Appeals against Adjudication of Claims

Introduction

Regular readers will know that we generally receive very few reported decisions on the adjudication of creditor claims from the Scottish Courts. The Sheriff Appeal Court’s recent decision in the case of Speight v the Accountant in Bankruptcy is therefore worth noting.

Decision

Mr Speight had been sequestrated in 2018. The Accountant in Bankruptcy (“AIB”) was appointed trustee and adjudicated creditor claims in June 2020. Mr Speight requested a review but the claims remained unchanged and therefore became confirmed in terms of the Bankruptcy Scotland Act 2016. The decision was intimated to Mr Speight in August 2020. In terms of the 2016 Act Mr Speight had 14 days to challenge the decision by appeal to the Sheriff. He did not do so.

Mr Speight thereafter submitted an appeal to the Sheriff in relation to the adjudications in August 2022, almost 2 years after the statutory deadline. He contended that bereavement in his family, and good grounds of challenge, meant that the Court should allow the Appeal to proceed. The Sheriff dismissed the Appeal as incompetent, being out of time.

Mr Speight appealed to the Sheriff Appeal Court. The Appeal Court disagreed with Mr Speight that the Appeal being warranted meant an acceptance of competence by the Sheriff; the Sheriff did the right thing in allowing the appeal to be warranted in the first instance. The Appeal Court did accept Mr Speight’s argument that s.211 of the 2016 Act gave the Court the discretion to waive the time limit for the appeal (this is the section that allows a waiver for failure to comply with the act). However, the Court noted that “the late opening claims would undermine the trustee’s statutory function. If the statutory deadlines were vulnerable..it would mean endless uncertainty.” The Appeal Court noted that the s.211 point had not been argued before the Sheriff. The Appeal Court indicated that even if they had been considering s.211 of the 2016 Act they would not have allowed the Appeal to be lodged late; the delay had been inordinate and there was no good explanation for it.

Comment

This is a decision worth noting for IP’s. On the one hand it is slightly concerning that adjudication appeals could be attempted late with s.211 invoked. On the other hand, the Appeal Court has given strong guidance that an inordinate delay and the interests of the trustee discharging their functions will be keys issues for the Court to consider when deciding whether to exercise discretion. If a late appeal is made trustees should take advice.

 

 

 

BBM Solicitors specialise in advising IP’s in both contentious and non-contentious matters (including transactional work). Contact: Eric Baijal (emb@bbmsolicitors.co.uk).This briefing note is current as at 1 February 2023 and is our understanding of the position described at that date. Legal advice ought to be taken before relying on its terms (particularly to ensure the law has not changed).