As we acclimatise to Phase 1 of lockdown restrictions being lifted, the courts have recently issued updated guidance on how certain business can now proceed and on what basis you can seek to do so.
Please note, due to the pace at which the impact of the Coronavirus pandemic is evolving, this article can only seek to offer insights as at the date of publication (5 June 2020). It is acknowledged that the position may change over the coming days, weeks and months.
The Coronavirus pandemic has impacted on every individual, organisation and business in the UK and the world over. The Scottish Courts and Tribunals Service (SCTS) is no exception. Whilst a return to business as usual is not yet possible, parties can now take steps to progress certain business. With regard to civil business (including, actions for payment of money), the following changes will take effect.
Court of Session
The Court of Session will now progress certain business as follows:
- The Inner House (primarily dealing with civil appeals from the Outer House) will allow substantive hearings to proceed by way of WebEx video conference or by written submissions. The Court will now hear appeals and procedural hearings will proceed as scheduled (preferably by way of written submissions or if required, by way of WebEx video conference).
- The Outer House (primarily dealing with high those relation to Petition business (including for example, petitions by creditors seeking to wind up a company). The procedural hearings will be conducted (preferably by teleconference or by written submissions, with the agreement of the Court. Any parties who had business which was scheduled to call before 21 April 2020 and was cancelled can now apply to have that business rescheduled.
The Courts are now dealing with administrative business electronically.
Urgent matters will be prioritised.
Non-urgent matters are likely to take longer than usual to be progressed due to a backlog of correspondence/limited staff resources.
Substantive hearings which require witnesses will continue to be adjourned for the time being.
Sheriff Court
All urgent Sheriff Court civil business will continue to be consolidated into the 10 Sheriff Court "hubs"up until 15 June, namely: Glasgow, Edinburgh, Dundee, Falkirk, Inverness, Aberdeen, Kilmarnock, Hamilton and Dumfries.
In addition to the urgent business already being dealt with by the Sheriff Court hubs including applications for interim interdicts, caveats, urgent corporate insolvency and sequestration applications, urgent applications in relation to Adults with Incapacity and various child protection and support related applications), all local Sheriff Courts will now resume dealing with the following business :
- Any ordinary, family and commercial actions; adults with incapacity applications; and corporate insolvency proceedings which were sisted by the Court or administratively adjourned can now be progressed where the Court is satisfied that there is a good reason to do so and where the matter can proceed remotely (with the exception of hearings which require the leading of evidence).
- All Commissary applications (ie. business related to dealing with the estate of a deceased person) including applications for confirmation and petitions for appointment of executor dative. There will be a delay in the processing of such applications due to reduced staff resources, and presumably, a backlog of business.
In the Sheriff Court, in cases previously suspended, where Parties consider that an action can be progressed remotely and that there is good reason to do so, they may apply to restart the case at the original local Sheriff Court.
All local Sheriff Courts are now processing the backlog of business submitted during the lockdown. Priority will be given to undefended actions seeking decree, cases which have resolved by joint/unopposed motion and those cases awaiting the issue of extract decrees/simplified divorces.
The remaining backlog of business including the lodging of initial writs, notices of intention to defend and returned citations will then be processed. Any new civil business received after 2 June 2020 will not be progressed before 15 June 2020 and will ultimately be processed in chronological order unless the business is considered urgent.
From 15 June 2020, all Sheriff Court civil business should be submitted to the local Sheriff Courts having jurisdiction.
What the changes mean in practice
In practice, the above noted changes are anticipated to have the following effects:
1. New actions for payment of money can be submitted from 15 June 2020.
Owing to the backlog of business, unless there is a good reason - such as where interim order are deemed necessary (ie. interim interdict, arrestment or inhibition on the dependence, etc.) - such actions are not likely to be progressed expediently.
2. All debt related court hearings in respect of current ‘live’ actions will either be continued for a period of weeks (unless there is good reason to progress or restart the action – see above) or formally put on hold for a period.
It is anticipated that procedural timetables will be adjusted in accordance with the above.
3. Where actions have concluded or interim orders have been granted, an increased provision of services by Sheriff Officers means that enforcement of certain business will now resume.
As well as undertaking urgent and necessary instructions, they are now in a position to arrange service of initial writs, summonses and simple procedure claims together with enforcement of decrees by arrestments, inhibitions and earnings arrestments (but only where a Charge has previously been executed). Charges for payment at business/commercial premises will resume.
We anticipate some delays in the processeing of such matters by Sheriff Officers, who are likely to be inundated with a backlog of business. Separately, third party arrestments ('freezing' orders) or earning arrestments (deductions taken directly from salaries) could be affected by the closure of offices where such orders would usually be served.
How to minimise the reliance on the court system
In light of the above, where possible we would advise parties to consider putting measures in place to avoid the need to rely on the court system at this time.
Such measures may include:
Maintaining lines of communication with creditors/ debtors
Creditors/ debtors are encouraged to seek to identify the most appropriate, currently available contacts within organisations/ businesses (or their legal advisors) and open lines of communication via email, telephone or other digital means of communication.
Where invoices, remittance advice or other financial documents require to be issued, this should be done (where possible) by email or other digital means of communication.
Delays in communication are to be expected. Parties are encouraged to adjust their expectations accordingly.
Negotiating payment terms
Cashflow is a major issue for many businesses at this time. Parties are encouraged, where possible, to seek to agree sustainable payment terms, including: deferred payments, payment holidays or instalment payment schedules. Of course, where possible, parties should endeavour to pay invoices timeously and/ or to meet pre-set payment schedules, but where revised terms are sought an early approach is advised.
Recently published government procurement guidelines indicate that businesses supplying goods/ services to the public sector may benefit from new measures to designed to boost cash flow and support businesses until 30 June 2020. We would advise such business to make enquiries with their public sector client contacts. Further details are available here.
Alternative Dispute Resolution
Whilst the above noted advice is provided with a view to avoiding disputes, where that is not possible we would advise parties to consider Alternative Dispute Resolution (ADR) before reverting to the court system. This will be particularly relevant where contracts are ambiguous when it comes to issues attributable to Covid-19, such as payments for contracts only partly completed or where modifications to contracts are sought.
ADR is wide ranging. It could take the form of negotiating terms of settlement either directly or via legal representatives; or mediation – which could be done remotely via telephone or video conferencing. Indeed, many mediators have long provided this type of service.
Above all else, parties should focus on good, early communication. They should also consider what reasonable changes they may make to their debt recovery and payment procedures in light of the unprecedented circumstances affecting us all just now.
We remain ready to guide and support you through any payment disputes affecting you or your business at this time.
Visit our COVID-19 support hub.
