Case Comment: Royal Bank of Scotland plc v Wilson & Anor  UKSC 50
01 Wednesday Dec 2010
The intricacies of Scottish conveyancing are unlikely to grip the readers of this blog. So, in this article, the focus is on the unhappy turn of events which confronted the respondent’s counsel at the recent Supreme Court hearing.
To do so requires at least a simple outline of the issue in the appeal. The appellants owed money to the bank. The bank held a security over their house. When the appellants failed to make payments, the bank sent a letter asking for repayment of some or the whole debt. The letter did not mention the security over the house. Without much further ado the bank applied to the Sheriff Court to have the debtors summarily ejected from their home, under section 5 of the Heritable Securities (Scotland) Act 1894, on the grounds that the debtors were in “default” of a condition in the security. The definition of “default” is to be found is the Conveyancing and Feudal Reform (Scotland) Act 1970.
The Ground of Appeal was that the Inner House was wrong when it decided that the letter sent to the debtor amounted to the “formal requisition” required under the 1894 Act to trigger the bank’s entitlement to the drastic remedy of summary ejection.
But, only minutes into the argument in the Supreme Court, Lord Walker asked a question that introduced a new argument for the appellants. The question was not about the adequacy of the purported requisition; what he wanted to know was why, when repayment had been demanded and not made, the creditor had not served a calling-up notice under section 19 of the 1970 Act. Section 19 was couched in mandatory terms. It said that: “Where a creditor … intends to require discharge of the debt … failing that … to exercise any power conferred by the security to sell any subjects … he shall serve a calling-up notice.”
Lord Walker’s question could most comfortably be asked by someone unfamiliar with the orthodox conveyancing practice of treating a failure to pay on demand as a default, or by means of calling-up, at the option of the creditor. The practice treats the “shall” in section 19 as a “may”.
With that intervention, the question in the appeal became when does “shall” mean “may” and when does it mean “must”. At this, the heart of the respondent’s counsel must have sunk. He would have known, there and then, that most of his prepared argument would have to be thrown away. Reports from the front advise that, on both sides, the advocacy was admirable. However, it would be interesting to see in a transcript, of the kind supplied by the US Supreme Court, the twists and turns that the argument took.
In the event, it turns out that, in the context, despite 40 years of contrary practice, and the Inner House decision in Bank of Scotland v Millward (1999 SLT 901), the “shall” does mean “must” and not “may”. This cannot have been a good day for the respondents. It is likely to have to pay the costs in the Supreme Court and expenses below, when all it needed to have done was abandon the action seeking ejection under the 1894 Act and serve a calling-up notice. The Court considered, of course, the fairness of allowing the appeal on the basis of an argument thought up in the course of the hearing. It was thought that the submissions were more that adequate and the appellants would have won in any event. It was better to decide the case on the correct juridical basis.
This case emphasises that those involved in legal drafting should probably avoid using the word “shall”. It would be best to eschew “shall” and use “must” where the drafter means “has a duty to”.