Caveats – The Scottish Early Warning System
Caveats are an ‘early warning system’ peculiar to Scotland. In England, an interim (immediate) court order can be sought without any notice being given to the party against whom the order is sought. But in Scotland, things are a little different.
Caveats can be lodged at the Court of Session and Sheriff Courts on behalf of companies, individuals, firms, partnerships and trusts. They last for one year from the date of lodging and can be renewed on a continuous basis.
Wherever a caveat is lodged in the name of a party, that court must give that party notice of the hearing before any application for an interim court order against that party can be heard (with the exception of court appointments of administrators or receivers).
Without the caveat, no notice of the hearing would be given and there would be no opportunity to oppose the application. In those circumstances, the court order can be granted.
While interim orders can be recalled, the old adage that prevention is better than cure applies as much here as anywhere else. In particular, interim orders can have catastrophic results for the party the order is granted against, even if they are recalled shortly thereafter. For example, a court order prohibiting a business from trading or a person from working for their new employer could result in substantial financial losses to that party.
If a caveat is in place and the application is successfully opposed, not only would that party be saved from having to comply with the court order, it is also cheaper and easier to defend your position at the initial hearing than it is to try and recall the order at a later date.
Why has the Threat of a Sheriff Court Action Increased?
As there is a cost for lodging each caveat, the decision is often taken to rely solely on a Court of Session caveat. However, changes to the court rules introduced last year mean that any action with a value of £100,000 or less must be brought in a Sheriff Court.
In addition, the jurisdiction of the Sheriff Courts was further expanded this week (on 28 November 2016). Now, an interim order granted in one sheriff court can (in suitable circumstances) apply to any other Sheriffdom in Scotland, giving them a wider reach than ever before.
As the costs involved in raising a Sheriff Court action are lower than in the Court of Session, we expect that interim applications in Sheriff Courts will be made far more often. Now, more than ever, it is worth considering whether caveats should be lodged in the Sheriff Courts where an action could realistically be raised. For example:
- the location of any property owned;
- any place in Scotland where you conduct business; or
- the location of your registered office or any other offices or branches.
How Can We Help?
We can arrange for caveats to be lodged at courts throughout Scotland and a solicitor is always on call in case a caveat is triggered. We also employ a free caveat renewal monitoring system, to enable continuous protection (if required).