgment obtained in Scotland enforced outwith Scotland, in another part of the United Kingdom. The Scottish courts have jurisidiction based on the arrestment of movable property, and the Court of Session, but not the sheriff court, has a jurisdiction based on possession an interest in heritable property. Both those bases of jurisdiction, at least in circumstances where the proceedings have no connection with the property in question, would be regarded as exorbitant by most other countries. Paragraphs 13.163 and 13.164 of Lord Maxwell's report made that clear.

Court of Session judgments based on arrestment to found jurisdiction are at present expressly excluded from enforcement in other parts of the United Kingdom by section 8 of the Judgments Extension Act 1868. Sheriff court judgments would not be so enforced.

I am surprised that the right hon. and learned Member for Warley, West has appended his signature to the amendment. The amendment is designed not simply to maintain the status quo in Scotland. The right hon. and learned Gentleman, in supporting the amendment, is saying that effect would have to be given to judgments not recognised in England because of the 1868 Act and enforced elsewhere. That is not preserving the status quo but it represents a substantial increase in the number of Scottish arrestments to found jurisdiction as against persons domiciled elsewhere in the United Kingdom.

Mr. Archer

I am grateful to be given the opportunity of putting on the record that I appended my signature because I thought that it was right for an opportunity to be given for the debate to take place. I was not necessarily asserting any view about the debate.

The Solicitor-General for Scotland

I could not resist twisting the right hon. and learned Gentleman's tail in some small manner. I recognise that it is important to discuss the matter.

There are no equivalent rules of jurisdiction in the 1968 convention. Indeed, by article 3 the taking of jurisdiction on such grounds against persons domiciled in another contracting State is prohibited.

Following the advice of the Maxwell committee, rule 2(8) of schedule 8 has the effect of retaining, and in the case of jurisdiction based on presence on interest in immovable property, of extending to the sheriff court, these jurisdictions as against persons domiciled outwith the rest of the United Kingdom and the EEC.

In ceasing to apply those grounds of jurisdiction against persons domiciled in other parts of the United Kingdom, we are again following the advice of the Maxwell committee, which considered their use in the United Kingdom context to be exorbitant. It will be appreciated that schedule 4 allocates jurisdiction within the United Kingdom on the basis of rules similar to those contained in the 1968 convention and that the courts of other parts of the United Kingdom are equally giving up certain grounds of jurisdiction that are commonly considered exorbitant as against persons domiciled in Scotland. Thus, it will no longer be possible for a person to be sued in England and Wales simply because a writ has been served on him during his temporary presence there. The ability to present a Scotsman who is climbing the steps of the shuttle to Glasgow with a writ, if that is the only basis on which jurisdiction is taken against him, will no longer exist. That is one of the grounds of jurisdiction in the 1968 convention that is specifically prohibited by article 3.

The hon. Member for Garscadden used the example of contract. It must be appreciated that although the basis for asserting jurisdiction on arrestment of movables in Scotland would be lost, in many ways the jurisdiction of the Scottish courts is being extended as against persons domiciled in other parts of the United Kingdom. That extension would limit greatly the cases in which the two jurisdictions that are to be lost could be usefully employed.

Schedule 4 is not simply a matter of domicile. With respect to the hon. Member for Garscadden, he somewhat over-simplified the position. It is not just a matter of exercising jurisdiction on the basis of domicile. In the convention reflected in schedule 4, a number of rules are set out and the hon. Gentleman will see that provision is made for actions grounded on contract or, if I may use the Scottish term, delict or to establish a tortious law. Articles 5(1) and 6 of schedule 4 will give jurisdiction to the Scottish courts in many circumstances where at present there has had to be reliance on arrestment, as will articles 13 and 14 in relation to transactions involving a consumer. The hon. Gentleman will see that that is a wide jurisdiction.

Mr. Dewar

Perhaps the Minister will define "consumer". In a sense, anyone who buys anything for his own use is a consumer. Obviously a wholesaler buying for resale is not a consumer, but a firm can buy a piece of machinery which it intends to use in its business. Article 14 caught my eye. It has not been debated at great length and I am curious to know how wide is the term "consumer", because it has a lay connotation of any individual who buys anything for his own use.

The Solicitor-General for Scotland

If the hon. Gentleman examines article 13, he will find the definition of a consumer. It is very wide. He will also find the definition of "contract" and then he will see what article 14 provides. If anything surprises me about this legislation, it is that there have not been queries about the matter. I doubt whether the Law Society of Scotland would have objected to it, but others might have done so.

Clause 27 provides for the first time a procedure by which, where a person must be sued in another part of the United Kingdom, his assets in Scotland can be secured. The hon. Gentleman raised that point and drew our attention to the fact that the procedure is operative only in the Court of Session. I am glad to say that it is not just a matter of the faculty mafia having its way yet again. Paragraph 5.241 of Lord Maxwell's report states: Such an application should, we think, be competent in the Court of Session only. This is the only court which is at present competent to grant warrant for inhibition, though the Sheriff Court can also grant warrant for arrestment. The hon. Gentleman may be happier with what the report next states: The Court of Session seems the most appropriate to handle cases with a foreign element. We recommend, however, that the application should not require the employment of counsel and that a solicitor anywhere in Scotland should be able to sign it. That may give the hon. Gentleman some cause for comfort. The provision is not covered by clause 27. It must be covered by rules of court rather than the Bill, and I can do no more than afford him the hope that it might be included in the rules of court.

There would be no problem about the lower limit because what is being sought is not an action in the Court of Session but simply a warrant for arrestment. The substantive action is not being considered.

Therefore, while the practical concerns of the Law Society of Scotland which have led them to propose the amendments are entirely understandable, their acceptance would put in question the entire basis of what is generally agreed to be the useful scheme of allocation of jurisdiction within the United Kingdom set out in schedule 4. For those reasons, the Government will continue to resist them.

Many of the fears that have been expressed are unnecessary. As the hon. Member for Garscadden is aware from a letter sent by Mr. Brodie to Mr. Riddell, the point was made that in more than 17,000 actions in the sheriff court in 1979 only 54 letters of arrestment were granted. Some of those were probably outwith England or the EEC. Furthermore, of the 54 letters, some would in future be covered by the extensions to the jurisdiction in schedule 4.

While I appreciate the concern of the Law Society of Scotland, it seems to me that the general scheme of the Bill is desirable. If we were to attempt to accept the amendments, far from maintaining the status quo, we would have to introduce an alteration not only to the law of Scotland but to the law of England. Naturally, some Englishmen would consider that undesirable and unacceptable.

Mr. Dewar

I thank the Solicitor-General for Scotland for his careful reply. There is much common ground between us. I understand that there are difficulties about accepting the amendments, given the Europe-wide framework of the convention which must be accepted or rejected as a whole. The specific exclusions in article 3(b) and (c) of schedule 1 strike specifically at those matters and tie the hands of the Solicitor-General. These matters are worth discussing because they draw attention to the difficulties presented by this sort of legislation. The news in clause 3 that Mr. P. Jenard and Professor Dr. Peter Schlosser are to become institutional writers in Scots law by statute strikes me as being extremely strange. I was unfamiliar with their works and I hope to remain unfamiliar with them. These gentlemen are rather strange bedfellows with the great institutional writers of Scots law.

I welcome the reassurance that the Solicitor-General for Scotland was able to give about the distinction between the enforcement of a decree—indeed, an arrestment on the dependence of a decree pending another in another court—and the lower limit on initiating actions in the Court of Session. If the hon. Gentleman is right in saying that no difficulty will stem from that distinction—and he uttered soothing words about the possibility of further action in an administrative sense—following the Maxwell recommendation, his reassurance will be helpful.

12.30 pm

Article 13 defines a consumer's rights, and I find it interesting. It seems that anyone who buys anything outside his trade or profession and who lives in Scotland can found an application in connection with that purchase in Scotland. That appears to be so on a first reading of the article. That is a wide jurisdiction. It will give rise to some interesting developments. It is sweeping in its terms. I do not necessarily quarrel with that, but I find it rather surprising. It underlines the concern that there will be endless horrors for young lawyers in Scotland who will have to master this measure when it is enacted. The main part of the Bill is set out in only 30 or so pages but there are well over 70 pages of impenetrable schedules. That is always a bad sign in any legislation.

My doubts and those of the Law Society of Scotland have not been assuaged. There will be some disappointment when it is learnt that the Solicitor-General for Scotland was unable to take a more helpful line. At least we know where we stand, and I do not think that there is any virtue in delaying the House further on these matters. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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