Commentary on Sections Termination, recall and discharge after distribution
61.Section 32 makes provision for the termination of the judicial factory, the recall of the judicial factor’s appointment, and the discharge of the judicial factor, where the factory estate has been distributed in accordance with section 30(8) or (11) or section 31(5)(a).
62.Subsection (2) places the judicial factor under a duty to apply to the Accountant for termination, recall and discharge, and subsection (3) requires the application to be accompanied by the final accounts for the factory estate. Section (4) requires the Accountant to audit the final accounts and grant the termination, recall and discharge, unless subsection (5) applies. Subsection (5) applies if, having audited the accounts, the Accountant is of the view that there has or may have been misconduct or failure by the judicial factor. If the Accountant is of that view, section 41 will apply. Section 41 makes provision for the Accountant to take action where the Accountant believes that there has been, or might have been, misconduct, a failure to discharge duties, or a failure to comply with an instruction by the judicial factor.
63.Subsection (6) requires the Accountant to send a copy of the certificate of termination, recall and discharge, if granted, for recording in the Register of Inhibitions.
64.Section 33 sets out the process where a judicial factor dies or ceases to carry out the functions of judicial factor and no application has been lodged with the court for the appointment of a replacement judicial factor.
65.Subsection (2) applies where the judicial factor dies. The Accountant must determine whether the purpose for which a judicial factor was appointed still exists and, if it does, apply to the court for the appointment of a replacement judicial factor.
66.Subsection (3) applies where the judicial factor ceases to carry out the functions of judicial factor. The Accountant must apply to the court for the recall of the original judicial factor and the appointment of a replacement judicial factor.
67.Subsection (4) makes provision for a situation where a judicial factor has died or ceased to perform their duties, no application has been lodged for the appointment of a replacement judicial factor, and the Accountant is of the view that the purpose for which the judicial factor was appointed no longer exists but that the factory requires to be formally wound up. In that case, a duty is placed on the Accountant to apply to the court for the appointment of a judicial factor, for the specific purpose of bringing the judicial factory to an end.
68.Subsection (5) sets out duties that apply to a replacement judicial factor appointed as a result of an application made under subsection (2), (3) or (4). Paragraph (a) requires the factory accounts pertaining to the period of appointment of the original judicial factor to be brought up to date, and paragraph (b) requires those accounts to be closed with effect from the date of appointment of the replacement judicial factor. Paragraph (c) requires the replacement judicial factor to apply to the Accountant for the discharge of the original judicial factor, if the replacement judicial factor considers it to be appropriate to do so. Subsection (6) provides for the Accountant to grant an application for discharge of the original judicial factor made under subsection (5)(c) if the Accountant is satisfied that it would be appropriate to discharge the original judicial factor.
69.Subsection (7) provides for the expenses of applications under subsection (2), (3) or (4) to be paid from the factory estate, but gives the court discretion to direct otherwise.
70.Section 34 makes provision for the recall and discharge of judicial factors, in circumstances other than where the purpose for which the judicial factor was appointed has been fulfilled or there are not sufficient funds in the factory estate to meet the ongoing costs of the judicial factory.
71.Subsection (1) allows the court to recall and discharge a judicial factor on an application being made to the court by the judicial factor. Subsection (2) provides for the court to recall a judicial factor on an application being made by a person other than the judicial factor.
72.Subsections (3) to (7) set out more detail around the procedure that applies in relation to applications under subsection (1) by the judicial factor for recall and discharge, and to applications under subsection (2) by another party for recall of the judicial factor. Subsection (3) requires that applications also request the appointment of a replacement judicial factor, and subsection (4) requires that the appointment of a replacement judicial factor takes place at the same time as the original judicial factor is recalled. Subsection (5) sets out the requirements for intimation of an application made under subsection (1) or (2), while subsection (6) gives the court the power to determine that such requirements do not apply in a particular case. Subsection (7) provides that when the court grants the application to recall the judicial factor, the judicial factor must send the Accountant the accounts relating to the factory estate.
73.Subsection (8)(a) allows the judicial factor to apply to the court for discharge in the event recall is granted following an application made by another person under subsection (2). Subsection (8)(b) makes provision for applications under subsection (2). Subsection (8)(b)(i) requires the court to be satisfied that a person making an application under subsection (2) has an interest in the factory estate, and subsection (8)(b)(ii) requires the court to require the person making the application to find caution for the court expenses, unless that requirement would not be in the interests of justice.
74.Subsection (9) places an obligation on the Accountant to review the accounts for the factory estate when the court has granted a recall under subsection (1) or subsection (2). The Accountant must send to the court a report setting out the results of the audit and the Accountant’s view as to whether, if an application has been made for the judicial factor to be discharged, the judicial factor should be discharged. Subsection (10) requires the court to consider the report from the Accountant and make any further inquiry it considers necessary before granting any application for discharge under this section.