Meeting date: Wednesday, June 27, 2018
Meeting of the Parliament 27 June 2018
Agenda: Agriculture (Culture and Heritage Value), Portfolio Question Time, Homelessness, Prescription (Scotland) Bill: Stage 1, Complaint Against Mark McDonald MSP, Scottish Parliamentary Corporate Body Motion, Business Motions, Parliamentary Bureau Motions, Point of Order, Decision Time, National Health Service at 70
- Agriculture (Culture and Heritage Value)
- Portfolio Question Time
- Prescription (Scotland) Bill: Stage 1
- Complaint Against Mark McDonald MSP
- Scottish Parliamentary Corporate Body Motion
- Business Motions
- Parliamentary Bureau Motions
- Point of Order
- Decision Time
- National Health Service at 70
Prescription (Scotland) Bill: Stage 1
The next item of business is a debate on motion S5M-12958, in the name of Annabelle Ewing, on the Prescription (Scotland) Bill at stage 1. I call Joe FitzPatrick to move the motion.
That the Parliament agrees to the general principles of the Prescription (Scotland) Bill.—[Joe FitzPatrick]
I call Alison Di Rollo, Solicitor General for Scotland, to speak to the motion. You have nine minutes, Solicitor General.15:18
I am pleased to be here today on behalf of the Scottish Government to open the debate on the general principles of the Prescription (Scotland) Bill, which began as part of the Scottish Law Commission’s ninth programme of law reform. I thank those who gave evidence, the convener and members of the Delegated Powers and Law Reform Committee and, in particular, the Scottish Law Commission, whose report included the draft of the bill, for its work. The bill will be taken forward by the new Cabinet Secretary for Justice and Minister for Community Safety following their formal appointment, subject to Parliament’s approval tomorrow.
The Scottish Government welcomes the committee’s support for the general principles of the bill and its recognition that the bill will provide clarity and legal certainty in those areas of negative prescription that have caused practical difficulties for creditors and debtors alike in Scotland.
The bill began as part of the Scottish Law Commission’s ninth programme of law reform, and its aim is to increase clarity, legal certainty and fairness in the law of negative prescription. In civil law, that doctrine serves a vital function: it sets time limits for when obligations and correlative rights are extinguished. That serves the interests of individuals where, after a certain lapse of time, it is fairer to deprive one of a right rather than allow it to trouble the other; it also serves the public interest, because litigation begun promptly encourages legal certainty.
It is probably worth briefly revisiting the bill’s intentions, which are to resolve issues with the law of negative prescription that have caused practical difficulty. Those are deemed to be worthy and welcome reforms to this aspect of the law. We should perhaps bear that in mind when we debate the bill’s principles this afternoon.
What does the bill do? By extending the five-year negative prescription period to cover all statutory obligations to make payment, the bill will significantly simplify the law in that area. Currently, the Prescription and Limitation (Scotland) Act 1973 lists specific categories of obligation that are subject to the five-year prescriptive period. Consequently, that list needs to be constantly updated if new obligations are to come under the five-year prescription. At the same time, there are statutory obligations that do not come under the five-year prescription but where there are no policy grounds to explain or justify that. There are exceptions to the new rule, such as taxes, council tax and Department for Work and Pensions overpayments—in other words, generally those statutory obligations of a public law nature.
Negative prescription is about the extinction of obligations after they become enforceable but it is difficult to say that there is an enforceable obligation unless we know whom to enforce against. In the case of seeking damages, it is, after all, only fair that, if a person does not know who was responsible for their loss, injury or damage, time should not run against them until they know, or can reasonably be expected to know, who was responsible. Section 5 will do just that. It makes little sense to postpone the start of prescription when the creditor becomes aware of the cause of their loss yet unaware of the identity of those responsible. The Scottish Government welcomes the committee’s recognition that the new test proposed in the bill will achieve a fair balance between the interests of the creditor and those of the debtor.
While it seems fair to creditors to allow them some time to discover the identity of the person responsible for their loss or damage, it is also fair to defenders that time does not carry on indefinitely against them. An unusual feature of Scots law is that both the five and 20-year prescription for obligations to pay damages run from the same date—that is, the date of the loss. Another unusual feature is that the 20-year prescription can be interrupted, with the effect that the 20-year period starts again, so it is possible for a long time to pass before an obligation finally prescribes.
The bill will make the 20-year prescription, in relation to obligations to pay damages, commence on the date of the act or omission giving rise to the loss. It will also make the 20-year prescription a true long stop by preventing the period from being restarted. The committee, along with a number of those who gave evidence at stage 1, agree with the Scottish Government that such provision will increase legal certainty and clarity. The committee also recognises the logic in allowing the prescription period to continue until proceedings finish, where that happens after the end of the 20-year period.
A good deal of time has been spent on what the bill does not do, as opposed to what it does. It simply maintains the exceptions that exist under Scots law. With respect to council tax and non-domestic rates, the bill does not seek to change the position as it is generally understood. Local taxes are vital sources of income for local authorities in the same way that other taxes are vital sources of income for the Scottish and United Kingdom Governments, and the Scottish Government does not want, as the SLC has indicated, to differentiate the treatment of local taxation payments from all other tax payments.
Will the Solicitor General take an intervention?
I want to make progress at this stage, if that is all right.
The Convention of Scottish Local Authorities told the committee that it is rare for action to be taken to recover a debt that is more than five years old, but that any move to a five-year negative prescription period would—just like with the DWP—hurt the debtor most. Payments would either have to be recovered over a shorter period—and we must always remember that local taxes are recurring obligations that are due every year, so failure to make payment one year is likely to be compounded the following year—or councils would have to change the way they try to pursue and enforce payment, leading to substantially increased costs for councils, for the Scottish Courts and Tribunals Service and, more important, for the debtors themselves. The Scottish Government notes from the committee’s report that the committee has agreed to write to all 32 local authorities for more information about such debts.
Reserved social security spending in Scotland is still decided on the basis of rules that are set by the DWP, and that includes how it decides to recover any overpaid benefits. The DWP has made it clear to the committee that, if there was no exception from the five-year prescription for obligations to repay reserved benefit overpayments, debtors would be placed in a worse position than they are in now, as the DWP would have to recover the money over a shorter period, meaning that larger amounts would require to be deducted from a debtor’s benefits over a shorter period.
The Scottish Government does not have any jurisdiction over policy decisions concerning the operation of reserved benefits, and the committee is keen not to increase the financial hardship on vulnerable people in our society. The DWP is in control of the matter, and the Scottish Government hopes that the committee will join it in recognising the impact that making reserved benefit overpayments subject to the five-year prescription would have.
Will the Solicitor General take an intervention?
I am going to press on for now.
As well as the provisions that I have mentioned, the bill makes some miscellaneous provisions, which I want to mention briefly before time runs out. First, the bill allows for agreements to extend the five-year prescription by no more than one year in order to allow parties time to negotiate an end to their dispute without the need for protective proceedings. The committee recognises the merit in those agreements. Secondly, the bill adds to the definition of “relevant claim” in order to take account of claims that are made in sequestrations and company administration receiverships.
In concluding my opening remarks, I again thank the Delegated Powers and Law Reform Committee for its scrutiny of and support for the bill’s general principles. The approach that is taken in the bill is not one of wholesale reform. Its aim is to focus on and address those particular areas that have caused difficulty in practice. The Scottish Government believes that the bill strikes a fair balance overall in redressing cases of unfairness for creditors and debtors while also serving the wider interests of fairness, justice and certainty.
In those circumstances, I move that the Parliament agrees to the general principles of the Prescription (Scotland) Bill.
Thank you, Solicitor General. I know that you are not used to this, but the motion has already been moved by Mr FitzPatrick.
Sorry, Presiding Officer. That was corroboration. [Laughter.]
Oh, yes. I was all in favour of corroboration. It got me into a lot of trouble. [Laughter.]
I call Graham Simpson to speak on behalf of the Delegated Powers and Law Reform Committee.15:27
I thank Ms Di Rollo for stepping in today.
One of the responsibilities of the Delegated Powers and Law Reform Committee is to scrutinise Scottish Law Commission bills. They are often seen as being quite technical, and members may think that our scrutiny is therefore quite turgid. As convener of the committee, perhaps I have just gone a little native, but I think that the Prescription (Scotland) Bill has proved to be a thoroughly interesting, important and thought-provoking piece of legislation.
I appreciate that many members might not have given much thought to the bill before today. They might have noted that it is a Scottish Law Commission Bill and thought that there is generally wide consensus among stakeholders on the need to reform the law and that any changes are fairly procedural and uncontroversial. Indeed, if they were asked to take part in this debate, they might have thought that they just needed to take their prescription and move on. They might even have thought that the bill is about the prescriptions that they get from their doctor. We have all had such prescriptions, but, thankfully, very few of us have had anything to do with the prescriptions that are covered in the bill.
There are some bills that we can really get stuck into—the Planning (Scotland) Bill, for instance. At first glance, the Prescription (Scotland) Bill did not appear to be one of those, but the DPLR Committee has had to wrestle with some important policy areas, such as council tax and social security benefits—policy issues with potential implications for our constituents, issues that affect some of the most vulnerable people in our society, and issues of justice for people who have suffered injustice.
I will give two examples that demonstrate why the bill is so important and why our committee was required to give it such robust scrutiny. Before I do, and for those members who are new to the legal term “prescription”, I can tell the chamber that I have found a handy way of thinking about it: it is the available time in which one is able to make a claim against loss. If someone has missed the deadline—the prescription period—their right is extinguished and, sadly, they are too late.
I turn first to the case of Morrison v ICL Plastics. As many members will remember with great sadness, the case stemmed from the tragic explosion at the Stockline Plastics factory in Glasgow in May 2004, in which nine employees were killed and which left many seriously injured. The case centred on a nearby business, David T Morrison and Co, which suffered significant damage from the explosion. However, when it sued ICL Plastics, which owned Stockline, for its loss, ICL defended the claim on the basis that it had already prescribed. In essence, Mr Morrison was told that he was too late to receive justice.
The case revolved around the interpretation of the existing legislation, the Prescription and Limitation (Scotland) Act 1973, and what the start date was—the date on which the loss, injury or damage occurred. Morrison believed that the start date was in 2013, when he found out that the explosion was ICL’s fault, but ICL argued that the start date was in 2004, when Morrison’s had initially suffered the loss. The Supreme Court, by a majority of three to two, found in favour of ICL.
The committee recognises the impact that the Supreme Court’s decision had on the law of prescription. We therefore agree with the proposal in section 5, which allows the pursuer to know who caused the loss before the prescription period begins. That will mean that, in future, people who, like David Morrison, are trying to seek recompense for damage suffered due to negligence will not be told that it is too late to pursue the ICLs of this world. That is a welcome change to the law.
Another example might help to explain section 8, which covers the start date for the longer 20-year prescription period. Under the bill, that period will now start from the date when the act or omission that led to the loss occurred.
Fenella Mason, head of construction and projects at the law firm Burness Paull, gave the helpful illustration of a problem with a large infrastructure project such as—and I do not want to cause any undue worry to the current transport minister—the Queensferry crossing. Ms Mason asked the committee to assume that, back in 2008, one of the bridge’s engineers produced a defective design. As the structure did not open until 2017, and as it is not unusual for it to take 10 or 12 years for a problem to manifest itself, in that example the right of the Scottish Government to sue for damages could be lost.
The committee recognises that the start date for the 20-year prescription that is proposed in the bill might therefore result in some harsh cases. However, it was persuaded by the argument that evidence can deteriorate considerably over time, which in turn can lead to difficulties when compiling a case. As a number of witnesses said in evidence, we have to draw a line somewhere.
In the time available, I have not been able to mention the important welfare aspects that the committee wrestled with. We felt that they were of such significance that we wrote to the Social Security Committee, the Justice Committee, the Equalities and Human Rights Committee and the Local Government and Communities Committee to ask for their views on our work and whether they had anything to add. I am grateful to those committees for their helpful responses, particularly given the very tight deadline that we gave them. I am sure that some of my colleagues will pick up on those welfare issues in their own contributions.
I thank all those who contributed to the committee’s scrutiny of the bill, whether in writing or by appearing before the committee during one of our evidence sessions. As members know, a committee’s scrutiny is only as good as the evidence that it receives, so we are very grateful for the time and energy given to help us in our work.
I thank the Minister for Community Safety and Legal Affairs and her officials for the constructive way in which they engaged with the committee, and I thank the Scottish Law Commission for proposing the bill. The committee was a little concerned that the commission did not perhaps consult as widely as it could have done, and we have called on it to review its processes for future consultations.
I also thank my fellow committee members for their enthusiasm in grappling with the issues that the bill raises. Although there were a couple of areas on which we could not reach agreement, that work was a great example of parliamentary scrutiny, with the committee wanting to get the best legislation possible on the statute books.
I close with the words of William Gladstone, who said:
“Justice delayed is justice denied.”
I hope that the provisions of the bill will ensure that justice might not be completely denied due to the passage of time. My committee and, indeed, all members, will welcome that. The bill will ensure greater fairness and equity in the civil justice system. I commend the committee’s report to members.15:35
First, I will simplify the meaning of “prescription”. Prescription and Scots law on prescription encourage people to enforce their rights swiftly, and before it becomes too difficult for a person—or, indeed, an organisation—who is defending a claim to gather the appropriate evidence. As we heard from Graham Simpson, delay can cause the quality of vital evidence that might be available for use in a court case to diminish. The Prescription (Scotland) Bill aims to amend the law relating to the extinction of civil rights and obligations by the passage of time.
For negative prescription, the Prescription and Limitation (Scotland) Act 1973 established five-year and 20-year prescriptive periods. Twenty-year prescription applies to all obligations other than those that are specifically excluded from it by other provisions in the 1973 act. Five-year prescription applies to obligations on one statutory list and not to obligations on a second statutory list in schedule 1 to the 1973 act. In practice, most obligations in Scots law end after five years.
If enacted, the bill would implement the Scottish Law Commission’s recommendations on the law of prescription and amend the 1973 act in relation to negative prescription only. That means that a person has a certain timeframe in which to do something or it will become time barred. With positive prescription, the person needs the time to pass in order to claim the right to something.
The bill contains three main proposals in technical areas of law. However, what I am about to say is just a general guide.
Section 1 of the bill relates to obligations to pay damages and obligations under the law of delict. “Delict” refers to Scots law that relates to types of civil law, apart from breach of contract. It covers a group of wrongful behaviours in relation to a person who has been wronged and can obtain a legal remedy in the civil courts. It includes the common law of negligence and other specific types of delict, such as defamation and occupiers’ liability. It is separate from the law of contract.
Section 2 will extend the scope of the five-year prescription to include certain obligations that are associated with contracts.
Section 3 sets out the general rule that statutory obligations to pay money are covered by the five-year prescription. However, there are some statutory obligations that are covered only by the 20-year prescription.
The committee not only took oral evidence; written evidence was also taken from the legal profession, academics, the welfare rights sector, the Scottish Law Commission and the then minister in charge of the bill, who was Annabelle Ewing MSP. All those who responded to the committee’s call for written evidence and who gave oral evidence agreed that the bill is necessary. In its written evidence, Shepherd and Wedderburn LLP agreed, and said that
“the Bill will improve clarity, certainty and fairness”
“overall resources will be more efficient and costs reduced. It is likely that advising clients on potential prescription will be less complex whilst still not straightforward.”
Under the 1973 act, the five-year prescription applies to obligations on one statutory list and not to obligations on a secondary statutory list, as detailed in the act. The lists have been amended many times over the years, which makes the law extremely complex.
Section 3 of the bill will extend the five-year prescription to all statutory obligations to pay money, with some exceptions that will remain within the scope of the 20-year prescription. Those exceptions are taxes and duties that are recovered by Her Majesty’s Revenue and Customs and Revenue Scotland; council tax and non-domestic rates, as well as the sums that are connected with enforcement of obligations; the obligation to pay child maintenance; and sums that are recoverable under the legislation relating to social security benefits and tax credits.
There is some debate about those exemptions. For example, there appears to be some uncertainty under the current law about the prescription period relating to council tax and business rates debts. Under the current law, council taxes and business rates are probably covered only by the 20-year prescription, although there is no decided case on the point, which leads to some uncertainly in practice. It is not as clear cut as the time simply being five or 20 years, when we consider joint and several liability in situations in which people genuinely believe that they have paid but discover that a debt is outstanding and is significantly more than the original amount. Joint and several liability is a general principle of Scots law, but people do not always appreciate the meaning or severity of its implications.
The committee has recommended that the Scottish Government give further consideration to the exception for council tax and business rates, and that it provide a more detailed description of the public policy arguments for the exception, ahead of stage 2. The committee also recognises that there are wider policy considerations in the bill, particularly in relation to welfare rights.
Overall, the committee welcomes the greater certainty that the bill will provide for users of the law, agrees with the bill’s aim of increasing clarity, certainty and fairness for the law on negative prescription, and considers that the bill, as drafted, generally meets its aims.
I thank the four committees that responded to the questions that were put to them on the wider policy areas, and I thank the committee clerks for the time, patience and effort that went into guiding the committee members through the bill.15:41
In the light of the announced reshuffle of Government ministers, I begin by registering my thanks to Michael Matheson and Annabelle Ewing. Over the time that I have spent shadowing the justice brief, we have had some notable disagreements—on police governance, the British Transport Police merger and the repeal of the Offensive Behaviour at Football and Threatening Communications (Scotland) Act 2012—but there have also been some clear areas of constructive engagement on the broad issue of prison reform, on ensuring that the criminal justice system and the judicial system work and on the more specific circumstances around the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. I thank both Michael Matheson and Annabelle Ewing and wish them luck in their new roles.
I also welcome Humza Yousaf—I am glad that he is here this afternoon on the front bench—and Ash Denham to their new positions, and look forward to engagement with them, be it constructive or, on occasion, critical, where that is needed.
I must admit that the Labour group was very excited to hear that there was going to be a debate this afternoon about prescription. Indeed, a queue lined up so that we could talk about medication, pharmacies and, on the 70th anniversary of the national health service, some very important health issues. When the truth was revealed about the debate, I am not sure that we had quite the same ease in filling the debate slots.
However, the issues around debt and the length of time for which it is reasonable to pursue debts are very important and have very real and human implications. We are therefore debating important issues this afternoon. In that regard, I thank the members and clerks of the Delegated Powers and Law Reform Committee for the stage 1 report, which provides a useful basis for the debate; and I thank the organisations that provided briefings to inform the debate. I also thank the Scottish Law Commission, whose work prompted the bill’s introduction.
Prescription is a valuable principle in civil law that ensures that people who are aggrieved face a time limit for raising a claim in court, which is important because it encourages people to enforce their rights promptly. Without that, paper evidence could become lost, damaged or destroyed and witnesses might have died or become untraceable, or simply might not remember the facts of the case.
Above all, having no time limit might lead to people being pursued for debts for a length of time that anyone would consider to be unreasonable. It is against that principle that the bill seeks to reform prescription. I will focus my remarks on the discoverability test and the exceptions to the five-year period.
The discoverability test is used to determine when the prescriptive period starts. Recently, two important cases at the Supreme Court have altered interpretation of the test, one of which has already been mentioned in the debate—David T Morrison & Co Ltd v ICL Plastics Ltd and others. The other is Gordon and others v Campbell Riddell Breeze Paterson LLP, in 2017. Those rulings held that the five-year period started when the pursuer knew, or should reasonably have known, that the loss occurred, regardless of whether they knew that it had been caused by fault or negligence.
The bill changes that test to meet three conditions: that the pursuer knew that the loss had occurred, that they knew that the loss was caused by another person’s act or omission, and that they knew the identity of that person. Labour members believe that that is a reasonable and sensible compromise position that means that pursuers are not placed in a harsh situation in which their claim could be invalid before they even knew or had discovered that they had a claim.
There are two notable exceptions to the five-year prescription period, which members have acknowledged in the debate. Those exceptions are council tax and non-domestic rates. Other members might well have been contacted by constituents, as I have, about issues arising from council tax debt, when people are frustrated that councils that have failed to enforce actively a debt for several years suddenly come down on the debtor like a pile of bricks, even when the debtor had been paying what they thought was the correct amount for years. Citizens Advice Scotland told the committee that a five-year prescription period would force all creditors actively to pursue and enforce their debt, which would perhaps put off the need for such things as sequestration by councils.
We should not let policy be led by the inability of councils to enforce debts, nor should the law encourage in councils and public bodies inefficiency in actively pursuing those debts.
The Government’s argument is that the exception retains the status quo, but that does not persuade me or my Labour colleagues. The bill, unsurprisingly, is about changing the status quo where necessary, so the justification to exempt council tax and business rates should be based on the merits of the case, not on the basis that it has always been so.
Prescription is an important principle that is in need of reform. We are happy to support the bill at stage 1, but Labour members look forward to further debate and to seeing how it can be improved at future stages.15:47
Like Daniel Johnson, I start by acknowledging the contribution that was made by the new justice secretary’s predecessor, Michael Matheson, and by Annabelle Ewing. I am sure that the new justice secretary will have advised his predecessor that despite his move to the transport portfolio, he has not got rid of me yet, because I will beat a path to his door first on ferries and thereafter on many other issues. I look forward to working with Humza Yousaf in his new role.
I am conscious that unlike most colleagues in the chamber, except Daniel Johnson, I do not have the advantage of having listened to the stage 1 evidence. That is never ideal and—as Graham Simpson acknowledged—we are discussing a highly technical bill, so it makes me rather nervous. I am sure that the justice secretary feels that, too.
Nonetheless, having read the committee’s report—I pay tribute to the work that was done by the committee—and the many briefings from stakeholders, for which I am more than usually grateful, I wish to raise a small number of points in this brief contribution to the debate.
First, it is worth my while to confirm that the Scottish Liberal Democrats welcome the bill, which is a welcome attempt to modernise and to bring greater clarity to the law on prescription. It seems to be self-evident that establishing a cut-off point for claims to be raised or rights to be asserted has the advantage of providing certainty, so that individuals and businesses have some prospect of being able to organise their affairs and to plan for the future. Even prospective pursuers will benefit from the enforced discipline of making timely claims. The Law Society pointed out that
“many years after the fact, evidence will have deteriorated or disappeared and relevant individuals may no longer be traceable, or indeed have passed away.”
Although that does not preclude the possibility of unfairness arising in individual cases, the principle that underlies the bill appears to be sound.
I will touch on a couple of specifics. I note the lively debate around whether council tax and business rates should be exempt from the five-year prescription. In its briefing, the Law Society outlined half a dozen reasons why it believes that that is not justifiable and might produce unfair results. Although I think that councils, like others, should be required to do everything possible to pursue debts in a timely fashion, I struggle to accept that the 6 per cent penalty charge that attaches to unpaid council tax would act as a disincentive on the collecting council. I cannot see a council adopting a strategy, which is what it would have to be, to deliberately delay collections in order to rack up penalty charges. The Law Society seemed to acknowledge that, and it undermined its own argument when admitting that
“uncollected sums are quite small and if the council has not sought to enforce within 5 years, there may be little practical appetite to pursue them many years later.”
I have more sympathy with the concern of the Convention of Scottish Local Authorities that introducing a five-year prescription would
“dis-incentivise payment and would lead to a decline in in-year collection.”
That said, I note that the committee was unable to reach an agreed position on that—I also note Daniel Johnson’s comments on the matter—and that the committee is looking for further rationale for the exception in advance of stage 2. That seems to be a sensible strategy. Like other members, I will look with interest at the forthcoming responses.
In relation to the discoverability test, the bill’s proposal to start the five-year period only when a pursuer knows that they have suffered a damage, injury or loss, that it was the fault of someone else by act or omission, and that they can identify that party, offers on balance more upsides than downsides, particularly for legal certainty.
I want to flag a concern that was highlighted by the Law Society, again, about the treatment of existing obligations that might be affected by the new law. In a bill that is aimed at delivering clarity, the confusion around claims that are prescribed under existing law but not under the new law is unhelpful. I hope that the Government will be able to address that at stage 2.
For now, I thank the committee and those who gave evidence, and confirm that the Scottish Liberal Democrats will support the bill at decision time.15:51
I am delighted to speak in the debate, and I place on record my thanks to Michael Matheson and Annabelle Ewing. In particular, I appreciate Annabelle Ewing’s dedication when giving evidence to the DPLR Committee not just on the bill but on previous occasions.
I welcome the bill and, as a committee, we recommend it to Parliament. Paragraphs 52, 56 and 57 of the committee’s report provide a clear indication that the bill is a step forward, that it will provide clarity of understanding and that stakeholders are generally content with its proposals.
For something that started off as a fairly technical bill, it certainly came to life when we received evidence from Mike Dailly of the Govan Law Centre. We have already heard some commentary on that, and I am sure that Mr Findlay will touch on it in his speech.
The convener and the Solicitor General have touched on the technical nature of the bill, which has been helpful. I will touch on a couple of other areas.
The Scottish Law Commission has brought forward three bills in recent years. I previously suggested that there could be the potential for more than one small technical area of legislation to be brought together, where possible, to make progress in dealing with outstanding issues. I still believe that that would be beneficial on occasion. However, the bill highlighted a different scenario regarding the SLC’s consultation process.
As the bill is technical, the examination of some areas, such as welfare rights, might not have been fully pursued. That became evident once we started our deliberations, which the executive summary of our report highlights. Although the welfare rights sector was contacted during the SLC’s consultation, it was only as we undertook our work that we established some issues that affect the sector. Therefore, I firmly believe that our recommendation that the SLC
“reviews its consultation processes with a view to giving policy considerations a greater level of attention when deliberating on law reforms”
highlights something that would be beneficial.
Section 3 of the bill and its exemptions are the main focus of our report and considerations. We could not agree on whether the exemption for council tax and business rates was appropriate. With councils clearly wanting the status quo but Mike Dailly suggesting that the period for council tax should be cut—and with very little other evidence—we had to try to test what was being suggested. We believe that our action in writing to COSLA and the Society of Local Authority Lawyers and Administrators in Scotland, as well as to four other committees of this Parliament, was the right thing to do to test any new evidence. COSLA’s response was helpful but, as we indicate in the report, it was not signed off politically, so our decision to write to all 32 councils was also the correct thing to do. Attempting to establish the exact debt situation, broken down into five-yearly periods, will be advantageous for further understanding of and deliberation on that section of the bill.
However, COSLA’s response indicated that, if the collection period was reduced from 20 years to five years, higher instalments would have to be applied, which would have a detrimental effect on the debtors, who are the people we all want to protect.
Ultimately, we all want the bill to be right, and I am sure that we all have a great deal of sympathy for Mike Dailly’s arguments, but a few things need to be considered. First, is this the correct bill to attempt to change that part of the law?
Secondly, why should the bill hamper the ability and flexibility of local authorities when they collect unpaid council tax? A reduction from 20 years to five years would be vast, so what would the effects be? I hope that the committee’s letter to the councils will provide some information to help with that. As the minister indicated in her reply to the committee’s report,
“the 20 year prescription will no longer be capable of interruption by a relevant claim or acknowledgment and will therefore act as a true long stop.”
I am delighted that this technical bill is being recommended to progress and look forward to the next stages of the bill’s journey through the Parliament.15:55
I thank my colleague Graham Simpson, the convener of the Delegated Powers and Law Reform Committee, and the committee clerks for their work on the bill. Having substituted on the committee for my colleague Alison Harris while the bill was being discussed, I am grateful to be able to add my voice today.
The bill enjoys support inside and outwith the Parliament, and the convener recognises the general contentment among stakeholders. The Law Society of Scotland summed the bill up by noting that it would modernise and bring greater clarity to our law of prescription.
It will do so through a series of changes to the five-year and 20-year prescription periods. It is not an attempt at wholesale reform but rather aims to address specific issues that have caused, or might cause, difficulty in practice. More fundamentally, it aims to bring clarity, certainty and fairness while balancing the law between creditors and debtors.
With that in mind, the committee has recognised the need to address various issues before the bill reaches stage 2, such as cases involving council tax, benefit overpayments and situations in which 20-year prescription can mean harsh results for individual cases.
The committee was split on whether council tax should be exempt from the five-year rule. The disagreement came down to balancing perceptions of fairness with public policy. No one wants to see individuals treated unfairly, but we have a public duty to treat taxpayers fairly by recovering their money, because that serves a wider public good. I hope that the issue receives the attention and review that it deserves as the bill progresses.
That process is already under way. The committee will write to local authorities to ascertain how many still have council tax and business rates debts outstanding after five years and how often payment has been sought using the 20-year prescription. I welcome that engagement, but we must ensure that the process is kept on track and that responses are acted on.
In a similar vein, more discussion is needed about whether overpayment of benefits should be subject to five-year or 20-year prescription. Avoiding overpayments is the best solution, but, when it happens, there is again the question of fairness versus the wider public good. Some people regard 20 years as too long, but, to paraphrase a clever man, time is relative. Public finances do not obey neat demarcations of time and we must retain flexibility in safeguarding public money.
On the 20-year rule, there will always be a need for longer prescription periods, even though we recognise the problems that they can create, such as with gathering evidence after a number of years. The bill balances that necessity by strengthening the hand of defenders through much earlier prescription starting points in many cases and by preventing court proceedings from resetting the clock on the 20-year period. That measure, in particular, is a welcome boost, as it offers greater certainty to defenders.
Certainty is a fundamental point. People must be able to live their lives without fear that they will be open to lawsuits for evermore. Even if individual cases might throw up some unwelcome developments, there is a wider public interest in legal certainty that must be served. Of course, as the Law Society points out, individual cases can also be better served by claimants taking early action.
People have a right to claim what is lawfully theirs, but they also have a right not to be dragged through the courts to settle decades-old debts. The reforms before us help achieve that through increased clarity and better balance between parties. However, as we move towards stage 2, I hope that ministers will pay heed to the concerns that have been raised by the committee and will seek to address them in a manner that carries the Parliament with them. That will allow the bill to continue to focus on the substantive issues and ensure the continuation of the broad support that we see here today.
I would appreciate it if the last two speeches in the open debate came in at just under four minutes, please.16:00
We welcome the bill. The new discoverability test, which requires a person to be aware that their loss, injury or damage was caused by a person’s act or omission and to know that person’s identity before the five-year period starts, is fairer than the current law.
The bill seeks to simplify prescription and ensure—with few exceptions—that all debts that arise from personal contracts or statute are covered by the five-year rule, but it is disappointing that the Government has been persuaded to exempt certain statutory creditors. The exemption from five-year prescription of council tax and benefit payments under United Kingdom legislation, which makes them subject to the 20-year prescription, will leave people vulnerable to high penalties many years after they were incurred, even when those people might not have been aware of them. Given the six-year prescription that covers council tax debt and benefit overpayments in England and Wales, the bill fails to provide simplicity, fairness and clarity, particularly for those who will access devolved and reserved benefits.
When I tried to intervene on the Solicitor General, I did not want to catch her out in unfamiliar surroundings; I genuinely wanted to seek clarity about the debt that will be transferred from the UK Government to the Scottish Government. The devolution of social security powers to the Parliament means that the debt that is associated with historical claims will also be transferred. Maybe the Solicitor General will cover, in concluding, what system will apply to the debt that is transferred from the UK Government to the Scottish Government if the bill is passed.
Mike Holmyard from Citizens Advice Scotland told the Delegated Powers and Law Reform Committee that the position was unfair, and he gave examples of problems with obtaining adequate evidence from debtors and local authority collection systems. He explained that the way in which council tax is collected exacerbates the difficulties that debtors have in understanding their council tax debt. CAS advisers see clients who have built up debts over 10, 11 or 12 years because their council does not appear to have taken any action to collect those debts. The clients do not understand how a council can go from making no effort to collect payments over a long period to taking drastic action to recover the debts. Similar issues arise in relation to benefit overpayments under UK legislation.
A divergence between devolved benefits and reserved benefits would result from how section 3 of the bill interacts with section 66 of the Social Security (Scotland) Act 2018. The combined effect of the two provisions is that five-year prescription would apply to devolved social security benefits but 20-year prescription would apply to reserved social security benefits.
We welcome the bill, but we will look again at some areas of it at stage 2.16:03
I join colleagues across the chamber in paying tribute to Annabelle Ewing. I had the privilege of being the parliamentary liaison officer to Michael Matheson and her earlier in the parliamentary session. I wish her the very best and I congratulate him on his new post.
I welcome the opportunity to speak in support of the bill at stage 1. As the bill originates in the work of the Scottish Law Commission, it is—naturally—more technical than many other matters that we debate in the chamber. Given that the Delegated Powers and Law Reform Committee was also appointed as the lead committee, the proposals that the bill contains are situated closer to the consensual end of the spectrum of political debate.
However, given the implications that the law of prescription has for a range of areas, the bill has provoked some broader questions, particularly on the recovery of debt by public bodies. The two areas of contention that emerged from the committee’s deliberations are reflected at paragraphs 111 and 144 of the committee’s stage 1 report and concern council tax and benefits respectively. I will focus my remarks on the issue of debt to local authorities.
Currently, the prescription period as it applies to council tax and non-domestic rates is uncertain. It is probable that the 20-year prescription period applies, but there is no decided case on the point that could offer more certainty, as has been noted. I believe that there is consensus in seeing the bill as an opportunity to bring clarity, but there is contention as to whether the period of prescription should be five or 20 years. Both the advocates of five years and those advocating 20 years have offered strong arguments.
Those who advocate a five-year prescription period include the Law Society of Scotland and Mike Dailly from the Govan Law Centre. The Law Society contends that a 20-year period is unfair. Its reasoning is set out in paragraph 86 of the committee report, which states that
“non-payment of council tax attracts a high penalty charge so that the value of the debt grows over time, and”
“situations where people in good faith believe that they have paid their council tax yet are chased for the debt many years later, particularly in situations where joint and several liability applies.”
Mike Dailly argues that the position in Scotland should equate with that in England, where action to recover council tax debt must be initiated within six years. Mr Dailly offered a further nuance to his position by suggesting a compromise through having—I quote from paragraph 90—
“five year prescription with an exceptional circumstance test to establish whether there had been deliberate behaviour on behalf of the debtor to create delay in enforcing debt.”
Those who advocate retention of 20-year prescription include SOLAR and COSLA, although COSLA’s response to the committee had not been politically endorsed. Both organisations highlight the importance of local taxation to councils and the need for a legal regime that allows effective collection of debt. A further argument that the committee considered was on there being parity between local and national Government with regard to the prescribed period for debt recovery.
Although I am sympathetic to the arguments that have been made by the Law Society and Mike Dailly, I am not yet convinced that the bill that is under consideration today is the appropriate vehicle for delivering significant reform of local authority debt collection. There are three reasons that have led me to that view. First, there has so far been insufficient consultation with relevant stakeholders regarding the implications of any reform. However, as my colleague Stuart McMillan said, efforts have been undertaken in that regard.
Secondly, on a practical level, the process of council debt recovery is normally commenced swiftly, and the consequential issuance of a summary warrant creates, in effect, a 20-year prescription period. It should be noted that that compares favourably with the English equivalent—a liability order—which, as an instrument of English law, is indefinite due to the lack of prescription in that jurisdiction.
Thirdly, I believe that there is a risk of the bill going beyond its SLC-inspired remit and trespassing into policy areas that should be the concern of other committees in the Parliament beyond the DPLR Committee.
Time limits me from going into further detail on benefits, but I look forward to hearing the Government’s response to the issues that have been raised in the debate.16:08
I welcome the new ministers—although I think that they have left the chamber—and I thank the outgoing ministers for their public service. I thank the Solicitor General and the convener of the DPLR Committee for setting out the positions of the Government and the committee on the bill and for highlighting some of the key issues.
There have been welcome changes on discoverability and other technical aspects, as we have heard during the debate. However, I want to focus on how the bill and the issues around it will impact on people.
In a past life, I worked for six years as a front-line housing officer in the social housing sector. I worked with tenants, housing associations and councils, and I took a great interest in the welfare rights side of the job. I tried to ensure that people received their entitlement and that the council or housing association was paid the rents and housing benefit that it was owed.
That job was a tremendous apprenticeship for going into politics, as I saw people’s lives in the raw. By going in and out of people’s houses every day and helping them deal with financial pressures, I gained an understanding of the stresses and strains that are put on families and communities. I gained an understanding of the crushing impact that debt can have on relationships and on mental and physical health and general wellbeing.
In cases of extreme debt, I had to invoke an eviction process that, ultimately, meant that people lost their homes. Housing officers in Scotland are faced with that awful dilemma every day. That is very grim and the worst part of the job, and it is also evidence of a failure of policy.
In my experience, many debts came on the back of problems in the benefits system that meant that people had their benefits stopped or reduced or that overpayments accrued through errors in the system.
I say that against the backdrop of the bill and, in particular, the exemption from five-year prescription of council tax and overpayments of reserved benefits, which means that people will be subject to a 20-year prescription period and possibly higher penalties after that debt is discovered. People might not be aware of that debt. They might have long since disposed of any files or records that they had at home that would help them address the debt when they discover that they have it. A six-year prescription period covers council tax and overpayments in England and Wales, but it will be 20 years in Scotland.
The Scottish Government took the correct action when it wrote off historical poll tax debts after almost 30 years. Under the proposed system, if it is enacted, people will have council tax debt hanging over them for up to 20 years. Let us think about that.
If the benefits system were starting from scratch and the UK Government proposed a six-year debt recovery period in England but a 20-year period in Scotland, there would rightly be an outcry, but that is what is being proposed in the bill. Mike Dailly from the Govan Law Centre made a very positive contribution to the committee’s proceedings, as did CAS and the Child Poverty Action Group. All of them share my belief that the law in Scotland on prescription for council tax and reserved benefits overpayments should be brought more into line with the law in England and Wales, and my Labour colleagues have said that today.
We believe that a five-year prescription period would bring Scotland more in line with what happens in England and Wales. If we do not see any movement on that point during the bill’s progression, we will bring forward an amendment on it at stage 2.16:11
In a debate of this nature, it may seem that my right to say anything interesting by this stage has been extinguished by prescription. Let me start by mentioning my entry in the register of interests as a practising advocate.
Prescription might seem to be a boring lawyer’s topic—those lawyers with their pedantic pronunciations. It is, of course, an ancient topic known to legal systems the world over, and it hardly needs to be mentioned that the Romans with their usucapio and other rules were the basis of much of present-day European thinking on the matter.
When I was at Heidelberg University, I remember a professor teaching us about the subject and telling a story to illustrate its meaning. He told of purchasing a bottle as a student—I will let others guess what was in it. He gave only a receipt to the shopkeeper and did not actually pay for it at that stage. As a student, he thought what a convenient arrangement that was. However, he said, it would not be convenient if, more than 40 years later, the shopkeeper came calling and demanded payment of the bill for that bottle. The professor’s point was simply this: an agreement should not be left as if forgotten and forgiven, only to be trundled out years later and a demand presented, when circumstances, situations and even fortunes might have completely changed.
Eleanor Roosevelt once said:
“Justice cannot be for one side alone, but must be for both.”
Prescription is about that balance of justice, which seeks to be fair to both parties. It sets a limit to the time beyond which a right cannot be relied upon—in vox pop, “use it or lose it”. Those are well established and widely accepted principles in the legal systems of the world, past, present and—one would hope—future.
As the professor’s illustration indicates, the question of prescription is one that applies across a wide breadth of human life and experience. I did a short trawl through Scottish case law of the past couple of centuries. A huge number of issues were covered, ranging from salmon fishing rights to boundary disputes to every other conceivable form of commerce. I certainly will not bore the Parliament with a tale of each and every one of those cases.
However, the subject even featured in a case relating to the interpretation of the Temperance (Scotland) Act 1913—the case of Macfarlane v Lanarkshire County Council of 1921, which is Session Cases 664. The case related to a poll conducted and the question of whether it had taken place on a market day, which would have been prohibited under the act. The Lord President commented:
“to shut all licensed premises in the area on the day of a poll which is concerned with a question of licensing policy is an intelligible precaution against influence; while to shut them on a market day is to cause needless inconvenience and annoyance. The Act of Parliament is framed in view of both these considerations.”
Has the member lifted Stewart Stevenson’s speech today?
What can I say? I have been found out. No, not on this occasion, Mr Findlay.
There is a need to balance the rights and obligations of creditors and debtors, which is what the bill aims to achieve. It also aims to achieve desirable clarity in the current prescription regime, because fairness requires that and not just the balancing of interests. It is that particular aspect of clarity on which the current law has been found to be wanting in a number of respects. The bill is to be welcomed, for we all need to know where we stand when it comes to our rights and obligations, and we need to know within a reasonable time. Any lack of clarity in prescriptive rules is undesirable.
There are of course points that need to be looked at carefully, and those have been covered by my colleagues, members of the committee and others who have spoken. There is an issue with the section 5 discoverability test. There can be complexity in relation to multiple defenders, particularly where the burden of proof is being placed on the pursuer rather than the defender. There is a question in relation to heritable rights at 20-year prescription where the land register has failed to correctly reflect rights and obligations. Finally, there is the point that Mr Findlay eloquently raised and talked about—perhaps in a speech lifted from Mr Stevenson—to do with recovery of taxes and obligations to the state. The question that he raised was why there should be a longer period for that than there is in relation to private individuals.16:17
I do not want to turn this into a mutual appreciation society, but I add my thanks and tributes to the outgoing justice ministers and the members of the DPLR Committee, who have obviously given close and intelligent consideration to the bill. At first sight, the bill seems technical and dry, but it is anything but that. We can see from Neil Findlay’s positive contribution that the bill is about improving Scotland’s statute book. It is black-letter law and technical to that extent, but it matters. I am delighted that the bill has been given the amount of scrutiny that it clearly has had. I thank all members for their contributions to what is an important and valuable debate, which has confirmed that there is support across the chamber for the general principles of the bill, and that is surely to be welcomed.
Issues have been raised, however. In essence, it is a matter of balancing the rights and interests of various parts of society, and it is clear that balancing exercises have been carried out from the genesis of the bill in the Scottish Law Commission right through to its consideration today. All the issues that have been raised—I will touch on just two or three of them in the time allowed—will of course receive the close consideration that they deserve.
The first matter to mention, which Daniel Johnson, Graham Simpson and others referred to, is the fact that the bill does not change the position in relation to council tax. So far as the aim has been expressed, it is simply to maintain the status quo. How did we get to that considered position? The exception maintains the status quo with regard to council tax debt. Following the publication of one of the first drafts of the bill, the Scottish Law Commission immediately received representations from local authorities. Among the points that they made was that the policy reasons that justify excepting taxes that are payable to HMRC and Revenue Scotland apply equally to taxes that are payable to local authorities. It was acknowledged that there would be few cases in which it would take more than five years to collect such local taxes, but the point of principle was made well, and the SLC, in taking an overview of the situation, was persuaded by the arguments—
Given that the situation is different south of the border, has any evidence been gathered on whether the six-year prescription period for local authorities in England has had negative consequences?
I do not think that such a comparative exercise has been done. The scope of the bill does not go that wide. As Tom Arthur mentioned, the purpose of the bill is to amend, reform and clarify the law on prescription in Scotland; it is not to bring about wholesale reform of debt recovery and the arrangements for the collection of taxes and revenues. Therefore, the answer to Mr Johnson’s question is no.
We know that more than £2 billion-worth of council tax debt is owed across Scotland, £1.2 billion of which relates to debts that are more than five years old. It is likely that making the prescription period for those debts five years would force a change in the way in which councils recover the debt, which would be to the detriment of the debtor, about whom Neil Findlay has spoken so passionately. In its letter to the DPLR Committee, COSLA made it clear that a greater impetus would be given to local authorities to secure repayment within the reduced period. There are competing issues, and arguments can be made on both sides, but the Scottish Government, in common with the Scottish Law Commission, is satisfied that the exemption for council tax debt is justified.
I turn briefly to the exception to the five-year prescription period for social security. Again, it is a question of maintaining the status quo, which is that 20-year negative prescription applies. In England and Wales, the analogous legal concept is limitation rather than prescription, so the debt might still be active after that time. It is crystal clear from the DWP’s evidence to the committee that making reserved benefit overpayment subject to the five-year prescription period would impose greater hardship on the most vulnerable members of society. That is a key message, which has been delivered to the SLC and the DPLR Committee repeatedly, and it is part of the balancing exercise that I have mentioned. I am sure that the committee, as it outlined in its report, is keen to ensure that greater hardship is not imposed on the most vulnerable in our society.
That might be the DWP’s position, but it would be highly unusual if it was the argument of Citizens Advice Scotland, the Govan Law Centre and the Child Poverty Action Group that we should have a harsher regime for poor and vulnerable people in Scotland. I find that very difficult to believe.
Mike Dailly and other consultees have expressed their views. This is a complex, nuanced matter on which there are different shades of opinion. However, there is no question but that the consultation process resulted in the view being expressed that removal of the exception would cause greater hardship. I repeat that we are talking about a series of balancing exercises, as the DPLR Committee and the SLC are aware, and the Scottish Government is satisfied that the right balance has been—
Will the Solicitor General take an intervention?
I must press on.
I turn to an issue that Daniel Johnson and Tom Arthur mentioned, and of which Alison Harris gave a helpful explanation—discoverability and joint and several liability. The Scottish Government consulted the SLC on joint and several liability, the law on which the bill will not change.
I am heartened to hear universal approval of the clarity that the proposed new discoverability test will bring. The test will improve the position of creditors generally in relation to latent damages. It is significant that Brodies LLP, in its submission to the committee, was clear in its view that
“the reform of s11(3)”—
of the 1973 act—
“will be welcomed since it clarifies the essential facts which a party must be aware of before a 5 year prescriptive period starts to run in respect of an obligation to pay damages.”
The bill remedies a defect that Morrison v ICL Plastics brought about, and I am heartened by the consensus across the chamber that that is to be welcomed.
There are many more issues in this technical but fascinating bill. I simply thank members again for their speeches in the debate. It is clear that many if not all members support the general principles of this important bill: to provide fairness, clarity and certainty to those areas of the law of negative prescription that have caused practical difficulties in its operation.
The bill is an opportunity for this Parliament to protect those who have a claim from running out of time in which to proceed with it, to change the current situation of possible perpetual liability to claims, including for those who have historical council tax debt, and to make clearer which obligations prescribe after five years.