SHERIFFDOM OF LOTHIAN AND BORDERS AT EDINBURGH

B844/11

Judgement

By

Kathrine EC Mackie, Sheriff of Lothian and Borders, at Edinburgh

In the cause

SANTANDER UK PLC a Company incorporated under the Companies Acts (Company No 2294747) with their Registered Office at 2 Triton Square Regents Place London

Pursuers

Against

DAVID GALLAGHER otherwise DAVID GALLACHER residing at 1 Gilmerton Dykes Grove Gilmerton Edinburgh EH17 8JF

Defender

Edinburgh 26^th July 2011

The Sheriff having resumed consideration of the cause, the calling up notice in terms of section 19(1) of the Conveyancing and Feudal Reform (Scotland) Act 1970 not having been served upon the defender competently, dismisses the Application and finds no expenses due to or by either party.

NOTE

[1]. Warrant to cite was granted on 12^th May 2011 in this Summary Application for orders in terms of section 24 of the Conveyancing and Feudal Reform (Scotland) Act 1970 (the 1970 Act) and section 5 of the Heritable Securities (Scotland) Act 1894. A hearing was fixed to take place on 1^st July 2011. On that date there was no appearance by or on behalf of the defender. The action was continued until 15^th July 2011 to allow the pursuers to produce documentation in support of the Application. On 15^th July 2011 I was addressed by Mr Anderson on behalf of the pursuers.

[2]. It was accepted by Mr Anderson that, as was stated by the late Lord Rodger in Royal Bank of Scotland-v-Wilson 2010 SLT 1227 at paragraph 51, in a case falling within the scope of s19(1) of the 1970 Act a creditor must serve a calling up notice and that the pursuers' case falls within the scope of s19(1).

[3]. The calling up notice in this case was served by Sheriff Officers on 18^th February 2011. The certificate of execution states that service was effected "by depositing said Notice.........within his dwelling place......by means of a letterbox as after I made diligent enquiry I could not find him personally nor anyone to accept service thereof and by posting a like just copy thereof........in a first class envelope....".

[4]. It was submitted by Mr Anderson that the mode of service employed in this case satisfied the requirement of s19(6) of the 1970 Act to make "delivery to the person on whom it is desired to be served". Mr Anderson contended that if Parliament had intended that personal service, as it is commonly understood, was required the word "personally" would have been used. He referred to the unreported decision in Household Mortgage Corporation plc-v-Diggory Peterhead Sheriff Court 29^th November 1996 and 21^st March 1997 considered in Paisley and Cusine's Unreported Property Cases from the Sheriff Court. In that case service of a calling up notice was effected by Recorded Delivery post and a certificate of service was produced. The defender offered to prove that the notice had been received by a neighbour who had not passed it to him. The Sheriff repelled the defender's preliminary plea on the ground that the defender had to do more than simply deny the pursuers' averments to rebut the presumption raised by the ex facie sufficient evidence of service. The Sheriff Principal upheld the Sheriff's decision and said "Where recorded delivery post is used it seems to me that physical delivery to the debtor is not required." Mr Anderson submitted that since the subsection provided alternative modes of service there should be no difference in the standard of notice to the debtor. If physical delivery is not required where recorded delivery post is used it should not be required where "delivery to the person" is used.

[5]. Mr Anderson advised that in practice creditors would instruct Sheriff Officers to serve a calling up notice, that the Officers would make enquiries in order to confirm that the debtor resided at the address provided and, if they were unable to serve the notice personally, the Officers would effect service by depositing it within the property by means of the letterbox. This, it was submitted, was in accordance with the underlying objectives of the "debtor friendly" approach of the Home Owner and Debtor Protection Act 2010. It was a mode of service more likely to bring to the attention of the debtor the critically important terms of the calling up notice.

[6]. In the event that service of the calling up notice by depositing within the debtor's dwelling house by a letterbox did not amount to "delivery to the person" Mr Anderson submitted that in terms of s53(1) of the 1970 Act such service was "as close as may be" to "delivery to the person". Accordingly, he submitted, it was in compliance with the provisions of s19(6). I was referred to a decision in Royal Bank of Scotland-v-Marshall dated 5^th June 1996 also contained in Paisley & Cusine's Unreported Property Cases from the Sheriff Court.

[7]. Despite their detailed guidance through what Lord Rodger called in Royal Bank of Scotland-v-Wilson the maze of the Conveyancing and Feudal Reform (Scotland) Act 1970 their Lordships did not address the provisions of s19(6) and the means whereby a calling up notice may be served. Section 19(6) of the 1970 Act provides:-

"For the purposes of the foregoing provisions of this section, the service of a calling-up notice may be made by delivery to the person on whom it is desired to be served or the notice may be sent by registered post or by the recorded delivery service to him at his last known address, or, in the case of the Lord Advocate, at the Crown Office, Edinburgh, and an acknowledgment, signed by the person on whom service has been made, in conformity with Form C of Schedule 6 to this Act, or, as the case may be, a certificate in conformity with Form D of that Schedule, accompanied by the postal receipt shall be sufficient evidence of the service of that notice; and if the address of the person on whom the notice is desired to be served is not known, or if it is not known whether that person is still alive, or if the packet containing a calling-up notice is returned to the creditor with an intimation that it could not be delivered, that notice shall be sent to the Extractor of the Court of Session, and shall be equivalent to the service of a calling-up notice on the person on whom it is desired to be served."

[8]. In Household Mortgage Corporation-v-Diggory some consideration was given to the terms of s19(6). The case concerned service of a calling up notice by Recorded Delivery post. A certificate of service together with the postal receipt was produced. In terms of s19(6) that was sufficient evidence of service of the notice. As the Sheriff Principal said physical delivery to the debtor was not required where service by Recorded Delivery post was employed. As long as the packet was not returned with intimation that it could not be delivered service was presumed to have been effected. In his submissions to the Sheriff Principal the pursuers' agent's said that s19(6) permitted service to be made by delivery of the notice to the debtor in person, by registered or recorded delivery post at the last known address of the debtor or by notice to the Extractor of the Court of Session. The Sheriff Principal indicated that he agreed with that analysis. He said "Service by "delivery to the person" requires the creditor, by some means, to place the document in the hands of the debtor; on the other hand, notional service by notice to the Extractor of the Court of Session plainly relates to a situation in which a notice is valid even though the debtor knows nothing about it."

[9]. In my opinion the analysis of the terms of s19(6) in Household Mortgage Corporation-v-Diggory is correct although that case was primarily concerned with the question of service by Recorded Delivery post. Different and alternative modes of service are provided for in s19(6). There is nothing unusual about that. Service of court documents may be effected by Recorded Delivery post or by Sheriff Officers. However, alternative modes of service do not, in my opinion, necessarily mean that the outcome need be the same. While service by Recorded Delivery post does not require that the packet be physically delivered to the debtor it does not follow that any alternative mode of service need not involve physical delivery to him.

[10].        In terms of the rules of the Sheriff Court rule 5.3 provides that service of any document may be by recorded delivery. Rule 5.4 provides that service by Sheriff Officers of "an initial writ, decree, charge, warrant or any other order or writ following upon such initial writ or decree served by a sheriff officer on any person shall be served personally or by being left in the hands of a resident at the person's dwelling place or an employee at his place of business". Where such service is unsuccessful a Sheriff Officer "may, after making diligent enquiries, serve the document by depositing it in that person's dwelling place or place of business or by affixing it to the door of that person's dwelling place or place of business".

[11].        Accordingly service of a court document may be by recorded delivery post, which may not involve physical delivery to the party upon service is to be effected, or by Sheriff Officers, personally, which would involve physical delivery to that party. Other methods of service by Sheriff Officers are provided for in rule 5.4, namely, leaving in the hands of a resident or employee or, after making diligent enquiries, by depositing in the party's dwelling house or affixing to the door.

[12].        It was accepted by Mr Anderson that in serving a calling up notice Sheriff Officers were not fulfilling any official function in terms of the Act of Sederunt (Messengers at Arms etc Sheriff Court Rules 1991. Their Official functions are defined in paragraph 14 of the 1991 Rules as, inter alia, "execute a citation or serve any document required under any legal process". In terms of paragraph 15 Sheriff Officers may also carry out "extra official" functions which are defined as including "in the absence of any statutory provision to the contrary, service on a person for remuneration of any notice which is required to be served under any enactment". Service of a calling up notice would seem to be an exercise of an extra official function. The provisions of the rules of court and the modes of service available to Sheriff Officers therein would appear to me to relate only to performance of their official functions.

[13].        I note that in their certificate of execution of service of the calling up notice Sheriff Officers state that "after diligent enquiry I could not find him personally...". However in their certificate of execution of service of this Application Sheriff Officers state that they "deposited....by means of a letterbox as after due enquiry I had reasonable grounds for believing that the defender resides at that particular address, (my emphasis) as I could not find anyone therein to accept service...". The different forms of certificate imply that Sheriff Officers were aware that they were performing different functions.

[14].        The calling up notice is the foundation of the pursuers' application. Accordingly it is important that service of the notice is carried out in accordance with the provisions of s19(6). The issue for the court is the interpretation of the language used in that provision and in particular the words "delivery to the person on whom it is desired to be served".

[15].        I was not directed to any material that may have assisted in identifying the intention of Parliament in the enactment of the provision. In my view the words used mean what they say, namely, that service of the calling up notice may be made by delivering to the person, that is, personally. Nothing in the subsection implies that service may be effected by any of the modes of service specifically provided for in the rules of court. Nothing is said about making diligent enquiries and then leaving the notice within a property. Had Parliament intended that any means of service similar to or the same as that provided for in the service of court documents other language would have been used. It appears to me that what Parliament intended was that the calling up notice was not simply left within a property. If personal service is not effected the creditor is not frustrated in the process. The subsection provides for service upon the Extractor of the Court of Session where the debtor's address is not known or if the Recorded Delivery packet is returned with intimation that it could not be served. Service on the Extractor is equivalent to service on the person.

[16].        The Home Owner and Debtor Protection (Scotland) Act 2010 introduced a number of amendments to the 1970 Act. The purpose of the Act, as is stated in the introduction, is to amend the law regarding the enforcement of standard securities over residential properties. As is clear from the title the intention of Parliament was to give greater protection to debtors in cases such as the present where a heritable creditor is seeking to exercise their rights under a standard security and in particular to recover possession of the subjects with a view to sale. Parliament had the opportunity to review the provisions of s19(6) but did not do so.

[17].        I am reinforced in my view about the meaning of "delivery to the person" by the opinion of Sheriff Principal Risk in Household Mortgage Corporation-v-Diggory. The creditor's agent in that case interpreted the provision as including delivery of the notice to the debtor "in person" an interpretation with which the Sheriff Principal agreed. I also note that in the very informative textbook by Mark Higgins, The Enforcement of Heritable Securities, reference to which was made by Mr Anderson, at paragraph 2.7.1 the author states "Calling up notices may therefore be served either by recorded delivery or personal service under s19(6) of the 1970 Act".

[18].        I did not find the decision in Royal Bank of Scotland-v-Marshall to be of assistance. In that case it was argued unsuccessfully that since the form of the standard security and calling up notice were not precisely in the terms of the statutory provisions they were invalid. They were considered by Sheriff Gordon to be as closely as may be to the requirements of the Act. In my opinion service by depositing within the dwelling house of the debtor by means of a letterbox cannot be considered to conform "as closely as may be" to personal service.

[19].        Since the calling up notice in this case was not served in accordance with the requirements of the 1970 Act this Application is incompetent and falls to be dismissed.