Chamber and committees

I do not agree that the bill lowers the criteria that are required for a person to be appointed as the Accountant of Court. While the drafting of the SLC’s provision has been updated, there was no intention to depart from the recommendation in the SLC report. That recommendation was that the accountant

“should have a knowledge of law and accounts.”

The report states that that does not necessarily mean that they should be required

“to be formally qualified in both, or either”.

The bill provides that the accountant must be

“appropriately qualified or experienced in law and accounting.”

To my mind, that is not a “watering down” of standards, and I consider that the bill gives effect to the SLC recommendation.

Last week, I heard what Patrick Layden had to say to the committee regarding the issue. The point was raised with him in correspondence after the session, and he confirmed to me that the drafting of the bill is consistent with the SLC’s policy recommendations.

Under the bill, the SCTS will determine whether the person who is appointed is the best fit for the role. That seems to be a sensible approach to take, in particular given that the Accountant of Court is an SCTS employee. The SCTS has had the power to appoint an accountant for around 90 years, and I am not aware of any concerns that have been raised about whom it has appointed over that time or the experience or knowledge of those people.

Yes, I think that it would be up to each judicial factor in each case, based on merit.

Yes—I think that the section strikes the right balance between protecting the estate and dealing with serious misconduct. The accountant is under a duty to investigate complaints and reach a decision, and it is only right that, if they conclude that there has been serious misconduct, they report it to the appropriate professional body. The role of the court is to dispose of the matter as it sees fit.

The alternative—of allowing a court to intimate—would mean that time would have to pass before the accountant finds that there has been serious misconduct, and the court process begins to decide the appropriate disposal. It is only right that the professional body is notified of the matter as soon as possible, to allow it time to consider it. In my view, that early notice is an important safeguard for the protection of the estate and possibly other cases in which the judicial factor acts professionally.

Currently, only some kinds of appointments of judicial factors need to be publicised and most respondents to the SLC’s consultation were of the view that some form of publication of appointments was necessary. The SLC consulted with the keeper of the registers and concluded that registration in the register of inhibitions was inappropriate.

I do not know whether Michael Paparakis wants to add anything to that.

We will talk to stakeholders, and I will then get back to you on that. I appreciate the points that you have made.

From reading the bill as a whole, I think that it is clear that the nature of the judicial factor’s role is fiduciary. While the term “fiduciary duty” is not used in the bill, the Government considers that the bill will achieve the same effect.

A fiduciary duty is essentially a duty to act in good faith in the interests of another, rather than in one’s own self-interest. Section 10 of the bill makes it clear that judicial factors have

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

It also requires judicial factors to

“exercise care, prudence and diligence”

and

“take professional advice when appropriate.”

The Scottish Law Commission told the committee that it had set out

“very clearly in”

its

“report that the essence of the institution was that it was fiduciary”—[Official Report, Delegated Powers and Law Reform Committee, 16 April 2024; c 16.]

and that it was not considered “necessary” to include a specific reference to that in the bill.

I understand that some stakeholders have suggested that the matter should be clarified, but others, such as the SLC and the Faculty of Advocates, have pointed out that to add even a simple statement to that effect could have unintended consequences. However, it might be possible to add something to the explanatory notes to the bill in order to make that point clearer for users of the legislation, and I am willing to consider that further.

Section 23 of the bill contains a general rule that any costs of litigation that is pursued by the judicial factor

“on behalf of the factory estate”

are

“to be met from the factory estate.”

The general rule is, however, “Subject to section 24” of the bill. Under section 24, the court is given the power to find a judicial factor personally liable if they have breached their duty and the court finds it “appropriate” to hold them “personally liable”.

We need to strike the right balance to allow a judicial factor reasonable space to manage an estate in good faith. I do not think that a judicial factor should be found personally liable if, with the benefit of hindsight, their actions are found to have been unreasonable but there has been no breach of duty.

Given the continuing need for competent judicial factors, we must be careful, and we do not necessarily want to put blocks in the way of people wanting to be appointed. Allowing for judicial factors to be held personally liable for taking actions that do not amount to a breach of duty would, in my view, be likely to discourage judicial factors from pursuing litigation that is in the interests of the estate, and perhaps even discourage individuals from acting as judicial factors altogether.

I consider that the bill and the 1977 act work alongside each other. The bill allows for the appointment of a judicial factor to manage the estate of a missing person. If the missing person is subsequently declared dead by way of an application under the 1977 act, the purpose for which the judicial factor was appointed would no longer exist and the judicial factory would be terminated. As the committee heard, families of missing people may not want to apply immediately for a declarator, and the appointment of a judicial factor to manage the missing person’s estate is an alternative.

You would think that they were an accountant per se.

You raise a valid point. In general, a layperson would probably assume that the Accountant of Court was an accountant, so we could perhaps look at how we make that a bit clearer.