Chamber and committees

In sections 6 and 29, specific timescales are imposed that require the clerk or the accountant to register a notice of appointment or certificate of termination, recall and discharge within seven days. Those time limits were put in place to ensure that registration was carried out promptly, rather than to prevent registration outwith that seven-day window.

However, having considered the written evidence of the Sheriffs and Summary Sheriffs Association, I think that there is potential for doubt, which could lead to litigation. Given that these are procedurally important steps, it is important to ensure that the clerk of the court and the accountant are not prevented from registering the notices or certificates when that is done outwith the seven-day period.

Accordingly, amendments 5 and 24 remove those time limits from sections 6 and 29. Importantly, those sections still require the clerk of the court and the accountant to send the notices or certificates for registration as soon as is reasonably practical.

I move amendment 5.

Amendment 5 agreed to.

In its stage 1 report, the committee considered registration of notices of appointment of judicial factors in the register of inhibitions, under section 6, and the alternative of creating a stand-alone register of judicial factories.

Amendment 8 gives effect to the committee’s recommendation that the bill should require the Scottish ministers to periodically review the continuing appropriateness of registration of appointments of judicial factors in the register of inhibitions, and it enables the Scottish ministers to give effect to any findings of such reviews. Any regulations under that provision would be subject to the affirmative procedure.

I move amendment 8.

These are minor and technical amendments.

Amendments 14 and 15 are technical amendments that address a point that was raised by the centre for Scots law at the University of Aberdeen in its written evidence. Section 10(7) defines “factory functions” for the purposes of sections 10 and 11, but there is no reference to the “factory functions” as such in section 11. Rather, section 11 makes reference to “standard powers” and

“functions set out in sections 12 to 19”,

both of which fall within the definition of “factory functions”. Amendments 14 and 15 make minor adjustments to correct that.

The definition of “financial assets” in section 13(4) was raised as being an issue by the centre for Scots law and by the Law Society of Scotland. In particular, the Law Society was concerned about the practical effect of trying to decide whether a particular financial asset was of a similar nature to cash accounts or share certificates.

Given that the definition was found to be unhelpful, I have lodged amendment 17 to leave the term “financial assets” undefined. The effect of that is that those words will now be given their ordinary natural meaning.

Section 33 allows for termination of a judicial factory when there are insufficient funds

“to meet the expenses of ...

(a) any formulation by the judicial factor of a scheme”

for distribution of the estate

“(b) the seeking of approval of such a scheme, and

(c) distribution of the factory estate in accordance with such a scheme.”

In written evidence, it was queried whether section 33(1) should have “or” instead of “and” between paragraphs (b) and (c). The issue is whether section 33 should apply only when all three conditions are satisfied or whether it should also apply when only one or two conditions are met. It is considered that there may be circumstances when, for example, there are sufficient funds to formulate a scheme but insufficient funds to seek approval and to distribute the estate. As such, there is value in having greater flexibility, with section 33 covering a wider range of circumstances, and amendment 30 adjusts section 33 accordingly.

On amendment 31, the committee asked me to consider whether the relationship between section 34 and section 38 needs further clarification, and I have given that some thought. Although I do not think that anything should be added to the bill to clarify the relationship between the two provisions, I consider that section 34 can be usefully amended to make it clearer to users of the legislation that it is not only any criminal liability incurred by the judicial factor in the course of their actings as judicial factor that continues after discharge, but also any civil liability connected to the relevant acts or omissions. Amendment 31 makes that change.

Section 43 allows persons with an interest in the factory estate to inspect or obtain copies of certain documents relating to the factory. Those documents are listed in section 43(4). The Law Society has highlighted that the inventory is not specified in section 43(4) and that that differs from the SLC drafting, which refers to the

“inventory, management plan, annual accounts and audit report”

as being open to inspection. The inventory was unintentionally omitted from the bill as introduced, and amendment 37 corrects that. It also adds to the list of documents available for inspection the balance sheet that must be prepared when a replacement judicial factor is appointed.

The word “section” is repeated in section 45(2)(a), and amendment 38 corrects that error.

Finally, amendments 40 to 42 make consequential amendments to the Bankruptcy (Scotland) Act 2016, following written evidence from the centre for Scots law.

I ask members to support the amendments in the group.

I move amendment 14.

Amendment 14 agreed to.

Amendment 15 moved—[Siobhian Brown]—and agreed to.

Section 10, as amended, agreed to.

Schedule 1 agreed to.

Section 11 agreed to.

Section 12—Power of judicial factor to require information

Good morning, convener and colleagues.

Section 1(2) of the bill requires the applicant to intimate an application under section 1(1) to

“every person who, so far as the applicant is able to ascertain after reasonable enquiry, has an interest in the estate.”

In its written evidence, the Faculty of Advocates queried why there was no such requirement in relation to the appointment of a judicial factor in the course of other proceedings under section 1(3). We took the view that such a requirement was not imposed in relation to section 1(3) appointments because the relevant persons would already be parties to proceedings. However, on reflection, it seems possible that that might not always be the case. Therefore, I consider that it is sensible that the requirement to intimate to persons with an interest applies to section 1(3) appointments, too, which is what amendment 1 provides for.

By amending sections 1, 28 and 31 of the bill, amendments 2, 23 and 28 will confer discretion on the court to dispense with intimation requirements, which is in line with the suggestion by the Faculty of Advocates in its written evidence. The amendments recognise that it might not always be possible for intimation to be made to all relevant persons. For example, where the appointment of a judicial factor to the estate of a missing person is sought, the missing person will have an interest in the proceedings, but intimation to them will generally not be possible. The amendments will ensure that the court can dispense with intimation when the particular circumstances of the case warrant it.

At stage 1, there was a range of discussion that focused on circumstances in which the property to be managed by a judicial factory belongs to a charity. After consulting stakeholders and considering the evidence, I lodged a number of amendments that will ensure that the bill better caters to cases involving charity property.

Amendments 4, 19 and 20 in my name respond to the concerns that were raised by some stakeholders by recognising the difficulties that might arise where the bill requires the intimation of documents to every person with an interest in the estate while also recognising the wider public interest in charities. The amendments require that, where the estate is that of a charity, in addition to the standard requirement to intimate to persons with an interest in the estate, intimation is also to be given to OSCR, as the charity regulator, and notification is to be given to the general public by way of advertisement. Amendment 4 also confers a power on the court to dispense with notification requirements to the public where circumstances justify that.

Amendment 18, which would amend section 26 of the bill, provides that a judicial factor appointed on the trust’s estate can apply to the Accountant of Court for authorisation to exercise a function that may be at odds with the terms or purposes of the trust. In addition to applying to the accountant, the judicial factor must also comply with certain notification requirements. In line with the approach that has been taken to other amendments, amendment 18 provides flexibility in circumstances where intimation cannot be reasonably made. That may include circumstances where there is a wide class of beneficiaries named in a trust deed or where some beneficiaries are not yet born.

Amendment 21 recognises the fact that it might not always be possible for a judicial factor to intimate a proposed scheme of distribution of the estate to all interested persons—for example, when an interested person’s present whereabouts are unknown and cannot, with reasonable inquiry, be ascertained. The accountant may dispense with intimation if, in her view, there is a good reason to do so in the particular circumstances of the case.

I ask members to support my amendments in this group.

I move amendment 1.

Amendment 1 agreed to.

Amendment 2 moved—[Siobhian Brown]—and agreed to.

Perhaps I can give you a little bit of history first. When the ACCC reported back in 2021, it asked that the UK be required to submit an action plan in 2022, followed by a progress report in October 2023 and a final progress report in October 2024. However, following the general election in July, and the consequent change of Government, the ACCC agreed to an extension for the submission of the final progress report to the end of this month. The Scottish Government supplied our report to DEFRA several weeks ago.

As I said, we know that the SCJC has committed to public consultation on the extension of protective expenses orders to the sheriff courts. That will be in its work plan for 2024-25.

As it is independent of Government, it would be inappropriate for me to comment at this stage. If we got to the end of that consultation and there were concerns, it would perhaps be an issue that Government could consider at that stage. However, as the SCJC is moving towards a consultation, I do not think that it would be appropriate for me to interfere.

Absolutely. One issue was the types of claims that are covered and the actions that we propose to take in that respect. In the context of the Aarhus convention, particular reference is made to nuisance and littering and the domestic law on both points under the Environmental Protection Act 1990. In Scotland, a litter abatement order would be sought in the sheriff court, but, to date, there has been very little available case law on that point. An action for nuisance would be raised in the sheriff court, too. The relevant committee of the SCJC has instructed the preparation of draft rules on the extension of PEOs to the sheriff court, with the aim of running a public consultation exercise on the matter next year.

The final point raised by the ACCC was about the level of cost caps. The SCJC has published on its website—so it is publicly available—a research paper about cost caps when used in practice. The paper sets out information on the use of PEOs based on the evidence available. The SCJC has given consideration to the cost caps, but is content to keep the current amounts at the moment. The SCJC has decided to maintain the ability to vary cost caps up and down, which is reflective of the statutory guarantee of judicial independence. Since cost capping was introduced in 2013, there have been no instances of caps being shifted upwards in practice.

The SCJC has also provided clarification of the phrase “on cause shown”; namely, that the party would need to demonstrate a valid reason. That is a Scots law term, and the SCJC has challenged the idea that it would cause enough uncertainty to lead to somebody abandoning proposed litigation.

Those are two areas in relation to which action is happening and proposed. As I said to the convener, there are other areas where we have taken action since the report was published.

I will bring in Denise Swanson, who is the legal expert on regulation 15.

I do not think that it will be me who will make the statement, so I do not think that it would be appropriate—

We recognise that we need to reform the legal aid system. The officials are seeking to work collaboratively, especially with the legal sector, and to build a consensus. I hope that all the stakeholder sessions that we are planning to hold will allow stakeholders to discuss the contents of legal aid reform and their priorities. We are definitely open to working with the legal profession and all stakeholders in legal reform, while seeing what we can do during the rest of the parliamentary session through secondary legislation to make some progress.