Meeting of the Parliament (Hybrid)

Meeting date: Thursday, December 3, 2020

Official Report 993KB pdf

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Solicitors in the Supreme Courts of Scotland (Amendment) Bill: Final Stage

The next item of business is a debate on motion S5M-23014, in the name of Christine Grahame, on the final stage of the Solicitors in the Supreme Courts of Scotland (Amendment) Bill.

Before the debate begins, I note that the Presiding Officer is required under standing orders to decide whether, in his view, any provision of the bill relates to a protected subject matter—that is, whether it modifies the electoral system and franchise for Scottish parliamentary elections. In the case of the bill, he has decided that no provision relates to a protected subject matter. Therefore, the bill does not require a supermajority for it to be passed at the final stage.

15:36  

I am pleased to open the final stage debate on the Solicitors in the Supreme Courts of Scotland (Amendment) Bill. I thank my colleagues on the private bill committee—Bill Bowman, who was the deputy convener, Daniel Johnson and John Mason—for their work.

The bill was introduced on 26 September 2019, and is being promoted by the Society of Solicitors in the Supreme Courts of Scotland—the SSC Society. The bill passed its preliminary stage on 19 August 2020 and completed its consideration stage on 7 September 2020.

If Parliament passes the bill today, it will give the SSC Society powers to wind itself up and to create new types of membership. It will allow members of the society to resign, abolish the offices of librarian and fiscal, and rename the widows fund as the dependents fund, as well as close that fund to new members, or close it completely.

As members will recall from the preliminary stage debate, the benefits of membership of the society today include access to the society’s building at Parliament house in Edinburgh, use of a legal library and members’ lounge, and membership of the widows fund, which is renamed the dependents fund by the bill.

The society currently has about 220 members located throughout Scotland, and is run by five office bearers and a council of six members. Over recent years, demographic changes in the membership have meant that the society now finds itself with a predominantly older and retired membership, with fewer younger members joining. Apparently, that is not unusual for such societies nowadays. Therefore, there is concern that a dwindling number of members might one day find themselves in a position in which the society, or the dependents fund, needs to be wound up, but they do not have the powers to do so.

One of the objectives of the bill is to enable the society to attract new members and to create different forms of membership, such as corporate membership, trainee membership and associate membership. It is hoped that that will encourage younger members of the legal profession to join the society. When it is possible to do so, new members will be able to make use of the library and facilities at the society’s building in Parliament Square, albeit that that is not possible in the current circumstances.

At the preliminary stage, the committee questioned whether there was the possibility of a sudden influx of corporate or associate members, who might then disagree with a decision that was taken by the small group of remaining full society members. The promoter explained that it would be clear from the outset, and in the bill, that those new members would not have voting rights.

The bill also contains a provision that would give members the ability to resign their membership, unconnected from any disciplinary matters or retirement. At present, if a member fails to pay their membership fees for two years, their membership automatically ceases. However, we heard from the promoter that it is an “unwieldy process”, and that allowing members to resign their membership would be useful.

Part of the committee’s role has been to assess whether the bill will actually achieve its objectives. The committee undertook a thorough examination of the bill at the preliminary stage. We considered the purpose of the bill and whether it would give the society the powers that it requires. We also considered whether the bill should proceed as a private bill.

One of the interesting aspects of being involved with the bill has been in gaining an understanding of how private bills differ from the public bills that are scrutinised by Parliament. For a private bill, the committee is required to satisfy itself on two points: that the bill conforms to the definition of a private bill as set out in standing orders, and that the accompanying documents conform to standing orders and are adequate to allow proper scrutiny of the bill.

On 17 December 2019, the committee therefore held an evidence session with the society’s office bearers and their drafting adviser. During the committee’s evidence session with the promoter, the office bearers emphasised from the outset that they do not expect to wind up the fund or the society any time soon. However, they wish to have the mechanisms in place, in case they are required in the future, so that winding up can proceed in an orderly fashion. It is understandable that the current office bearers wish to avoid leaving members with the prospect of having to raise an urgent action before the Court of Session.

The committee asked about how winding up of assets would work, and questioned whether the procedures for closing the newly named dependents fund and for winding up the society are robust enough. My committee colleagues will provide more detail on the amendments that were made at consideration stage, which strengthened the bill.

The committee’s preliminary stage report, which was published on 15 January 2020, covers in some detail our questions about and recommendations on the bill. That was reflected in the preliminary stage debate, which was held on 19 August. The bill passed the preliminary stage when, in line with the committee’s recommendation, Parliament agreed to the general principles of the bill and agreed that it should proceed as a private bill.

As no objections were lodged during the initial 60-day objection period, the committee turned at consideration stage straight to amendments. I lodged 11 amendments on the promoter’s behalf, which all addressed recommendations in the committee’s preliminary stage report. My committee colleagues will touch on other aspects of our work on the bill, including consideration stage amendments.

I conclude by stating that the committee recommends that Parliament agrees that the bill be passed.

I move,

That the Parliament agrees that the Solicitors in the Supreme Courts of Scotland (Amendment) Bill be passed.

15:42  

I, too, would like to thank my colleagues for their work on the bill to this stage, and I add my thanks to the clerks. Briefly, I will depart very slightly from my script. The work that is carried out on private bills is incredibly important and is an important duty that we have in the Parliament. It is, by its very nature, niche, but it is obviously of fundamental importance to organisations such as the Society of Solicitors in the Supreme Courts of Scotland, the functions and underpinnings of which are set out in statute. I therefore thank the clerks for keeping us straight, for keeping on top of the detail and for getting the bill through to this stage.

I intend to concentrate on the mechanisms that are required for the winding up of the society, and on certain aspects of the society’s meetings.

The promoter made it clear from the outset that the main aim of the bill is to address the lack in the Solicitors in the Supreme Courts of Scotland Act 1871 of powers to wind up the society. It came to the attention of the current office bearers that, should the society one day find itself in the regrettable position of having to wind up, it currently lacks the powers to do so. Understandably, the office bearers do not wish to find themselves, as one put it,

“aged 85 and the only person left at the table,”

only able to

“resign from office, walk away and leave an organisation that still exists with nobody to manage it.”—[Official Report, Solicitors in the Supreme Courts of Scotland (Amendment) Bill Committee, 17 December 2019; c 10.]

Quite so. The bill therefore inserts into the 1871 act section 52B, which sets out the general process for decisions on the winding up of the society.

The process starts with the council agreeing a proposal to wind up the society, followed by either a general meeting of the members or byelaws being made to decide the procedures to be followed at a special general meeting. The society’s members must be given at least 30 days’ notice of the special general meeting at which they will consider the proposal to wind up the society, using the previously agreed procedure.

If the members vote to wind up the society, the council will implement that decision, either in accordance with the arrangements that have been made by the society or in such manner as the council considers expedient.

At the preliminary stage, the committee questioned whether the procedure to dispose of the society’s assets was detailed and robust enough to encompass any tensions as a result of the division of the society’s substantial assets. We noted that, even with the best of intentions, the division of assets may lead to tensions. It was therefore welcome that the promoter proposed amendments to the bill at the consideration stage to strengthen the procedure around the division of the society’s assets, which include the society’s headquarters, situated just off the Royal Mile.

The bill has therefore now been amended to require that the society’s members are consulted on how any property be distributed in the event of the society being wound up. That consultation must take place before the special general meeting where members would discuss any proposal to wind up the society.

I hope that I have provided members with useful detail on how the bill has been amended at the consideration stage to strengthen the procedures for winding up the society. However, as the promoter has made clear throughout the passage of the bill, it is hoped that those procedures will not be required any time soon. I agree with the committee’s recommendation that the Scottish Parliament agrees to pass the bill.

15:46  

I, too, thank my colleagues on the committee, the clerks and the promoter for their work in getting the bill to this stage, and I thank the convener, Christine Grahame, for moving the motion and for her professional way of chairing the committee.

As the convener mentioned, the bill is necessary as the promoter has noted the changing demographics in the society. The office bearers are currently faced with an ageing membership that may result in their one day having to wind up the society. The committee therefore agrees with the promoter that it is necessary to ensure that, should that unfortunate circumstance take place, the society has the powers that it requires to allow for an orderly closure of the society, the dependents fund or both.

The Solicitors in the Supreme Courts of Scotland Act 1871 set out the procedures that govern the society’s widows fund. The bill has renamed that fund the dependents fund and has inserted new detailed procedures that would allow for it to be closed to new members or closed completely. Those procedures include an actuarial investigation, a meeting of the members to consider a resolution to close the fund and the offer of

“such lump sum or other payment as seems reasonable”

for the annuitants or potential future annuitants. Any residual money would then transfer to the society.

Although the committee generally agreed with those provisions, we noted that the promoter might want to consider, as part of the winding-up procedures, a provision in the bill that the beneficiaries and any prospective beneficiaries should be notified of a proposal to close the fund. The promoter accepted that recommendation and amendments were lodged at the consideration stage to address that. Those amendments mean that the bill now requires that all annuitants and prospective annuitants be notified in advance of any decision to close the dependents fund completely.

The committee also examined the procedures involved in winding up the society; our intention was to ensure that the procedures were as robust as possible and that the promoter would not find itself in the position of having to come back to Parliament again to amend the 1871 act. Although we agreed that it is the right of the society’s members to make their own decisions about its future, we considered that some of the practical procedures around the decision making could be strengthened.

At the preliminary stage, the committee heard that

“typically, only around 10 of the 220 current members attend the statutory general meetings.”

We noted our concerns about the lack of requirement in the bill for a quorum in the decision-making process and the fact that a voting threshold was not mandatory for meetings where winding-up decisions were to be taken. The committee therefore welcomed the promoter’s proposed amendments to ensure that, for any decision to wind up the society, a voting threshold must be set, which the bill now requires.

It has been interesting to experience the private bill process and to play a slightly different role from the usual one of a committee member. Generally speaking, I enjoy a bit of controversy, but there has been none of that in the bill. However, it has been interesting.

I agree with the committee’s recommendation that the Scottish Parliament agrees that the bill be passed.

15:49  

In closing on behalf of the committee, I, too, thank my colleagues for their work on the bill so far, and I again thank the Society of Solicitors in the Supreme Courts of Scotland’s secretary, Robert Shiels, for showing us around the society’s building at Parliament Square. It was a useful visit and helped to set the context for the position that the society, which has an entirely voluntary membership, now finds itself in.

The Solicitors in the Supreme Courts of Scotland Act 1871 forms the statutory constitution for the society. However, one omission from the act was any powers for the society to wind itself up, either because the then members did not foresee a day when the society might not exist, or because they deliberately did not include powers that would allow the society to close down. In 1979, elements of the 1871 act were amended to reflect the changes that had occurred over the previous century, but the issue of the lack of powers was not addressed.

As my colleagues have mentioned, the society’s office bearers were clear from the outset that there is no wish to close the dependents fund or the society in the near future. However, the office bearers have acted prudently by ensuring that, should the bill be passed today, the society’s constitution will now set out the necessary powers to allow it to be wound up.

In the bill’s accompanying documents and in evidence to the committee, the promoter set out a number of alternatives that were considered instead of primary legislation. The promoter’s memorandum notes:

“Under the common law, the doctrine of cy pres would allow trustees to make an application to the Court of Session to have the terms of a public trust varied where the purposes of the trust are or have become impossible to fulfil or have become particularly inappropriate.”

However, due to the nature of the dependents fund, any attempt by the trustees to close the fund or vary the payment of entitlement to lump sums against future entitlements, means that, according to the promoter,

“a cy pres scheme is very unlikely to be approved by the Court.”

The promoter also noted that section 9 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 gives the sheriff court and the Court of Session powers to

“approve a scheme for the variation or reorganisation of the trust purposes”

in any public trust. However, as with the cy pres scheme, the trustees believed that to be unsuitable for the dependents fund.

The trustees also considered sections 39 and 40 of the Charities and Trustee Investments (Scotland) Act 2005 as a means of providing the required powers but concluded that

“the use of the Fund cannot be said to be dedicated to charitable purposes as such and so it would not seem to qualify”

under the 2005 act.

The bill therefore seeks to modernise the society’s statutory constitution, which is the 1871 act, and its purposes include giving the society powers to wind itself up in the future; creating new types of membership; making new provision to allow members of the society to resign; and abolishing the offices of librarian and fiscal.

One of the other objectives of the bill is to update some aspects of the act’s terminology. Widows fund is being changed to dependents fund and reference to lawful children is being removed. The bill will allow the trustees to pay annuity claims based on cohabitation, depending on the facts and circumstances between the deceased member and the claimant.

As I noted at preliminary stage, the promoter is also removing the offices of librarian and fiscal. The role of fiscal was a historic office for handling matters of discipline, which are now dealt with by the Law Society of Scotland and the Scottish Legal Complaints Commission. The office of librarian is being removed because, although the society will still have a librarian, that person is no longer required to be a qualified solicitor.

As my colleagues have noted, 11 amendments were lodged on behalf of the promoter at the consideration stage. Those amendments improve the bill and strengthen the procedures surrounding the winding up of the society and the dependents fund. I am grateful to the promoter for taking on board the recommendations in our preliminary stage report.

The amendments not yet mentioned by my colleagues include minor and technical amendments, such as ensuring that the 1871 act is consistent in terms of style. One amendment also clarified the type of meeting that a member holding one of the new forms of membership that the bill creates would not be entitled to participate in.

The bill has been fascinating to work on, not least because it has meant that the committee has played a small part in a society that has been in existence for more than two centuries. When the society was formed in 1784, and made a body corporate through a royal charter that was granted in 1797, I doubt that the founding members could have envisaged their society being debated in the Scottish Parliament more than 200 years later. Perhaps we might think of what might be happening here in 2220.

The setting up of the widows fund—now the dependents fund—in 1817 also means that annuities have been paid to the surviving spouses and orphans of the society’s members for more than 200 years.

I agree with the committee’s recommendation that the Scottish Parliament agrees that the bill be passed.

Thank you, Mr Bowman. That was very succinct. I can confirm that Mr Bowman did not speak for nine minutes—I forgot to restart the clock.

That concludes the final stage of the Solicitors in the Supreme Courts of Scotland (Amendment) Bill.