31 Legal Change and Scots Private Law

JOE THOMSON (GLASGOW)

INTRODUCTION

The genesis of this paper is unusual, but not perhaps untypical of the dedicatee of this Festschrift. In 1992, I was visiting Alan in Athens when early one morn­ing he announced at breakfast that I was to take his comparative law class later that day.

LEGISLATION AND LEGAL CHANGE

At the outset, I must clarify the parameters of the discussion. From the nine­teenth century onwards, successive governments have endeavoured to imple­ment social and economic policies through legislation. Typical areas are education, health, housing, labour relations and taxation. There is no doubt that this legislation originates from a political agenda and to that extent, at least, reflects economic and social policies.

Instead, my concern is with legislative reform of Scots private law. The last twenty years have, for example, seen a total transformation of Scots family law. The catalyst for change has been the Scottish Law Commission: its reforms have been implemented by legislation.^[952] The work of the Commission displays the hallmarks of thorough research into the current rules of Scots law (and their per­ceived deficiencies), extensive study of the relevant comparative law and con­sultation with interested parties. At the end of the day, however, the Commission has sought the “best” rules, regardless of their origins and “fit” with pre-existing, legal principles.

To give some examples. Since the end of the nineteenth century, Scots law has had a system of separate property for husbands and wives.^[953] As a consequence, a spouse who did not own the matrimonial home had no right to occupy the house.^[954] Because of the limited role of equity in Scots law, even a spouse who had contributed directly or indirectly to the acquisition of the property, did not acquire any proprietary interest in the house and could still be excluded by the owner.^[955] All this changed as a result of the Matrimonial Homes (Family Protection) (Scotland) Act 1981, which gave a spouse who did not own the mat­rimonial home (the non-entitled spouse), a statutory right to occupy the premises.^[956] This statutory right of occupation cannot be prejudiced by the owner’s (the entitled spouse) dealings with the property.^[957] In other words, a third party who purchases the property from the entitled spouse, prima facie takes it subject to the non-entitled spouse’s statutory right of occupation. Moreover, the statutory right of occupation does not need—indeed, cannot—be registered in the Land Register of Scotland or the Register of Sasines.

My second example is concerned with financial provision on divorce. Section 9(1)(a) of the Family (Scotland) Act 1985 provides that matrimonial property is to be subject to fair division: prima facie fair division is equal division of the matrimonial property.^[961] Matrimonial property consists of all the property acquired by either or both of the parties during the marriage other than by way of gift or succession from a third party.^[962] This form of deferred community of acquests is, of course, inconsistent with Scots common law which, as we have seen, is based on a system of separate property. The property rules, so carefully learned and nurtured by practitioners, become quite irrelevant when a couple divorce. It is not surprising that the profession has required time to adjust to the new regime. More worryingly, perhaps, the courts have on occasion departed from the literal meaning of the statutory provisions to allow certain items of property to be excluded from the concept of matrimonial property which is sub­ject to fair division.^[963] More recently, it appears that the law has begun to “set­tle” as the profession has accommodated the new regime.

My third example is the Age of Legal Capacity (Scotland) Act 1991. Before this enactment, the law relating to legal capacity of children was—in terminol­ogy, at least—a last output of the civil law. We divided children into two classes, pupils^[965] and minors.^[966] Pupils had no legal capacity; any legal transaction had to be carried out on their behalf by their tutor, who was usually their parent. However, such a transaction could be reduced vis-a-vis a third party on the grounds of minority and lesion. Minors had legal capacity. But their contracts were only valid if they had obtained the consent of their curator, who was usually their parent. Once again there was the possibility of reduction on the grounds of minority and lesion but this action did not apply to certain contracts, for example, contracts made in the course of the minor’s business. However, on reaching minority, the curator had no power in respect of the person of the child who could, for example, marry¹⁶ or consent to medical treatment without the curator’s agreement. Minors in Scots law had therefore considerable freedom to determine their own lifestyles.

In spite of the absence of modern litigation,¹⁷ the Scottish Law Commission took the view that the law was anachronistic and a new regime was introduced by the 1991 Act. The Romanistic terminology was swept away, and a new dis­tinction was made between children below the age of sixteen and young people between the ages of sixteen and eighteen. Children below the age of sixteen have no active legal capacity¹⁸ and any purported legal transaction is null.¹⁹ It is envisaged that the child’s legal representative, who will usually be a parent, will enter into any transactions on the child’s behalf. But in contrast to the previous law, such a transaction cannot be reduced vis-a-vis a third party as the action of reduction on the grounds of minority and lesion is abolished.²⁰ There are, how­ever, a large number of exceptions to the general rule of no legal capacity until the age of sixteen. The most important of these are as follows: the capacity to enter legal transactions of a kind commonly entered into by persons of the child’s age and circumstances, provided the terms of the contract are not unrea- sonable;²¹ the right to test at the age of twelve or over;²² the right to consent to an adoption order or order freeing a child for adoption when the child is twelve or over;²³ the right to consent to medical treatment if the doctor considers that a child below the age of sixteen understands the nature and possible conse­quences of the procedure;²⁴ and the capacity of a parent under the age of sixteen to exercise parental responsibilities and rights.²⁵

When a young person is between sixteen and eighteen, in spite of having full legal capacity, the court has the power to reduce any transaction entered into during that period until the young person is twenty-one, on the grounds that it is a prejudicial transaction.²⁶ Reflecting the previous law, however, certain transactions cannot be set aside, such as those entered into in the course of a young person’s business²⁷ or previously ratified by a court.²⁸

¹⁶ The minimum age to marry in Scots law was, however, raised to the age of 16 for both sexes by the Age of Marriage Act 1929, a piece of UK legislation.

¹⁷ Or because of its absence?

¹⁸ Age of Legal Capacity (Scotland) Act 1991, s. 1(1)(a).

¹⁹ Ibid. s. 2(5).

²⁰ Ibid. s. 1(5).

²¹ Ibid. s. 2(1)(a) and (b).

²² Ibid. s. 2(2).

²³ Ibid. s. 3(2).

²⁴ Ibid. s. 2(4).

²⁵ Ibid. s. 1(3)(g), as amended by the Children (Scotland) Act 1995, Sch. 4, para. 53(2)(b).

²⁶ Age of Legal Capacity (Scotland) Act 1991, s. 3(1).

²⁷ Ibid. s. 3(3)(f).

²⁸ Ibid. s. 3(3)(j).

Several points should be made. First, the new law is as complex, if not more so, than the old. Law reform should surely simplify the law. Secondly, how is the new law to be disseminated to children, young persons and others? In a small research project carried out in 1993, I discovered that banks and building soci­eties, for example, had no knowledge of the law and operated their own rules in respect of a child or young person opening an account.²⁹ It was even more wor­rying to discover that neither schoolteachers nor the medical profession were even aware of the most basic principles. Moreover, since sixteen was now the relevant age, young people who were minors under the old law saw their rights in respect of personal autonomy restricted under the new regime. Given this sit­uation, the absence of any litigation under the 1991 Act is not surprising.

While the 1991 Act contains exceptions to the general principle of absence of legal capacity until the age of sixteen, further exceptions have arisen as a result of other statutes. The Child Support Act 1991, which was enacted in the same session as the Age of Legal Capacity (Scotland) Act 1991,³0 provides that a child aged twelve or more can, in Scotland, apply on his or her own behalf for a main­tenance assessment.³¹ The Age of Legal Capacity (Scotland) Act 1991 has itself been amended to allow children below the age of sixteen to have capacity to consult a solicitor and pursue civil litigation: when a child is twelve or over, such capacity is to be presumed.³² Moreover, a major policy of the Children (Scotland) Act 1995 is to give children the opportunity to express their views when a parent or court or children’s hearing are making a decision in respect of them.³³ There is a presumption that a child of twelve or over is of sufficient age and maturity to form a view.³⁴ Furthermore, a remarkable provision expressly enacts that a mother whatever age she may be can agree that the father of an ille­gitimate child should have parental responsibilities and rights!³⁵

In my view, these developments undermine the general principle introduced by the 1991 Act that the age of legal capacity should be sixteen. Certainly, the changes introduced by the Children (Scotland) Act 1995 pay no attention to that principle. In short, the law on legal capacity of children and young persons in Scots law is overly complex and unprincipled. But, since it is to be found in the statute book, it is the law—even if clearly out of step with other conflicting social policies which have also been implemented by legislation. A simple solu­tion would have been to enact that the age of minority was twelve for both sexes and continued with the previous regime. The point, however, is that in Scotland today, legal change occurs without any apparent concern about how the new law “fits” not only with existing common law but even recent legislative reforms.

²⁹ Some Scottish institutions appeared to apply English law!

³⁰ The Child Support Act is ch. 48; the Age of Legal Capacity (Scotland) Act is ch. 50.

³¹ Child Support Act 1991, s. 7.

³² See s. 2(4A) and (5A), inserted by the Children (Scotland) Act 1995, Sch. 4, para. 53(3).

³³ Children (Scotland) Act 1995, ss. 6(1), 11(7) and 16(2).

³⁴ Ibid. ss. 6(1), 11(10) and 16(2).

³⁵ Ibid. s. 4.

I have chosen these examples from family law for several reasons. First, I can claim some expertise in the area. Secondly, it is often assumed by comparative lawyers and legal theorists that family law is closely intertwined with the cul­tural values of a particular society: in other words, family law par excellence reflects the mores of the society that the law purports to regulate. It therefore is the least receptive area for legal transplants. Whatever was the position in the past, it is the present writer’s contention that this is evidently not the case in modern Scots law. While there may be resistance from the professions to imple­menting legal change, reform of family law will become effective when the legal culture absorbs the new rules, albeit that these may be inconsistent with exist­ing legal principles. On the other hand, some reforms, as, in my view, the Age of Legal Capacity (Scotland) Act 1991, are unlikely to flourish. This is not because of lack of fit with the principles of the legal system, but because the rules are of little relevance in practice—and therefore rarely used—and have largely been overtaken by later legal change. The seed of the 1991 Act, has, as it were, been strangled by the tares of indifference (or ignorance) and the thistles of fur­ther reforming legislation.

Nevertheless, the thrust of my thesis is that legal change through legislation can occur even where the new rules bear little or no relationship to existing legal principles. Moreover, perhaps after a considerable time lag, during which the new regime is absorbed into the legal culture, they can become effective law in practice.

For example, in Carse v. Coppen the Inner House vociferously rejected the concept of a floating charge: “it is clear in principle and amply supported by authority that a floating charge is utterly repugnant to the principles of Scots law and is not recognised by us as creating a security at all”.^[967] Floating charges were, however, introduced by statute in 1961.^[968] For thirty years, the legislation proved relatively uncontroversial. The clash with fundamental principles of Scots prop­erty law eventually came in 1992.^[969] A company had sold a house and had deliv­ered a disposition to the purchasers. Before the disposition was registered, the floating charge crystallized. Under the statute, the floating charge attaches to all the company’s “property... comprised in its property and undertaking” as if it was a fixed security.^[970] It is a cardinal principle of the Scots law of property that a purchaser does not have a real right in respect of heritage until the disposition is registered. Unlike English law, Scots law does not treat the purchaser in these circumstances as having an equitable title to the property nor will it impose a constructive trust for the purchaser’s benefit. The Inner House held that, since registration had not taken place, the ownership of the property remained with the company and the floating charge attached to it. This was in spite of the fact that the purchasers had paid the price. The effect was that the purchasers were left as unsecured creditors. The injustice of this is obvious.

The House of Lords reversed the decision of the Inner House. While recog­nizing that a real right is only created by registration, their Lordships argued that the issue before them was the meaning of “property” in the relevant statu­tory provisions. In this context, they held that the floating charge attached only to property in which the company had a beneficial interest at the time of crys­tallization. The mere fact that the recorded title was still in the name of the com­pany was not sufficient for the house to be treated as part of its “property and undertaking”.

This cause celebre is important for our understanding of legal transplants. Because of the perceived needs of modern corporate finance, the floating charge was introduced into Scots law, although it was a concept totally alien to the law of Scotland. The transplant took. When a conflict arose, the courts were able to resolve the difficulty by purposive construction of the statutory provisions rather than strict adherence to established legal principle. The ingenuity of the House of Lords was such that this was done without atomizing^[971] the unitary nature of the concept of property in Scots private law. Legal systems can nurture the strangest cuckoos without jettisoning other beloved fledglings.

Because Scots law has historically been adept at receiving legal rules from numerous sources, such as feudal law, canon law, civil law (ius commune) and English law, there appears to be little difficulty in absorbing EU directives. As I have argued, it does not matter whether a legal transplant contains new con­cepts and rests uneasily with established legal principles. One example must suf­fice. Part I of the Consumer Protection Act 1987 purports to implement EC Directive 85/374/EEC. As is well known, this statute introduces a regime of strict liability for personal injury or damage to consumer property as a result of defec­tive products. The concept of strict liability is, however, rarely found in Scots common law where delictual obligations arise from the concept of culpa, that is the defender’s fault.^[972] It would appear that this doctrinal difference has not caused any difficulty in receiving the 1987 Act into contemporary legal culture. There has as yet been no reported Scottish decision on the construction of the 1987 Act. Do years of silence indicate success or failure? (Or, perhaps, does it show that products are not so defective as we were led to believe?) Whatever the reason, the vast commentaries on the Directive and the 1987 legislation have proved to be of academic interest only: rarely in the field of legal scholarship has so much been written by so many to so little effect in practice.

We have been considering legal change through legislation. It has been argued that this has been achieved in Scots private law even where the new law is totally alien to existing principles and doctrine. Legal conservatism can sometimes hinder de facto implementation of the law, but even so the new rules will in time become integrated into the legal culture. Even where a conflict arises, judicial imagination can resolve the issue. Legal systems are more like sponges than we might think. The result may not be doctrinally elegant, but modern private law defies systemization when change occurs through a deluge of legislation. This may not be the case in relation to the other medium of legal change, judicial innovation. It is to this issue that I now turn.

LEGAL CHANGE AND JUDICIAL INNOVATION

In a stimulating paper,^[973] Lord Rodger of Earlsferry argued that no assessment of law reform could validly be made without taking into account the contribu­tion of the judiciary. There he maintained that many important legal reforms were achieved not by legislation but by judicial law-making. In other words, legal change occurs as a result of judicial willingness—and ability—to innovate. In most cases, however, the scope for judicial creativity is limited. Judges are, for example, generally confined within the arguments of counsel, a point often forgotten by critical academic commentators. Their primary duty is to give a decision in a particular case: the parties are, after all, paying expenses to resolve their litigation, not to lay down new legal principles.^[974] More importantly, in contrast to legal change through legislation, there must be doctrinal fit between the decision and existing rules and principles. Nevertheless, there are leading cases where the courts either forge disparate rules into principle or reformulate principles into even broader intellectual concepts that are sufficiently dynamic to extend the frontiers of the law.

For a Scots lawyer, the classic example of such a case is Donoghue v. Stevenson.^[975] The speeches of Lord Atkin and Lord MacMillan, in which they articulated the neighbourhood principle as the criterion for the imposition of a duty of care, opened the way for the extension of the boundaries of delictual lia­bility. (Scots lawyers cannot, however, argue that Donoghue represents the hall­mark of a system based on principle, as Mrs Donoghue lost in both the Outer and Inner Houses of the Court of Session!)^[976] It remains to be seen whether the criteria for the imposition of a duty of care to prevent pure economic loss laid down in Henderson v. Merrett Syndicates^[977] are destined to become as important as the neighbourhood principle.

In discussing the issues involved in legal change through judicial innovation, I shall distinguish civil and criminal cases. As far as civil law is concerned, my example will be taken from the Scots law of unjustified enrichment. The case of Morgan Guaranty Trust Co of New York v. Lothian Regional Council arose as a result of a finding that local authorities had acted ultra vires their statutory powers in engaging in “swaps” transactions.^[978] The pursuer sought repetition (recovery) of the sums paid to the defender on the basis of unjustified enrich­ment. In Scots law, the action to recover monies paid under error is the condic­tio indebiti, reflecting, of course, the civilian legal tradition.^[979] The defender argued that the action failed in limine since the money had been transferred under an error of law, that is, the extent of the local authority’s statutory pow­ers.

At the time of the action, it might appear that this defence was sound. Although its reasoning can be criticised, in Glasgow Corporation v. Lord Advocate the First Division of the Inner House of the Court of Session had held in 1959 that the distinction between error of law and error of fact had been transplanted from England and was part of Scots law.^[980] This decision was con­firmed fifteen years later in Taylor v. Wilson’s Trustees.^[981] In explaining his view that the condictio indebiti was restricted to cases of an excusable error of fact, Lord Cameron observed:

“Whatever may have been regarded as the law of Scotland in the days of the institu­tional writers, assimilation to the law of England as that developed in the eighteenth century, a process which began with the judgments of Lord Brougham in the case of Wilson & McLellan v. Sinclair and Dixon v. Monkland Canal Co. is now authorita­tively completed by the judgments in Glasgow Corporation v. Lord Advocate” (emphasis added).^[982]

But, of course, since 1975 the law of unjustified enrichment has been trans­formed south of the border. In Woolwich Equitable Building Soc. v. IRC, the House of Lords recognized the right under general principles of unjustified enrichment to recover monies paid in response to an unlawful tax demand.^[983] Although not the central issue in the case, the majority considered that there was little, if any, merit in the error of law defence. Moreover, in Scotland itself, judges as well as the Scottish Law Commission considered the law to be unsat- isfactory.^[984]

Nonetheless, in Morgan Guaranty Trust, the judge at first instance dutifully followed the two Inner House precedents, which were, of course, binding upon him.^[985] A bench of five judges heard the case when it was reclaimed to the Inner House. After an exhaustive citation of authority, including academic writings, the Court found for the appellants. The Court did not simply say that an error of law should no longer be a bar to the condictio indebiti. Instead, it relied on the written pleadings before the whole Court of Session in the early case of Stirling v. Earl of Lauderdale,^[986] and held that it was a well established principle of Scots law in 1773 that error of law was not per se a defence to an action of repetition. Accordingly in Glasgow Corporation v. Lord Advocate^[987] and Taylor v. Wilson’s Trs,^[988] both Divisions of the Inner House had erred in recognizing such a defence. The Lord President (Hope) concluded:

“I think that the error of law rule has no solid foundation in principle and I consider that the court in Stirling v. Earl of Lauderdale reached a sound decision on this point. In my opinion the decisions in Glasgow Corporation v. Lord Advocate and Taylor v. Wilson’s Trs should now be overruled.”^[989]

This decision has generally been welcomed as removing an unprincipled and inequitable rule from the Scots law of unjustified enrichment—a rule based on expediency rather than equity.^[990] It should be noted, however, that while an error of law no longer bars the action in limine, the defender can still rely on the nature of the pursuer’s error as one of the circumstances that might render resti­tution inequitable in a particular case.^[991] The important point, of course, is that whatever they said, the judges in Morgan Guaranty did change Scots law. Yet, even in a case where change could be anticipated (and welcomed), the judges adopt the remarkable argument that they are not changing the law. Instead, they claim to be simply returning to a “well established” principle of Scots law from which earlier judges had departed in a misconceived attempt to assimilate Scots and English law. In other words, legal change must be shown to have doctrinal “fit” even if that change is so fundamental that it involves overruling two rela­tively recent prima facie binding precedents.

It would, perhaps, be an over-statement to argue that Morgan Guaranty is an “abuse” of the rule of law or to weep too long over a local authority’s failure to retain large sums that it should never have had in the first place. Moreover, if the Inner House had not allowed the appeal, there was every likelihood that the House of Lords would have done so.^[992] As it was, the pursuer was at least saved the inconvenience and cost of a subsequent appeal and the council tax payer had the privilege of paying for the return of the Scots law on repetition to its civilian roots.

Matters are different when we consider legal change by judicial innovation in criminal cases. One of the most remarkable features of Scots criminal law is that all the major crimes (such as murder, culpable homicide, rape, and theft) are common law offences. Moreover, some crimes, for example, breach of the peace and shameless indecency, are amorphous: and the Scottish courts have had lit­tle hesitation in adapting them to novel situations, thus extending the scope of criminal liability. Not only is legal change achieved through judicial means but, of course, the change has retrospective effect so far as the accused is con­cerned.^[993]

In S v. H. M. Advocate,^[994] for example, the High Court of Justiciary held that the rule that a husband could not be guilty of raping his wife when she was liv­ing with him was anachronistic and should be abandoned:

“Nowadays it cannot seriously be maintained that by marriage a wife submits herself irrevocably to sexual intercourse [with her husband] in all circumstances. It cannot be affirmed nowadays, whatever the position may have been in earlier centuries, that it is an incident of modern marriage that a wife consents to intercourse obtained only by force. There is no doubt that a wife does not consent to assault upon her person and there is no plausible justification for saying today that she nevertheless is to be taken to consent to intercourse by assault.”^[995]

While few would disagree with these sentiments the question remains whether such legal change should be introduced retrospectively.^[996]

Another example is provided by the crime of causing culpable and reckless injury. The nineteenth century cases were concerned with reckless administra­tion of dangerous substances such as alcohol^[997] and drugs^[998] to young children. In Khaliq v. H. M. Advocate,^[999] the High Court of Justiciary held that this crime encompassed the supply of glue-sniffing kits to children, with the knowledge that they would abuse the substance. The Court refused to accept that there was any distinction between supply with knowledge of likely abuse and actual administration of a dangerous substance to a child. In particular, the court refused to accept that a child’s voluntary act in sniffing the glue was a novus actus interveniens that broke the chain of causation. The media hailed this deci­sion as illustrating the rational strength of Scots criminal law. Less happy were the accused who only continued to sell the kits after receiving legal advice that they were not committing an offence in doing so: initially, they were sentenced to three years’ imprisonment. In spite of its logical infelicities, the case can per­haps be justified as a judicial response to blatant abuse of children. Ulhaq v. H. M. Advocate followed Khaliq, however, without any discussion of its inherent difficulties in relation to causation.^[1000] This was a case of the sale of glue to an adult “victim”. The inroads these decisions have made into the doctrine of cau­sation culminated in Lord Advocate’s Reference (No. 1 of l994),^[1001] when the High Court of Justiciary held that a supplier of drugs, which the victim admin­istered herself, was guilty of culpable homicide when she overdosed and died. Again, this decision was considered by the media to be a “breakthrough” in the battle against drug abuse.

A final example. All shamelessly indecent conduct is criminal in Scotland. Often there is no need for the generic crime to be charged, as the conduct will constitute a specific crime, for example, indecent exposure or homosexual behaviour.^[1002] In Watt v. Annan,^[1003] however, the generic offence was used to pros­ecute a person for showing an obscene film to adults in a private room in a hotel. It has subsequently been used to criminalize sexual behaviour between a man and his daughter, albeit that the behaviour was between consensual adults in private and, as it did not involve sexual intercourse, did not constitute incest.^[1004] Similarly, consensual intercourse between a girl of sixteen and her foster-parent has been held to be shameless indecency even although Parliament has declined to make such behaviour a statutory offence.^[1005] The crime is deliberately impre­cise: it is not the indecency of the conduct that makes it criminal but the quality of the shamelessness.^[1006] In this way the court can criminalize conduct which the judiciary considers to be repugnant to society.

I have emphasized that these examples of judicial law-making have generally met with public—or, at least, media—approval. Indeed, it can be argued that they illustrate the value of judicial discretion to achieve substantive justice. But as John Tasioulas has observed, there is a price to be paid:

“Augmenting the strict requirements of criminal law through a retrospective exercise of discretion in order to better achieve substantive justice violates the principle that criminal liability and sanctions should be imposed in accordance with clear and deter­minate laws declared in advance to those subject to them (nulla poena sine lege).”^[1007]

It is ironic that while judicial innovation in Scots criminal law attempts to fur­ther values inherent in contemporary Scottish society, there is a conflict with fundamental constitutional principles in so doing.

CONCLUSION

This chapter was an attempt to explore the nature of legal change in one mod­ern legal system, that of Scotland. We have restricted the discussion to change in private law, including criminal law. While judicial innovation in criminal law purports to reflect contemporary societal values, this is not the case in private law generally. Judicial innovation in private law will usually be justified by resort to existing legal doctrine, but this can sometimes be little more than a fic­tion. In Scotland, legal change is now largely achieved through legislation. A major theme of this chapter is that statutory rules do not have to be consistent with established legal principle to be transplanted successfully. The ability of a legal system to absorb new rules—regardless of their genesis—cannot be over­estimated. The danger of what has been described as legal drift is largely a fig­ment of the academic imagination.^[1008] Doctrinal purity has never been a feature of Scots law, whatever those with nationalist sentiments may feel.

Watson’s pioneering work on comparative law and legal theory enabled me to ask the questions discussed in this chapter:^[1009] it is no reflection on the teacher if his pupil’s efforts only begin to explore the fascinating phenomenon of legal change in Scots private law.