AS AMENDMENTS IN LIEU OF COMMONS AMENDMENTS Nos. 76 and 77 (Hansard, 16 October 1985)

§ Lord Cameron of Lochbroom

My Lords, I beg formally to move my Motion 77A, That the House do disagree with the Commons in their Amendments Nos. 76 and 77 but propose the Amendments Nos. 77B and 77C in lieu thereof.

The amendments which I have tabled have the effect of restricting to Scotland Clauses 30 and 37 of the Bill, which provide for the vesting of the debtor's estate in and the ingathering of that estate by the permanent trustee. At present, these provisions apply to other parts of the United Kingdom, so that all the property of a Scottish bankrupt, whether moveable or immoveable, in any part of the United Kingdom would vest directly in the permanent trustee. There have been similar provisions in every Scottish bankruptcy Act since 1839, and the Scottish Law Commission did not recommend any change in this position.

However, during the Bill's passage through another place there was some concern that the provisions in Clause 30(4) of the Bill as to the vesting of the real estate of a Scottish bankrupt in other parts of the United Kingdom were not sufficient to give adequate protection to third parties who might deal with the debtor's estate in ignorance of the sequestration. Accordingly, the amendments which are now numbered 76 and 77 were made to the Bill. However, further consideration of these amendments has led to a more detailed examination of how direct vesting would work in practice in the rest of the United Kingdom.

666 It has been concluded that, certainly as far as England is concerned, not only was Clause 30(4) insufficient to deal with changes in English property law since 1925 but the direct vesting of any English property of a Scottish bankrupt in his permanent trustee created a number of difficulties and anomalies. While the principle of direct vesting, as I have indicated, has had a long history in Scottish bankruptcy Acts, we have no wish to continue in the statute a provision which for whatever reason could cause severe problems as to its operation in other jurisdictions.

The amendments that I am therefore proposing in place of Amendments Nos. 76 and 77 will have the effect of restricting Clauses 30 and 37 to Scotland and deleting Clause 30(4). This will bring the provisions relating to a Scottish sequestration into line in this respect with those applicable to an English bankrupt in Part III of the Insolvency Bill. Similar amendments are also being made to bankruptcies in Northern Ireland by the Insolvency Bill. It is intended that the position with regard to a bankrupt's property in any other part of the United Kingdom should be dealt with by Clause 213 of the Insolvency Bill, which provides for mutual assistance between courts in the United Kingdom which deal with bankruptcy and insolvency, and by the further amendments it is proposed to make to that clause.

We shall of course be considering the amendments to be made to the Insolvency Bill next week, and I would not wish to pre-empt discussion on those amendments, but in order to establish a clear picture for your Lordships of what the new position will be for a Scottish trustee working under this Bill, I would describe the overall effect of what is intended. In short, it is intended that the permanent trustee will have, by virtue of regulations to be made under Clause 213 of the Insolvency Bill, the same rights in relation to property in England, Wales or Northern Ireland as he would have if he had been appointed a trustee in a bankruptcy under the law of those countries. Regulations will be able to make provision for vesting that property in the permanent trustee and for protecting that property from the debtor and the creditors prior to its vesting. In cases of dispute the permanent trustee in a Scottish sequestration who claims property in any other part of the United Kingdom will also be enabled to submit that claim directly to the bankruptcy courts in that part and they will then be required to assist him.

I hope your Lordships will agree that these provisions will have the effect of putting the permanent trustee in a Scottish sequestration in a stronger position than if he had simply to rely on Clause 30 extending to other parts of the United Kingdom outwith Scotland. They also ensure that due account is taken of the position under local law and that there is reciprocity between all parts of the United Kingdom. I beg to move.