Professional practice updates 2014

Professional practice updates June 2014

Register of Insolvencies and Accountant in Bankruptcy

URGENT ALERT - Register of Insolvencies not up to date, and risk to solicitors and their clients 

Powers of Attorney - URGENT (30 May 2014)

Register of Insolvencies and Accountant in Bankruptcy (26.6.14)

Members will be aware from our previous intimation on the Website that a problem has been experienced with the Register of Insolvencies having network difficulties resulting in the Register not being updated since midnight on Thursday 19 June. This has impacted on settlement of conveyancing transactions. 

The Society can confirm that the problem now seems to have been resolved and the latest update from the Accountant in Bankruptcy reads:-

Thursday 26 June 2014 08:15

The network issues affecting the RoI have now been resolved. The data has been updated and the relevant files are available for download.

Apologies for any inconvenience


URGENT ALERT - Register of Insolvencies not up to date, and risk to solicitors and their clients (25.6.14)

The Society wishes to notify members of a current issue with the Register of Insolvencies which is run by the Accountant in Bankruptcy (an agency of the Scottish Government).  It is currently experiencing  considerable 'network problems' and is only up to date as at 20 June. A statement of the current position on the AIB website is as undernoted:-

Wednesday 25 June 2014 13:00

Network issues across Scottish Government continue to have an impact on the RoI . Our IT department have managed to get a version working, however, the data available is only up to date as of Friday 20th June. IT continue to work on the issue and will have it resolved as soon as possible.

AiB switchboard staff have no further details when the RoIl will be fully operational

Apologies for any inconvenience

The risk for solicitors and their clients is that up to date information from the Register of Insolvencies regarding whether (A) sellers have any entries noted against them in the Register of Insolvencies which would prevent the sale of a property from settling, or (B) purchasers have any entries noted against them in the Register of Insolvencies which would prevent their mortgage loans proceeding, is not available for the settlement of the transaction.

Although the Register of Insolvencies is stated to be up to date "as of Friday 20thJune" it is apparently the case that no information is available on the Register of Insolvencies after midnight on Thursday 19 June.

Notwithstanding the above, it is understood that information relating to bankruptcies is still being supplied to the Registers of Scotland and is then appearing on the Register of Inhibitions. Accordingly details of bankruptcies after midnight on Thursday 19 June are still appearing on the Register of Inhibitions although the Register of Inhibitions is only available to be searched a day later than the Register of Insolvencies.  Therefore the Register of Inhibitions would still appear to be "up to date". 

The position would seem to be that a bankruptcy which is registered on say Day 1 can be sent by the AiB to the Registers of Scotland on Day 1 and should arrive with the Register of Inhibitions on Day 2 and be noted by them. The entry in the Register of Inhibitions while received and noted on Day 2 will not be available to be searched against until Day 3. However, the entry in the Register of Insolvencies would normally be available to be searched against on Day 2, thus the one day difference between the Register of Insolvencies and the Register of Inhibitions.

As a result of this, the LSS consider that letters of obligation issued using the information in the Register of Inhibitions would still meet the criteria of "Classic" letters of obligation. The wording of our Guidance on this is:- 

"Is there anything needed to make the obligation classic apart from the actual obligation itself?

There are four conditions which must be complied with, where applicable.  These are:-

a search must have been carried out immediately prior to the date of entry including, in Sasine cases a search in the computerised presentment book.  The CML Handbook provides that the search in the Personal Registers be no more than three working days' old but in all other cases the Conveyancing Committee accepts that both Property and Personal Register searches can be up to seven days' old (five working days' old); In calculating the number of days, the Committee considers that you should count from the settlement date back to the date to which the Search is certified as being correct (as opposed to the date on which it was issued).".

The LSS cannot give legal advice to its members on this matter and it will be up to members to consider the position carefully in relation to any particular transaction. However, LSS does not feel that members would necessarily be in breach of their obligations to settle transactions on the basis of the Personal Search (search in the Register of Inhibitions) only, without the current additional benefit of the Register of Insolvencies. Hopefully the whole matter will be resolved shortly.


Powers of Attorney - URGENT (30 May 2014)

It has come to the attention of the Society that Sheriff Baird at Glasgow Sheriff Court has issued an Opinion holding that a Continuing Power of Attorney in favour of  the Clydesdale Bank was invalid on account of it failing to set out information required by Section 15 of the Adults with Incapacity (Scotland) Act 2000. Sheriff Baird's decision is understood to be  under appeal.

The style of Power of Attorney used by the Clydesdale Bank in the case, used similar wording to the style of Power of Attorney which is provided on the website of the Office of the Public Guardian.  The Sheriff has acknowledged in his Opinion, that the consequences of his decision could be that Powers of Attorney prepared in a style similar to that of the one in relation to which his decision was made, could be invalid and therefore of no effect during the granter's incapacity. This could have very serious implications for all solicitors, granters of Powers of Attorney, Attorneys, and members of the public, where the Power of Attorney has been prepared in a similar style.  The Society are considering the issue further, but in the  interim, members are advised to review and  consider whether they should alter the wording in Powers of Attorney prepared by them.

Members are also referred to:-

1. A Statement issued by the Office of the Public Guardian today which is in the following terms:-

This article brings to practitioners' attention a potential issue with the commonly used continuing power of attorney style raised within a recent opinion [1] of Sheriff Baird, Sheriff of Glasgow and Strathkelvin.

The Adults with Incapacity (Scotland) Act 2000 states that a continuing power of attorney shall only be valid if, inter alia, "it incorporates a statement which clearly expresses the granter's intention that the power of attorney be a continuing power"[2].  The majority of deeds submitted to the Public Guardian address this by narrative in the opening clause often akin to "person X to be my continuing attorney ("my attorney") in terms of section 15 of the Adults with Incapacity (Scotland) Act 2000" (the Act).   A "continuing attorney" is a person on whom a continuing power of attorney is conferred [3].

Section 15(1) is explicit that the power of attorney shall … continue to have effect in the event of the granter becoming incapable [in relation to decision about the matter to which the power of attorney relates].  A reference to section 15 has been treated by the Public Guardian as a clear statement that the granter intends the power to have continuing effect.

The Scottish Law Commission considered whether the clause which imparts a continuing power of attorney should be prescribed; they concluded that any words showing that the granter clearly intended the document to confer continuing authority should suffice [4].

In addition to the standard reference to section 15 there is often a 'recall clause' which expressly indicates that the document is to remain in effect until a recall in writing or until the granter's death - which has been treated as an express statement that the powers are to have continuing effect.

To date, a document so styled has been sufficient to satisfy the Public Guardian that the granter has offered a clear expression of their intention that the deed is to be a continuing power of attorney and thus that the statutory requirement is met. However, practitioners' attention is drawn to the divergent views on this matter in order that they can determine if a more explicit reference is required.

As with all judgements of this type, Sheriff Baird's opinion/decision is subject to appeal.

Sandra McDonald

Public Guardian

 


[1] AW39/14 Valid Creation of Continuing Power of Attorney Application for Guardianship in respect of NW. Opinion of Sheriff John A Baird, Esq, Advocate Sheriff of Glasgow and Strathkelvin at Glasgow.

[2] Section 15(3)(b) Adults with Incapacity (Scotland) Act 2000

[3] Section 15(2) Adults with Incapacity (Scotland) Act 2000

[4] Scottish Law Commission Report on Incapable Adults 1995  Paragraph 3.8

  

2. An article in the Law Society Journal

3. The opinion of the sheriff on the ScotCourts website.