Seòmar agus comataidhean

Under the current law, it is usually the case that trustees are personally liable to pay litigation expenses to successful opponents but have a right of relief against the trust estate. Section 65 sets out the new default position, which is that

“a trustee does not incur personal liability”

and will only do so where certain grounds exist and the court exercises its discretion to make an order for expenses against the trustee personally under one of those grounds.

Amendments 33 to 37 respond to concerns about the impact of section 65(2) of the bill, which were raised by the Law Society and STEP among others. The amendments remove section 65(2) and as a whole the section as amended makes a significant shift away from the likelihood that a trustee would incur personal liability for litigation expenses when compared with what we understand is current practice.

Section 65(3) allows the court wide discretion to deal with litigation expenses and allows the court to take into account all the circumstances when deciding how to exercise its discretion. Amendment 35 adds to the list of circumstances in which the court may exercise its discretion to find a trustee personally liable for expenses of litigation the scenario where

“the trust property is ... insufficient to meet the expenses incurred”

in litigating. That ensures that those who may wish to do so cannot abuse trusts to raise vexatious litigation and easily avoid the legal costs of doing so.

Trustees would be able, by application under a new subsection, to ask the court to determine liability before expenses are incurred, so that the trustees would be proceeding with any litigation with their eyes open.

Section 65, as already discussed, is of general application to any litigation to which trustees may be party. Under the section as introduced, the court can impose personal liability on trustees for litigation expenses in certain circumstances, including where the trust property is insufficient to meet the expenses or the trustee has brought about the litigation by breach of duty.

That is, however, limited to the Court of Session and therefore the provision restricts itself to setting out a statutory regime for how litigation expenses incurred in the Court of Session shall be determined. That is not the policy intention, however, and I have listened to evidence from stakeholders, such as the Sheriffs and Summary Sheriffs Association, who have pointed out that litigation will also take place in the sheriff courts, not just at the Court of Session.

Accordingly, amendment 40 clarifies the position so that the power that is conferred on the courts by section 65 can be exercised by the Court of Session and by the appropriate sheriff court. I ask members to support my amendments in this group.

I move amendment 33.

Amendment 33 agreed to.

Amendments 34 to 37 moved—[Siobhian Brown]—and agreed to.

Section 65, as amended, agreed to.

Sections 66 to 72 agreed to.

After section 72

There has been on-going engagement with stakeholders and the legal sector. I bring in Jamie Wilhelm to give an update on that.

The power allows for changes to a regulator’s functions. Where that relates to a regulator whose regulatory scheme was approved by virtue of the 1990 act, or for future regulators that achieve accreditation by virtue of the bill, that may be done via direction. That is not considered possible for existing regulators whose regulatory functions are set out in primary legislation, such as the Law Society and the Faculty of Advocates. It is considered, in such a case, that regulations are the most appropriate way to make changes. I will give an example. If it was considered that the Law Society had failed to properly regulate conveyancing or executry practitioners, that function could be used.

The power is also designed to be applied when a category 1 or category 2 regulator has not observed the regulatory objectives. Having considered stakeholders’ feedback, we intend to lodge amendments at stage 2 to transfer the responsibilities in sections 19 and 20 to the Lord President. We are also giving consideration to amending the sections so that regulations may be introduced only on the recommendation of the Lord President. As an additional safeguard, we are also considering whether the Lord President should have to give consent to any draft regulations before they can be laid in Parliament.

I have listened carefully to the concerns of the legal sector. Even though Esther Roberton, who appeared before the committee last week or the week before, wanted an independent regulator, she did not consider it appropriate to have any ministerial interference. I am listening carefully to such views, which is why we are considering those amendments.

Yes, the matter has been raised with me. As you know, it is not possible for the Scottish ministers or the Scottish Government to intervene in or comment on individual legal matters. However, I will be happy to meet you to discuss the issue.

Since the bill has been introduced, there have been on-going discussions with stakeholders, the Lord President and the judiciary about that. We are still at stage 1, so we have a bit to go, but as we move forward through the parliamentary process, we will be happy to provide further detail. At the moment, we are still working on the detail.

I do not. I will bring in my officials, but since the introduction of the bill, we have shown a willingness and an openness to work with the judiciary and stakeholders and to consider amendments prior to stage 2, so I do not agree with you.

Yes. Talks are on-going with all stakeholders and the legal sector.

Yes.

I would just like to thank the committee for its time, and I look forward to receiving your report.

We are working on the detail of that now; we are in discussion about that.