Judicial factors: consultation

Part 4: Further testing of recommendations

Jurisdiction

4.1 Paragraphs 3.4 to 3.10 of the Commission’s Report discussed the jurisdiction of the courts.  The Commission concluded that petitions for the appointment of a judicial factor should continue to be competent in both the Court of Session and the Sheriff Court.

4.2 However, the Scottish Government’s initial view is that applications to appoint judicial factors could be heard in the Sheriff Court rather than the Court of Session.   There does not seem a particular need for cases of this nature to be heard in the Court of Session and hearing them in the Sheriff Court would reduce costs and legal expenses.  

4.3 This is particularly important when applications to appoint a judicial factor may be made by individuals, such as, for example, may happen when a family member seeks the power to manage the estate of a missing person (see part 2 of this consultation paper).

4.4 Therefore, the Scottish Government proposes that any primary legislation to implement the Scottish Law Commission’s report should provide that applications to appoint a judicial factor be heard in the sheriff court and not in the Court of Session.   This would apply to all applications to appoint judicial factors and to “administrators” carrying out functions similar to judicial factors (but please see paragraphs 4.5 to 4.6 below).

4.5 The Court of Session would retain the power to appoint a judicial factor in the course of other proceedings should that seem necessary or desirable.   As the Commission outlines in paragraphs 3.12 to 3.14 of their Report, any new legislation would make it clear that the Sheriff Court would also have the power to appoint a judicial factor in the course of other proceedings.  Sections 3 and 5 of the draft Commission Bill make relevant provision.

4.6 Recommendation 7 of the Report which is discussed at paragraph 3.11 of the Report deals specifically with the appointment of judicial factors under the Solicitors (Scotland) Act 1980.  Currently the rules of court provide that petitions for these appointments are made to the Inner House of the Court of Session.  The Commission recommended that such appointments should no longer be made in the Inner House.

4.7 The Scottish Government sought a view on this issue from the Law Society of Scotland.  The Law Society had no objection to such appointments being heard before the Outer House but did have some concerns about these appointments being made in the Sheriff Court.

4.8 Those concerns as advised by the Law Society were: - 

• The appointments are made with insufficient frequency to develop significant procedural expertise and deep knowledge of the law and practice of judicial factories.
• Appointments often need to be made quickly to allow steps to be taken to secure documents and money. Such appointments could be compromised should hearings be required at short notice in remote Sheriff Court locations where we may be unable to secure local representation with the required expertise.  This would mean legal representatives from Edinburgh would need to travel to the court, with additional costs and delay.
• Having the appointing court near the Society allows skills and expertise in this area of law to be built up amongst the Society’s legal representation. This ultimately reduces cost in the long run to the estates which bear the costs of the action.
• Making appointments in the locality of the Solicitor’s place of business could present a number of challenges, including possible difficulties in securing a Sheriff who would not need to recuse him or herself from hearing such an action. This could lead to delay, particularly where there are urgent transactions or client funds at risk (we had a case recently where the Sheriff Court was dealing with a matter involving a local Solicitor, they spent a great deal of time debating whether they could hear the case and then agreed they could not, it was moved to the next nearest sheriff Court where the Sheriffs there decided since they all knew the Solicitor they too could not deal with the matter, it was then moved to a third Sheriff court. This process created further cost and delay before the case was finally heard). It would of course be more problematic were a Sheriff to hear the case and then the interim appointment was challenged by the solicitor who was known to the Sheriff, and consequently the appointment fell.
• Speed is of the essence in these cases - the Petition Department of the Court of Session and the Accountant of Court have arranged a set of protocols to allow the quick exchange of documentation to take place given the onerous process required by the Judicial Factors Act 1849. 

4.9 Concerns have also been expressed by those involved in rewriting the civil court rules as part of Courts Reform that such a proposal would place applications for the appointment of judicial factors under section 41 of the Solicitors (Scotland) Act 1980 out of step with other applications and appeals under the Solicitors (Scotland) Act 1980.

4.10 In addition they queried the rationale for treating applications for the appointment of judicial factors under section 41 of the 1980 Act differently from other applications and appeals under the 1980 Act.  The focus of the Commission appeared to be harmonising the procedure for all applications for the appointment of judicial factors under section 41.  

Question 14

Should applications to appoint a judicial factor be heard in the sheriff court rather than the Court of Session?

Yes 

No   

Don’t know  

If you wish, please give reasons for your answer.

Question 15  

If applications to appoint a judicial factor are to be heard in the sheriff court rather than the Court of Session, should it be the same rule for applications to appoint a judicial factor under the Solicitors (Scotland) Act 1980?

Yes 

No   

Don’t know  

If you wish, please give reasons for your answer.

Which Sheriff Court?

4.11 Section 1(4)(a) of the draft Commission Bill provides that the reference to “an appropriate sheriff court” is “where the petition relates to an estate a substantial part of which (that is to say a part comprising at least one fifth of its value) is situated in a particular Sheriffdom, to the sheriff court of that Sheriffdom”.

4.12 The Scottish Government does not consider that this provision assists with providing sufficient clarity on jurisdiction.  Therefore, the Scottish Government proposes to remove section 1(4)(a) before any Bill is introduced into Parliament and rely on the other provisions of section 1(4) to determine jurisdiction. 

4.13 In addition, the proposed provisions outlined in Part 2 of the consultation on jurisdiction to appoint a judicial factor to the estate of a missing person are also relevant.

4.14 Therefore, the “appropriate sheriff court” for an application in relation to the estates of missing persons would be:

• Where the missing person was domiciled the day before the person was first known to be missing; or
• Where the missing person had been habitually resident for at least one year (or, if more than one place in Scotland, where most time had been spent); or
• Where the person’s spouse or civil partner or cohabitee is domiciled or has been habitually resident for at least one year (or, if more than one place in Scotland, where most time had been spent); 

4.15 In relation to the estates of natural persons other than missing persons, the “appropriate sheriff court” could be in the Sheriffdom where the applicant, or any person with an interest in the estate is domiciled or has been habitually resident.

4.16 In relation to the estates of persons other than a natural person, the “appropriate sheriff court” could be in the Sheriffdom where the person who has the estate has a place of business.

4.17 If none of the above applies, the “appropriate sheriff court” would be the sheriff court in Edinburgh.

Question 16  

The Scottish Government proposes that the “appropriate sheriff court” for an application would be:

Estates of missing persons

• Where the missing person was domiciled the day before the person was first known to be missing; or
• Where the missing person had been habitually resident for at least one year (or, if more than one place in Scotland, where most time had been spent); or
• Where the person’s spouse or civil partner or cohabitee is domiciled or has been habitually resident for at least one year (or, if more than one place in Scotland, where most time had been spent).

Estates of other natural persons

• In the Sheriffdom where the applicant, or any person with an interest in the estate is domiciled or has been habitually resident.

Non-natural persons

• In the Sheriffdom where the person who has the estate has a place of business.

None of the above applies

If none of the above applies, the “appropriate sheriff court” would be the sheriff court in Edinburgh. 

Does this seem a reasonable approach?

Yes 

No   

Don’t know  

If you wish, please give reasons for your answer.

Grounds of appointment

4.18 Section 4 of the Commission’s Bill sets out grounds on which judicial factors may be appointed.  Section 4 provides that:-

“ The grounds on which a judicial factor may be appointed under this Act are that it appears to the court there is an estate which requires to be managed or in relation to which actings of some kind are required and (either or both)—

(a) for whatever reason, it is not possible, not practicable or not sensible for that management or those actings to be carried out by those who would ordinarily be responsible for carrying them out,

(b) it would be to the advantage of the estate were a judicial factor to be appointed to manage it or to carry out the requisite actings”. 

4.19 In addition, section 6 makes further provision on qualifications so that the person appointed must be an individual, of full legal capacity and a suitable person.    At the moment, the majority of those appointed as judicial factors are, however, either legal or financial professionals.  

4.20 The Scottish Government considers it important to retain flexibility on who can be appointed to be a judicial factor.  In particular, and as discussed in part 2 of this consultation, the Scottish Government wishes to ensure that it is straightforward for family members to apply to become a judicial factor in relation to the estate of a missing person.   

4.21   South of the border, section 4 of the Guardianship (Missing Persons) Act 2017 makes provision on “choice of guardian” and lays down detailed provision on who may be appointed.   The Scottish Government’s view is that detailed provision of this nature is not needed in Scotland and that the approach outlined in sections 4 and 6 of the draft Commission Bill should be followed, including in relation to the appointment of judicial factors to the estates of missing people.

Question 17

Should sections 4 and 6 of the draft Commission Bill be followed in relation to who may be appointed as a judicial factor?

Yes 

No   

Don’t know  

If you wish, please give reasons for your answer.

Requirement for caution (Scottish Law Commission Report paragraphs 3.28 to 3.36) 

4.22 Caution^[5] is usually arranged by obtaining a bond with an insurance company to be lodged with the court. The aim is to provide security against any improper actings by the factor.

4.23 Section 7 of the draft Bill introduces a discretion on the court’s part as to whether or not to require a judicial factor to find caution but the discretion is to be exercised sparingly.  This represents a change from the current position which is that all judicial factors must find caution. 

4.24 Two policy points informed the Scottish Law Commission’s recommendation to introduce a discretion.  The first was that the cost of finding caution annually could be a substantial outlay for an estate.  The second was that it was impossible to state that there would never be any circumstances where it would be appropriate to require a judicial factor to find caution.  Under the Bill, the Accountant is to fix the amount of caution required, enabling that officer to take account of all the circumstances of the particular case, and that amount can be varied as circumstances require.

4.25 South of the border, section 6(3)(a) of the Guardianship (Missing Persons) Act 2017 provides that when appointing a guardian the court may “require the guardian to give the Public Guardian security for the exercise of the guardian’s functions.”

4.26 The Scottish Government has considered if the wording in section 7 about the court imposing a requirement for caution “only where it considers that exceptional circumstances peculiar to the particular appointment make it prudent to do so” give sufficient clarity.  The Scottish Government’s initial view is this wording is fine.   As the Explanatory Notes to section 7 say, “it is intended that the court should exercise this discretion sparingly”. 

Question 18  

Do you agree that the wording at section 7 of the draft Bill reflects that caution is only required in exceptional circumstances?

Yes 

No   

Don’t know  

If you wish, please give reasons for your answer.

Registration of appointment (Scottish Law Commission Report paragraphs 3.84 to 3.86)

4.27 Section 8 of the draft Bill introduces two new requirements.  First, it provides that the clerk of the court must intimate all appointments to the Accountant of Court, given the Accountant of Court’s supervisory role in relation to judicial factors.   Secondly, it provides that the clerk of the court must register the notice of appointment in the Register of Inhibitions.    The fee for doing this would be met from the estate.

4.28 Publicity in the Register of Inhibitions would have the effect that, for example, should anyone other than the judicial factor attempt to transact in relation to any of the estate’s heritable property, the fact of the appointment would appear in the usual searches conducted during such property transactions.

Proactive management of the estate

4.29 Section 14 of the draft Bill reflects the rationale for appointing a judicial factor by obliging the judicial factor, as an overarching duty, generally to carry out the functions of the office for the benefit of those with an interest in the estate.  It is intended that this duty should strike a suitable balance between a duty merely to conserve and a duty to manage proactively.

4.30 As the circumstances of each appointment and of each judicial factor will vary, the standard of care has been deliberately couched in general terms against which the performance of an individual judicial factor can be measured.

4.31 The policy is that the general duty to carry out the functions of the office for the benefit of those with an interest in the estate should be subject both to the terms of the interlocutor of appointment and to any other statutory regime under which the particular judicial factor has been appointed.

Question 19

Do you consider that interlocutors should contain provisions on how proactively an estate should be managed?

Yes

No

Don’t Know

If you wish, please give reasons for your answer

Remuneration of judicial factor (Scottish Law Commission Report paragraphs 7.2 to 7.11)

4.32 At present a judicial factor is paid a commission each year.  Section 53 of the draft Bill provides that a judicial factor is entitled to be paid remuneration at agreed intervals and to recover outlays.  It also requires the Accountant of Court to fix rates of remuneration for judicial factors, with different rates being able to be fixed for certain situations.  Rates are to be reviewed at least annually and a judicial factor who is not satisfied with the Accountant’s decision on the amount of remuneration or frequency of payment may apply to the court.

4.33 According to the Scottish Courts and Tribunal Service website, the hourly rate for the commission paid to a Judicial Factor takes account of their professional qualifications, experience and the hourly rate which would routinely be paid to them in the exercise of their normal duties (for example as a Solicitor or Accountant). The hourly rates payable from 1 April 2019 are:

• Partner - £246.84
• Manager - £178.50
• Support Staff - £89.25

Question 20  

Should judicial factors continue to be paid a commission?

Yes

No

Don’t’ know

If you wish, please give reasons for your answer

Question 21 

Do you have any other comments on how judicial factors should be paid in future?