Scottish Law Commission Report on Moveable Transactions

On 19 December 2017 the Scottish Law Commission published its Report on Moveable Transactions. The Report is in 3 volumes (see Volume 1 (PDF); Volume 2 (PDF); and Volume 3 (PDF)). Volume 3 is in fact a draft Bill, covering what is within the devolved competence of the Scottish Parliament. A news release (PDF) and a summary (PDF) are also available.

This is a huge piece of work and I congratulate Dr Andrew Steven (who led on this law reform project) and everyone else who was involved in it. I won’t regurgitate the various Scottish Law Commission materials here; I will simply commend them to you.

I am taking a bit of a punt in commending all of the material to you, as I have not fully digested it. That which I have read I am thoroughly impressed by. I look forward to further analysis in the coming weeks and months, including in our legislature(s).

The limited comment I will make here relates to my own small involvement in this law reform project. Back in 2011 – before I had even started this blog (I know, right?) – I collaborated with my late colleague Professor David Carey Miller in a response to the initial Scottish Law Commission Discussion Paper. Having this blog now allows for a slightly solipsistic but I hope useful contribution.

Before that, a tangent. I am very sorry that David is not still around for a lot of reasons, but at moments like this I and many others will miss him all the more acutely. I have no doubt he would have brought his great legal mind and his particular specialism in relation to corporeal moveables to bear on this Report in a way that would have either: a) authoritatively endorsed it; or b) politely but oh so effectively offered improvements on it.

Back to my own views on moveable property. It is fair to say land has become more of a specialism of late. That said, I have dabbled with moveables, both in practice and in the academy.

In terms of my practice, I hazily recall one episode where, as an employee in the Capital Projects department of Tods Murray LLP, I played a supporting role to a construction colleague who was trying to offer advice to a client whose subcontractor had brought materials onto its site, whilst that subcontractor had not paid its supplier for those materials. These materials were transferred subject to something known as a retention of title clause. The concept is a simple one: no payment, no transfer of ownership. So the supplier would still own the stuff and could get it back, right? Well, maybe not. Not every day presented me with a scenario that could have been straight from a property law exam, but when I was called over for a blether with my colleague between frantic phone calls this was such a day. The supplier was apparently seeking to collect or indeed collecting the moveables and I was asked whether it could do so. Notwithstanding any land law issues of coming onto someone else’s site (I cannot recall the exact facts as to whether this would have been a helpful matter to raise), the Sale of Goods Act 1979 seemed to present an answer. The goods were – at least arguably – owned by our client. This was because the subcontractor was a “buyer in possession”, and in terms of section 25 of the 1979 Act this meant our client could obtain title even though there was a retention of title clause. This stuff matters and has financial implications. It just so happened that the law favoured our client in this instance, or at least it gave us enough dust to throw up in the air to make self-help remedies that bit less attractive whilst the legalites were being considered more closely. Aside from that specific example, the project finance strand of my practice meant I was also involved periodically with attempts to secure moveable property, particularly incorporeal moveable property. Suffice it to say, it is generally thought to be easier to assign claims (debts) in security under English law than Scots law, and let’s not even get started on share “pledges” in Scots law. This stuff matters too. Such perceptions (fair or otherwise) and actual legal formalities contribute to whether or not Scotland is a place where people want to do business. All of this is why the work of the Scottish Law Commission is so important.

In terms of my academic output, in the noughties I was fortunate to be part of a team of writers including David Carey Miller, Andrew Steven and Scott Wortley as we contributed a report in Scots property law to a comparative European project. (I was also fortunate to have been taught by Scott as an undergraduate the University of Strathclyde – to say I had imposter syndrome amongst this company would be an understatement.) This was published by Sellier in 2009, alongside reports for England and Wales, Cyprus and Ireland. Some of my other publications have touched on moveable property, and of course moveable property features in the content of property law courses for the Scottish LLB. And there was the response to the Discussion Paper itself.

As for David’s academic credentials, you don’t need to look any further than his book on Corporeal Moveables in Scots Law (of which there are two editions, the second with David Irvine). If you do happen to look further, you will find plenty more scholarly output in the form of his articles and chapters on the topic.

Credentials aside, the more important issue is what we said in our response. So what did David and I say? I confess, I had to look at the Report to remind myself: a word search for “Aberdeen” will either reveal what we contributed or what my colleague the insolvency specialist Donna McKenzie Skene offered. For anyone interested, conducting a search might be a better way to gauge what we said that was suitably of note than me re-hashing it here.

Suffice it to say, we were not laughed out of town, which was reassuring, and it is nice to have played a role. In particular, I was happy to see our comments engaged with in relation to (for example) why it would not make sense to tie protection of an acquirer of a moveable from the effect of an existing statutory pledge (that being the name of the proposed new moveable security – see recommendation 72) to delivery of the secured moveable (when delivery plays no role in the transfer of ownership in a sale transaction; for those interested in the legal argument behind this, in our response we highlighted that a possible analogy with the abovementioned section 25 of the Sale of Goods Act 1979 was imperfect – see page 108 of Volume 2). We also got a mention in relation to the possible protection of good faith acquirers of lower value goods, with our suggested figure of £1,000 being latched onto (page 107). It appears Ross Anderson was the only other respondent to propose a figure: in his case, he acknowledged his £5,000 proposal was “arbitrary”. So was our figure, but it is good to know we were in the correct ball-park. Finally, I am also pleased to note my defence of the term “intimation” by analogy with a Church of Scotland intimations sheet made it into the Report and flavoured Recommendation 10.

What next? I am not planning to make any further comment than this blog post, so I await further mulling from other commentators with interest.

There is then the issue of finding legislative time for this matter. I appreciate this is at a premium, with Brexit and all that, but this really is an important matter and it would be a shame for this Report to go the way of (for example) the Report on Succession, which is still largely unimplemented.

Regardless of what happens next, it is fair to say that the Scottish Law Commission has played its part. Hopefully it will be a springboard to legislation. Even if it is not, it stands on its own as a thorough and very welcome piece of scholarship.

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About basedrones

Bachelor of Laws. Scots lawyer working at the University of Aberdeen. English law qualified. Took far too long to write this bio. Blogs on legal issues, with occasional veering into other purportedly intellectual stuff from time to time. Tweets about legal issues, education, law clinics, fitba, music, rogue cell division and not at all about politics at @MalcolmCombe.
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