Official Report 469KB pdf
Agenda item 2 is an evidence-taking session on the Bankruptcy (Scotland) Bill. I welcome from the Scottish Government and the Accountant in Bankruptcy: Richard Dennis, chief executive officer and the accountant in bankruptcy; Alex Reid, head of policy development at the Accountant in Bankruptcy; and Graham Fisher, head of branch 1, constitutional and civil law division, Scottish Government legal directorate. Good morning, gentlemen. It is good to see you again.
I will begin the questioning. The Bankruptcy (Scotland) Bill consolidates legislation dating back over the past 30 years, but given that most of that legislation is actually fairly recent, is there a need for consolidation?
I do not think that the age of legislation is necessarily an issue when it comes to the value of consolidation, which is all about the number of reforms and changes that have been made since the initial legislation came into force and the ease with which it can be used. Given that we have just completed what might be the most radical reforms to personal insolvency this century, now is a particularly good time for consolidation. The bill, which is about ease of use and modernisation, will be available in future years and, as I said, after a period of major reform is a good time rather than a bad time to consolidate.
Can you provide any examples of the practical difficulties that are associated with the current legislation?
I might be uniquely qualified to give you some examples of the practical difficulties. Members might recall that I was appointed as the accountant in bankruptcy in April, and when I came to use the current legislation, I found it very difficult to follow. In fact, I already use the consolidation bill instead of the existing legislation when I need answers to queries.
Consolidation is about making legislation simple, modern and up to date, dealing with inaccuracies and ensuring that the legislation is easy to use not only for specialists but for people more generally. It is extremely difficult to use the existing legislation.
Paragraphs 6 and 7 of the background paper contain some detailed material on the overall approach to consolidation and set out why it is valuable. That applies with particular import here, given the number of times that we have changed the Bankruptcy (Scotland) Act 1985. If you tried to follow through the legislative requirements and how they might affect you, you would find yourself struggling and you would need to have lots of different documents on the table, unless you were able to pay for the kind of electronic consolidated version that some professionals have access to.
It is self-evident that, as Mr Dennis said, we have just undertaken a major reform of the law in this area. At what point in the cycle do we discover the need to tweak legislation? Does that need not become most evident immediately after a major reform because, as soon as people engage with the changes, they realise that changes have been made? If so—if that statement proves, from broad experience, to be correct—might one not conclude that there might be a case for waiting to see whether, following major reform, any further changes are required before we move to consolidation?
I will ask my colleagues to respond to that, but my perception is that we did an awful lot of very radical things in the Bankruptcy and Debt Advice (Scotland) Act 2014. We will want to see the impact of compulsory financial education on certain classes of debtors, and I believe that about a fortnight ago there was a members’ business debate on the use of the moratorium that was introduced in the act. The minimal asset process is new and is fundamentally different, and the common financial tool is also a significant change. We will want to see how those changes have bedded in and whether they have delivered what the Parliament hoped they would deliver.
Moreover, the wider stakeholder community is keen for us to stop changing things for a while. As the committee will know, there have been four or five major bankruptcy acts in the past decade, and after such a period of major reform, the stakeholder community out there needs time to adjust to all the things that have been done. It is therefore highly likely that, even if a tweak to the bankruptcy legislation was to become desirable, there would be good reasons—not least the question of parliamentary time—for thinking, “We’ll leave it a few years before we do this.”
I do not know whether my colleagues wish to add anything to that.
We had the Scottish Law Commission report in 2013 and then the series of changes in the 2014 act. An issue about the preparation of a consolidation is that, if the work is not done, it can end up being lost. The drafter has to do a lot of detailed technical work to put the consolidation bill together, but with such bills there is always a danger that that work will be lost because of further changes and updates to the law from a range of different areas—in this case, not just Scottish Government proposals to change bankruptcy law, but ad hoc consequential amendments that are made by legislation in other areas. There is always a danger in waiting for the next set of policy reforms.
Essentially, then, the argument, which I am prepared to accept, is that after a major reform there is normally a period of quiet while we wait to see whether it is appropriate to make further changes in the light of that reform, and that that is probably the best period in which to undertake consolidation, if we are going to consolidate. Is that essentially the point that you are making?
Yes. When we consolidated the criminal procedure legislation, for example, policy changes were made before the consolidation provisions.
There is one other point. Consolidation was an option at the time of the Bankruptcy and Debt Advice (Scotland) Act 2014 because it implemented almost all the SLC recommendations. However, the decision was made to allow those changes to be implemented and to settle in before consolidation. That is the reason why consolidation is being done now.
10:15
Thank you. That was helpful, and it brings us to the next set of questions, which are on timing.
As I understand it, there were 38 recommendations in the Scottish Law Commission’s 2013 report and the majority of them have been introduced. One change that seems to be happening in the bill concerns protected trust deeds. Why is it considered appropriate to include the law of protected trust deeds in the bill, and restate secondary legislation as primary legislation?
Principally, the bill consolidates the material in the Bankruptcy (Scotland) Act 1985 and its amendments in other legislation. As you say, it also adds in the protected trust deeds regulations. That was recommendation 38 in the SLC’s report. In particular, the SLC noted the Law Society of Scotland’s view that the protected trust deeds regulations are core to the daily practice of insolvency law and it took the view that, because this is a complex body of law and it is too important to be relegated to subordinate legislation, it would be useful to include it in the main bankruptcy statute. The Government supports that approach, and it is the approach that the bill takes.
Protected trust deeds are considered to be a major alternative route into insolvency protection, and they are sufficiently important to warrant inclusion in the primary legislation. It might also be worth saying that provision for protected trust deeds has always been made under the bankruptcy statute. In the past, schedule 5 of the 1985 act contained more detailed provision on protected trust deeds. Under the bill, that is kept in the main bankruptcy statute. It fits well within the framework of the material that is consolidated in the bill.
At the same time, there is a need to keep some flexibility in the area because of changes to the granting of voluntary trust deeds for the benefit of creditors, which the measures regulate. The power for the Scottish ministers to change the area by regulations, if necessary, is also maintained and consolidated in the bill.
I presume that the regulations were put in secondary legislation deliberately and for a reason. What has changed? Have they just become more important?
The overall framework is seen as being important. Some elements will be maintained in regulations, such as the power to set forms in relation to those regulations, but more of the overall framework will be returned to primary legislation.
There was a conscious decision in the Bankruptcy and Diligence etc (Scotland) Act 2007 to take wider powers to adjust the regulation of protected trust deeds. That was because of the need to be able to react to changing practices on the ground in the different forms of trust deeds that debtors can grant, advised by insolvency practitioners, for the benefit of their creditors.
How do you decide what goes in primary legislation and what goes in secondary legislation?
That is a very good question. The answer might depend on the overall importance of the framework and the particular area. The Delegated Powers and Law Reform Committee is well placed to make judgments on that because of the forms and other aspects of legislation that you see daily.
The need to update values in legislation is particularly relevant to the bankruptcy legislation. Such measures are sometimes seen as administrative or minor even though they can be important in practice. The need for flexibility in certain areas might be a reason why matters are dealt with in subordinate legislation, and the overall effect and wider framework of the legislation is key. In this case, some of that is being added back into the primary legislation. Because protected trust deeds have a similar effect to sequestration, they are seen as worthy of being in primary legislation.
I think that it comes down to how far you see full administration bankruptcy, the minimal asset process and protected trust deeds as similar approaches. Those are the three choices for getting debt relief for someone who cannot repay their debts. Why would two of them be in the primary legislation and one of them not be in it? The purpose of putting the protected trust deeds provisions in primary legislation is to ensure that there is a level of consistency.
As the committee may or may not remember, one of the changes that the Protected Trust Deeds (Scotland) Regulations 2013 made was to change the time period over which contributions are paid for protected trust deeds. In the Bankruptcy and Debt Advice (Scotland) Act 2014, we brought full administration into the same time period. We have tried to make the two options more similar. Similarly, the common financial tool can be used for both. Increasingly, they are looking like similar options, and it is important that they are treated in the same way in legislation.
The SLC’s recommendation 1 was implemented only partially, and I believe that the reason for not implementing recommendations 32 and 37 relates to the use of the proposed section 104 order. Will you explain why those recommendations have been dealt with separately?
The SLC’s first recommendation was to remove the words “or interest” in the context of a right or interest that the debtor has that may vest in the trustee in sequestration. That was considered when the Bankruptcy and Debt Advice (Scotland) Bill was considered, and it was discussed in detail with the SLC. Essentially, there was a concern that, if the recommendation was implemented in all the different areas of consideration, it might inadvertently lead to a doubt at the margins about what transfers to the trustee when the debtor is sequestrated and during the period of the sequestration.
The doubt in question was a fairly technical one. For example, in relation to a hope of succession or a bequest that the debtor might expect to receive, there was a doubt at the margins about whether, in a peculiar set of circumstances, that would transfer to the trustee in sequestration in the way that the 1985 act intended. There was a concern that the effect would be altered. That was considered with the SLC at the time and the proposal that only the transfer of a legal right be referred to was taken forward in three of the references in the 2014 act but not in the others. That approach is maintained in the bill.
It was felt to be a bit safer to leave the provision as it was because there might be consequences if it was changed.
Exactly.
Why were recommendations 32 and 37 not implemented?
That relates partly to the provision in the section 104 order. The situation as regards recommendation 32 is confusing because no provision in the section 104 gives effect to it. Essentially, it has been superseded by the repeal of measures for composition out of bankruptcy in the 2014 act.
Recommendations 32 and 37 would have fixed two very minor errors—one was introduced by the Bankruptcy (Scotland) Act 1993 and the other was introduced by the Bankruptcy and Diligence etc (Scotland) Act 2007. Recommendation 37 is the one that will be implemented in the section 104 order. A minor part of that order will achieve consistency with the law of England and Wales and Northern Ireland in relation to a particular cross-reference in the 1985 act and the way in which that has been amended. A level of consistency will be introduced on that point. That has been left to the section 104 order rather than being included in the bill because it deals with the law of England and Wales and Northern Ireland.
Just to clarify that for all of us who are not terribly into all the legal side of the matter, is it that we are not changing the law in England, Wales and Northern Ireland, but that the law there will be changed as a consequence of our changing the law here? Is that how it works?
It is as a consequence of our changing the law here, but the section 104 order will change the law in England, Wales and Northern Ireland. That is precisely what that narrow aspect does—it fills in that gap.
Can you give a practical example of what that would mean?
Yes. A particular example relates to concurring creditors, but not in relation to a debtor application for bankruptcy, and filling in that part of the limitation rules in the law in England, Wales and Northern Ireland. Under those rules, a creditor’s claim expires after a certain amount of time if they do not pursue the claim. However, under Scottish sequestration rules, those limitation rules do not have effect if the sequestration has been entered into in Scotland. Therefore, a creditor does not have to worry about their claims ceasing to have effect; in other words, those claims do not lapse as they would under the rules in the law of England, Wales and Northern Ireland. The rules are effectively put on hold, because the bankruptcy has happened in Scotland.
That is fair enough. Thank you.
Just to tie off the section 104 order issue, you are saying that the effect of the order will be not to consolidate but to change the law.
The order will have three different effects, the first of which is the change that I have just mentioned—that is, it will fill in the bits of the law of England, Wales and Northern Ireland where the Bankruptcy (Scotland) Act 1985 previously extended into the law of those countries. It will make a few free-standing minor provisions of that nature.
The order will also amend various statutes, largely in reserved areas, that apply across the UK. For example, it will update the references to the 1985 act to references to this legislation. Finally, it will fill in a minor part of Westminster procedure in which the bill maintains the secretary of state’s powers to make various provisions by subordinate legislation, for example, in relation to fees on the reserved side.
What effect will the section 104 order have on the consolidation bill that is before us? The order sits outside that process, but if it is not passed—or if it is not passed timeously—will that in any way invalidate or require any change to the bill, or will that be essentially incidental?
It is essentially incidental—or, more accurately, consequential on those changes. The section 104 order is an important part of the package; it is important for it to be made to ensure that the overall package works, and we have obviously been working with the UK Government for a while to put the order in place. However, the content of the bill itself does not depend on the changes in the order.
To be absolutely clear, although the section 104 order and what it will do are important, its passage or non-passage need have no effect on the consolidation that the committee is considering and which the Parliament will consider.
I suppose that that is essentially right in terms of the bill’s content.
I am sorry—do forgive me—but you have used that weasel word “essentially”.
I was going to explain that it will be for Parliament to decide whether it is content for the material in the Bankruptcy (Scotland) Act 1985 to be consolidated in the bill.
As I have explained, part of the 1985 act will effectively be reproduced in the section 104 order. That is part and parcel of the devolution settlement. Those aspects are fairly marginal because we have been able to keep most of what is in the 1985 act in the consolidation bill. However, there are aspects where, because of section 29(2)(a) of the Scotland Act 1998 and the restriction on legislative competence, the Scottish Parliament cannot make provision to change the law of England and Wales. That is just the nature of the devolution settlement, and in those cases, the section 104 order is the mechanism that would be used.
Am I correct in understanding that if, for any reason, the section 104 order is not made—I am not suggesting that it will not be—we would drop back to the 1985 act or something prior to that? Would there be a hole in the law?
10:30
There would be a hole in the law of England and Wales. It would be a fairly marginal hole and would create only a small difficulty in the workability of the law. However, the intention is for the package of measures, including the section 104 order, to address that.
So the section 104 order is necessary to give the full range of powers and effective law that the package is intended to provide. We cannot just drop back to the way in which the law was previously written.
I suppose that that might be the case if there was some problem in extremis, but we have no reason to expect that to be the case and there are no concerns among our UK Government counterparts about the timescale for the overall package of measures, which has been planned for some time. We would not want to disrupt the law by not having the section 104 order.
Coming back to the consultation on what we have in front of us, to what extent were the Accountant in Bankruptcy and the Scottish Government consulted about what should be consolidated—by which I mean, literally what is in the bill and what is not?
I suppose that the basic premise for starting the project was the consolidation of the 1985 act. The Scottish Government and the Accountant in Bankruptcy initially approached the issue because consolidating the 1985 act material was seen to be valuable. The proposal to add protected trust deeds material, which came out of the Scottish Law Commission’s consultation, was taken up and supported by the Scottish Government.
I do not think that adding other material was ever seriously considered. There are one or two areas in the wider law—for instance, the debt arrangement scheme regulations, which one could argue are, in their overall effect, equally significant to the protected trust deeds material—that could be considered, but that issue is very much seen as not part of the bankruptcy statute. That is the main thing to say about where the material that is included in the bill has come from.
Are the Accountant in Bankruptcy and the Government the same entity for the purposes of this discussion?
That is a tricky question to answer. Officially, do we have a separate view? No, we do not—we agree with the Government.
That is helpful. I just wanted that on the record.
Have there been any comments from stakeholders about the information that you have just given me, Mr Fisher? Does anybody out there feel that we have missed a trick and should have done something else?
Not that we are aware of, although something might be thrown up in the committee’s call for evidence. I am not aware of anything else that arose out of the SLC’s consultation, other than the measures proposed for consolidation in the bill.
It is good to see the measure of agreement.
Are we going back to Stewart Stevenson now?
I think that I have covered the points that I wanted to raise, convener.
That is okay. If you are comfortable that the issue has been covered, we will go to John Mason.
On a more general area, will anything be done to make insolvency practitioners and other stakeholders, perhaps, aware of the bill when it is passed?
Alex Reid will deal with that.
The AIB has made a significant effort to make stakeholders aware of the consolidation of bankruptcy legislation. For example, we highlighted the bill’s introduction to Parliament in news releases, on the AIB’s website and, probably more important, in a wide range of stakeholder meetings that the AIB holds, including the debt insolvency stakeholder forum, at which progress on consolidation is a regular item for discussion. That forum includes key stakeholders from the insolvency practitioner, money advice and creditor sectors, and we are trying to keep in close touch with all those groups. The AIB also hosts annual spoken stakeholder sessions, and we have workshops on a range of topics in Glasgow, Edinburgh and Inverness that will take place in January and February and which will be another opportunity to communicate information on the bill and receive feedback from stakeholders.
Is the feeling that people who are most interested are up to speed and so there will be no need for a special push after the bill is passed?
Yes. I think that people will be up to speed.
It is worth adding that this is a fairly small world to deal with. On the industry side of the sector, there might be between 100 and 140 licensed insolvency practitioners in Scotland, almost all of whom will be members of the Institute of Chartered Accountants of Scotland or the International Bar Association. The stakeholder communication channels are very easy and quick in the fee-paid sector. It is slightly harder to get to the free money advice sector, but we have good channels through Citizens Advice Scotland, Money Advice Scotland and so on.
I realise that corporate insolvency is not included in the bill, because, as I understand it, a lot of that is reserved. Will there be a parallel process for consolidating that legislation?
There is a lot of interest among our stakeholders in the corporate insolvency world in our plans for that. Alex Reid can give you a brief outline of what we are planning to do on that over the next year or so.
A corporate insolvency modernisation process is taking place. You are correct to point out that the area is broadly, but not wholly, reserved, but we are taking forward two main streams of work in relation to Scottish corporate insolvency. Through a public services reform order, we are making changes to the Insolvency Act 1986 as it relates to Scottish insolvency processes to try to modernise those processes and bring them into line with changes that have been introduced for practitioners in England and Wales. That will lay the foundation for the modernisation of Scottish corporate insolvency rules. Practitioners have been calling for that for a long time, because of the mismatch of corporate insolvency practices.
That programme of work will be taken forward in parallel with the modernisation of rules in England and Wales, with the intention of having revised and modernised rules commence at the same time.
When you say “rules”, you do not mean primary legislation.
They are not primary legislation. The public services reform order makes changes to the primary legislation—the 1986 act—as it applies to the devolved aspect of corporate insolvency. The rules will be secondary legislation that will cover the relevant processes of administration, receivership and winding up.
Assuming that the bill is passed, will the secondary legislation need to be updated?
Yes. That is part of the intention of the package. When the bill—assuming that it is passed—comes into force, the subordinate legislation will be consolidated. We have done that reasonably recently in relation to the reforms introduced in the Bankruptcy and Debt Advice (Scotland) Act 2014, and that will help us with this work.
It will mean that a set of rules will sit between the bill and the subordinate legislation that points to it. Although such an approach might not be legally necessary, it will create a coherent package of measures for practitioners to look at in relation to the effect of the new bill.
What process will that go through, and what will be the timescale for it?
The overall timescale is that, granted a fair wind, the act will come into force towards the end of next year. That will allow the Parliament to scrutinise the package of regulations and orders that is necessary in the autumn of next year. As for the exact way in which we will cut up the different provisions, we could work in different ways, but several different sets of measures will certainly be included in that.
Will stakeholders get the opportunity to feed into that process?
Absolutely.
Thank you.
Do you expect that to involve any significant transitional arrangements?
Transitional arrangements are provided for in the bill. By and large, the bill will apply to new sequestrations that are applied for and trust deeds that are granted after the commencement date, which will be towards the end of 2016, as I have explained. The current measures will continue to apply to sequestrations and trust deeds that are in train.
I did use a technical term, so forgive me. Am I right in hearing you as saying that, after a certain date, we will be in the new regime and that up to that point—and this will probably relate to the date of the sequestration—we will be in the previous regime?
Yes. There will be a continuing need to look at the old regime for existing sequestrations. For new sequestrations after that date, the bill will apply.
So, returning to my original question, you do not expect those in the old regime to be subject to some of the new rules when they are in force.
I do not.
There will simply be a clean break.
That is right.
I am sure that that makes sense. That is fine—thank you.
Stewart, do you have a final question?
I do, convener. It is basically about the mechanical process. A decision has been made on what legislative provisions will be consolidated and taken into the consolidation bill. I am parking section 104 considerations—we have covered that, so let us not go there. I just wonder, in the significant process of lifting from old legislation into new, whether anyone, independent of the drafter, has checked three things.
First, has someone independently verified that all the relevant provisions in what is claimed to be being consolidated have been transferred? Secondly, has the check included verifying that nothing outwith what is claimed to be being consolidated has inadvertently been transferred in the consolidation bill? Finally, has someone independently verified that, leaving aside the broader issue of clarifying words, the transcription has correctly transferred the legal effect to the consolidation bill? In other words, given that someone has sat in a darkened room for a considerable time making the transcription from the existing law to the new, what independent check has there been of that process? I have yet to meet someone who is not fallible.
Given that this is a long and technical bill, I understand the question. As I have said, it is a Government bill and the Government has been taking it forward. We have looked at it and we are happy that it is a consolidation. I do not know what degree of independence you are looking for beyond that, but the parliamentary process is part of that scrutiny.
“Independent” is perhaps not the word that I want to focus on; I am talking about someone other than the person who did the transcription. Has somebody subsequently looked over their shoulder? I will say, hand on heart, that it is not something that I could do, but it is important that the committee knows that it has been done. Perhaps you can say a little about who functionally—not a named individual—has looked at the process and satisfied themselves about it, because that is essential to our being able to tell Parliament that it is a proper transcription.
10:45
As I have said, the bill is a Government bill, and the Government has put it forward in the way that we would put forward any bill. It has been led by the drafter at the Scottish Law Commission, which is essential because of the nature of the consolidation work, but the bill itself is a Government bill and, obviously, it has been checked by us and the Government’s lawyers.
Yes, but I come back to the question “Quis custodiet ipsos custodes?” Who will guard the guards? I really want to hear about the separation between the person who has been charged with lifting things out of the existing legislation and putting them into the new legislation and the person who has looked at that output so that we have the best possible assurance that somebody with a neutral point of view who has not been part of the transcription process has given such professional assertion as it is possible to make that the transcription has been correctly undertaken.
If the Scottish Law Commission drafter is the guardian, part of our job as Government lawyers in looking at the consolidation is to guard that guardian, and we have checked the bill to ensure that it matches your three criteria.
I suspect that you will get some reassurance on that when the draftsman come before you. It is not as if he goes into a darkened room and never consults any of his colleagues.
The SLC published a draft bill. Members will see in the supporting papers some curious things called the “Table of Derivations” and the “Table of Destinations”, which are allegedly there to make it easy for all of us to check that there is nothing in the new legislation that was not in the old legislation and that every bit of the old legislation has been taken forward into the new legislation. Unfortunately, there are people out there in the world who will spend their time going through those tables, and I am sure that, if they think that we have missed something, they will bring that to our attention.
I just wanted to get that on the record. We will return to the question on another occasion.
There is one other thing that I would like to go back to. We have had an extensive discussion of the proposed section 104 order, but do we necessarily have everything on the record that the witnesses might want to say about the law relating to reserved matters? Would they like to give any further explanation of how paragraph 7 of schedule 4 to the Scotland Act 1998 operates to allow restatement?
Yes. I welcome the chance to put that on the record.
I think that this is set out in the drafter’s note on the bill, but it is true to say that, in some areas, the bill restates the law on reserved matters; however, in doing so, it is not beyond legislative competence. I suppose that that is slightly unusual for bills that are before the Parliament, but it is specifically permitted by paragraph 7 of schedule 4 to the Scotland Act 1998. That provision provides that the law as restated specifically remains reserved law, so Westminster can change that law as it could before.
In the wider terms of the tests for devolved legislation, the bill’s aim otherwise is, of course, the consolidation of existing law. In this case, it is a fairly pure consolidation. Accordingly, there is no problem with the bill from the legislative competence point of view.
If it assists, I can flag up the matters of reserved law that are restated in the bill. They are principally the provision on preferred debts in schedule 3, the recovery of excessive pension contributions in sequestration in sections 101 to 107 and some other areas by virtue of the detail of the devolution settlement. The great advantage of that approach for a consolidation bill is that, as I have mentioned, it allows the great body of what was in the Bankruptcy (Scotland) Act 1985 to be transferred to the bill and kept together in one place. That is fairly essential to the exercise.
Thank you. I am grateful to you for putting that on the record. As a former student of some of the subject—although never, I should say, bankruptcy—I know that it is awfully useful to have everything in one place at some point in one’s studies.
I am conscious that this has partly been a putting-things-on-the-record session, but if colleagues have nothing else that they wish to put on the record, if the witnesses are comfortable that we have covered everything that they expected us to cover and given that we have finished with the questions that we wanted to ask, I will simply thank the witnesses very much for their evidence and briefly suspend the meeting to enable us to reorganise.
10:50 Meeting suspended.
We come to agenda item 3, the purpose of which is to consider the Scottish Law Commission’s recommendations in relation to consolidation in the Bankruptcy (Scotland) Bill. Of the 38 SLC recommendations, 32 have already been given effect prior to the bill. Of the remaining six SLC recommendations, five have not been given effect, or have not fully been given effect, in the bill for technical, legal reasons.
Does the committee agree that only SLC recommendation 38—the inclusion in the consolidation of the law on protected trust deeds—formally falls within the committee’s remit for scrutiny?
Members indicated agreement.
Does the committee agree to consider recommendation 38 in detail at a subsequent meeting?
Members indicated agreement.
Agenda item 4 is also on the Bankruptcy (Scotland) Bill. The committee is to consider whether the consolidation in parts 1 to 4 of the bill correctly restates the enactments that are being consolidated and whether the consolidation is clear, coherent and consistent. The definitions that are used in parts 1 to 4 remain largely embedded in the provisions in which they appear in the Bankruptcy (Scotland) Act 1985. By contrast, the definition of
“debt advice and information package”
has been moved to the interpretation section.
Does the committee agree to ask the drafter why the approach has been taken of moving the definition of
“debt advice and information package”
to the interpretation section of the bill?
Members indicated agreement.
Certain matters in relation to the consistency and clarity of the consolidation have been identified. Does the committee therefore agree to ask the drafter why the “subject to” wording that appears in section 5(2)(b)(i) of the 1985 act has not been restated in section 2(1)(b)(i) of the bill and whether the provision as restated is sufficiently clear as regards the qualification that is set out in section 3 of the bill?
Members indicated agreement.
Does the committee agree to ask the drafter whether replacing the words
“at the date of the presentation of the petition, or as the case may be at the date the debtor application is made”
in the definition of “qualified creditor” in section 7 with a defined term—for example, “the relevant date”—would make this definition and the definition of “qualified creditors” clearer for the reader?
Members indicated agreement.
Does the committee agree to draw the attention of the drafter to the wording of section 8(1) of the bill, which restates the words “A debtor application” as “Any debtor application”, and to ask for an explanation as to why that change has been made?
Members indicated agreement.
Does the committee agree to draw the attention of the drafter to the lack of consistency in drafting style between sections 11(1) and (2) and section 12(1) of the bill, which make almost identical provision, and to suggest that, in the interest of consistency, it would be preferable for the same drafting approach to be taken?
Members indicated agreement.
Does the committee agree to draw the attention of the drafter to the lack of consistency in drafting style between subsections (2), (3) and (4) of section 13, and to suggest that, in the interest of consistency, it would be preferable for the same drafting approach to be taken?
Members indicated agreement.
It appears that section 16(6) of the bill goes further than section 7(4) of the 1985 act, which it restates. Section 7(4) of the 1985 act provides that the apparent insolvency of a companies act company and any other entity in respect of which an enactment provides that sequestration is incompetent may be constituted under section 7. Section 16(6) of the bill, on the other hand, extends that to a limited liability partnership in addition to the other entities.
Does the committee agree to draw the attention of the drafter to that point and to ask for an explanation as to why it is considered that section 16(6) of the bill properly restates section 7(4) of the 1985 act?
Members indicated agreement.
Section 16(7)(b) seems to go further than section 7(2)(b) of the 1985 act, which it restates, in that it provides for more situations in which a debtor’s apparent insolvency will end when the debts are paid off.
Does the committee agree to draw the attention of the drafter to that point and to ask for an explanation of why it is considered that section 16(7)(b) of the bill properly restates section 7(2)(b) of the 1985 act?
Members indicated agreement.
11:00
Section 22(5) of the bill provides that a sheriff must forthwith award sequestration on a petition that is presented under this section if they are satisfied on a number of points. One of the points—at section 22(5)(d)—on which the sheriff must be satisfied is that, in the case of a petition by a trustee, at least one of the two specified conditions applies and the petition contains a declaration by the trustee that sequestration would be in the best interests of creditors. The equivalent 1985 act provision appears to require the sheriff to be satisfied on one matter or the other but not both.
Does the committee agree to ask the drafter why section 22(5)(d) requires the sheriff to be satisfied on both the points that are set out while the equivalent provision of the 1985 act appears to require the sheriff to be satisfied on one point or the other but not both of them?
Members indicated agreement.
Section 23 of the bill provides that sequestration must not be awarded by the sheriff if, “without delay”, the debtor pays off the relevant debts. The equivalent 1985 act provision uses the term “forthwith” rather than “without delay”. Elsewhere in the bill, the word “forthwith” is changed to “without delay”, and in one case it is changed to “immediately”.
Does the committee agree to ask the drafter for further explanation as to why the word “forthwith” has been changed to “without delay” in section 23 and elsewhere in the bill, and to “immediately” in section 70(1)(a)?
Members indicated agreement.
Does the committee also agree to ask the drafter to comment on what effect that is considered to have on the meaning of the relevant provisions and on the consistency of the bill as a whole?
Members indicated agreement.
In section 24(7), the name of the Debtors (Scotland) Act 1987 is incorrectly given an apostrophe. Does the committee agree to draw that point to the drafter’s attention?
Members indicated agreement.
The use of the phrase “fall asleep” in section 27(12) of the bill appears unusual. Does the committee agree to ask the drafter to consider whether the use of the phrase “fall asleep” in section 27(12) is sufficiently clear to the reader, or whether further explanation could be helpful?
Members indicated agreement.
Section 32 of the bill restates subsections (1) to (8) of section 17B of the 1985 act. However, subsection (9) of section 17B does not appear to be restated in section 32 or elsewhere in the bill. Does the committee agree to ask the drafter for an explanation of whether—and where—section 17B(9) of the 1985 act is restated in the bill?
Members indicated agreement.
It appears that the word “have” in section 46(4)(a) may be an error and that it should instead be “has”. Does the committee agree to draw that point to the attention of the drafter?
Members indicated agreement.
The words “as soon as possible” in section 23 of the 1985 act have been restated as “as soon as may be” in section 48(5) of the bill. Does the committee agree to ask the drafter to explain why that change has been made and what effect it is considered to have on the meaning of the provision?
Members indicated agreement.
Does the committee agree to draw the attention of the drafter to the wording of section 71(2) of the bill, which restates the words “An application” as “Any application”, and to ask for an explanation as to why that change has been made?
Members indicated agreement.
Thank you for your patience.