Meeting of the Parliament 25 May 2017
I am pleased to have the opportunity to speak in the debate to agree the general principles of the Contract (Third Party Rights) (Scotland) Bill. I am one of the members of the Delegated Powers and Law Reform Committee and, as members have heard, we have taken extensive evidence on this Scottish Law Commission bill in recent months. If anyone has been wondering what we do on a Tuesday morning, they now have some idea.
I echo the opening comments of our convener, John Scott: there are a lot of people to thank. They have been thanked already—I will just add my thanks to them as well.
I am not a lawyer as, I know, many members are, and the matter is very technical, so from the outset I was keen to understand why the bill was required and who would benefit from it. We have had many weeks to consider those points, and as the process has moved forward I have been persuaded of the bill’s merits.
The minister, in her opening remarks, explained that third-party rights are helpful in everyday life and in business, and it is therefore important that Scots law is effective and keeps up with society. There is consensus that the current common-law arrangements do not achieve that, and that the bill will provide a welcome remedy; it is good that we all agree on that.
At the Delegated Powers and Law Reform Committee, we explored in written and oral evidence the question of what benefits would be derived in moving from the current common-law position to a statutory footing. We heard that case law is unlikely to develop fast enough to deal with the problems in the law that have been identified. Indeed, the bill team and the Scottish Law Commission have indicated that relying on the common-law position is unsustainable.
Many of the witnesses raised concerns about the legal uncertainty arising from the current common-law approach, and the underlying rationale for introducing the bill is that the current arrangements are simply not fit for purpose. A lack of certainty in the law prevents the use of third-party rights, which leads to a lack of case law, thereby preventing the law from being developed. John Scott quoted David Christie of the Robert Gordon University, who eloquently described that scenario as a “death spiral”.
The evidence overwhelmingly showed that the system needs an upgrade, and the bill therefore seeks to codify the existing law on third-party rights in one easily accessible place, which is a very welcome step.
I contemplated many times during the committee’s deliberations the question of how the bill will be used. If the bill is enacted, will it be a useful law that will be used in the face of competing and well-established workarounds and reliance on English law, as we have heard today?
One of the themes that emerged from our evidence sessions was that the bill’s purpose is to clarify the law in Scotland and, as the policy memorandum states, to
“promote the use of Scots law”.
Scottish Law Commission officials stated during evidence sessions and as part of the SLC’s investigation that lawyers in Scotland are currently applying English law to Scottish contracts, although it was not possible for that to be quantified in any way other than through anecdotal evidence.
In response to questioning on that particular point, Professor Hector MacQueen of the Scottish Law Commission said:
“It is certainly not that we have anything against the use of English law or, indeed, English law generally. It is more a case of where Scots law is not doing the job, it is up to Scottish lawyers, the Scottish Parliament and the Scottish courts, where possible, to do something about that. If one leaves a law in a state that means that nobody uses it, there is something amiss. Our attitude to such matters is just part of the mechanics of society, if you like. People will remain free to use English law if they prefer it, and they might do so. However, it is a pity if the legal system is not working for those who work in it.”—[Official Report, Delegated Powers and Law Reform Committee, 14 March 2017; c 11.]
That captures exceptionally well the principles and the practical aims that underpin the bill.
At the same time, there has been a dose of realism about the bill’s implementation. As we have heard, the experience in England and Wales suggests that it takes time for such legislation to be adopted. It is therefore perhaps to be expected that the bill’s provisions will not necessarily be immediately adopted by the legal profession in Scotland. In fact, we heard that, although legislation on third-party rights has been in place in England and Wales for some time through the Contracts (Rights of Third Parties) Act 1999, there has only recently been an uptake in the use of the act, and even then it appears that, in most cases—in the construction sector, for example—people continue to rely on collateral warranties.
However, witnesses including the Law Society of Scotland and the Royal Incorporation of Architects in Scotland have suggested that the benefits offered by the bill may encourage legal practitioners and their clients to use newly codified legislation. Of course, we in Scotland are not beginning from a standing start.
In terms of fairness and equal access, Dr Ross Anderson of the Faculty of Advocates suggested that the bill might benefit people who do not have the resources to access expensive legal advice. He said:
“One of the great advantages of the bill is that it sets out, in modern language, what the law actually is.”—[Official Report, Delegated Powers and Law Reform Committee, 21 March 2017; c 8.]
We also heard that the use of collateral warranties can be costly, so the bill will have practical benefits in that regard.
I did not think that I would have more to say than the time allows, but I am being encouraged to wrap up by the Presiding Officer.
The bill will be a useful tool for legal practitioners and their clients. No one expects a rapid uptake of the legislation in the short term, but it is important for the reputation of Scots law that it does a good job. I welcome the general principles of the bill.