Chamber and committees

Section 30 requires the Accountant of Court to apply for the appointment of a replacement judicial factor where the original factor dies or ceases to perform duties, where the Accountant of Court considers that the purpose for which the original factor was appointed still exists and that no application for replacement has been lodged by anyone else.

I have considered the provision further, however, and the bill does not set out what should happen when the original factor dies or ceases to perform their duties and the purpose for which they were appointed no longer exists, but some actions are still required to bring the judicial factory to an end. I consider that, in such circumstances, the judicial factory should be formally terminated following the processes under the bill and, where appropriate, the original factor discharged. Although that is not likely to be a common occurrence, amendment 25 is a sensible precaution to ensure that judicial factories are brought to a proper end and to avoid any doubts that might arise in such cases.

Amendments 26, 27 and 29 are all consequential amendments to reflect the addition of the new section 30(3A).

I move amendment 25.

Amendment 25 agreed to.

Amendments 26 and 27 moved—[Siobhian Brown]—and agreed to.

Section 30, as amended, agreed to.

Section 31—Resignation and applications for recall and discharge in other circumstances

Amendment 28 moved—[Siobhian Brown]—and agreed to.

Section 31, as amended, agreed to.

Section 32—Inventory and balance sheet where replacement judicial factor appointed

Amendment 29 moved—[Siobhian Brown]—and agreed to.

Section 32, as amended, agreed to.

Section 33—Termination of judicial factory where insufficient funds

Amendment 30 moved—[Siobhian Brown]—and agreed to.

Section 33, as amended, agreed to.

Section 34—Ending of judicial factor’s accountability on discharge

Amendment 31 moved—[Siobhian Brown]—and agreed to.

Section 34, as amended, agreed to.

Section 35—Accountant of Court: appointment, remuneration and fees

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.

Section 1(5)(b) of the bill contains rules as to when a particular sheriff court has jurisdiction. Where an application relates to the estate of a person other than an individual, such as a company, the sheriff court of the sheriffdom in which the person has a place of business has jurisdiction.

In its written evidence, the centre for Scots law at the University of Aberdeen suggested that a non-natural person’s registered office should be included as an additional category. I consider that to be a sensible suggestion, given that a registered office can generally be relied upon to establish jurisdiction in certain actions in relation to companies. Therefore, amendment 3 makes that change.

Amendment 39 makes it clear that the sheriff court and the Court of Session have concurrent jurisdiction to hear applications for the appointment of a judicial factor, irrespective of the value of the estate in question.

In its written evidence, the Faculty of Advocates highlighted the fact that the bill did not expressly address the question of jurisdiction of the sheriff court under section 39 of the Courts Reform (Scotland) Act 2014, and I agree that it would be helpful for the bill to make the position clear.

I move amendment 3.

Amendment 3 agreed to.

Section 1, as amended, agreed to.

After section 1

Amendment 4 moved—[Siobhian Brown]—and agreed to.

Sections 2 to 5 agreed to.

Section 6—Intimation and registration of notice of appointment

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

The Government is independent of the SCJC, so consultation is up to the SCJC. I know that it has committed to consult on that issue next year.

I do not know whether any of the officials would like to add anything further.

I thank Pam Gosal for that question—I was watching the previous session before I came to the committee.

As I said in my previous answer, I have been clear thus far that we will not be introducing a bill in the current session of Parliament. I am really keen to look at legal aid reform, but it would be more in the landscape of secondary legislation. We have been listening to the committee, and it is important that we look in particular at different funding models for access to justice on environmental issues.

My officials are currently developing a paper on legal aid reform that will, in the coming months, set out the potential areas of reform. We are planning to host a variety of engagement sessions along with that.

Denise Swanson might want to add to that.

On legal aid reform?

The issue of whether there should be a dedicated environmental court in Scotland has been discussed for many years, and it is clearly a question of interest within many portfolios and the Scottish judiciary.

The most recently published statement on the issue was in the “Report into the Effectiveness of Governance Arrangements, as required by section 41 of the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021”, which the Scottish Government published last year. That report had to consider whether an environmental court would enhance the environmental governance arrangements that were put in place by the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021 to rectify the inadequacies that were created by the UK leaving the European Union. The report also considered wider issues of environmental governance in the context of the 2021 act.

The report stated:

“The Scottish Government recognises the strengths in the current balance of parliamentary, administrative and judicial roles in decision making on environmental matters, and does not see any strong argument for the creation of a specialist court.”

We have since consulted on that report, and a written statement will be laid before Parliament soon. It would not be appropriate for me to pre-empt that statement, but I will highlight some points.

The court in New South Wales was highlighted in the previous session. There are two key examples of such courts operating, in New Zealand and Australia, which have been discussed by stakeholders. As has been described, those courts have remits that mainly cover disputes about local spatial plans, environmental permits and planning applications. Most of the cases are not of a nature that would lead to a judicial review in Scotland; rather, there would be a reconsideration of the merit of plans and the decisions themselves.

In general, Parliament has shown little interest in such matters being considered by courts in Scotland in the same way that such issues are considered by those courts in Australia and New Zealand.