Commentary on Sections Part 4 – Distribution of factory estate, termination, recall, and discharge of judicial factor
54.Section 30 sets out the basic procedure for the distribution of the factory estate on the basis of a scheme formulated by the judicial factor. This will apply where the judicial factor is of the view that either the purpose for the appointment of a judicial factor has been fulfilled or has ceased to exist, or that there are not sufficient funds in the factory estate to meet the cost of the judicial factory continuing. By virtue of subsection (1)(b), this section also applies in relation to a scheme for the distribution of the factory estate under section 22, where the estate is the object of dispute.
55.Section 30(2) requires the judicial factor to send a copy of the proposed distribution scheme, together with an up to date inventory of the factory estate, to the Accountant for approval. Subsection (3) provides for the Accountant to either approve the scheme, subject to any modifications which the Accountant requires, or reject it. If the Accountant approves the scheme, then subsection (4) requires the judicial factor to intimate the scheme to OSCR, where the estate is that of a charity, and to every person who has an interest in the estate, sending to each such person a copy of the scheme and the inventory. Subsection (5) provides that where the estate is that of a charity, the judicial factor must give notice to the general public that a scheme for distribution has been approved. Subsection (6) gives the Accountant the power to determine that the requirements to notify interested persons, or to advertise to the general public, do not apply in a particular case. Subsection (7) allows those persons to submit to the Accountant an objection to the scheme within 21 days of receipt of intimation under subsection (4). Subsection (8) provides that if no objection is received, or if any objections are received but then withdrawn, the judicial factor is under a duty to distribute the estate in accordance with the scheme.
56.Where an objection is made to the scheme, subsection (9) requires the Accountant to refer the matter to the court which appointed the judicial factor, and to notify the judicial factor and the other relevant parties that the referral has been made. Subsection (10) obliges the court to which a referral is made under subsection (9) to require the person who submitted the objection to lodge caution for the expenses of the court, except where the court considers that it would not be in the interests of justice to do so. Subsection (11) requires the court to give the judicial factor, the person who submitted the objection, and any other interested person, the chance to present the arguments in favour of the scheme or the objection to it. After hearing those arguments, the court may reject the objection and direct that the estate be distributed in accordance with the scheme. Alternatively, the court may instruct the judicial factor to distribute the estate in a different way, or make a different order which the court considers appropriate. Subsection (12) makes clear that a scheme for distribution under this section may relate to part only of an estate.
57.Section 31 sets out the process by which a person with an interest in the distribution of a factory estate can apply to the court for distribution. Subsection (2) sets out the notification requirements which a person who lodges such an application must comply with – subsection (3) gives the court the power to determine that this requirement does not apply in a particular case. Subsection (4) sets out the parties to whom the court is required to give the opportunity to make representations about the application and why it should or should not be granted. Subsection (5) sets out the options which are available to the court after hearing those representations – the court can either instruct the judicial factor to distribute the estate as the court directs, or the court can refuse the application, in which case no distribution will take place and the judicial factory will continue.
58.Subsection (6) sets out further conditions which apply if the application is made to the court by a person other than the judicial factor. The court must be satisfied that the applicant has tried to persuade the judicial factor to prepare and submit a scheme for distribution of the factory estate to the Accountant under section 30, and that the judicial factor has not done so and does not intend to do so. Alternatively, the court must be satisfied that the judicial factor has previously submitted a scheme to the Accountant under section 30, but that scheme has been rejected by the Accountant.
59.Subsection (7) sets out further requirements which apply if the applicant under subsection (1) is the judicial factor. Before instructing any distribution of the estate, the court must be satisfied that the judicial factor has prepared and submitted a scheme for the distribution of the estate under section 30, and that scheme has been rejected by the Accountant.
60.Subsection (8) obliges the court to require the applicant to find caution for the expenses of court proceedings under this section, unless the applicant is the judicial factor, or the court considers that it would not be in the interests of justice to impose such a requirement.