May 2017

Are Nurses Turning to Foodbanks?

Are Nurses Turning to Foodbanks?

In last night’s Scottish politics leadership debate, Nurse, Clare Austin, made a strong attack against First Minister, Nicola Sturgeon, on the level of pay nurses are receiving working in the NHS.

Nicola Stugeon, to her credit, sympathised that the 1% pay cap for public sector workers had went on too long. She even explained how her own sister worked in the NHS and often told her how difficult it was for workers in the public sector and particularly the NHS.

However, in the aftermath, 100’s of social media users and journalists began trawling Clare Austin’s social media accounts and began posting photos of her drinking wine, going on holiday and eating out, resulting in them questioning whether what she said about having to turn to foodbanks on occassions was credible.

It made me think. Is there circumstances a Scottish nurse may have to turn to a foodbank? Are there circumstances when someone trying to hold down a job, a house and raise a family may become so desperate they may not have enough to get by some months?

Financial Statement

I, therefore, drafted an income and expenditure for a ficitonal nurse on a gross salary of £30,000 per year, which is a relatively high salary for a nurse. See nurse pay bands here. I don’t know what Clare earns, but some people are posting on the internet she gets £22,500.

My nurse is a single parent, lives in Edinburgh, doesn’t smoke or drink alcohol and needs a reliable car for her shift work and a mobile phone for her and her daughter. She has life and critical illness insurance, and her flat is in band C for council tax (she gets a 25% single person discount), but could easily be in a higher band. She takes her lunches to work and no provision has been made for a pension.

I have not included contents insurance for her property, or her TV licence payments.

Her situation is what I would expect to be typical, but could easily be worse. She has no debts and no payments have been allowed for paying debts, other than a £40 per month banks charges.

At the end of the day, she has £88 per week to survive on  and from this she has to buy for her and her daughter food, clothing, cleaning products for her home, and christmas and birthday presents. It assumes her daughter doesn’t get pocket money and takes her lunches to school with her.

So is it reasonable, to assume such a person may have to turn occassionally to a food bank? What I would say, is its reasonable to assume that each month this woman has to make hard financial decisions, is probably not saving and some months will just not get by. If she has any significant debts, its likely at some point she will be made bankrupt.

INCOME£ per month
Salary net1,973
Tax Credits   173
Child Benefit     88
Total2,234
Expenditure£ per month
Edinburgh Rent (2 bedroom)   702
Council Tax   105
Childcare   433
Travel   200
Mobile     60
Gas/Electricity   150
HP Car   100
Life Insurance (including critical Illness)     60
Bank Charges     40
Total 1850
Disposable Income   384
Disposable Income (weekly)      88
Gratuitous alienation did not breach human rights law

Gratuitous alienation did not breach human rights law

Lord Armstrong has held in a decision dated the 11th May 2017, that the provisions contained in s34 of the Bankruptcy (Scotland) Act 1985, relating to gratuitous alienations, were ECHR compliant.

The Background

Miss Farrell had married Mr Walker in November 2007 and they were subsequently divorced in August 2010. Mr Walker was sequestrated in April 2009. The Accountant in Bankruptcy was appointed the trustee in his sequestration.

Prior to the sequestration, Mr Walker was the sole owner of a property at 1A Beechwood Avenue, Rutherglen, but in December 2007 the property was sold for £435,000. After the mortgage on the property and the costs of sale were deducted, this left Mr Walker with £178,723.82.

Mr Walker then transferred this sum to Miss Farrell. Miss Farrell then purchased a new property using these funds and funds from the sale of her own home for £866,000. The purchase was funded by

  1. The funds transferred to her by Mr Walker as a gift;
  2. £313,000 from the sale of her own property; and
  3. A mortgage of £380,000.

The Pursuer’s Case

The trustee in sequestration sought to challenge the transfer of the funds from Mr Walker to Miss Farrell as a gratuitous alienation under s34 of the Bankruptcy (Scotland) Act 1985 and raised an action for payment of money.

Arguments for the Defender

Miss Farrell did not dispute that the transfer of funds from Mr Walker was a gratuitous alienation. She instead claimed that the statutory defences available in s34(4) did not take into consideration the circumstances of the alienation, or the reasonability or proportionality of making the order on her personal or financial circumstances. She claimed in this regard s34(4) was incompatible with her rights under Articles, 6,8, 14 and Article 1 of the First Protocol of the European Convention of Human Rights.

Article 6 – The Right to a Fair Trial

The court held that Miss Farrell’s complaint that her right to a fair trial was denied was misconceived. Miss Farrell’s complaint was about the fact that s34(4) did not allow her a stateable defence, not that the process itself was unfair.

Article 8 – Right to Respect for Family life and Home

Miss Farrell argued that the effect of the order sought by the pursuer would be that she would have to sell her home and this would constitute an interference in her family life and that of her children. This argument, the court held, was also misconceived. The action was one for payment of money, not for the sale of her home, although if successful it may have resulted in Miss Farrell being sequestrated and her trustee looking to sell her home. However, in that event, Miss Farrell would have access to the defences allowed under s113(2) of the Bankruptcy (Scotland) Act 2016 (formerly S40 of the Bankruptcy (Scotland) Act 1985).

Article 14 – Protection Against Discrimination

The defender also argued s34(4) discriminated against her in that it allowed gratuitous alienations, made for the benefit of associates, to be challenged where they occurred within five years of the date of sequestration, rather than for two, where the beneficiary was not an associate. The court dismissed this argument as although Miss Farrell had argued her family had been discriminated against, she failed to specify the basis of the discrimination under any grounds prohibited by Article 14.

In addition, under the circumstances of the cases, the gratuitous alienation had taken place within two years of the debtor’s sequestration, so would have been challengeable even if Miss Farrell had not been an associate.

Article 1, First Protection – Peaceful Enjoyment of Property

Finally, Miss Farrell argued that the order sought would interfere with her peaceful enjoyment of her property, namely her home. Again the court dismissed this argument, as the order sought was for payment of money, not for the sale of the debtor’s home.

The court also held that aims of S34 of the Bankruptcy (Scotland) Act 1985 were legitimate and did strike the correct balance between the interests of the debtor’s creditors and Miss Farrell. It held they were reasonably proportionate to that aim.

Unjustified Enrichment

Interestingly, the Court also held that Miss Farrell would not be able to claim unjustified enrichment or be able to make a claim in the sequestration, if the order sought was granted and payment made, as the transfer of funds were a gift and unjustified enrichment could not be claimed.

The full case can be read here.

Personal Insolvency Seminar

Personal Insolvency Seminar

0 comments

In the last ten years, over 183,000 Scots have been subject to Scotland’s Personal Insolvency Laws. In this seminar, Protected Trust Deeds and Sequestrations will be examined from the perspective of a money adviser

Since 2007, there has been three primary pieces of legislation that have largely dealt with this area of law, not including the consolidation act, the Bankruptcy (Scotland) Act 2016.

In that time, the law and practice relating to sequestration and protected trust deeds has seen substantial change, with a greater emphasis on adminstrative procedure, rather than judicial processes.

However, the courts continue to play a significant role in this area of law.

This one day seminar, is aimed at money advisers and legal practitioners who advise consumers on personal insolvency, before they enter an insolvency process, during those processess and after they have received a discharge.

It focuses on when insolvency is appropriate and when it is not; what form proposals can take and what are the rights and obligations of debtors who have been sequestrated or are party to a protected trust deed.

This seminar will be invaluable for practitioners who wish to gain an insight into the issues that debtors can face and will look at the law and practice that can enable them to negotiate and represent their client’s interests more effectively.

For more information see here.