Cabot SPR appeal: A welcome outcome for unsecured lenders in Scotland

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Walker Morris partner Louise Power explains an appeal allowed by the Sheriff Appeal Court which clarifies that the “interventionist and problem-solving approach” required of sheriffs under the new Simple Procedure Rules (SPR) for low value claims [1] does not extend to undefended claims.  The appeal concerned a number of test cases and will be of interest to all those concerned with consumer credit and debt recovery in Scotland.

Undefended SPR claims: test case appeals

The Sheriff Appeal Court (SAC) has published a judgment [2] in three test cases concerning the court’s approach in undefended actions under the SPR.  As from 28 November 2016, the SPR replaced the previous small claims procedure and part of the summary cause procedure in Scotland and are designed to provide a speedy, inexpensive and informal way to resolve disputes where the monetary value does not exceed £5,000.

The SAC allowed appeals by Cabot Financial UK Ltd (Cabot) against decisions to dismiss its undefended actions for payment, ruling that the “interventionist and problem-solving approach” required of sheriffs in the new procedure does not extend to undefended claims.


The SPR were brought in to allow sheriffs to be more proactive in managing lower value cases, provided they adhered to certain principles, including ensuring that unrepresented parties were not unfairly disadvantaged. The result has been that sheriffs have been much more critical of many such claims and some sheriffs have insisted upon further evidence being produced before they would grant a decree, even where the case was entirely undefended.

In this case, Cabot had pursued separate simple procedure claims against the defenders for payment of various sums due under mail order credit agreements. (Each of the individuals had entered into them with another company, JD Williams and Company Limited, which had then assigned all rights in the debts to Cabot.) Cabot claimed that the defenders were each in breach of the original contracts, having failed to pay on demand as agreed.

The claims were undefended, although one defender had sought a time to pay order, and yet all three actions were dismissed in the first instance. The original sheriff had ruled that it was unclear whether Cabot had title to sue and that Cabot’s failure to comply with an “unless order”, made under SPR 8.4 and requiring further information, warranted a dismissal.

The three conjoined appeals were test cases and many within the consumer credit and debt recovery industry in Scotland have awaited the judgment of interest. Apart from the fact that another 17 cases involving similar grounds of appeal have already been “paused” pending the outcome of the Cabot appeals, there are, of course, significant public interest concerns associated with consumer credit generally.  In particular, these cases were especially concerned with the importance of balancing consumer/debtor protection on the one hand, with the need for access to justice for creditors/pursuers on the other.

SAC decision

Allowing the appeals, the SAC ruled that the original sheriff had erred in dismissing Cabot’s claims. The SAC construed the SPR “in accordance with established principles of interpretation” to find, in the absence of clear and unambiguous language to the contrary, that the rules do not alter the existing common law or extend the court’s powers in undefended cases.

The three key practical points to take away from the judgment are:

  1. Where a case is undefended, the sheriff has very limited discretion to refuse to grant a decree and/or to demand production of further evidence;
  2. Discretion will generally only be available to the court where there are manifest issues arising from the pleadings about the competence of the action, jurisdiction or prescription; and
  3. Beyond these three areas, “not much will be required in a debt action” when it is undefended.

WM Comment

In a decision that will be welcomed by lenders pursuing lower value consumer debt in Scotland for its clarity and common sense approach, the SAC has now confirmed that where claims with a value of £5,000 or lower are undefended, the pursuer will need to produce only limited, straightforward evidence in support. In line with the intention originally underlying the SPR, this should facilitate the quicker, less costly and less formal processing of such claims through the court system.


[1] The simple procedure for determining claims with a value of £5,000 or less was introduced by section 72 of the Courts Reform (Scotland) Act 2014 and the SPR) are made by Act of Sederunt (2016 No 200) and have been amended by Act of Sederunt (Rules of the Court of Session 1994 and Sheriff Court Rules Amendment) (No 4) (Simple Procedure) 2016/315.
[2] Cabot v McGregor, Gardner, Brown [2018] SAC Civ 12. The judgment can be accessed here.