VESTING OF ESTATE, AND DEALINGS OF DEBTOR, AFTER SEQUESTRATION (Hansard, 22 July 1985)

§ The Solicitor-General for Scotland
I beg to move amendment No. 14, in page 34, line 6, leave out from 'may' to 'shall' in line 9 and insert ', after having regard to all the circumstances, determine a suitable amount to allow for—

(a) alignment for the debtor; and

(b) the debtor's relevant obligations;
and if the debtor's income is in excess of the total amount so allowed the sheriff.

Mr. Deputy Speaker
With this, we may take Government amendments Nos. 15, 16, 21 and 22.

§ The Solicitor-General for Scotland
The amendments have as their common theme the need for consideration to be given in bankruptcy proceedings to the maintenance of the debtor and his family. Amendments Nos. 14 and 15 are intended to ensure that the court, when deciding the level of the income that should be left to him, will take account of the debtor's need to maintain himself and his family, including any spouse or former spouse and children even though they are not living with him.
The amendments to clause 35 provide that in considering whether to recall an order awarding a capital payment or a transfer of property on divorce, the court must consider all the circumstances, and in particular the financial circumstances of the person from whom the payment or property would be recovered in the event of recall of the order.
The purpose of amendment No. 16 is to make it clear that any creditor, even an alimentary creditor, whose debt would be discharged in the sequestration by virtue of clause 54 should not be able to do diligence in respect of that debt against any income vesting in the debtor after the date of his sequestration. As drafted, clause 32(4) does not prevent alimentary creditors, who can claim in the sequestration—and whose claim would be discharged by virtue of clause 54—from, as it were, "coming out" of the sequestration and doing diligence directly against the debtor's post-sequestration income. That would be an unfortunate result. The amendment prevents it from taking place.

§ The Solicitor-General for Scotland
I beg to move manuscript amendment No. 75, in page 35, line 14, leave out from "dealing" to "is" in line 16.

Mr. Deputy Speaker
With this, we may take amendment No. 17, in page 35, line 14, leave out "before" and insert 'within a period of 3 months commencing on'.

§ The Solicitor-General for Scotland
Following the tabling of amendment No. 17 by the hon. Member for Glasgow, Garscadden (Mr. Dewar), we have given further consideration to the period after the date of sequestration within which certain transactions between a debtor and a third party would be protected.
The hon. Member for Garscadden is probably aware that the Scottish Law Commission gives no reason for its 783 view in paragraph 11.38 of its report that the protection for such dealings, which at present is unlimited, should continue only until the date of publication of the award of sequestration in the Edinburgh Gazette. It would appear, however, that it might have been influenced by the thought that publication in the Edinburgh Gazette should be taken as notice to the world of sequestration. That is not correct either as a matter of fact or of law.
We have accordingly concluded that there should be no time limit upon the protection afforded to such dealings and I have tabled a manuscript amendment to this effect. This would appear to be preferable to the amendment extending the period for three months because it is equally arbitrary to have a three-month period as to have the period as at present specified in the Bill.
I appreciate, of course, the argument that it is important to avoid any fraudulent misuse of this period to the detriment of the creditors, but having looked carefully at the provision, I am convinced that the safeguards contained in it are more than adequate. Certainly section 107 of the 1913 Act which is similar in many ways to what we are now proposing has not, to my knowledge, caused any difficulty in the 72 years that it has been operating.
I am grateful to the hon. Member for Garscadden and I hope that he thinks that the Government amendment is desirable. I suspect that he chose the three-month period because he did not believe that he would be successful in achieving any time limit.

§ Mr. Dewar
The Minister is partly correct. I am grateful to him for tabling his manuscript amendment which goes further than my amendment. I enjoyed his modest knocking of the Edinburgh Gazette and its role in the world. I do not know who edits that august publication, but the Solicitor-General's view was probably realistic.
I agree that any period of protection would be arbitrary and that it is better to remove the restriction and to leave protection to be dealt with by clause 32(8)(b) which states the person dealing with the debtor was.… unaware of the sequestration and had.… no reason to believe that the debtor's estate had been sequestrated or was the subject of sequestration proceedings. That means that in a bona fide case the person will be completely protected. That is a sensible approach which has worked well for many years under the law of Scotland. It is a good amendment, even if it had to be scrawled in quill pen at the last moment by one of the Solicitor-General for Scotland's aides.