Chamber and committees

The draft Scottish Tribunals (Listed Tribunals) Regulations 2024 are relatively straightforward regulations. They amend the Tribunals (Scotland) Act 2014 to include the transport tribunal in the list of tribunals listed at schedule 1 to that act, whose functions may then be transferred to the Scottish tribunals. The regulations also specify the appeal functions for the transport tribunal that may be transferred, namely the devolved appeals function.

The Tribunals (Scotland) Act 2014 created a new simplified statutory framework for tribunals in Scotland by establishing the First-tier Tribunal for Scotland and the Upper Tribunal for Scotland, known collectively as the Scottish tribunals. The act brought the existing tribunal jurisdictions together and provided a structure for new jurisdictions. Schedule 1 to the 2014 act sets out the bodies whose functions may transfer into the Scottish tribunals.

The draft regulations are part of a wider suite of regulations that are required to transfer certain appeal functions of the transport tribunal under section 39 of the Transport (Scotland) Act 2001 to the Upper Tribunal for Scotland, and to allocate new appeal functions in relation to bus service improvement partnerships under the Transport (Scotland) Act 2019 to the Upper Tribunal for Scotland. It is intended that the respective transfer and allocation of these appeals functions to the Upper Tribunal occur at the same time. The Scottish Government is currently working towards a transfer and allocation date in December 2024. Further regulations to effect that transfer and allocation will follow.

The Scottish Tribunals (Listed Tribunals) Regulations 2024 support the Scottish Government’s policy intention to transfer devolved appeal functions into the Scottish Tribunals.

Finally, I understand that the Delegated Powers and Law Reform Committee considered the draft regulations on 23 April 2024, but raised no queries in respect of them.

I will be happy to answer any questions.

The GAD analysis suggests that the current further 0.5 per cent margin remains applicable, and it is probably worth reiterating that that margin broadly results in a 30 to 35 per cent chance of undercompensation. It is impossible to ensure that no one in receipt of damages to which the discount rate applies will ever be undercompensated or overcompensated, but we can reduce the likelihood of pursuers being undercompensated through that important protection on the further margin.

Historically, there is a very fine balance between overcompensation and undercompensation, which is hard to determine specifically. Do you want to add anything to that, Michael?

We have seen an increase in all insurance premiums since the cost of living crisis—every household has been impacted. I do not know whether the decision will increase insurance premiums specifically.

Yes. No issues or financial complications have been raised. Although Community Justice Scotland has not needed to demonstrate that it follows that duty until now, it has been doing so since it was established in 2017.

I do not know whether my officials have any insight on the concerns that have been raised.

My understanding is that more information has been requested for the relevant committee. I will bring in Michael Paparakis, who has been corresponding.

The personal injury discount rate is the rate by which an award of damages for personal injury, which includes future loss in the form of a lump sum, is adjusted to reflect the fact that the injured person can invest the money. The way in which the discount rate is calculated was reformed in 2019 by the Damages (Investment Returns and Periodical Payments) (Scotland) Act 2019. Under that legislation, the current discount rate is 0.75 per cent.

The legislation requires a statutory review of the rate every five years, and a review is therefore required to begin on 1 July 2024 and to be completed within 90 days. Ahead of the review, the Scottish ministers must consider whether the factors to be used in that review continue to meet the needs of the hypothetical investor. That consideration is now complete, and the draft regulations before you amend some of the factors that the Government actuary must use in reviewing the personal injury discount rate.

The factors that are being amended are as follows. The index for impact of inflation will change from the retail prices index to the average weekly earnings index, and the standard adjustment for tax and costs will change from 0.75 per cent to 1.25 per cent. The period of investment will change from 30 years to 43 years.

Those amendments have been informed both by consultation carried out last year with stakeholders and by work that we have commissioned jointly with the Northern Ireland Executive in the form of a report from the Government Actuary’s Department. I am happy to take any questions.

In May last year the Scottish Government invited views on the need or otherwise to adjust any of the statutory factors, and it requested any evidence to support those views. In addition, we invited views and evidence on whether a single or multiple rate should apply, and a total of 24 responses were received, including from all the key stakeholders.

The Scottish Government has asked GAD to consider those responses and other available evidence and to provide advice to the Scottish Government. As I said, the consultation was carried out in consultation with the Northern Ireland Executive.

I will bring in Michael Paparakis regarding any further evidence.

Thank you, convener. I know that you have taken a great interest in the situation with McClure Solicitors, and you have discussed that with me and with the Law Society. The Law Society’s position on that is on the public record, because it was given to the committee in an evidence session in the past couple of weeks.

I am aware that the matter has been reported to Police Scotland, and I understand that Police Scotland has commented that an assessment of the information is on-going. Therefore, it would be inappropriate for me to comment much further on the individual circumstances of the case.

However, in general, a judicial factor appointed under the Solicitors (Scotland) Act 1980 does not carry out any legal work in the way that an incoming firm is able to. In many cases, it might be preferable for another firm to take over the business of a failing firm rather than for a judicial factor to be appointed, provided that there are no concerns as to any misdeeds.

Ultimately, the Law Society is the regulator and will be best placed to decide whether to seek the appointment of a judicial factor to a solicitor firm. However, I am also working closely with you and other MSPs in relation to the regulation of legal services.

Good morning committee, and apologies for my voice.

The Judicial Factors (Scotland) Bill seeks to implement the Scottish Law Commission’s recommendation in its 2013 report on judicial factors. If passed, the bill will put in place an updated and comprehensive regime that will bring clarity, accessibility and efficiency to this vital but outmoded area of law. Reform of the law of judicial factors is perhaps not particularly high profile, but the bill will make important and practical changes for those who are involved with judicial factors in one way or another.

A judicial factor is a person who is appointed by the court to gather, hold, safeguard and administer property that is not being managed properly. Common examples of appointments include where there has been a breach of Law Society of Scotland accounting rules, where a sole practitioner dies and where there is no executor who is willing to carry out the administration of an estate. There are also circumstances in which a judicial factor could usefully be appointed but that does not happen for a number of reasons—say, where the estate of a missing person needs to be managed.

The overall modernisation of the office should make the appointment of a judicial factor more suitable in cases that involve missing persons, but I understand the complexities and difficulties that come with dealing with a loved one’s estate in such circumstances. That is why I have agreed to work with the charity Missing People on the preparation of guidance for those who are considering applying to appoint a judicial factor.

The SLC recommends that some of the bill’s provisions be extended to the whole of the United Kingdom, and my officials have started the process of engaging with the UK Government on pursuing a section 104 order to that end. The order would include provisions to allow the judicial factor to exercise their functions in relation to the whole estate, regardless of where in the United Kingdom the property is situated, and provisions with regard to a judicial factor’s powers to obtain information from UK bodies and UK Government departments.

The Law Society of Scotland has highlighted the problem of the operation of the Solicitors (Scotland) Act 1980 with regard to incorporated practices, and it has asked for that act to be amended to extend the existing intervention powers in relation to sole practitioners to such practices. Amendments that have been lodged to the Regulation of Legal Services (Scotland) Bill will address those concerns.

The bill introduces a statutory framework that sets out clearly the essential features of the office of judicial factor and the broad parameters within which it should operate, and it will be to the benefit of all those who are involved in any capacity in judicial factories. I know that a number of areas of detail came up during the committee’s stage 1 evidence sessions. I have worked with the committee and MSPs on another SLC bill in the current session in order to address the issues that have been identified, and I will continue to do so as the bill progresses through Parliament.

I look forward to answering the committee’s questions.

Section 10 of the bill is clear that judicial factors must

“hold, manage, administer and protect the ... estate for the benefit of persons with an interest in the estate.”

I consider that most judicial factors will be expected to manage the estate in the interests of the missing person. The considerations that a judicial factor will take into account when making decisions—for example, whether they can take into account assumed preferences of the missing person—will depend on the purpose of the appointment and the specific circumstances of each individual case.

The bill is flexible, and the person who is seeking the appointment of a judicial factor may ask for additional powers to be conferred on them, such as the power to make gifts. It would be possible for a judicial factor to manage the estate in the interests of the missing person and to make payments to or take actions to benefit family members of the missing person, such as their children.