As we acclimatise to lockdown the courts have recently issued updated guidance on how certain business can now proceed and on what basis you can seek to do so.

The pace at which the impact of the Coronavirus pandemic is evolving means that the situation facing many businesses is constantly changing and even since this article was originally drafted the first virtual sheriff court hearing has taken place in Inverness.

The Scottish Courts and Tribunals Service (SCTS) was initially very limited in what could be progressed and whilst a return to business as usual is not yet possible, parties can now take steps to progress certain business. With regard to civil business (including actions for payment of money), the following changes will take effect.

Court of Session

The Court of Session will now progress certain business as follows:

• The Inner House (primarily dealing with civil appeals from the Outer House) will allow substantive hearings to proceed by way of WebEx video conference or by written submissions.  The Court will now hear appeals and procedural  hearings will proceed as scheduled (preferably by way of written submissions or if required, by way of WebEx video conference).
• The Outer House (primarily dealing with high  those relation to Petition business (including for example, petitions by creditors seeking to wind up a company).  The procedural hearings will be conducted (preferably by teleconference or by written submissions, with the agreement of the Court.  Any parties who had business which was scheduled to call before 21 April 2020 and was cancelled can now apply to have that business rescheduled.

The Courts are now dealing with administrative business electronically.

Urgent matters will be prioritised.

Non-urgent matters are likely to take longer than usual to be progressed due to a backlog of correspondence/limited staff resources.

Substantive hearings which require witnesses will continue to be adjourned for the time being.

Sheriff Court

All Sheriff Court civil business will be consolidated into 10 Sheriff Courts, namely: Glasgow, Edinburgh, Dundee, Falkirk, Inverness, Aberdeen, Kilmarnock, Hamilton and Dumfries.

In addition to the urgent business already being dealt with by the Sheriff Court (including applications for interim interdicts, caveats, urgent corporate insolvency and sequestration applications, urgent applications in relation to Adults with Incapacity and various child protection and support related applications), the following business can now be progressed with effect from 1 May 2020:

• Any ordinary, family and commercial actions; adults with incapacity applications; and corporate insolvency proceedings which were sisted by the Court or administratively adjourned can now be progressed where the Court is satisfied that there is a good reason to do so and where the matter can proceed remotely (with the exception of hearings which require the leading of evidence).
• All Commissary applications (ie. business related to dealing with the estate of a deceased person) including applications for confirmation and petitions for appointment of executor dative.  There will be a delay in the processing of such applications due to reduced staff resources, and presumably, a backlog of business.

In the Sheriff Court, in cases previously suspended, where Parties consider that an action can be progressed remotely and that there is good reason to do so, they may apply to restart the case.

What the changes mean in practice

In practice, the above noted changes are anticipated to have the following effects:

1. New actions for payment of money are not likely to be progressed expediently – and in many cases not at all – in the short term. Where possible, unless there is good reason to progress an action – such as where interim orders are deemed necessary (i.e interim interdict, arrestment or inhibition on the dependence, etc.) – such actions be postponed to a later date.
2. All debt related court hearings in respect of current ‘live’ actions will either be continued for a period of weeks (unless there is good reason to progress or restart the action – see above) or formally put on hold for a period.  It is anticipated that procedural timetables will be adjusted in accordance with the above.
3. Where actions have concluded or interim orders granted, enforcement will continue to be delayed.  This is attributable to the availability of Sheriff Officers/ Messengers-at-Arms to service while they operate at reduced capacity and only undertake urgent and necessary instructions.  Separately, third party arrestments (‘freezing’ orders) or earning arrestments (deductions taken directly from salaries) could be affected by the closure of offices where such orders would usually be served.

How to minimise the reliance on the court system

In light of the above, where possible it is advised that parties consider putting measures in place to avoid the need to rely on the court system at this time.

Such measures may include:

Maintaining lines of communication with creditors/ debtors

Creditors/debtors are encouraged to seek to identify the most appropriate, currently available contacts within organisations/ businesses (or their legal advisors) and open lines of communication via email, telephone or other digital means of communication.

Where invoices, remittance advice or other financial documents require to be issued, this should be done (where possible) by email or other digital means of communication.

Delays in communication are to be expected. Parties are encouraged to adjust their expectations accordingly.

Negotiating payment terms

Cashflow is a major issue for many businesses at this time. Parties are encouraged, where possible, to seek to agree sustainable payment terms, including: deferred payments, payment holidays or instalment payment schedules. Of course, where possible, parties should endeavour to pay invoices timeously and/ or to meet pre-set payment schedules, but where revised terms are sought an early approach is advised.

Recently published government procurement guidelines indicate that businesses supplying goods/ services to the public sector may benefit from new measures to designed to boost cash flow and support businesses until 30 June 2020. Such businesses should make enquiries with their public sector client contacts. Further details are available here.

Alternative Dispute Resolution

Whilst the above noted advice is provided with a view to avoiding disputes, where that is not possible parties should consider Alternative Dispute Resolution (ADR) before reverting to the court system. This will be particularly relevant where contracts are ambiguous when it comes to issues attributable to Covid-19, such as payments for contracts only partly completed or where modifications to contracts are sought.

ADR is wide ranging.  It could take the form of negotiating terms of settlement either directly or via legal representatives; or mediation – which could be done remotely via telephone or video conferencing. Indeed, many mediators have long provided this type of service.

Above all else, parties should focus on good, early communication. They should also consider what reasonable changes they may make to their debt recovery and payment procedures in light of the unprecedented circumstances affecting us all just now.

Lindsays remain ready to guide and support you through any payment disputes affecting you or your business at this time – visit Lindsays COVID-19 support hub for further information and guidance.

Katherine McAlpine,

Senior Solicitor in Dispute Resolution and Litigation at Lindsays

Katherinemcalpine@lindsays.co.uk