Auction of attached articles

Section 27 - Notice of public auction.

61.     Section 27 provides that an auction of attached articles must be held by public auction in an auction room unless it is impractical to do so in which event the auction may be held in an alternative location that the officer considers appropriate other than in a debtor's dwellinghouse. Section 27(3) allows other articles, attached along with those which it is impractical to auction in an auction house, to also be auctioned at the alternative location in order to prevent the cost of having two auctions.

62.     Intimation of the date and place of the auction, and the date of removal of attached articles kept outside dwellinghouses, must be given to the debtor and to any third party in possession of the attached articles, and details advertised by public notice.

Section 28 - Alteration of arrangements for removal or auction

63.     Section 28(1) prohibits the date of auction or removal from being varied, unless due to circumstances beyond the creditor's or officer's control. Any new date must be intimated to the debtor and to any other person in possession of the attached articles. Section 28(3) requires the new date to be at least seven days after intimation.

Section 29- Cancellation of auctions

64.      This section allows an auction to be cancelled to enable the debtor to repay the debt in the event of an agreement having been reached with the creditor but restricts the cancellation to no more than two occasions. Section 29(4) allows for any necessary subsequent resumption of the auction should the debtor default on an agreement made with the creditor, provided that the sheriff, on an application by the creditor, is satisfied that the debtor has defaulted. Section 29(5) makes provision for the debtor to be given an opportunity to respond to an allegation that he/she has breached the agreement, including a right to be heard, before the sheriff makes an order allowing the resumption of the auction.

Section 30 - Auction

65. Section 30(1) to (3) provides for the auction to be attended by the officer and a witness and for a record to be made of the articles sold specifying the amount which each achieved.

66. Section 30(4) permits any article to be bought by any creditor or by a third party who owns the article in common with the debtor.

Section 31 - Disposal of proceeds of auction

67. Section 31(1) provides for the proceeds of the auction to be applied firstly to meet the expenses of the procedure and then to the creditor to meet the debt with any surplus payable to the debtor. Section 31(2) provides that, where the sum due is not realised, ownership of any unsold articles will pass to the creditor, in which case their value will be credited against the debt due.

68. Section 31(6) specifies that the proceeds of auction are to include any sum consigned in court and any sum received from a third party for purchase of the debtor's share in joint property.

Section 32 - Report of auction

69. Section 32(1) requires a report to be made to the sheriff within 14 days of the date of auction.

70. Section 32(2) specifies the content of the report of auction, including details of articles sold and remaining unsold, price achieved, expenses, any surplus paid to the debtor and any balance due to or by the debtor.

71. Section 32(3) provides for the sheriff to order that the chargeable expenses, in whole or in part, be charged against the officer responsible for the report in the event of the report being made late without reasonable excuse or the officer's refusal or delay in making the report. Section 31(4) allows the sheriff to treat any such failure as misconduct.

Section 33 - Audit of report of auction

72. Section 33 requires the sheriff to remit the report of the auction to the auditor of court for him to tax the expenses charged, certify the balance due to or by the debtor and make a report to the sheriff.

73. Section 33(4) requires the sheriff to make an order declaring what sum remains due to or by the debtor. In the event of an irregularity in the procedure, the sheriff may declare the auction void and make any other provision considered necessary as a result. However, any such order will not affect a purchaser's title to property bought in good faith.

General and miscellaneous provisions

Section 34- Articles belonging to a third party

74. Section 34(1) enables articles, prior to auction, to be released from attachment where a third party claims ownership and either the officer is satisfied as to the validity of the claim or the sheriff grants an order.

75. Section 34(3) provides for other articles owned by the debtor and kept at the same place as where the original attachment took place to be attached instead of the released articles.

Section 35 - Articles in common ownership

76. Section 35(1) allows articles commonly owned by a debtor and a third party to be attached and sold in satisfaction of the debtor's debt.

77. Section 35(2) allows the common owner to redeem such articles on payment of an amount equal to the debtor's interest in the article.

78.     Section 35(3) enables the sheriff to order that the article be released from attachment where its sale would be unduly harsh to the common owner.

79.     Section 35(4) provides for other articles owned by the debtor to be attached in replacement.

Section 36 - Procedure where articles in common ownership are sold at auction.

80.     Section 36 covers circumstances where assets in common ownership are sold at auction. Section 36(1) and (2) entitles the third party to a proportion of the proceeds of sale corresponding to his/her interest in them.

Section 37 - Attachment terminated by payment or tender of full amount owing

81.     Section 37 provides that an attachment will cease to be effective where the full amount owing to the creditor is paid.

Section 38 - Assistance to debtor

82.     Section 38 allows the sheriff clerk to provide debtors with assistance in explaining the procedure involved or completing any forms which may be necessary in connection with any of the procedures in the Act.

Section 39 - Expenses chargeable in relation to attachment etc.

83.     This section makes provision for determining liability as between debtor and creditor for the expenses of the procedures in the Act.

Section 40 - Recovery from debtor of expenses of attachment

84.     This section specifies when the expenses of an attachment chargeable against the debtor may be recovered otherwise than from the proceeds of auction.

Section 41 - Ascription of sums recovered by attachment or while attachment is in effect

85.     This section provides for the order in which amounts recovered by attachment are to be applied, namely towards the cost of attachment, then to interest payable which had accrued by the date of the attachment, then to the debt due including expenses.

Section 42 - Restriction on fees payable by debtor

86.     This section prohibits the charging of fees to the debtor for any application made by the debtor under the Act, any objections made by the debtor to an application made by another party or in relation to any hearing.

Section 43 - Power to provide for lay representation

87.     This section confers power to make provision in rules of court for lay representation to be permitted in proceedings concerning attachment.

Section 44 - Legal aid

88.     This section provides that legal aid is not available for proceedings under Parts 2 and 3 of the Act. Third parties are not prevented from obtaining legal aid in connection with those proceedings.

Section 45 - Interpretation of this Part and Parts 3 and 4

89.     This section defines terms used in Parts 2, 3 and 4 of the Act.

PART 3 - ATTACHMENT OF ARTICLES KEPT IN DWELLINGHOUSES: SPECIAL PROCEDURE

90.     This Part of the Act provides for special procedures that are to be followed when attaching property kept in dwellinghouses. These procedures follow recommendation 6 of the Working Group.

91.     The Act of Sederunt (Debt Arrangement and Attachment (Scotland) Act 2002) 2002 which came into force on 30 December 2002 makes provision for the Rules of Court to be applied under the Act.

92.     A specific application must be made to the court for an exceptional attachment order in all cases where a creditor wishes to pursue the attachment of property in a dwellinghouse. Each case will be considered individually on its own merits by judicial enquiry. The sheriff will have regard to specified criteria when considering whether to grant an exceptional attachment order. Any order granted will be restricted to articles which are not essential.

Section 46 - Restriction on attachment of articles kept in dwellinghouses

93.     This section prohibits the attachment of articles kept in a dwellinghouse except in accordance with the provisions of Part 3 where an exceptional attachment order is being pursued.

Section 47 - Exceptional attachment order

94.     Section 47 provides for the granting of an order of court authorising the attachment of non-essential assets, on an exceptional basis, within dwellinghouses. Attachment of articles in dwellinghouses will be competent only where the court is satisfied that exceptional circumstances exist.

95.     Section 47(2) provides that, where it is considered that exceptional circumstances exist justifying the granting of an order, assets which are not essential may be auctioned. The procedure for auction will follow that in Part 2.

96.     Section 47(3) requires that, when considering whether to make an exceptional attachment order, the sheriff must take account of specified factors. This ensures that an appropriate assessment of individual circumstances is made.

97.     Section 47(4) specifies the factors to be taken into account by the court. These include whether money advice has been given to the debtor, whether there is any agreement for settlement of the debt and whether there has been any previous time to pay arrangement. The court must also have regard to the nature of the debt, particularly where it relates to any trade, business or unpaid tax. To assist the court, the debtor will have the opportunity to make a voluntary declaration about his financial circumstances, his ability to pay and any non-essential assets held (and, where they are held, their aggregate value).

98.     In taking account of whether the debtor has received money advice the sheriff may, where appropriate, make that opportunity available, if necessary by intervention of a domestic visit for the purposes of providing money advice.

Section 48 - Exceptional circumstances

99.     Section 48 specifies matters about which the sheriff must be satisfied when deciding whether to grant an exceptional attachment order. The creditor must have attempted to obtain settlement by negotiation and must have attempted earnings or ordinary arrestment if appropriate in the individual circumstances of the case. The sheriff must be satisfied that an auction of the non-essential assets which the debtor has would not only meet the creditor's expenses recoverable from the auction, but also reduce the outstanding debt itself by £100.

100.     Section 48(1)(d) requires sheriffs to make an overriding decision on whether it is reasonable in the circumstances to grant an exceptional attachment order.

101.     Section 48(2) provides that where a creditor has not attempted other diligence first because there was not a reasonable prospect of successfully recovering the expenses and minimum sum, that creditor will be treated as having made a reasonable attempt to do so.

Section 49 - Power of entry

102.     This section provides that it will not be competent to enter a dwellinghouse unless there is a person present who is over 16 years of age and is able to understand the proceedings, or the debtor has been given 4 days' notice of the intended entry. The sheriff may dispense with the requirement to give notice on application if cause can be shown.

Section 50 - Unlawful acts before attachment

103. Section 50(1) and (2) provide that the removal, sale, gifting or relinquishment of non-essential assets known to be subject to an exceptional attachment order or their wilful destruction or damage by anyone will amount to breach of the order.

104. Section 50(3) requires the debtor to give notification if an asset is stolen and of any insurance claim which it is intended to make. Section 50(5) and (6) make provision for a sum of money to be consigned in court by the debtor in circumstances where an asset is made unavailable before attachment has taken place in the knowledge of an exceptional attachment order's existence. The sum to be consigned will be the best estimate of the amount which the asset would have achieved at auction under section 50(7). Where an attachment ceases to have effect, any sum which has been consigned in court will be paid to the creditor to the extent necessary to meet the debt with any surplus left over being paid to the debtor under section 50(8).

Section 51 - Valuation

105.     Section 51 provides that assets being attached under an exceptional attachment order should be valued by the officer at the price which they would be likely to fetch on the open market.

Section 52 - Articles with sentimental value

106.      Section 52 prohibits the attachment of assets of sentimental value to the debtor not exceeding an aggregate value of £150, according to the values attributed by the officer under Section 51. This provision will implement recommendation 9 of the Law Commission in Scot Law Com No 177.

Section 53 - Removal of articles attached in dwellinghouse

107.     Section 53(1) provides for immediate removal of non-essential assets in execution of an exceptional attachment order once an attachment schedule has been completed unless the officer considers it impractical to do so, for example where specialist handling is required. Section 53(2) provides that if an article is not immediately uplifted, the officer must inform the debtor or any person in possession of the article when it will be removed. Section 53(3) permits only those assets likely to realise the sum due to be removed, according to the values attributed by the officer under Section 51.

Section 54 - Professional valuation

108.     This section provides that the officer, if he considers it appropriate, can arrange for an article, attached under an exceptional attachment order, to be valued by a professional valuer or other suitable skilled person. It also provides for the debtor to be notified of the new value where the valuer values the attached article at a different amount than the officer did at attachment.

Section 55 - Release of articles from attachment

109.     This section allows a period of 7 days from the removal of non-essential assets during which the debtor may apply to the sheriff for the return of an asset on the grounds that attachment was incompetent, that auction would be unduly harsh. It also provides for the right of the debtor to apply within 7 days for release of assets of sentimental value not exceeding an aggregate value of £150.

Section 56 - Redemption

110.     Section 56 provides for the redemption of non-essential assets within 7 days of the date on which they were attached. Redemption will be at an amount which the asset is likely to fetch if sold on the open market, according to the values attributed by the officer under Section 51 or by the specialist valuer under Section 54(1).

Section 57 - Appeals

111.     Section 57 provides for an appeal against any decision in relation to proceedings concerning an exceptional attachment order to be made to the sheriff principal with the leave of the sheriff and on a point of law only. Section 57(2) provides that the decision of the sheriff principal will be final.

PART 4 - ABOLITION OF POINDINGS AND WARRANT SALE

Section 58 - Abolition of poindings and warrant sales

112.     This section makes provision for the abolition of poindings and warrant sales and repeals various provisions of the Debtors (Scotland) Act 1987.

Section 59 - Savings

113.     Section 59(1) makes saving provisions in respect of warrant sales already completed before the date on which their abolition comes into force. Section 59(2) enables a poinding and warrant sale, already commenced before the provisions of the Act came into force, to be completed for poindings outwith dwellinghouses only up until 31 March 2003. Section 59(4) provides that summary warrants which authorised a poinding and warrant sale before the Act came into force are to be treated as authorising an attachment after that date. These savings apply to references to poindings and warrant sales in the Bankruptcy (Scotland) Act 1985, the Debtors (Scotland) Act 1987, and the Proceeds of Crime Act 2002.

PART 5 - MISCELLANEOUS AND GENERAL

Section 60 - Application of this Act to sequestration for rent and arrestment

114.     This section provides that certain provisions of the Act apply to other methods of enforcement namely some types of arrestment and a landlord's right of hypothec and its enforcement by a sequestration for rent. In particular the articles exempt from attachment under Section 11(1) or Schedule 1 are similarly exempt under these other methods of enforcement.

Section 61 - Minor and consequential amendments and repeals

115.     This section makes provision for Schedule 3, which provides for necessary minor and consequential amendments to and repeals of existing legislation, to have effect.

Section 62 - Regulations and orders

116.     This section provides that, where the Act gives the Scottish Ministers power to make an order or regulations, such power will be exercisable by statutory instrument subject to negative resolution procedure apart from those specified in Section 62(3). This provides that the first regulations made in relation to debt payment programmes under section 7 of the Act will be subject to an affirmative resolution, as will any order made under Sections 47,60 or 64 of the Act.

Section 63 - Crown application

117.     This section provides for application of the Act to the Crown acting in its capacity as a creditor or employer.

Section 64 - Short title and commencement

118.     This section provides for commencement of the Act on 30 December 2002, with the exception of sections 43 and 62. Powers conferred by the Act to make rules of court will be come into force upon Royal Assent to enable them to be in place in advance of the commencement of the rest of the Act. Sections 1 to 9, regarding the debt arrangement scheme, will be brought into force on a day to be appointed by the Scottish Ministers.

Schedule 1 - Expenses of attachment Etc

119.     This schedule is introduced by Section 39. It sets out a list of expenses of attachment etc which are recoverable from the debtor regardless of whether an attachment takes place within or outwith a dwellinghouse. Schedule 1(1)(k) also provides that the costs of storing valuable non-essential assets, as a consequence of an exceptional attachment order, are recoverable against the debtor.

Schedule 2 - Non-essential assets

120.     This schedule is introduced by Section 45 and gives details of articles in a dwellinghouse which cannot be considered non-essential assets for the purpose of an exceptional attachment order. Paragraph 5 gives the Scottish Ministers the power to amend this list by way of regulations.

Schedule 3 - Minor and consequential amendments and repeals

121.     This schedule is introduced by Section 61 and makes necessary minor and consequential amendments and repeals to existing legislation. For example, section 33(1)(a) of the Bankruptcy (Scotland) Act 1985 provides exemptions to property vesting in the trustee for bankruptcy and this schedule amends that provision to incorporate property exempt from attachment in the Act. Provision is also made at Schedule 3(15)(2) to allow a debtor's apparent insolvency to be constituted under Section 7(1)(c) of the Bankruptcy (Scotland) Act 1985 upon a "nil" schedule of attachment being returned with a report of attachment.

DEBT ARRANGEMENT AND ATTACHMENT (SCOTLAND) ACT 2002

The following table sets out, for each Stage of the proceedings in the Scottish Parliament on the Bill for this Act, the dates on which proceedings at that Stage took place, the references to the Official Report of those proceedings and the dates on which Committee Reports were published and the references to those Reports.