CHAI’s Success Sets the Law Straight on Welfare Benefits and Bank Arrestments

Our in-house housing team (EHAP) has received an honourable mention and thanks from the sheriff in an important decision, which is now authority for welfare claimants in Scotland objecting to an arrestment of their bank account by a debt collector.

EHAP’s involvement in the case arose through attending the twice weekly hearings of Edinburgh sheriff court, to be on hand to assist homeowners facing cases for possession by a mortgage lender or sequestration. During the hearing a case called which grabbed attention because of having advised a colleague on a similar case for a client of another of CHAI’s advice services.

In the sheriff court hearing Mr McKenzie was objecting to having his bank account arrested by Scott & Co. for a debt to City of Edinburgh Council. He had lodged the objection himself, as the process is excluded from any assistance from Legal Aid. In his objection, Mr McKenzie cited the Social Security legislation which provides that welfare benefits are inalienable and cannot be subject to diligence (debt enforcement) by a creditor.

The solicitor for the Council made an argument against Mr McKenzie’s objection, in which they cited a previous court decision. In that, the sheriff had accepted the contention that once welfare benefit was paid into a bank account it ceased to be a benefit payment and became money in a bank account, which could be subject to an arrestment.

During a pause for the sheriff to read the written submissions, the EHAP adviser intervened to offer advice to Mr McKenzie. We brought to his attention that the previous court decision being relied upon by the Council was not authority for their argument, because it had been overturned on appeal. On reconvening, the sheriff asked for further details, and we were able to advise the court that the appeal to the Sheriff Principal had reversed the decision of the sheriff, but that it had not been published in any of the regular law reports. As a result, Mr McKenzie’s case was continued for both parties to make further submissions.

We met with Mr McKenzie to discuss his case and advise on his options. Knowing that the case would include detailed legal pleadings, and that the Council had a large firm of solicitors representing it, we advised Mr McKenzie that we could ask the Faculty of Advocates for assistance. Through their Free Legal Services Unit, charities can ask for help from an advocate willing to work pro bono (voluntarily and unpaid, for the public good). That was the route Mr McKenzie chose and the Faculty came good, with an advocate willing to work on the case.

The case progressed with case conferences with the client and advocate being held online. Further written submissions were made by the advocate and procedural hearings attended. Then an in-person hearing at the sheriff court took place for legal arguments, by which point the City of Edinburgh Council was joined by the Bank of Scotland in opposing our client’s objection to the bank arrestment.

Finally, we received the written decision of Sheriff Corke. In that, the arguments of the Council and the Bank were rejected. The sheriff held that the underlying purpose of Social Security benefits was to provide the beneficiary and any dependants with the basic necessities of life. Further, that the intention of Parliament was that those benefits were for the protection of the person in need and not for the satisfaction of creditors. In doing so, the sheriff endorsed the earlier appeal decision which had gone unreported, and expressed gratitude to EHAP for ensuring that the court was not misled on the previous case law.

The full decision ([2023] SC EDIN 21) is available from the Scottish Courts & Tribunals Service website:
You can read more about this case on the Scottish Legal News website: