Saturday 29 December 2018

Scottish rents spiralling at double the rate of inflation don’t tell the full story: GLC raises concern over the private rented sector in Scotland

Unlawful and unfair exploitation of vulnerable tenants lie beneath Scottish Government statistics 

Rents in Glasgow and Edinburgh’s private rented sector (PRS) have risen more than anywhere else in Scotland, and Govan Law Centre (GLC) believes spiralling rent costs are leading to more homelessness and poverty.

We believe the story beneath the Scottish Government’s official statistics is stark, and deeply worrying.  Casework from GLC’s Citywide Private Rented Sector service in Glasgow reveals how many private landlords aren’t following the legal protections in place for rent increases. 

Some tenants end up paying for the repairs their landlords are obliged by law to carry out.
Many vulnerable tenants are being pushed into financial hardship and misery, and being forced to live below “the breadline” and rely on foodbanks to make ends meet.

In Glasgow, private rents have been hiked up by almost one third between 2010 and 2018 (31.13%) - almost double the rate of inflation (the consumer price index rose by a total of 18.7% over the last eight years - see further Chart 1 below).

GLC’s PRS Co-ordinator Wendy Malloy said
: “We can evidence that rent increases being implemented during lets are having a serious impact on household financial sustainability, and increasing the risk of homelessness. A lot of the time these increases are being done without proper legal notice being served and with tenants simply accepting they have to pay”.

“We are seeing many households struggle with arrears and we are providing legal advice and representation in these circumstances. We believe this highlights the need to get the message out to people that there is a formal process in place for increasing rents and mechanisms to appeal should the tenant disagree with the proposed increase. Always seek free advice from your local law centre or advice agency”.

GLC’s Principal Solicitor Mike Dailly said: “Our casework provides cogent evidence of unlawful rent hikes across the City by private landlords. One of our clients is a disabled single parent whose landlord increased her rent by 43% during one month to £1,500 p.m. The housing benefit ‘local housing allowance’ was only £800 p.m. Other clients already struggling to make up housing benefit shortfalls have been trying to cope with rent increases of around £100 p.m. Tenants can apply for discretionary housing payments to help, but these are generally temporary. In practice, many tenants are meeting rent hikes by using their social security money for food and heating costs”.

“There is clearly a need for greater public awareness that rent hikes require formal written notice and must comply with certain legal procedures to be valid. There is always a right to appeal, although the law on market rents tends to favour private landlords. Govan Law Centre believes the private rented sector remains largely unregulated and in practice is too often a free-for-all for landlords out to squeeze as much money as they can from a tenant with limited options”.

“For low income tenants there is no consumer choice or genuine market competition in this sector. We believe there is a case for national regulation - there is no national regulation at present unlike for the social rented sector. There is a need for a ‘living rent’ in this dysfunctional market, and strengthening the rights of private sector tenants in Scotland. The present system is unsustainable and is costing the taxpayer in terms of the social, human, and medical problems it creates”.

Case study Mrs J
Mrs J is a widowed woman with 3 adult children living in private rented property. Mrs J’s has a number of health problems and her own income derives from sickness and disability benefits. Mrs J’s also has an entitlement to housing benefit of £800 per month which was capped at the maximum level of local housing allowance. The client with the assistance of her family were able to pay the difference of £250 towards the contractual rent of £1,050 each month. Mrs J’s landlord came to the clients home to advise that he was increasing the rent to £1,500 each month and that this was to be effective from the next date rent was due. Govan Law Centre were able to advise that this increase had not been intimated to her in the prescribed form and insufficient notice had been given and also advised this to the landlord. A few months on from this her landlord returned and provided the correct intimation and notice which meant there was to be an increase of £450 per month towards the rent. Mrs J and her family were unable to afford this increase despite significant reductions in their household spending. As a result of this increase Mrs J and her family had to make an application for Homelessness on the basis that their rent was unaffordable and can no longer sustain their tenancy.

Case study Mr K

Mr K is a single man living in private rented property. Mr K has lived in the property for over 12 years. Due to poor mental health Mr K has been unable to work throughout the period of his tenancy. Mr K’s housing benefit was capped at the maximum local housing allowance for the property but only had to pay a few pounds from his Employment Support Allowance to meet the contractual rent. At the start of the year his landlord advised that the level of rent was to be increased by £91 per month. Mr K has had some assistance with Discretionary Housing Payment to help meet this increase however due to the nature of the award this was only a short term award. Mr K started further utilising his Employment & Support Allowance to help cover the shortfall but this has meant he has had to cut back significantly on essential expenditure such as food, heating and lighting. Mr K was unable to sustain these cut backs and as such his rent has become affordable. Mr K is now currently looking to move into Registered Social Landlord housing stock but due to the level of housing stock available has yet to find suitable alternative accommodation. As a consequence Mr K has accrued arrears to the value of the monthly rental shortfall.

Case study Ms B
Ms B is a single parent to two boys and lives in private rented accommodation. Ms B works full time, so was paying rent herself until the landlord increased this from £650 to £750 pcm. As the property was also suffering disrepair and dampness, Ms B’s income was being used to provide additional heating and fixing repairs the landlord was refusing to do, such as replace a broken window, clean and paint over dampness. When the rent was increased Ms B begun to miss payments and accrued arrears of £1300 and late payments. Ms B has applied for DHP but this was refused. She was now borrowing from family and friends to manage the arrears and pay full rent. Govan Law Centre were able to report the landlord to Landlord Registration and the Housing and Property Chamber for Scotland and as a consequence a rent relief order and repair enforcement order were granted. Govan Law Centre were also able to ascertain that the rent increase was unlawfully implemented as no rent increase notice had been served. Ms B gave up her private tenancy a few weeks after the enforcement orders were granted to move in with family while seeking social housing.

PRS stats for Scotland from 2010 to 2018 (year end September)





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Tuesday 18 December 2018

GLC settles Sheriff Appeal Court eviction appeal: Elderpark Housing Assn v. M

Govan Law Centre has settled a Sheriff Appeal Court (SAC) case where a single female parent and her children were due to be evicted following an unsuccessful evidential hearing (proof) which had been conducted by a private firm of solicitors in Glasgow. Parties have agreed to allow the appeal insofar as it relates to the eviction, while adhering to the payment decree, with the appeal being dismissed on a no expenses basis. The Glasgow Scottish Secure tenant will remain in her home with the threat of physical eviction lifted.

The case of Elderpark Housing Association v. M concerned an appeal by way of Stated Case is in relation to a decree for recovery of heritable possession granted by the sheriff in summary cause proceedings in July 2017. The appellant argued that the proceedings were incompetent for the social landlord’s failure to comply with section 14(2)(a) of the Housing (Scotland) Act 2001 (“the 2001 Act”). As a matter of law, the appellant contented that the court was not entitled nor empowered to grant decree in the proceedings. The appellant’s arguments did not require to be tested by the SAC, however, the issues raised may be of interest to housing advisors and solicitors generally.

In the appellant’s submission section 14(2) of the 2001 Act is a fundamental statutory requirement that goes to the competency of the eviction proceedings. From a plain reading of section 14, a landlord cannot raise recovery of possession proceedings without complying precisely with the requirements of subsection (2). The language used in subjection (2) sets out the clear intention of the 2001 Act, namely that “proceedings may not be raised unless” a landlord complies with subjection (2). In the appellant’s submission, the use of these words meant that proceedings raised without compliance with section 14(2) are incompetent as a matter of law. There is no provision in section 14 for relief for non-compliance with section 14(2), nor is any power or discretion given to the court on this issue of jurisdictional competency. Section 14(1) and (2) provides as follows:

14 Proceedings for possession
(1) The landlord under a Scottish secure tenancy may raise proceedings by way of summary cause for recovery of possession of the house.
(2) Such proceedings may not be raised unless—
(a) the landlord has served on the tenant and any qualifying occupier a notice complying with subsection (4),
(b) the proceedings are raised on or after the date specified in the notice, and
(c) the notice is in force at the time when the proceedings are raised”.

The appellant’s appeal point was that the respondent did not comply with section 14(2)(a) of the 2001 Act by failing to serve a notice complying with subsection (4) (the Notice of Proceedings for Recovery of Possession or “NPRP”) on a qualifying occupier within the appellant’s household. Subjection (6) of section 14 of the 2001 Act provides the following statutory definition of a “qualifying occupier”:

“(6) In this section and section 15, “qualifying occupier” means a person who occupies the house as that person's only or principal home and who is—
(a) a member of the tenant's family aged at least 16 years,
(b) a person to whom the tenant has, with the landlord's consent under section 32(1), assigned, sublet or otherwise given up possession of the house or any part of it, or
(c) a person whom the tenant has, with such consent, taken in as a lodger”.

No NPRP was served on the appellant’s daughter who was 16 when defences were lodged. She had been aged 16 for over four months when the NPRP was served on the appellant. This was not a matter in dispute between the parties. The 2001 Act places a duty upon the respondent to ascertain whether there are any qualifying occupiers in the tenancy subjects before serving a NPRP. Section 14(3) of the 2001 Act provides as follows:

“(3) Before serving a notice under subsection (2) the landlord must make such inquiries as may be necessary to establish so far as is reasonably practicable whether there are any qualifying occupiers of the house and, if so, their identities”.

The appellant’s submission was that the sheriff was not entitled in law to grant decree in July 2017. Reference was made to the House of Lords decision in Regina v Soneji and another [2005] UKHL 49, [2006] 1 AC 340. This opinion considers questions of statutory interpretation in relation to whether a provision is mandatory or directory.  The general position has been that where there is a failure to comply with a mandatory statutory provision what then follows is a nullity.  Reference was made to Lord Steyn’s judgment starting at page 349, paragraph 14: “A recurrent theme in the drafting of statutes is that Parliament casts its commands in imperative form without expressly spelling out the consequences of a failure to comply”.

This approach was consistent with the decision of the Sheriff Principal in North Lanarkshire Council v. Cairns 2012 SLT (Sh Ct) 128. This opinion of the court concerned a qualifying occupier – a tenant’s son - unsuccessfully arguing that he had a right to minute for recall of decree. He was not a “party” to the proceedings. However, the Sheriff Principal held that his Article 6 rights in terms of section 6 and schedule 1 of the Human Rights Act 1998 were safeguarded by the requirement for a NPRP to be served on him in terms of section 14 – reference was made to paragraph 32 at page 10 of the court’s opinion. The qualifying occupier had been served with a NPRP in Cairns, and had the opportunity had he so wished to apply to become a party to the action under section 15 of the 2001 Act.

The issue of an NPRP not being served on a qualifying occupier was not pled or argued before the sheriff at first instance. However, the appellant contended that it was pars judicis for the court to consider competency if the issue goes to nullity.

This point was recently considered by the Inner House in Simpson v. Downie 2013 SLT 178 – reference was made to paragraph 10: “By reference to Macphail, Sheriff Court Practice (3rd edn), para.2.09, and to the opinion of Lord Young in Douglas v Tait at (1884) 12 R., p.14, it should not be regarded as pars judicis for the court to take a technical point on competency unless either a nullity, or some important external interest, could be identified”. In Simpson the Inner House dismissed the action as incompetent as the issue was one that went to jurisdictional competency.

The appellant was represented by GLC’s Mike Dailly, Solicitor Advocate.


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Friday 7 December 2018

GLC secures recall of mortgage repossession decree despite defender having appeared in court: Santander UK plc v. P

Following the decision of the Sheriff Appeal Court in NRAM plc v. Cordiner last year, it is generally thought that a homeowner cannot recall a decree by a "Minute for Recall of Decree' where he or she had appeared in court, or been represented.  

This week, Govan Law Centre (GLC) was able to secure a recall of a mortgage repossession decree despite the homeowner having previously appeared before the sheriff.  A summary of the case is set out below. 

Mr P consulted Govan Law Centre through the Ayrshire Homelessness Prevention Project because his mortgage lender, Santander UK plc, had raised a repossession action against him. His mortgage had matured and the full balance had become due. His lenders had obtained decree for repossession. As a result, Mr P was facing homelessness.

Mr P had not attended the first hearing of the case, as his lenders’ solicitors had told him he did not need to, since they would ask for the case to be continued for him to get financial advice. Mr P attended the next hearing of the case personally, and he was given further time again by the Sheriff. Mr P was not aware of the next hearing date, and therefore did not attend. Unfortunately, at this hearing, decree was granted in his absence. Mr P had not been represented in the process, nor put forward any defence. 

Mr P instructed Govan Law Centre to lodge a Minute for Recall of Decree on his behalf. This was lodged and a hearing was held at Kilmarnock Sheriff Court. The Pursuers opposed the Minute for Recall on the basis of a recent decision of the Sheriff Appeal Court, in NRAM plc v Cordiner (2017) SAC (Civ) 27. They argued that the Minute for Recall was not competent on the basis of this decision. The Sheriff refused the Minute for Recall. 

Section 24D of the Conveyancing and Feudal Reform (Scotland) Act 1970 states: 

“(1) A person mentioned in subsection (2) below may apply to the court for recall of a decree granted on an application under section 24 (1B) of this Act

(2) Those persons are (…) (b) the debtor, but only if the debtor did not appear and was not represented in the proceedings on the application under section 24(1B); “

In Cordiner, the Defender had lodged defences, been represented at previous hearings, consented to decree, amongst various other procedural stages. On appeal, the Sheriff Appeal Court held that, as the Defender had appeared and been represented in the proceedings, she was prevented from using the recall process. 

Mr P instructed us to lodge an appeal of the Sheriff’s decision refusing the Minute for Recall on the basis that his case could be distinguished from Cordiner, and on the basis that the Sheriff’s decision was incompatible with his Convention Rights under the European Convention on Human Rights. 

Having regard to the reasoning in Cordiner, it was Mr P’s position that the question to be determined was whether in his case litiscontestation had occurred, in which case, the appellant would have been prevented from seeking a recall of decree. This was the case in Cordiner, which had a particularly extensive procedural history. This had not occurred in the present case, as confirmed by the Sheriff in her note. She stated “At no time did he offer any defence to the action”

Additionally, in Cordiner, the court was not persuaded that they required to fully consider the requirement to read down the relevant section of the legislation in line with the European Convention on Human Rights, as the defender had fully engaged in proceedings, having lodged pleadings and been represented in numerous hearings. This was not the case in the present proceedings, and Mr P submitted that the Appeal Court should fully consider these submissions, and read down the legislation to be compliant with his Convention Rights.

Before the appeal hearing was due to be heard in his case, Mr P’s lenders agreed to the decree being recalled. The appeal was therefore dropped, and the case referred back to the Sheriff court. There is an evidential hearing fixed. Mr P is proceeding through the Mortgage to Rent Scheme and hopes he will soon be in a position to discharge his liabilities to his lenders, and remain in his home. 

It certainly would have been beneficial for borrowers in general to have received some clarity from the Appeal Court about the position of Minute for Recalls being lodged in similar circumstances, where no formal defence has previously been tendered and decree in absence is granted. However, this is an extremely good result for Mr P. We urge anyone in similar circumstances to seek urgent legal advice. 

The defender and appellant was represented by GLC's senior solicitor, Laura Simpson, and Mike Dailly, Solicitor Advocate was instructed in the appellate proceedings. 


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Thursday 20 September 2018

Govanhill Law Centre prevents “instant” eviction of family of EU citizens without notice in Glasgow

Govanhill Law Centre (GhLC) has prevented the instant eviction of a family of European Union (EU) nationals with four young children by lodging a sheriff court appeal earlier this afternoon seeking the suspension of the eviction.

Physical ejection from the property was scheduled to take place tomorrow at 10am in Govanhill. A sheriff at Glasgow Sheriff Court has now issued a court order to temporarily suspend the ejection, in order to give the family time to secure homeless or alternative accommodation.

The client had obtained the lease of a privately let flat in Govanhill, paying a deposit and rent, only to discover they had been duped.  There is a criminal practice in Glasgow of fraudsters breaking into vacant flats and falsely letting them out to vulnerable low paid EU workers. 

Our client’s case called in court yesterday on 48 hours notice (instead of the usual 21 days). Our client accepted she would have to leave the flat but asked for a little time to find alternative accommodation. The sheriff refused to do so and granted an immediate extract decree for eviction, and dispensed with the need to serve a charge for removing. The standard practice on decree for eviction is an occupier will have 28 days before eviction by sheriff officers.

The client’s solicitor, GhLC’s senior solicitor, Rachel Moon obtained instructions for Govan Law Centre’s Mike Dailly to draft an urgent Note of Appeal today. The Note of Appeal argued that the sheriff’s decree was unlawful as it was a disproportionate interference with the client’s right to respect for her private and family life, and her home, as safeguarded by Article 8 of the European Convention on Human Rights.

There had been no proper assessment of the proportionality of the granting of an “instantly enforceable” eviction decree as was required standing European human rights jurisprudence including the case of Kay v. UK (2012) 54 E.H.R.R.  Some key facts in the case were in dispute and there was no evidential inquiry.

The court had been made aware the family could not obtain homelessness assistance from the local council upon zero notice, given the need to ingather evidence to satisfy the various residency and work tests for eligibility, and would be destitute and homeless without some period of notice. Despite this, the sheriff had granted decree, which would be immediately enforced with no notice.

Following the sheriff’s order this afternoon, the family now have an opportunity to secure alternative accommodation with the help of Govanhill Law Centre.

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Thursday 19 July 2018

Permission for homelessness petition for judicial review to proceed against Glasgow City Integration Joint Board (Glasgow City Health and Social Care Partnership)

Lady Paton has granted permission today for a petition to proceed for judicial review of a homelessness decision against the Glasgow City Integration Joint Board (GCIJB; also known as the 'Glasgow City Health and Social Care Partnership'). A procedural hearing has been assigned for 22 August, and a substantive hearing for 3 October 2018 at 10am in Zungunde v. Glasgow City Integration Joint Board.

The intentional homelessness decision was made by Glasgow City Council on behalf of the GCIJB. It is believed that this may be the first petition for judicial review in Scotland against an Integrated Joint Board with respect to its delegated statutory responsibilities and duties.

The GCIJB is a body corporate established by Order under section 9 of the Public Bodies (Joint Working) (Scotland) Act 2014 (the 2014 Act).  On 6 February 2016, the GCIJB assumed delegated duties and decision-making power under Part II of the Housing (Scotland) Act 1987 (the 1987 Act) in terms of section 1(5) of the 2014 Act, its Integration Scheme approved under section 7 of the 2014 Act, and The Public Bodies (Joint Working) (Integration Joint Board Establishment) (Scotland) Amendment Order 2016 (SSI 2016/2).

Although the GCIJB subsequently issued a Direction under section 26 of the 2014 Act for Glasgow City Council to carry out its functions under the Part II of the 1987 Act, the petitioner's position is that in terms of inter alia section 25(3) of the 2014 Act, the duties and powers under Part II of the 1987 Act rest with the GCIJB, and that Glasgow City Council act on the GCIJB's behalf.

The GCIJB is represented by the NHS Scotland Central Legal Office, the petitioner is represented by GLC's Mike Dailly, Solicitor Advocate.
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Thursday 28 June 2018

Sheriff Appeal Court case on credit card debt & prescription scheduled for 23 August 2018

A fresh appeal diet before the Sheriff Appeal Court was assigned today by Sheriff Principal Turnbull in PRA Group (UK) Ltd v. MacPherson, for 23 August 2018.  The new diet will allow time for the appellant's civil legal aid application to be determined by the Scottish Legal Aid Board.

The appeal case deals with a novel point of Scots law, which potentially affects many consumer credit cases across Scotland, where old credit card debt has been sold on to UK and international debt-purchasing companies and then pursued through the Scottish courts.

The appellant's position is that court proceedings for debt were not raised until over five years from when his monthly credit card payment was last due. The claimant and creditor's position is that the starting point for prescription is after it serves a default notice under the Consumer Credit Act 1974, which was before the five year prescriptive period in Scots law.

The appellant believes that the creditor is conflating UK consumer credit law and the enforcement of credit agreements, with the Scots law of prescription. The appellant contends that credit card agreements clearly make "provision" for the date when the whole balance due is to be repaid, which is the date upon which a monthly payment has been missed.

The appellant is represented by GLC's Mike Dailly, Solicitor Advocate.  The creditor is represented by Brodies LLP.
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Monday 14 May 2018

GLC meets Maggie Craig, Financial Conduct Authority's Head of Department, Scotland

Govan Law Centre (GLC) has had a very productive and helpful meeting with the Financial Conduct Authority's (FCA) new Head of Department, Scotland, Maggie Craig in Govan this morning. Before joining the FCA, Maggie held a variety of roles at the Association of British Insurers (ABI) including Director of Scottish Affairs, Acting Director General and, latterly, Director of Financial Conduct Regulation.

Maggie set out the new business strategy for the FCA's increased presence in Scotland, which now employs 101 people in Edinburgh's Fountainbridge, as well as the new opportunities for Scotland's growing 'fintech' (financial technology) industry. The financial services sector contributes around £8bn to the Scottish economy.

Principal Solicitor, Mike Dailly set out GLC's hope and aspiration for fintech solutions to revolutionise the free money advice sector in Scotland, by utlising opening banking developments from the revision to the EU's Payment Services Directive ('PSD2') to streamline debt advice for both advisors and consumers. A good example of some of the opportunities for fintech solutions to help and empower consumers were set out in a Money Advice Service 'Financial Capability Lab' report last week.

Mike also discussed a number of concerns around some particular high cost credit card products, and mortgage lenders fees and charges, as well as recent developments with respect to potentially prescribed credit debt cases in Scotland, and excessive and punitive interest charges in cases where secured debt has been sold on.  GLC agreed to keep in touch with Maggie on relevant areas of consumer interest in Scotland.
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Wednesday 25 April 2018

Scottish Government should return to first principles to be fair to consumers in reforming the law of prescription in Scotland

Govan Law Centre (GLC) has argued that the Scottish Government's reform of the law of prescription - the date that obligations are extinguished in law - should go back to first principles. GLC's Principal Solicitor set out our position yesterday before the Scottish Parliament's Delegated Powers and Law Reform Committee, which is leading the Stage 1 inquiry on the Prescription (Scotland) Bill.  The evidence session is available to watch on YouTube.

The Scottish Government's aim - and the starting point of the Scottish Law Commission original Discussion Paper thinking - was to create clarity, simplicity, certainty and fairness in the law on prescription.  GLC believes that this should mean all legal obligations are subject to a five year prescriptive period as a matter of principle. The current law, contained in the Prescription and Limitation (Scotland) Act 1973, is almost half a century old and the justification for requiring 20 years to pursue debts and obligations is outdated with today's standards and technology.

While the Scottish Law Commission originally envisaged Scots law being simplified so that all statutory obligations would be subject to the five year 'quinquennium', the Bill makes a number of exceptions to this rule for tax generally, national insurance, council tax, child maintenance and reserved social security benefits. These exceptions result in a 20 year prescriptive period.

GLC notes that public policy arguments have been accepted for differential treatment, but we still believe that the five-year prescriptive period should apply to all statutory obligations.  For example, there is no justification for council tax to be subject to a six year prescriptive period in England but 20 years in Scotland.

If the Scottish Government is not willing to amend the Bill, GLC has encouraged the Parliament's Committee to do so, which failing to consider a fall back compromise position.  For example, the Bill’s current exceptions could be subject to five years, and an extended period of 10 years in the following exceptional circumstances:

  • Where there has been willful, false or misleading information by the debtor which has resulted in a material delay in enforcing the debt due, or
  • The creditor can prove that the delay in enforcing the obligation was not due to a material delay on its part, and it would be in the public interest to allow an extended period.

As a matter of public policy, we can see why there may be a case for individual exceptions, but they should be genuinely exceptional, otherwise what the Bill will fail in its goal of providing “certainty, clarity and fairness”, by allowing debts and obligations to linger for 20 years without being pursued as early as possible.

In relation to social security benefits, we believe there is no justification for not having all devolved and reserved benefits subject to the five year prescriptive period.  It is inequitable that people have a month to appeal a benefit decision, while the DWP would have 20 years to pursue reserved benefit debts.

GLC believes that the “appropriate date” for the start date of the running of the five year prescriptive period for consumer debts in terms of section 6 of the 1973 Act should start from the last payment made.  This current law is set out in section 6 and schedule 2 of the 1973 Act and depends on whether the contract makes provision for when repayment is due, which failing when a written demand for repayment is made.

We have a number of cases in court at present where old consumer credit debts have been sold by banks to debt collection companies, and we think the starting point for prescription for consumer debts should be simplified as the last payment made by the consumer.  The alternative is the current position of highly technical arguments where the creditor can argue that a later start date applies, for example, when it demands full repayment – which can add an extra year or more to the quinquennium.

GLC fully supports section 5 of the Bill which amends section 11 of the 1973 Act, and introduces a new "discoverability test'. Section 5 of the Bill would address the 2014 UKSC decision in Morrison & Co Ltd v. ICL Plastics Ltd, which established that the start date for prescription was when a pursuer knew they had suffered loss, injury or damage. This can result in unfairness when no-one knew who was culpable until some years later.

Section 5 of the Bill would require additional knowledge in relation to the fault/negligence and identity of a defender before the prescriptive period can begin in a damages claim.  We believe this represents practical common sense, and is a fair and reasonable approach.

GLC argued that section 8 of the Bill should be deleted.  There is no cogent case to change the law on when the 20 year prescriptive period begins. At present the period runs from the date of a pursuer's knowledge of a defender’s act or omission, however the Bill would run the period purely from the actual date of the act or omission.  We have no difficulty with section 6 of the Bill in relation to removing interruptions to the 20 year prescriptive period.

We have significant concerns over section 13 of the Bill, which would permit contracting out of the five prescriptive period by one year with a 'standstill agreement'. Very often consumers in financial difficulty are in a weak and vulnerable position, and may not seek independent advice until the last moment, so we believe this provision could result in serious injustice in practice.  We suggested a possible compromise that section 13 of the Bill should only engage where there is certification from a solicitor or accredited money advisor (in debt cases) that the consumer has taken independent legal advice and agrees to extend the five year prescriptive period.

Mike Dailly was giving evidence on behalf of GLC, along with Mike Holmyard of Citizens Advice Scotland. The Committee's Stage 1 inquiry on the Bill is ongoing, with the Minister scheduled to appear before the Committee next week.  
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Wednesday 11 April 2018

Recruitment: Govan Law Centre seeks qualified solicitors to join our Glasgow legal team

Govan Law Centre (GLC) seeks qualified solicitors to join our Glasgow legal team. We are seeking solicitors with civil court/tribunal experience.  We offer the opportunity to develop your legal career, undertake contentious/novel litigation, and utlise innovative client solutions as we expand our legal services across Glasgow and Scotland.

Experience in the fields of housing, homelessness, and public law would be an advantage. These are full time posts, however, job sharing will be considered. These positions will be based in our Govan HQ, and will include provision of a variety of legal advice and representation for clients in terms of mainly housing, mortgage arrears and homelessness.  It will also involve providing legal representation at court.

The successful candidates must:
  • Hold a degree in Scots Law
  • A diploma in legal practice
  • An unrestricted Law Society of Scotland practising certificate
  • Have good research and analytical skills
  • Ability to work well under supervision
It would be desirable if the candidates had:
  • Knowledge and experience of issues relating to social welfare law
  • Experience in appearing in court or tribunal settings
  • Experience in dealing with vulnerable clients
  • Experience in handling a large and varied workload
  • Experience in working within a team setting
Please send a CV and covering letter explaining why you are interested in this position to: Candy Walker, Service Manager, Govan Law Centre, 18-20 Orkney Street, Glasgow, G51 2BX or by e-mail to cwalker@govanlc.com. CLOSING DATE: FRIDAY 27THAPRIL 2018 AT 12 NOON.  Any applications received after the closing date will not be considered.

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Tuesday 10 April 2018

Scots lawyers should face ethics action over shell firm abuse

Here, Govan Law Centre's Principal Solicitor, Mike Dailly, argues that much more must be done to tackle the misuse of Scottish Limited Partnerships as shell firms in Scotland.  See also today's (Tuesday, 10 April 2018) news story in The Herald, "Scots lawyers should face ethics action over shell firm abuse".

When the Panama Papers scandal broke two years ago, few would have thought such murkiness would wash up on the shores of Scotland.  The use and abuse of shell companies to facilitate massive tax evasion, money laundering and organised crime didn’t happen here.  Or so we thought. 

A naïve belief that Scotland was somehow beyond the shady world of global finance and international crime has been shattered by good investigative journalism from The Herald, confirming that we are not so different to Panama.  The reality is that no country in the world is immune from international crime.  But that doesn’t mean to say we should make it easy for fraudsters.

While Scottish Limited Partnerships (SLPs) have been a respected and legitimate business model for over a century, this vehicle has now been car-jacked by those with something to hide.  In the four years before 2016, the number of SLPs registered in Scotland increased by 237%, while those registered elsewhere in the UK increased by 43%.  16,461 new SLPs were registered at just 10 addresses in Scotland.  Something was happening.

The attraction of SLPs is a combination of their secrecy and separate legal persona in law.  Unlike in England, a SLP is a legal entity in its own right that can enter into contracts, own and control assets.  As a partnership it is ‘tax transparent’ so only the partners are taxed as individuals, and no accounts need be filed with Companies House.  Until last year, the owners of a SLP were entitled to secrecy.  In short, it was the perfect partner to a shell company in Panama City.

Responding to growing concern over the abuse of SLPs for criminal activity, the UK Government introduced new transparency regulations last June requiring SLPs to disclose the identity of “people with significant influence or control” (PSCs) over them.  Companies House maintains a register of PSCs, and it was thought that removing the secrecy of SLPs would dissuade those with unlawful intentions.  However, many partners of SLPs routinely flout these new regulations.  

We must do much more to tackle this problem in Scotland.  While SLPs and company law is generally reserved to Westminster, the regulation of Scotland’s professions isn’t.  Why should Scottish solicitors, accountants and others act for SLPs who flout the law?  Simply explaining that the responsibility for compliance with transparency regulations rests with the SLP isn’t good enough.  This should be a matter of professional conduct and ethics.

For example, it isn’t in the public interest for Scottish solicitors to continue to provide services and/or host SLPs who ignore transparency regulations.  There is a very real risk that continuing to act for SLPs with something to hide will damage the public interest and reputation of the legal profession in Scotland. 

There is nothing to prevent the Law Society of Scotland introducing a professional conduct rule to prohibit a Scottish solicitor from acting for a SLP who fails to demonstrate compliance with the transparency regulations.  It should be a matter of professional ethics.  The power to do so exists under section 34 of the Solicitors (Scotland) Act 1980. 

Scottish law firms could be required to declare the number of SLPs they act for on a six monthly basis, and give a declaration they are satisfied the SLP has complied with the transparency rules. The professional regulatory bodies for accountants and other professionals could easily do likewise using conduct rule making powers. 

No professional in Scotland should act for a SLP flouting the 2017 transparency regulations.  To do so should give rise to professional misconduct.  If regulatory bodies in Scotland are unwilling to do more to combat the misuse of SLPs then there is nothing to stop the Scottish Parliament from legislating.  Govan Law Centre offers its support to MSPs in framing an appropriate member’s bill, if so required. 

* This commentary first appeared in The Herald.

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Saturday 27 January 2018

Govanhill Law Centre persuades local authority to treble rate of pay for overnight care workers

Govanhill Law Centre has been successful in persuading a local authority in Scotland to almost treble its rate of pay for overnight "sleepover care".  A self-directed care funding package had made provision for £3.51 per hour gross pay for overnight care workers - £3.03 per hour net.  That figure has now been revised to £9.38 per hour in a disabled person's care package. The funding package had previously made no provision for the cost of paying the National Minimum Wage (NMW) to carers providing overnight care. 

The requirement to pay the NMW is a statutory right is set out in the National Minimum Wage Act 1998, as amended, and the National Minimum Wage Regulations 2015. The NMW from April 2017 was £7.50 per hour (£8.54 gross), for those aged 25 and over. It will be £7.83 per hour net from April 2018. 

The local authority's position was that funding for overnight care was being considered nationally by local authorities in discussion with the Scottish Government. In dismissing the client's complaint pursued by Govanhill Law Centre's senior solicitor Laura Simpson, the council argued that "it would not be fair or equitable to increase funding to your client alone". 

A petition for judicial review was drafted in-house by Govan Law Centre's Principal Solicitor to challenge the local authority's decision in the Court of Session in relation to the relevant law.  The petition sought reduction of the local authority's decision as ultra vires and illegal. However, the local authority chose to review and increase its rate of pay above the NMW rate while the petition was sisted at the Court of Session pending determination of a full civil legal application.

The petitioner's position was that overnight carers were entitled to the NMW having regard to Whittlestone v. BJP Home Support Limited [2014] I.C.R 275, and J Esparon t/a Middle West Residential Care Home v. Slavikovska [2014] I.C.R. 1037.; and Wright v Scottbridge Construction Ltd 2003 SC 520, where the Inner House of the Court of Session held that for the purpose of Regulation 3 of the National Minimum Wage Regulations 1999 where an employee was contractually required to be at a work throughout a shift, the entire period of the shift was “time work” for the purpose of Regulation 3.


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