Part 4

Distribution of factory estate, termination, recall and discharge of judicial factor

Distribution of factory estate

Approval of judicial factor’s scheme for distribution of factory estate
30
1
This section applies where a judicial factor has formulated a scheme—
a
for the distribution of the factory estate, on the basis that it appears to the judicial factor—
i
that the purpose for which the judicial factor was appointed is fulfilled or no longer exists,
ii
that there are not, or may not be, sufficient funds in the factory estate to meet the continuing expenses of the judicial factory, or
b
which comprises a distribution of the factory estate by virtue of section 22(4).
2
The judicial factor must send to the Accountant—
a
a current inventory of the factory estate, and
b
a copy of the proposed scheme.
3
The Accountant may—
a
approve the scheme (with or without modifications), or
b
reject the scheme.
4
If the Accountant approves the scheme, the judicial factor must without delay—
a
intimate the approved scheme—
i
where the factory estate is that of a charity, to OSCR, and
ii
to each person who, so far as is known to the judicial factor after reasonable enquiry, has an interest in the estate, and
b
send to each such person—
i
a copy of the current inventory of the factory estate, and
ii
a copy of the approved scheme.
5
Where the factory estate is that of a charity, the judicial factor must without delay give notice to the general public, by way of advertisement, that a scheme for the distribution of the factory estate has been approved.
6
The Accountant may dispense with the requirement in subsections (4)(a)(ii) and (5), in whole or in part, on cause shown.
7
A person who receives intimation under subsection (4)(a) may, within the period of 21 days beginning on the day the person receives the intimation, lodge with the Accountant an objection to there being a distribution in accordance with the approved scheme.
8
If no objection is lodged under subsection (7) (or an objection is lodged but subsequently withdrawn), the judicial factor must distribute the estate in accordance with the approved scheme.
9
If an objection is lodged under subsection (7) (and is not subsequently withdrawn), the Accountant must—
a
refer the objection to the court which appointed the judicial factor, and
b
give notice of that referral to—
i
the judicial factor, and
ii
each person to whom intimation was given under subsection (4)(a).
10
The court must require the objector to find caution for the expenses of the court proceedings unless it considers that, in all the circumstances, it would not be in the interests of justice to impose such a requirement.
11
The court may, after hearing the objector, the judicial factor and any other person who it is satisfied has an interest in the matter—
a
reject the objection and direct the judicial factor to distribute the estate in accordance with the approved scheme,
b
instruct the judicial factor to distribute the estate in such manner as the court orders, or
c
make such other order as the court considers appropriate.
12
This section and sections 31 and 32 apply in relation to any formulation, scheme, approval, application or recording in relation to a part only of a factory estate as they apply in relation to a factory estate.

Application for distribution of factory estate
31
1
A person with an interest in the distribution of the factory estate (“the applicant”) may apply to the court for distribution in such manner as the court considers appropriate.
2
Where an application is made under subsection (1), the applicant must intimate the application without delay to—
a
the judicial factor (if the judicial factor is not the applicant),
b
the Accountant, and
c
any other person to whom the court directs that intimation should be made.
3
The court may dispense with the requirement in subsection (2), in whole or in part, on cause shown.
4
On an application being made under subsection (1), the court must give the opportunity to make representations in relation to the application to—
a
the applicant,
b
the judicial factor (if the judicial factor is not the applicant),
c
the Accountant, and
d
any other person who the court is satisfied has an interest in the application.
5
After hearing any representations, the court may—
a
instruct the judicial factor to distribute the estate in such manner as the court orders, or
b
refuse the application.
6
If the applicant is not the judicial factor, the court may not instruct the distribution of the factory estate unless—
a
it is satisfied that—
i
reasonable steps have been taken by the applicant to persuade the judicial factor to formulate and submit a scheme for the distribution of the factory estate to the Accountant for approval, and
ii
the judicial factor has not formulated and submitted such a scheme and does not intend to do so, or
b
it is satisfied that the judicial factor has previously submitted a scheme for the distribution of the factory estate to the Accountant for approval but that scheme has been rejected by the Accountant.
7
If the applicant is the judicial factor, the court may not instruct the distribution of the factory estate unless it is satisfied that the judicial factor has previously submitted a scheme for the distribution of the factory estate to the Accountant for approval but that scheme has been rejected by the Accountant.
8
The court must require the applicant to find caution for the expenses of the court proceedings unless—
a
the applicant is the judicial factor, or
b
where the applicant is not the judicial factor, it considers that, in all the circumstances, it would not be in the interests of justice to impose such a requirement.

Termination, recall and discharge after distribution

Termination, recall and discharge after distribution of factory estate
32
1
This section applies where a judicial factor has distributed the factory estate by virtue of section 30(8) or (11) or section 31(5)(a).
2
The judicial factor must apply to the Accountant—
a
for the judicial factory to be terminated,
b
for the judicial factor’s appointment to be recalled, and
c
for the judicial factor to be discharged.
3
An application under subsection (2) must be accompanied by a copy of the judicial factor’s final accounts for the factory estate.
4
The Accountant must audit the final accounts and, except where subsection (5) applies, grant the judicial factor a certificate—
a
terminating the judicial factory,
b
recalling the judicial factor’s appointment, and
c
discharging the judicial factor.
5
If, after auditing the final accounts, the Accountant considers or suspects there has been misconduct or failure on the part of the judicial factor, section 41 applies.
6
As soon as reasonably practicable the Accountant must send the certificate to the Keeper for recording in the Register of Inhibitions.
7
Any fee payable by virtue of subsection (6) is to be met from the factory estate.

Appointment of replacement judicial factor

Duty of Accountant to apply for appointment of replacement where judicial factor has died or ceased to perform duties
33
1
Where a judicial factor (“the original judicial factor”)—
a
dies, and no application is lodged by any person for a judicial factor to be appointed in place of the original judicial factor, subsection (2) applies,
b
ceases for whatever reason to perform the duties of a judicial factor and no application is lodged by any person for a judicial factor to be appointed in place of the original judicial factor, subsection (3) applies.
2
Where this subsection applies, if the Accountant is of the opinion that the purpose for which the original judicial factor was appointed still exists, the Accountant must apply to the court for the appointment of a judicial factor under section 1(1), in place of the original judicial factor.
3
Where this subsection applies, if the Accountant is of the opinion that the purpose for which the original judicial factor was appointed still exists, the Accountant must apply to the court—
a
for the recall of the original judicial factor’s appointment, and
b
under section 1(1), for a judicial factor to be appointed in place of the original judicial factor.
4
Where either subsection (2) or (3) applies, if the Accountant is of the opinion that—
a
the purpose for which the original judicial factor was appointed no longer exists, and
b
some actings are required to bring the judicial factory to an end,
the Accountant must apply to the court under section 1(1) for a judicial factor to be appointed in place of the original judicial factor to carry out those actings.
5
A judicial factor appointed by virtue of subsection (2), (3) or (4) (“the replacement judicial factor”) must—
a
bring the accounts relating to the factory estate up to date,
b
close those accounts as at the date on which the appointing interlocutor for the replacement judicial factor is pronounced, and
c
on its appearing to the replacement judicial factor to be appropriate to do so, apply to the Accountant for discharge of the original judicial factor.
6
The Accountant may grant an application made under paragraph (c) of subsection (5) if satisfied that it is appropriate to do so.
7
The expenses of any application lodged under subsection (2), (3) or (4) are, unless the court determines otherwise, to be met from the factory estate.

Other applications for recall and discharge

Resignation and applications for recall and discharge in other circumstances
34
1
Where a judicial factor wishes to resign other than in the circumstances mentioned in section 30(1)(a) or (b), the court may, on application by the judicial factor—
a
recall the judicial factor’s appointment, and
b
discharge the judicial factor.
2
Where a person (the “applicant”) other than the judicial factor applies to have the judicial factor’s appointment recalled other than in the circumstances mentioned in section 30(1)(a) or (b), the court may recall the judicial factor’s appointment.
3
An application for recall and discharge under subsection (1), or for recall under subsection (2), must include an application for appointment of a judicial factor (a “replacement judicial factor”) on the factory estate in place of the judicial factor whose appointment is to be recalled.
4
The court must not grant recall under subsection (1) or (2) unless, at the same time, it appoints a replacement judicial factor.
5
A judicial factor who makes an application under subsection (1), or an applicant under subsection (2), must intimate the application without delay to—
a
the Accountant,
b
the judicial factor (if the judicial factor is not the applicant), and
c
any other person to whom the court directs that intimation should be made.
6
The court may dispense with the requirement in subsection (5), in whole or in part, on cause shown.
7
When the court grants recall under subsection (1) or (2), the judicial factor must send a copy of the accounts for the factory estate to the Accountant.
8
When an application for recall under subsection (2) is made—
a
the judicial factor may apply by motion for the court, if it grants the application, also to grant the judicial factor’s discharge,
b
the court—
i
may grant the application only if satisfied that the applicant has an interest in the factory estate, and
ii
must require the applicant to find caution for the expenses of the court proceedings unless it considers that, in all the circumstances, it would not be in the interests of justice to impose such a requirement.
9
On receiving a copy of the judicial factor’s accounts by virtue of subsection (7), the Accountant must audit those accounts and present to the court a report—
a
with regard to the audit, and
b
as to whether, in the Accountant’s view, where the judicial factor applied to be discharged under subsection (1) or (8)(a), the discharge ought to be granted.
10
The court must not grant—
a
discharge under subsection (1), or
b
discharge under subsection (8)(a),
until the court has received and considered a report under subsection (9), and made such further inquiry (if any) as it considers necessary.

Inventory and balance sheet

Inventory and balance sheet where replacement judicial factor appointed
35
1
Where a replacement judicial factor is appointed by virtue of—
a
section 33(2), (3)(b) or (4),
b
section 34(4), and the judicial factor whose appointment has been recalled (“the original judicial factor”) has not been discharged,
the replacement judicial factor and the Accountant must agree the inventory and balance sheet for the factory estate as at the appointment date of the replacement judicial factor.
2
Where a replacement judicial factor is appointed by virtue of section 34(4) and the original judicial factor has been discharged, the final inventory and balance sheet of the original judicial factor constitute the opening inventory and balance sheet of the replacement judicial factor.

Termination of judicial factory where insufficient funds

Termination of judicial factory where insufficient funds
36
1
This section applies where the Accountant is satisfied that there are not sufficient funds in the factory estate to meet the expenses of, or arising in connection with—
a
any formulation by the judicial factor of a scheme under section 30(1),
b
the seeking of approval of such a scheme, or
c
distribution of the factory estate in accordance with such a scheme.
2
The Accountant must, except where subsection (5) applies—
a
direct the judicial factor to distribute the funds in the factory estate in any way the Accountant considers appropriate,
b
terminate the judicial factory,
c
recall the judicial factor’s appointment, and
d
discharge the judicial factor.
3
As soon as reasonably practicable after terminating a judicial factory under subsection (2)(b) the Accountant must send the certificate of termination, recall and discharge to the Keeper for recording in the Register of Inhibitions.
4
Any fee payable by virtue of subsection (3) is to be met from the factory estate.
5
If the Accountant considers or suspects there has been misconduct or failure on the part of the judicial factor, section 41 applies.

Ending of judicial factor’s accountability on discharge

Ending of judicial factor’s accountability on discharge
37
1
A judicial factor’s accountability for acts and omissions in the capacity of judicial factor in relation to the factory estate or, as the case may be, part of the estate, ends when—
a
an interlocutor containing an order for discharge of the judicial factor is issued by the clerk of court, or
b
the judicial factor is discharged by the Accountant.
2
Subsection (1) does not apply to any acts or omissions in relation to which the judicial factor has incurred criminal liability in the course of holding, managing, administering or protecting the estate.
S. 30 not in force at Royal Assent, see s. 54(2)
S. 31 not in force at Royal Assent, see s. 54(2)
S. 32 not in force at Royal Assent, see s. 54(2)
S. 33 not in force at Royal Assent, see s. 54(2)
S. 34 not in force at Royal Assent, see s. 54(2)
S. 35 not in force at Royal Assent, see s. 54(2)
S. 36 not in force at Royal Assent, see s. 54(2)
S. 37 not in force at Royal Assent, see s. 54(2)