Convention compatibility of adjudication for debt

3 February 2011

The case of Hull v Campbell [2011] CSOH 24 is, in the words of Lord Turnbull "an action which arose out of a remarkable set of facts, concerns a remedy unheard of in modern times and concluded in quite surprising circumstances..."

The case was about the diligence of adjudication for debt.  Lord Turnbull summarises this diligence as follows "Following on the grant of a decree for payment a creditor may raise an action for adjudication, which is an action directed at the debtor's specified heritable property. A decree of adjudication operates as a judicial heritable security over the subjects adjudged and prevents the owner from disposing of them in any fashion. The debtor may redeem the security at any time but if after ten years the debt is still unpaid the creditor can convert his security into a title to the property by an action of "expiry of the legal". A decree of declarator of expiry of the legal is understood to have the effect of conveying the subjects adjudged to the creditor".

The case was an action for declarator of expiry of the legal.  The creditor sought the whole subjects adjudged.  Those subjects were the debtor's house where he lived with his wife.  The house was worth more than the debt due.  The debtor conceded that the creditor was entitled to the value of the debt with interest, but not the excess of the value of the house above that sum.    The creditor argued he was entitled to declarator for the whole value of the house, even though that would not be compatible with the Convention right to property under Article 1 of Protocol 1 as not achieving a fair balance.   The creditor's analysis gave rise to an issue about whether old Scots Acts of 1469, 1661 and 1672 were contrary to the Human Rights Act 1998. 

The Lord Advocate intervened due to the potential effects on Sections 79-81 of the Bankrupcy and Diligence (Scotland) Act 2007.  She, as well as the debtor, argued that the diligence of adjudication for debt was Convention compatible.  The court agreed, finding it had a discretion as to the remedy it granted, and indicated that it would have granted decree of declarator subject to a requirement that the pursuer account to the defender for any excess over the debt due plus reasonable expenses of sale.  But, bizarrely, the creditor was interested only in all or nothing, and moved for dismissal in the event that the court would not grant declarator for the whole adjudged subjects.  So the court dismissed the action. 

Anna Poole of Axiom Advocates acted for the Lord Advocate.